Indio City Council
August 17, 2022

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47 shopping malls, etc. 32 The FCC found that one third of Americans live in a multiple tenant environment and these MTEs disproportionately serve “lower -income and marginalized communities”. 33 The new rules:
• Prohibit contracts where a provider pays the MTE owner greater percentages of revenue as penetration increases;
• Prohibit contracts where the provider gains exclusive rights to compensate the owner in return for access to the MTE and its tenants;
• Require disclosure by the provider of any contract that provides exclusive marketing rights to tenants or prospective tenants; • Prohibit sale/leaseback of MTE inside wiring, where the wiring in the building is sold to the owner and then leased back on an exclusive basis .

From the City’s perspective this may provide additional impetus and benefit for extending fiber optic facilities to these locations .

HOUSING AND URBAN DEVE LOPMENT (HUD)

PROGRAMS
HUD has several programs in which broadband is an allowable use for funds . • The HOME Investment Partnerships Program is a grant program which funds a wide range of activities including building, buying, and/or rehabilitating afforda ble housing for rent or homeownership or providing direct rental assistance to low -income people. It is “the largest federal block grant to state and local governments designed exclusively to create affordable housing for low -income households.” 34 HOME fun ds may be used for wiring HOME properties for broadband internet, and all HOME -assisted housing must meet minimum property

32 These also include Multiple Dwelling Units (MDUs) and multiunit premises. 33 Report and Order and Declaratory Ruling ; Improving Competitive Broadband Access to Multiple Tenant Environments; FCC 22 -12; GN Docket No. 17 -142, Released February 15, 2022, at paragraph 1.
34 HOME F AQs, U.S. Department of Housing and Urban Development. https://www.hud.gov/program_offices/comm_planning/home/faqs

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48 standards which include installation of broadband infrastructure including wireless. 35
• Community Development Block Grant (CDBG) fun ds may be used to install wiring, fiber optic cables and permanently affixed equipment for broadband internet access for certain eligible activities. See CDBG FAQs at
https://ww w.hud.gov/program_offices/comm_planning/CDBG/faqs • The Housing Trust Fund “provides grants to states to produce and preserve affordable housing for extremely low - and very low -income households.” 36 All HTF -assisted housing must meet minimum property stand ards which include access to broadband, so costs to wire the property for broadband internet is eligible .

While these housing funds can be limited broadband is an eligible expenditure for the City to consider in its Housing Element, which seeks to accommo date housing needs for all incomes, groups with disabilities, and the homeless .

CITY POLICIES
The City correctly identifies the range of opportunities created by deployment of fiber optic networking in the City . Fiber networks are a capital infrastructur e asset with a long -life span, supporting high speed broadband which is now the “4 th utility” necessary to serve communities . An expanded fiber network in Indio has utility from a city management perspective for supporting the rapid growth in connected dev ices used for city services including streetlights, traffic signals, cameras, data collection, etc . Expanded fiber networking is also essential for economic development and support for residential and business services . In sum, next generation broadband services supported by fiber optic networks are expected to “have a net positive economic and social impact to local economies, while enhancing a community’s quality of life through expanded innovation opportunities, workforce development training, the narrow ing of the digital and/or

35 Id.
36 Housing Trust Fund FAQs, U.S. Department of Housing and Urban Development. https://www.hud.gov/program_offices/comm_planning/htf/faqs

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49 economic divide and improved organizational operation efficiencies.” [RFP, p. 2]
Infrastructure
General Plan
The City seeks to encourage the development of reliable and cost -effective next generation broadband services through its General Plan . Fiber optic cable and conduit is a crucial infrastructure building block for economic development and to meet the needs of residents, businesses, and the City’s guests .

Economic Development Element
Many of the goals of the economic development element of the General Plan depend on or include broadband network development . Goal ED -2 is a growing employment base with diverse job opportunities, which depends in part on infrastructure improvements [ED -2.3] . Goal ED -3 is workforce development which requires internet access provided via community -wide Wi-Fi and high -speed connectivity for businesses and households (ED -3.5] .

Goal ED -5 is to use creative and innovative infrastructure financing options which include actively s eeking a public -private partnership to provide “ultra, high speed fiber optic communications to businesses in Indio” and “where feasible and applicable, new construction shall install future cables to support citywide broadband internet accessibility” [ED -5.7].

The City seeks to actively market areas of Indio as “fiber ready” which is one of the crucial first screening questions companies ask when building a list of new locations for expansion . Among other locations a “fiber -ready” Downtown and Midtown Dis trict would aid their redevelopment and revitalization .

Infrastructure and Public Facilities Element
The General Plan includes Telecommunications as a key component of infrastructure. Goal IE -5 includes support for high quality telecommunications servic es and utilities . One policy to help achieve this is support for public private broadband partnership to provide advanced fiber optic networking as well as requirement that new construction in the City include installation of fiber optic cables to support citywide broadband

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50 internet accessibility [IE -5.1] . This could be addressed in the modified zoning standards and updated subdivision ordinance contemplated by the City [General Plan, Table 12 -2, page 12 -3].
“Dig Once” and Utility Coordination
The City p assed a resolution supporting the concept of “Dig Once” “whereby conduit is installed for future or immediate use for fiber optic cable installation whenever underground construction occurs in a roadway” .

Implementation of this concept often begins by coor dination among City departments and regional agencies first, such as Public Works and Indio Water Authority and others . The concept can then be extended to include projects of utilities and other occupants of the public right of way using the same cost sav ing/pavement protecting objectives .

Indio may have substantial opportunity for cost savings by coordinating work for the various storm drain projects and street and highway widening projects in the City’s Capital Improvements Plan, the State’s middle mile project in Coachella Valley, and the CVAG traffic signal synchronization project . Some jurisdictions require fiber optic cable and/or conduit to be placed by developers. For example,
• The City of Brentwood California has required developers to place cond uits and fiber optic systems for use by the City and its licensed franchisees . Sonic is presently using these fiber optic systems to provide Fiber to the Home services . [Title 16, Subdivisions and Land Development, Chapter 16.120.120, Undergrounding – Elec tric, communications, street lighting and advanced technology systems.] • The City of Shafter California conditions approval of developer agreements in part on installation of fiber optic systems to serve each buildable lot and dwelling in the development in concert with its municipal fiber optic network . [See, Appendix D, Developer Agreement Conditions for the City of Shafter CA]
• Sandy, Oregon requires all development sites shall be provided with public water, sanitary sewer, broadband (fiber) and storm drainage, constructed concurrent with development . Work to install public improvement facilities must proceed according to procedures adopted by the City Engineer, to among other things “provide for orderly and efficient land division patterns supported by a connected system of

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51 streets, fiber (broadband), water supply, sanitary sewer and stormwater drainage facilities.” [Development Code, Chapter 17.84.60] • Ocala Florida establishes fiber conduit rules which contain detailed specifications and procedures fo r conduit to be installed by the developer, Ocala Utility Services will install the fiber optic systems . [“Fiber Conduit Rules and Regulations” can be provided on request.]

COACHELLA VALLEY ASSOCIATION OF

GOVERNMENTS (CVAG)
CVAG 37 is well along in planni ng a traffic signal synchronization project which will upgrade traffic signal controllers to coordinate traffic on major roadways. 38
CV Sync will establish a framework for future “smart region” by installing highly technical hardware and software system s connected into a world -class, regional network. CV Sync will have technology that allows all cities to communicate and coordinate in real -time to manage traffic flow, which will be especially useful for the large events that draw hundreds of thousands of tourists to the Coachella Valley. This project will also deploy fiber -optic broadband technology throughout the Coachella Valley, which can help to unlock federal and state funding opportunities. CV Sync also includes improved communication to motorists.

Notably, the CV SYNC project overlaps geographically with the State of California’s middle mile fiber optic deployment providing substantial opportunities for deployment of additional fiber optic facilities while still saving substantial sums of money . See below, where the black lines

37 Agencies participating in CVAG are Riverside County, Caltrans, and the Cities of Indio, Cathedral Ci ty, Coachella, Desert Hot Springs, Indian Wells, La Quinta, Palm Desert and Palm Springs.
38 CV Sync: Keeping the Coachella Valley Moving. https://www.cv -sync.com/

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52 represent the CV SYNC project and the thick orange lines represent the approved middle mile project. 39

Figure 19. CV Sync alignment with Golden State Network

WIRELESS FACILITIES
Wireless Communicatio ns Facilities
Chapter 159.420 of the Indio’s Zoning Regulations (and accompanying definitions in Chapter 159.004) establish regulations and procedures for large commercial antennas on public and private property, including in the public right -of-way. The regulations are intended to “protect and promote the public health, safety and welfare, and aesthetic quality of the city” and “minimize the potential safety and aesthetic impacts on neighboring

39 CVAG Broadband Presentation, March 10, 2022.

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53 property owners and the community, and to comply with applica ble state and federal laws” .

The regulations and standards in the ordinance are generally in line with those of other California cities. The policies/procedures and standards adopted by City Council resolution 40 include provisions for handling “eligible facilities requests” for equipment modifications under Section 6409 of the Spectrum Act and related FCC rules. 41
Small Wireless Ordinance
The City Council adopted an urgency ordinance for Small Wireless Facilit ies on April 3, 2019 in response to the FCC’s Small Cell Order pertaining to “reasonable aesthetic criteria”. 42 The Ordinance establishes Chapter 159.422, Small Wireless Communications Facilities, which are defined using the FCC definition of a “small wire less facility” (including mounting height specification, maximum antenna volume – less than 3 cubic feet, maximum equipment volume – less than 28 cubic feet, or the size of a refrigerator, and maximum radiofrequency radiation per FCC rules) .

The ordinance does not itself contain specific regulations, but requires small wireless facilities to comply with policies, procedures, standards, and limitations established by City Council Resolution because “existing Code provisions were not specifically designed to address the unique legal and practical issues that arise in connection with deployment of small wireless facilities in the public right -of-way” . The City Council adopted its “Policies, Procedures, Standards and Limitations for Submittals and Review of Sma ll Wireless facilities in the Public Right -of-Way in the City of Indio” 43 (“policies and standards”) on April 3, 2019, which have remained unchanged.

Small Cell Wireless Design Standards and Guidelines
The City uses the best practice for management of sm all cell deployments having approved specific small cell design policies and standards by Council

40 Resolution No. 10075.
41 See Appendix B, Federal Communications Commission, “The Spectrum Act and Eligible Facilities Requests”.
42 Urgency Ordinance No. 1738.
43 Resolution No. 10075.

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54 Resolution No. 10075. This best practice avoids embedding specific terms, guidelines and procedures pertaining to small cells in ordinances and allows the Cit y to be more flexible over time in how it administers wireless facilities placement requirements and adapts to rapid change in technology.

The city’s policies and standards establish siting requirements and preferences (e.g., small wireless facilities are least preferred in residential districts) and objective aesthetic criteria for placement of small wireless facilities (including concealment requirements, size restrictions and undergrounding) which are provisions commonly adopted by other cities.

Under t he policies and standards no small wireless facilities are allowed on decorative poles, or traffic signal poles and standards . The City’s policies and standards cover all the most important items including:
• defining required contents for applications
• outlining the review process and required findings for approval • providing most, less and least preferred location preferences • providing preferences for support structures
• providing specific design standards including undergrounding, limits on equipment v olume, acoustic analyses, use of flat rate/unmetered power, wiring and cabling,
• providing requirements for maintenance and administrative requirements for rearrangements, abandonment, termination, installation of new poles, etc .

The policies and standa rds are especially complete around RF compliance reporting, and cooperation with RF compliance evaluations . These policies equip the City very well to handle any RF issues that may arise in the community.

Master License Agreements (MLA)
Use of Master Lic ense Agreements has emerged as a key practice for cities and counties to deal with the large number of pole attachments that are associated with 5G deployment. An MLA establishes the procedures, terms and conditions under which licensees (wireless provider s or their agents) may request individual pole licenses. The MLA is a comprehensive document that contains uniform terms and conditions applicable to all wireless facilities installed on City -owned poles. Individual pole licenses identify the licensed pole and contain detailed exhibits for the site plans, permits, fee

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55 schedules, insurance documentation, and other materials that are unique to each site. When the City grants a pole license, that pole license (together with all the plans, equipment specificati ons and fee schedules) become integrated with the MLA.

Use of an MLA framework provides for a level playing field since the MLA format remains essentially the same regardless of licensees. Each wireless service provider executes a separate MLA with the Ci ty that entitles them to obtain pole licenses on a first come, first -served basis for a specific time.

Thus, one set of rules is used for all wireless service providers which in turn reduces the administrative burden on the City and promotes a level playin g field among competitive licensees.

The wireless service providers benefit from use of an MLA to license existing City –owned infrastructure to install small cell facilities rather than bearing the time and cost of negotiating individual pole licenses. Th is more streamlined process accelerates the deployment of advanced wireless facilities. The City benefits from use of an MLA as well by establishing more robust wireless broadband networks available to the City’s residents and businesses, maintaining great er control over aesthetics and potential liability from wireless facilities on City -owned poles, and earning license revenues which help defray the costs of managing and administering access to the public rights -of-way and recognize the value of attaching to City assets .

Consideration of an MLA may be especially important for the City since it owns many streetlights . Magellan Advisors will provide the City with a sample MLA draft for its consideration in developing a draft MLA.

CONCLUSIONS AND IMPLICATION S
The state and federal broadband policy environment strongly supports expansion of the City’s broadband infrastructure while ensuring the City can maintain its unique aesthetic preferences and qualities. State and national policy is squarely focused on e liminating the “digital divide” and making broadband access available to all citizens and communities.

To accomplish this, the Infrastructure Investment and Jobs Act (IIJA) and SB 156 in California have made large amounts of funding available to invest in fiber optic technology which remains the “gold standard” for broadband infrastructure. One important initiative in the State of California is

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56 construction of an open -access middle mile network designed to provide connectivity for rural and urban areas to achieve the greatest reductions in the number of households unserved by broadband service. There is also grant funding for extending last -mile facilities to unserved areas (residences and businesses without access to 100/100 Mbps speed).

The IIJA also funds the FCC’s Affordable Connectivity Program which provides a $30 per month subsidy for a minimum 100 Mbps download speed connection to eligible households . Cities can benefit from the ACP by gaining awareness of program details and communicating them t o their low -income residents and program managers for services provided to the low -income communities .

Several other policy changes favor broadband development. Both the State of California (Caltrans) and the Federal Highway Administration have changed p olicy direction to encourage utility coordination in its funded projects that facilitate economic and efficient placement of broadband infrastructure . The FCC is improving broadband mapping so that areas unserved with broadband service are more readily ide ntifiable. The FCC has also implemented new rules to provide for competitive choice in multi - tenant environments. On the wireless side of things, the Ninth Circuit Court of Appeals preserved local authority over aesthetic decisions for deployment of 5G sma ll cell antennas and ancillary equipment. Other policies, particularly the state’s mandate for cities to allow micro -trenching and the FCC’s “shot clock,” are less favorable .

The City ordinance pertaining to antennas and facilities on public and private property (Chapter 159.420) reasonably addresses the important considerations associated with those types of facilities, including mobile wireless antennas on macrotowers. The City has a Small Wireless Facilities ordinance (Chapter 159.422) more recently ado pted under the auspices of the FCC’s “Small Cell Order.” At the same time the City adopted a robust “Policies, Procedures, Standards and Limitations for Submittals and Review of Small Wireless facilities in the Public Right -of-Way in the City of Indio” adopted via Council resolution on April 3, 2019. The Ninth Circuit decision confirms the City’s latitude and authority to administer these robust standards and guidelines for placement of small cell facilities.

The City could consider development of a Master License Agreement (MLA) to provide common terms and conditions for all wireless providers for

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57 deployment of small cell facilities on City structures including streetlights .

The City will need to plan its approach for compliance with SB 378, which mandates approval of “micro -trenching” applications, which is defined as a narrow open excavation trench that is: (1) no wider than 4 inches; (2) at a depth of 12 to 26 inches; and (3) created for the purpose of installing a subsurface pipe or conduit given a cons ensus within the City’s management that the shallower depth is undesirable for long term health of the City’s streets.

Review of the City’s policies and practices suggests certain actions could be undertaken by the City. Going forward, all significant Cit y projects and initiatives should include explicit consideration of broadband implications.

Broadband is critical infrastructure and general plan elements should incorporate actions which support expansion of broadband infrastructure.

For example, includin g placement of fiber optic conduit in transportation planning and capital improvement projects where it aligns with the City’s overall broadband network master plan .

The City should use coordination of project planning among departments working in the pub lic rights of way to include placement of broadband infrastructure. Inclusion of broadband infrastructure in planning for economic development, economic development corridors and general plan elements adds to the commitment to infrastructure for the City’s economic development .

Given the crucial importance of broadband, the City should include “how can we use this to expand broadband capacity and availability” as a question on the checklist related to all major projects and initiatives. For example, for major road projects this could lead to the inclusion of conduit for fiber optic cable as part of the project plan. Similarly, for public housing initiatives, this could lead to using HUD funds for broadband wiring. In sum design and development processes and documents need to include broadband as a fundamental consideration .

The City may also include required provision of conduit and fiber optic systems as a condition of developer agreements . Real estate developments can be conditioned upon deploying networ k infrastructure, including fiber and wireless, to be deeded to the City along with roads and other infrastructure. Broadband access and internal building wiring can be

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58 required for affordable and public housing and CDBG and other HUD funds can be applied to this purpose.

Very large funds are available for infrastructure development including transportation. State and federal transportation policies now explicitly encourage utility coordination, and the City can take advantage of that to place additional f iber and conduit. Caltrans has a new policy on accommodation of broadband facilities in the public right of way. The Golden State Network (GSN) is a new public corporation that will build and operate statewide middle -mile network in Caltrans rights -of-way. The City should explore these opportunities with the District 8 representative on utility coordination and GSN.

Deployment of additional broadband infrastructure for other purposes can be planned in conjunction with traffic fiber for Intelligent Transpor tation Systems (ITS) and the City’s fiber master plan. Notably, CVAG’s CV SYNC project overlaps geographically with the State of California’s middle mile fiber optic deployment providing substantial opportunities for deployment of additional fiber optic fa cilities while still saving substantial sums of money . CV SYNC is well along in planning and construction, and it is therefore urgent that immediate action be taken to take advantage of this substantial opportunity.

The City of Indio can most effectively capitalize on the current policy environment through a comprehensive, proactive approach to developing its digital infrastructure, including but not limited to broadband. Traffic and utility infrastructure require and are co -located with network assets in the public right of way. Access infrastructure directly supports economic development, education, essential services, health care, and housing. While abundant resources are coming available for broadband development, it is unlikely they will be adequate, b ut they may be used as leverage for other funding. A wide range of complementary investments and impact multipliers are made possible by a comprehensive strategic approach.

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59 4. Gap Analysis
Gap 1 : 10% of the City’s residents lack broadband
competition
The cit y of Indio is considered well served since Spectrum essentially covers the city with over 25 Mbps/3Mbps . Also, 90% of the city’s residences are also served by Frontier with a competitive ‘gigabit’ offering . That leaves 10% of the city without gigabit com petition.

Gap 2 : Lack of Metro Fiber
As noted above ( section 1. Asset Inventory , Non-City Owned Assets ) there is a lack of metro fiber in the City of Indio . This can impact large com mercial entities from moving to Indio as they often demand redundant connections from two service providers .

GAP 3 : Lack of Data Centers and Interconnect Facilities.

In the long term, the city and region would benefit from having interconnect facilities a nd data centers to ensure Indio, and the county, are in the early waves of new digital services and applications . As shown in Figure __ there are limited data centers east of Riverside . This is not an immediate concern assuming sufficient connectivity to Los Angeles .

GAP 4: Lack of Internet Access in a Percent of Indio
Households
Those residents lacking broadband access are not limited by availability .

Broadband internet access is available throughout the City of Indio . It could be from fixed network providers such as Spectrum or Frontier or AT&T, a wireless provider such as the cellular 4G/5G companies, a variety of Wireless Internet Service Providers (WISP) offering Fixed -Wireless Access, or even from several satellite providers . The availabi lity of internet access is not limiting Indio residents in participating in the modern world . However, there are substantial segments of the population, including low income, seniors and the disabled, that lack broadband internet access where they live.

The primary reasons these segments lack broadband are economics and digital literacy . Economics impacts broadband in two ways . First, is the cost of the devices such as laptops, PCs, or tablets. Second, are the monthly recurring fees . Digital

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60 literacy inc ludes the ability to use devices to access the internet for any purpose .

This impacts seniors and immigrants from less digitalized countries .

Both Spectrum and Frontier have programs based on the Federal Affordable Connectivity Program (ACP) and are willi ng to work with the city to promote these offerings . ACP provides a $30 subsidy per household which can be applied to either a $30 service, which becomes essentially free, or towards a more expensive, and higher data rate services . The program also has a o ne-time $100 subsidy toward the purchase of a device .

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61 5. Feasibility Analysis
Selecting the right broadband business model for local government is highly dependent on several factors that will suggest the most appropriate option for the community. For example, understanding the community needs and knowing the competitive market factors will define what infrastructure options fit well within the community, and determining organizational and operational capabilities of the local government. Equally important is an understanding of the financial commitments and risk and reward that participating organizations are willing to support to fund and sustain a successful broadband initiative .

Figure 20. Municipal Broadband Considerations
The commonly implemented business models fall on a continuum that ranges from low risk, low investment options to higher risk, high investment options . Figure 2 illustrates this continuum . Moving along the continuum of business model options involves increasing degrees of risk and reward: risks in terms of financial, operational, and regulatory risk; rewards in terms of community benefits, revenue generation, and over potential for excess cash flows .

Moving “up” the continuum generall y requires increasing levels of investment and implies greater local government participation in the delivery of broadband services . Public policy is considered “passive” approach, where the government does not directly participate in the broadband infrast ructure . This compares to “active” models, such the Dark or Lit Open Access and City as the Retail ISP models, where the local government in involved in all or part of the broadband network . Local governments must determine which business models meet their organization’s risk/reward tolerance to achieve the community’s broadband goals .

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62 Figure 21. Broadband Participation Models

B U S IN ES S MO D E L OP T I ON S
“Carrier -Class” Municipal Fiber Backbone
The Indio city government, like any organi zation, needs an internal network to function . Each location requires a connection to the city’s network so it can communicate to centralized data center resources and IT applications .

Many city networks have evolved over time and are a conglomeration of public and private assets and private service providers’ active services . This results in higher capital equipment costs, higher operating expenses, including large monthly service fees, and an inflexible infrastructure . For the future, the City of Indio n eeds an infrastructure -grade city -wide municipal fiber network. Infrastructure -grade means high capacity, low latency, fully redundant and future proof for 30 -50 years.

Indio would benefit by evolving the current municipal network into the infrastructure -grade fiber optic network connecting all city locations and primary anchor institutions . Properly architected, with resiliency and high fiber counts, it will provide the city a future -proof infrastructure foundation .

The passive assets (Conduit and fiber) would be architected to support separate physical networks for public safety, the schools, the city, and

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63 service providers. This infrastructure would also be the backbone for future network expansions . This would apply to adding new government buildings to the network, as well as adding an array of remote smart city sensors and cameras .

The city should also have fully redundant paths to key internet inter - exchange facilities . Given Indio’s location, it is recommended that the city’s network be connected to both the Los Angeles and Phoenix interconnect facilities . The city would establish path redundant connections from separate service providers to both locations . Separate routes to Phoenix may be challenging since most long -haul fiber runs along Highway 10. Path redundancy to the LA areas should be attainable . Additionally, it is prudent to establish connections to the county and adjacent cities networks for increased resiliency in the event of natural disasters.

This networ k is critical infrastructure and needs to be funded . Part of the financial justification will come from the saving in payments to 3 rd party communication service providers . There may be opportunities to lease excess conduit and dark fibers to private servi ce providers . National, and international, private service providers that serve businesses offer an “end - to-end” service and to satisfy the requirement, it is common for them to lease parts of their network in local areas they do not own assets . This wou ld include leasing conduit to deploy their own fiber or leasing dark fiber to serve a specific location . These leasing opportunities would be for excess capacity along the paths of the new city’s network . The next section describes an incremental approach to deploy assets closer to Indio’s commercial centers .

Expand city network to business districts
Businesses of all types need high speed, low latency, and resilient connectivity to the Internet and to the Cloud . This connectivity is as critical as electr icity to operate their businesses . Many businesses demand connections to the internet from two separate service providers using two different physical paths . Given the importance of the business community to the City of Indio, the city must ensure there is sufficient digital infrastructure to meet their needs . To address this, the city could extend their infrastructure -grade municipal network to pass major business districts . This would include the passive assets of conduit and dark fiber. These would be

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64 available for lease (and sale) to all service providers to facilitate and accelerate their ability to serve Indio businesses .

We do not recommend the city offer “active”, or “lit”, service on either a wholesale or retail level to businesses . Business -class services require service level agreements (SLAs) with guaranteed uptime and performance, as well as 24x7 support . Without economies of scale, this limited operation would be difficult to achieve sustainability (i.e., cash flow breakeven).

Expand to Reside ntial Neighborhoods.

Should the city determine that some, or all, residential areas are underserved , the city has a range of options as illustrated in Figure 2 . The infrastructure -grade municipal network described in Section 1 above could be leveraged to address this broadband gap . This section will discuss each of the operational models and will illustrate a range of partnership opportunities which can reduce risks.

MODEL 1 : POLICY ONLY
The city could take the approach to encourage Spectrum and Frontier to upgrade their existing networks and/or attract a new private entrant to overbuild the city . Frontier and Spectrum are large companies with national footprints to upgrade. They prioritize their upgrades based on their own business models and algorithms . Spectrum is the dominant provider and can remain competitive for many years with an electronics -only upgrade . This upgrade, called DOCSIS 4.0, is expected to be commercially available no earlier than 2025 . They will need to construct additional fiber to remain competitive in the long term . Frontier has fiber to 90% of the city and they need to upgrade to 10 Gbps PON or beyond to remain competitive in the near term . Future PON upgrades are likely electronic upgrades at the home and at the central office and will not require additional fiber.

There are numerous privately funded fiber companies in the U.S. Many have raised $100 of millions of private capital and are looking for medium size cities and large towns to serve . The household scale and d ensity of Indio are attractive to an overbuilder . Their fundamental business decision revolves around their confidence in acquiring and maintaining household subscription rates of 35 -40% in a three -way competition with Spectrum and Frontier . (Note: the cit y would face the same decision as discussed below).In

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65 the 10% of the city not served by Frontier fiber, the city could encourage and incent Frontier, or a new entrant, to overbuild these neighborhoods with FTTP. In these areas, they would be in a two -way c ompetitive situation with Spectrum . Incentives could range from grants, subsidies, or tax credits.

MODEL 2 : CITY PASSIVE INFRASTRUCTURE
If the city determines that it must make a more substantial intervention to ensure every household has competitive broadband, it must first decide where to deploy . The government could serve the entire city, or it could serve select areas only . Once the area is determined, the city would need to select the appropriate operating model as shown in Figure 2 .

The first step in all the active participation models (Models 2, 3 and 4) is the construction of passive infrastructure (Conduit and Fiber) to each location the city wants to serve . The city could stop here and adopt a Dark Fiber Open Access model (Model 2 ). In one model, the municipality funds the construction of the passive assets and then leases the entire network to a single provider for a long duration (e.g., 20 years). This model could bring a single new full fiber ISP to the city creating a 3 -way com petition with Spectrum and Frontier .

To encourage additional competition, the city could architect the infrastructure to enable it to lease dark fibers to multiple ISPs on a home -by- home basis . This would require that each home’s fiber be terminated in a central office, or the city must architect its remote fiber aggregation cabinets and vaults to accept electronic equipment from multiple ISPs. This is a significant architectural change . The issue with this approach in Indio, is the second provider on the city’s infrastructure would be the fourth ISP in the market.

In this model, the city would fund the deployment of the passive assets (conduits and dark fibers) with the goal of leasing them to private service providers. In theory, Spectrum and Frontier co uld lease fiber and conduit from the city to serve new areas or to save on construction costs . However, large service providers, including Spectrum and Frontier, prefer to own their network assets and are unlikely to consider leasing assets from the city . To address this, the city could consider selling conduits and dark fibers to them .

Though, the city should always maintain ownership of multiple conduits and large amounts of dark fiber to enable competition and future expansions .

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66 In the instances where a city receives grant money to fund the construction, large service providers may expect the city to give them the assets . This is not completely unreasonable, and the city can negotiate performance metrics to ensure the public needs are met over the life o f the assets .

It is important to note that prior to the construction of any passive assets, agreement(s) with service providers should be in place . These agreements could be in many forms based on the operational model selected by the city .

In all cases, the lease payments, or selling prices, would be structured to cover the operational expenses and financing costs of the passive assets .

This full fiber infrastructure approach would also have fiber strands available for municipal purposes. It will provide a large part of the City’s infrastructure -grade municipal network at marginal costs .

Partnership Options to Reduce Risk
There are two components of passive infrastructure, the initial design and construction, and the on -going maintenance . The city would likely enlist third party specialists , or partners, for each phase of the project . There are many companies in the fiber ecosystem that provide design and construction services , including Magellan Advisors, that would respond to City RFPs . For on-going maintenance, the city could utilize existing public works resources, or they could outsource all or parts of these functions to third parties . Keep in mind, this is critical infrastructure and the city, or its maintenance partner, would need to r espond rapidly in the event of network disruption such as a fiber cut .

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67 Figure 22. Model 3 - City Active Infrastructure
In Model 2, each service provider using the passive assets would need to deploy their own electronics to del iver internet services to each home . This includes both centralized network equipment and customer premises located devices (e.g., Wi -Fi Routers) in each household served . In Model 3 , the “Active Infrastructure” or “Lit Open Access” Model, the municipality owns and operates the active infrastructure needed to transport data locally throughout the city .

In this model, the municipality funds and builds the passive FTTP network and deploys the active transport equipment. Retail Internet service providers conn ect to the city’s infrastructure at aggregation points and lease active Ethernet virtual circuits to each home served . They would deploy their own equipment (e.g., BGP Routers) to route local packets to the global internet .

For the ISPs, the barrier to serving the community is low, and this can lead to a competitive marketing place for residential internet services .

Conceptually, the city would be operating an Ethernet network and leasing Virtual LAN’s (VLANs) to one or more ISP . Given the size of Indio t his would not be a large complex network . Given the ubiquity of Ethernet, network management and operational support systems are widely available. The same is true for the workforce managing them . The question for the lit open access model, is can you att ract one or more ISPs to compete with Spectrum and Frontier in Indio? The value to an ISP of the lit model is their entry costs to serve the city are minimal as compared to building their own physical

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68 infrastructure . They still have a minimum take rate to achieve breakeven and to create a sustainable business. This ultimately is a question of scale.

The active asset work most efficiently with scale since there is a high upfront cost . This is also called the “first customer served costs” . Thus, an active asset model targeting small areas may have challenges achieving breakeven .

In all the open access models, the retail ISP is the face to the customer .

However, should the city implement any of them, they should allocate funds for marketing or communi ty outreach . The city’s success is directly linked to the ISP’s success and residents will need to understand the open access business model and the impact to the city finances .

Model 3 – City Active Infrastructure
In Model 2, each service provider usin g the passive assets would need to deploy their own electronics to deliver internet services to each home. This includes both centralized network equipment and customer premises located devices (e.g., Wi -Fi Routers) in each household served. In Model 3, the “Active Infrastructure” or “Lit Open Access” Model, the municipality owns and operates the active infrastructure needed to transport data locally throughout the city.

In this model, the municipality funds and builds the passive FTTP network and deplo ys the active transport equipment. Retail Internet service providers connect to the city’s infrastructure at aggregation points and lease active Ethernet virtual circuits to each home served. They would deploy their own equipment (e.g., BGP Routers) to ro ute local packets to the global internet.

For the ISPs, the barrier to serve the community is low, and this can lead to a competitive marketing place for residential internet services.

Conceptually, the city would be operating an Ethernet network and le asing Virtual LAN’s (VLANs) to one or more ISP. Given the size of Indio this would not be a large complex network. Give the ubiquity of Ethernet, network management and operational support systems are widely available. The same is true for the workforce to manage them.

The question for the lit open access model, is can you attract one or more ISPs to compete with Spectrum and Frontier in Indio? The value to an ISP of the lit model is their entry costs to serve the city are minimal as compared to

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69 building their own physical infrastructure. They still have a minimum take rate to achieve breakeven and to create a sustainable business. This ultimately is a question of scale.

The active asset work most efficiently with scale since there is a high upfront cost. This is also called the “first customer served costs”. Thus, an active asset model targeting small areas may have challenges achieving breakeven.

In all the open access models, the retail ISP is the face to the customer.

However, should the cit y implement any of them, they should allocate funds for marketing or community outreach. The city’s success is directly linked to the ISP’s success and residents will need to understand the open access business model and the impact to the city finances.

Partnership Options to Reduce Risk
All the partnership and outsourcing opportunities available to the passive assets Model 2 are options here too . The active transport infrastructure would essentially be a city -wide Ethernet network . The city could own the active assets and operate everything with internal IT resources. Alternatively, they could also outsource the equipment operations to third party specialists . The ability to outsource would also apply to the 24x7 Network Operations Center (NOC) and the ve hicle fleet needed for on -site support at subscriber home .

Figure 23. Model 4 – City as the Retail ISP

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70 Model 4 – City as Retail ISP

In the dark and lit open access models (Model 2 and Model 3), each entity involved in the long -term operations of the broadband network must cover expenses (including financing), and in the case of private entities make a profit . Given the economics, there is a finite amount of operating margin that can be distributed amongst the entities . In M odel 3, lit open access models, there are at least two entities operating network equipment (The ISP and the Lit Wholesale Provider) . Given these economics, the city may choose to be the retail ISP . While this is a big endeavor for a city, it is also the fastest model to achieve financial returns .

Becoming a retail ISP requires the city to also deploy the network electronics required to route local packets to the global internet . It would also mandate the City ISP deploy and support Wi -Fi in each subscrib er’s household . This would require the city to have the capabilities and resources to put trained personnel on -site at each served location .

The City ISP would face the same fundamental economic question as a new private ISP . Can the city attract and maintain 35 -40% of Indio households? The key to driving take rates is marketing and community outreach . While the city can leverage existing municipal communication channels it would need a substantial marketing budget to drive take rates .

Marketing can drive initial take rates but retaining them requires a reliable network and solid customer service . Thus, as the retail ISP, the city would need to establish and staff a 24x7 customer support call center . This model has the same first customer served costs as the active open access model .

Thus, becoming a retail ISP for a small subset of the city’s single -family homes could be challenging . For a city -wide deployment, the City ISP would be in a 3 -way competition with Spectrum and Frontier .

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71 Partnership Op tions to Reduce Risk
The partnership and outsourcing models described in the passive and active open access models apply to the City ISP model as well . As noted, there are several additional functions of being a retail ISP that the city may choose to outso urce . These include marketing, customer support call centers and support for whole -home Wi -Fi. In theory, the city could fund the construction of the city -wide FTTP network and outsource everything to a range of specialty 3 rd parties or a single ISP . The r etail brand would remain the city’s .

Figure 24. Model 5 – City as the Retail ISP with Partners

MODEL COMPARISON
This section will compare the four operating models shown in Figure 2 against Upfront Capital Expenditure (CAPEX) and On-going Operational Expenses (OPEX) . The models will then be compared based on the relative aggregate risks and how those risks can be reduced by partnering .

Model 1 has no direct financial risks to the city, models 2, 3 and 4 do . As noted, these operating models represent a continuum of increased risk for increased rewards . The biggest jump in both risk and effort starts with the FTTP Model 2 (See Figure 3). This is when the large amount of up -front capital is required to design and build the FTTP network . These risks can be mitigated by building to demand, but the success will be determined by achieving sufficient take -rates in a competitive market . This level of risk and

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72 effort applies to Models 3 and 4 as well. Model 3 requires more capital and effort than the passive FTTP Model 2 . However, the incremental costs of the transport equipment are minimal . The bigger impact from Model 2 to Model 3 is the workforce to manage a 24x7x365 operations .

The same is true jumping from Model 3 to Model 4 . Howe ver, the incremental total costs due to the routing equipment are low . The incremental work force required to manage the additional electronics is minimal as well . The bigger financial and workforce impacts are in marketing and customer support in Model 4 . As discussed, to reduce risks and impact, there are many functions that can be outsourced to a range of 3 rd parties.

The risks are reduced when the city outsources critical functions to experienced experts . The organizational impact is reduced since the 3rd party employees are not town employees . However, these models have the added challenge of allocating revenues and margins across multiple entities.

All the open access models, dark and lit, have the challenge of finding one or more ISPs to commit to s erving the community . To our knowledge, no major U.S. service provider has participated in an open access network . However, there are many ISPs that do . These are smaller and regional companies that were created to serve subscribers at gigabit speeds with out having to construct their own fiber network .

Figure 25. Upfront CAPEX
The three models beyond Policy -Only start with the construction of the conduit and fiber networks . This is a huge, multi -year effort that requires a

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73 large amount of capital upfront to design and build . Thus, there is a sharp rise in CAPEX, and risk, when the decision to construct the network is made .

Beyond this, the incremental costs to overlay either a wholesale Layer 2 network or a retail Layer 3 network are small compared to the upfront construction costs . CAPEX will rise but not by an amount that would materially change the economics and finances of the project .

On-Going OPEX
A network of conduit and dark fiber is a long -term asset with low operating expenses (OPEX) . This is true with both aerial and underground deployments . Both are subject to random disruptions that require specialized workforces to manage . The OPEX will increase substa ntially with the addition of active infrastructure . Both active models, wholesale open access and retail ISPs, require 24 -hour x 7 -Day operations management teams . This includes network management, customer support call centers and onsite home management. Key points are:

1. Big Jump in CAPEX with network build

2. Big jump in OPEX when adding active infrastructure.

Aggregated Risks
The risk of a Policy Only approach will vary depending on the current market conditions . In Indio, the risk to 90% of the city that h ave gigabit offerings from both Spectrum and Frontier is low . Frontier’s equipment -only upgrade to 10 Gbps should put pressure on Spectrum to upgrade and will keep prices reasonable and customer service high . The risk to remaining 10% is higher .

Without en couragement and incentives, Frontier may not overbuild these areas leaving them with a monopoly provider.

All three participation models (Models 2, 3, and 4) have the risk of funding and constructing the passive infrastructure . If the city is funding the project with municipal debt, there are financial risks associated with meeting the debt repayment requirements . The key parameters are the take -rate achieved and average monthly revenue per subscriber . Both parameters will be influenced by the market ris ks. The city, or 3 rd party ISPs, will be facing competition from incumbent providers which will react competitively . This is true whether the city is a passive or active open access provider or the retail ISP. In all cases, the retail ISP utilizing the cit y’s passive infrastructure must

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74 achieve sustainable take rates of 35 -40% to be financially stable . The smaller and newer ISPs will have to compete with well entrenched and cash -rich cable and telco incumbents. In all three models there is execution risks o f the ISP .

The risk to the city increases when it decides to become the retail ISP . In the wholesale model, the city will rely on the expertise and core competencies of the retail ISPs . In the City ISP model, the city must take on the entire responsibilit y. This includes retail marketing, customer service, and in -home Wi-Fi support .

Figure 26. Operating Models and Risk
Aggregated Risks with 3 rd Party Partners
The skill sets and core competencies required to operate a broadband network are vast and specialized . The infrastructure and asset -centric models enables opportunities to outsource individual functions to specialized 3 rd party partners . This reduces the execution and operational risks of the overall network . Howe ver, the financial risk will increase the more the city outsources. The month revenue per home will be driven by the competition . These revenues will have to cover the operating expenses and any debt servicing expenses . The more cash that flows to third pa rties, the less will be available for internal operations and debt payments . This increases the breakeven take rates, thus increases risks .

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75 Risk Mitigation
Funding and building an FTTP network throughout the city is a major undertaking with substantial r isks . However, the risks can be reduced in several ways . First, you build to demand . You only build the laterals down a street where there is a minimum up -front take rate, often greater than 50% .

Second, revenues from early active subscribers reduces the total amount of external capital required . Third, this is long term civic infrastructure and can be financed over 20 or more years . This reduces periodic debt service payments which reduces the breakeven take rates . Fourth, Indio neighborhood are dense. De nsity enables the construction costs to be allocated over more household thereby reducing the cost to pass and cost to serve each household . The same challenges and risk reduction opportunities exist in Models 2, 3 and 4 .

1. Risk of “Policy Only” depends on current Market Conditions.

2. If you have a single provider, the risks of Policy Only are higher than if you have 2 or more providers.

3. Most risks are reduced with partners, though financial risk may increase slightly.

SUMMARY
Cities and towns need an infrastructure -grade municipal network to manage their governments . Similarly, fiber optics and broadband are critical digital infrastructure for all cities and towns . If a city, such as Indio, determines that there are parts of the population that are not served sufficiently, they have a range of options to address the gaps . The asset -based infrastructure model discussed herein establishes a framework to facilitate strategic decision making at the municipal level .

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76 6. Conceptual High -Level Design
Magellan’s t eam developed a high -level design (HLD) that incorporated the findings from the asset inventory, needs assessment, and market assessment. The HLD is a conceptual framework for a possible and realistic method for accomplishing the desired outcome.

The first step in the design process is to identify the sites and areas that need to be supported with broadband. Once the sites, goals, and areas are identified, the existing infrastructure needs to be plotted and assessed to determine how to best utiliz e it for cost savings and quick deployment. After the existing infrastructure is optimized, it is important to first design the most cost -effective construction methods; existing fiber, existing conduit, new aerial, microtrenching, followed by new undergr ound boring.

Construction Methods
There are many different construction methods, some using existing infrastructure and other methods are new and require substantial more labor, materials, and expertise.

Existing Assets and infrastructure
Existing ass ets consist of any conduit, cable, pole, tower, handholes, and rights -of-way that have previously constructed and have capacity to be used to add additional or new broadband technologies. Existing infrastructure are the first construction methods consider ed when starting a design due to the cost savings and speed to market benefits. It is important to investigate and find all possible infrastructure regardless of which department or company that constructed it.

Existing conduits do not have to built for fiber or even be empty, if the conduit has a large enough diameter, a new cable can be pulled in even if there is a cable in the conduit. Existing fiber cables with very low strand availability can be used effectively with the use of wave division multip lexing and very high bandwidth technologies reducing the need for high strand count. Poles can be used for aerial cable placement and wireless technology deployment.

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77 New Construction Methods
New construction is the last option considered when designin g a broadband network for two reasons: it is the most expensive construction there is and secondly it is substantially slower with the added permitting, engineering, and construction timelines.

The most common new construction methods, in order of expens e, are new aerial, plowing, microtrenching, and boring. New aerial is the most cost - effective new construction method because it requires the least amount of equipment, the speed at which the aerial can be constructed, and the engineering involve. Plowin g is used the process of using a larger tractor type machine that has a blade that vibrates up and down as is drug behind the machine and conduit or cable is placed as the blade moves through the ground. Microtrenching is the process of a carbide tipped s aw blade that cuts a 2” wide by up to 24” deep trench through asphalt, dirt, concrete, etc. conduit or cable is then placed in the trench and restored back to the original state. Boring takes place with a machine that “drills” rods through the ground at a ny depth needed and places a conduit in the hole the “drilling” just created. This is a very expensive method for many reasons including the high cost of the machines, the higher cost of maintaining these machines, and the liability that comes with it. T he liability is so high because the drilling process is not very accurate, the “drill” can’t see what is in the ground and hitting other utilities is a very real and fairly common experience.

HLD
Here is the planned HLD for the City of Indio broken into three phases or focus areas. The phases do not rely on each other and could be accomplished in any order or all the same time depending on budgeting and desired timeframes with a partner.

Phase 1
Phase 1 is the initial area of focus because it would all ow the City to potential save substantial operating capital. The city currently spends around $145k on 3 rd party services. Depending on the final design and services required most of these services can realistically be cancelled and the savings would hel p for offset the costs for construction of phase 1.

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78 Figure 27. Ind io HLD Phase 1

Phase 2
Phase 2 focuses on supporting the underserved areas as defined by the National Technology and Information Admi nistration, any area that hoes not have at least 25 m bps download and 3 mbps upload speed. It also uses the CVAG project to place fiber throughout the city to future proof the network and also to provide partnership opportunities .

The underserved area needs supporting because the incumbents are focusing o n the new development areas and not planning on building in this area. There are a lot of existing businesses and residents in this area spread out through large open areas ripe for future expansion and economic development. Indi o is located in a central location for the Coachella Valley and could be a hub for the area. Supporting the area is a critical for future growth and aiding in the region in coming together for broadband support .

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79 Figure 28. Indio HLD Phase 2

Phase 3
Phase 3 is the final area of focus in supporting the known development areas and expanding as needed to support the residential growth. The partnership will define this area in supporting the ISP with growth in areas that could provide a high market share .

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80 Figure 29. Indio Phase 3
HLD costing by phase
The costing for the HLD can be fo und on the table below. I t depicts the cost for construction of each phase based on the est imated construction cost for local area construction contractors. A partnership with a pr ivate ISP could reduce thes e costs drastically based on the partnership developed . T he part nership sho uld incl ude trad ing assets, sharing costs of construction, and revenue share . The city currently spends close to $145 k on connect ions and services through 3rd party co mpan ies. Again, depen ding on the partnership, these ser vices should be cancelled after phase 1 in construc ted and the network in stalled in to the city facilities and select an chor ins titutions. The annual savings is e stimated between $122 k - $145K . The par tnership cou ld include provid ing services to the city facilit ies by the ISP in exchange for using city assets.

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81 City of Indio Construction Cost by Phase
Phase Construction Type FEET Per Foot Extended
Phase 1 - City Facilities CVAG 26,158 $ 120.00 $ 784,740.00 New Aerial 3,088 $ 25.00 $ 77,200.00 New Underground 10,747 $ 1,350.00 $ 967,230.00 Phase 1 - Total 39,993 $ 1,495.00 $ 1,829,170.00 Phase 2 - Underserved CVAG 147,654 $ 360.00 $ 4,429,620.00 New Aerial 2,714 $ 50.00 $ 67,850.00 New Underground 87,026 $ 4,140.00 $ 7,832,340.00 Phase 2 - Total 237,394 $ 4,550.00 $ 12,329,810.00 Phase 3 - Extension New Underground 13,397 $ 360.00 $ 1,205,730.00 Phase 3 - Total 13,397 $ 360.00 $ 1,205,730.00 Grand Total 290,784 $ 6,405.00 $ 15,364,710.00

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82 7. Recommendations & Next
Steps

R E C O M M E N D A T I O N S

1. Create a broadband oversight committee tasked with furthering broadband development in the City and the Coachella Valley , working closely with CVAG and the State of California as it builds out the Golden State Network, its open access middle mile network in the region and throughout the State on Caltrans right -of-way.

2. Continue discussions with CVAG , utilizing the RTSSP to place fiber optic cables in the traffic system conduits during the project , saving time and significant construction costs.

3. Research and apply for grants to aid in constructing broadband in the un/underserved census blocks and new development zones .

4. Issue an RFP to find a private partner to run and supply services for all phases of the network design .

5. Build phase 1 of the prop osed high -level design by connecting city facilities together on one common city owned network and connect the backbone network to the Golden State Network for wholesale internet services at reduced costs .

6. After phase 1 is constructed, Information Technol ogy should install new equipment to provide gigabit services to city facilities and c ancel leased broadband services from 3rd parties saving the City anywhere from $122k - $145k a year in operat ing expenditures .

7. As funding and a public private partnershi p is in place , build phase 2 of the network design , supporting the underserved portions of the City and increasing economic viability in those areas.

N E X T S T E P S

1. Designate an Individual or committee to manage, promote, and expand broadband in Indio . (see recommendation 1)

2. Complete, adopt, and implement improved policies for network asset development . (see section 3 policy assessment)

3. Continue discussions with CVAG, CV -SYNC project management, to use this project to cost effectively expand the Cit y’s network.

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83 4. Finalize an agreement to use the CV -SYNC project for both phase 1 and 2.

5. Research and apply for f unding, LATA , Last Mile and TCC Grant s for the Jewel and downtown communit ies.

6. Once funding is in place, issue an RFP to find a partner to cons truct , maintain, support services for all phases of the network buildout.

7. With partne rship in place, engineer, permit, construct phase 1 of the HLD.

8. Upon completion of phase 1, connect all city facilities to the city network and install city managed services.

9. After services are installed and running on the city network, cancel current services not needed.

10. Issue an RFP to expand phase 1 of the network into the Jewel and downtown communit ies with an partner ISP that can construct, manage, maintain, and service th ose businesses and residen ts.

11. Engage local providers, and i f local ISPs are not inclined to support new development, Indio should build phase 3 of the network to aid in the development of new residential and busin ess parks where the developers are request ing fiber expansion.

12. Create workflows to review capital projects, permits, and development agreements to economically , incrementally and opportunistically build network infrastructure .

13. Involve the County, other lo cal institutions and regional stakeholders in network development efforts. Indio is in a great position to take a leading role working with CVAG and other regional stakeholders and cities in creating a regional approach to broadband.

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84 Appendix A: California’s
Broadband Policy
Governor Newsom’s Executive Order
Governor Newsom issued Executive Order N -73-20 44 on August 14, 2020 , which found:
• Over 2 million Californians do not have access to broadband at benchmark speeds of 100 Mbps (download) including 50 percent of rural housing units.
• 23 percent of California housing units, housing 8.4 million residents, do not have broadband subscriptions (as of December 2018). • 34 percent of adults over age 60 do not currently use the Internet. • “The COVID -19 pandemic has amplified the extent to which broadband is essential for public safety, public health, and economic resilience”. • “The COVID -19 pandemic has caused schools to shift to distance learning”.

The Executive Order directed state agencies to bridge the Digital Divide and ordered:

1. California state agencies to pursue a minimum broadband speed goal of 100 Mbps download speed to guide infrastructure investments and program implementations; and,

2. The California Broadband Council to create a n ew State Broadband Action Plan 45 for a roadmap accelerating state agency deployments and supporting local government deployments, providing information on federal and state funding, and maximize inclusion of tribal lands.

The Executive Order also directed state agencies to collaborate regarding broadband mapping and data, funding, deployment, and adoption:

1. Undertake regular research with private sector companies to understand and predict current and future demand for broadband to

44 See , https:// www.gov.ca.gov/2020/08/14/38666/ .
45 See , https://broadbandcouncil.ca.gov/wp -content/uploads/sites/68/2020/12/BB4All - Action -Plan -Final.pdf

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85 better manage policies, pro grams and resources for continued leadership in broadband innovation (mapping and data).

2. Office of Business and Economic Development is to identify funding opportunities for broadband deployment and adoption (funding).

3. Department of Technology is to seek leveraging opportunities for state contracting authorities to further broadband access and adoption (funding).

4. Transportation agencies to include placement of fiber and conduit in all appropriate and feasible state transportation projects along strategic corridors (deployment).

5. Provision of an inventory of state property for use in broadband infrastructure by the Department of General Services (deployment).

6. Coordination by the Office of Emergency Services to expand broadband infrastructure when implement ing Next Generation 9 -1-1 (deployment).

7. Identification and support for new broadband projects that support precision agriculture by the Department of Food and Agriculture (deployment).

8. Housing agencies are to provide recommendations to the CPUC for incre ased free or low -cost broadband connectivity serving subsidized housing units (deployment).

9. Office of Business and Economic Development to coordinate outreach informing residents of affordable internet service, including tools developed by CPUC for easy i dentification and subscription to affordable broadband plans, promotion of affordable home internet service to recipients of School Lunch program benefits by California Emerging Technologies Fund, and promotion of affordable home internet services by the C alifornia State Library (adoption).

10. Department of Education to lead statewide effort to ensure students have computers and connectivity necessary for distance learning (adoption).

11. Department of Aging to analyze needs of people over 60 for access to broadband and opportunities to close the digital divide among older Californians (adoption) .

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86 The Executive Order directed the California Public Utilities Commission (CPUC) to take specific actions regarding broadband mapping and data, and deployment:

1. Lead mapping and data gathering efforts to provide information on locations without broadband access, private and public broadband network infrastructure, state owned infrastructure and rights of way, costs of middle mile and last mile deployments (mapping a nd data).

2. Provide information supporting development of local broadband infrastructure deployment and digital equity plans (mapping and data).

3. Use programs under its jurisdiction to accelerate broadband deployment and leverage utility infrastructure (depl oyment).

Rulemaking Regarding Broadband Infrastructure
Deployment and to Support Service Providers in the State of California
The CPUC opened a rulemaking proceeding 46 to begin implementation of the Executive Order . Both the Governor’s Executive Order and the CPUC rulemaking were written prior to availability of COVID -19 vaccines, amid pandemic -related shut -down requirements. The CPUC Order states:

Communities across California face a multitude of barriers for the deployment of resilient and accessible net works . Broadband internet access service in urban communities varies by
neighborhood, with great discrepancies in infrastructure technology . Communities in rural areas often lack sufficient wireline and wireless broadband internet access service, as well as the backhaul infrastructure to provide broadband services .

The COVID -19 pandemic has highlighted the extent to which broadband access is essential for public safety, public health and welfare, education, and economic resilience . The pandemic adds greate r urgency to develop new strategies and expand on existing successful measures to deploy reliable networks with affordable service . Universal connection to the internet at reliable speeds is crucial to California’s economic recovery from

46 Order Instituting Rulemaking Regarding Broadband Infrastructure Deployment and to Support Service Providers in the State of California; R.20 -09-001; Septemb er 18, 2020 .

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87 the impact of COVI D-19. More Californians are telecommuting from their places of residence and millions of children are attending classes remotely . Additionally, with unprecedented growth in unemployment caused by COVID -19 and the need to participate in society from home, t he demand for low -cost broadband internet access service will increase as millions of additional Californians need affordable plans to get through the pandemic and recover. 47
The CPUC Rulemaking is to “identify strategies and tactics to facilitate expediti ous deployment of reliable, fast, and affordable broadband infrastructure as well as services to connect all Californians.” The issues included are “infrastructure deployment models and strategies, economic vitality and recovery strategies, and strategies to support specific communities, public safety, and other critical uses.” 48 Senate Bill 156, Funding for a State -Operated Open -Access Middle -Mile Network, Last -Mile Facilities, and a Broadband Loan Loss Reserve Fund
The State of California built on the Executive Order’s direction to eliminate the Digital Divide when Senate Bill 156 was signed into law on July 20, 2021 .

This bill implements significant broadband provisions for the 2021 -22 budget, including creation of a Federal Funding Account to use American Rescue Plan Act (ARPA) funds . The major elements of the broadband budget are:

1. $3.25 billion in funding (all from ARPA) for construction of a state - owned open -access middle mile network designed to provide connecti vity for rural and urban areas to achieve the greatest reductions in the number of households unserved by broadband service under state and federal standards .

2. $2 billion in funding ($1.072 billion from ARPA) for “last mile” projects, funded through the Br oadband Infrastructure Grant Account program, divided between rural and urban counties .

3. $750 million (general funds) to assist local governments and non -profit organizations in financing broadband projects.

47 Id., at page 6 .
48 Id., at page 9.

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88 Other major provisions of SB 156 include:

1. Establishment of the Office of Broadband and Digital Literacy at the Department of Technology, with duties including oversight of the acquisition and management of the statewide open -access middle -mile network.

2. Requirement for CPUC to identify and prioritize statewide open -access middle -mile locations according to specified priorities, including:
a. Locations where there is no known open -access affordable middle -mile networking, that would enable last mile connection s. b. Areas unserved or unserved by open -access middle -mile networks where such networking can be built expeditiously. c. Locations that would enable last mile connections to unserved residences and community anchor institutions and tribal lands.

3. Requirement fo r CPUC to prioritize state highway rights -of-way for open -access middle mile network construction.

4. Stipulates that the open -access middle -mile network if for a public purpose and can be leased for less than fair market value.

5. Exempts certain broadband proj ects from CEQA requirements.

6. Removes limitations on local governments receiving grant funding.

The CPUC added SB 156 issues to the scope of Rulemaking 20 -09-001 regarding broadband infrastructure deployment on August 2, 2021 . The added issues address the i mplementation of SB 156 and the historic funding for middle -mile and last -mile broadband deployment contained in the American Rescue Plan Act. 49
State Operated Open -Access Middle -Mile Network
“Middle -mile refers to the high -capacity fiber -optic cables that traverse long distances (i.e., 10s – 100s of miles) to connect communities to the Internet backbone.” 50 Middle Mile networking connects the “last mile” distribution facilities connecting households and businesses to the network, with the

49 Assigned Commissioner’s Second Amended Scoping Memo and Ruling, R.20 -09-001; August 2, 2021 .
50 “Middle Mile Locations Outreach Briefing” presented to California State Association of Counties, Californi a Public Utilities Commission, August 20, 2021 .

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89 backbone long ha ul facilities that comprise the Internet backbone between large cities such as San Francisco and New York .

Development of open -access middle -mile networking is crucial for unserved households in both rural and urban areas . “Lack of Middle Mile is a barrie r to deployment and affordability” 51 of broadband services . The CPUC indicates middle mile networking is expensive to build for smaller providers, and either expensive to lease or unavailable from existing providers due to competitive position and proprie tary networks. 52
SB 156 prioritizes middle mile construction for a “geographically diverse group of projects in rural and urban areas of the state to achieve the greatest reductions in the amount of households unserved by broadband internet access servic e meeting federal and state standards”. 53 SB 156 provides that the newly -established Office of Broadband and Digital Literacy in the California Department of Technology will oversee the acquisition and management of contracts for development, constructio n, maintenance, and operation of the middle -mile network . CDT has retained CENIC California Middle Mile Broadband Initiative LLC as the third -party administrator for the network. 54
CPUC Staff produced an initial proposal for a statewide middle mile network that met the specifications contained in SB 156 . The proposal included 8000 road miles of networking, all within state highways and rights of way, using 100 Mbps as the definition of unserved households. 55

51 Id.
52 Id.
53 SB 156 Senate Floor Analysis, July 11, 2021.
54 https://www.govreport.org/news/california -selects -nonprofit -third -party -administrator - as-broadband -partner/ The third -party administra tor “will develop the fiber network and partner with CalTrans to manage construction of the middle -mile infrastructure along state highways and rights of way . CENIC will also collaborate with the [CPUC] on locations for middle -mile infrastructure and last -mile connectivity.” 55 Id.

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90 The CPUC Staff -proposed middle -mile network map is available online. 56 The proposed network segments running through Indio and in the adjacent area are shown here:

The CPUC informed CDT that it had completed its final analysis and mapping of middle -mile locations to ensure the locations “enable last -mile service connections and are in communities where there is no known middle -mile infrastructure that is open access, with sufficient capacity, and at affordable rates,” and included required prioritizations and public comments. 57 This resulted in acceptance of Middle Mile Project 17 in Coachella Valley:

56 https://www.arcgis.com/home/webmap/viewer.html?webmap=e17e4e1c88b04792ab0a2c5 0aa1a 19a3&extent= -126.1445,34.5234, -113.5981,41.1113 57 Middle Mile Locations Analysis and Data Report Website, CPUC letter to Russ Nichols, California Department of Technology, March 15, 2022 . https://cdt.ca.gov/wp - content/uploads/2022/03/CPUC -Middle -Mile -Analysis -Transmittal -Letter -3-15-22.pdf

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91 See the California All Middle -Mile Broadband Initiative webpage for further information . https://middle -mile -broadband -
initiative.cdt.ca.gov/pages/mmbi -about
RM 20 -09-001 Decision Adopting Federal Funding Account Rules California’s new Federal Funding Account establishes a two -billion -dollar grant program “focused on building broadband internet infrastructure to

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92 communities without access to Internet service at sufficient and reliable speeds.” 58 The Rules and Guidelines contained in the Commission’s Decision address:
• Eligible areas: CPUC will publish priority areas.
• Funding criteria and CPUC e valuation of applications, which will consider proposed matching funds, project technology choice, type of partnership, inclusion of Lifeline service, pricing commitments, low - cost broadband plans, coverage of existing broadband needs, applicant capacity a nd performance, project plan and budget, and leveraging of state middle -mile network .
• Entities eligible to receive funding include those possessing CPUC certification, other facilities based broadband providers, local government agencies, electric utiliti es, non -profits, cooperatives, and California tribes.
• Middle -mile infrastructure may be funded if it is needed to achieve proposed last -mile connections, but use of the state middle -mile network is expected . CPUC will verify if state middle -mile network could be used. In any event, open access, interconnection, and just, reasonable and non -discriminatory pricing is required . • Performance criteria include project completion deadlines, minimum speeds and maximum latency, data caps are disfavored, commitment to “serve all” customers at specified prices, and participation in affordability programs.
• Required information from applicants, including description of applicant’s current broadband infrastructure, project location data, deployment schedule, proposed expe nditures, economic life of assets, letters of credit/funding sources and financial qualifications, five -year business plan demonstrating project viability, pricing commitments, marketing and outreach plan, and government and community support.
• Application submission, timelines and objections process . • Reporting requirements consistent with US Treasury rules on compliance and reporting guidance for state and local ARPA funds and other identified information.
• Payments based on submittal of progress reports.

58 Decision Adopting Federal Funding Account Rules; Rulemaking Regarding Broadband Infrastructure Deployment and to Support Service Providers in the State of California; R.20 -09-001; D. 22 -04-055 dated April 21, 2022 . (“Federal Funding Account Decision”)

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93 • Execution and performance including commencement of project at agreed time and following the project plan.
• Provisions for sale or transfer of assets during the construction and post -construction phases .
• Penalties.

The decision addresses “ affordability ” requirements where affordability is defined as “the impact of essential utility service charges on a household’s ability to pay for non -discretionary expenses”. 59 The Decision requires Federal Funds Account grantees to participate in the FC C’s Affordable Connectivity Program (which provides a discount of up to $30 per month on broadband service) or other broad based affordability program . The Decision also encourages applicants to provide a low -cost broadband plan which is less than $40 per month, without data caps, 50/20 Mbps speeds, no charge for installation, no minimum term and includes a free modem or router .

The Loan Loss Reserve
SB 156 establishes the Broadband Loan Loss Reserve Fund in the State Treasury to fund costs of financing the deployment of broadband infrastructure by local agencies or non -profits, including payment of costs of debt issuance, obtaining credit enhancement, and establishing and funding reserves for payment of interest and principal . Revenue bonds iss ued by joint power authorities can be supported by the Broadband Loan Loss Reserve .

SB 156 provides that the CPUC may establish eligibility requirements, financing terms and conditions, and allocation criteria, for infrastructure projects deployed in whol e or in part using financing supported by the reserve fund . It also authorizes the CPUC to require information from the local agency or non -profit demonstrating the ability to reasonably finance and implement the broadband project using financing supported by the reserve fund .

It is anticipated that CPUC staff will provide a proposal for implementing the Loan Loss Reserve Fund in Spring 2022. 60

59 Federal Funding Account Decision, at page 66 .
60 https://www.cpuc.ca.gov/industries -and -topics/internet -and -phone/broadband - implementati on-for -california

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94 Appendix B: Federal
Communications Commission
Wireless Services Policies
The placement of wireless facilities is governed by an interrelated legal framework characterized by shared jurisdiction between state (e.g., cities and counties, and the California Public Utilities Commission) and federal authorities (the Federal Communications Commission or FCC, and Congres s). 61  However from time to time, the Federal Communications Commission (and Congress) has preempted or sought to preempt the authority of state and local jurisdictions over wireless matters .

Federal law provides the basis for federal preemption where it allows local authorities to regulate the “placement, construction, and modification” of wireless communications facilities but subject to certain limitations .62 Those limitations include:
• City regulations may not “prohibit or have the effect of prohibitin g the provision of personal wireless services” 63;
• City regulations may not “unreasonably discriminate among providers of functionally equivalent services” 64;
• Any denial of an application to place, construct, or modify a personal wireless facility must be based on “substantial evidence contained in a written record” 65; and,
• City regulations may not “regulate the placement, construction, and modification of personal wireless service facilities on the basis of the environmental effects of radio frequency emis sions to the extent that

61 The following discussion does not constitute a legal opinion and should not be construed as such. Questions about interpretation or applicability of these or other provisions of federal or California law should be referred to legal cou nsel. 62 47 U.S.C. § 332(c)(7)(A).
63 47 U.S.C. § 332(c)(7)(B)(i)(I).
64 47 U.S.C. § 332(c)(7)(B)(i)(II).
65 47 U.S.C. § 332(c)(7)(B)(iii).

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95 such facilities comply with the Commission's regulations concerning such emissions. 66”
With the emergence of 5G, the large national wireless service providers pushed the Federal Communications Commission to preempt the authority of state and local jurisdictions regarding siting of wireless facilities, while pressing state legislatures for legislation to limit local authority over matters pertaining to small cell deployment . Such legislation has been considered in Califor nia in 2017 but ultimately did not become law due to Governor Brown’s veto .

FCC Regulation of Radio Frequency Emissions
In one specific area – radio frequency (RF) emissions – the Federal Communications Commission (FCC) has been assigned complete regulat ory jurisdiction, under the 1996 Telecommunications Act . TA96 preempted local regulation of RF safety standards in favor of a uniform national RF safety standard under FCC jurisdiction. 67 Local authorities can require compliance with these national FCC RF standards be demonstrated in evaluating 5G siting applications. Applicants often make this demonstration part of the application package, and many cities have ordinance or standards and guidelines provisions that require RF compliance be demonstrated by applicants . Local authorities may not however deny wireless communications facilities siting applications based on RF emissions – Congress has preempted local authority on this subject and placed jurisdiction in the hands of the FCC.

The FCC determined in 2 019 that no update to its guidelines for exposure to RF emissions was required for 5G equipment. 68 This decision was appealed, and the Court of Appeals for the District of Columbia remanded that decision back to the FCC to provide “a reasoned explanation for its determination that its guidelines adequately protect against harmful effects of exposure to radiofrequency radiation unrelated to cancer.” 69 The FCC has

66 47 U.S.C. § 332(c)(7)(B)(iv).
67 47 U.S.C. § 332(c)(7).
68 Resolution of Notice of Inquiry, Second Report and Order, Not ice of Proposed Rulemaking, and Memorandum Opinion and Order , FCC 19 -26, released December 4, 2019 . 69 Environmental Health Trust, et al. v. Federal Communications Commission and United States of America , No. 20 -1025, Decided August 13, 2021 (DC Cir .), at page 30.

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96 not yet made any decisions and findings on 5G RF emissions so there is a potential for change to the RF emission standards.

See the FCC’s A Local Government Official’s Guide to Transmitting Antenna RF Emission Safety for further information on the FCC’s current RF emission rules. 70
The FCC Small Cell Order
One of the most recent examples of FCC pre emption is the FCC’s 2018 “Small Cell Order”. 71 There the FCC sought to limit and preempt local authority over placement of small cell facilities . It broadly interpreted the “effective prohibition” provisions of the Telecommunications Act Sections 253(a) and 332(c)(7) to find that a state or local government need only “materially inhibit” placement of “small wireless facilities” to have an effect of prohibiting the provision of wireless service . The Small Cell Order:
• permits fees only to the extent they a re non -discriminatory (“no higher than the fees charged to similarly -situated competitors in similar situations”) and are a “reasonably approximation” the government entity’s “objectively reasonable costs” specifically related to the deployment. 72
• sets o ut “safe harbor” fee levels which are “presumptively reasonable” – $270 per small wireless facility per year, $500 application fee for up to five facilities, plus $100 for each facility beyond five. 73 Higher fees can be charged if the state or local gover nment entity can show the higher fees are a reasonable approximation of cost and the costs themselves are reasonable and being assessed in a non - discriminatory manner. 74

70 A Local Government Official’s Guide to Transmitting Antenna RF Emission Safety: Rules, Procedures, and Practical Guidance ; Local and State Government Advisory Committee, Federal Communications Commission, June 2, 2000 .
https://wireless.fcc.gov/siting/FCC_LSGAC_RF_Guide.pdf
71 Declaratory Ruling and Third Report and Order; In the Matter of Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investm ent; WT Docket No. 17-79; In the Matter of Accelerating Wireline Broadband Deployment by Removing Barriers to infrastructure Investment; WC Docket No. 17 -84; Released by the Federal Communications Commission, September 27, 2018. (“Small Cell Order” or “Ord er”.) 72 Small Cell Order, at paragraph 50 .
73 Id., at paragraphs 78 -79.
74 Id., at paragraph 80.

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97 • appears in a footnote to preclude “in -kind” services or contributions stating such s ervices or contributions “are not cost -based” and “they inherently have ‘the effect of prohibiting’ service”. 75 • States aesthetic requirements must be reasonable, objective, non - discriminatory and published in advance, or they are subject to possible preemption. 76 Undergrounding requirements are subject to similar criteria. 77
Additional provisions of the Small Cell Order include:
● Shortened shot clocks pertaining to small wireless facilities:
o 60 days for siting on preexisting structures;
o 90 days for siting requests the involve construction of a new qualifying structure;
● Shot clocks are applied to all authorizations, e.g., zoning permits, building permits, electrical permits, road closure permits, and engineering permits; 78
● Permits fees paid to consultants and third -party contractors to be passed through as long as they are reasonable. 79
● Conflicting provisions of state small cell laws would evidently be preempted by the FCC; 80 and,
● Conflicting provisions of preexisting contracts could be preempted by the FCC, depending on facts and circumstances. 81
The Small Cell Order was appealed to the Ninth Circuit Court of Appeals, which issued its Opinion 82 largely upholding the FCC’s Small Cell Order but with one exception, where it uphel d local authority over aesthetic regulations :

75 Id., at footnote 252 . The footnote cites no evidence beyond comments of service providers.
76 Id., at paragraphs 84 -89.
77 Id., at paragraph 90.
78 Id., at paragraph 144.
79 Id., at paragraph 70 .
80 Id. , at paragraph 6 .
81 Id., at paragraph 66 .
82 City of Portland v. United States, 969 F.3d 1020, 1049 -1053 (9 th Cir., 2020).

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98 The exception is the Small Cell Order provision dealing with the authority of local governments in the area of aesthetic regulations. We hold that to the extent that provision requires small cell facilities to be treated in the same manner as other types of communications services, the regulation is contrary to the congressional directive that allows different regulatory treatment among types of providers, so long as such treatment does not “unreasonably discri minate among providers of functionally equivalent services.” 47 U.S.C § 332(c)(7)(B)(i)(I). We also hold that the FCC’s requirement that all aesthetic criteria must be “objective” lacks a reasoned explanation .

And:

In sum, the requirement that aesthetic regulations be “no more burdensome” than those imposed on other technologies is not consistent with the more lenient statutory standard that regulations not “unreasonably discriminate.” The requirement that local aesthetic regulations be “objecti ve” is neither adequately defined nor its purpose adequately explained. On its face, it preempts too broadly. We therefore hold those
provisions of Paragraph 86 of the Small Cell Order must be vacated.

The Spectrum Act and “Eligible Facilities Requests”
Prior to the Small Cell Order, the “Spectrum Act” enacted by Congress in 2012 83 added new requirements and directives to the Federal Communications Commission (FCC) for processing and approval of wireless deployments . Following the Spectrum Act, the FCC issu ed new regulations to interpret and implement the Section 6409(a) requirements and directives of the Act related to local authorities processing of applications for wireless communications facilities. In brief, the Act tightens the application of “shot clock” timelines, and requires local jurisdictions to approve certain collocations and modifications to existing wireless communications facilities under shortened explicit deadlines, if it is an “eligible facilities request” – any request for modification of an existing tower or base station that does not substantially change the physical dimensions of such tower or base station,

83 See Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. No. 112 -96, 126 Stat. 156, § 6409(a) (2012) ( “Spectrum Act ”), codified at 47 U.S.C. § 1455(a).

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99 involving (1) collocation of new transmission equipment; (2) removal of transmission equipment; or (3) replacement of transmission equipment. The new FCC regulations established defined standards for what for “substantial change” and implemented the statutory changes to “shot clock” regulations .

In short, under these rules, a State or local government shall approve within 60 days any request for modification of an existing wireless tower or base station that does not substantially change the physical dimensions of such tower or base station . The Rules adopted by the FCC are preemptive and apply to cities and other local authorities.

The FCC’s “5G Upgrade” Declaratory Ruling
After the Small Cell Order, the FCC made a Declaratory Ruling which expands preemption of local authority regarding placement of wireless facilities . The Declaratory Ruling 84 was issued on June 10, 2020, and “clarifi es” existing FCC rules originally adopted in 2014 to implement the “eligible facilities requests” defined in the Spectrum Act .

Specifically, our Declaratory Ruling clarifies our rules regarding when the 60 -day shot clock for State or local government revi ew of modifications of existing structures commences. 8 We also clarify what constitutes a “substantial change” in the physical dimensions of wireless infrastructure under our rules, and the extent to which certain elements of a proposed modification to existing infrastructure affect the eligibility of that proposed modification for streamlined State or local government review under section 6409(a). 85
Under the Declaratory Ruling, applicants can now start the shot clock with the first procedural step require d by the City (e.g., a pre -application meeting) and submission of documentation demonstrating the proposed modification is an eligible facilities request. 86 The Declaratory Ruling also provides additional interpretation on what constitutes “substantial ch ange” for height

84 In the Matter of Implementation of State and Local Governments’ Obligation to Approve Certain Wireless Facility Modification Requests Under Section 6409(a) of the Spectrum Act of 2012 , WT Docket No. 19 -250 and RM -11849, FCC 20 -75 (released Jun. 10, 2020) 85 Id., at paragraph 4 .
86 If a city does not have a Section 6409 process in place, the applicant can start the shot clock by filing documents that are typically required for a zoning or siting review .

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100
increases for towers outside the public right of way 87, details on equipment cabinets 88, further explanation regarding “defeat” of concealment elements 89, and siting approval conditions 90.

Assembly Bill 537
Assembly Bill 537 amends state law to reflect FCC shot clock requirements and clarify that small wireless facility applications must be processed and approved in accordance with applicable FCC shot clock rules, effective January 1, 2022 . AB 537 places the start of the shot clock i n line with FCC rules with the primary clarification being that the shot clock starts if or when an agency requires a pre -application meeting, communication, or similar step before submission . AB 537 clarifies that an agency must notify an applicant of an incomplete application within the time periods established by FCC rules .

The FCC’s Site Modification Report and Order 91
Based on petitions from the wireless industry, in November 2020 the FCC revised the definition of “substantial change” for modification s of existing

87 Section 6409 defines substantial change pertaining to modification of a tower located outside of public rights -of-way as one which “increases the height of the tower by more than 10% or by the height of one additional antenna array with separation from the nearest existing antenna not to exceed twenty feet, whichever is greater.” The Declaratory Ruling clarifies that “separation from the nearest existing antenna” means the distance from the top of the highest existing antenna on the tower to the bottom of the proposed new antenna to be deployed above it.
88 The Declaratory Ruling clarified that small pieces of equipment such as remote radio heads/remote radio units, amplifiers, transceivers mounte d behind antennas and similar devices are not “equipment cabinets” if they are not used as physical containers for smaller, distinct devices. Also, the maximum number of additional equipment cabinets that can be added under the rules is measured for each separate eligible facilities request, rather than the cumulative number of equipment cabinets on the site. 89 The Declaratory Ruling stated to “defeat concealment,” the proposed modification must cause a “reasonable person” to view the structure’s intended stealth design as no longer effective after the modification.
90 The Declaratory Ruling clarifies a municipality may not impose and enforce conditions on approvals for wireless facilities that then prevent future modifications or upgrades that are otherwise eligible facilities requests.
91 In the Matter of Implementation of State and Local Governments’ Obligation to Approve

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towers outside the public right of way . An eligible facilities request may now include a modification of an existing tower outside the public rights -of-way that entails ground excavation or deployment of transmission equipment up to 30 feet i n any direction outside the boundaries of a site . Other eligible support structures besides towers outside the public right of way are not affected by this revised definition . This change by the FCC is intended to facilitate addition of equipment to existi ng towers to expand 5G capacity . It is expected this rule change will allow additional providers to collocate on towers and allow additional equipment (fiber terminations, cabinets and power supply, backup power, etc.) to be placed to expand 5G services.

The FCC also expanded on the definition of a “site” such that it “refers to the boundary of the leased or owned property surrounding a tower and any access or utility easements currently related to the site as of the date that the tower or base station was last reviewed and approved by a state or local government”. 92
This decision was uniformly opposed by cities, counties and other local authorities and is subject to requests for reconsideration .

Broadband Mapping
The FCC has administered a broadband mapping process for a decade that is known to be inaccurate in that it overreports broadband availability due to its data and methodology . The data is self -reported by broadband providers and is not verified by the FCC . But the bigger issue is th at if one home in a census block can get broadband service, the whole census block is considered to be “served” . Thus, a consumer is not able to tell from the FCC’s broadband map with any certainty whether broadband is actually available or not at a partic ular address .

Congress recognized the problematic nature of existing FCC broadband maps, which becomes an even more urgent issue when policymakers desire

Certain Wireless Facility Modification Requests Under Section 6409(a) of the Spectrum Act of 2012 , WT Docket No. 19 -250, Report and Order, FCC 20 -75 (Rel. Nov. 3, 2020) (“ Site Modification Report and Order”).
92 “Small Entity Compliance Guide”, Implementation of State and Local Governments’’ Obligation to Approve Certain Wireless Facility Modification Requests Under Section 6409(a) of the Spectrum Act of 2012, Report and Order, FCC 20 -153, WT Docket No. 19 -250, Released November 3, 2020, dated January 4, 2021.

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to identify areas without broadband availability to fund deployment of broadband infrastructure . Thus , the Broadband Deployment Accuracy and Technological Availability (S. 1822), or “Broadband DATA act” was passed in 2020 . Among other things the Broadband DATA Act directs the FCC to collect granular service availability data from wired, fixed wireless and satellite broadband providers, set parameters for service availability data collected from mobile wireless broadband providers, permits the FCC to collect verification data, requires the FCC to establish a crowdsourcing process for data collection, and re quires the use of these new maps for new awards of broadband funding . The FCC has implemented a Broadband Data Collection program to improve the accuracy of broadband maps and create the “broadband serviceable location fabric” for the maps. 93 Affordable Connectivity Program
The Infrastructure Investment and Jobs Act (IIJA) extends the Emergency Broadband Benefit to provide $30 per month discounts for broadband service to eligible households which enroll in the Affordable Connectivity Program 51. “Eligibl e households” are defined as those with incomes at or below 200% of the poverty level or meets other stated criteria. 52 The minimum speed to be offered by participating providers has been increased to 100 Mbps download. 53
The ACP is intended to ensure th at low -income households have broadband connections for work, school, healthcare and other needs . In addition, under the ACP there is a one -time discount available up to $100 to purchase a laptop, desktop or tablet device .

Various wireless and landline b roadband internet providers participate in the ACP . The participating providers will be different in each area .

The ACP is a new program and so far, it “flies under the radar” . The FCC is seeking ways to expand community and marketing outreach so that th ose who will benefit are aware of the program and sign up. 54 Cities can benefit from the ACP by gaining awareness of program details and communicating them to their low -income residents and program managers for services provided to the low -income communit ies.

93 Broadband Data Collection, Federal Communications Commission . https://www .fcc.gov/BroadbandData

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Appendix C: Infrastructure
Investment and Jobs Act (IIJA)
Broadband Infrastructure Grants
Provisions regarding state broadband infrastructure grants ($42.45 billion):
• Funds will be disbursed based on a competitive grant process administered by each state under rules promulgated by the National Telecommunications and Information Administration (NTIA). • New FCC mapping of broadband availability must be completed before proposals will be accepted . FCC maps are expected early to mid -2022. • Priorities and specific allowed uses of funds:
o First, infrastructure for areas without 25/3 Mbps service. o Then infrastructure for areas without 100/20 Mbps service . Then eligible community anchor institutions.
o Multi -Dwelling Units (MDUs): Installing internet and Wi -Fi infrastructure or providing reduced -cost broadband within a multi - family residential building, prioritizing those with a substantial share of qualified low -income households.
o Programs for broadband adoption including provision of affor dable internet -capable devices.
o Broadband data collection, broadband mapping and planning . • Project requirements for funding:
o Speeds of at least 100/20 Mbps with low latency . Higher speeds will receive priority.
o 25% match required from non-federal sources, such as in -kind contributions, unspent COVID relief funds or provider investment. o Projects prioritized based on higher speed, greater scalability, faster buildout and service coverage for high poverty areas. o Projects must be completed within four years.
o Projects must offer at least one low -cost broadband option (rates are not regulated, but determined by state, approved by NTIA).

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o Additional requirements included regarding service quality, reliability, cyber rules, prohibition on using g ear manufactured in China, required technical and operational capacity for the subgrantees .

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Appendix D: Developer
Agreement Conditions for the
City of Shafter CA
Building Department Conditions:

1. Fiber Optic Installation for Dwelling Units: Owner agrees to install in each dwelling unit the following fiber optic requirements:
a. Install a dedicated City Fiber Enclosure adjacent to the other utility enclosures or a Common Communication Enclosure
(collectively “Utility Enclosure”) for the proposed communications utilities (phone, cable, fiber, etc.). The enclosure type shall be Benner-Nawman 14326W-UL or as approved by the City. The Utility Enclosure may face the garage exterior or interior and shall include one 120-volt, 15-amp convenience receptacle mounted inside the enclosure on either side wall with the outlets facing horizontally.

The receptable power shall be protected by a ground fault circuit interrupter (GFCI).
a. Install a wireless-transparent 28-30 inch or 42-inch Structured Media Enclosure (“Media Enclosure”) of type Legrand 30" ENP3050 or 42" ENP4250, Leviton 30" 49605-30W, Primex Verge 30" P3000 or 42" P4200 or as approved by the City in a master bedroom closet wall or a laundry room wall furthest from the water supply and maintain a minimum 48-inch horizontal clearance between and 24- inch clearance above any metallic appliances or accessories. The enclosure shall include one 120-volt, 15-amp convenience receptacle located inside the enclosure.
a. Install a conduit pathway from the Utility Enclosure to the Media Enclosure with a minimum of one (1) 1-inch diameter non-metallic, flexible conduit which shall maintain a minimum 36-inch bend radius and protrude a minimum of 6-inches into the enclosures.

The conduit shall be marked with orange Tyvek or plastic tags, labeled “City Fiber Use Only” and “661-746-5000”, tie wrapped to the conduit in plain view within the enclosures.
a. Install a continuous conduit without breaks or couplings from the existing City Fiber Distribution Enclosure located in the right-of- way (“Distribution Enclosure”) to the bottom side of the Utility Enclosure. The conduit shall be installed a minimum of 36-inches

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below grade, protrude a minimum of 12-inches into the Utility Enclosure, be orange in color, and be factory labeled “City of Shafter 661-746-5000”. If the conduit does not have an integrated tracer wire, a continuous external #12 AWG solid conductor tracer wire with high-density polyethylene insulation rated for direct burial shall be installed along with the conduit leaving a minimum 15-feet of slack coiled in the Distribution Enclosure and 3-feet of slack coiled in the Utility Enclosure. The conduit and tracer wire shall be inspected by a City of Shafter Public Works Department representative before shading and backfilling.
i.After backfilling, the conduit shall be mandrel tested between the Distribution Enclosure and the Utility Enclosure. All conduits 1/2-inch or larger shall require mule tape or equivalent installed.

Mule tape shall be slack (no tension) and fastened to the plug or cap. Innerducts and Microducts shall have the pull string completely removed before being tested with a ball bearing. The testing process shall be witnessed by a City of Shafter Public Works Department representative.
i.Couplings shall be used to repair damaged or short conduit only if approved by the City. Conduit couplings shall be an air-tight, water-tight, push-on compression fitting approved by the City.

Tracer wire couplings shall be an airtight, water-tight, twist or compression connector approved by the City. Coupling integrity shall be inspected by a City of Shafter Public Works Department representative.
a. Category 6 Unshielded Twisted Pair (CAT 6 UTP) cable (or as approved by the City) shall be installed according to industry standards and the requirements below and shall not be pinched, stapled, bent sharply, or crossing any sharp, unprotected edges:
i.Install minimum of three (3) cables from the Utility Enclosure to the Media Enclosure.
i.Install the following connection points terminated to a CAT 6- rated 8P8C (RJ-45) jack within a single-gang low voltage wall box, using the ANSI/TIA-568 T568A termination standard:

1. Minimum of two (2) connection points to every
entertainment center, kitchen, master bedroom,
kitchenette, office, den, etc.
i.Install one (1) or more Wi-Fi Access Point (WAP) ceiling mounting locations (as approved by the City) on each floor such that no exterior wall is more

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than 30- feet from any WAP mounting location. Each WAP mounting location shall include a single-gang, low voltage wall box through which a single CAT 6 UTP cable with a minimum three (3) feet of slack shall be terminated with a CAT 6-rated 8P8C (RJ-45) plug for connecting to a WAP.

Engineering Department Conditions:

1. Developer shall design and install a system of conduits, terminal enclosures, distribution enclosures, splice enclosures, connection points, and hand holes for a fiber optic network to each buildable lot within the development. Design and material specifications are available from the City of Shafter. Plans shall be submitted and approved by the City of Shafter, prior to recordation of the final map, showing the proposed utility trench and all appurtenant hardware. The design shall include the following minimum specifications:
a. A combination of fiber optic conduits shall minimally include 4” SDR-11 HDPE, 2” SDR-11 HDPE, 7-Way bundled HPDE innerduct with attached tracer wire, and direct-bury HDPE Microduct with attached tracer wire. Fiber optic conduits may be joint trenched with other utility company pipes and/or conduits.
a. All underground fiber optic conduits, innerduct bundles, Microducts, etc. shall be factory-labeled “City of Shafter 661-746-5000”.

Conduits shall be identified by a permanent marking, with the address number of the residence they serve, within the distribution enclosures.
a. All underground fiber optic conduit paths shall have tracer wire.

If the conduit does not have an integrated tracer wire, a continuous external #12 AWG solid-conductor tracer wire with high-density polyethylene insulation rated for direct burial shall be installed along with the conduit leaving a minimum 15-feet of slack coiled in the endpoint enclosures.
a. The ends of all fiber optic conduits, innerducts, and Microducts shall be plugged or capped to prevent dirt, debris, or foreign objects from entering.
a. After backfill and compaction, all conduits shall be checked for obstructions, and reexcavated and repaired or replaced as required.

Conduits 1/2-inch or larger shall require mule tape or equivalent installed. Mule tape shall have a minimum 2’ slack at each end which shall be fastened to a tie-off loop on the inside of the plug or cap. Mule tape tie-off and tension check to be witnessed shall be witnessed by a City of Shafter Public Works Department representative. Innerducts

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and Microducts shall be mandrel tested while being witnessed by a City of Shafter Public Works Department representative. a. A combination of underground utility enclosures shall minimally include 36”W x 60”L x 36”D polymer concrete enclosures with dual torsion covers, 36”W x 36”L x 24-36”D and 24”W x 36”L x 24-36”D High Density Polyethylene (HDPE) enclosures.
a. All underground utility enclosures shall be factory-stamped “City Fiber”.

Tract Map Conditions (not fully modified to align with the more recent Dev.

Agreement Conditions above):

1. Minimum 24 inch bending radius on all service drop conduits.

1. Minimum 48 inch bending radius on all 2 inch hdpe conduits and futurepath.

1. Minimum 96 inch bending radius on all 4 inch hdpe conduits.

1. All couplings and caps shall be approved by the city.

1. Couplings shall be eliminated for all futurepath and service drop conduits (except to join the r.o.w. segment to the p.u.e. segment).

1. Any couplings used in the fiber optic conduit shall be installed in accordance with city direction. Detection wires at couplings shall be wired together in an approved manner. Detection wires shall not carry tension.

1. All coupling locations shall be documented as length (ft) of conduit from nearest vault.

1. Ends of all conduits shall be capped to prevent dirt, foreign objects, or debris from entering the conduit. ½” and larger shall have a cap or plug with a ring for fastening the mule tape so that it does not retract into the conduit. Innerducts and microducts shall be capped with …

1. Microducts shall have a minimum of 50' of rolled up conduit at the property line of each home for future connection to homes.

1. All conduits 2" or greater shall be capped and have mule tape or equivalent installed. Mule tape shall be slack (no tension) and secured to the cap to prevent loss of the mule tape within the conduit.

1. All 2" hdpe conduit shall be accompanied by 12 gauge insulated solid copper tracer wire (or copper-clad stainless steel), to be approved by city.

All end points including box locations will have 25' minimum of rolled up tracer wire.

1. Make & model of all vaults and boxes shall be approved by the city prior to use or installation.

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1. All fiber optic vaults and boxes shall be located outside sidewalk and a minimum of 12 inches clearance from water mains and wall foundations.

Clearance from other utility boxes shall be 36" minimum.

1. All vault and box locations shall be backfilled and well compacted with vibratory or equivalent prior to placing the box.

1. All 36x60 boxes shall be set on a minimum of 10 inches of gravel. All 36x36 and 24x36 boxes shall be set on 8 inches of gravel.

1. Conduits shall come into each box from below and shall terminate as close to the top of the box as possible while still allowing the lid to close.

Conduits shall be cut to their final length by others just before fiber is placed.

1. Fiber optic conduits coming from the same direction shall be bundled closely to each other within the vault or box. Where possible, bundled conduits shall occupy the portion of the box or vault that identifies the direction from which the conduits came. For instance, conduits coming in from the south shall be bundled and placed within the south side of the box. Same for all other directions.

1. Microducts within the distribution box shall be tagged to identify the address of the residence they serve. Tag shall be permanently fixed to the microduct within the box. Tag shall be waterproof and corrosion resistant.

Product shall be approved by the city.

1. Backfill around box perimeter shall be well compacted with vibratory.

1. All microduct and future path shall be mandrel tested. Microduct shall be tested with a 5 millimeter bb. Futurepath shall be tested with a 7 millimeter bb.

1. All microduct and futurepath shall have a detection wire factory- bundled external to the microduct(s).

FTTH installation process recently changed to move away from Microduct but not placed in Dev. Agreements or Map conditions:

New Tracts - Service Drops from Distribution boxes to home Utility boxes:
a. Install Orange 1-1/4" SDR-11 conduit.
a. NOTE: If this conduit specification cannot be obtained for the start of a new tract, the “Sleeve” conduit used on the “Active Tracts” may be used for the full tract or until the specified conduit arrives and the Sleeve conduit is exhausted (e.g., Tract 7388). a. Standard factory labeling (not branded for any provider) a. No tracer wire is required for the service drop conduit paths

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a. May terminate conduit at the edge of PUE to the homes covered with a box or capped conduit to protect all communications utilities' conduits until later extension to the homes. a. Couple with non-metallic push-on, compression fit, translucent- center connectors rated airtight to 250 psi, watertight, 700# pull- out, and direct burial.

1. Call for City inspection before any shading
a. Shade with minimum 6" of sand. 12” preferred
a. Backfill and compact
a. Install 1/2" 1200+ lb polyester mule tape. Tape must be slack and tied to the inside of conduit caps in the Distribution box and tied to or screwed down with in the Utility box.
a. Call to coordinate mule tape tie-off and tension check to be witnessed by City inspector.

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Appendix E: Broadband
Operating Models Comparison
This section will review the pros and cons of the broadband models and compare them by t heir risk and impact. The Pros and Cons of each model are highlighted in Table 1 and the Risk & Impacts are highlighted in Table 2.

Table 5. Pros and Cons of Broadband Operating Models
P r o ’ s C o n s
Model 1 – Encourage SPs –
Policy Only
• Accelerate upgrades
• Encourage
competition
• No financial risk to
city.
• Digital future at the mercy
of private providers
• Timing of upgrades
uncertain (Fiber and 5G)
• Competition not assured
Model 2 – Dark Fiber FTTP
(Passive Infrastructure)
• Control of digital
future
• Infrastructure -grade
municipal network at
marginal costs.
• Smart city readiness.
• Ensure at least two gig
competitors
• Large upfront investment
• Financial risk
• Finding ISP for long -term
commitment
• Comcast response
• Achieving sustainable take
rates.
•
Model 3 – Lit Open Access
(Active Infrastructure)
• Control of digital
future
• Infrastructure -grade
municipal network at
marginal costs.
• Smart city readiness.
• Ensure two gig
competitors
• Finding initial I SP
• Achieving sustainable take
rates.
• Lack of operational
expertise
• 24x7 -x365 operations
• Need to address municipal
network neutrality and
privacy concerns.
• Financial implications of
multiple entities

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P r o ’ s C o n s
Model 4 – City as the Retail
ISP
• Improved financial
returns
• Many partnership
opportunities to
reduce risks.
• Infrastructure -grade
municipal network at
marginal costs.
• Smart city readiness.
• Achieving sustainable take
rates.
• Lack of operational
expertise
• Need to address municipal
network neutrality a nd
privacy concerns.
• 24x7 -x365 operations
Model 3 – With 3 rd Party
Support
• Same as Model 3 plus:
• Risk reduction
• Reduced municipal
headcount
• Same as Model 3 plus:
• Financial implications of
multiple entities.

Model 4 – With 3 rd Party
Support
• Same as Model 4 plus:
• Risk reduction
• Reduced Municipal
headcount
• Same as Model 4 plus:
• Financial implications of
multiple entities.

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Table 6. Impact Assessment Broadband Operating Models
R i s k a n d I m p a c t
F i n a n c i a l
I m p a c t /
R i s k
O p e r a t i o n a l /
O r g a n i z a t i o n
I m p a c t
C o m m u n i t y
I m p a c t
Model 1 – Encourage ISPs – Policy Only Low Low Low
Model 2 – Dark Fiber FTTP High Medium High
Model 3 – Lit Open Access High High High
Model 4 – City ISP High High High
Model 3 – With 3 rd Party Support High Medium High
Model 4 – With 3 rd Party Support High Medium High

Table 7. City Examples of Broadband Operating Models
Business Model Description Examples Summary
Public Policy
Only (Model
1)
City uses policy tools
and standards to
streamline
construction and
reduce the cost of
building
infrastructure.
• Santa Cruz
County, CA
• Knoxville, TN
Low risk/reward
option to support
incentives to
accelerate
broadband
investment but no
“quick wins ” to
improve services
Model 2 –
Passive
Infrastructure
City provides conduit
and/or dark fiber to
businesses,
broadband providers,
and other public
organizations
City does not provide
retail services
• Santa Monica,
CA
• Palo Alto, CA
• Lakeland, FL
Improves the cost
and availability of
fiber infrastructure
to providers,
businesses, and
community
organizations, not
generally used for
residential
Model 3 –
Active
Infrastructure
City financed and
operated
• Palm Coast, FL
• Danville, VA
Enables more
competition and
choice but difficult
to incentivize

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Business Model Description Examples Summary
Wholesale services
only to retail
broadband providers
Retail providers
deliver Internet,
telephone, and other
services
broadband
providers to use
municipal
infrastructure
Model 4
Municipal
Retail ISP
City financed and
operated
• Bristol, VA
• Morristown,
TN
• Ashland, OR
Enables the city to
provide major
improvements to
residential services
but requires
significant
investment and
operational
capabilities.

INDIO SWOT ANALYSIS
A Strength, Weakness, Opportunity and Threat (SWOT) analysis is a common tool to compare business strategies . It is used here, to evaluate the operational models available to the City of Indio. This section presents and discusses the SWOT analysis for the si x fiber infrastructure and operational options presented to the city . These are:

1. Infrastructure -grade Municipal Network

2. Expand municipal backbone to businesses.

3. Expand municipal backbone to residences.
a. Policy -only
b. Passive Infrastructure
c. Active Infrastructure
d. City as ISP
Infrastructure -grade Municipal Network
Infrastructure Grade Municipal Network
Strengths Weaknesses

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• City gets mandatory digital
infrastructure.
• Ability to incrementally build
the network
• Low financial risk
• Does not ensure gigabit
competition.
• Does not address digital
divide.

Opportunities Threats
• Leverage backbone to serve
businesses.
• Leverage backbone to serve
residences.
• City becomes digital laggard .

Every city needs digital infrastructure to function. Digital infrastructure includes fiber, wireless infrastructure (e.g., towers and small cells) and data centers. An important foundation for the city is the infrastructure -grade municipal network. This ne twork will connect every municipal location and key anchor institutions and will have the redundancy, resiliency, and capacity to serve the city for 30 to 50 years. Once designed, the city can build it incrementally based on yearly budgets, prioritized nee ds, and other local realities.

The strength for Indio in architecting and building this infrastructure -grade network is it will provide the city a backbone network that can go beyond serving the city government. The backbone will enable the options of expanding to businesses and residences discussed below. The city or private internet service providers could leverage the conduit and dark fiber assets to serve residential neighborhoods. The existence of these assets will greatly reduce the deployment costs to public or private service providers serving commercial and residential subscribers in Indio.

The primary weakness is a city -government centric network does not directly address the areas of Indio that do not have gigabit competition. Frontier could lea se these assets to reduce the time and cost to cover the remaining 10%. However, they have noted that they prefer to own, not lease, network assets. There are exceptions such as small segments under challenging locations including railroads and rivers.

Expand municipal backbone to businesses.

Expand Municipal Network to
Businesses

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Strengths Weaknesses
• Businesses assured fiber
connectivity.
• Ability to incrementally build
the network
• Ability to build to demand.
• Low financial risk
• Needs business ISPs to
support build -out.
• Does not address digital
divide .

Opportunities Threats
• Ensure requisite digital
infrastructure to retain and
attract businesses .
• City becomes digital laggard.

Once the municipal network backbone is constructed it can be incrementally expanded to serve business corridors and business districts. This will ensure that businesses have access to the high capacity, and resilient, connectivity they need. The ability to incrementally expand the network and to build it only to actual demand are strengths of this approach. Prior to any investment, the city would have agreements in place with private service providers to lease the new infrastructure. The upfront agreements will determine where and what assets (e.g., conduit or fiber) are deployed and will result in a low financial risk to the city. Nothing will be built or spent unless an agreement is in place to cover the costs to the city. The weakness to this approach is it does not address the 10% of Indio with a single gi gabit provider
Expand Infrastructure to Residential Areas
If the city determines that it must take action in residential areas four options were studied .

They are:
a. Policy -only
b. Passive Infrastructure
c. Active Infrastructure
d. City as ISP
Policy -only
Model 1 Policy Only Encourage and incent
Strengths Weaknesses

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• Low financial risk • Does not ensure gigabit
competition
• Reliance on private providers
for digital future
• Opportunity • Threats
• Digital infrastructure needs
met with competitive private
providers.
o

• City becomes digital laggard.

The Policy Only approach’s strength is the low financial risk to the city.

Depending on the policies adopted, there could be direct financial impac t from reduced fees or tax incentives. However, the reliance on private providers for all the city’s communication needs will have higher on -going costs due to monthly service fees. These could be addressed when negotiating the incentives with private serv ice providers. The opportunity is all of Indio’s digital infrastructure needs will be met with private providers creating a competitive and dynamic marketplace for city, business and residential subscribers.

The weakness is encouragement and incentives ma y not ensure each location has competition. This is particularly acute in the 10% of the city that does not have Frontier fiber. It also does not ensure that either Spectrum or Frontier will upgrade their infrastructure in a timely manner. Both companies h ave large national service footprints and a finite amount of capital for upgrades. They will focus their investment on areas that are most competitive. Thus, while most of Indio has gigabit competition, this does not ensure they’ll have 10 Gigabit competit ion.

Model 2 Passive infrastructure
Model 2 Passive Infrastructure Dark Fiber Open Access
Strengths Weaknesses
• Addresses Digital Divide,
serves all unserved locations
• Financial risk to city
• Dependent on long term lease
by ISP.

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• City network for marginal
costs
o Fiber for Smart City
applications
• Fiber for 5G Densification
• Ability to build network in
increments.

Opportunity Threats
• Establish city -wide dark fiber
asset base and leverage for:
o City -IT network Including
smart city applications
o Fiber for business zones
o FTTP for residential and
business users
o Fiber for 5G
• High financial risk to city
• ISP Execution Risk in achieving
take rates.
• M&A risk of private partner
• Incumbent reactions
Models 2, 3, and 4 begin with the construct ion of a Fiber -to-the-Premises (FTTP) network in the city. It could be a targeted build -out to select areas or a city -wide infrastructure project. As will be discussed, the active models require scale for effective operations. Whereas the passive model 2 c an be linearly built over time. In a city -wide FTTP project, the construction of the foundational passive infrastructure is the biggest strength and weakness.

The strength is the City of Indio will have the fiber optic digital infrastructure needed for the next 30 -50 years. This infrastructure could serve homes, businesses, 5G tower and small cells and the city.

The tremendous strengths and the accompanying opportunities also present the biggest weaknesses and threats to the city, namely financing the FTTP infrastructure. See section 7.__ for a risk and risk reduction discussion. In this model, one or more ISPs would have pre -construction agreements with the city for long -term asset leases. Spectrum and Frontier already have substantial assets in the city a nd have a strong desire to own their assets.

Large national service providers, including Comcast, Verizon and A&T also prefer to own their own assets and have not expressed any interest in adopting this asset leasing model.

There are many qualified smaller and regional ISPs that would adopt this model. However, the ISP would be a third entrant and compete with

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Spectrum and Frontier. This is an added threat to the city. The financial success of the infrastructure, and potenti ally the ability to pay the debt, is directly dependent on the success of the ISP partner or partners.

Model 3 Active infrastructure
Model 3 Active Infrastructure Lit Fiber Open Access
Strengths Weaknesses
• Addresses Digital Divide,
serves all unserved locations
• City network for marginal
costs
• Fiber for Smart City
applications
• Fiber for 5G
• Create a highly competitive
market for residential
broadband.
• Financial risk to city
• ISP Execution Risk in achieving
take rates.
• Margin distribution among all
entities.

Opportunities Threats
• Establish city -wide dark fiber
asset base and leverage for:
o City -IT network Including
smart city applications
o Fiber for business zones
o FTTP for residential and
business users
o Fiber for 5G
• Many partnership
opportunities to reduce risks
• High financial risk to city
• ISP Execution Risk
• Incumbent reactions
• M&A risk of private partner
• City/ISP must compete with
incumbent cable and
telephone companies to
achieve requisite take -rates.

Model 3 has the s ame strengths and weaknesses as the Passive Asset Model.

In the passive model, each ISP brings all the electronic equipment needed to offer services to end subscribers. This requirement and physical limitations of the fiber network favors leasing the entir e passive network to a single provider. In this active model, the city operates the local optical and transport electronic equipment. This greatly reduces the barriers to entry of ISPs wanting to serve retail customer in Indio. This should increase the

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number of ISPs on the network creating a very competitive market in Indio for residential broadband.

This model has the additional strength of having a single physical network capable of serving all of the cities needs. Since the residential FTTP network will cover most of the city, there will also be fiber available, at marginal costs, for a municipal network, a public safety network, a smart city network, 5G densification and to serve businesses. This would be a “one and done” construction project that woul d last many years and result in fiber to all reasonable locations in Indio.

The weakness of this model is the presence of Spectrum and Frontier serving 90% of the city with gigabit speeds. This new entrant would be the third. If the value of the lit open access model is achieved, there would be many ISPs competing for the finite amount of homes connected to the city’s network.

These ISPs would then be the fourth, fifth, etc. ISPs competing in Indio. In all cases, the new ISPs will face aggressive competiti on from both Spectrum and Frontier. This issue in the 10% of Indio not served with two providers is whether there are enough household to attract a new entrant to 10% of Indio.

City as ISP
Model 4 City as Retail ISP
Strengths Weaknesses
• Addresses Digital Divide, serves
all unserved locations
• City maintains full control over
its destiny
• City receives 100% of revenue
generated from system
• Improved financial returns
• Get city network for marginal
costs
• Fiber for Smart City applications
• Fiber for 5G
• Financial risk to city
• City must compete for business
with incumbents.
• City must manage and operate a
retail "business“.
• Lack of operational expertise and
skills sets.

Opportunities Threats

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• City participates in all upsides
and generates new revenue
streams to support the local
community.
• Revenue stays in the community.
• City can leverage City -wide
network assets as needed for
City and utility operations
• Provision of voice services if
needed .
• Incumbent reactions
• City must bond/finance the entire
cost of the project - including
working capital
• City must execute the construction
and operations of a new utility
• Staffing/resourcing the right talent
• City must compete with incumbent
cable and telephone companies to
achieve requisite take -rates.
• Need to address municipal
network neutrality and privacy
concerns.

The City as the Retail ISP Model 4 has the same SWOT as Model 2 since the City ISP needs the passive infrastructure to offer retail services. It addresses the additional financial weakness of the lit -open access Model 3 of distributing residential monthly fees amongst the different entities, as the city is the only entity involved.

The biggest weaknesses and threats come from the operational aspects of being a retail Internet Service Provider. The city would need to establish, acquire, or outsource a range of new skillsets and operational methods and procedures (M&Ps). These would include a 24x7 customer support call center and a field service team that can support whole -home Wi -Fi on site.

SUMMARY
The section provided a SWOT analysis of th e six options presented in Section

7. As illustrated in Section 7, these options represent a continuum that ranges from low risk, low investment options to higher risk, high investment options. From a SWOT perspective, those options with the most appealing strengths and opportunities have offsetting weaknesses and threats.

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AGENDA ITEM #9.2
Resolution No. 10323 adopting the City of Indio Fiber Master Plan (Ian C... Page 354 of 970 City of Indio
City Council
August 17, 2022

STAFF REPORT

To: City Council
From: Bryan H. Montgomery, City Manager
Prepared by: Scott Trujillo, Deputy City Manager
Subject: Resolution No. 10319 approving a Power Purchase Agreement and Site Lease Agreement with Nobell Energy Solutions, LLC and making certain findings pursuant to Government Code Section 4217.10 et. seq for the installation of a carport-mounted solar power syste m at the new Public Safety Campus parking lot.

RECOMMENDATION:

Adopt Resolution No. 10319 making certain findings and approving certain agreements, as described therein, for purchasing solar power from Nobell Energy Solutions, LLC, for a carport -mounted solar power system at the new Public Safety Campus parking lot.

SUMMARY:

An approximately 517 kW carport-mounted solar system would be installed in the new Public Safety Campus parking lot and financed via a Power Purchase Agreement (PPA) with Nobel Energy Solutions. This partnership provides substantial benefits that includes but is not limited to: zero capital costs to install carport shade and renewable solar energy; LEED building credits; and a 20 -year cost savings of nearly $1 Million when compared to a bond -funded purchase of carport shade structures without solar. This solar power purchase agreement will last 20 years, with a purchase option after 10 years for approximately $1,150,000. The solar system includes the installation 12 -15 carports, solar panels, and other equipment used to produce and distribute the solar power . The system will likely begin power production in Spring 2024, at which point the first payment occurs.

BACKGROUND INFORMATION:

In an effort to go-green by relying on renewable energy, put less strain on IID’s electrical grid, provide shaded parking, a nd realize overall cost savings the City has partnered Nobell Energy Solutions.

Under this specialized type of work, Nobell provides 100% of the upfront capital costs to build the carports with solar panels in the new Public Safety Campus parking lot and i n turn the City buys the power from Nobell directly. The likely location of the panels are shown on the Site Lease Agreement (Exhibit “B”), the Solar PPA (Exhibit “B”), as well as the attached Financial Analysis document. The proposed solar panels will provide an initial production of 517 kilowatts (12 carports) although the final number of carports/panels will be determined by subsequent meetings with IID, the City, and Nobell.

At the end of the 20 year agreement the City has several options for the disposition of the equipment.

Nobell Energy can either remove the equipment, commit to do another agreement, or sell the equipment to the City for $1. At the end of 10th year of the agreement the City may purchase the system for approximately $1,150,000. The equipment includes the panels, carport, and other equipment that was used to produce and distribute the solar power.

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 355 of 970 To keep the solar rates as low as possible the system owner, Nobell Energy Solutions, will retain the solar investment tax credit and depreciation benefits.

FINANCIAL SUMMARY:

Current FY Financial
Impact:
$0 In current year budget: N/A
Current FY General
Fund Impact:
$0 Budget adjustment: No
Next FY Financial
Impact:
$149,580 Strategic Objective: Public Safety
Source of funds: Building and Grounds ISF Fund-Org-Object Reference:
604-523012

Additional Financial Details:

There is no cost to the City for the installation of the solar power system; the City will pay Nobell Energy Solutions for the power produced by the system beginning in FY 2023/2024.The Nobell Energy proposal incorporates an annual rate increase of 3% for the cost of power generated by the solar system, and compares it to an assumed 5% or more annual increase for power provided by IID. A solar PPA with Nobell provides nearly $1M of savings over 20 years when compared with bond-funded direct purchase of carport shade without solar at the Public Safety Campus. At the end of 10th year of the agreement the City may purchase the system for approximately $1,150,000, and at the 20 year mark the City can purchase for $1.

As set forth in the financial analysis provided for the PPA and included as part of this report, below are the estimated power costs for three options:

Comparison of Alternatives
Item Maintain Status Quo 20 Year PPA PPA/Purchase at 10 Years
Power Purchases $3,332,561 $3,859,759 $1,623,926
Utility Subsidy n/a $0 $0
Operating Expenses n/a $0 $276,781
Purchase Price n/a $0 $1,150,000
Cost of Shade on 12
Carports $1,040,000 $0 $0
Total $4,372,561 $3,859,759 $3,050,707
Based upon the chart above, there is significant savings over the term of the PPA or if the City decides to purchase the system. In either case, the benefit to the City is the utilization of the solar power system to produce less expensive power and to shade parking spaces at no capital cost to the City. The best case scenario is for the City to purchase the system in year 10.

ALTERNATIVES:

Do not adopt the Resolution authorizing the Solar Power Purchase Agreement.

ATTACHMENTS:

Attachment 1: Solar PPA
Attachment 2: Site Lease Agreement
Attachment 3: Nobell - Financial Analysis of Solar PPA

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Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 356 of 970 Attachment 4: Resolution No. 10319 - Nobell Energy (PSC)

APPROVAL(S):

Roxanne Diaz, City Attorney Approved - 03 Aug 2022
Rob Rockwell, Asst. City Manager & Dir. Of Finance Approved - 05 Aug 2022 Bryan H. Montgomery, City Manager Approved - 08 Aug 2022

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Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 357 of 970

SOLAR POWER PURCHASE AGREEMENT
This Solar Power Purchase Agreement (“PPA”) is made and entered into as of __________ __, 2022 (“Effective Date”), by and between Nobell Energy Solutions, LLC, a California limited liability company (“Power Provider”) and the City of Indio, a municipal corporation (“Host Customer”). Each of Power Provider and Host Customer shall be referred to herein as a “Party” and collectively, as the “Parties”.

RECITALS
WHEREAS, Host Customer owns and operates the Indio Public Safety Campus located on the real property identified by the municipal address of 46835, 46951, and 46867 Bristol Street, Indio, California, 92201 (“Property”); and
WHEREAS, Host Customer desires to have installed a 517 kW DC carport shade structure mounted solar photovoltaic power generation system in accordance with the specifications set forth in this PPA (“System”) on the Property in order to reduce its energy costs as well as its dependence on fossil fuel resources and to promote the generation of electricity from solar energy; and WHEREAS, Host Customer and Power Provider have agreed to enter into a lease, which is attached hereto as Exhibit “A” (“Site Lease”) for that portion of the Property where the System will be located (the “Site”); and
WHEREAS, Power Provider has developed an ownership and financing structure as set forth in this PPA under which the Power Provider will design, install, own, operate, and maintain the System at no cost to Host Customer (except as may be expressly set forth herein and in the Site lease) so long as Host Customer agrees to buy all the electricity generated from the System in accordance with the terms and conditions set forth in this PPA; and
WHEREAS, as part of this PPA and in consideration of the Site Lease, Power Provider and Host Customer intend that Power Provider will retain and be the beneficiary of all environmental credits (green tags), carbon credits, pollution credits, and all the other financial incentives and tax benefits generated by the development, operation, and ownership of the System.

NOW, THEREFORE, in consideration of the terms and conditions hereinafter set forth, and intending to be legally bound hereby, the Parties hereby covenant and agree as follows:

AGREEMENT

1.POWER PROVIDER’S DUTIES

1.1Construction of System. Power Provider shall have access to the Site to install, construct, test, service, maintain, and repair the System in accordance with the specifications and description set forth in Exhibit “B” attached hereto and incorporated herein. The Power Provider shall submit the System’s designs, plans and specifications to the Host Customer for plan check and approval. Power Provider may hire licensed, independent contractors to design, build, and install the System. Such independent contractors may use subcontractors for any part or all of the services contracted by Power Provider. Notwithstanding the foregoing, Power Provider will remain solely

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 358 of 970 2 responsible to Host Customer for all work performed by such independent contractors and subcontractors. Power Provider and its contractors and subcontractors shall install the System in good and workmanlike manner in accordance with industry standards. Power Provider will maintain and repair the System in a good and operable condition at all times hereunder which shall include cleaning the system consistent with Prudent Industry Practice (defined in Section 7.1 hereinbelow). If the System is damaged or destroyed for any reason, including theft, vandalism or other casualty, Power Provider shall be responsible to repair or replace the same as soon as reasonably practicable thereafter

1.2Removal of System. Power Provider shall remove all of the System from Host Customer’s Property at Power Provider’s sole expense: (i) upon the expiration of the Term, including the renewal Term; or (ii) in the event that this PPA is terminated pursuant to Section 7.

1.3 Compliance with Laws. The System shall conform with all Applicable Laws (as defined in Paragraph 2.4.5 hereinbelow), regulations and orders, including, without limitation, obtaining all permits or approvals required by any governmental entity, including Host Customer. At no expense to Host Customer, Host Customer shall cooperate to promptly assist Power Provider in obtaining any and all permits or approvals required by any Governmental Authority.

1.4Delivery of Electricity from Solar Panels to Host Customer. Power Provider shall provide all wiring from the System to the point at which the System connects to the Host Customer’s existing building electrical system (“Connection Point”) as identified in Exhibit “B” attached hereto and incorporated herein. Custody, control and ownership of electricity shall transfer from the Power Provider to the Host Customer at the Connection Point.

1.5Interruptions in Delivery of Electricity. Power Provider may interrupt, reduce or discontinue the delivery of electricity for purposes of inspection, maintenance, repair, replacement, construction, installation, removal or alteration of the equipment used for the production or delivery of electricity. No such interruption shall last more than twenty-four (24) hours except for extraordinary or unanticipated repairs without the prior consent of Host Customer, which consent will not be unreasonably withheld, conditioned or delayed. Power Provider shall give written notice to Host Customer of any expected interruption of delivery of electricity at least five (5) business days prior to the date of any interruption and shall inform Host Customer of the expected length of any interruption and to schedule such interruption to minimize disruption to Host Customer. Power Provider reserves the right to curtail the delivery of electricity if so directed by authorized governmental authorities, electric utilities or as necessitated by an emergency or immediate risk to the health and safety of persons or destruction of property. Power Provider shall use reasonable care to ensure the operation of the System and supply of electricity. However, the Parties explicitly acknowledge and understand that the System is comprised of intermittent generation facilities, and will not provide Host Customer with an uninterrupted supply of electricity at all times.

1.6Repairs and Other System Disruptions. Given the duration of the term of this PPA, the Parties agree and expect that the Host Customer shall undertake repairs of its property, but not the System, during the term of this PPA. As such, the Parties agree that during the term of this PPA, Host Customer shall be afforded a total of twenty (20) working days (“Repair Time”) during which Host Customer may repair the Property and during which the System shall be removed and/or rendered non- operational as safety may so require in order for Host Customer to effectuate the repair. Such Repair Time shall not include Power Provider’s time incurred to partially or completely disassemble and/or

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 359 of 970 3 move the System as may be required by Host Customer to make repairs. Power Provider shall charge Host Customer for its costs incurred to disassemble or move the System for repairs/replacement work undertaken by Host Customer during the Repair Time. Host Customer shall not be obligated to make any payment to Power Provider during the Repair Time to the extent the System is not providing electricity to the Host Customer. In the event that Host Customer requires more time beyond the Repair Time (“Disruption Period”), Host Customer shall (i) pay Power Provider for all work required by Power Provider to disassemble or move the System; (ii) continue to make all Monthly Payments; and (iii) reimburse Provider for any other lost revenue during the Disruption Period, including any lost revenue associated with any reduced sales of Environmental Financial Attributes and any reduced Renewable Energy Credits. For the purpose of calculating lost revenue for such Disruption Period, electricity shall be deemed to have been produced at the average rate over the preceding twelve (12) months (or, if the disruption occurs within the first twelve (12) months of operation, the average over such period of operation).

1.7Cost to Restore Service Following Interruption. Power Provider shall bear all costs associated with restoring service following any interruption of electricity as part of Power Provider’s operation of the System; provided, however, that, if interruptions of electricity are caused directly by the actions or inactions of Host Customer, including but not limited to, Host Customer’s additional repairs contemplated in the above-defined Disruption Period, then Host Customer agrees to bear the costs associated with the restoration of the delivery of electricity.

1.8Ownership of System, Renewable Energy Credits and Environmental Financial Attributes. Ownership of the System shall vest in Power Provider for all purposes including depreciation and credits for federal and state tax purposes. Host Customer and Power Provider agree that the System shall at all times be personal property severable from the Property and shall not become a fixture. The Power Provider shall own all “Renewable Energy Credits” and all “Environmental Financial Attributes” relating to the System or the electricity generated by the System. “Renewable Energy Credits” shall mean those certificates (including Tradable Renewable Certificates), green-e tags, pollution credits, carbon offset credits, or other transferable indicia used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants, or indicating generation of a particular quantity of energy from a renewable energy source by a renewable energy facility attributed to the electricity during the Term created under a renewable energy, emission reduction, or other reporting program adopted by a Governmental Authority (as defined in Paragraph 2.4.5 hereinbelow), or for which a registry and a market exists (including but not limited to, as of the Effective Date are certificates issued by Green-e in accordance with the Green-e Renewable Electric Certification Program, National Standard Version 1.3 administered by the Center of Resource Solutions) or for which a market may exist at a future time. “Environmental Financial Attributes” shall mean all of the following financial rebates and incentives that is in effect as of the Effective Date or may come into effect in the future, excluding, however, any Renewable Energy Credits: (i) performance-based incentives under the California Solar Initiative, incentive tax credits or other tax benefits, and accelerated depreciation (collectively, “allowances”), howsoever named or referred to, with respect to any and all fuel, emissions, air quality, or other environmental characteristics, resulting from the use of solar generation or the avoidance of the emission of any gas, chemical or other substance into the air, soil or water attributable to the sale of Energy generated by the System; and (ii) all reporting rights with respect to such allowances.

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Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 360 of 970 4 1.9Reporting of Ownership. Host Customer shall not report to any person that any Environmental Financial Attributes or the Renewable Energy Credits relating to the electricity generated by the System and/or the System belong to any person other than Power Provider. At the Power Provider’s request, Host Customer shall execute all such documents and instruments reasonably necessary or desirable to effect or evidence Power Provider’s right, title and interest in and to the Environmental Financial Attributes or Renewable Energy Credits, as the case may be, relating to the System or the electricity generated therefrom.

1.10Conditions to Power Provider’s Obligations. Subject to the terms and conditions of this PPA, each of the following conditions precedent is required prior to Power Provider’s obligations to:
(a) commence construction and installation of the System; and (b) commence the delivery of electricity to Host Customer:

1.10.1Necessary Governmental Approvals. Power Provider shall have received and retained where necessary, all applicable and material federal, state and local approvals, permits, licenses and authorizations necessary: (a) for the construction and installation of the System, prior to the commencement of construction and installation of the System; and (b) for the generation and sale of electricity to the Host Customer under this PPA, prior to the commencement of delivery of electricity to Host Customer.

1.10.2Additional Consents and Approvals. Power Provider shall have obtained from all Parties any necessary easements, leases/leasebacks, licenses, consents and approvals and other rights Power Provider reasonably deems necessary or desirable for the construction and installation of the System, the production and delivery of electricity to the Connection Point, and the operation and maintenance of the System under this PPA.

1.10.3Ownership of Approvals. All such permits and approvals in this Section 1.9 shall be owned and controlled by Power Provider.

1.10.4Diligence. Power Provider shall have had the opportunity to complete proper due diligence relating to Host Customer, including but not limited to legal, accounting, environmental and technical reviews. Such diligence shall also include visits by Power Provider to Host Customer’s Property, meetings between Power Provider’s management and Host Customer’s management, and other measures deemed necessary by Power Provider.

1.10.5No Material Changes. Power Provider determines that Host Customer’s electricity requirements have remained consistent since the Effective Date of this PPA, and Host Customer shall not have experienced any other material changes, including changes in its load profile.

2.HOST CUSTOMER’S DUTIES

2.1No Obstruction of System. Host Customer shall not install or permit to be installed on the Property (or any other property owned or controlled by Host Customer) any physical obstruction (such as, but not limited to, trees) to the operation of the System that reduces the electrical energy generated by the System.

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Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 361 of 970 5 2.2Liens. Host Customer shall not directly or indirectly cause, create, incur, assume or suffer to exist any mortgage, pledge, lien (including mechanics', laborers' or materialmen's liens), charge, security interest, encumbrance or claim of any nature (“Liens”) on or with respect to all or a part of the System or any of Power Provider’s interest therein. If Host Customer breaches its obligations under this Section, it shall immediately notify Power Provider in writing, shall promptly cause such Lien to be discharged and released of record without cost to Power Provider, and shall defend and indemnify Power Provider against all costs and expenses (including reasonable attorneys' fees and court costs at trial and on appeal) incurred in discharging and releasing such Lien. Power Provider shall not directly or indirectly cause, create, incur, assume or suffer to exist any Liens on or with respect to the Site, the Property or Host Customer’s interest therein. If Power Provider breaches its obligations under this Section, it shall immediately notify Host Customer in writing, shall promptly cause such Lien to be discharged and released of record without cost to Host Customer, and shall defend and indemnify Host Customer against all costs and expenses (including reasonable attorneys' fees and court costs at trial and on appeal) incurred in discharging and releasing such Lien.

2.3Access of Property. Power Provider will have the right to access the Site and the Property in accordance with the terms of the Site Lease, for the purposes of installing, constructing, servicing and testing the System, and any other activities related to or arising from the installation, maintenance and operation of the System.

2.4Electricity Purchases.

2.4.1Purchase and Sale of Electricity. In accordance with the terms and conditions herein, commencing on the Service Commencement Date (as defined in Paragraph 7.1 hereinbelow) and continuing throughout the remainder of the Term (as defined in Paragraph 7.1 hereinbelow), Power Provider shall deliver to the Host Customer at the Connection Point, and Host Customer shall accept delivery from Power Provider at the Connection Point, all of the electrical output generated by the System. Notwithstanding the preceding, in the event of a Force Majeure obstructing the Host Customer’s ability to use the electricity output, the Host Customer shall not be obligated to accept or pay for the electricity output during the period of such Force Majeure. Power Provider warrants that it will deliver the Electricity Output to Host at the Connection Point free and clear of all liens, security interests, claims and other encumbrances. The amount of electrical power delivered to the Connection Point from the System (“System Output”) shall be in whole kWh and determined in accordance with the provisions of Section 4 hereinbelow.

2.4.2Payments. If Power Provider does not elect to invoice Host Customer on a “Level Pay Plan” basis as described in Exhibit “C”, Host Customer shall pay Power Provider for the electricity output a monthly payment for the preceding month as set forth in the attached pricing provisions in Exhibit C, attached hereto and incorporated herein by this reference. The monthly payment shall be in part based on the “Solar Energy Price” as defined in Exhibit C. Power Provider will invoice Host Customer each month for the prior month’s energy delivery. Host Customer shall pay the full Monthly Payment or any amounts owed pursuant to Section 9.1 within twenty-one (21) days of the invoice date from Power Provider for the prior month (“Due Date”). Host Customer shall, at Host Customer’s option, (a) cause a check to be drawn in the undisputed amount due made payable to the Power Provider, or (b) pay such amount via wire transfer to Power Provider’s bank account.

Unless otherwise directed by Power Provider, all payments must be made payable to: Nobell Energy Solutions, 2045 E. Tahquitz Canyon Way, Palm Springs California 92262.

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 362 of 970 6 2.4.3Late Fees. If any part of a payment is not made by Host Customer within twenty- one (21) calendar days following the Due Date, Host Customer agrees to pay Power Provider interest of five (5%) percent per annum on the amount past due (“Late Fee”) until the payment has been made in full. Host Customer agrees to pay Power Provider any Late Fees not later than one (1) month following the original Due Date. The calculation of Late Fees that remain unpaid as set forth in this section shall not constitute any waiver of Host Customer’s obligation to pay such amounts when due, or Power Provider’s right to collect, any payment by Host Customer under any such invoice, as well as Power Provider’s right to exercise its rights with respect to Host Customer’s Default.

2.4.4Changes in Applicable Law. In the event that any fee or charge (other than a tax as described in Section 9.1) is imposed on the delivery of electrical energy by Power Provider to Host Customer as a result in a change in Applicable Law, Power Provider shall promptly submit to Host Customer a written notice setting forth (a) the citation of the applicable change in Applicable Law, and (b) the manner in which such change in Applicable Law has changed or will materially change Power Provider’s costs, including reasonable computations in connection therewith, and (c) Power Provider’s proposed adjustment to the Solar Energy price. Host Customer agrees to negotiate with Power Provider an equitable adjustment in the Solar Energy Price (as defined in Exhibit “C”) such that the new rate fairly apportions as between the Parties, the cost increase related to the change in Applicable Law, which adjustment shall remain in effect over the remaining years of the Term of this PPA or until the fee or charge that caused the increase in costs is altered, repealed, or made inapplicable to the System. Power Provider will not be entitled to any adjustment in the Solar Energy Price as a result of a change in Applicable Law which alters the value or applicability of the Renewable Energy Credits and Environmental Financial Attributes and accepts all risk associated with same. As used in this PPA, “Applicable Law” shall mean, with respect to Governmental Authority (defined as any federal, state, regional, county, town, city, or municipal government, whether domestic or foreign, or any department, agency, bureau, or other administrative, regulatory or judicial body of any such government), any constitutional provision, law, statute, rule, regulation, ordinance, treaty, order, decree, judgment, decision, certificate, holding, injunction, registration, license, franchise, permit, authorization, guideline, governmental approval, consent or requirement of such Governmental Authority, enforceable at law or in equity, along with the interpretation and administration thereof by any Governmental Authority.

3.REPRESENTATIONS.

3.1Host Customer Representations. Host Customer hereby represents to Power Provider that:

3.1.1Due Authorization. Host Customer is duly authorized and empowered to enter into this PPA and Host Customer shall deliver to Power Provider certified copies of all ordinances, resolutions and other documents evidencing such authorization and empowerment to enter into this PPA;

3.1.2No Conflict. This PPA is enforceable according to its terms and does not conflict with or violate the terms of any other material agreements to which Host Customer is a party, including, if applicable, any Host Customer licenses with respect to the Property;

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Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 363 of 970 7 3.1.3Host Customer Data. Host Customer has furnished, or caused others to furnish, to Power Provider accurate and complete data concerning energy usage for and other information pertaining to the Property, requested by Power Provider as follows:
(a) Utility and any other energy Power Provider records for the 12-month period preceding the Effective Date;
(b) Any energy or environmental audits relating to all or any part of the Property;
(c) Any service or maintenance agreement(s) regarding the building electrical system (“BES”) for the Property, or any part thereof; and (d) Building structural plans/building system electrical designs as needed.

3.1.4Accuracy of Information. The information provided pursuant to this PPA as of the Effective Date is to the best of Host Customer’s actual knowledge true and accurate in all material respects;

3.1.5Ability to Perform. Host Customer has no knowledge of any facts or circumstances that, but for the passage of time, would materially, adversely affect either Party’s ability to perform its respective obligations hereunder and, if Host Customer is a governmental entity or instrumentality thereof, as set forth in the Recitals to this PPA, the Host Customer has complied with all laws and regulations relative to procurement of the electricity; and

3.1.6Control over Property. Host Customer has the authority to enter into the Site Lease attached hereto to lease or sublease the Property to Power Provider. (a) In the event that any or all of the Property is or becomes subject during the Term of this PPA to a lease, or to a security interest, lien or mortgage, such agreement shall not conflict with Power Provider’s rights as provided hereunder whereby the System is the personal property of Power Provider severable from the Property and not a fixture. (b) Host Customer shall, at no cost to Host Customer, grant to Power Provider requested easements, licenses, consents and approvals necessary for the production and delivery of electricity to the Connection Point, and the operation and maintenance of the System under this PPA.

3.1.7Hazardous Materials or Contamination. Host Customer represents and warrants that, after due diligence, there are no Hazardous Materials (as defined herein) on the Property that would adversely affect the construction, installation or operation of the System. If Host Customer becomes aware of the presence of any Hazardous Materials that would adversely affect the construction, installation or operation of the System, Host Customer shall promptly notify Power Provider of the type and location of such Hazardous Materials in writing. Host Customer agrees to assume full responsibility for (and protect, indemnify and defend Power Provider against) any liability or cleanup obligations for any contamination or pollution or breach of Environmental Laws related to the Property, unless, but only to the extent, attributable to the actions of Power Provider. For purposes of this PPA, “Hazardous Materials” means and includes each substance designated as a hazardous

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 364 of 970 8 waste, hazardous substance, hazardous material, pollutant, contaminant or toxic substance or as designated with words of similar meaning and regulatory effect under any Environmental Law, petroleum and petroleum products or derivatives, and any other substance for which liability or standards of conduct may be imposed under Environmental Law. For purposes of this PPA, “Environmental Law” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 1471 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 through 2629; and all laws of any governmental authority having jurisdiction over the Property or the Site addressing pollution or protection of the environment and all amendments to such laws and all regulations implementing any of the foregoing.

3.2Power Provider Representations. Power Provider hereby represents to Host Customer that:

3.2.1Due Authorization. Power Provider is duly authorized and empowered to enter into this PPA;

3.2.2No Conflict. This PPA is enforceable according to its terms and does not conflict with or violate the terms of any other material agreements to which it is a party;

3.2.3Accuracy of Information. The information provided pursuant to this PPA as of the Effective Date is true and accurate in all material respects;

3.2.4Due Diligence. Power Provider is experienced in the installation of commercial solar photovoltaic energy generation systems, has carefully reviewed all of the Host Customer data as described in Section 3.1.3, and has made its own determination as to the adequacy of the structural integrity and electrical systems located on the Property and their suitability for the System. Subject to Host Customer’s representations and warranties made in this PPA or the Site Lease and Power Provider’s termination rights set forth in Section 7.3, Power Provider accepts the Property in its current condition “AS-IS” and the responsibility for any repairs or upgrades to the Property that are necessary to support the System that are not identified on Exhibit “B”; and

3.2.5Ability to Perform. Power Provider has no knowledge of any facts or circumstances that, but for the passage of time, would materially adversely affect either Party’s ability to perform its respective obligations hereunder.

4.METERING.

4.1Metering Equipment. The Parties acknowledge and agree that Power Provider shall, or shall cause a third party to, provide, install, own, operate and maintain a meter on the Property with real time digital access that is accessible by Power Provider and Host Customer, and Power Provider shall, or shall cause a third party to, exercise reasonable care in the installation, operation, and maintenance of the meter so as to assure to the maximum extent reasonably practical an accurate determination of such quantities. The location of the meter shall be approved by Host Customer prior

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 365 of 970 9 to its installation and shall be used for the purpose of measuring the amount of electricity generated by the System.

4.2Meter Reading. Readings of the meter shall be conclusive as to the amount of electricity generated by the System; provided that if the meter is out of service, is discovered to be inaccurate pursuant to Section 4.3, or registers inaccurately, measurement of electricity generated by the System shall be determined by estimating by reference to quantities measured during periods of similar conditions when the meter was registering accurately. Power Provider shall read the meters at the end of each calendar month, and shall record the electricity delivered to Host Customer. The meters shall be used as the basis for calculating the Solar Energy Payment if it elects to not invoice Host Customer on a “Level Pay Plan” as set forth in Exhibit “C”.

4.3Testing and Correction. The following steps shall be taken to resolve any disputes regarding the accuracy of the meter:

4.3.1If either Party disputes the accuracy or condition of the meter, such Party shall so advise the other Party in writing.

4.3.2Power Provider shall, within fifteen (15) business days after receiving such notice from Host Customer or issuing such notice to Host Customer, advise Host Customer in writing as to Power Provider’s position concerning the accuracy of such meter and Power Provider’s reasons for taking such position.

4.3.3If the Parties are unable to resolve the dispute through reasonable negotiations, then Power Provider may cause a neutral, unrelated third party having considerable experience testing such meters and acceptable to Host Customer to test the meter.

4.3.4If the meter is found to be inaccurate by not more than 2%, any previous recordings of the meter shall be deemed accurate, and the Party disputing the accuracy or condition of the meter shall bear the cost of inspection and testing of the meter.

4.3.5If the meter is found to be inaccurate by more than 2% or if such meter is for any reason out of service or fails to register, then (a) Power Provider shall promptly cause any meter found to be inaccurate to be adjusted to correct, to the extent practicable, such inaccuracy, (b) Power Provider will pay the cost of inspection and testing of the meter; and (c) the Parties shall estimate the correct amounts of electricity delivered, based on usage during the previous calendar year, for no more than the preceding six (6) months and Power Provider shall either invoice or credit Host Customer for the correct amounts of electricity delivered.

5.ENVIRONMENTAL COMPLIANCE.

Power Provider shall comply with any and all applicable environmental laws, including the California Environmental Quality Act, relating to the installation and operation of the System and Host Customer shall comply with any and all applicable environmental laws relating to the Property (excluding the System installed thereon). The forgoing shall include, but shall not be limited to, the California Environmental Quality Act. If required to do so by an applicable governmental authority, each Party shall retain the services of qualified consultants to provide all required research and documentation required to meet its compliance obligations set forth in this Section 5. Host Customer shall be

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 366 of 970 10 responsible for the costs of the initial study which may be required to install the System. Either Party, following the completion of such initial study, may terminate this PPA by written notice to the other Party should environmental compliance measures or unforeseen site conditions render the construction of the System economically disadvantageous for the terminating Party or the time required to implement any environmental compliance measures or remediation exceed the Party’s reasonable expectations. If Host Customer does not obtain all required environmental approvals by within six (6) months from the Effective Date, either Party may terminate this PPA by written notice to the other Party, provided such notice is given within ten (10) business days following such six (6) month period.

Nothing set forth herein shall be interpreted to require either Party to undertake environmental remediation at the Property if mandated by law, regulation or as a condition of regulatory approval prior to the construction of the System.

6.SYSTEM.

6.1Location. Host Customer and Power Provider agree that the System shall be situated on Host Customer’s Property at the locations specified in Exhibit “B”, attached hereto. Host Customer warrants that this PPA is enforceable according to its terms and does not conflict with or violate the terms of any other material agreements to which Host Customer is a party, including, if applicable, any Host Customer leases, licenses or other agreements with respect to the Property. Host Customer also acknowledges and agrees that it is not the owner of the System and does not have title to the System.

Host Customer acknowledges that this Agreement may be financed through a sale-leaseback transaction, in which case, the rights and obligations of a third party, other than Power Provider, shall be assumed via an assignment and assumption agreement to which Host Customer shall be a party and under which such agreement the third party shall assumes the duties and obligations under this PPA as provided for in the agreement.

6.2Ownership. During the Term of this PPA, ownership of (i) the System constructed by Power Provider upon the Property, (ii) all alterations, additions or betterments thereto shall vest in Power Provider for all purposes including depreciation for federal and state tax purposes. Host Customer and Power Provider agree that the System shall at all times be personal property severable from the Property and shall not become a fixture. Power Provider, or Power Provider's permitted assigns, shall at all times retain title to and be the legal and beneficial owner of all System, including the right to any tax credits available under federal or state law, and all System shall remain the property of Power Provider or Power Provider's assigns. Power Provider shall be entitled to, and is hereby authorized to, file one or more precautionary UCC Financing Statements or fixture filings, as applicable, in such jurisdictions as it deems appropriate with respect to the System in order to protect its rights in the System. The Parties intend that neither Host Customer nor any party related to Host Customer shall acquire the right to operate the System or be deemed to operate the System for purposes of Section 7701(e)(4)(A)(i) of the Internal Revenue Code of 1986, as amended, and the terms of this PPA shall be construed consistent with the intention of the Parties.

6.3Reduce Other Electric Purchases. The electricity generated by the System will reduce Host Customer’s purchase of electricity from other sources, including the Host Customer’s local utility. However, the System is not intended to eliminate entirely Host Customer’s electricity needs from other sources, and therefore, Host Customer shall have a contractual arrangement in place at all times during the Term of this PPA with its local electric utility or with another provider of retail electricity. Host Customer shall be responsible for maintaining and fulfilling all contractual

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 367 of 970 11 obligations with respect to its utility service provider, including with respect to such interconnection service, power supply service, net-metering arrangements and delivery service, and, where applicable, meet all requirements imposed by the local utility. Depending on the Host Customer’s demand load profile, the electricity generated by the System may or may not eliminate applicable demand charges, including but not limited to, non-coincident demand charges, or any other component of the utility rate charged by the local utility which otherwise remains applicable to the Host Customer notwithstanding the Host Customer’s purchase of electricity generated by the System.

6.4Net-Metering. In the event that Host Customer’s load is less than the total output being delivered by Power Provider to the Connection Point at any given time, the Parties acknowledge and agree that such electricity shall have been delivered to Host Customer at the Connection Point in accordance with Section 1.4 and shall flow through the BES to the interconnection point between the BES and the local utility. The Parties further acknowledge and agree that in such instance, the treatment of such electricity shall be determined by arrangements between Host Customer and its local utility (which arrangements are typically referred to as “net-metering”), which shall have no impact whatsoever upon the terms and conditions of this PPA. Host Customer acknowledges that the amount of electrical power subject to net-metering is dependent on many factors, including, but not limited to, the Host Customer’s operating hours, changes to the amount of electrical power used by Host Customer, conservation measures, and weather conditions.

6.5Alteration of Power Provider Equipment. Host Customer shall not cause or voluntarily permit any modification or alteration to any part of Power Provider’s equipment located on the Property, including without limitation the System, valves, conduits, piping or other materials or tools, except in the event of an emergency. In an emergency, to the extent that Host Customer is aware of a threat of injury to persons or damage to property and is capable and qualified to act without substantial cost or risk to the health or safety of any person, Host Customer shall take reasonable steps to respond to the emergency and shall so inform Power Provider as soon as practicable (orally or in writing). In the event that Power Provider is capable of generating and delivering electricity to Host Customer, but as a result of Host Customer’s willful misconduct, errors or omissions, Host Customer does not accept delivery of such electricity or is unable to accept delivery of such electricity, Host Customer shall pay Power Provider the estimated amount of electricity that would have been delivered but for Host Customer’s actions.

6.6Host Customer Maintenance of its Property. Host Customer shall use care to ensure that its Property and all equipment thereon does not disrupt or interfere with the operation of the System. Power Provider shall use care to ensure that the System and all related equipment does not disrupt or interfere with the operation of the Property. Power Provider shall maintain, repair and replace such parts of the System to comply with applicable law and shall secure and enforce all System warranties.

6.7Warranty. Power Provider represents that the System and each component part thereof is covered by a manufacturer’s warranty, a copy of which Power Provider shall provide to Host Customer as soon as practicable following mutual execution of this PPA. Until this PPA expires or is sooner terminated, Power Provider agrees to use its best efforts to pursue all remedies against the manufacturer of the System for all System deficiencies and defects.

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 368 of 970 12 7.TERM.

7.1 The term of this PPA (“Term”) shall commence on the Effective Date set forth above and shall expire on that date which is the earlier of (a) twenty (_20_) years from the Service Commencement Date (as defined below) or (b) December 31, 2044, unless the PPA is terminated earlier as set forth herein. Power Provider shall provide no less than three (3) business days written notice of the Service Commencement Date to Host Customer. The Service Commence Date shall mean that (i) the System has been completely installed and commissioned, including the process of starting up and testing of all components; has been synchronized with the grid; and is capable of producing Electricity Output; (ii) that the System is ready for operation and has successfully completed all performance testing in accordance with Prudent Industry Practice (as defined below); and (iii) the service under this PPA will begin on the date certain indicated in the notice; and the System begins production of Electricity Output (the “Service Commencement Date”). The delivery of energy from the System as part of the commissioning and testing process shall not constitute the commencement of service. At any time prior to the end of the Term, the Parties may meet and negotiate the terms and conditions on which this PPA may be extended in their respective sole and absolute discretion. For purposes of this paragraph, “Prudent Industry Practice” shall mean the practices, methods and acts engaged in or approved by a significant portion of the solar energy industry that, at a particular time, in the exercise of reasonable judgment in light of the facts known or that reasonably should have been known at the time a decision was made, would have been expected to accomplish the desired result in a manner consistent with law, regulation, reliability, safety, environmental protection, economy and expedition.

7.2 Upon the expiration of the Term or the termination of this Agreement by Host Customer, Power Provider will promptly dismantle, pack and remove the System from the Property and repair any damage caused by such removal. If Power Provider fails to undertake such action within thirty (30) days written notice of termination from Host Customer, then Host Customer may arrange to have the System removed at Power Provider’s sole cost and expense.

7.3 Notwithstanding any other term in this PPA to the contrary, Power Provider shall have the right to terminate without liability this PPA at any time during the Term in the event Power Provider reasonably determines that (a) the cost to upgrade or improve any structural component of the improvements on the Property exceeds $50,000.00 or (b) the cost to comply with a governmental order relative to the ownership or operation of the System exceeds $100,000. Such termination will be deemed effective the date given in Power Provider’s termination notice to Host Customer; provided, however, that Power Provider’s specified date of termination shall be no later than sixty (60) days following the date Power Provider’s termination notice is actually received by Host Customer.

8.INSURANCE

8.1General Liability Coverage. From the Effective Date until termination or expiration of the Term, Power Provider and its contractors and subcontractors each agree to maintain or cause to be maintained General Liability insurance against claims for bodily injury, loss of life or property damage occurring on the Property (including within the buildings thereon); and on the portion of the street and the sidewalks adjacent thereto with bodily injury, loss of life and property damage coverage in an amount of not less than Two Million Dollars ($2,000,000.00) per occurrence. The Host Customer shall be named under the applicable policy as Additional Insureds.

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 369 of 970 13 8.2Automobile Coverage. Power Provider and its contractors and subcontractors, as applicable, shall carry a business automobile policy with a combined single limit of not less than One Million Dollars ($1,000,000). Coverage for automobile liability insurance shall be at least as broad as Insurance Services Office Form Number CA 0001 (ed. 6/92) covering automobile liability, Code 1 (any auto). The automobile liability program may utilize deductibles, but not a self-insured retention, subject to written approval by the Host Customer.

8.3Workers Compensation Coverage. Power Provider, its contractors and subcontractors as applicable, shall carry Workers’ Compensation insurance during the full term or duration of the PPA, to insure statutory liability for injury to its employees in the State of California. The policy should have limits as follows: Bodily injury by accident, $1,000,000 each accident, and each employee a $1,000,000 policy limit.

8.4Property Damage. Power Provider will carry all-risk Builders Risk insurance during construction and all-risk Property insurance thereafter covering the System in an amount equivalent to the full replacement value of the System. Host Customer will carry all-risk property insurance covering the property on which the System is located in the amount not less than the replacement value of the Host Customer’s buildings, personal property and equipment, which comprise all or a portion of the Property, excluding coverage for the System.

8.5All Policies. All insurance, including Workers Compensation coverage, its contractors and subcontractors as applicable, shall include an insurer’s Waiver of Subrogation in favor of the other Party and will be in a form and with insurance companies that are financially sound and reputable that are qualified to do business in the State of California with a minimum A.M. Best Rating A- or as otherwise acceptable to the Host Customer’s Risk Manager. All insurance shall be primary and any other insurance, deductible, or self-insurance maintained by the indemnified parties shall not contribute with this primary insurance. The workers’ compensation and employer’s liability program may utilize either deductibles or provide coverage excess of a self-insured retention, subject to written approval by the other Party.

8.6Evidence Required. Insurance certificates for all coverages required by the PPA shall be provided by each Party to the other Party within twenty (20) business days after the Effective Date, prior to the construction of the System and during the term of this Agreement as requested in writing by the other Party. All insurance policies shall contain a provision that such policies shall not be canceled or terminated without thirty (30) days prior notice from the insurance company to the other Party.

9.TAXES

9.1Sale of Energy. In the event that any state or local taxes are assessed against the generation, sale, delivery or consumption of energy, Host Customer shall either pay or reimburse Power Provider for all such amounts due, including any taxes assessed thereon, as set forth in Section

2.4.2, except any federal or state income taxes imposed on Power Provider based on such sales.

9.2Real Estate or Property Taxes. Power Provider will pay and hold harmless Host Customer from ad valorem and related property tax, if any, assessed on (i) the System; (iii) Power Provider's ownership, installation or use of the System; or (iii) any other aspect of this PPA.

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 370 of 970 14 9.3Other Taxes. Power Provider will pay and hold harmless Host Customer from any federal, state or local taxes imposed upon Host Customer arising from this PPA, other than as set forth in Section 9.1 above, including but not limited to Power Provider's manufacture, installation and acquisition of the System.

9.4Revenue and Tax Code Notice. This PPA may result in the creation of a possessory interest. (Rev. & Tax. Code § 107.6) If such a possessory interest is vested in Power Provider, Power Provider may be subjected to the payment of personal property taxes levied on such interest. Power Provider shall be responsible for the payment of, and shall pay before becoming delinquent, all taxes, assessments, fees, or other charges assessed or levied upon Power Provider. Power Provider further agrees to prevent such taxes, assessments, fees, or other charges from giving rise to any lien against the Property or any improvement located on or within the Property. Nothing herein contained shall be deemed to prevent or prohibit Power Provider from contesting the validity or amount of any such tax, assessment, or fee in the manner authorized by law. Power Provider shall be responsible for payment of any personal property taxes, possessory interest taxes, permit fees, business license fees and any and all fees and charges of any nature levied against the System and the operations of Power Provider at any time. If bills for taxes on the System thereon are received by the Host Customer, Host Customer shall immediately remit such bills to Power Provider. Any fee or charge resulting from any possessory interest created hereby and/or the use and operation of the System on the Property shall be the responsibility of the Power Provider. In the event of any sale of the Property, Power Provider shall not be responsible for any taxes levied as a result of such sale.

10.DEFAULT

10.1Events of Defaults. Any one or more of the following events shall constitute an event of default (“Event of Default”): (a) Host Customer fails to pay an invoice within sixty (60) days of the date of the invoice; (b) Host Customer materially interferes with or damages the System; (c) Either Party fails to observe or perform any other material term or condition in this PPA; (d) Either Party (i) voluntary or involuntarily files or has filed a petition in bankruptcy or a petition or answer seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution, or other relief of the same or different kind under any provisions of the bankruptcy laws that is not dismissed within sixty (60) days of the initial filing, (ii) makes an assignment for the benefit of creditors, (iii) has a receiver appointed with respect to the business property or assets of such Party on the Property, or (iv) otherwise is unable to pay its debts as they become due; (e) Either Party misrepresents a material fact contained in this PPA as of the Effective Date; and (f) Either Party violates or fails to enforce any applicable law, regulation or ordinance related to the use or occupancy of the Property.

10.2Right to Cure. Either Party shall, after notice, promptly and diligently commence curing a Default and shall have thirty (30) days after notice is given to complete the cure of said Default; provided, however, that if the nature of the defaulting Party’s failure is such that more than thirty (30) days are reasonably required for its cure, then such Party shall not be in Default if the defaulting Party begins such cure within the thirty (30) day period described in the preceding sentence, provides notice to the non-defaulting Party of the extended time required for performance, within such thirty (30) day period, and, thereafter, diligently prosecutes such cure to completion; provided, further, if an Event of Default is incapable of being cured, then cure provisions contained in this Section 10.2 shall not apply to such Event of Default.

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 371 of 970 15 10.3Notice of Default. A Party shall not be considered to be in default under this PPA unless (i) the non-defaulting Party has given written notice specifying the default; and (ii) the defaulting Party has failed to cure the default in accordance with provisions of Section 10.2.

10.4Remedies.

10.4.1If the defaulting Party has failed to cure as set forth herein, the non-defaulting Party shall have right to terminate this PPA by giving written notice to the defaulting Party on a date specified in such notice.

10.4.2If a termination occurs as a result of Host Customer’s default, then Host Customer shall pay Power Provider solely from available funds as remitted by applicable law: (i) an “Early Termination Payment,” equal to the sum of: (i) the costs of dismantling, packing, removing and transporting the System, minus the value received for the System net any marketing and resale costs if Power Provider is able to sell the System to a third party, (ii) the present value of any Environmental Financial Incentives (including any applicable tax credits) that would have accrued to Power Provider if the early termination of this PPA did not occur, and (iii) any and all direct and reasonable fees, costs or charges actually incurred by Power Provider to recapture any applicable tax credit or grant in lieu thereof as a result of the termination of this PPA, and (iv) the present value of Host Customer’s purchase obligations hereunder with respect to the electricity of the System for the remaining portion of the Term, which shall be calculated by applying the present value discount to the product of the following: the number of days remaining in the term of this PPA times the product of (x) the kWh Rates Host Customer would otherwise pay for such electricity (as such kWh Rates would have been escalated over time) times (y) the Average kWh Output. For purposes of this definition, “Average kWh Output” means the daily average number of kWh of electricity actually delivered to Host Customer from the System beginning on the Commercial Operation Date through the date of termination of this PPA. If termination of this PPA occurs prior to the date that is one (1) full year after the Commercial Operation Date, for purposes hereof, it shall be assumed that the “Average kWh Output” of the System during such partial year was the expected daily number of kWh of electricity, calculated by dividing the estimated annual yearly production by 365. The present value discount shall be equal to the prevailing prime rate of interest as published in The Wall Street Journal on the day preceding the date of termination of this PPA. Upon Host Customer’s default, Power Provider is entitled to remove the System without further obligation to Host Customer.

10.4.3If a termination occurs as a result of Power Provider’s default, then Power Provider will promptly dismantle, pack and remove the System from the Property and repair any damage caused by such removal. If Power Provider fails to undertake such action within thirty (30) days written notice of termination from Host Customer, then Host Customer may arrange to have the System removed at Power Provider’s sole cost and expense. Host Customer will have no obligation to store or sell the System and may dispose of it in any manner that Host Customer deems expedient.

Any proceeds received by Host Customer from the disposition of the System may be applied to any damages due and payable to Host Customer for the breach of this PPA by Power Provider.

10.4.4Limitation on Liability. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE DEFAULTING PARTY’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT ACTUAL DAMAGES

SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 372 of 970 16 DAMAGES AT LAW OR IN EQUITY ARE WAIVED UNLESS EXPRESSLY HEREIN PROVIDED. NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,

PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS

INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY

INDEMNITY PROVISION OR OTHERWISE EXCEPT (I) TO THE EXTENT PART OF AN

EXPRESS REMEDY OR MEASURE OF DAMAGES HEREIN OR (II) WITH RESPECT TO A THIRD PARTY INDEMNITY CLAIM.

11.FORCE MAJEURE. Neither Power Provider nor Host Customer shall be considered to be in default in the performance of its obligations under this PPA , to the extent that performance of any such obligation, is prevented or delayed by a force majeure event, including, but not limited to by way of example, acts of God, adverse weather conditions and other acts of nature, subsurface conditions, supply shortages, and/or riot or civil unrest provided that written notice of such event is provided to the other Party, however, a force majeure event shall not be the result of the fault or negligence of the affected Party and such Party would have been unable to overcome such act or event with the exercise of due diligence (including the expenditure of reasonable sums).

12.LIABILITY; INDEMNIFICATION

12.1Mutual Limitation of Liability. Unless explicitly provided in this PPA, neither Party hereto nor any of their respective partners, officers, directors, agents, subcontractors, vendors or employees shall be liable to the other Party hereunder for any consequential or indirect loss or damage arising out of this PPA, whether such loss or damage arise in contract, tort (including negligence), strict liability, warranty, statute or otherwise, including loss of revenues, loss of profit, cost of capital, loss of goodwill, or any other special or incidental damages. Notwithstanding the foregoing, this Section 12.1 shall not limit the damages available to a Party to the extent that it is covered by any insurance coverage with respect to claims of personal injury, wrongful death or property damage.

12.2Mutual Indemnification. To the fullest extent permitted by law, each Party (the “Indemnifying Party”) shall defend, indemnify and hold harmless the other Party and its officers, employees, contractors and agents (“Indemnitees”) from and against any and all claims, demands, suits, liabilities, causes of action, losses, expenses, damages, fines, penalties, court costs and reasonable attorneys’ fees (collectively, “Claims”) that arise or result from, or are occasioned by or in connection with: (a) the Indemnifying Party’s breach of this PPA and/or the Site Lease; (b) any negligent, reckless or intentionally wrongful act or omission to act by the Indemnifying Party; and (c) violations of laws by the Indemnifying Party. Notwithstanding the foregoing, it is the intent of the Parties that where negligence is determined to have been joint or contributory, principles of comparative negligence will be followed, and each Party shall bear the proportionate cost of any loss damage, expense or liability attributable to that Party’s negligence. This indemnification, defense and hold harmless obligation shall not be limited by insurance coverages and shall survive the termination or expiration of this PPA and the Site Lease.

12.3 Individual Indemnification. Power Provider shall further be the Indemnifying Party and Host Customer shall be the Indemnitee with respect to any Claims by third parties that arise as a result of the operation of the System by Power Provider, its employees, contractors and agents. Host Customer shall further be the Indemnifying Party and Power Provider shall be the Indemnitee with respect to any Claims by third parties that arise as a result of the operation of the Site and the Property

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 373 of 970 17 (excluding the System) by Host Customer, its employees, contractors and agents.

12.4 Third Party Claims. In connection with third party claims, an Indemnitee shall promptly give written notice (a “Claim Notice”) to the Indemnifying Party of the commencement, or threat of commencement, of any claim or proceeding if such Indemnitee believes that indemnification with respect thereto may be sought from the Indemnifying Party under this Agreement. The Indemnifying Party shall be entitled to assume the defense of the claim or proceeding described in a Claim Notice, with counsel reasonably satisfactory to the Indemnitee, at the Indemnifying Party’s sole expense and without diminution of the Indemnifying Party’s indemnity obligations under this Agreement, upon the delivery to the Indemnitee of written notice (an “Election Notice”) of the Indemnifying Party’s election assume such defense within ten (10) days of delivery to the Indemnifying Party of the related Claim Notice. After proper delivery of an Election Notice, the Indemnifying Party will not be liable to the Indemnitee under this Agreement for any fees or costs of counsel subsequently incurred by the Indemnitee with respect to the claim or proceeding referred to in the Election Notice, provided that the Indemnitee shall have the right to employ separate counsel with regard to any such claim or proceeding at the Indemnitee’s expense. If the Indemnifying Party assumes the defense of a claim or proceeding under this Section 12.3, the Indemnifying Party agrees not to enter into any waiver, release or settlement of such claim or proceeding without the prior written consent of the Indemnitee, unless such waiver, release or settlement includes an unconditional release of the Indemnitee from all liability arising out of such claim or proceeding.

13.ASSIGNMENT

13.1Assignment; Binding Effect. The Parties shall not, without the prior written consent of the other, which consent will not be unreasonably withheld or delayed, assign, pledge or transfer all or any part of, or any right or obligation under, this PPA, whether voluntarily or by operation of law, and any such assignment or transfer without such consent will be null and void. Notwithstanding the foregoing, Host Customer shall have the right to transfer this PPA in connection with the sale of the Property, provided that Power Provider is provided ten (10) days written notice of such transfer and upon the assumption of any and all rights and obligations in this PPA and the Site Lease by the purchaser of the Property. Host Customer shall be released from its obligations hereunder upon such transfer. For the purposes of this Section 13.1, (a) changes in control of Power Provider shall not be deemed an assignment of this PPA; and (b) Power Provider shall be entitled to assign its rights and interests in this PPA for collateral purposes in connection with any equity or debt financing of Power Provider or Power Provider’s Affiliates, provided, however, that notwithstanding any such assignment, Power Provider will remain responsible for the performance of all obligations under this Agreement.

Each Party agrees to execute such reasonable consents to assignment and other documents, and to provide such information, as is requested by the other Party and reasonably required in connection with any permitted assignment pursuant to this Section.

13.2Cooperation with Financing. Host Customer acknowledges that Power Provider will be financing the acquisition of the System and Host Customer agrees that it shall cooperate with Power Provider and its financing parties in connection with such financing of the System. Such cooperation shall include (a) the furnishing of such Host Customer information reasonably requested by Power Provider’s lender, (b) the giving of such usual and customary estoppel certificates, (c) instruments in

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 374 of 970 18 commercially reasonable form that provide Power Provider’s lender the right to secure and gain access to the System, (d) accommodating reasonable requests by the financing party for clarifications regarding the rights and duties of the Parties under this PPA; provided, however, in no event will Host Customer be obligated to materially change any rights or benefits, or materially increase any burdens, liabilities or obligations of Host Customer under this PPA (except for providing notices and additional cure periods to the financing parties with respect to Events of Defaults with respect to Power Provider as a financing party may reasonably request).

13.3Transfer and Assignment Notice. In the event Power Provider desires to assign or transfer all or any portion of the PPA, Power Provider shall deliver to the Host Customer thirty (30) days advance written notice of its intention ("Transfer Notice"), which written notice shall set forth:

13.3.1 Power Provider's bona fide intention to transfer the PPA, or portion thereof; and

13.3.2 The name and address of the proposed purchaser or transferee ("Proposed Transferee") and its qualifications and experience operating similar projects to the System; and

13.3.3 Reasonably detailed information about the financial and business status and controlling persons of Transferee

14.MISCELLANEOUS.

14.1Dispute Resolution and Arbitration.

14.1.1Notice of Dispute/Negotiated Resolution. In the event that there is any controversy, claim or dispute between the Parties hereto arising out of or related to this PPA, or the breach hereof, that has not been resolved by informal discussions and negotiations, either Party may, by written notice to the other, invoke the formal dispute resolution procedures set forth herein. The written notice invoking these procedures shall set forth in reasonable detail the nature, background and circumstances of the controversy claim or dispute. During the twenty (20) business day periods following said written notice, the Parties shall meet, confer and negotiate in good faith to resolve the dispute. Either Party may, during said twenty (20) business day periods, request the utilization of the services of a professional mediator, and the other Party or parties to this dispute shall cooperate with such request and equally share the reasonable costs of such mediator.

14.1.2Arbitration. Any dispute arising under this PPA, including, without limitation, all disputes relating in any manner to the performance or enforcement of this PPA shall be resolved by binding arbitration in the County of Riverside, California, pursuant to the rules of Judicial Arbitration and Mediation Services (“JAMS”), as amended or as augmented in this Agreement (the “Rules”). Arbitration shall be initiated as provided by the Rules, although the written notice to the other party initiating arbitration shall also include a description of the claim(s) asserted and the facts upon which the claim(s) are based. Arbitration shall be final and binding upon the Parties and shall be the exclusive remedy for all claims subject hereto, including any award of attorney’s fees and costs.

Either party may bring an action in court to compel arbitration under this Agreement and to enforce an arbitration award. All disputes shall be decided by a single arbitrator. The arbitrator shall be selected by mutual agreement of the Parties within thirty (30) days of the effective date of the notice initiating the arbitration. If the Parties cannot agree on an arbitrator, then the complaining party shall notify JAMS and request selection of an arbitrator in accordance with the Rules. The arbitrator shall have

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 375 of 970 19 only such authority to award equitable relief, damages, costs, and fees as a court would have for the particular claim(s) asserted. In no event shall the arbitrator award punitive damages of any kind. The Parties acknowledge that one of the purposes of utilizing arbitration is to avoid lengthy and expensive discovery and allow for prompt resolution of the dispute. The arbitrator shall have the power to limit or deny a request for documents or a deposition if the arbitrator determines that the request exceeds those matters which are directly relevant to the claims in controversy. The document demand and response shall conform to Code of Civil Procedure section 1282.6. The deposition notice shall conform to Code of Civil Procedure section 1283. The Parties may make a motion for protective order or motion to compel before the arbitrator with regard to the discovery, as provided in Code of Civil Procedure. Notwithstanding the election by the Parties to arbitrate their disputes, nothing contained herein shall prevent a party from filing an action in a court of competent jurisdiction to seek any form of equitable remedy or relief.

14.2Confidentiality.

14.2.1Intentionally Left Blank.

14.2.2Power Provider agrees to keep confidential all documents, utility bills, architectural and mechanical plans, and any other information provided by Host Customer during the Term of this PPA and thereafter.

14.2.3 Notwithstanding anything to the contrary set forth herein or in any other agreement to which the Parties are parties or by which they are bound, the obligations of confidentiality contained herein and therein, as they relate to the transaction, shall not apply to the U.S. federal tax structure or U.S. federal tax treatment of the transaction, and each Party (and any employee, representative, or agent of any Party hereto) may disclose to any and all persons, without limitation of any kind, the U.S. federal tax structure and U.S. federal tax treatment of the transaction. The preceding sentence is intended to cause the transaction not to be treated as having been offered under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations promulgated under Section 6011 of the Code and shall be construed in a manner consistent with such purpose. In addition, each Party acknowledges that it has no proprietary or exclusive rights to the tax structure of the transaction or any tax matter or tax idea related to the transaction.

14.3Notices and Changes of Address. All notices to be given by either Party to the other shall be in writing and must be either delivered in person or sent via express overnight delivery service addressed as follows:

If to Power Provider:

Nobell Energy Solutions, LLC
2045 East Tahquitz Canyon Way
Palm Springs, CA 92262
Attn: Manager
(760) 837-7400
If to Host Customer:

City of Indio
Attention: City Manager
100 Civic Center Mall
Indio, California 92201

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or such other addresses as either Party may hereinafter designate by notice to the other. Notices are deemed delivered or given and become effective upon mailing if mailed as aforesaid and upon actual receipt if otherwise delivered. Either Party may provide a copy of a notice by electronic mail, but such delivery shall not be deemed effective unless the original copy is delivered in person or sent via express mail delivery service.

14.4Applicable Law and Jurisdiction. This Agreement is made and shall be interpreted and enforced in accordance with the laws of the State of California. Jurisdiction and venue shall be Riverside County, California.

14.5Attorneys’ Fees. If any action shall be instituted between Host Customer and Power Provider in connection with this PPA, the Party prevailing in such action shall be entitled to recover from the other Party all of its reasonable costs and expenses incurred in connection with such action by arbitration or other legal proceeding, including reasonable attorneys’ fees.

14.6No Amendment. This Agreement may not be amended, modified or terminated except by a writing signed by the Parties hereto.

14.7Energy Audit. Any energy audit that may be authored by Power Provider and/or its consultant(s), including any summaries, excerpts, and abstracts thereof (collectively, the “Energy Audit”), are used to show operational and consumption data and calculations and projections regarding savings, but do not reflect the savings guaranteed by Power Provider; in the event of any conflict or contradiction between the Energy Audit and the provisions of this PPA, the provisions of this PPA shall govern.

14.8Further Documents. The Parties shall timely execute and deliver all documents and perform all further acts that may be reasonably necessary to effectuate the provisions of this PPA.

14.9Severability. If any part of this PPA is deemed to be unlawful, invalid, void or otherwise unenforceable, the rights and obligations of the Parties shall be reduced only to the extent required to remove the invalidity or unenforceability.

14.10Counterparts. This Agreement may be executed in several counterparts, each of which when executed shall be deemed to be an original, but all together shall constitute but one and the same Agreement.

14.11Neutral Interpretation. The Parties acknowledge that this is a negotiated Agreement and, in the event of any dispute over its meaning or application, this PPA shall be interpreted fairly and reasonably and neither more strongly for, nor more strongly against, either Party. Any headings or captions contained in this PPA are for reference purposes only and are in no way to be construed to interpret, define or limit the scope, extent or intent of this PPA or any provision hereof.

14.12No Waiver. The failure of a Party to enforce any term of this PPA or a Party’s waiver of the nonperformance of a term by the other Party shall not be construed as a general waiver or

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14.13Survival. Any provisions necessary to give effect to the intent of the Parties hereunder after the termination of this PPA shall survive the termination of this PPA, including without limitation Section 22.1.

14.14Marketing. Each Party has the right to promote the installation and usage of the installed System through any means, including through press releases, case studies, published material, Internet websites and sales literature, so long as the other Party is provided with the opportunity to review and approve the proposed promotion, which may not unreasonably be withheld, conditioned or delayed.

14.15Forward Contract. The Parties acknowledge and agree that this PPA and the transactions consummated under this PPA constitute a “forward contract” within the meaning of the United States Bankruptcy Code and that each of Provider and Host is a “forward contract merchant” within the meaning of the United States Bankruptcy Code.

14.16Service Contract. The Parties acknowledge and agree that, for accounting or tax purposes, this PPA is not and shall not be construed as a lease and, pursuant to Section 7701(e)(3) of the Internal Revenue Code, this PPA is and shall be deemed to be a service contract with respect to the sale to the Power Provider of electric energy produced at an alternative energy facility.

14.17Complete Agreement. This PPA, together with any documents expressly incorporated herein by reference, shall constitute the entire Agreement between both Parties regarding the subject matter hereof and supersedes all prior agreements, understandings, representations, and statements, whether oral or written. There are no agreements, understandings, or covenants between the Parties of any kind, expressed or implied, oral or otherwise pertaining to the rights and obligations set forth herein that have not been set forth in this PPA.

14.18Conflicts. In the event of any conflict between this PPA and the Site Lease, the terms of this PPA will prevail.
[Signatures follow on the next page]

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Power Provider:

Nobell Energy Solutions, LLC,
a California limited liability company
By: _______________________________
Frederick W. Noble, Jr., Manager
Host Customer:

City of Indio
By: _____________________________
Bryan Montgomery
Its: City Manager

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EXHIBIT A

SITE LEASE
[Follows on the next page]

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EXHIBIT B

SYSTEM DESCRIPTION
(Conceptual Solar Panel Layout Presented Below. Solar Panels Intended on 12 of 15 Architect- Planned Carports. As-built design to be provided at Service Commencement Date)

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SOLAR ENERGY PRICE AND MONTHLY PAYMENT
Solar Energy Price shall mean $0.1975 / kWh for the period commencing on the Service Commencement Date and expiring twelve (12) months thereafter. Commencing on the second anniversary of the Service Commencement Date, the Solar Energy Price shall increase three percent (3.0%) annually over the prior year’s Solar Energy Price. The Monthly Payment will be determined by multiplying the amount of electricity delivered by Power Provider from the System in kWh for a given calendar month by then applicable Solar Energy Price.

During any “Operating Year” (i.e., the period of time commencing on the Service Commencement Date or any anniversary thereof and continuing for twelve (12) consecutive months thereafter), Power Provider may, at its election, invoice Host Customer under a “level pay” plan for the System Output Component of the Monthly Payment (“Level Pay Plan”). Under such a plan, Power Provider will make a good faith estimate of the System Output for any given Operating Year (“Power Provider’s Estimated System Output”), multiply such System Output estimate by the Solar Energy Price in effect during such Operating Year and divide that result by twelve. The resulting amount shall be deemed the levelized amount for each monthly invoice delivered during the applicable Operating Year. At the conclusion of an Operating Year in which a Level Pay Plan was created, Power Provider will provide a settlement statement that provides the actual System Output for the applicable Operating Year, Power Provider’s Estimated System Output, the amounts invoiced and paid during the Operating Year, and the credit or additional charge to be applied to the next monthly statement for the System Output Component of the Monthly Payment.

Exhibit “C”, Page 1 of 1

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PURCHASE OPTION
At any time commencing after the ten (10) year anniversary of the Effective Date, Host Customer shall have the option to purchase the System from Power Provider after which time ownership of the System shall vest in Host Customer in perpetuity, or until Host Customer should elect to sell the System. Thereafter, the System shall become a fixture of the Property and Host Customer shall assume all operational, maintenance and other ownership responsibilities for the System, and shall derive all benefits attendant with ownership of the same, including, but not limited to, the rights to all energy produced by and stored within the System for Host Customer to use in any way it sees fit, and rights to any and all Environmental Financial Attributes, to the extent such benefits may still be available to Host Customer under all Applicable Laws.

Host Customer’s purchase of the System shall be for an amount equal to the greater of ($1,150,000) or the fair market value of the System reasonably determined by Power Provider; and Host Customer shall pay Power Provider in cash equivalent for such purchase. In order to exercise its option to purchase the System, Host Customer must provide Power Provider written notice of its intention to purchase, and the Parties shall then take all appropriate actions to effectuate such transfer of title as expediently as practicable, and shall also cooperate with one another to accomplish the same. The System shall be free from all liens or other monetary encumbrances upon transfer of title of the System to Host Customer and shall be transferred on an as-is, where- is basis. Once Host Customer acquires title to the System, this PPA shall automatically terminate and be of no further force or effect.

If the Power Provider’s fair market value determination is disputed by Host Customer, within thirty (30) days of receipt of Host Customer’s notice of dispute of Power Provider’s fair market value determination, the Parties shall each retain the services of a professional appraiser to value the System. Each Party shall bear the costs for their respective appraiser. The two appraisers selected by the Parties shall mutually select a third appraiser, whose services shall be equally paid for by the Parties. Within 120 days of Host Customer’s dispute notice, the three appraisers shall evaluate and present their determinations of the price of the System that would be negotiated in an arm’s-length, free market transaction, for cash, between an informed, willing seller and an informed, willing buyer, neither of whom is under compulsion to complete the transaction. The appraiser’s valuation that diverges the greatest from each of the other two appraisers’ valuations shall be disregarded, and the arithmetic mean of the remaining two appraisers’ valuations shall be deemed to be the Fair Market Value of the System(s).

Exhibit “D”, Page 1 of 1

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SITE LEASE AGREEMENT
This Site Lease Agreement (“Agreement”) made and entered into as of ___________ __, 2022 (the “Effective Date”), between Nobell Energy Solutions, LLC, a California limited liability company (“Tenant”) and the City of Indio, a municipal corporation, (“Landlord”).

WHEREAS, Concurrently herewith Landlord and Tenant have entered into that certain Solar Power Purchase Agreement (“PPA”) wherein Tenant has agreed to develop, finance, install, own, operate, maintain and repair a solar energy facility, as more particularly described in Exhibit “B” of the PPA (the “System”), on the Site (as defined in Section 1 below) and Landlord has agreed to lease the Site, and to provide certain access rights, to Tenant for such purpose.

Landlord has also agreed to purchase from Tenant energy generated by the System in accordance with the term of the PPA.

WHEREAS, Landlord currently owns the real property more particularly described on Exhibit “A” attached hereto (“Property”) and all structures (“Buildings”) and other improvements (“Improvements”) located thereon other than the System.

WHEREAS, in order to carry out the terms of the PPA, and to enable Landlord to enjoy its rights and perform its obligations under the PPA, Landlord agrees to lease the Site (as defined below) to Tenant on the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Tenant and Landlord hereby agree as follows:

1. LEASE
Landlord does hereby grant, demise and sublease to Tenant, and Tenant hereby subleases from Landlord, in accordance with the terms and conditions set forth herein, a portion of the Property consisting of approximately 25,700 square feet of parking lot space as shown on the site plan attached hereto as Exhibit “B” (the “Site”) where the System will be installed. At the completion of the installation of the System and supporting infrastructure, Tenant shall provide Landlord with “as built” plans for the System. Landlord hereby also grants to Tenant a non- exclusive easement and right of way across or through the Property to the Site as may be reasonably required for (i) the delivery, installation, operation, maintenance and repair of the System; (ii) utility lines, pipes and conduit for the transmission of electricity or otherwise serving the System; and (iii) as may be otherwise reasonably required by Tenant in connection with this Agreement and the System. All plans for any modifications to the Site will be subject to the prior review and approval of Landlord, its architect or other professional advisors, which approval will not be unreasonably withheld, conditioned or delayed.

2. RENT
Tenant hereby covenants to pay Landlord, on or before the Service Commencement Date (as defined in the PPA), as and for rent of the Site for the Term (as defined in paragraph 8(a) below), the sum of One Dollar ($1.00) per year.

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3. SYSTEM CONSTRUCTION
(a) Installation. Subject to the approval rights set forth below, Landlord hereby consents to the construction and installation of the System, including, without limitation, solar panels, mounting substrates or supports, wiring and connections, power inverters, service equipment, metering equipment and utility interconnections in accordance with the PPA. Tenant will be solely responsible for obtaining all necessary permits and approvals for such installation and for compliance with all requirements of federal, state or local law. All plans for any modifications to the Site will be subject to the prior review and approval of Landlord, its architect or other professional advisors, which approval will not be unreasonably withheld. (b) System Support. Landlord has provided all plans and other information required by Tenant to determine the rooftops Buildings on which the System will be installed have sufficient structural strength and integrity to support the System in accordance with all applicable building codes without any further modification or improvements to the Site by Landlord (unless otherwise provided for in Exhibit “B”). In the event that any modifications or improvements are required in connection with the installation of the System, it will be at the sole cost and expense of Tenant.

4. SYSTEM INSTALLATION, OPERATION AND OWNERSHIP
(a) Tenant Rights. Tenant shall have the right from time to time during the term hereof:
(i) to construct, install and operate the System on the Site; (ii) to maintain, clean, repair, replace and dispose of part or all of the System; (iii) to add or remove equipment as needed provided that there is no material change in the character or appearance of the Site;
(iv) to access the Site;
(v) to perform (or cause to be performed) all tasks necessary or appropriate, as reasonably determined by Tenant, to carry out the activities set forth in this Section 4 and in the PPA; and
(vi) to install higher efficiency equipment or additional equipment as permitted by the PPA.
(b) Transfer of Property. Landlord acknowledges and agrees that Tenant or Tenant’s affiliate is the exclusive owner and operator of the System, and that the System may not be sold, leased, assigned, mortgaged, pledged or otherwise alienated or encumbered (collectively, a “Transfer”) with the fee interest or leasehold rights to the Property. Landlord shall not Transfer the Property unless Landlord shall have given Tenant at least thirty (30) days’ prior written

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notice thereof, which notice shall identify the Transferee, the Property to be so Transferred and the proposed date of Transfer. Landlord agrees that this Agreement and the rights granted in Section 1 of this Agreement shall run with the Property and survive any Transfer of any of the Property. Landlord shall cause any Transferee to acknowledge and consent to be obligated under the terms herein, and acknowledge Tenant’s rights in the Site as set forth herein including, without limitation, an acknowledgement by such Transferee that it has no interest in the System and shall not gain any interest in the System by virtue of the Landlord’s Transfer.

5. ACCESS TO SITE
Tenant will give Landlord reasonable written or telephonic notice, but no later than two (2) business days, before any entry onto the Site by Tenant’s employees, agents or contractors.

Landlord will provide Tenant access to the System and the Site for the purposes set forth in Section 4 hereof. Notwithstanding anything to the contrary in this Agreement, Tenant shall be permitted to access the Site twenty-four (24) hours a day, seven (7) days a week for emergency purposes, as reasonably determined by Tenant. Within twenty-four (24) hours of such emergency access, Tenant shall provide Landlord with a written explanation of the nature of the emergency. Non-emergency access shall be limited to normal business hours (i.e., Monday through Friday, excluding holidays, between the hours of 7:00 am. and 7:00 p.m.).

6. REPRESENTATIONS AND WARRANTIES, COVENANTS OF LANDLORD (a) Authorization and Validity. The execution and delivery by Landlord of, and the performance of its obligations under, this Agreement have been duly authorized by all necessary action, do not and will not require any further consent or approval of any other person, and do not contravene any provision of, or constitute a default under, any indenture, mortgage or other material agreement binding on Landlord or any valid order of any court, or regulatory agency or other body having authority to which Landlord is subject. This Agreement constitutes a legal and valid obligation of Landlord, enforceable against Landlord in accordance with its terms. (b) Landlord’s Interest in Property. Landlord represents, warrants and covenants that Landlord has lawful authorization to use and occupy the Property and Buildings and Improvements thereon; and that Tenant shall have quiet and peaceful possession of the Site, free from any claim of any entity or person of superior title thereto without hindrance to or interference with or molestation of Tenant’s quiet enjoyment thereof, throughout the term of this Agreement.
(c) No Interference with and Protection of System. Landlord represents and warrants to Tenant that there are no circumstances known to Landlord and commitments to third parties that may damage, impair or otherwise adversely affect the System or its construction, installation or function (including activities that may adversely affect the System’s exposure to sunlight).

Landlord will not initiate, conduct or permit activities on, in or about the Site or the Property that have a reasonable likelihood of causing damage, impairment or otherwise adversely affecting the System (including activities such as, but not limited to, the growth of trees or other vegetation, that may adversely affect the System’s exposure to sunlight). Landlord shall take all reasonable

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steps to limit access to the Site to Tenant and Tenant’s employees, invitees, agents and representatives. Landlord shall have no obligation to provide security for the System. (d) Mortgage Subordination. Landlord covenants that it will obtain a subordination, non-disturbance and attornment agreement (“SNDA”) from any third party who now has or may in the future obtain an interest in the Property, including, without limitation, any lenders to Landlord or any lenders to the fee title owner, as applicable. Such SNDA shall (i) acknowledge and consent to the Tenant’s rights in the Site and the Property, (ii) acknowledge that such third party has no interest in the System and shall not gain any interest in the System by virtue of the parties’ performance or breach of this Agreement, (iii) subordinates any lien such third party may have in and to the Property to this Agreement, and (iv) acknowledge that any such third party shall not disturb Tenant’s use and enjoyment of the Site in accordance with the terms of this Agreement should such third party (or such third party’s successors-in-interest) acquire title to the Property through foreclosure, a deed in lieu, or otherwise. (e) Utilities. Landlord shall provide Tenant with Station Power during the term of this Agreement provided the cost to Landlord for the same does not exceed ten dollars ($10.00) in any calendar month. For purposes of this Agreement, “Station Power” shall mean electric energy consumed in the start-up and operation of the System, which is distinct from the alternating current output of the System.
(f) Insolation. Landlord acknowledges and agrees that access to sunlight (“insolation”) is essential to the value to Tenant of the rights granted hereunder and is a material inducement to Tenant in entering into this Agreement. Accordingly, Landlord shall not permit any interference with insolation on and at the Site. Without limiting the foregoing, Landlord shall not construct or permit to be constructed any structure on the Property that could adversely affect insolation levels, or permit the growth of foliage on the Property that could adversely affect insolation levels. If Landlord becomes aware of any potential development or other activity on adjacent or nearby properties that could diminish the insolation to the Site, Landlord shall advise Tenant of such information and reasonably cooperate with Tenant at no cost to Landlord in measures to preserve existing levels of insolation at the Site. Notwithstanding any other provision of this Agreement, the Parties agree that (i) Tenant would be irreparably harmed by a breach of the provisions of this Section 6(f), (ii) an award of damages would be inadequate to remedy such a breach, and (iii) Tenant shall be entitled to equitable relief, including specific performance, to compel compliance with the provisions of this Section 6(f). (g) Hazardous Materials. Landlord represents and warrants that to the best of Landlord’s knowledge with no obligation to investigate the same, there are no Hazardous Materials (as defined herein) on the Property that would adversely affect the construction, installation or operation of the System. If Landlord becomes aware of the presence of any Hazardous Materials that would adversely affect the construction, installation or operation of the System, Landlord shall promptly notify Tenant of the type and location of such Hazardous Materials in writing. Landlord agrees to assume full responsibility for (and protect, indemnify and defend Tenant against) any liability or cleanup obligations for any contamination or pollution or breach of Environmental Laws related to the Property, unless, but only to the extent, attributable to the actions of Tenant. For purposes of this Agreement, “Hazardous Materials”

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means and includes each substance designated as a hazardous waste, hazardous substance, hazardous material, pollutant, contaminant or toxic substance or as designated with words of similar meaning and regulatory effect under any Environmental Law, petroleum and petroleum products or derivatives, and any other substance for which liability or standards of conduct may be imposed under Environmental Law. For purposes of this Agreement, “Environmental Law” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 1471 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 through 2629; and all laws of any governmental authority having jurisdiction over the Property or the Site addressing pollution or protection of the environment and all amendments to such laws and all regulations implementing any of the foregoing.
(h) Liens. Landlord represents and warrants to Tenant that there are no liens, security interests or other encumbrances on the Property that to its actual knowledge would affect the System. Landlord covenants to Tenant that it will not directly or indirectly cause, create, incur, assume or suffer to exist any mortgage, pledge, lien (including mechanics', laborers' or materialmen's liens), charge, security interest, encumbrance or claim of any nature (“Liens”) on or with respect to all or a part of the System or any of Tenant’s interest therein. If Landlord breaches its obligations under this Section 6(h), it shall immediately notify Tenant in writing, shall promptly cause such Lien to be discharged and released of record without cost to Tenant, and shall defend and indemnify Tenant against all costs and expenses (including reasonable attorneys' fees and court costs at trial and on appeal) incurred in discharging and releasing such Lien. If Landlord shall fail to remove and discharge any Lien as required under this Section 6(h) within ten (10) days following written notice by Tenant, then, in addition to any other right or remedy of Tenant, Tenant may, but shall not be obligated to, discharge the same, either by paying the amount claimed to be due, or by procuring the discharge of such Lien by depositing in a court a bond or the amount claimed or otherwise giving security for such claim, or by procuring such discharge in such manner as is or may be prescribed by law. Landlord shall, within 10 days after demand therefor by Tenant, pay to Tenant an amount equal to all reasonable costs and expenses incurred by Tenant in connection with the exercise by Tenant of the foregoing right to discharge any Lien, together with interest thereon from the date of each such expenditure at the maximum rate permitted by law.
(i) Reports, Plans and Studies. With respect to the reports, plans and studies Landlord has provided Tenant relating to the Property, or the Buildings or Improvements thereon, Landlord represents and warrants to Tenant that it is actually unaware, without duty of inquiry, of (a) any material incorrect or omitted fact or (b) a false or misleading opinion or conclusion contained therein.
(j) Consent and Non-Disturbance Letter. Landlord covenants that it will deliver to Tenant’s lender a landlord’s agreement substantially in the form set forth on Exhibit “C”.

7. TENANT’S LENDER SECURITY INTEREST RIGHTS

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(a) Authorization and Validity. The execution and delivery by Tenant of, and the performance of its obligations under, this Agreement have been duly authorized by all necessary action, do not and will not require any further consent or approval of any other person, and do not contravene any provision of, or constitute a default under, any indenture, mortgage or other material agreement binding on Tenant or any valid order of any court, or regulatory agency or other body having authority to which Tenant is subject. This Agreement constitutes a legal and valid obligation of Tenant, enforceable against Tenant in accordance with its terms. (b) Due Diligence; AS-IS. Tenant acknowledges that it has conducted its own investigation of the suitability of the Site for the System and is not relying on any representation or warranty of Landlord except as specifically set forth in this Agreement in making its decision to enter into this Agreement.
(c) Hazardous Materials. Tenant will not use or bring any Hazardous Materials to the Property or the Site in connection with its installation, operation or maintenance of the System unless such Hazardous Materials are routinely and customarily used in the construction, operation, maintenance or repairs of photovoltaic solar power generation systems. Tenant agrees to assume full responsibility for (and protect, indemnify and defend Landlord against) any liability or clean-up obligations for any contamination or pollution or breach of Environmental Laws directly caused by Hazardous Materials brought onto the Property by Tenant or its employees, contractors, or representatives.
(d) Compliance with Law. Tenant will install, operate and maintain the System and undertake all of its obligation under this Agreement in compliance with the requirements of all applicable federal, state and local laws, rules, regulations or ordinances. (e) Liens. Tenant will not directly or indirectly cause, create, incur, assume or suffer to exist any Liens on or with respect to all or a part of the Property or Site or any of Landlord’s interest therein. If Tenant breaches its obligations under this Section 7(e), it shall immediately notify Landlord in writing, shall promptly cause such Lien to be discharged and released of record without cost to Landlord, and shall defend and indemnify Landlord against all costs and expenses (including reasonable attorneys' fees and court costs at trial and on appeal) incurred in discharging and releasing such Lien. If Tenant shall fail to remove and discharge any Lien as required under this Section 7(e) within ten (10) days following written notice by Landlord, then, in addition to any other right or remedy of Landlord, Landlord may, but shall not be obligated to, discharge the same, either by paying the amount claimed to be due, or by procuring the discharge of such Lien by depositing in a court a bond or the amount claimed or otherwise giving security for such claim, or by procuring such discharge in such manner as is or may be prescribed by law.

Tenant shall, within 10 days after demand therefor by Landlord, pay to Landlord an amount equal to all reasonable costs and expenses incurred by Landlord in connection with the exercise by Landlord of the foregoing right to discharge any Lien, together with interest thereon from the date of each such expenditure at the maximum rate permitted by law.

8. TERM; EVENT OF DEFAULT

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(a) Term. The term of this Agreement (“Term”) shall commence on the Effective Date, and terminate on the date that is ninety (90) days after the termination of the PPA to allow for the orderly removal of the System.
(b) Removal. Upon the expiration of the Term or the termination of this Agreement for any reason, Tenant will promptly dismantle, pack and remove the System from the Site within the period specified above and repair any damage caused by such removal. If Tenant fails to undertake such action within thirty (30) days written notice from Landlord, then Landlord may arrange to have the System removed at Tenant’s sole cost and expense. (c) Event of Default. If either party hereto fails to cure a material breach of this Agreement within thirty (30) days after written notice from the non-defaulting Party, such uncured breach shall be an event of default (“Event of Default”) under this Agreement; provided, however, that the cure period shall be extended by the number of days during which the defaulting Party is prevented from taking curative action solely by force majeure event, including but not limited to by way of example, acts of God, adverse weather conditions, and other acts of nature, subsurface conditions, supply shortages, and/or riot or civil unrest (“Force Majeure”) if the defaulting Party had begun curative action and was proceeding diligently, using commercially reasonable efforts, to complete such curative action. Upon the occurrence of an Event of Default, in addition to any other rights and remedies available to the non-defaulting Party at law or in equity, such non-defaulting Party shall have the option to terminate this Agreement upon written notice to the defaulting Party.

9. DISPUTE RESOLUTION AND ARBITRATION
In the event that there is any controversy, claim or dispute between the parties hereto arising out of or related to this Agreement, then either Tenant or Landlord may invoke the dispute resolution procedure set forth in Section 14.1 of the PPA.

10. INSURANCE
Each of Landlord and Tenant shall obtain and maintain the insurance coverages required under the PPA.

11. TAXES
Landlord shall pay all (a) real and personal property taxes relating to the Property on which the Site is situated, (b) taxes computed upon the basis of the net income or payments derived from the Property by Landlord or the owner of any interest therein, and (c) taxes, fees, service payments, excises, assessments, bonds, levies, fees or charges of any kind which are adopted by any public authority after the Effective Date. The Tenant agrees to pay all ad valorem taxes and related property taxes, if any, relating to the System as provided in the PPA.

12. LIABILITY AND INDEMNITY.

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The Liability and indemnity provisions of Section 12 of the PPA shall apply to this Agreement.

13. ASSIGNMENT.

This Site Lease may only be assigned in connection with a permitted transfer or assignment of the PPA.

14. MISCELLANEOUS
(a) Amendment. This Agreement may be amended only in writing signed by Tenant and Landlord or their respective successors in interest. (b) Notices. All notices will be given in the manner specified in the PPA. (c) Waiver. The waiver by either party of any breach of any term, condition, or provision herein contained shall not be deemed to be a waiver of such term, condition, or provision, or any subsequent breach of the same, or any other term, condition, or provision contained herein. Any such waiver must be in a writing executed by the party making such waiver.
(d) Remedies Cumulative. No remedy herein conferred upon or reserved to Tenant or Landlord shall exclude any other remedy herein or by law provided, but each shall be cumulative and in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute.
(e) Headings. The headings in this Agreement are solely for convenience and ease of reference and shall have no effect in interpreting the meaning of any provision of this Agreement.
(f) Choice of Law. This Agreement shall be construed in accordance with the laws of the State of California (without regard to its conflict of laws principles). Venue shall be Riverside County.
(g) Binding Effect. This Agreement and its rights, privileges, duties and obligations shall inure to the benefit of and be binding upon each of the parties hereto, together with their respective successors and permitted assigns.
(h) Counterparts. This Agreement may be executed in counterparts, which shall together constitute one and the same agreement. Facsimile signatures shall have the same effect as original signatures and each party consents to the admission in evidence of a facsimile or photocopy of this Agreement in any court or arbitration proceedings between the parties. (i) Entire Agreement. This Agreement (including the exhibits, any written schedules, supplements or amendments) along with the PPA represents the full and complete agreement

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between the parties hereto with respect to the subject matter contained herein and supersedes all prior written or oral agreements between said parties with respect to said subject matter. (j) Further Assurances. Upon the receipt of a written request from the other party, each party shall execute such additional documents (e.g., utility interconnection agreement), instruments and assurances and take such additional actions as are reasonably necessary and desirable to carry out the terms and intent hereof. Neither party shall unreasonably withhold, condition or delay its compliance with any reasonable request made pursuant to this section. (k) Estoppel Certificate. From time to time, upon written request by Tenant or Landlord (or their respective lenders), the other party shall provide within ten (10) days thereafter an estoppel certificate attesting, to the knowledge of Landlord or Tenant of the other party’s compliance with the terms of this Agreement or detailing any known issues of noncompliance.
(l) Attorneys’ Fees. If any action shall be instituted between Tenant and Landlord in connection with this Agreement, the party prevailing in such action shall be entitled to recover from the other party all of its reasonable costs and expenses incurred in connection with such action by arbitration or other legal proceeding, including reasonable attorneys’ fees.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

Tenant:

Nobell Energy Solutions, LLC,
a California limited liability company
By: _______________________________
Frederick W. Noble, Jr., Manager
Landlord:

City of Indio
a municipal corporation
By: Bryan Montgomery
Its: City Manager

Landlord:

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EXHIBIT “A”

DESCRIPTION OF PROPERTY
The real property located in Riverside County, State of California, commonly known as the Indio Public Safety Campus identified by the municipal address of 46835, 46951, and 46867 Bristol Street, Indio, California, 92201.

Exhibit A, Page 1 of 1

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EXHIBIT “B”

SITE PLAN
Exhibit B, Page 1 of 1

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EXHIBIT “C”

LANDLORD AGREEMENT
Follows on the next page

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LANDLORD’S AGREEMENT
Borrower Lender Loan Number
[NOBELL PROJECT CO] Power Partners, LLC Community Valley Bank c/o Nobell Energy Solutions, LLC 1443 Main St.
2045 East Tahquitz Canyon Way El Centro CA 92243
Palm Springs, CA 92262
THIS LANDLORD’S AGREEMENT is entered into among [NOBELL PROJECT CO] Power Partners, LLC (“Borrower”), whose address is 2045 E. Tahquitz Canyon Way, Palm Springs, CA 92262; Community Valley Bank (“Lender”), whose address is 1443 Main St, El Centro CA 92243; and the City of Indio, a municipal corporation, whose address is 100 Civic Center Mall, Indio, CA 92201 (“Landlord”).

Landlord and Borrower (as successor-in-interest to Nobell Energy Solutions, LLC, a California limited liability company) are parties to that certain Solar Power Purchase Agreement dated _________ __, 2022 (“PPA”), in part to allow Borrower (as the “Power Provider under the PPA) to construct and operate a solar system (“Solar System”) as also described below) upon the Premises, and to permit Landlord to purchase energy produced by the Solar System from Borrower.

Under the PPA and Site Lease, Landlord has granted certain easements to the Borrower for purposes of effectuating the intent of the parties under the PPA. Borrower and Lender have entered into, or are about to enter into, an agreement whereby Lender has acquired or will acquire a security interest or other interest in the Collateral (described below). Some or all of the Collateral may be affixed or otherwise become located on the Premises. To induce Lender to extend the Loan to Borrower against such security interest in the Collateral and for other valuable consideration, Landlord hereby agrees with Lender and Borrower as follows.

COLLATERAL DESCRIPTION. The word “Collateral” means certain of Borrower’s personal property, equipment and fixtures (excluding fixtures not owned by Borrower) in which Lender has acquired or will acquire a security interest, including without limitation the following specific property:

Solar Panel and all related equipment with corresponding serial numbers and bar codes located at 46835, 46951, and 46867 Bristol Street, Indio, California, 92201 (“Solar System”) as more fully described in Exhibit “A” attached hereto and made a part hereof; whether any of the foregoing is owned now or acquired later; all accessions, additions, replacements, and substitutions relating to any of the foregoing; and all records of any kind relating to any of the foregoing.

DISCLAIMER OF INTEREST. Landlord hereby consents to Lender’s security interest (or other interest) in the Collateral and, with respect to the Lender, disclaims all interests, liens and claims which Landlord now has or may hereafter acquire in the Collateral but only through as the date Landlord exercises its option to purchase the Solar System. If Landlord does not exercise its option to purchase the Solar System, Landlord shall continue to disclaim all interests, liens and claims which Landlord has or may thereafter acquire in the Collateral. Landlord agrees that, so long as Landlord has not exercised the Option under the PPA, any lien or claim it may now have or may hereafter have in the Collateral will be subject to Lender’s security interest (or other present or future interest) in the Collateral and will be subject to the rights granted by Landlord to Lender in this Agreement. Notwithstanding the foregoing, Landlord hereby agrees that any lien or claim it may hereafter have in the Collateral will be subject to Lender’s security interest (or other present or future interest) in the Collateral and will be subject to the rights granted by Landlord to Lender in this Agreement until all amounts due and owing under the Loan and Related Documents are paid in full; provided, however, that Landlord’s rights under the PPA, including Landlord’s rights to exercise the Option under the terms set forth in the PPA, shall not in any way be diminished, reduced or negatively affected in any way whatsoever.

ENTRY ONTO PREMISES. Landlord and Borrower grant to Lender the right to enter upon the Premises for the purpose of removing the Collateral from the Premises or conducting sales of the Collateral on the Premises, in accordance with the Loan and Related Documents; provided, however, that Lender shall give both the Landlord and the borrower at least five (5) business days’ prior written notice thereof. If Lender enters onto the Premises and removes the Collateral, Lender agrees with Landlord not to remove any Collateral in such a way that the Premises are damaged, without either repairing any such damage or reimbursing Landlord for the cost of repair.

LEASE DEFAULTS. Both Borrower and Landlord agree and represent to Lender that, to the best of their knowledge, there is no breach or offset existing under the PPA. Landlord agrees not to terminate the PPA, despite any default by Borrower, without giving Lender written notice of the default and an opportunity to cure the default within a period of sixty (60) days from receipt of the notice. If the default is one that cannot reasonably be cured by Lender (such as insolvency, bankruptcy, or other judicial proceedings against Borrower), then Landlord will not terminate the Easement & PPA so long as Landlord receives all sums due under the PPA for the period during which Lender is in

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possession of the Premises in connection with its removal of Collateral from the Premises or conducting sales of the Collateral on the Premises.

MISCELLANEOUS PROVISIONS. This Agreement shall extend to and bind respective heirs, personal representatives, successors and assigns of the parties to this Agreement. The covenants of Borrower and Landlord respecting subordination of the claim or claims of Landlord in favor of Lender shall extend to, include, and be enforceable by any transferee or endorsee to whom Lender may transfer any claim or claims to which this Agreement shall apply. Lender need not accept this Agreement in writing or otherwise to make it effective. This Agreement shall be governed by and construed in accordance with the laws of the State of California. If Landlord is other than an individual, any agent or other person executing this Agreement on behalf of Landlord represents and warrants to Lender that he or she has full power and authority to execute this Agreement on Landlord’s behalf. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is in writing and signed by Lender.

Without notice to Landlord and without affecting the validity of this Landlord’s Agreement, Lender may do or not do anything it deems appropriate or necessary with respect to the Loan, any obligors on the Loan, or any Collateral for the Loan; including without limitation extending, renewing, rearranging, or accelerating any of the Loan indebtedness.

AMENDMENTS. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.

NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Landlord, shall constitute a waiver of any of Lender’s rights or of any Landlord’s obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of the Lender.

SEVERABILITY. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

TERMINATION. This Agreement shall automatically terminate without further documentation required when all sums due under the Loan and Related Documents have been paid in full.

ADDITIONAL PROVISION. Lender and Landlord agree that if Borrower defaults under the Note or other loan documents, Lender will provide written notice specifying the event of default to Landlord and allow Landlord up to 30 days after Landlord’s receipt of the notice to cure such default, in which case the default shall be waived by Lender.

However, Landlord shall have no obligation to cure such default.

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

Agreement. The word “Agreement” means this Landlord’s Agreement, as this Landlord’s Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Landlord’s Agreement from time to time.

Borrower. The “Borrower” means [NOBELL PROJECT COMPANY], a California limited liability company and includes all co-signers and co-makers signing any promissory note or other instrument evidencing the Loan and all their successors and assigns.

Collateral. The word “Collateral” means all of Borrower’s right, title and interest to all the Collateral as described in the Collateral Description section of this Agreement.

Landlord. The word “Landlord” means City of Indio and is used for convenience purposes only. Landlord’s interest in the Premises may be that of a fee owner, lessor, sublessor or lienholder, or that of any other holder of an interest in the Premises which may be, or may become, prior to the interest of Lender.

Lender. The word “Lender” means Community Valley Bank, its successors and assigns.

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Loan. The word “Loan” means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced.

Premises. The word “Premises” means the real property located in Riverside County, State of California, commonly known as the Indio Public Safety Campus identified by the municipal address of 46835, 46951, and 46867 Bristol Street, Indio, California, 92201.

Related Documents. The words “Related Documents” means all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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BORROWER, AND LANDLORD ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS LANDLORD’S AGREEMENT, AND BORROWER AND LANDLORD AGREE TO ITS TERMS. THIS AGREEMENT IS DATED __________________ __, 2022.

BORROWER:
[NOBELL PROJECT COMPANY], LLC
BY: NOBELL Energy Solutions, LLC, a California limited company Manager of [NOBELL PROJECT COMPANY] Power Partners, LLC By: _____________________________________
Frederick W. Noble, Jr., Managing Member
LANDLORD: LENDER:

City of Indio, a municipal corporation
By: __________________________

Name: Bryan Montgomery
Title: City Manager
Community Valley Bank
By: __________________________
Name: ________________________
Title: _________________________

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EXHIBIT A TO LANDLORD AGREEMENT
Solar Panel Serial Numbers
(______________ Project)
[to be provided]

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Financial Analysis
of
Carport Shade
at
Indio Safety Campus
Purchase or Solar PPA?

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A 517 kW carport-mounted solar system at the Indio Safety Campus, financed by a PPA with Nobell Energy Solutions, provides numerous and substantial benefits:
• ZERO capital cost for free carport shade and renewable energy • LEED building credits
• 20-year cost avoidance of nearly $1 Million compared to a bond-funded purchase of carport shade structures without solar
• Nearly 800,000 kwh of clean energy from the sun annually, avoiding the annual emission of 567 metric tons of CO2, equivalent to emissions from:

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Conceptual Image - Overview
• 12 of 15 carports
covered with solar
panels
• City cost estimate
of $1.3M to build
all 15 carports
• Simple math –>
12/15*$1.3 =
$1.04M of avoided
carport cost with
solar PPA

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Key Item Campus
Indio cost of capital / interest rate / discount rate 3.5% Cost of 12 carports without solar $1,040,000
Cost of solar system incl. shade structure on 12
carports $2,400,000
Solar system size (kw) 517
Annual solar system output (kwh) 796,826
Solar system % coverage of Indio's consumption 85%*
IID electricity rate at project completion $0.1323
Nobell PPA rate $0.1975
IID and PPA annual rate increase 3%
Solar panel degradation / yr 0.50%
*This is our most variable assumption as we did not receive anticipated consumption data for the campus. With lower coverage, the argument for a PPA becomes stronger.

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Assumed 13 cent IID rate after
project completion is derived from:
$0.1141*1.16 = $.1323

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Takeaway: A solar PPA with Nobell provides nearly $1M of 20- year cost avoidance to Indio compared with bond-funded direct purchase of carport shade without solar at the safety campus.

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Nobell is a 10 year-old company based in Palm Springs that develops commercial renewable energy systems at host customer sites in California and Arizona. We spun out of 30 year-old Southern California wind energy developer, Wintec Energy.

We specialize in the PPA transaction whereby host customers, for zero upfront cost, can buy solar energy at cheaper rates than grid energy, often receiving parking lot shade as a free side benefit.

Our tax equity investor and lender relationships allow host customers to pay only for the solar power generated without any of the upfront cost of owning a system.

Customers include the cities of Indio and Rancho Mirage, CA, the Coachella Valley Water District, and numerous churches, schools, non-profits, retirement communities, and residential condominiums.

Please see a sample of our recently installed systems at http://www.nobellenergy.com/videos.html

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For further information relating to the information contained in this presentation, please contact:

Mark Watkins, CEO
Nobell Energy Solutions, LLC
2045 East Tahquitz Canyon Way
Palm Springs, CA 92262
(650) 743-5412 (cell)
[email protected]
Fred Bell, COO
Nobell Energy Solutions, LLC
2045 East Tahquitz Canyon Way
Palm Springs, CA 92262
(760) 578-1600 (cell)
[email protected]

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A RESOLUTION OF THE CITY OF INDIO APPROVING A POWER

PURCHASE AGREEMENT, SITE LEASE AGREEMENT AND

LANDLORD AGREEMENT WITH NOBELL ENERGY SOLUTIONS
PURSUANT TO GOVERNMENT CODE SECTION 4217.10 ET. SEQ

AND MAKING CERTAIN FINDINGS THEREIN
WHEREAS, the City Council of the City of Indio desires to improve the energy efficiency of the Public Safety Campus parking lot; and WHEREAS, the City Council of the City of Indio (the "City") is authorized pursuant to Sections 4217.10 through 4217.18 of the California Government Code (the "Act") to enter into energy conservation contracts pursuant to which the City may acquire and finance equipment and services to reduce energy use or to make for a more efficient use of energy; and
WHEREAS, a duly noticed public hearing was held on August 17, 2022 as required by law.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF INDIO DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS:

Section 1.All of the recitals above are true and correct.

Section 2.The City Council hereby determines that it is in the best interests of the City to enter into a power purchase agreement with Nobell Energy Solutions (“Nobell”) in order to improve the energy efficiency of the Public Safety Campus parking lot as well as reduce the City’s carbon footprint in the reduction of greenhouse gas emissions (“Energy Conservation Program”).

Section 3.Pursuant to Government Code Section 4217.12, the City Council hereby finds that the anticipated cost to the City for electrical energy services provided for by the agreement with Nobell and the associated agreements (“Agreement”), is less than the anticipated marginal cost to the City of energy that would have been consumed by the City in the absence of the Agreement and as applicable, that the difference, if any, between the fair rental value for the real property subject to the facility ground lease and the agreed rent with the energy and conservation services improvements, is anticipated to be offset by below-market energy purchases or other benefits provided under the energy service contract.

Section 4.The City Council approves the Power Purchase Agreement, Site Lease Agreement and Landlord Agreement presented to the City Council on August 17, 2022 in the final form negotiated and finalized by the City Manager and the City Attorney. When such Agreements are final to the satisfaction of the City Manager, the City Manager is hereby authorized to execute said agreements on behalf of the City.

AGENDA ITEM #10.1
Resolution No. 10319 approving a Power Purchase Agreement and Site Lease... Page 412 of 970 Section 5.The City Council hereby authorizes the City Manager to take any and all actions and to execute and deliver any and all agreements, documents and certificates which they may deem necessary or advisable in order to carry out, give effect to and comply with the terms of this Resolution. Such actions are hereby ratified, confirmed and approved.

Section 6.The City Clerk shall certify to the adoption of this resolution.

PASSED, APPROVED AND ADOPTED this 17th day of August, 2022. ________________________

WAYMOND FERMON, MAYOR
ATTEST:
_________________________

CYNTHIA HERNANDEZ, CMC

CITY CLERK

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City Council
August 17, 2022

STAFF REPORT

To: City Council
From: Bryan H. Montgomery, City Manager
Prepared by: Kevin H. Snyder, Dir. Of Community Development Subject: Resolution No. 10315 establishing and adopting a fee schedule for the administration of the City of Indio Cannabis Storefront Retail Business Permit Program and determining that the adoption of the fee schedule is exempt from review under CEQA pursuant to CEQA guidelines section 15061(b)(3)

RECOMMENDATION:

Adopt Resolution No. 10315 establishing and adopting a fee schedule for the administration of the City of Indio Cannabis Storefront Retail Business Permit Program and determining that the adoption of the fee schedule is exempt from review under CEQA purs uant to CEQA guidelines section 15061(b)(3)

SUMMARY:

Resolution No. 10315 establishes and adopts relevant City fees for the administration of the City's Cannabis Storefront Retail Business Permit Program.

BACKGROUND INFORMATION:

On June 27, the Medical and Adult Use Cannabis Regulation and Safety Act (MAUCRSA) was signed into law, which provides a comprehensive regulatory framework for licensing, control and taxation of medical and adult-use cannabis related businesses in California.

On December 6, 2017, the City Council adopted Ordinance No. 1726 esta blishing Sections 159.565 through 159.568 of the Indio Municipal Code prohibiting commercial cannabis activity in the City.

On May 18, 2022, the City Council adopted Ordinance No. 1779 amending Chapter 159 (zoning regulations) of the Indio Municipal Code to allow Cannabis Storefront Retailer and Cannabis Non - Storefront Retailer Businesses in commercial land use districts except for the neighborhood commercial zone, mixed use land use districts and on properties regulated by a specific plan or project master plan that permit commercial land uses excluding any properties designated as neighborhood commercial; amending the subchapter entitled Cannabis Activity (159.565 et. seq.); and making a determination that the ordinance was exempt from review under CEQA pursuant to CEQA guidelines section 15061(b)(3). Also, on May 18, 2022, the City Council adopted Ordinance No. 1780 adding a new Chapter 123 entitled cannabis business activities to Title XI, Business Regulations, of the Indio Municipal Code to regulate commercial cannabis uses in the city.

AGENDA ITEM #10.2
Resolution No. 10315 establishing and adopting a fee schedule for the ad... Page 414 of 970 Pursuant to the provisions of the California Constitution and the laws of the State of California, the City of Indio is authorized to adopt and implement rates, fees, and charges for municipal services; provided, however, that such rates, fees, and/or charges do not exceed the estimated reasonable cost of providing such services. The City Council has previously established various schedules of rates, fees, and charges for services provided by the City.

California Government Code Section 66016 requires notice to be given and data made available at specified times prior to the adoption of increases in existing rates, fees, and charges, or the adoption of new rates, fees, and charges for use permits and building inspectio ns sometime hereinafter at a public meeting of the City Council.

California Government Code Section 66018 requires notice to be published in accordance with California Government Code Section 6062a and data made available concerning rates, fees, and charges prior to conducting a public hearing with respect to the adoption of increases in rates, fees, and charges, or the adoption of new rates, fees, and charges for which no other procedure is provided by law.

On August 3, 2022, the City of Indio published a public hearing notice in the Desert Sun, a newspaper of record with respect to the adoption of new cannabis related rates, fees and charges.

Pursuant to California Government Code Sections 66016 and 66018, the City Council is scheduled to hold a duly noticed public hearing on August 17, 2022 and received oral and written presentations there at with respect to the rates, fees and charges describ ed herein prior to the adoption of this Resolution.

City staff supported by a qualified consultant have analyzed the cost of providing permitting and other services related to the administration of the City’s Cannabis Storefront Retail Business Permit Program The following is a summary of the proposed fees for this Program inclusive of the City's 3.64 percent technology fee:

The adoption of the fee schedule for the administration of the City’s Cannabis Business Permit Program is reasonable in that t he fees seek to recover the costs incurred by the City related to the permitting and other services for the the administration of this Program.