5. Pursuant to Applicant’s certification in this resolution, the PLHA funds will be expended only for eligible Activities and consistent with all program requirements.
6. Applicant shall be subject to the terms and conditions as specified in the Standard Agreement, the PLHA Program Guidelines and any other applicable SB 2 Guidelines published by the Department.
7. City Manager of the City of Lake Forest is authorized to execute the PLHA Program Application, the PLHA Sta ndard Agreement and any subsequent amendments or modifications thereto, as well as any other documents which are related to the Program or the PLHA grant awarded to Applicant, as the Department may deem appropriate.
PASSED AND ADOPTED by the City Council of the City of Lake Forest, this 20th day of December 2022, by the following vote:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
Signature of Approving Officer:
ROBERT PEQUEÑO, MAYOR OF THE CITY OF LAKE FOREST
CERTIFICATE OF THE ATTESTING OFFICER
The undersigned, Lisa Berglund, City Clerk of the City of Lake Forest, California, do es hereby attest and certify that the foregoing Resolution is a true, full and correct copy of the Resolution duly adopted at a regular meeting of the City Council of the City of Lake Forest held on the 20th day of December 2022, which was duly convened and held on the date stated thereon and that said document has not been amended, modified, repealed or rescinded since its date of adoption and is in full force and effect as of the date hereof.
I, Lisa Berglund , City Clerk of the City of Lake Forest , do hereby certify that the foregoing Resolution was duly adopted by the City Council at a regular meeting held on the 20th day of December 2022 by the following votes:
ATTEST:
LISA BERGLUND, CITY CLERK
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RESOLUTION NO. 2022-0XX
CITY OF LAKE FOREST )
COUNTY OF ORANGE ) §
STATE OF CALIFORNIA )
LISA BERGLUND, CITY CLERK
Attachment: Applicant’s PLHA Plan for the 2019-2023 Allocations
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Exhibit 1
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Supportive/
Case
Manageme
nt Services
Supportive
/Case
Managem
ent
Services
0§302(c)(4)(E)(ii) Projected
Number of Households Served n/a n/a n/a n/a n/a
§302(c)(4)(E)(i) Provide a detailed and complete description of how allocated funds will be used for the proposed Activity. §302(c)(4)(E)(ii) Unmet share of
the RHNA at AMI Level
Note: complete for years 2019,
2020, 2021 only
n/a n/a n/a n/a n/a 0
30% 30% 30%
Type of Activity for Persons
Experiencing or At Risk of
Homelessness
Supportive
/Case
Managem
ent
Services
Supportive
/Case
Managem
ent
Services
Supportive
/Case
Managem
ent
Services
TOTAL§302(c)(4)(E)(ii) Area Median
Income Level Served 30% 30%
§302(c)(4)(E)(i) Percentage of
Funds Allocated for the Proposed
Activity
95.00% 95.00% 95.00% 95.00% 95.00%
Funding Allocation Year 2019 2020 2021 2022 2023
The City currently allocates CDBG funding to assist with homeless prevention and assistance services to organizations such as Families Forward, South County Outreach, and Family Assistance Ministries.
The City proposes to utlize the PLHA allocation in three ways: 1) contract services with Mercy House to provide homeless outreach to help the homeless population with shelters, secure transitional or permanent housing, obtain medical assistance, or be admitted into a recovery program; 2) fund a full-time Homeless Liaison Officer through the Orange County Sheriff’s Department; and 3) fund a full-time City position for Homeless Coordinator, who will work closely with Mercy and the HLO to manage outreach and housing assistance to Lake Forest's unhoused population.
Complete the table below for each proposed Activity to be funded with 2019-2023 PLHA allocations. If a single Activity will be assisting households at more than one level of Area Median Income, please list the Activity as many times as needed to capture all of the AMI levels that will be assisted, but only show the percentage of annual funding allocated to the Activity one time (to avoid double counting). §302(c)(4)(C) Provide a description of how the Plan is consistent with the programs set forth in the Local Government’s Housing Element.
The City of Lake Forest's proposed PLHA activity aligns with their Housing Element through Goal 1: Housing and Supportive Services for Special Needs Populations; Policy 1.3: Support the provision of housing and supportive services for extremely low-income households and special needs groups, such as the elderly, persons with disabilities (including developmental disabilities), large families, single- parent households, and those in need of temporary shelter; Program 6: The City contracts with Mercy House, a non-profit service provider specializing in assisting the homeless; and Program 9: Sites for Homeless Shelters/ Homeless Prevention and Assistance Services. §302(c)(4) Plan Rev. 2/16/22
§302(c)(4)(A) Describe the manner in which allocated funds will be used for eligible activities.
The City of Lake Forest will utilize 95% of their annual PLHA allocation for eligible activity Section 301 (a) (6): Assisting persons who are experiencing or at risk of homelessness, including, but not limited to, providing street outreach and supportive/case management services that allow unhoused people to obtain and retain housing and related services. The remaining 5% of the annual allocation will support the City's administrative costs for this activity
§302(c)(4)(B) Provide a description of the way the Local government will prioritize investments that increase the supply of housing for households with incomes at or below 60 percent of Area Median Income (AMI).
The City of Lake Forest will utilize its PLHA allocation to address the needs of the homeless and at risk of homelessness population. This population consists of those who earn between 0 to 30% of Area Median Income.
Activities Detail (Activities Detail (Must Make a Selection on Formula Allocation Application worksheet under Eligible Activities, §301)) §301(a)(6) Assisting persons who are experiencing or At risk of homelessness, including, but not limited to, providing rapid rehousing, rental assistance, supportive/case management services that allow people to obtain and retain housing, operating and capital costs for navigation centers and emergency shelters, and the new construction, rehabilitation, and preservation of permanent and transitional housing.
PLHA Page 1 302(c)(4) Plan
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§302(c)(4)(E)(iii) A description of major steps/actions and a proposed schedule for the implementation and completion of the Activity. §302(c)(4)(E)(iv) Period of
Affordability for the Proposed
Activity (55 years required for
rental housing projects)
n/a n/a n/a n/a n/a
The City will fund the Mercy House outreach contract, Homeless Liasion Officer Sheriff Department position, and City Homeless Coordinator position through PLHA funds during the five year Planning Period.
PLHA Page 2 302(c)(4) Plan
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CITY COUNCIL AGENDA REPORT
MEETING DATE: 12/20/2022
DEPARTMENT: Community Development
SUBJECT:
GENERAL UPDATE OF POSSIBLE OPTIONS TO ADDRESS IMPACTS FROM
WAREHOUSING AND DISTRIBUTION FACILTIY USES IN THE CITY
RECOMMENDED ACTION(S):
1. Direct staff to prepare a Zoning Ordinance amendment to define the types of industrial uses that include a warehousing/storage/distribution component and potentially identify locations where some types of warehousing/storage/distribution are not allowed and provide policy direction regarding the applicability of any Zoning Code amendment on current development applications.
2. Direct staff to include a study of the City’s industrial areas that analyzes the existing industrial stock, identifies how market trends and new technology may shape future uses, and determines the suitability of the existing circulation system to accommodate future uses, as a new initiative in the Strategic Business Plan.
EXECUTIVE SUMMARY:
On October 18, 2022, the City Council held a discussion regarding possible options to address impacts from warehouse/storage/distribution facilities in the city. The City Council directed staff to return within 60 days with a general update on applications being processed, begin public engagement and provide information on any project modifications that could lead to eminent domain. This report provides information on outreach efforts with the public, professional organizations, the real estate community, and the City of Irvine. Additional information is provided on the three applications that have been received by the Community Development Department and information on eminent domain.
This report provides the results of staff’s initial public engagement campaign and other information necessary for the City Council to consider the two recommendations provided by staff. Staff’s initial public engagement efforts demonstrate the public is concerned about the impact logistics activity has on their neighborhood, but more outreach is needed.
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First, staff recommends the City Council direct staff to prepare a Zoning Ordinance amendment to define the types of industrial uses that include a warehousing/storage/distribution component and potentially identify locations where some types of warehousing/storage/distribution uses are not allowed. If approved, updated Zoning Ordinance definitions would aid the City in regulating the impact these types of uses may have on adjacent neighborhoods. In addition, refined definitions for such uses will provide greater clarity for decision makers, the public, and landowners. This update process would be led by staff and take approximately six months to complete. Should the City Council wish to pursue this option, staff is seeking policy direction regarding the future applicability of any Zoning Code amendment on current development applications.
Second, staff recommends the City Council direct staff to include a study of the City’s industrial areas that analyzes the existing industrial stock, identifies how market trends and new technology may shape future uses, and determines the suitability of the existing circulation system to accommodate future uses, as a new initiative in the Strategic Business Plan. The City’s Strategic Business Plan will be updated in early 2023 as part the 2023-25 Operating Budget development process. Staff estimate a comprehensive planning engagement like this will cost approximately $120,000-$150,000 and plan to provide further details when the Strategic Business Plan is discussed as part of the update process in 2023.
There is no direct fiscal impact associated with the recommended actions.
BACKGROUND:
On October 18, 2022, the City Council held a discussion regarding options to address impacts from warehouse/storage/distribution facilities in the City. The staff report for that meeting, (Attachment 1) provided information regarding the roadway impacts associated with the use of large semi-trucks and an overview of the development of the various industrial areas in the City and South Orange County. The report also identified the range of potential impacts from such facilities, including health impacts, compatibility impacts with adjacent land uses, traffic and safety impacts, and economic impacts. At the conclusion of the discussion, the City Council directed staff to return within 60 days, begin public engagement on the issues, continue to process applications before the City that are requesting industrial use, and come back to the City Council with a general update on the characteristics of those applications and any modifications that could lead to eminent domain (Attachment 2). The following information is provided in response to the City Council’s direction to staff.
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Public Engagement
Staff engaged the public through a meeting on December 8, 2022, with graduates of the City’s Leadership Academy. More than 60 residents attended the meeting. Staff introduced the subject with a PowerPoint presentation highlighting industrial development in the City and gave an overview of the modern warehouse/storage/distribution facilities that are being built in Orange County. The presentation also introduced the range of impacts that can occur when these industrial uses are in close proximity to residential uses. At the conclusion of the presentation, staff conducted an electronic poll to gauge the reactions of the residents assembled. The questions and the responses (not all attendees participated in the survey) received were as follows:
Question 1: What aspect of Lake Forest is most important for you to preserve?
53% The community feel
25% Local shopping and dining
3% Job opportunities
19% Mobility and free flow of traffic
Question 2: Expanded modern industrial uses will impact my quality of life
26% Very likely
32% Likely
23% Not Likely
19% Not Sure
Question 3: Given the location of industrial areas, what is your greatest concern?
18% 24 Hour operations
54% Large trucks on City streets
18% Noise
10% Roadway safety
0% No Concerns
Additional engagement efforts included discussion with a commercial real estate organization, local real estate brokers and staff from the City of Irvine, as well as a review of recently published articles on this subject. Staff met with representatives of the National Association of Industrial and Office Properties (“NAIOP”) in December of 2022. The representatives shared information regarding their organization, educational materials that were available and examples of collaborative work efforts the organization has had with cities in the region. NAIOP expressed an interest in continuing an open dialog and working with the City collaboratively, should the opportunity arise. On December 16, Item: 16
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2022, the City Manager and staff are scheduled to tour an industrial project with representatives of NAIOP.
Staff also met with the City of Irvine’s Community Development Department staff regarding their efforts to address large-scale warehouse/storage/distribution uses. The Irvine Spectrum industrial area, adjacent to the western edge of Lake Forest, includes approximately 10.1 million square feet of industrial land. The area surrounding the John Wayne Airport includes more than 57 million square feet of industrial land. Like Lake Forest, Irvine staff has been fielding many inquiries to develop large warehouse/storage/distribution facilities on a speculative basis. In response, the Irvine Planning Commission initiated a Zoning Code amendment in February of 2022 to review the definitions, the entitlement process, and development standards in the Zoning Ordinance relating to these uses. Irvine staff worked closely with major landowners, real estate developers, and transportation experts to develop the draft amendment.
In November of 2022, the Irvine Planning Commission recommended that the Irvine City Council adopt code amendments that would add/modify definitions for various industrial storage facilities, identify a review process based on the overall size of the buildings proposed, and specifically identify areas within the industrial zones where new logistics facilities or warehouses would not be allowed.
Update on the Characteristics of the Applications received from Ares and Western Realco
Subsequent to the City Council meeting held on October 18, 2022, staff met with the applicants on November 3, 2022, to discuss moving forward with the entitlement process. Ares submitted plans and a revised Noise Analysis on December 6, 2022. Western Realco submitted revised project plans on December 12, 2022. Pending alternative direction from the City Council, the three applications (one building proposed by Ares and two buildings proposed by Western Realco) will continue to be processed according to normal course of business.
The general characteristics of the applications are summarized in Table 1 below.
Table 1: Summary of Applications
Applicant Address Description Breakdown of Uses
Latest
Submittal
Western
Realco
26110, 26140,
26160
Enterprise Way
•Proposed 157,800+ sf.
Building
•35+ feet tall
•Replace 3 2-story
buildings totaling
145,440 sf.
•12 truck docks
•Warehouse 68,900 sf.
•Manufacturing
76,900 sf.
•Office
12,000 sf. 12/12/2022
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Applicant Address Description Breakdown of Uses
Latest
Submittal
Ares
26200
Enterprise Way
•Proposed 168,467 sf.
Building
•Exceeds 35 ft, height
•Replace 144,906 sf. 2-
story office building
•Warehouse 158,467 sf.
•Office 10,000 sf.
Alternative Plan:
•Warehouse 53,461 sf.
•Manufacturing 105,000
sf.
•Office 10,000 sf. 12/6/2022
Western
Realco
26250
Enterprise Way
•Proposed 77,000 sf.
warehouse & office
building
•40-44 feet tall
•Replace 2-story 76,978
sf. office building
•Warehouse 69,000 sf.
•Office 8,000 sf. 12/12/2022
Modifications to the Public Right-of-Way that could Lead to Eminent Domain At this point in the review of the three entitlement applications, the need for the City to use the power of eminent domain to acquire right-of-way to make intersection improvements cannot be ascertained. The applicants may be successful in acquiring the additional land area needed for the improvements through negotiating with the impacted property owners.
DISCUSSION:
Staff has prepared additional information on the existing areas within the city zoned for industrial use. As noted in the October 18, 2022, staff report, the South Orange County market area contains approximately 25 million square feet of industrial use. Approximately 9.2 million square feet is located within the City of Lake Forest. As illustrated in Exhibit A below, there are seven industrial areas within the city. A majority of the industrial land is located within the former noise contour of Marine Corps Air Station El Toro, which is in the Planned Communities of Pacific Commercentre, Baker Ranch, and Foothill Ranch. Two smaller areas of industrial use are situated closer to the I-5 Freeway in the Lake Forest and El Toro Planned Communities. Each industrial area has its own unique characteristics, such as building size, building height, types of uses and operational restrictions. Each area is also unique in its relationship and proximity to residential land uses and the City’s arterial roadway network.
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Exhibit A: Industrial Areas in Lake Forest
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Regulating warehousing/storage/distribution uses requires important policy considerations for the City Council. One of the ways the City can regulate these uses is to revise definitions in the City’s Zoning Ordinance to reflect the various types of uses that are now being constructed in the market area and to specify where specific uses would be appropriate. New definitions would allow the decision makers and public to better understand the scale and operating characteristics of proposed industrial projects. Currently, the City’s Zoning Ordinance does not account for the specialized types of industrial warehousing/storage/distribution uses that are now being proposed in the marketplace. To remedy this, staff recommend the City Council direct staff to prepare a Zoning Ordinance amendment to define the types of industrial uses that include a warehousing/storage/distribution component and potentially identify locations where some types of warehousing/storage/distribution are not allowed.
If approved to begin work drafting a Zoning Ordinance amendment, staff would work collaboratively with industrial property owners, professional organizations (NAIOP and BIAOC) and the local brokerage community to craft the new definitions. Adjacent land uses would be analyzed to determine if there are areas within the existing industrially zoned districts where some types of warehouses/storage/distribution uses should not be allowed, or areas where a buffer between the uses should be established. The proposed changes would be reviewed by the Planning Commission and forwarded to the City Council for final action. Staff expect the Zoning Ordinance amendment project to take approximately six months. As part of this effort, staff requests policy direction from the City Council regarding the applicability of potential new zoning on existing development applications.
Beyond amending the definitions in the Zoning Ordinance, staff is recommending that a more comprehensive study of the future of the industrial component of the City’s land use plan be undertaken. This effort would likely require 12 months of study and the assistance of a consultant. Currently, Goal A of the City’s Strategic Business Plan states “Our livable City is well-planned, attractive, and safe.” There are currently six strategies that address improving mobility, changes in technology, State mandates, housing and economic opportunities, and business attraction. During the forthcoming process to update the City’s Strategic Business Plan in early 2023, staff plan to propose a new initiative to study more thoroughly current and potential industrial uses in the City. Staff estimate a comprehensive study of industrial uses, including a significant public engagement component, will cost approximately $120,000-$150,000. If approved, staff will provide further details during the budget workshop sessions which will precede the adoption of the update to the Strategic Business Plan and the 2023-25 Operating Budget.
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CONCLUSION:
There are currently dynamics that necessitate the consideration of a Zoning Code amendment to address the immediate need for clarification of warehouse/storage/distribution uses and the appropriate location for such uses in the City’s industrial districts. These dynamics include:
•The development of more than 6,000 new residential units in the City since 2014 and the potential development of new mixed-use areas allowed in the 2040 General Plan which may heighten the potential for land use incompatibility between residential and warehouse/storage/distribution uses throughout the city.
•An increase in market demand to develop speculative buildings for industrial land uses that rely on trucking activities due to the growth in online consumer activity and the need to distribute supply in strategic locations.
•A desire by businesses to have their products positioned closer to the end use consumers, which drives the interest for new
warehouse/storage/distribution uses strategically placed within the marketplace. Given the limited amount of industrial land in South Orange County, coupled with the strong market demographics, Lake Forest is a desirable place for these facilities.
Staff recognizes that these uses are necessary, support a robust economy, and can offer jobs. However, these industrial uses can also be the source of land use compatibility issues if not properly located or managed. As a result, staff recommends the City Council direct staff to prepare a Zoning Ordinance amendment to define the types of industrial uses that include a warehousing/storage/distribution component and identify locations where some types of warehousing/storage/distribution would potentially not be allowed. Staff also recommends the City Council direct staff to include a study of the City’s industrial areas that analyzes the existing industrial stock in the City, identifies how market trends and new technology may shape future uses, and determines the suitability of the existing circulation system to accommodate future uses, as a new initiative in the Strategic Business Plan. There is no direct fiscal impact associated with these recommended actions.
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FISCAL IMPACT:
Should the City Council provide direction to prepare a Zoning Code amendment, the cost would be minimal. The work effort could be carried out with the staff of the Community Development Department.
ATTACHMENTS:
1. Staff Report dated October 18, 2022
2. Minute Excerpt from October 18, 2022
Submitted By: Gayle Ackerman, AICP, Director of Community Development Approved By: Debra Rose, City Manager
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ATT
ACHMENT 1
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ATTACHMENT 1
CITY COUNCIL AGENDA REPORT
MEETING DATE: 10/18/2022
DEPARTMENT: Community Development, Public Works, and
City Attorney
SUBJECT:
DISCUSSION OF POSSIBLE OPTIONS TO ADDRESS IMPACTS FROM
WAREHOUSING AND DISTRIBUTION FACILITY USES IN THE CITY
RECOMMENDED ACTION(S):
1. Direct staff to procure a consultant to study the impact of expanded large scale warehouse, distribution, and manufacturing uses in the community, including potential health, compatibility, traffic, and economic impacts.
2. Direct staff to administer a public engagement process both during and after the completion of the study.
3. Exercise discretion in directing staff to return to the City Council at a subsequent City Council meeting with a large scale warehouse, distribution, and manufacturing-related uses moratorium for consideration.
EXECUTIVE SUMMARY:
There is a growing trend in the development of sizable industrial buildings to accommodate manufacturing, distribution, research, and materials handling.
These buildings are considerably larger and taller than the warehouses constructed in the last 40 years and are specifically designed to accommodate larger semi-trucks, referred to as WB-67 trucks. This trend is seen in cities with industrial areas such as Anaheim, Brea, Fullerton and Irvine. In South Orange County, more than 75% of industrially zoned land is located in the City of Lake Forest and the Irvine Spectrum area. Staff has received numerous inquiries, as well as two entitlement applications, for the replacement of existing office buildings with large scale manufacturing, warehouse, and distribution uses.
The City’s existing regulations for manufacturing, warehouse, and distribution uses are outdated, inconsistent, and do not anticipate the potential impacts these uses may have on the community. Staff recommends studying and potentially updating the City’s regulation of warehouse and distribution uses. This may include amending the Zoning Ordinance to clarify definitions and update permissible and conditionally permitted uses, and amending the Zoning Map to Item: 16
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identify appropriate locations for various industrial land uses and preparing development standards to address the height, bulk, and siting of such facilities in relation to surrounding uses.
Staff recommends the City Council direct staff to procure a consultant to study the impact of expanded large scale warehouse, distribution, and manufacturing- related uses on the community, including potential health, compatibility, traffic, and economic impacts. Staff recommends this study be inclusive of the community and involve comprehensive public engagement. Staff also recommends the City Council exercise discretion in directing staff to return at a subsequent City Council meeting with a warehouse-related uses moratorium for consideration. A warehouse-related uses moratorium would limit issuance of permits for warehouse-related uses while the City conducts the community- inclusive study.
BACKGROUND:
Warehouse and distribution facilities are increasingly important segments of the economy. These uses are often in high demand given the evolving nature of the economy, including increases in online consumer purchases and the decrease in vacant, developable land. Unfortunately, warehouse and distribution facilities can also cause significant adverse impacts in the communities in which they operate.
By their nature, warehouse and distribution facilities commonly generate significant truck traffic. Impacts associated with truck traffic can include traffic congestion, light and noise pollution, damage to local streets and infrastructure, deteriorating air quality and environmental health, and disruption of adjacent uses, both physically and visually, due to the large scale of the buildings constructed for this use.
Modern warehousing and distribution facilities often utilize large semi-trucks known as WB-67’s. A WB-67 has a front-to-back wheelbase dimension of 67- feet. The total length of the WB-67 semi-truck and trailer can be well over 70-feet (see Figure 1 below). Like many suburban communities, the City’s roadway infrastructure was not designed and constructed with WB-67’s in mind. Rather, the vehicle contemplated was a WB-40 truck, with a front-to-back wheelbase of 40-feet. The current presence of WB-67’s on City streets presents numerous issues, including traffic safety concerns stemming from the vehicle’s wide turning radius and the degradation of City roadways caused by their heavy weight loads.
Figure 1 below illustrates the approximate dimensions of several large transport vehicles, including the WB-40 and WB-67.
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Figure 1: Semi-Truck Lengths
The following illustrations (Figures 2 and 3) show the engineering turning templates for a WB-40 and WB-67, respectively. The location shown in Figures 2 and 3 is the intersection of Bake Parkway and Commercentre Drive, which is representative of a typical intersection in the city.
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Figure 2: WB-40 Turning Template
As illustrated in Figure 2 above, the WB-40 (standard length semi-truck and trailer) is able to make simultaneous left turning movements without conflict (shown in blue). In addition, the WB-40 is able to make a right turning movement without colliding with the curb and traffic signal poles (shown in green).
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Figure 3: WB-67 Turning Template
As shown in Figure 3 above, the WB-67 is not able to make simultaneous left turning movements without conflicting with another WB-67 (shown in red). The length of WB-67’s also makes it difficult to complete turns when shorter semi- trucks are in the same intersection, such as the WB-40. In addition, the right turning movement can collide with curbs and traffic signal poles at the intersection corners (shown in red).
Figures 2 and 3 illustrate that existing City streets were not designed to accommodate the turning movements of WB-67’s. Currently, WB-67’s are present in the City with minimal restrictions, but drivers of the WB-67’s require precision when navigating our streets. Unfortunately, some drivers of the WB- 67’s are not precise and can damage intersection infrastructure, as shown in Figure 4 below.
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Figure 4: El Toro Road and Rockfield – WB-67 Traffic Signal Knockdown – March 2022
The image above demonstrates that the curb return radius and minimum setback of the traffic signal pole were not compatible with the turning radius of the WB-67.
The City’s Traffic Engineering Division continually monitors and evaluates signalized intersections for conflicting large semi-truck turning movements.
Regarding conflicting left turning movements, there has not been any data supporting that there is an existing conflict with current WB-67’s traffic patterns that are traveling through the city. Staff expect the use of WB-67’s on local streets to increase pursuant to industry trends. The establishment of more large scale warehouse, distribution, and manufacturing uses in the city could further exacerbate the use of WB-67’s on local streets.
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DISCUSSION:
City Layout & History
Much of Lake Forest was planned and developed under the County of Orange (“County”), prior to the City’s incorporation in 1991. Large landholdings were approved by the County as individual Planned Communities, generally featuring residential, open space, and limited commercial development. Each Planned Community has its own set of development regulations, such as land use, density, setbacks, and permitted uses. The Planned Communities that largely make up the City of Lake Forest are shown in Figure 5 below.
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Figure 5: Planned Communities Map
The City’s development was heavily influenced by the operations of the Marine Corps Air Station El Toro (“MCAS El Toro”) - a 4,700-acre military base, adjacent to the western boundary of the City. The primary departure corridor for aircraft was located directly over the center of Lake Forest, resulting in a wide swath of land where the noise contours exceeded 65 dB CNEL. Due to the extreme noise environment, residential land uses were prohibited within this area. Allowable uses were limited to commercial, industrial, agriculture, and open space. Further restrictions on development were imposed by the Accident Potential Zone (“APZ”), which limited the maximum size of buildings in some areas. The historic location of the 65 CNEL noise contour and the APZ is illustrated in Figure 6 Item: 16
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below. As shown in this figure, the Planned Communities most impacted by the 65 CNEL noise contour included the entirety of Pacific Commercentre, as well as portions of Foothill Ranch, Portola Hills, and Baker Ranch.
Figure 6: Noise Contour Map
The noise contour resulted in the establishment of an industrial corridor in the center of the City, flanked by residential uses to the north and south. This land use pattern is unusual, in that industrial uses are typically located in close proximity to transportation corridors, airports, and rail facilities.
After the closure of MCAS El Toro and the decision by voters not to establish an international airport at the former base, landowners approached the City seeking approval of new residential communities on the vacant land that had been restricted to non-residential use. Ultimately, the City approved the addition of more than 5,000 new homes on land that was located within the former 65 CNEL noise contour. With the adoption of the 2040 General Plan, the City also Item: 16
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included a new mixed-use designation of Urban Industrial that allows a combination of residential and industrial land uses near the Civic Center. As a result, the City’s industrial corridor is different from that of most cities because (1) it is not located by major freeways which require large trucks to travel through much of the City to reach their destination, and (2) large-scale industrial uses have the potential to be located in immediate proximity to residential areas and other sensitive uses.
Industrial Development in the City
South Orange County has a limited supply of industrial property in comparison to the rest of Orange County as demonstrated in the figure below:
Industrial submarkets Total industrial square footage
Airport area 57,270,587 square feet
North Orange County 108,489,986 square feet
West Orange County 37,679,076 square feet
South Orange County 24,953,026 square feet
Over 75% of South Orange County’s industrial property is located in the Irvine Spectrum or Lake Forest:
South County submarkets Total industrial square footage Irvine Spectrum 10,118,884 square feet
Lake Forest 9,194,773 square feet
Dana Point/San Clemente 2,795,215 square feet
Laguna Hills/Aliso Viejo 1,764,718 square feet
Mission Viejo 743,055 square feet
Laguna Niguel/Laguna Beach 336,381 square feet
The industrial land in Irvine Spectrum is clustered around the I-5, I-405, and SR- 133 corridors. Conversely, the industrial land in Lake Forest is predominately in the center of the city, with smaller concentrations in the historic Light Industrial Area (El Toro Road and Jeronimo Road) and within the Lake Forest Planned Community (Lake Forest Drive and Muirlands Boulevard). A wide range of industrial facilities have been constructed over the years, including facilities with office, light manufacturing, and warehouse and distribution uses.
Staff has observed increased interest in the City’s industrial properties. For instance, staff has recently fielded at least seven inquiries regarding the potential to demolish existing office buildings and construct warehouses, distribution facilities, and modern light manufacturing buildings.
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to both may be required to accommodate such uses. It is clear from both recent interest and the fact that Lake Forest is home to the majority of industrial property in South Orange County that, absent changes to the City's planning regulations, large scale warehouse, distribution, and manufacturing facilities and their associated impacts will become a more significant issue in the community.
Warehouse, Distribution, and Manufacturing Facility Impacts An increase in the warehouse and distribution facilities may generate significant externalities in the community, including health impacts, compatibility impacts with adjacent land uses in terms of both visual scale and operating characteristics, traffic and safety impacts, and economic impacts.
Disruption of Adjacent Uses
The scale of new industrial facilities, which can include buildings that exceed 300,000 square feet, can overwhelm adjacent single-family homes. In addition, many manufacturing and distribution facilities desire additional height to accommodate high pile storage and technological advances, such as the use of robotics. The height of these buildings, especially when adjacent to residential uses and arterials can be overwhelming.
In addition to public safety and traffic issues, the prevalence of large trucks can cause significant noise and vibrations when travelling on the roadways next to residential areas. Left unaddressed, this traffic has the potential to detrimentally impact these residential areas by upsetting existing neighborhood tranquility.
Public and Safety Traffic Issues
Warehouse and distribution facilities are specifically designed to accommodate efficient deliveries from semi-trucks. An increase in warehousing facilities will be accompanied by an increase in semi-truck traffic. Some warehouse and distribution facilities are designed to accommodate large WB-67 trucks, which create unique impacts beyond traditional truck traffic. WB-67 trucks occupy more space in intersections due to their large turn radius, as described previously. The larger turn radius can damage intersection signal equipment, which can result in traffic delays, congestion, and safety hazards for the traveling public.
Additionally, the wider turn radius of WB-67’s poses a collision risk when other semi-trucks are in the same intersection completing turns. These collisions pose a safety hazard for both semi-truck drivers and the traveling public.
Air Quality and Environmental Health
Large warehouse and distribution facility trucks (including WB-67’s) often utilize diesel engines. Diesel engines emit a complex mixture of air pollutants, including Item: 16
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ATTACHMENT 1
2 2
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both gaseous and solid material. The solid material in diesel exhaust is known as diesel particulate matter (“DPM”). DPM is considered a subset of particulate matter less than 2.5 microns in diameter (“PM2.5”). Most PM2.5 derives from combustion, such as use of gasoline and diesel fuels by motor vehicles, burning of natural gas to generate electricity, and wood burning. DPM is most concentrated adjacent to freeways, truck routes, and roadways traveled by trucks. PM2.5 is the size of ambient particulate matter air pollution most associated with adverse health effects of the air pollutants that have ambient air quality standards. These health effects include cardiovascular complications, respiratory impacts, and premature death. Taken together, the possibility of numerous warehousing and distribution facilities served by legions of DPM- emitting trucks presents potential impacts on the health and welfare of residents living in adjacent neighborhoods.
Economic Impacts
The demolition of existing office buildings and the replacement of those structures with manufacturing, distribution, and warehouse facilities may have an economic impact on the city depending on the specifics of each situation. For example, Panasonic Avionics, the former tenant of office buildings in the City’s industrial area, was one of the City’s top 25 sales tax producers. Warehouse and distribution facilities typically do not generate sales tax. If some of the City’s sales tax-generating property is repurposed or replaced with warehouse and distribution uses, the City may lose valuable sales tax streams and need to absorb the increased impact these uses have on local infrastructure.
Existing Zoning Regulations
The Lake Forest Municipal Code’s approach to warehouse and distribution uses is outdated and ill-equipped to address the impacts and concerns profiled above.
Currently, warehouses and distribution facilities are permitted uses in the City’s Urban Activity and Industrial Zones (see LFMC, § 9.72.090(A)). The Zoning Code’s definitions for both uses are decades-old and non-specific, failing to recognize the transformation these uses have seen in recent years. Each is currently defined in the Code as follows:
“Warehouse” is defined as “a building, or portion thereof, used primarily for the storage of goods and materials.”1
“Distribution facility” is defined as a “business which stores goods and materials prior to their delivery to retail outlets or their sale to other businesses.”
1 LFMC, § 9.04.030(D) (Definitions)
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As noted above, the industrial areas of focus are also covered by the Lake Forest, Pacific Commercentre, Baker Ranch, and Foothill Ranch Planned Community Texts (“PC Texts”). Like the Zoning Code, the PC Texts are not equipped to adequately regulate modern-day warehouse and distribution facility uses. Among other issues, the PC Texts:
• Do not differentiate among the various types of modern warehouse and distribution facility uses (e.g., “Smart” warehouses, cold storage warehouses, and “last-mile” facilities).
• Do not uniformly address measures aimed at limiting impacts from modern warehouse and distribution facility uses (e.g., siting criteria, distance separation, alternative pavements to reduce noise, barriers and screening to reduce light pollution, hours of operation limits).
• Do not contain consistent and readily discernable requirements regarding the allowance and/or entitlement(s) necessary to effectuate development of these uses.
City Council Options and Staff Recommendations
The City’s existing regulations for warehouse and distribution facility uses are outdated, inconsistent, and do not anticipate potential impacts these uses may have on the community. Because the impacts resulting from these uses have the potential to change the nature of the City and significantly impact residents, staff recommends engaging in a public process, including the following:
1. Hire Consultant to Study Impacts and Options. Staff recommends hiring a consultant to assist the City in studying the potential health, compatibility, traffic, and business impacts related to these uses. This study will frame the policy options that could be considered by the City Council in the future. Possible options may include amending the Zoning Ordinance to clarify definitions and update permissible and conditionally permitted uses; amending the Zoning Map to identify appropriate locations for large scale warehouse, distribution, and manufacturing facilities; preparing development standards to address the height and bulk of such facilities; and levying development impact fees on warehousing and distribution facility uses to finance the infrastructure improvements to accommodate these uses.
2. Initiate Public Engagement Process. Throughout the study process and upon receiving a final report, staff recommends the City Council engage with the public by holding public workshops to hear from residents, Item: 16
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businesses, and other community members to understand their concerns and to receive their input on the desirability and possible location of large scale warehouse, distribution, and manufacturing uses. At the conclusion of this public process, the City Council could take action on possible amendments to the Zoning Ordinance, Zoning Map, development impacts fees, and similar regulations.
3. Moratorium. Staff recommends the City Council exercise discretion in directing staff to return at a subsequent meeting with a resolution to establish a moratorium on large scale warehouse, distribution, and manufacturing uses. If the City Council desires to institute such a moratorium, staff will return at a subsequent City Council meeting with a resolution for the City Council to consider. The resolution would require a 4/5 vote of the City Council and would establish a temporary moratorium during which the City conducts a community-inclusive study on the impacts of warehouse-related uses. If the City Council does not desire to institute such a moratorium, the City can still conduct the community-inclusive study while also processing planning applications for warehouse-related uses.
If the City Council were to institute a moratorium, when the moratorium term ends, an application for large scale warehouse, distribution, and manufacturing uses would be required to comply with any updated planning regulations, which may include new Zoning Code regulations and an updated Zoning Map.
FISCAL IMPACT:
There is no fiscal impact associated with the recommended action.
Initiated By: Gayle Ackerman, AICP, Director of Community Development, Thomas E. Wheeler, P.E., Director of Public Works/City Engineer, and Matthew Richardson, City Attorney
Submitted By: Gayle Ackerman, AICP, Director of Community Development, Thomas E. Wheeler, P.E., Director of Public Works/City Engineer, and Matthew Richardson, City Attorney
Approved By: Debra Rose, City Manager
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ATTACHMENT 2
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CITY COUNCIL AGENDA REPORT
MEETING DATE: 12/20/2022
DEPARTMENT: Finance
SUBJECT:
PROFESSIONAL SERVICES AGREEMENT FOR INVESTMENT ADVISORY
AND MANAGEMENT SERVICES
RECOMMENDED ACTION(S):
1. Award an Agreement for Professional Services to Chandler Asset Management for Investment Advisory and Management Services.
2. Authorize the Mayor to sign, and the City Clerk to attest, the award of contract to Chandler Asset Management, substantially in the form attached.
EXECUTIVE SUMMARY:
As the City considers its financial position and fiscal stability, staff has identified the need for professional investment advisory and management services.
Working with a professional investment advisory firm would allow the City to transition its passively managed investment portfolio into an actively managed investment portfolio. The benefits of hiring a professional advisor also align with the City’s goals of maintaining prudent and sustainable financial practices.
On December 6, 2022, the City Council directed staff to revise the City's Investment Policy to expand the allowable investment opportunities permitted by California Government Code and allow an investment advisory firm to actively manage the City's investment portfolio. Following a Request for Proposals (“RFP”) procurement process, staff recommends awarding a Professional Consultant Services Agreement to Chandler Asset Management (“Agreement”) for Investment Advisory and Management Services. The proposed Agreement has an initial term of three years with two optional one-year extensions. The proposed Agreement also has unique compensation terms based on the total amount of assets under management that would be actively managed by the firm and as authorized by the City. There is no fiscal impact associated with the proposed staff recommendation at this time, and the cost of the proposed services would be covered by investment income generated by the total assets under management.
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BACKGROUND:
As the City considers its financial position and fiscal stability, staff has identified the need for professional investment advisory and management services. The procurement and consideration of these services results from considering the strategic benefits and objectives behind having the City’s investment portfolio actively managed by a professional consultant. The following report lists the strategic reasoning, governing policies, and prudent objectives driving the recommendation to award an agreement for professional investment advisory and management services.
Strategic Benefits of Hiring a Professional Investment Advisor The City’s Strategic Plan identifies three priority areas to achieve the goal of “Our healthy City government is sustainable and well-run with committed people.” The three priority areas are as follows:
•Sustainable – Responsible financial policies and prudent financial decisions provide short-term fiscal stability and long-term financial health. •Well-Run – Good Governance and professional management supports the City’s ability to serve the needs of the community.
•Committed People – Talented, ethical staff and contractors are vital assets to our organization and essential to effective City operations.
In alignment with these strategic priorities, contracting with a professional investment advisory firm would allow the City to have access to the knowledge and expertise of an investment advisory team to actively manage the City’s investments. Moreover, the work of an investment firm would support the current roles and goals of staff in a manner that would allow the City to focus on long- term financial health and sustainability.
The City’s Financial Management and Budgetary Policy and the Risk Based Reserve Analysis provide the foundational policies to guide prudent financial decisions. The Risk Based Reserve Analysis establishes the level of financial reserves to protect the City against unexpected interruptions in revenues, vulnerability of State actions, adverse economic conditions, unpredictable one- time costs, and exposure to natural disasters and emergencies. These policies guide the City’s preparedness for situations of uncertainty and risk and ensure that the City maintains established reserve levels without committing them to City operations or projects. These established reserve levels are not intended to be spent in the near term and may be available for greater strategic investment through an investment advisor.
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Investment Policies and Objectives
The investment of the City’s funds is guided by the California Government Code and the City’s Statement of Investment Policy. The City’s current Statement of Investment Policy is reviewed and adopted annually by the City Council.
The City’s investment portfolio is currently managed by the Director of Finance with the assistance of Finance department staff. The Director of Finance has been delegated as the City Treasurer. As of June 30, 2022, the City’s portfolio balance was approximately $159 million and includes deposits with the State of California Local Agency Investment Fund (“LAIF”), the Orange County Investment Pool (“OCIP”) and the California Asset Management Program (“CAMP”).
The City’s primary objective in its investment strategy is to achieve a reasonable rate of return on public funds while minimizing the potential for capital losses arising from market changes. Although the generation of revenue through interest earnings on investments is an appropriate metric, the primary consideration in the investment of City’s funds is capital preservation in the overall investment portfolio. As such, the City’s yield objective is to achieve a reasonable rate of return on City investments rather than to achieve the maximum generation of income, which would expose the City to unacceptable risk.
The investment portfolio is currently passively managed. Although the Director of Finance is qualified and can deploy a strategic investment approach, the use of a professional investment advisor would complement staff’s ability to deploy an investment strategy by establishing a partnership with a qualified professional consultant. By hiring a professional investment advisor, staff would work with the consultant to preserve the City’s prudent financial practices and leverage the expertise of the consultant to plan and manage future investment. Through the proposed services, the investment portfolio would transition to being actively managed by an investment advisory firm and would allow for a more strategic investment approach.
City Council Direction
On December 6, 2022, the City Council directed staff to revise the City's investment policy to expand the allowable investment opportunities permitted by California Government Code and allow an investment advisory firm to actively manage the city's investment portfolio. Staff’s recommendations, which described in detail in the Discussion section of this report, would satisfy the direction given by the City Council.
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DISCUSSION:
The City Manager reviewed and approved the RFP for Investment Advisory and Management Services to be released on July 22, 2022. Five proposals were received in response to the RFP from the following firms:
•Chandler Asset Management, Inc. (“Chandler”)
•CSM Advisors, LLC (“CSM”)
•Garcia Hamilton and Associates (“GH&A”)
•Meeder Public Funds, Inc. (“MPF”)
•PFM Asset Management, LLC (“PFM”)
Consistent with the City’s Purchasing and Contracting Guidelines (“Purchasing Guidelines”), staff assembled a selection committee approved by the City Manager to review proposals and participate in the interview phase of the selection process. The Selection Committee was comprised of the following staff:
•Assistant City Manager
•Director of Finance
•Assistant Director of Finance
•Management Analyst, Finance
The review process is comprised of three phases: the Technical Review of written proposals, the Qualifications Interview, and the Revised Cost Proposal evaluation. A firm must receive an average of 60 points (60%) or higher, in the Technical Review phase to move on to the Qualifications Interview phase. Three out of the five firms scored at least a 60-point average score from the Technical Proposal Review: Chandler, MPF, and PFM.
Pursuant to the City’s Purchasing Guidelines, the City invited the three firms that scored a minimum average of 60 points for an interview to discuss their respective approaches to the requested services. Interviews were conducted on September 22 and September 27, 2022. The results of the technical review and interview phases are summarized in Tables 1 and 2 below.
Table 1: Investment Advisory and Management Services RFP Technical Review Scoring
Technical Review Rater
Firm 1 2 3 4
Technical
Review
Subtotal
Interview*
Chandler Asset Management 87 82 87 89 345 Yes
CSM Advisors 57 59 56 56 228 No
Garcia Hamilton and Associates 58 57 54 53 222 No
Meeder Public Funds 74 73 81 89 317 Yes
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PFM Asset Management 80 83 85 86 334 Yes
*To achieve a minimum average of 60 points or greater, Technical Review Subtotal must equal 240 or greater when there are 4 raters.
Table 2: Investment Advisory and Management Services RFP Interview and Cost Proposal Scoring
Technical Review Rater
Firm 1 2 3 4
Interview
Subtotal
Pricing
Points
x 4
Total
Chandler Asset Management 149 134 138 140 561 160 721
CSM Advisors 0 0 0 0 0 - -
Garcia Hamilton and Associates 0 0 0 0 0 - -
Meeder Public Funds 129 126 133 123 511 200 711
PFM Asset Management 118 105 101 106 430 150 580
Following the Qualifications Interviews, and subsequent scoring by the Selection Committee, the Acting Purchasing Coordinator reviewed the cost proposals. Cost proposals for these types of services are unique in that fees are based on units known as basis points. A basis point is equivalent to one one-hundredth of one percent of the total amount of assets under management (“AUM”). This means that the cost of services is variable and dependent upon the total amount of investments the City authorizes the consultant to manage.
To compare cost proposals in a fair and equitable manner (i.e., an “apples to apples” cost comparison), staff applied a scenario in which the total of assets under management for the City would be $130 million. The methodology used to determine the proposed amount of AUM for this scenario to compare cost proposals included a preliminary review of the required cash flow needed throughout the year and considered the City’s current policies and practices. With this scenario applied, the cost proposals for the three interviewed firms are summarized in Table 3. The impact on the total scoring is reflected in Table 2.
Table 3: Cost Proposals*
Firm Tier 1
Fee
Tier 2
Fee
Tier 3
Fee Discount
Estimated
Annual
Fee Based
on AUM*
Estimated
Annual
Fee Based
on AUM w/
Discount
Estimated
Three Year
Term Total
Chandler
0.09 of
1% for
first $50
million
0.06 of
1% for
$50-100
million
0.04 of
1% for
AUM
over
$100
million
$9,000
annually,
Applied
only if
AUM ≥
$100 mil.
$87,000 $78,000 $234,000
MPF
0.08 of
1% for
first $25
million
0.04 of
1% for
funds
over $25
million
- - $62,000 - $186,000
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Firm Tier 1
Fee
Tier 2
Fee
Tier 3
Fee Discount
Estimated
Annual
Fee Based
on AUM*
Estimated
Annual
Fee Based
on AUM w/
Discount
Estimated
Three Year
Term Total
PFM
0.07 of
1% for
first $100
million
0.05 of
1% for
$100-200
million
0.04 of
1% for
AUM
over
$200
million
Fee cap
of
$80,000
(16%
discount),
1st Year
Only
$84,970
$80,000
(1st Year
Only)
$249,940
*Staff completed the Cost Proposal comparison using the scenario of $130 million as the amount of assets under management (“AUM”).
Including the cost proposal component, Chandler Asset Management received the highest ranking in the proposal review process, with a total of 721 points placing them in the Qualified, Advantageous category.
Chandler Asset Management:
Established in 1988, Chandler is a California-headquartered firm that has been providing investment advisory and management services for local governments in the state for over three decades. With experience serving 140 public agencies in California, Chandler would serve as a local neighboring partner in developing a tailored, comprehensive investment strategy for the City. Chandler demonstrates extensive knowledge and expertise in all applicable federal laws and California Government Code that regulate the investment of public funds. Furthermore, they demonstrated an understanding of the City’s goals and priorities that would prioritize enhancing safety and liquidity in a manner that conforms to legal requirements and achieves the City’s goals.
The services team includes skilled and experienced key personnel, including an experienced Senior Relationship Manager and an expert investment team.
Chandler’s approach includes direct access to the City’s investment advisor, detailed reporting, and policy advisory services to ensure City policies are optimized and compliant. Chandler’s partnership approach demonstrates an understanding that is aligned with the City’s current financial position and reflects the desired level of experience and familiarity in working with California local governments. Staff believes that the recommended consultant’s understanding of the City’s current policies, ongoing practices, and future goals indicate that the recommended consultant would ensure the City’s successful transition to working with a professional investment advisor.
Staff recommends the City Council award the proposed Agreement with Chandler Asset Management with an initial three-year term and two optional one- year extensions (Attachment 1). The Agreement was prepared by Finance staff, has been reviewed by the City Attorney, and approved as to form. The Item: 17
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Agreement also includes a unique compensation exhibit, without a not-to-exceed compensation amount, to accommodate the unique fee structure and the variability of AUM at any given point during the engagement with the firm. As a result of this unique fee structure, any further modifications to the fee structure or terms of the Agreement shall be brought forth to the City Council as an amendment. There is no 10% extra work authority that can be approved by the City Manager without direction and approval from the City Council.
Staff conducted a reference check (Attachment 2) with other local agencies that have contracted with Chandler for investment advisory and management services. Staff found the reference check to be positive and overall indicative of an effective and useful service offering.
Next Steps
Should the City Council choose to award the Agreement with Chandler, staff would begin working to review and draft revisions to the Investment Policy and bring recommendations to the City Council for approval at its annual review. Per policy direction provided at the December 6, 2022 City Council meeting, the City Council provided policy direction to do the following:
1. Revise the City’s Investment Policy to allow all investment opportunities authorized in the California Government Code.
2. Revise the City’s investment Policy to allow for the use of an investment advisory firm to actively manage the City’s investment portfolio.
Staff plans to bring the proposed revisions to the City Council for approval in January 2023.
Following the initial step of reviewing and approving the revised Investment Policy, the City would begin its transition to having investments actively managed by having the investment advisor complete the following:
1. Complete a cash flow analysis to ensure that the appropriate amount of funds is available for operational expenses throughout the year.
2. Develop an investment portfolio strategy that prioritizes the safety of the principal, maintains appropriate levels of liquidity as determined in the cash flow analysis, and generates market yield and return.
Once the firm completes these analyses, staff would review the analyses and proposed portfolio strategy to ensure that they are accurate and align with the City’s objectives. Upon approval of the strategy, the investment advisory firm would begin to actively manage investments. Throughout the ongoing management of the investment portfolio, the City would receive monthly and Item: 17
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quarterly reports that would be made available to the Audit Committee and City Council as dictated in the City’s Investment Policy.
FISCAL IMPACT:
The proposed compensation structure would be calculated and deducted on a monthly basis from investment income generated through the City’s current investments and would be based on total AUM. As a result, there is no net fiscal impact generated as result of the investment advisory and management services discussed in this report.
ATTACHMENTS:
1. Agreement for Professional Services with Chandler Asset Management, Inc.
2. Reference Check for Chandler Asset Management, Inc.
Initiated By: Nidia Ruelas, Management Analyst
Submitted By: Kevin Shirah, Director of Finance/City Treasurer Approved By: Debra Rose, City Manager
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ATTACHMENT 1
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(BB&K 2019)
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CITY OF LAKE FOREST
PROFESSIONAL CONSULTANT SERVICES AGREEMENT
1. PARTIES AND DATE.
This Agreement is made and entered into this day of
, , by and between the City of Lake Forest, a municipal corporation, organized under the laws of the State of California, with its principal place of business at 100 Civic Center Drive, Lake Forest, California, 92630 ("City") and Chandler Asset Management, Inc., a California corporation, with its principal place of business at 6225 Lusk Boulevard, San Diego, CA 92121 ("Consultant"). City and Consultant are sometimes individually referred to herein as "Party" and collectively as "Parties."
2. RECITALS.
2.1 Consultant.
Consultant desires to perform and assume responsibility for the provision of certain professional investment advisory and management consulting services required by the City on the terms and conditions set forth in this Agreement. Consultant represents that it is experienced in providing professional investment advisory and management consulting services to public clients, is licensed in the State of California, and is familiar with the plans of City.
2.2 Project.
City desires to engage Consultant to render such professional investment advisory and management consulting services for the Investment Advisory and Management Services project ("Project") as set forth in this Agreement.
3. TERMS.
3.1 Scope of Services and Term.
3.1.1 General Scope of Services. Consultant promises and agrees to furnish to the City all labor, materials, tools, equipment, services, and incidental and customary work necessary to fully and adequately supply the professional investment advisory and management consulting services and additional provi sions necessary for the Project ( “Services”). The Services and Additional Provisions are more particularly described in Exhibit "A" attached hereto and incorporated herein by reference. All Services shall be subject to, and performed in accordance with, this Agreement, the exhibits attached hereto and incorporated herein by reference, and all applicable local, state and federal laws, rules and regulations.
3.1.2 Term. The term of this Agreement shall be from December 21, 2022 to December 20, 2025 , unless earlier terminated as provided herein. The City shall have the unilateral option, at its sole discretion, to renew this Agreement automatically for no more than two (2) additional one-year terms. Consultant shall complete the Services within the term of this Agreement, and shall meet any other established schedules and deadlines.
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3.2 Responsibilities of Consultant.
3.2.1 Independent Contractor; Control and Payment of Subordinates . The Services shall be performed by Consultant or under its supervision. Consultant will determine the means, methods and details of performing the Services subject to the requirements of this Agreement. City retains Consultant on an independent contractor basis and not as an employee.
Consultant retains the right to perform sim ilar or different services for others during the term of this Agreement. Any additional personnel performing the Services under this Agreement on behalf of Consultant shall also not be employees of City and shall at all times be under Consultant's exclusi ve direction and control. Neither City, nor any of its officials, officers, directors, employees or agents shall have control over the conduct of Consultant or any of Consultant's officers, employees, or agents, except as set forth in this Agreement. Cons ultant shall pay all wages, salaries, and other amounts due such personnel in connection with their performance of Services under this Agreement and as required by law. Consultant shall be responsible for all reports and obligations respecting such additional personnel, including, but not limited to: social security taxes, income tax withholding, unemployment insurance, disability insurance, and workers' compensation insurance.
3.2.2 Schedule of Services. Consultant shall perform the Services expeditiously, within the term of this Agreement, and in accordance with the Schedule of Services set forth in Exhibit "B" attached hereto and incorporated herein by reference. Consultant represents that it has the professional and technical personnel required to perform t he Services in conformance with such conditions. In order to facilitate Consultant's conformance with the Schedule, City shall respond to Consultant's submittals in a timely manner. Upon request of City, Consultant shall provide a more detailed schedule of anticipated performance to meet the Schedule of Services.
3.2.3 Conformance to Applicable Requirements . All work prepared by Consultant shall be subject to the approval of City.
3.2.4 Substitution of Key Personnel . Consultant has represented to City that certain key personnel will perform and coordinate the Services under this Agreement. Should one or more of such personnel become unavailable, Consultant may substitute other personnel of at least equal competence upon written approval of City. In the event that City and Consultant cannot agree as to the substitution of key personnel, City shall be entitled to terminate this Agreement for cause. As discussed below, any personnel who fail or refuse to perform the Services in a manner acceptable to the City, or who are determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project or a threat to the safety of persons or property, shall be promptly removed from the Project by the Consultant at the request of the City. The key personnel for performance of this Agreement are as follows: Mia Corral Brown, Senior Relationship Manager.
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3.2.5 City's Representative. The City hereby designates Kevin Shirah, Director of Finance/ City Treasurer, or his designee, to act as its representative in all matters pertaining to the administration and performance of this Agreement ("City's Representative"). City's Representative shall have the power to act on behalf of the City for review and approval of all products submitted by Consultant but not the authority to enlarge the Scope of Work or change the total compensation due to Consultant under this Agreement. The City Manager shall be authorized to act on City's behalf and to execute all necessary documents which enlarge the Scope of Work or change the Consultant's total compensation subject to the provisions contained in Section 3.3 of this Agreement. Consultant shall not accept direction or orders from any person other than the City Manager, City's Representative or his/her designee.
3.2.6 Consultant's Representative. Consultant hereby designates Mia Corral Brown, Senior Relationship Manager , or her designee, to act as its representative for the performance of this Agreement ("Consultant's Representative"). Consultant's Representative shall have full authority to represent and act on behalf of the Consultant for all purposes under this Agreement. The Consultant's Representative shall supervise and direct the Services, using his/her best skill and attention, and shall be responsible for all means, methods, techniques, sequences, and procedures and for the satisfactory coordination of all portions of the Services under this Agreement.
3.2.7 Coordination of Services. Consultant agrees to work closely with City staff in the performance of Services and shall be available to City's staff, consultants and other staff at all reasonable times.
3.2.8 Standard of Care; Performance of Employees. Consultant shall perform all Services under this Agreement in a skillful and competent manner, consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Consultant represents and maintains that it is skilled in the professional calling necessary to perform the Services. Consultant warrants that all employees and subconsultants shall have sufficient skill and experience to perform the Services assigned to them. Finally, Consultant represents that it, its employees and subconsultants have all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the Services, and that such licenses and approvals shall be maintained throughout the term of this Agreement.
As provided for in the indemnification provisions of this Agreement, Consultant shall perfo rm, at its own cost and expense and without reimbursement from the City, any services necessary to correct errors or omissions which are caused by the Consultant's failure to comply with the standard of care provided for herein. Any employee of the Consultant or its sub-consultants who is determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project, a threat to the safety of persons or property, or any employee who fails or refuses to perform the Services in a manner acceptable to the City, shall be promptly removed from the Project by the Consultant and shall not be re -employed to perform any of the Services or to work on the Project.
3.2.9 Laws and Regulations. Consultant shall keep itself fully informed of and in compliance with all local, state and federal laws, rules and regulations in any manner affecting the performance of the Project or the Services, including all Cal/OSHA requirements, and shall give all notices required by law. Consultant shall b e liable for all violations of such laws and regulations in connection with Services. If Consultant performs any work knowing it to be contrary to such laws, rules and regulations, Consultant shall be solely responsible for all costs arising therefrom. C onsultant shall defend, indemnify and hold City, its officials, directors, officers, DocuSign Envelope ID: 41CB081C-3F5B-4701-9CCD-047BF06E95DF Item: 17
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employees, agents, and volunteers free and harmless, pursuant to the indemnification provisions of this Agreement, from any claim or liability arising out of any failure or alleged failure to comply with such laws, rules or regulations.
3.2.10 Safety. Consultant shall execute and maintain its work so as to avoid injury or damage to any person or property. In carrying out its Services, the Consultant shall at all times be in compliance with all applicable local, state and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed. Saf ety precautions, where applicable, shall include, but shall not be limited to: (A) adequate life protection and lifesaving equipment and procedures; (B) instructions in accident prevention for all employees and subconsultants, such as safe walkways, scaff olds, fall protection ladders, bridges, gang planks, confined space procedures, trenching and shoring, equipment and other safety devices, equipment and wearing apparel as are necessary or lawfully required to prevent accidents or injuries; and (C) adequat e facilities for the proper inspection and maintenance of all safety measures.
3.2.11 Insurance. Consultant agrees to procure and maintain, at Consultant’s expense all insurance specified in Exhibit “D” attached hereto and by this reference incorporated herein. Consultant shall require all subconsultants to carry the same policies and limits of insurance that the Consultant is required to maintain, unless otherwise approved in writing by the City.
3.2.12 Water Quality Management and Compliance.
3.2.12.1 Storm Water Management. Storm, surface, nuisance, or other waters may be encountered at various times during the Services. Consultant hereby acknowledges that it has investigated the risk arising from such waters, and assumes any and all risks and liabilities arising therefrom.
3.2.12.2 Compliance with Water Quality Laws, Ordinances and Regulations. Consultant shall keep itself and all subcontractors, staff, and employees fully informed of and in compliance with all local, state and federal laws, rules and regulations that may impact, or be implicated by the performance of the Services including, without limitation, all applicable provisions of the City’s ordinances regulating water quality and storm water; the Federal Water Pollution Control Act (33 U.S.C. § 1251, et seq.); the Californi a Porter-Cologne Water Quality Control Act (Water Code § 13000 et seq.); and any and all regulations, policies, or permits issued pursuant to any such authority. Consultant must additionally comply with the lawful requirements of the City, and any other municipality, drainage district, or other local agency with jurisdiction over the location where the Services are to be conducted, regulating water quality and storm water discharges.
3.2.12.3 Compliance with DAMP and LIP. In addition to compliance with the laws, ordinances and regulations listed in Section 3.2.12.2 of this Agreement, Consultant must comply with all applicable requirements of the Orange County Drainage Area Management Plan (“DAMP”), the City of Lake Forest Local Implementation Plan (“LIP”) and the applicable Water Quality Management Plan (“WQMP”). The DAMP contains requirements related to design and construction of public projects. Consultant must be familiar the DAMP, and the LIP and comply with the requirements as specified therein.
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A copy of the DAMP is available on the internet at:
https://media.ocgov.com/gov/pw/watersheds/documents/damp/default.asp A copy of the LIP is available on the internet at:
http://www.lakeforestca.gov/depts/pw/water/local_implementation_plan_%28lip%29.asp More information on the applicable WQMP is available on the internet at:
http://www.lakeforestca.gov/depts/pw/water/water_quality_management_plan_(wqmp).asp
3.2.12.4 Standard of Care. Consultant warrants that all employees and subcontractors shall have sufficient skill and experience to perform the work assigned to them without impacting water quality in violation of the laws, regulations and policies described in Sections 3 .2.12.2 and 3.2.12.3 of this Agreement. Consultant further warrants that it, its employees and subcontractors have or will receive adequate training, as determined by the City, regarding these requirements as they may relate to the Services.
3.2.12.5 Liability for Non-compliance.
(A) Indemnity: Failure to comply with laws, regulations, and ordinances listed in Sections 3.2.12.2 and 3.2.12.3 of this Agreement is a violation of federal and state law. Notwithstanding any other indemnity contained in this Agreement, Cons ultant agrees to indemnify and hold harmless the City, its officials, officers, agents, employees and authorized volunteers from and against any and all claims, demands, losses or liabilities of any kind or nature which the City, its officials, officers, agents, employees and authorized volunteers may sustain or incur for noncompliance with the laws, regulations, and ordinances listed above, arising out of or in connection with the Services, except for liability resulting from the sole established negligence, willful misconduct or active negligence of the City, its officials, officers, agents, employees or authorized volunteers.
(B) Defense: City reserves the right to defend any enforcement action or civil action brought against the City for Consultant’s failure to comply with any applicable water quality law, regulation, or policy. Consultant hereby agrees to be bound by, and to reimburse the City for the costs associated with, any settlement reached between the City and the relevant enforcement entity.
(C) Damages: City may seek damages from Consultant for delay in completing the Services caused by Consultant’s failure to comply with the laws, regulations and policies described in Sections 3.2.12.2 and 3.2.12.3 of this Agreement, or any other relevant water quality law, regulation, or policy.
3.3 Fees and Payments.
3.3.1 Compensation. Consultant shall receive compensation, including authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit "C" attached hereto and incorporated herein by reference.
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invoice which indicates work completed and hours of Services rendered by Consultant. The invoice shall describe the amount of Services provided since the initial commencement date, or since the start of the subsequent billing periods, as appropriate, through the date of the invoice.
City shall, within 30 days of receiving such invoice, review the invoice and pay all non -disputed and approved charges thereon. If the City disputes any of Consultant's fees, the C ity shall give written notice to Consultant within thirty (30) days of receipt of an invoice of any disputed fees set forth therein.
3.3.3 Reimbursement for Expenses. Consultant shall not be reimbursed for any expenses unless authorized in writing by City, or included in Exhibit "C" of this Agreement.
3.3.4 Extra Work . At any time during the term of this Agreement, City may request that Consultant perform Extra Work. As used herein, "Extra Work" means any work which is determined by City to be necessary for the prop er completion of the Project, but which the Parties did not reasonably anticipate would be necessary at the execution of this Agreement.
Consultant shall not perform, nor be compensated for, Extra Work without written authorization from the City.
3.3.5 Rate Increases. In the event that this Agreement is renewed pursuant to Section 3.1.2, the rate set forth in Exhibit “C” may be adjusted each year at the time of renewal as set forth in Exhibit “C.”
3.4 Labor Code Requirements.
3.4.1 Prevailing Wages. Consultant is awar e of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the perfor mance of other requirements on "public works" and "maintenance" projects. If the Services are being performed as part of an applicable "public works" or "maintenance" project, as defined by the Prevailing Wage Laws, and since the total compensation is $1,000 or more, Consultant agrees to fully comply with such Prevailing Wage Laws. City shall provide Consultant with a copy of the prevailing rates of per diem wages in effect at the commencement of this Agreement. Consultant shall make copies of the prevai ling rates of per diem wages for each craft, classification or type of worker needed to execute the Services available to interested parties upon request, and shall post copies at the Consultant's principal place of business and at the project site. It is the intent of the parties to effectuate the requirements of sections 1771, 1774, 1775, 1776, 1777.5, 1813, and 1815 of the Labor Code within this Agreement, and Con sultant shall therefore comply with such Labor Code sections to the fullest extent required by law. Consultant shall defend, indemnify and hold the City, its officials, officers, employees, agents, and volunteers free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.
3.4.2 Registration. If the Services are being performed as part of an applicable “public works” or “maintenance” project, in addition to the foregoing, then pursuant to Labor Code sections 1725.5 and 1771.1, the Consultant and all subconsul tants must be registe red with the Department of Industrial Relations (“DIR”). Consultant shall maintain registration for the duration of the project and require the same of any subconsultants. This project may also be subject to compliance monitoring and enforcement by the DIR. It shall be Contractor’s sole responsibility to comply with all applicable registration and labor compliance requirements, including the submission of payroll records directly to the DIR.
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3.5 Accounting Records.
3.5.1 Maintenance and Inspection . Consultant sha ll maintain complete and accurate records with respect to all costs and expenses incurred under this Agreement. All such records shall be clearly identifiable. Consultant shall allow a representative of City during normal business hours to examine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement. Consultant shall allow inspection of all work, data, documents, proceedings, and activities related to the Agreement for a period of three (3) year s from the date of final payment under this Agreement.
3.6 General Provisions.
3.6.1 Termination of Agreement.
3.6.1.1 Grounds for Termination . City may, by written notice to Consultant, terminate the whole or any part of this Agreement at any time and without cause by giving written notice to Consultant of such termination, and specifying the effective date thereof, at least seven (7) days before the effective date of such termination. Upon termination, Consultant shall be compensated only for those services which have been adequately rendered to City, and Consultant shall be entitled to no further compensation. Consultant may not terminate this Agreement except for cause.
3.6.1.2 Effect of Termination . If this Agreement is terminated as provided herein, City may require Consultant to provide all finished or unfinished Documents and Data and other information of any kind prepared by Consultant in connection with the performance of Services under this Agreement. Consultant shall be required to provide such document and other information within fifteen (15) days of the request.
3.6.1.3 Additional Services. In the event this Agreement is terminated in whole or in part as provided herein, City may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated.
3.6.1.4 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective parties at the following address, or at such other address as the respective parties may provide in writing for this purpose:
Consultant: Chandler Asset Management, Inc.
6225 Lusk Boulevard
San Diego, CA 92121
ATTN: Mia Corral Brown, Senior Relationship Manager
City: City of Lake Forest
100 Civic Center Drive
Lake Forest, CA 92630
ATTN: City Clerk
Such notice shall be deeme d made when personally delivered or when mailed, forty -eight (48) hours after deposit in the U.S. Mail, first class postage prepaid and addressed to the party at its applicable address. Actual notice shall be deemed adequate notice on the date actual not ice occurred, regardless of the method of service.
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3.6.2 Ownership of Materials and Confidentiality.
3.6.2.1 Documents & Data; Licensing of Intellectual Property . This Agreement creates a non-exclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodied in plans, specifications, studies, drawings, estimates, and other documents or works of authorship fixed in any tangible medium of expression, including but not limited to, ph ysical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Consultant under this Agreement ("Documents & Data"). Consultant shall require all subconsultants to agree in writing that Cit y is granted a non -exclusive and perpetual license for any Documents & Data the subconsultant prepares under this Agreement. Consultant represents and warrants that Consultant has the legal right to license any and all Documents & Data.
Consultant makes no such representation and warranty in regard to Documents & Data which were prepared by design professionals other than Consultant or provided to Consultant by the City. City shall not be limited in any way in its use of the Documents & Data at any time, provided that any such use not within the purposes intended by this Agreement shall be at City's sole risk.
3.6.2.2 Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, writte n information, and other Documents & Data either created by or provided to Consultant in connection with the performance of this Agreement shall be held confidential by Consultant. Such materials shall not, without the prior written consent of City, be us ed by Consultant for any purposes other than the performance of the Services. Nor shall such materials be disclosed to any person or entity not connected with the performance of the Services or the Project. Nothing furnished to Consultant which is otherw ise known to Consultant or is generally known, or has become known, to the related industry shall be deemed confidential. Consultant shall not use City's name or insignia, photographs of the Project, or any publicity pertaining to the Services or the Proj ect in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of City.
3.6.2.3 Confidential Information. The City shall refrain from releasing Consultant’s proprietary information ("Proprieta ry Information") unless the City's legal counsel determines that the release of the Proprietary Information is required by the California Public Records Act or other applicable state or federal law, or order of a court of competent jurisdiction, in which case the City shall notify Consultant of its intention to release Proprietary Information.
Consultant shall have five (5) working days after receipt of the Release Notice to give City written notice of Consultant's objection to the City's release of Proprietary Information. Consultant shall indemnify, defend and hold harmless the City, and its officers, directors, employees, and agents from and against all liability, loss, cost or expense (including attorney’s fees) arising out of a legal action brought to compel the release of Proprietary Information. City shall not release the Proprietary Information after receipt of the Objection Notice unless either: (1) Consultant fails to fully indemnify, defend (with City's choice of legal counsel), and hold City harmless from any legal action brought to compel such release; and/or (2) a final and non-appealable order by a court of competent jurisdiction requires that City release such information.
3.6.3 Cooperation; Further Acts . The Parties shall fully cooperate with o ne another, and shall take any additional acts or sign any additional documents as may be necessary, appropriate or convenient to attain the purposes of this Agreement.
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party, either legal, administrative or otherwise, arising out of or in connection with this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the losing party reasonable attorney's fees and all other costs of such action.
3.6.5 Indemnification.
To the fullest extent permitted by law, Consultant shall defend (with counsel of City’s choosing), indemnify and hold the City, its officials, officers, employees, volunteers and agents free and harmless from any and all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury of any kind, in law or equity, to property or persons, including wrongful death, in any manner arising out of, pertaining to, or incident to any alleged acts, errors or omissions, or willful misconduct of Consultant, its officials, officers, employees, subcontractors, consultants or agents in connection with the performance of the Consultant's Services, the Project or this Agreement, including without limitation the payment of al l damages, expert witness fees and attorneys fees and other related costs and expenses. Consultant's obligation to indemnify shall not be restricted to insurance proceeds, if any, received by the Consultant or the City, its officials, officers, employees, agents or volunteers.
If Consultant’s obligation to defend, indemnify, and/or hold harmless arises out of Consultant’s performance as a “design professional ” (as that term is defined under Civil Code section 2782.8), then, and only to the extent required by Civil Code section 2782.8, which is fully incorporated herein, Consultant’s indemnification obligation shall be limited to claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the Consultant, and, upon Consultant obtaining a final adjudication by a court of competent jurisdiction, Consultant’s liability for such claim, including the cost to defend, shall not exceed the Consultant’s proportionate percentage of fault.
3.6.6 Entire Agreement. This Agreement co ntains the entire Agreement of the parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings or agreements. This Agreement may only be modified by a writing signed by both parties.
3.6.7 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Orange County.
3.6.8 Time of Essence. Time is of the essence for each and every provision of this Agreement.
3.6.9 City's Right to Employ Other Consultants . City reserves right to emplo y other consultants in connection with this Project.
3.6.10 Successors and Assigns . This Agreement shall be binding on the successors and assigns of the parties.
3.6.11 Assignment or Transfer . Consultant shall not assign, hypothecate, or transfer, either directly or b y operation of law, this Agreement or any interest herein without the prior written consent of the City. Any attempt to do so shall be null and void, and any assignees, hypothecates or transferees shall acquire no right or interest by reason of such attem pted assignment, hypothecation or transfer.
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3.6.12 Construction; References; Captions. Since the Parties or their agents have participated fully in the preparation of this Agreement, the language of this Agreement shall be construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days or period for performance shall be deemed calendar days and not work days. All references to Consultant include all personnel, employees, agents, and subconsultants of Consultant, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, and volunteers except as otherwise specified in this Agreement. The captions of the various articles and paragr aphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content, or intent of this Agreement.
3.6.13 Amendment; Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.
3.6.14 Waiver. No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual rights by custom, estoppel, or otherwise.
3.6.15 No Third -Party Beneficiaries . There are no intended third party beneficiaries of any right or obligation assumed by the Parties.
3.6.16 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.
3.6.17 Prohibited Interests. Consultant maintains and warr ants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Further, Consultant warrants that it has not paid nor has it agreed to pay any company o r person, other than a bona fide employee working solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or o btain any present or anticipated material benefit arising therefrom.
3.6.18 Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subconsultant, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. Such non -discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. Consultant shall also comply with all relevant provisions of City's Minority Business Enterprise program, Affirmative Action Plan or other related programs or guidelines currently in effect or hereinafter enacted.
3.6.19 Labor Certification. By its signature hereunder, Consultant certifies that it is aware of the provisions of Section 3700 of the California Labor Code which require every employer to be insured against liability for Worker's Compensation or to undertake self-insurance in accordance with the provisions of that Code, and agrees to comply with such provisions before DocuSign Envelope ID: 41CB081C-3F5B-4701-9CCD-047BF06E95DF Item: 17
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commencing the performance of the Services.
3.6.20 Authority to Enter Agreement. Consultant has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and bind each respective Party.
3.6.21 Counterparts. This Agreement may be signed in counterparts, each of which shall constitute an original.
3.7 Subcontracting.
3.7.1 Prior Approval Required. Consultant shall not subcontract any portion of the work required by this Agreement, except as expressly stated herein, without prior written approval of City. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement.
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CITY OF LAKE FOREST CHANDLER ASSET MANAGEMENT, INC.
By:
By:
Robert Pequeño
Mayor
Martin Cassell
CEO & Chair of the Board
[If Corporation, TWO SIGNATURES,
President OR Vice President AND
Secretary OR Treasurer REQUIRED]
ATTEST:
By:
Nicole Dragoo, JD, IACCP
Corporate Secretary
By:
Lisa Berglund
City Clerk
APPROVED AS TO FORM:
By:
Best Best & Krieger LLP
City Attorney
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Exhibit “A”-1
EXHIBIT "A"
SCOPE OF SERVICES AND ADDITIONAL PROVISIONS
SCOPE OF SERVICES
Specific responsibilities of the Consultant include, but are not limited to the following:
1. General Investment Portfolio Management Services
a. Manage the City’s investment portfolio pursuant to the specific, stated investment objectives. Place all orders fo r the purchase and sale of securities, communicate settlement information to the City’s staff and coordinate security settlement. Execute all approved trades through competitive bidding processes when possible. Management of the portfolio will be in a fidu ciary capacity.
b. Ensure the portfolio is in compliance with applicable laws and the City’s Investment Policy including ordinances and resolutions relating to the investment of public funds.
c. Perform broker/dealer due diligence and maintain relations with th e broker/dealer community.
d. Investment Pool management: investigation of any pools, develop a questionnaire to monitor pools on an ongoing basis.
e. Continually monitor market conditions and circumstances and report on any recommended changes to policies, str ategies, and specific positions. f. Firms shall not have custody or possession of the funds or securities that the City has placed under its management. City has retained a custodian or safekeeping agent to take and have possession of its invested assets.
2. Investment Philosophy and Strategy Advisory Services a. Provide assistance in developing and implementing an investment strategy that will maintain or enhance portfolio quality and performance within the parameters of the City’s Investment Policy and cash flow needs. b. Establish and continually monitor an appropriate performance benchmark for the investment portfolio.
c. Annually, or more often, if necessary, review the City’s Statement of Investment Policy and provide recommended changes as needed per California Government Code or to incorporate best practices as provided by relevant statewide and national organizations. The City’s Investment Policy will be submitted to the Audit Committee and the City Council for approval on an annual basis.
d. Serve as a general r esource to the City’s staff for information, advice, and DocuSign Envelope ID: 41CB081C-3F5B-4701-9CCD-047BF06E95DF Item: 17
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Exhibit “A”-2
training regarding fixed -income investments. Communicate as necessary with City staff to understand the City’s investment operations.
3. Reporting and Meetings
a. Provide the City with investment reports t hat shall include, but not be limited to the following:
i. Monthly statements with all the information required by the California Government Code and Governmental Accounting
Standards Board (GASB). These reports must include, but not limited to: detailed port folio holdings including purchase price, accrued interest, amortized cost, market and book values, purchase date, maturity date, next upcoming potential call date, assigned security ratings by a nationally recognized statistical rating organization (NRSRA) , principal and interest payments, effective earnings rate, yield to maturity, days to maturity, and portfolio summary statistics. Other reporting functions to align with current investment policy would include:
1. Breakdown of portfolio by type of investment, showing dollar amount and percent of portfolio invested in each.
2. Side-by-side comparison of the current portfolio to the Policy limits for type, maturity, issuer and quality.
3. Annualized return and the weighted average maturity on portfolio.
4. Annualized return and the weighted average to call on portfolio.
5. Summary of market value by type of security and for total portfolio compared to book value.
6. Breakdown by issuer within each investment type with actual vs. allowed percentages and most recent quarterly rating of issuer.
7. Distribution of investments broken down by selling institution in dollar amount.
8. Any funds, investments or programs, including loans, which are under management of contracted parties.
These reports are required to be completed no later than the 20 th of the month for the immediately preceding month for presentation to the City Council at its next available meeting.
Quarterly investment reports including a description of market conditions, investment strategies employed, performance, and suggested changes to investment strategy. The performance numbers shall be presented as required by the CFA Institute’s Global Investment Performance Standards (GIPS).
Annual portfolio performance reports, based on the City’s fiscal year, including, but not limited to: local and national economy, the City’s portfolio holdings, performance objectives, and policy compliance.
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Exhibit “A”-3
b. Attend Audit Committee or City Council meetings as necessary.
ADDITIONAL PROVISIONS
1. Investment Policy. In investing and reinvesting Client’s assets, Chandler shall comply with Client’s Investment Policy, which is attached to this Exhibit A.
2. Authority of Chandler. Chandler is hereby granted full discretion to invest and reinvest all assets under its management in any type of security it deems appropriate, subject to the instructions given or guidelines set by Representative.
3. Electronic Delivery. From time to time, Chandler may be required to deliver certain documents to Client such as account information, notices and required disclosures. Client hereby consents to Chandler’s use of electronic means, such as email, to make such delivery. This delivery may include notification of the availability of such document(s) on a website, and Client agrees that such notification will constitute “delivery”. Client further agrees to provide Chandler with Client’s email address(s) and to keep this information current at all times by promptly notifying Chandler of any change in email address(s).
4. Proxy Voting. Chandler will vote proxies on behalf of Client unless otherwise instructed. Chandler has adopted and implemented written policies and procedures and will provide Client with a description of the proxy voting procedures upon request. Chandler will provide information regarding how Clients’ proxies were voted upon request. To request proxy policies or other information, please contact us by mail at the address provided, by calling 800-317-4747 or by emailing your request to [email protected].
5. Custody of Securities and Funds. Chandler shall not have custody or possession of the funds or securities that Client has placed under its management. Client shall appoint a custodian to take and have possession of its assets. Client recognizes the importance of comparing statements received from the appointed custodian to statements received from Chandler. Client recognizes that the fees expressed above do not include fees Client will incur for custodial services.
6. Valuation. Chandler will value securities held in portfolios managed by Chandler no less than monthly. Securities or investments in the portfolio will be valued in a manner determined in good faith by Chandler to reflect fair market value.
7. Investment Advice. Client recognizes that the opinions, recommendations and actions of Chandler will be based on information deemed by it to be reliable, but not guaranteed to or by it.
8. Payment of Commissions. Chandler may place buy and sell orders with or through such brokers or dealers as it may select. It is the policy and practice of Chandler to strive for the best price and execution and for commission and discounts which are competitive in relation to the value of the transaction and which comply with Section 28(e) of the Securities and DocuSign Envelope ID: 41CB081C-3F5B-4701-9CCD-047BF06E95DF Item: 17
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Exchange Act. Nevertheless, it is understood that Chandler may pay a commission on transactions in excess of the amount another broker or dealer may charge, and that Chandler makes no warranty or representation regarding commissions paid on transactions hereunder.
9. Other Clients. It is further understood that Chandler may be acting in a similar capacity for other institutional and individual clients, and that investments and reinvestments for Client's portfolio may differ from those made or recommended with respect to other accounts and clients even though the investment objectives may be the same or similar. Accordingly, it is agreed that Chandler will have no obligation to purchase or sell for Client's account any securities which it may purchase or sell for other clients.
10. Receipt of Brochure and Privacy Policy. Client hereby acknowledges receipt of the disclosure statement or "brochure" and “brochure supplement” also known as Part 2A and Part 2B of Form ADV, required to be delivered pursuant to Rule 204-3 of the Investment Advisers Act of 1940 (Brochure). Client further acknowledges receipt of Chandler’s Privacy Policy, as required by Regulation S-P.
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Exhibit “B”-1
EXHIBIT "B"
SCHEDULE OF SERVICES
Consultant shall perform services as described in Exhibit “A” Scope of Services at the direction of the City.
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Exhibit “C”-1
EXHIBIT "C"
COMPENSATION
City shall compensate Chandler monthly an amount calculated on the average market value of City's portfolio, including accrued interest, in accordance with the following schedule:
Assets Under Management Annual Investment Management Fee First $50 million 0.09 of 1% (9 basis points)
Next $50 million 0.06 of 1% (6 basis points)
Assets in excess of $100 million 0.04 of 1% (4 basis points)
In consideration for Client funding the managed portfolio with a minimum of one hundred thirty million dollars ($130,000,000), Chandler will apply an annual discount of nine thousand dollars ($9,000.00), deducted monthly for the first three (3) calendar years of the contract ($750 per month for 36 months). If the managed portfolio falls below one hundred million dollars ($100,000,000), the discount will be discontinued effective the month following the decrease in portfolio assets under management.
The fees expressed above do not include any custody fees that may be charged by Client's bank or other third party custodian.
Fees shall be prorated to the effective date of termination on the basis of actual days elapsed, and any unearned portion of prepaid fees shall be refunded. Client is not required to pay any start-up or closing fees; there are no penalty fees.
Fees shall be deducted monthly in arrears from Client’s custody account.
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Exhibit “D”-1
EXHIBIT “D”
INSURANCE REQUIREMENTS
3.2.11 Insurance.
3.2.11.1 Time for Compliance . Consultant shall not commence work under this Agreement until it has provided evidence satisfactory to the City that it has secured all insurance required under this section. In addition, Consultant shall not allow any subconsultant to commence work on any subcontract until it has provided evidence satisfactory to the City that the subconsultant has secured all insurance required under this section.
3.2.11.2 Types of Insurance Required . As a condition precedent to the effectiveness of this Agreement for work to be performed hereunder, and without limiting the indemnity provisions of the Agreement, the Consultant, in partial performance of its obligations under such Agreement, shall procure and maintain in full force and effect during the term of the Agreement the following policies of insurance. If the existing policies do not meet the insurance requirements set forth herein, Consultant agrees to amend, supplement or endorse the policies to do so.
(A) Commercial General Liability: Commercial General Liability Insurance which affords coverage at least as broad as Insurance Services Office "occurrence" form CG 0001, or the exact equivalent, with limits of not less than $1,000,000 per occurrence and no less than $2,000,000 in the general aggregate. Defense costs shall be paid in addition to the limits. The policy shall contain no endorsements or provisions (1) limiting coverage for contractual liability; (2) excluding coverage for claims or suits by one insured against another (cross-liability); or (3) containing any other exclusion(s) contrary to the terms or purposes of this Agreement. (B) Automobile Liability Insurance: Automobile Liability Insurance with coverage at least as broad as Insurance Services Office Form CA 0001 covering "Any Auto" (Symbol 1), or the exact equivalent, covering bodily injury and property damage for all activities with limits of not less than $1,000,000 combined limit for each occurrence. (C) Workers' Compensation: Workers' Compensation
Insurance, as required by the State of California and Employer's Liability Insurance with a limit of not less than $1,000,000 per accident for bodily injury and disease. (D) Professional Liability (Errors & Omissions): Professional Liability insurance or Errors & Omissions insurance appropriate to Consultant’s profession with limits of not less than $1,000,000. Co vered professional services shall specifically include all work to be performed under the Agreement and delete any exclusions that may potentially affect the work to be performed (for example, any exclusions relating to lead, asbestos, pollution, testing, underground storage tanks, laboratory analysis, soil work, etc.). If coverage is written on a claims-made basis, the retroactive date shall precede the effective date of the initial Agreement and continuous coverage will be maintained or an extended reporting period will be exercised for a period of at least three (3) years from termination or expiration of this Agreement.
3.2.11.3 Insurance Endorsements . Required insurance policies shall contain the following provisions, or Consultant shall provide endorsements on forms approved by the City to add the following provisions to the insurance policies:
(A) Commercial General Liability:
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Exhibit “D”-2
(1) Additional Insured: The City, its officials, officers, employees, agents, and volunteers shall be additional insureds with regard to liability and defense of suits or claims arising out of the performance of the Agreement.
Additional Insured Endorsements shall not (1) be
restricted to "ongoing operations"; (2) exclude "contractual liability"; (3) restrict coverage to "sole" liability of Consultant; or (4) contain any other exclusions contrary to the terms or purposes of this Agreement. For all policies of Commercial General Liability insurance, Consultant shall provide endorsements in the form of ISO CG 20 10 10 01 and 20 37 10 01 (o r endorsements providing the exact same coverage) to effectuate this requirement. (2) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium. (B) Automobile Liability:
(C) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium.
3.2.11.4 Professional Liability (Errors & Omissions):
(A) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancella tion has been served upon the City except ten (10) days shall be allowed for non-payment of premium. (B) Contractual Liability Exclusion Deleted: This insurance shall include contractual liability applicable to this Agreement. The policy must “pay on behalf of” the insured and include a provision establishing the insurer’s duty to defend.
3.2.11.5 Workers' Compensation:
(A) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium. (B) Waiver of Subrogation: A waiver of subrogation stating that the insurer waives all rights of subrogation against the City, its officials, officers, employees, agents, and volunteers.
3.2.11.6 Primary and Non -Contributing Insurance . All policies of Commercial General Liability and Automobile Liability insurance shall be primary and any other insurance, deductible, or self-insurance maintained by the City, its officials, offi cers, employees, agents, or volunteers shall not contribute with this primary insurance. Policies shall contain or be endorsed to contain such provisions.
3.2.11.7 Waiver of Subrogation . All policies of Commercial General Liability and Automobile Liability insura nce shall contain or be endorsed to waive subrogation against the City, its officials, officers, employees, agents, and volunteers or shall specifically allow Consultant or others providing insurance evidence in compliance with these specifications to DocuSign Envelope ID: 41CB081C-3F5B-4701-9CCD-047BF06E95DF Item: 17
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55136.00200\31918793.1
Exhibit “D”-3
waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against the City, its officials, officers, employees, agents, and volunteers, and shall require similar written express waivers and insurance clauses from each of its subconsultants.
3.2.11.8 Deductibles and Self-Insured Retentions. Any deductible or self- insured retention must be approved in writing by the City and shall protect the City, its officials, officers, employees, agents, and volunteers in the same manner and to the same extent as they would have been protected had the policy or policies not contained a deductible or self -insured retention.
3.2.11.9 Evidence of Insurance . The Consultant, concurrently with the execution of the Agreement, and as a condition precedent to th e effectiveness thereof, shall deliver either certified copies of the required policies, or original certificates on forms approved by the City, together with all endorsements affecting each policy. Required insurance policies shall not be in compliance i f they include any limiting provision or endorsement that has not been submitted to the City for approval. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf. At least fifteen (15 days) prior to the expiration of any such policy, evidence of insurance showing that such insurance coverage has been renewed or extended shall be filed with the City. If such coverage is cancelled or reduced and not replaced immediat ely so as to avoid a lapse in the required coverage, Consultant shall, within ten (10) days after receipt of written notice of such cancellation or reduction of coverage, file with the City evidence of insurance showing that the required insurance has been reinstated or has been provided through another insurance company or companies.
3.2.11.10 Failure to Maintain Coverage . In the event any policy of insurance required under this Agreement does not comply with these specifications or is canceled and not replaced immediately so as to avoid a lapse in the required coverage, City has the right but not the duty to obtain the insurance it deems necessary and any premium paid by City will be promptly reimbursed by Consultant or City will withhold amounts sufficient to pay premium from Consultant payments. In the alternative, City may cancel this Agreement effective upon notice.
3.2.11.11 Acceptability of Insurers . Each such policy shall be from a company or companies with a current A.M. Best's rating of no less than A:VII and author ized to transact business of insurance in the State of California, or otherwise allowed to place insurance through surplus line brokers under applicable provisions of the California Insurance Code or any federal law.
3.2.11.12 Enforcement of Agreement Provisions (no n estoppel) .
Consultant acknowledges and agrees that actual or alleged failure on the part of the City to inform Consultant of non-compliance with any requirement imposes no additional obligation on the City nor does it waive any rights hereunder.
3.2.11.13 Requirements Not Limiting . Requirement of specific coverage or minimum limits contained in this Appendix are not intended as a limitation on coverage, limits, or other requirement, or a waiver of any coverage normally provided by any insurance.
3.2.11.14 Insurance for Sub consultants. Consultant shall include all subconsultants engaged in any work for Consultant relating to this Agreement as additional insureds under the Consultant's policies, or the Consultant shall be responsible for causing DocuSign Envelope ID: 41CB081C-3F5B-4701-9CCD-047BF06E95DF Item: 17
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Exhibit “D”-4
subconsultants to purchase th e appropriate insurance in compliance with the terms of these Insurance Requirements, including adding the City, its officials, officers, employees, agents, and volunteers as additional insureds to the subconsultant's policies. All policies of Commercial General Liability insurance provided by Consultant’s subconsultants performing work relating to this Agreement shall be endorsed to name the City, its officials, officers, employees, agents and volunteers as additional insureds using endorsement form ISO C G 20 38 04 13 or an endorsement providing equivalent coverage. Consultant shall not allow any subconsultant to commence work on any subcontract relating to this Agreement until it has received satisfactory evidence of subconsultant’s compliance with all insurance requirements under this Agreement, to the extent applicable. The Consultant shall provide satisfactory evidence of compliance with this section upon request of the City.
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ATTACHMENT 2
Item: 17
379
Reference Check for Chandler Asset Management
Investment Advisory and Management Services
Contact 1 Contact 2 Contact 3 Contact 4 Contact 5
City of Brea, CA City of Murrieta, CA City of San Clemente, CA City of San Juan Capistrano, CA City of Tustin, CA # Questions Response Response Response Response Response 1 What were the services performed?
Responsible for buying and
selling securities and managing
the City's investment portfolio
based on the City's investment
policy.
Investment advisory services to
manage the City's investment
portfolio.
Manage purchasing and selling
of securities on behalf of the
City.
They are advisors to the City's
invest portfolio. Responsible for
recommending investment
purchases and policy changes.
Oversee the City's investment
portfolio while complying with
the City's investment policy.
2 How would you rate the quality of work?
Scale
1-5: 1 Poor, 2 Ok, 3 Good, 4 Very Good, 5
Excellent
5 5-Provide informative and easy
to read reports 5
5-Very good at what they do.
Pleased with the
recommendations they have
provided and understanding
the City's investment policy.
5 – Excellent services
3 Were there any delays or deviations from
the firms' workplan? If so, what caused
them?
No delays or deviations No deviations from workplan.
Have gone above and beyond. No delays or deviations No delays or deviations No delays or deviations.
Always timely and responsive
with any work they provide.
4 Did the firm meet all deadlines? Yes Yes Yes Yes Yes
5 Was regular communication satisfactory? Yes Yes Yes Yes Yes 6 How would you rate the firm’s approach
and performance when communicating
with City Council, Audit Committee, and
Investment Committee? Scale
1-5: 1 Poor, 2 Ok, 3 Good, 4 Very Good, 5
Excellent
5 –Chandler communicates on
a quarterly basis with the
City's Investment Advisory
Committee and once a year to
City Council.
5 - Excellent job in
communicating with City
Council members.
5-Investment committee
receives quarterly reports.
5-Do not have Finance or Audit
Committee. Great at
communicating with City
Council members on a quarterly
biases.
5 – Excellent job in
communicating with City
Council, Audit Committee, and
Investment Advisory Group. All
reports are informative and
easy to read.
7 Would you consider using this firm for
future projects/services?
Yes, would defiantly use
Chandler Asset Management
for future projects/ services
Yes Yes Yes Yes
8 Do you have any additional comments or
information regarding your experience
with the firm?
No additional comments No additional comments No additional comments No additional comments No additional comments 1 of 1
Item: 17
380
CITY COUNCIL AGENDA REPORT
MEETING DATE: 12/20/2022
DEPARTMENT: City Clerk
SUBJECT:
SELECTION OF MAYOR AND MAYOR PRO TEM FOR THE 2023 CALENDAR YEAR
RECOMMENDED ACTION(S):
1. SELECTION OF MAYOR:
a. OPEN nominations for Mayor;
b. CLOSE nominations for Mayor;
c. Members of the City Council VOTE;
d. City Clerk will DECLARE results.
e. Mayor assumes the role as Mayor on January 1, 2023
2. SELECTION OF MAYOR PRO TEM:
a. OPEN nominations for Mayor Pro Tem;
b. CLOSE nominations for Mayor Pro Tem;
c. Members of the City Council VOTE;
d. City Clerk DECLARE results.
e. Mayor Pro Tem assumes the role as Mayor Pro Tem on January 1, 2023
EXECUTIVE SUMMARY:
Currently, there is no City policy in place as it relates to electing a new Mayor and Mayor Pro Tem. Therefore, at this time all members of the City Council are eligible to serve as Mayor or as Mayor Pro Tem. Below is a list of City Council Members that have served as Mayor and/or Mayor Pro Tem within the last four years.
Table 1. Mayor and Mayor Pro Tem
Mayor Mayor Pro Tem
2022 Robert Pequeno Doug Cirbo
2021 Scott Voigts Robert Pequeno
2020 Neeki Moatazedi Mike James
2019 Mark Tettemer Neeki Moatazedi
Item: 18
381
FISCAL IMPACT:
There is minimal fiscal impact associated with the recommended action.
ATTACHMENTS:
None.
Submitted By: Lisa Berglund, City Clerk
Approved By: Debra Rose, City Manager
Item: 18
382
CITY COUNCIL AGENDA REPORT
MEETING DATE: 12/20/2022
DEPARTMENT: City Clerk
SUBJECT:
RECOGNITION OF MAYOR PEQUEÑO FOR HIS SERVICE IN 2022
RECOMMENDED ACTION(S):
Present gavel to Mayor Pequeño in recognition of his service and leadership in 2022.
EXECUTIVE SUMMARY:
The City Council reorganizes every year and selects a new Mayor and Mayor Pro Tem to serve for the following 12 months. Tonight is the last regular City Council meeting scheduled for 2022. Therefore, it is appropriate to recognize Mayor Robert Pequeño for his service as Mayor in 2022. The incoming 2023 Mayor will present a mounted gavel to commemorate the meetings called to order during Mayor Pequeño’s tenure as Mayor in 2022.
FISCAL IMPACT:
There is no fiscal impact associated with the recommended action.
ATTACHMENTS:
None.
Submitted By: Lisa Berglund, City Clerk
Approved By: Debra Rose, City Manager
Item: 19
383
CITY COUNCIL AGENDA REPORT
MEETING DATE: 12/20/2022
DEPARTMENT: City Clerk
SUBJECT:
COMMENTS BY OUTGOING MAYOR
RECOMMENDED ACTION(S):
Extend the opportunity to outgoing Mayor Pequeño to present comments.
EXECUTIVE SUMMARY:
The City's longstanding practice is to allow the outgoing Mayor a comment period at the end of their term (outside of normal City Council comments) to remark on the past achievements and highlights during their tenure.
FISCAL IMPACT:
There is no fiscal impact associated with the recommended action.
ATTACHMENTS:
None.
Submitted By: Lisa Berglund, City Clerk
Approved By: Debra Rose, City Manager
Item: 20
384