The River Trunk consists of a pipeline that ranges from 24-inch to 60-inch in diameter that conveys flow from the Beard Industrial Park to the City of Modesto Regional Water Recycling Facility – Sutter Campus (Sutter Campus). The total length of the River Trunk is approximately five miles and conveys approximately 24 percent of the City’s domestic wastewater flow. The Beard Brook Siphon consists of a 48-inch diameter trunk that starts at the west end of Oregon Drive, at the Gallo facility, and crosses under Beard Brook Park to Morton Boulevard. The current location of the River Trunk, adjacent to the Tuolumne River, poses access limitations to operations staff and could be subject to catastrophic damage in the event of elevated river flows. The Beard Brook Siphon also poses access limitations. As City staff evaluated these projects, consideration was given to realigning the River Trunk away from its current location to an alternate route within the public right-of-way and replacing the Beard Brook Siphon with a gravity system. Additional consideration was given to realigning the Sutter Trunk to connect to the new River Trunk.
Due to the magnitude of the entire River Trunk project in terms of construction and costs, the project was split into three (3) separate sub-projects:
1) River Trunk Pump Station - Project No. 1 (the “Project”), to be financed with the prosed bond issuance) included the design of a major lift station and force-mains, and the gravity sewer crossing under Beard Brook Park.
2) River Trunk Gravity System – Project No. 2, gravity trunks system along Colorado Avenue
3) River Trunk Shackelford – Project No. 3 includes the pump station for the Shackelford Crossing.
On April 1, 2014, by Resolution No. 2014-121, Council approved an Agreement with Carollo Engineers, Inc., (Carollo) for the preparation of a Preliminary Design Report (PDR), which serves as the basis of design for the project. The PDR evaluated improvements necessary, determined the most economical and beneficial approach, and evaluated different alternatives to address the existing deficiencies of the River Trunk.
The PDR confirmed that the existing River Trunk does not provide adequate capacity to convey peak wet weather flows, exposing the City to the risk of public health impacts and fines from sewer system overflows (SSOs). Additional flow capacity is required for the River Trunk to prevent SSOs in highly environmentally sensitive areas, such as Dry Creek and the Tuolumne River.
On March 22, 2016, by Resolution No. 2016-125, Council approved an Agreement with Carollo for Final Design Services for the River Trunk Realignment Project. The scope of the Agreement included the design of a major lift station and force-mains (River Trunk Pump Station - Project No. 1), the gravity sewer crossing under Beard Brook Park and gravity system along Colorado Avenue (River Trunk Gravity System – Project No. 2), and a pump station for the Shackelford Crossing (River Trunk Shackelford – Project No. 3). Upon completion of these three projects the former River Trunk will be available as a redundant system for domestic and industrial waste flows, providing increased reliability for industrial users and reduced liability in the event of a failure by preventing the discharge of raw sewage into the Tuolumne River. River Trunk Gravity #22..
- 773 -
City Council Meeting, September 23, 2025
Award River Trunk Realignment – Pump Station Project and New Bond Issuance
System – Project No. 2 has been completed and River Trunk Shackelford – Project No. 3 is currently under construction.
On November 13, 2023, by Resolution No. 2023-511, Council approved an Agreement with Carollo to complete the design and offer bidding assistance for Project 1 - River Trunk Realignment – Pump Station Project.
DISCUSSION:
Project Bid:
Consistent with the requirements of the Public Contract Code section 20101, the City issued a Request for Qualification (RFQ) to evaluate and prequalify perspective bidders. The City received nine (9) responses and following an evaluation by City Staff and Carollo, the consulting engineering firm, seven (7) contractors were deemed qualified to bid on the project.
The Project was advertised for bids to the prequalified bidders on April 30, 2025. Bids were publicly opened on July 1, 2025, pursuant to City Charter Section 1307. A total of four bids were received and following review of bid packages, Shimmick Construction Company, Inc, of Irvine, CA, was the responsible bidder with the lowest responsive bid. The bid tabulation is attached.
The bid analysis is:
Number of bids received 4
Number of bids within 10% of engineer’s estimate 1
Number of bids above the engineer’s estimate 4
Number of bids below the engineer’s estimate 0
Percent of lowest responsive bid above the engineer’s estimate 9.02% The lowest responsive bid was provided by Shimmick Construction Company, Inc, of Irvine, CA, which is 9.02% above the engineer’s estimate. The next bid was 26.72% above the engineer’s estimate and the highest bid received was 67.69% above the engineer’s estimate. Bidder competition and participation were evident as the City received four bids.
Modesto Municipal Code Section 8-3.203 generally requires all purchases, which meet or exceed $50,000 for material, equipment or contractual services to be formally bid. The award of contract for the construction of River Trunk Realignment – Pump Station Project to Shimmick Construction Company, Inc, of Irvine, CA, conforms to the Modesto Municipal Code, 8-3.203.
The City’s “Change Order Approval Policy” enacted by Council Resolution No. 1994-443 on July 19, 1994, revised on July 9, 2019, by Council Resolution No. 2019-326 and revised a second time on September 12, 2023, by Council Resolution No. 2023-405 established a Contract change order authority of 8% for Construction Contracts of this dollar value. However, after reviewing the plans and specifications, and given the nature and magnitude of this project where unforeseen utilities or buried structures, and other unaccounted for issues may arise, it is likely that this project could exceed the Director’s Authority of 8% ($9,224,800) of the Construction Contract amount of $115,560,000. Therefore, staff is requesting that the Director’s #22..
- 774 -
City Council Meeting, September 23, 2025
Award River Trunk Realignment – Pump Station Project and New Bond Issuance
Authority to issue change orders be increased to 10% ($11,556,000) of the Construction Contract amount.
While the contingency policy is utilized for each construction contract awarded by the City, it is not written into each contract, nor is it a guaranteed amount included in the final compensation to the contractor. Prior to bidding a project, staff work diligently to ensure that all projects and bid packages contain well-defined scopes of work and that all projects stay within budget.
Considering the size and complexity of the project, staff recommends utilizing a consultant to provide Construction Management and Inspection Services.
In accordance with Administrative Directive 3.1, Selection Procedures for Professional Consultants who Provide Architectural and Engineering Services for Capital Projects, a Request for Proposals (RFP) was issued on May 29, 2024 to the four (4) firms on the City’s Prequalified Consultant List. On July 23, 2024, staff received submissions from two (2) of the four (4) firms.
In accordance with Modesto Municipal Code 8-3.204(a) “Exceptions to Formal Bidding Requirements.”, Agreements for Professional Services are exempt from the bidding requirements of Modesto Municipal Code 8-3.203 if competitive quotations or proposals have been sought informally from at least three (3) qualified entities.
Therefore, staff is requesting approval of a Construction Management and Inspection Services Agreement with West Yost Associates in the amount of $8,500,000, plus $850,000 in additional services (if needed), for a total amount not to exceed $9,350,000.
Additionally, considering the size and complexity of the project and that Carollo is the Engineerof-Record, Engineering Support During Construction services will be needed from Carollo to ensure construction of the facilities meets the original design described in the plans and specifications.
Modesto Municipal Code Section 8-3.203 generally requires all purchases, which meet or exceed $100,000 for material, equipment, or contractual services to follow formal bid procedures. However, exceptions to the formal bidding process are granted in Modesto Municipal Code Section 8-3.204(d) “Where the Purchasing Manager, in his or her discretion, determines that a process other than the formal bid procedure set forth in Section 8-3.203 will result in procurement for the City at the lowest possible cost commensurate with the desired quality.”
Here, due to the professional liability involved, recruiting an engineering firm to transition a project from the design phase to the construction phase would most likely generate little interest, unless provisions were made in the Request for Proposal that the City was willing to cover the costs associated with the review, approval, and modification if necessary of the previous firms documents. Retaining the Engineer of Record throughout the course of the design, bid, build process is beneficial in that it results in a time and cost savings for the City, along with maintaining a consistent level of professional service and project specific expertise #22..
- 775 -
City Council Meeting, September 23, 2025
Award River Trunk Realignment – Pump Station Project and New Bond Issuance
Therefore, staff is requesting approval of an Engineering Support During Construction Agreement with Carollo Engineers for Engineering Support During Construction in the amount of $5,675,000, plus $567,500 in additional services (if needed), for a total amount not to exceed $6,242,500.
Bond Financing
PFM Financial Advisors LLC (PFM), the City’s Municipal Advisor, worked with City staff to evaluate financing options for the Project. The most common type of financing to fund this type of Project for a Utility Fund would be utilizing long-term fixed-rate Revenue Bonds. Revenue Bonds are secured through a pledge of utility revenues and allow public agencies to finance these large-scale infrastructure projects without requiring an immediate, large increase in utility rates.
City staff have established a financing team in collaboration with our Utilities Department, with PFM as the municipal advisor, Norton Rose Fullbright US LLP as bond and disclosure counsel and Siebert Williams Shank and Co., LLC, as the underwriter (procured via competitive RFP process), to assist with the financing process.
On behalf of the City, PFM solicited proposals from qualified underwriting firms and received six proposals, from Bank of America Securities, Wells Fargo Corporate & Investment Banking, Stifel, Nicolaus & Company, Loop Capital Markets, Siebert Williams Shank & Co and Oppenheimer & Co. After careful evaluation of experience, approach and pricing, Siebert Williams Shank was selected to serve as the underwriter on this deal based on being one of the top ranked utility bond underwriters and their approach with obtaining the best pricing for this transaction. Underwriter compensation will include a “takedown” of $1.5 per $1,000 of bonds issued as well as certain underwriter expenses and legal fees associated with transaction execution. The aggregate underwriter compensation including the takedown and expenses is expected to be no more than $150,000. As part of finalizing the bond documents, the draft Bond Purchase Agreement (BPA) will be incorporated as part of the Council agenda that the underwriter counsel will prepare and will be reviewed by City bond counsel, Norton Rose Fulbright. The BPA will capture the contractual agreement for the services with the underwriter, Siebert Williams Shank.
Once the financing team is in place, the financing process will involve developing transaction documents, meeting with the rating agency and getting credit rating for the proposed bond issuance, marketing and pricing the bonds, and finally closing the transaction and securing the funds.
The Wastewater Revenue Bond Indenture (Master Indenture), dated as of April 1, 2005 between the City and The Bank of New York Mellon Trust Company, N.A., authorizes the City to issue wastewater revenue bonds secured by a pledge of and first claim on the Net Revenues of the Wastewater System (as defined in the Master Indenture), which are held by the City in the Sewer Enterprise Fund established under the Master Indenture, to the payment of bonds and parity obligations issued thereunder. The proposed new bond issuance will incorporate the Sixth Supplemental Indenture with the previous supplementals being established from prior bond issuance as defined in the document.
#22..
- 776 -
City Council Meeting, September 23, 2025
Award River Trunk Realignment – Pump Station Project and New Bond Issuance
This bond issuance will also incorporate a Disclosure and Dissemination Agent Agreement to satisfy Rule 15c2-12(b)(5) of the Securities Exchange Act of 19341. This agreement will define requirements for continuing disclosures to investors, to ensure the City provides notice of the occurrence of certain material events relating to the outstanding securities that are likely to be of a material interest to bondholders or potential investors. Additionally, the City would be required to disclose annual financial information including audited financial statements and defined reporting requirements.
The transaction documents also include a Preliminary Official Statement which is the primary public offering statement for the issuance of the bonds. This document describes the wastewater system, the Project to be financed, and the economic, financial and demographic characteristics of the City.
FISCAL IMPACT:
The total estimated cost for the construction portion of this project is $143,900,000. Funding for the construction, contingency, administration, and City staff design support, will be budgeted in the current Fiscal Year 2025-26 Capital Improvement Program budget in account:
100646 – River Trunk Realignment
ANTICIPATED CONSTRUCTION EXPENDITURES:
Construction Contract (Shimmick Construction) $115,560,000 Construction Contingency (10%) $11,556,000
Construction Administration
Construction Management Services (West Yost) $8,500,000 Additional Services (10%) $850,000
City Staff $595,750
Engineering/Design/Administration
Engineering Support During Construction Services (Carollo) $5,675,000 Additional Services (10%) $567,500
City Staff $595,750
*TOTAL ANTICIPATED CONSTRUCTION EXPENDITURES: $143,900,000 *An appropriation transfer in the amount of $132,560,000 is necessary to fund the construction, contingency, construction administration, and design support during construction. This Project will be funded by the proposed not-to-exceed $60,000,000 bond issuance and the remaining amount will be funded through Wastewater Reserves. This bond issuance was factored into the current Sewer rate study based on the anticipated cash flow needed to fund this project. The allin interest rate on the bonds is expected to be about 5.0% to 5.5% and the annual debt service payments are estimated to be about $3.5 million to $4.5 million and will be subject to market conditions at the time of issuance. Per the current schedule bond pricing is expected in late 1 https://www.treasurer.ca.gov/cdiac/mmra/sec15c2-12.asp #22..
- 777 -
City Council Meeting, September 23, 2025
Award River Trunk Realignment – Pump Station Project and New Bond Issuance
October. The cost of bond issuance for this transaction is estimated to cost up to $500,000, which will be funded as part of the bond issuance. These costs include the expenses for underwriter services, bond counsel, and municipal advisor services.
In accordance with California Government Code Section 5852.12, Exhibit A of the Resolution outlines good faith estimates for the Series 2025 Bonds listed below. For detailed information please review the Resolution attached with the agenda item. • Estimated Principal Amount. $57,375,000
• Estimated True Interest Cost: 4.615%
• Estimated Finance Charge or Cost of Issuance. $410,000 (including underwriter compensation)
• Estimated Net Bond Proceeds. $60,000,000 (after accounting for Cost of Issuance) • Estimated Total Payment Amount or Total Debt Service. $112,225,000 (including debt service and estimated annual trustee fees over the life of the bonds) The good faith estimates are based on market conditions and best information available as of August 29, 2025.
CEQA/NEPA REQUIREMENTS:
Environmental review has been provided through the 2017 Wastewater Master Plan Environmental Impact Report (EIR) (SCH # 2016062033) certified by Council on January 28, 2020.
COMMITTEE RECOMMENDATION:
The upcoming construction project update report was presented to the Finance Committee on June 23, 2025, where the Committee accepted the report. The bond financing portion of this item was presented to the Finance Committee on August 25, 2025, and the Committee recommended forwarding the item to Council for approval.
RECOMMENDED COMMITTEE ACTION:
Staff Recommendation:
Resolution approving the Plans and Specifications for the River Trunk Realignment – Pump Station Project; accepting the Bid and Awarding a Construction Contract to Shimmick Construction Company, Inc, of Irvine, CA, in the amount of $115,560,000, authorizing the Director of Engineering Services to approve Change Orders up to the cumulative amount of $11,556,000, 10% of the original Contract price, for a total payment amount not to exceed $127,116,000 and authorizing the City Manager, or his designee, to execute the Agreement.
Resolution approving an Agreement with West Yost Associates, of Davis, CA, for Construction Management Services for the River Trunk Realignment – Pump Station Project in an amount not to exceed $8,500,000 for the identified scope of services, plus $850,000 for additional services (if needed), for a total amount not to exceed $9,350,000, and authorizing the City Manager, or his designee, to execute the Agreement.
Resolution approving an Agreement with Carollo Engineers Inc., of Walnut Creek, CA, for Engineering Support During Construction for the River Trunk Realignment – Pump Station 2 https://legiscan.com/CA/text/SB450/id/1652239
#22..
- 778 -
City Council Meeting, September 23, 2025
Award River Trunk Realignment – Pump Station Project and New Bond Issuance
Project, in an amount not to exceed $5,675,000 for the identified scope of services, plus $567,500 for additional services (if needed), for a total amount not to exceed $6,242,500 and authorizing the City Manager, or his designee, to execute the Agreement.
Resolution amending the fiscal year 2025-26 Capital Improvement Program budget in the amount of $132,560,000 to be transferred into the project from Wastewater Reserves to fully fund the construction, contingency, construction administration and design support during construction for the River Trunk Realignment – Pump Station Project and authorizing the City Manager, or his designee, to implement the provisions of this Resolution.
Resolution authorizing the issuance of not to exceed $60,000,000 principal amount of Wastewater Revenue Bonds, Series 2025, authorizing and directing execution of a Sixth Supplemental Wastewater Revenue Bond Indenture pursuant to which such bonds are issued, approving a Bond Purchase Agreement, an Official Statement and a Continuing Disclosure Agreement, and authorizing other official actions to execute the bond issuance.
Approved by:
William Wong, Director of Utilities
DeAnna Christensen, Director of Finance
Joseph P. Lopez, City Manager
Attachments:
1. Resolutions (5)
2. Construction Contract with Shimmick Construction Company, Inc, of Irvine, CA & Financial Interest Disclosure Form
3. Construction Management Agreement with West Yost Associates & Exhibits A-C
4. Engineering Support During Construction Agreement with Carollo Engineers & Exhibits A-C
5. Bid Results
6. Sixth Supplemental Indenture
7. Bond Purchase Agreement
8. Disclosure and Dissemination Agent Agreement
9. Preliminary Official Statement
#22..
- 779 -
9/23/2025/Utilities/WWong/Item X 1 2025-XX
MODESTO CITY COUNCIL
RESOLUTION NO. 2025-XX
RESOLUTION APPROVING THE PLANS AND SPECIFICATIONS FOR THE RIVER TRUNK REALIGNMENT – PUMP STATION PROJECT; ACCEPTING
THE BID AND AWARDING A CONSTRUCTION CONTRACT TO SHIMMICK
CONSTRUCTION COMPANY, INC, OF IRVINE, CA, IN THE AMOUNT OF $115,560,000, AUTHORIZING THE DIRECTOR OF ENGINEERING SERVICES
TO APPROVE CHANGE ORDERS UP TO THE CUMULATIVE AMOUNT OF $11,556,000, 10% OF THE ORIGINAL CONTRACT PRICE, FOR A TOTAL PAYMENT AMOUNT NOT TO EXCEED $127,116,000 AND AUTHORIZING
THE CITY MANAGER, OR HIS DESIGNEE, TO EXECUTE THE AGREEMENT WHEREAS, the River Trunk Realignment was one of the main priority projects identified in the 2016 Wastewater Collection System Master Plan and addresses deficiencies in the River Trunk, Sutter Trunks, and Beard Brook Siphon, and WHEREAS, the River Trunk consists of a pipeline that ranges from 24-inch to 60-inch in diameter that conveys flow from the Beard Industrial Park to the City of Modesto Regional Water Recycling Facility – Sutter Campus, and WHEREAS, the current location of the River Trunk, adjacent to the Tuolumne River, poses access limitations to operations staff and could be subject to catastrophic damage in the event of elevated river flows, and
WHEREAS, consideration was given to realigning the River Trunk away from its current location to an alternate route within the public right-of-way and replacing the Beard Brook Siphon with a gravity system, and
WHEREAS, consistent with the requirements of Public Contract Code section 20101, the City issued a Request for Qualifications to evaluate and prequalify prospective bidders; and
#22..
- 780 -
9/23/2025/Utilities/WWong/Item X 2 2025-XX
WHEREAS, the City received nine (9) responses and following an evaluation by City Staff and Carollo, the consulting engineering firm, seven (7) contractors were deemed qualified to bid on the project; and
WHEREAS, the Project was advertised for bids to the prequalified contractors on April 30, 2025, and
WHERAS, on July 1, 2025, bids were publicly opened, pursuant to City Charter Section 1307, four bids were received, and
WHERAS, Shimmick Construction Company, Inc, of Irvine, CA, was the responsible bidder with the lowest responsive bid, and
WHEREAS, Modesto Municipal Code Section 8-3.203 generally requires all purchases, which meet or exceed $100,000 for material, equipment, or contractual services to follow the formal bid procedures, and
WHEREAS, the award of a Contract for the construction of the River Trunk Realignment – Pump Station Project to Shimmick Construction Company, Inc, of Irvine, CA, conforms to the Modesto Municipal Code because the City complied with the formal bid procedures and Shimmick Construction Company, Inc, was the responsible bidder with the lowest responsive bid.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the plans and specifications for the River Trunk Realignment – Pump Station Project, accepts the bid and awards a Construction Contract to Shimmick Construction Company, Inc., of Irvine, CA, in the amount of $115,560,000, authorizes the Director of Engineering Services to approve change orders up to the cumulative #22..
- 781 -
9/23/2025/Utilities/WWong/Item X 3 2025-XX
amount of $11,556,000, 10% of the original contract price, for a total payment amount not to exceed $127,166,000.
BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to execute the Contract, in a form approved by the City Attorney. #22..
- 782 -
9/23/2025/Utilities/WWong/Item X 4 2025-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 23rd day of September 2025, by Councilmember _______________, who moved its adoption, which motion being duly seconded by Councilmember _______________, was upon roll call carried and the resolution adopted by the following vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ATTEST:
DIANA NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:
BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
#22..
- 783 -
9/23/2025/Utilities/WWong/Item X 1 2025-XX
MODESTO CITY COUNCIL
RESOLUTION NO. 2025-XX
RESOLUTION APPROVING AN AGREEMENT WITH WEST YOST
ASSOCIATES, OF DAVIS, CA, FOR CONSTRUCTION MANAGEMENT
SERVICES FOR THE RIVER TRUNK REALIGNMENT – PUMP STATION PROJECT IN AN AMOUNT NOT TO EXCEED $8,500,000 FOR THE
IDENTIFIED SCOPE OF SERVICES, PLUS $850,000 FOR ADDITIONAL
SERVICES (IF NEEDED), FOR A TOTAL AMOUNT NOT TO EXCEED
$9,350,000, AND AUTHORIZING THE CITY MANAGER, OR HIS DESIGNEE,
TO EXECUTE THE AGREEMENT
WHEREAS; on November 13, 2023, by Resolution No. 2023-511, Council approved an Agreement with Carollo to complete the design and offer bidding assistance for the River Trunk Realignment – Pump Station Project; and WHEREAS; considering the size and complexity of the project, staff recommends utilizing a consultant to provide Construction Management and Inspection Services; and WHEREAS; in accordance with Administrative Directive 3.1, Selection Procedures for Professional Consultants who Provide Architectural and Engineering Services for Capital Projects, a Request for Proposals was issued on May 29, 2024 to the four (4) firms on the City’s Prequalified Consultant list; and WHEREAS; on July 23, 2024, staff received submissions from two (2) of the four (4) firms; and
WHERAS, in accordance with Modesto Municipal Code 8-3.204(a) “Exceptions to Formal Bidding Requirements”, Agreements for Professional Services are exempt from the bidding requirements of Modesto Municipal Code 8-3.203 if competitive quotations or proposals have been sought informally from at least three (3) qualified entities.
#22..
- 784 -
9/23/2025/Utilities/WWong/Item X 2 2025-XX
NOW, THEREFORE BE IT RESOLVED, by the Council of the City of Modesto that it hereby approves an Agreement with West Yost Associates, in the amount of $8,500,000, plus $850,000 in additional services (if needed), for a total amount not to exceed $9,350,000 for Construction Management and Inspection Services for the River Trunk Realignment - Pump Station Project.
BE IT FURTHER RESOLVED, that the City Manager, or his designee, is hereby authorized to execute the agreement in a form approved by the City Attorney.
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 23rd day of September 2025, by Councilmember _______________, who moved its adoption, which motion being duly seconded by Councilmember _______________, was upon roll call carried and the resolution adopted by the following vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ATTEST:
DIANA NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:
BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
#22..
- 785 -
9/23/2025/Utilities/WWong/Item X 1 2025-XX
MODESTO CITY COUNCIL
RESOLUTION NO. 2025-XX
RESOLUTION APPROVING AN AGREEMENT WITH CAROLLO
ENGINEERS INC., OF WALNUT CREEK, CA, FOR ENGINEERING SUPPORT DURING CONSTRUCTION FOR THE RIVER TRUNK REALIGNMENT –
PUMP STATION PROJECT, IN AN AMOUNT NOT TO EXCEED $5,675,000 FOR THE IDENTIFIED SCOPE OF SERVICES, PLUS $567,500 FOR
ADDITIONAL SERVICES (IF NEEDED), FOR A TOTAL AMOUNT NOT TO EXCEED $6,242,500 AND AUTHORIZING THE CITY MANAGER, OR HIS
DESIGNEE, TO EXECUTE THE AGREEMENT
WHEREAS, on April 1st, 2014, by Resolution No. 2014-121, Council approved an agreement with Carollo Engineers, Inc., (Carollo) for the preparation of a Preliminary Design Report, which serves as the basis of design for the Project, and WHEREAS, on March 22nd, 2016 by Resolution No. 2016-125, Council approved an Agreement with Carollo for Final Design Services for the River Trunk Realignment Project, and
WHEREAS, on November 13, 2023, by Resolution No. 2023-511, Council approved an Agreement with Carollo to complete the design and offer bidding assistance for River Trunk Realignment – Pump Station Project, and WHEREAS, considering the size and complexity of the project and that Carollo is the Engineer-of-Record, Engineering Support During Construction services will be needed from Carollo to ensure construction of the facilities meets the original design described in the plans and specifications, and
WHEREAS, Modesto Municipal Code Section 8-3.203 generally requires all purchases, which meet or exceed $100,000 for material, equipment, or contractual services to follow formal bid procedures, and
#22..
- 786 -
9/23/2025/Utilities/WWong/Item X 2 2025-XX
WHEREAS, exceptions to the formal bidding process are granted in Modesto Municipal Code Section 8-3.204(d) “Where the Purchasing Manager, in his or her discretion, determines that a process other than the formal bid procedure set forth in Section 8-3.203 will result in procurement for the City at the lowest possible cost commensurate with the desired quality”, and
WHEREAS, due to the professional liability involved, recruiting and engineering firm to transition a project from the design phase to the construction phase would most likely generate little interest, unless provisions were made in the Request for Proposal that the City was willing to cover the costs associated with the review, approval and modification if necessary, of the previous firms documents, and WHEREAS, retaining the Engineer of Record throughout the course of the design, bid, build process is beneficial in that it results in a time and cost savings for the City along with maintaining a consistent level of professional service and project specific expertise.
NOW, THEREFORE BE IT RESOLVED by the Council of the City of Modesto that it hereby approves an agreement with Carollo Engineers, Inc., for Engineering Support During Construction for the River Trunk Realignment - Pump Station Project in an amount not to exceed $5,675,000 for the identified scope of services, plus $567,500 for additional services, if needed, for a maximum total amount of $6,242,500.
BE IT FURTHER RESOLVED, that the City Manager, or his designee, is hereby authorized to execute the agreement in a form approved by the City Attorney. #22..
- 787 -
9/23/2025/Utilities/WWong/Item X 3 2025-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 23rd day of September 2025, by Councilmember _______________, who moved its adoption, which motion being duly seconded by Councilmember _______________, was upon roll call carried and the resolution adopted by the following vote:
AYES:Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ATTEST:
DIANA NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:
BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
#22..
- 788 -
9/23/2025/Utilities/WWong/Item X 1 2025-XX
MODESTO CITY COUNCIL
RESOLUTION NO. 2025-XX
RESOLUTION AMENDING THE FISCAL YEAR 2025-26 CAPITAL
IMPROVEMENT PROGRAM BUDGET IN THE AMOUNT OF $132,560,000 TO
BE TRANSFERRED INTO THE PROJECT FROM WASTEWATER RESERVES
TO FULLY FUND THE CONSTRUCTION, CONTINGENCY, CONSTRUCTION
ADMINISTRATION AND DESIGN SUPPORT DURING CONSTRUCTION FOR THE RIVER TRUNK REALIGNMENT – PUMP STATION PROJECT AND
AUTHORIZING THE CITY MANAGER, OR HIS DESIGNEE, TO IMPLEMENT
THE PROVISIONS OF THIS RESOLUTION
WHEREAS, on July 1, 2025, bids were publicly opened, pursuant to City Charter Section 1307, and
WHEREAS, four bids were received, and
WHEREAS, due to the size and complexity of the project and the associated construction costs, certain budgetary transactions are necessary in the amount of $132,560,000 in order to fully fund the construction, contingency, construction administration and design support during construction for the River Trunk Realignment – Pump Station Project, and
WHEREAS, the Fiscal Year Fiscal Year 2025-26 Multi-Year Capital Improvement Program Budget must be amended.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the amendment of the Fiscal Year 2025-26 Capital Improvement Project Program Budget in the amount of $132,560,000 to be transferred into the project from Wastewater Fund Reserves.
BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to implement the provisions of this resolution. #22..
- 789 -
9/23/2025/Utilities/WWong/Item X 2 2025-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 23rd day of September, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ATTEST:
DIANA NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:
BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
#22..
- 790 -
09/23/2025/UTL/WWong/Item X 2025-XX
MODESTO CITY COUNCIL
RESOLUTION NO. 2025-
RESOLUTION AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $60,000,000 PRINCIPAL AMOUNT OF WASTEWATER REVENUE BONDS, SERIES 2025,
AUTHORIZING AND DIRECTING EXECUTION OF A SIXTH SUPPLEMENTAL
WASTEWATER REVENUE BOND INDENTURE PURSUANT TO WHICH SUCH
BONDS ARE ISSUED, APPROVING A BOND PURCHASE AGREEMENT, AN
OFFICIAL STATEMENT AND A CONTINUING DISCLOSURE AGREEMENT, AND
AUTHORIZING OTHER OFFICIAL ACTIONS TO EXECUTE THE BOND ISSUANCE RECITALS:
WHEREAS, the City of Modesto is a charter city and a municipal corporation organized and existing under the laws of the State of California (the “City”); and WHEREAS, pursuant to Section 200 of the Charter of the City of Modesto and the City of Modesto Wastewater Treatment Facilities Revenue Bond Law, constituting Chapter 6 of Title VIII of the Modesto Municipal Code (the “Bond Law”), the City is authorized to issue revenue bonds to finance the acquisition, construction, improvement, furnishing, equipping, remodeling, repair, reconstruction or rehabilitation of the wastewater treatment facilities of the City (the “Enterprise”) or for the purpose of refunding bonds issued for such purposes; and WHEREAS, the City has entered into a Wastewater Revenue Bond Indenture, dated as of April 1, 2005 (the “Master Indenture”), between the City and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the “Trustee”) to U.S. Bank National Association, providing for the issuance of wastewater revenue bonds thereunder and for the pledge of and first claim on the Net Revenues (as defined in the Master Indenture) of the Enterprise (as defined in the Master Indenture), which are held by the City in the Sewer Enterprise Fund established under the Master Indenture, to the payment of bonds and parity obligations issued thereunder; and #22..
- 791 -
09/23/2025/UTL/WWong/Item X 2 2025-XX
WHEREAS, in accordance with the Bond Law and the Master Indenture, as supplemented by a First Supplemental Wastewater Revenue Bond Indenture, dated as of April 1, 2005 (the “First Supplemental Indenture”), a Second Supplemental Wastewater Revenue Bond Indenture, dated as of April 1, 2005 (the “Second Supplemental Indenture”), a Third Supplemental Wastewater Revenue Bond Indenture, dated as of December 1, 2006 (the “Third Supplemental Indenture”), a Fourth Supplemental Wastewater Revenue Bond Indenture, dated as of April 1, 2018 (the “Fourth Supplemental Indenture”) and a Fifth Supplemental Wastewater Revenue Bond Indenture, dated as of November 1, 2020 (the “Fifth Supplemental Indenture,” and together with the Master Indenture, the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture and the Fourth Supplemental Indenture, the “Indenture”), each by and between the City and the Trustee, the City has previously issued its City of Modesto, California Wastewater Revenue Refunding Bonds, Series 2005A (the “Series 2005A Bonds”), its City of Modesto, California Wastewater Revenue Refunding Bonds, Series 2005B (Taxable) (the “Series 2005B Bonds”), its City of Modesto, California Wastewater Revenue Bonds, Series 2006A (the “Series 2006 Bonds”), its City of Modesto, California Wastewater Revenue Refunding Bonds, Series 2018A (the “Series 2018A Bonds”), its City of Modesto, California Wastewater Revenue Refunding Bonds, Series 2020A (Federally Taxable) (the “Series 2020A Bonds”) and its City of Modesto, California Wastewater Revenue Refunding Bonds, Series 2020B (the “Series 2020B Bonds” and, together with the Series 2005A Bonds, the Series 2005B Bonds, the Series 2006 Bonds, the Series 2018A Bonds and the Series 2020A Bonds, the “Prior Bonds”); and
#22..
- 792 -
09/23/2025/UTL/WWong/Item X 3 2025-XX
WHEREAS, the Series 2005A Bonds, the Series 2005B Bonds and the Series 2006A Bonds matured, were paid timely or were redeemed prior to maturity and are no longer outstanding; and
WHEREAS, the Indenture provides that the City may issue any indebtedness, installment sale obligation, lease obligation or other obligation of the City for borrowed money having an equal lien and charge upon the Net Revenues, therefore payable on a parity with the outstanding Prior Bonds (whether or not any bonds are Outstanding under the Indenture) (“Parity Debt”), from time to time in accordance with the terms of the Indenture; and WHEREAS, the City previously incurred an obligation (the “2011 State Loan”), pursuant to a Project Finance Agreement, dated as of August 26, 2011, as amended, by and between the State Water Resources Control Board, an administrative and regulatory agency of the State of California (the “SWRCB”), and the City, which 2011 State Loan constitutes Parity Debt pursuant to Section 3.05(c) of the Indenture; and
WHEREAS, the City previously issued a bond (the “Series 2015 Bond”), pursuant to a Bond Purchase Agreement, dated as of October 30, 2015, among the City, Capital One Public Funding, LLC, and The Bank of New York Mellon Trust Company, N.A., as paying agent, which Series 2015 Bond constitutes Parity Debt pursuant to Section 3.05(c) of the Indenture, and which refunded all of the Series 2005A Bonds and the November 1, 2023 and 2024 maturities of the Series 2006 Bonds; and
WHEREAS, the City previously incurred an obligation (the “2016 State Loan”), pursuant to a Project Finance Agreement, dated as of June 8, 2016, by and between the SWRCB and the #22..
- 793 -
09/23/2025/UTL/WWong/Item X 4 2025-XX
City, which 2016 State Loan constitutes Parity Debt pursuant to Section 3.05(c) of the Indenture; and
WHEREAS, the outstanding 2011 State Loan was refunded with a portion of the proceeds of the Series 2020A Bonds and the Series 2020B Bonds and is no longer outstanding; and
WHEREAS, the Indenture provides that the City may issue bonds from time to time as authorized by a supplemental indenture; and
WHEREAS, the City has determined that it is desirable and necessary and in the best interest of the City to authorize an additional series of wastewater revenue bonds in order to provide moneys to finance certain improvements to the Enterprise, in a principal amount not to exceed $60,000,000, to be designated “City of Modesto, California Wastewater Revenue Bonds, Series 2025” (the “Series 2025 Bonds”), to be issued pursuant to the Indenture, as supplemented and amended by the Sixth Supplement (defined below); and WHEREAS the Series 2025 Bonds are proposed to be sold to Siebert Williams Shank & Co., LLC (the “Underwriter”) pursuant to the Bond Purchase Agreement described below; and WHEREAS, it is proposed that the City execute and deliver the Continuing Disclosure Agreement described below to allow the Underwriter to comply with Rule 15c2-12(b)(5) of the Securities Exchange Act of 1934; and
WHEREAS, it is proposed that the City deem final for purposes of Rule 15c(2)-12 of the Securities Exchange Act of 1934, as amended (the “Rule”), a Preliminary Official Statement (the “Preliminary Official Statement”) and to execute and deliver a final Official Statement (the #22..
- 794 -
09/23/2025/UTL/WWong/Item X 5 2025-XX
“Official Statement”) and to authorize the distribution of the Preliminary Official Statement to prospective purchasers of the Series 2025 Bonds and the Official Statement to the actual purchasers of the Series 2025 Bonds; and
WHEREAS, the forms of the Preliminary Official Statement, the Bond Purchase Agreement, the Continuing Disclosure Agreement and the Sixth Supplement are on file with the City Clerk; and
WHEREAS, in accordance with Government Code Section 5852.1, the City Council of the City has obtained and wishes to disclose the information set forth in Exhibit A hereto; and WHEREAS, all acts, conditions and things required by the Bond Law and the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the sale and issuance of the Series 2025 Bonds authorized hereby do exist, have happened and have been performed in regular and due time, form and manner required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to issue and sell the Series 2025 Bonds for the purpose, in the manner and upon the terms herein provided.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MODESTO DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. Recitals. The above recitals are true and correct.
Section 2. Approval of the Series 2025 Bonds. The City Council hereby authorizes the issuance of its Wastewater Revenue Bonds, Series 2025 in an aggregate principal amount not to exceed $60,000,000. The Series 2025 Bonds may be issued in one or more series or subseries, #22..
- 795 -
09/23/2025/UTL/WWong/Item X 6 2025-XX
on a tax-exempt or taxable basis, with corresponding other or additional designations, as an Authorized Officer (defined below) shall determine.
Section 3. Sixth Supplement; Form of Series 2025 Bonds. The City Council hereby approves the form of the Sixth Supplemental Wastewater Revenue Bond Indenture (the “Sixth Supplement”) by and between the City and the Trustee, in substantially the form on file with the City Clerk together with any additions thereto or changes therein deemed necessary or advisable by Norton Rose Fulbright US LLP, Bond Counsel, or by the authorized officer executing the same, whose execution thereof shall be conclusive evidence of such officer’s approval of any such additions and changes. Each of the Mayor, the City Manager or the Director of Finance, or any duly authorized designee of any of such officers (each, an “Authorized Officer”), acting singly, is authorized and directed to execute, and the City Clerk is authorized and directed to attest to said signature on, the final form of the Sixth Supplement for and in the name and on behalf of the City. The City hereby authorizes the delivery and performance of the Sixth Supplement. The proposed form of the Series 2025 Bonds as set forth in the Sixth Supplement is hereby approved and any Authorized Officer, acting singly, is hereby authorized and directed to execute for and on behalf of the City the Series 2025 Bonds in substantially such forms and the City Clerk is authorized and directed to attest to said signature on the Series 2025 Bonds, and the Trustee is hereby authorized and directed to authenticate and deliver the Series 2025 Bonds to the Underwriter in accordance with the Sixth Supplement and the Bond Purchase Agreement approved herein, subject to the limitations set forth in Section 4 hereof.
Section 4. Bond Purchase Agreement. The City Council hereby approves the form of the Bond Purchase Agreement (the “Bond Purchase Agreement”) by and between the City and the Underwriter in substantially the form on file with the City Clerk together with any additions #22..
- 796 -
09/23/2025/UTL/WWong/Item X 7 2025-XX
thereto or changes, therein deemed necessary or advisable by Bond Counsel, or by the Authorized Officer executing the same, whose execution thereof shall be conclusive evidence of such Authorized Officer’s approval of any such additions and changes; provided, however, that the Underwriter’s discount shall not exceed 0.75% of the principal amount of the Series 2025 Bonds and the final maturity of the Series 2025 Bonds shall be not later than November 1, 2055.
Each Authorized Officer, acting singly, is authorized and directed to execute the final form of the Bond Purchase Agreement for and in the name and on behalf of the City. The City hereby authorizes the delivery and performance of the Bond Purchase Agreement.
Section 5. Official Statement. The City Council hereby approves the form of Preliminary Official Statement of the City relating to the Series 2025 Bonds in substantially the form on file with the City Clerk. Each Authorized Officer, acting singly, is authorized to certify that the Preliminary Official Statement, with such changes therein as the Authorized Officer so certifying shall approve after consultation with Bond Counsel, is as of its date “deemed final” for purposes of the Rule. Each Authorized Officer, acting singly, is authorized and directed to execute for and on behalf of the City a final official statement, in substantially the form of the Preliminary Official Statement, with such changes therein (and additions thereto to reflect the terms of the sale of the Series 2025 Bonds) as such Authorized Officer, acting singly, shall approve after consultation with Bond Counsel, such approval to be evidenced by the execution and delivery thereof. The Underwriter is authorized to distribute copies of the Preliminary Official Statement to persons who may be interested in the purchase of the Series 2025 Bonds, and the Underwriter is directed to deliver copies of any final Official Statement to all actual purchasers of the Series 2025 Bonds.
#22..
- 797 -
09/23/2025/UTL/WWong/Item X 8 2025-XX
Section 6. Continuing Disclosure Agreement. The City Council hereby approves the form of the Disclosure Dissemination Agent Agreement (the “Continuing Disclosure Agreement”) by and between the City and Digital Assurance Certification, L.L.C. in substantially the form on file with the City Clerk together with any additions thereto or changes therein deemed necessary or advisable by Bond Counsel, or by the Authorized Officer executing the same, whose execution thereof shall be conclusive evidence of such Authorized Officer’s approval of any such additions and changes. Each Authorized Officer, acting singly, is authorized and directed to execute the final form of the Continuing Disclosure Agreement for and in the name and on behalf of the City. The City hereby authorizes the delivery and performance of the Continuing Disclosure Agreement
Section 7. Good Faith Estimates. In accordance with Government Code Section 5852.1, good faith estimates of the following are set forth on Exhibit A attached hereto:
(a) the true interest cost of the Series 2025 Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Series 2025 Bonds, (c) the amount of proceeds of the Series 2025 Bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Series 2025 Bonds, and (d) the sum total of all debt service payments on the Series 2025 Bonds calculated to the final maturity of the Series 2025 Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Series 2025 Bonds.
Section 8. Other Actions. All actions heretofore taken by the officers and agents of the City with respect to the issuance of the Series 2025 Bonds are hereby approved, confirmed and ratified. Each Authorized Officer and any and all other officers of the City are hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things #22..
- 798 -
09/23/2025/UTL/WWong/Item X 9 2025-XX
and take any and all actions, necessary to effectuate the purposes of this Resolution, including the negotiating and obtaining of a municipal bond insurance policy, debt service reserve surety bond or investment agreement for any funds and accounts held under the Indenture if an Authorized Officer, upon the advice of PFM Financial Advisors LLC, Municipal Advisor, determines that such policy, bond or agreement will result in debt service savings or will otherwise be financially advantageous to the City, and the execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance, sale and delivery of the Series 2025 Bonds. #22..
- 799 -
09/23/2025/UTL/WWong/Item X 2025-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 23rd day of September, 2025, by Councilmember __________, who moved its adoption, which motion being duly seconded by Councilmember __________, was upon roll call carried and the resolution adopted by the following vote.
AYES: Councilmembers:
NOES: Councilmembers:
ABSTAIN: Councilmembers:
ABSENT: Councilmembers:
ATTEST:
DIANE NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:
By:
JOSE M. SANCHEZ, City Attorney
#22..
- 800 -
09/23/2025/UTL/WWong/Item X 2025-XX
EXHIBIT A
GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Series 2025 Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the City by PFM Financial Advisors LLC (the “Municipal Advisor”).
For the purpose of the estimates:
Principal Amount. The Municipal Advisor has informed the City that, based on the financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Series 2025 Bonds to be sold is $57,375,000 (the “Estimated Principal Amount”).
True Interest Cost of the Series 2025 Bonds. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Series 2025 Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Series 2025 Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Series 2025 Bonds, is 4.615%.
Finance Charge of the Series 2025 Bonds. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of Series 2025 Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Series 2025 Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Series 2025 Bonds), is $410,000.
Amount of Proceeds to be Received. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Series 2025 Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the City for the sale of the Series 2025 Bonds, less the finance charge of the Series 2025 Bonds, as estimated above, and any reserve fund or capitalized interest paid or funded with proceeds of the Series 2025 Bonds is $60,000,000.
Total Payment Amount. The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Series 2025 Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the City will make to pay debt service on the Series 2025 Bonds, plus the finance charge for the Series 2025 Bonds, as described above, not paid with the proceeds of the Series 2025 Bonds, calculated to the final maturity of the Series 2025 Bonds, together with the sum of annual ongoing costs to administer the Series 2025 Bonds not paid with proceeds of the Series 2025 Bonds (such as fiscal agent fees) is $112,225,000.
#22..
- 801 -
09/23/2025/UTL/WWong/Item X 2025-XX
The foregoing estimates constitute good faith estimates only and are based on market conditions prevailing at the time of preparation of such estimates on August 29, 2025. The actual principal amounts of the Series 2025 Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Series 2025 Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Series 2025 Bonds sold being different from the Estimated Principal Amount, (c) the actual amortization of the Series 2025 Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Series 2025 Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the City’s financing plan, or a combination of such factors. The actual date of sale of the Series 2025 Bonds and the actual principal amount of Series 2025 Bonds sold will be determined by the City based on various factors. The actual interest rates borne by the Series 2025 Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the Series 2025 Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the City. #22..
- 802 -
#22..
- 803 -
#22..
- 804 -
#22..
- 805 -
#22..
- 806 -
#22..
- 807 -
#22..
- 808 -
#22..
- 809 -
#22..
- 810 -
#22..
- 811 -
#22..
- 812 -
#22..
- 813 -
#22..
- 814 -
#22..
- 815 -
#22..
- 816 -
#22..
- 817 -
#22..
- 818 -
#22..
- 819 -
-1-
CONSTRUCTION MANAGEMENT SERVICES AGREEMENT
RIVER TRUNK REALIGNMENT – PUMP STATION PROJECT
THIS AGREEMENT, made and entered into in the City of Modesto, State of California, this _ day of , 2025, (“Effective Date”) by and between the CITY OF MODESTO, a municipal corporation of the State of California, hereinafter referred to as "CITY", and WEST YOST & ASSOCIATES, INC., a California corporation, hereinafter referred to as "CONSULTANT".
This Agreement is made with regard to the following recitals:
A. The CITY has determined that Construction Management Services are required for the River Trunk Realignment - Pump Station Project.
B. CONSULTANT represents that it is qualified, willing and able to provide the aforementioned services.
NOW, THEREFORE, in consideration of this agreement, and the mutual promises, covenants, and stipulations hereinafter contained, the parties agree as follows:
1. SCOPE OF SERVICES.
CONSULTANT shall undertake and complete the preparation of the scope of work as set forth and described in the documents attached hereto and referred to as Exhibit "A" or "project". The CONSULTANT shall perform the services as described in Exhibit "A" in a manner compatible with the standards of its profession, and shall produce a fully complete project that is acceptable to CITY.
2. TERM OF AGREEMENT.
This Agreement is effective as of the date first written above and will continue in effect until CITY’s acceptance of and payment for all services authorized by CITY #22..
- 820 -
-2-
and performed by CONSULTANT, unless terminated earlier in accordance with the provisions of the termination clause in this Agreement.
CONSULTANT shall undertake and complete the preparation of the scope of work as set forth and described in the documents commonly referred to as “project” attached hereto as Exhibit "A" and made a part hereof. CITY hereby gives CONSULTANT notice to proceed with the preparation of the project in the manner described in Exhibit "A", as of the Effective Date of this agreement. CONSULTANT shall diligently proceed with the preparation of the project and agrees to complete said preparation within the time period set forth in Exhibit "A".
3. COMPENSATION.
CONSULTANT agrees to accept a sum not to exceed EIGHT MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($8,500,000) (maximum compensation) as full remuneration for performing all services and furnishing all staffing and materials for CITY in accordance with Exhibit "A" attached hereto and for performance by CONSULTANT of all of its duties and obligations under this Agreement, except that additional services may be compensated as described below.
The Compensation shall be paid pursuant in the manner and at the times set forth below:
CITY shall pay CONSULTANT on a time and materials basis for CONSULTANT’s actual costs for all work called for in Exhibit “A” to this Agreement. All work to be performed under this Agreement shall be billed at the hourly rates set forth in Exhibit “B” attached hereto, CONSULTANT shall submit monthly invoices to City which include detailed tasks, hours worked, and billable rates for all work completed, and detailed receipts for #22..
- 821 -
-3-
any out-of-pocket costs paid by CONSULTANT in connection with work performed on this project. Expenses for travel reimbursement shall comply with the City’s Administrative Directive 1.2 (AD 1.2), as amended periodically. The City’s AD 1.2 is available at the link below:
https://www.modestogov.com/DocumentCenter/View/24156/Citys-Administrative-Directive-12 Additional services may be authorized by the City Manager in an amount up to, but not to exceed ten percent (10%) of the agreed maximum compensation, or EIGHT HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($850,000). In the event that additional services are deemed necessary, the CONSULTANT shall provide a written request to the City Manager indicating the reason for additional work, scope and cost of such work. The City Manager shall provide a written response to the request, either approving or denying the additional expenditure. If additional services are requested and approved, they will be billed at the hourly rates set forth in Exhibit “B” and may not exceed the amount requested and approved in writing by the City Manager. In that event, the new total compensation shall not exceed NINE MILLION THREE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($9,350,000). If additional services in excess of this amount are deemed necessary by City Staff, an amendment to this Agreement will be required and must be approved by the City Council prior to commencing the work, as provided in Paragraph 9 of this agreement.
4. OBLIGATIONS OF CONSULTANT.
Throughout the term of this Agreement, CONSULTANT shall possess, or secure all licenses, permits, qualifications and approvals legally required to conduct business.
CONSULTANT represents and confirms that it has all of the necessary professional capabilities and experience, as well as all tools, instrumentalities, facilities and other resources necessary to provide the CITY with the services contemplated by this Agreement. In providing services #22..
- 822 -
-4-
under this Agreement, the Consultant shall perform in a manner consistent with that degree of care and skill ordinarily exercised by members of the same profession currently practicing under similar circumstances at the same time and in the same or similar locality (“Standard of Care”).
CONSULTANT further represents and confirms that it will follow the best current, generally accepted and professional Standard of Care to make findings, render opinions, prepare factual presentations, and provide professional advice and recommendations regarding this project.
5. PERFORMANCE BY KEY EMPLOYEE.
CONSULTANT has represented to CITY that JP Davis, will be the person primarily responsible for the performance of the services referred to in this Agreement.
CITY has entered into this Agreement in reliance on that representation by CONSULTANT.
CONSULTANT therefore agrees that ten percent (10%) or more of the time to be devoted to the project that is the subject of this Agreement will be that of the above-named person.
6. OWNERSHIP OF DOCUMENTS/TITLE TO DATA.
Ownership of Documents
All reports, drawings, designs, graphics, working papers and other incidental work or materials furnished hereunder excluding any standard designs, details, specifications and other intellectual property to which Consultant held the copyright prior to performing services under this Agreement, shall become and remain the property of the CITY, and may be used by CITY as it may require without any additional cost to CITY upon payment of all invoices due and owing to Consultant. No reports shall be used by the CONSULTANT for purposes other than this contract without the express prior written consent of CITY. City shall not be limited in any way in its use of the Documents and Data at any time, provided that any such use not within the purposes intended by this Agreement shall be at City’s sole risk. #22..
- 823 -
-5-
Title to Data
If, as a part of the agreement, CONSULTANT is required to produce data such as, but not limited to, drawings, plans, specifications, calculations, models, flow diagrams, visual aids and other related materials, the originals of all such data generated under this agreement will be delivered to CITY upon the completion or termination of services under the Agreement.
All materials, documents, data or information obtained from the CITY data files or any CITY medium furnished to CONSULTANT in the performance of this Agreement will at all times remain the property of the CITY. Such data or information may not be used or copied for direct or indirect use by CONSULTANT after termination of this Agreement without written consent of the CITY.
7. NEWS AND INFORMATION RELEASE.
CONSULTANT agrees that it will not issue any news releases in connection with either the award of this Agreement, or any subsequent amendment of or efforts under this Agreement, without first obtaining review and approval of said news releases from CITY through the City Manager.
8. CONFLICT OF INTEREST.
CONSULTANT warrants that it presently has no interest and shall not acquire any interest, direct or indirect, which would create a “conflict of interest”, as that term is defined in the Political Reform Act (Gov. Code § 81000 et seq), for the CONSULTANT in the performance of this AGREEMENT. CONSULTANT warrants that, in performance of this AGREEMENT, CONSULTANT shall not employ any person having any such interest.
CONSULTANT understands that, if this AGREEMENT is made in violation of Government Code § 1090 et seq., the entire AGREEMENT is void and CONSULTANT will not be entitled to #22..
- 824 -
-6-
any compensation for services performed. CONSULTANT agrees to file a Statement of Economic Interests with the City Clerk at the start and end of this AGREEMENT if so, required at the option of CITY.
9. AMENDMENTS.
Both parties to this Agreement understand that it may become desirable or necessary during the execution of this Agreement, for CITY or CONSULTANT to modify the scope of services provided for under this Agreement. Any material extension or change in the scope of work shall be discussed with CITY and the change and cost shall be memorialized in a written amendment to the original contract prior to the performance of the additional work.
Until a change order is so executed, CITY will not be responsible to pay any charges CONSULTANT may incur in performing such additional services, and CONSULTANT shall not be required to perform any such additional services.
10. INDEPENDENT CONTRACTOR.
All acts of CONSULTANT, its agents, officers, and employees and all others acting on behalf of CONSULTANT relating to the performance of this Agreement, shall be performed as independent contractors and not as agents, officers, or employees of CITY.
CONSULTANT, by virtue of this Agreement, has no authority to bind or incur any obligation on behalf of City. CONSULTANT has no authority or responsibility to exercise any rights or power vested in the CITY. No agent, officer, or employee of the CITY is to be considered an employee of CONSULTANT. It is understood by both CONSULTANT and CITY that this Agreement shall not under any circumstances be construed or considered to create an employeremployee relationship or a joint venture. #22..
- 825 -
-7-
CONSULTANT, its agents, officers and employees are and, at all times during the terms of this Agreement, shall represent and conduct themselves as independent contractors and not as employees of CITY.
CONSULTANT shall determine the method, details and means of performing the work and services to be provided by CONSULTANT under this Agreement.
CONSULTANT shall be responsible to CITY only for the requirements and results specified in this Agreement, and, except as expressly provided in this Agreement, shall not be subjected to CITY's control with respect to the physical action or activities of the CONSULTANT in fulfillment of this Agreement. CONSULTANT has control over the manner and means of performing the services under this Agreement. CONSULTANT is permitted to provide services to others during the same period service is provided to City under this Agreement. If necessary, CONSULTANT has the responsibility for employing other persons or firms to assist CONSULTANT in fulfilling the terms and obligations under this Agreement.
If in the performance of this Agreement any third persons are employed by CONSULTANT, such persons shall be entirely and exclusively under the direction, supervision, and control of Consultant. All terms of employment including hours, wages, working conditions, discipline, hiring, and discharging or any other term of employment or requirement of law shall be determined by the CONSULTANT.
It is understood and agreed that as an independent contractor and not an employee of CITY neither the CONSULTANT or CONSULTANT 's assigned personnel shall have any entitlement as a CITY employee, right to act on behalf of the CITY in any capacity whatsoever as an agent, or to bind the CITY to any obligation whatsoever. #22..
- 826 -
-8-
It is further understood and agreed that CONSULTANT must issue W-2 forms or other forms as required by law for income and employment tax purposes for all of CONSULTANT's personnel.
As an independent contractor, CONSULTANT hereby indemnifies and holds CITY harmless from any and all claims that may be made against CITY based upon any contention by any third party that an employer-employee relationship exists by reason of this Agreement.
11. ASSIGNMENT.
Neither this Agreement nor any portion thereof shall be subcontracted or assigned without the express prior written consent of the CITY in each and every instance.
12. PATENT/COPYRIGHT MATERIALS.
Unless otherwise expressly provided in the Agreement, CONSULTANT shall be solely responsible for obtaining the right to use any patented or copyrighted materials in the performance of this Agreement. CONSULTANT shall furnish a warranty of such right to use to CITY at the request of CITY.
13. NOTICES.
Notice required by this Agreement shall be given in writing and shall be deemed given and effective upon receipt provided that such are delivered in accordance with the provisions of this Section. Notices shall be delivered either by: (a) personal delivery (including delivery by an overnight courier service which obtains confirmation of receipt); or (b) by facsimile, provided that such transmission is followed by delivery by an overnight courier service which obtains confirmation of receipt; or (c) postage prepaid, return receipt requested, certified mail; or (d) by electronic transmission subject to reasonable proof that the notice was both transmitted and received. Each such notice shall be sent to the parties at the address #22..
- 827 -
-9-
respectively set forth below or to such other address as a party may designate by written notice given in accordance with the provisions of this Section:
FOR CONSULTANT: Name: Charles Duncan
Address: 2020 Research Park Drive, Suite 100
Davis, CA 95618
Attention: Charles Duncan
Phone: (530) 792-3220
E-mail: [email protected]
FOR CITY: Name: City of Modesto
Address: 1010 10th Street
Modesto, CA 95354
Attention: Pete Kambel
Phone: (209) 577-5444
E-mail: [email protected]
14. INSURANCE REQUIREMENTS.
During the term of this Agreement, CONSULTANT shall maintain in full force and effect at its own cost and expense the insurance coverage as set forth in Exhibit C, attached hereto and incorporated herein, and shall otherwise comply with the other provisions of Exhibit C. CONSULTANT is responsible for uploading updated insurance documentation to the City’s “PINS Advantage” program.
15. TERMINATION OF AGREEMENT.
Termination by CITY for Default of CONSULTANT
Should CONSULTANT default in the performance of this Agreement or materially breach any of its provisions, at its option, CITY may terminate this Agreement by giving written notification to CONSULTANT. The termination date shall be the effective date of the notice. For the purposes of this section, material breach of this Agreement shall include, #22..
- 828 -
-10-
but not be limited to, any of the following: failure to perform required services or duties, willful destruction of CITY's property by CONSULTANT, dishonesty or theft.
Termination by City for Convenience
The CITY may also terminate the CONSULTANT 's performance under the Agreement, either in whole or in part, at its own discretion, or when conditions encountered during the Work make it impossible or impracticable to proceed, or when the CITY is prevented from proceeding with the Agreement by act of God, by law, or by official action of a public authority, or upon a determination by the CITY that such termination is in the best interest and convenience of the CITY, or whenever the CITY is prohibited from completing the Work for any reason. The CITY shall provide no less than ten (10) calendar days written notice of its intent to terminate the Agreement for convenience, and shall endeavor to provide the CONSULTANT with consultation with the CITY prior to termination.
Post-Termination Procedure
Upon receipt of a written notice of termination pursuant to either of the foregoing paragraphs, the CONSULTANT shall:
a. Cease its work as directed in the notice of termination as of the termination date and see to it that its employees, subconsultants and agents are notified of such termination and act as specified in the notice of termination;
b. Terminate all orders and Subconsultants except as necessary to complete any portion of the Work that is not terminated; c. If directed in writing by the CITY to do so, assign all right, title and interest in subcontracts and materials in progress to CITY, in which case the CITY will have the right at its discretion #22..
- 829 -
-11-
to settle, or pay any or all claims arising out of the termination of such subconsultants, but in no event shall recovery by any CONSULTANT or subconsultant include lost profits for portions of the Work not completed or undertaken, including materials not delivered;
d. Deliver or otherwise make available to the CITY all data, drawings, specifications, reports, estimates, summaries and such other information and material as may have been accumulated by the CONSULTANT in performing the Work whether completed or in process;
e. Settle outstanding liabilities and claims, subject to the approval of CITY;
f. Complete performance of such part of the Work as has not been terminated;
g. Take such other actions as may be necessary, or as may be directed by the CITY for the protection and preservation of the Work and/or property related to the Work;
h. If CITY so requests, and at CITY's cost, CONSULTANT shall provide sufficient oral or written status reports to make CITY reasonably aware of the status of CONSULTANT 's work on the project.
i. The CONSULTANT understands and agrees that CITY may, in CITY's sole discretion, refuse to pay CONSULTANT for that portion of CONSULTANT's services which were performed by #22..
- 830 -
-12-
CONSULTANT on the project prior to the termination date and which remain unacceptable and/or not useful to CITY as of the termination date.
CITY will pay CONSULTANT an amount based on the percentage of satisfactory work completed in accordance with the notice of termination. The final payment to the CONSULTANT after termination for convenience shall be limited to amounts due and owing under the Agreement at time of termination, including the following:
a. The cost of settling and paying valid claims arising out of the termination of the Work such as subconsultant agreements or contracts for materials;
b. The Agreement price allocable to the portion of the Work properly performed or goods supplied to the work site by the CONSULTANT as of the date of termination, as determined in accordance with the notice of termination, reduced by any sums previously paid to the CONSULTANT.
Authorization to Terminate Agreement
Termination of the Agreement may be invoked by the City Manager, or his/her designee, subject to the right of the CONSULTANT to appeal the City Manager, or his/her designee’s, decision to the City Council. The CONSULTANT shall appeal by notifying the City Clerk in writing within ten (10) calendar days of receipt of written notification from City of termination of the Agreement. In the event that termination of this Agreement is upheld by the City Council, any cessation of payment of delay claims, extended claims, Eichleay claims, or any other claims for delay shall be retroactive to the date of termination selected by the City Manager, or his/her designee.
#22..
- 831 -
-13-
16. CERTIFIED PAYROLL REQUIREMENT.
If CONSULTANT is performing “public works” as defined in Labor Code section 1720(a), CONSULTANT shall pay all workers, and shall ensure its subcontractors pay all of their workers, engaged in performing the services described in Exhibit “A” not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the services described in Exhibit “A” are to be performed, and not less than the general prevailing rate of per diem wages for holiday and overtime work as provided in the California Labor Code.
In accordance with California Labor Code Section 1773.2, the City has obtained the general prevailing wages in the locality in which the services described in Exhibit A are to be performed for each craft or type of work needed to be as published by the State of California Department of Industrial Relations, Division of Labor Statistics and Research, a copy of which is on file in the CITY’s Purchasing Department and shall be made available on request. CONSULTANT must comply with all applicable laws and regulations that apply to wages earned in performance of the services described in Exhibit “A”, including those set forth in Labor Code section 1770 et. seq.
17. INDEMNITY.
If CONSULTANT is Design Professional performing design professional services, as defined in California Civil Code section 2782.8, CONSULTANT agrees to indemnify, defend, and hold harmless the CITY, its agents, officers, officials, employees and volunteers, from and against any and all claims, demands, costs, or liability that arise out of, or pertain to, or relate to the negligence, recklessness, or willful misconduct of CONSULTANT and its employees, officials, officers, or agents in the performance of services under this Agreement, but this indemnity does not apply to liability for damages arising from the sole or active negligence, or willful misconduct of the CITY. The CITY agrees that in no event shall the cost to defend charged to the CONSULTANT exceed that CONSULTANT’s proportionate #22..
- 832 -
-14-
percentage of fault. However, notwithstanding the previous sentence, in the event one or more defendants is unable to pay its share of defense costs due to bankruptcy or dissolution of the business, the CONSULTANT shall meet and confer with other parties regarding unpaid defense costs. This duty to indemnify shall not be waived or modified by contractual Agreement or acts of the parties.
If CONSULTANT is not a Design Professional performing Design Professional Services, the CONSULTANT shall hold the CITY, its agents, officers, employees, and volunteers harmless from and save, defend and indemnify them against any and all claims, losses, liabilities, judgments or damages from every cause, including but not limited to injury to person or property or wrongful death, including reasonable costs and expenses of defense of any judicial or administrative action, arising directly or indirectly out of any negligent or intentional act or omission of CONSULTANT, or its agents, officers, officials, employees, or volunteers relating to or during the performance of its obligations under this Agreement, except for claims arising from the sole negligence of the CITY.
CONSULTANT's obligation to defend, indemnify, and hold the CITY, its agents, officers, and employees harmless under the provisions of this paragraph is not limited to or restricted by any requirement in this Agreement for CONSULTANT to procure and maintain a policy of insurance.
In the event that CONSULTANT or any employee, agent, or subcontractor of CONSULTANT providing services under this Agreement is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of CITY, CONSULTANT shall indemnify, defend, and hold harmless CITY for the payment of any employee and/or employer contributions for PERS benefits on behalf of CONSULTANT or its employees, agents, or subcontractors, as well as for #22..
- 833 -
-15-
the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of CITY.
18. DISPUTE RESOLUTION.
Venue for all claims, controversies, or disputes arising out of, or relating to the formation of this Agreement, or the breach, termination execution, enforcement, interpretation, or validity of this Agreement, including the determination of the scope or applicability of this contract provision shall be in the Superior Court of Stanislaus County or the United States District Court for the Eastern District of California.
19. ENTIRE AGREEMENT.
This Agreement and its exhibits contain the entire understanding between CONSULTANT and CITY. Additional or new terms contained in this Agreement which vary from CONSULTANT's proposal are controlling and are deemed accepted by CONSULTANT by shipment of any article or other commencement of performance hereunder. All previous proposals, offers and communications relative to this Agreement, whether oral or written, are hereby superseded except to the extent that they have been incorporated into this Agreement. No future waiver of or exception to any of the terms, conditions, and provisions of this Agreement shall be considered valid unless specifically agreed to in writing by all the parties.
20. PARTIAL INVALIDITY.
If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way. #22..
- 834 -
-16-
21. WAIVER.
The waiver by any party to this Agreement of a breach of any provision hereof shall be in writing and shall not operate or be construed as a waiver of any other or subsequent breach hereof unless specifically stated in writing.
22. AUDIT.
The CITY's duly authorized representative shall have access at all reasonable times to all reports, contract records, contract documents, contract files, and personnel necessary to audit and verify CONSULTANT's charges to City under this Agreement.
CONSULTANT agrees to retain reports, records, documents, and files related to charges under this Agreement for a period of four (4) years following the date of final payment for CONSULTANT services. CITY's representative shall have the right to reproduce any of the aforesaid documents.
23. GOVERNING LAW.
This Agreement shall be governed according to the laws of the State of California.
24. HEADINGS NOT CONTROLLING.
Headings used in the Agreement are for reference purposes only and shall not be considered in construing this Agreement.
25. COMPLIANCE WITH LAWS.
CONSULTANT shall insure compliance with all safety and hourly requirements for employees, in accordance with federal, state, and county safety and health regulations and laws. Consistent with the applicable Standard of Care, CONSULTANT shall comply with all applicable and
#22..
- 835 -
-17-
non-conflicting federal, state, and local laws, ordinances, regulations and permits.
26. CITY BUSINESS LICENSE.
Consultant will have a City of Modesto business license.
IN WITNESS WHEREOF, the City of Modesto, a municipal corporation, has authorized the execution of this Agreement in duplicate by its City Manager and attestation by its City Clerk under authority of Resolution No. 2025- , adopted by the Council of the City of Modesto on the day of , 2025, and WEST YOST & ASSOCIATES, INC. has caused this agreement to be duly executed in duplicate as of the Effective Date. (Signatures on Next Page)
#22..
- 836 -
City of Modesto | River Trunk Pump Station Improvements Project (Project 1) | July 16, 2024 31 Detailed Scope of Services
The following pages contain our detailed scope of services for providing CM&I services of the River Trunk Pump Station project. For ease of review, we have provided a summary of our proposed work with anticipated work deliverables and our key work assumptions.
The tasks are numbered to follow the requested Scope of Service items listed in the RFP. Scope tasks identified in the RFP are shown in a green box. Where we have added work tasks that are not specifically identified in the RFP, we number and placed in an orange box for ease of identification. Additional Support tasks including A Day Without SCADA® are show in a purple box.
Task RFP Scope Item Deliverables Assumptions
1.0 PRE-CONSTRUCTION SERVICES
1.01 Construction Management Plan (CMWP) ■ Five draft CMWP, one month after NTP ■ Five final CMWP
■ Sufficient number of final CMWP for
proposed CM staff use
■ Final CMWP to be delivered two weeks after comments received from the City ■ One set of consolidated comments on the draft CMWP
1.02 Communications and Correspondence (Document Management) ■ Development and implementation of written/oral communication necessary to facilitate the ongoing construction and documentation of the project.
■ City to provide access to eBuilder for all project stakeholders ■ City and/or CM to provide training for eBuilder use of project team on an as-needed basis. ■ CM responsible for tracking all Contractor, City, Designer communications and facilitate distribution of all communications to appropriate parties ■ Electronic backups to be provided to the City twice per month. Final copies shall be provided at the end of the project
1.03 Environmental Compliance and Permitting
■ Permit tracking log
■ Review and comments to the SWPPP
■ Review of inspection reports prepared by
GC’s Qualified SWPPP Practitioner
■ Inspection reports needed to comply with
individual permit requirements.
■ Permit requirements to be set forth in the plans and specifications
1.04 Pre-Construction Conference/Notice to Proceed
■ Conference agenda
■ Conference meeting notes
■ Action Item Log
■ City to provide meeting location
1.05 Escrow Bid Document Review ■ Review comments
■ City to provide meeting location
■ Escrow bid documents to be sealed after review meeting and stored in a secure location by the City
■ If necessary, the escrow bid docs shall only be accessed with all appropriate project stakeholders in attendance (i.e., Contractor, Owner, CM)
1.06 Pre-Construction Photograph and Video Documentation ■ Photographs and video recordings of existing conditions of properties along the rout of the pipeline including private property fences, irrigation systems, utility poles, roadway conditions, and other visible structures
■ Contractor to obtain pre-construction photos and video documentation independent of the CM for comparison in the event of a dispute
■ 1-1/2 day pre-construction photo & video documentation
2.0 CONSTRUCTION PHASE SERVICES
2.01 Mobilization ■ None ■ CM to coordinate with Contractor for location of project site trailers
2.02 Project Controls and General Administration
■ Pre-Construction Schedule Review meeting
agenda and notes
■ Generate Weekly Statement of Contract
Time
■ Prepare and issue review comments to the
preliminary schedule, baseline schedule, and
to monthly schedule updates
■ Summary of biweekly safety tailgate
meetings
■ Incident reports generated by the GC or the
CM
■ Outgoing correspondence such as letters,
memos, submittal reviews, RFI responses,
RFPs, change orders, progress payments, etc.
that are generated within the web-based
DCS
■ Project schedule timeline – 30 months for construction ■ Monthly schedule updates from the GC
■ 100 RFIs
■ 40 Change orders
Scope of Services Summary In RFP Scope Recommended and Included Scope Additional Support Tasks
EXHIBIT A
#22..
- 837 -
32 Task RFP Scope Item Deliverables Assumptions
2.0 CONSTRUCTION PHASE SERVICES CONT.
2.03 Project Invoices ■ Monthly West Yost invoices and project status report ■ 44 monthly project invoices and project status reports
2.04 Processing Progress Payments ■ CM approved GC’s monthly progress payment applications ■ File containing notes from labor compliance interviews, GC’s certified payroll reports (CPRs), and Bid Item Payment Sheets. ■ 30 monthly progress payment requests from the GC
2.05 Communication and Coordination
■ Weekly progress reports
■ Monthly progress reports
■ Construction Progress Meeting agendas and notes
■ Action item logs
■ GC’s look-ahead schedule
■ 130 weekly progress reports
■ 30 monthly progress reports
■ 120 in person progress meetings (1 hour in duration)
2.06 Onsite Inspection and Photo and Video Documentation ■ Daily inspection reports
■ Photo and video documentation of project progress
■ Response to the GC’s overall QC plan and individual QC plans
■ Concrete testing reports
■ Special inspection testing reports
■ Non-compliance notices
■ Stop notices (when appropriate)
■ Running QC deficiencies report
■ 617 working days of construction
■ 10 non-compliance notices
■ Video documentation performed once a month, 2 hrs drone time per month
2.07 Submittal Review and Management
■ Collated review comments received by the design engineer and/or plant O&M staff and return to the GC. ■ Prepare logs of current submittals in review and submittals needing to be resubmitted. ■ Submittal conference meeting agendas and notes
■ 25 submittal conference meetings at 1 hour in length
2.08 Request for Information Management (RFIs)
■ RFI log (and regular updates)
■ Final edits to the response from the City or design consultant which may include information on forthcoming change orders or field directives
■ 25 RFI conference meetings at 1 hours in length
2.09 Change Order Management
■ Potential Change Order log (and regular updates)
■ RFPs for potential change orders
■ Draft and final agreed-to change orders for the GC’s and City’s signature ■ Field directives for change order work that can’t be negotiated in time or can’t obtain an agreed-to lump-sum quote ■ 50 RFPs
■ 25 field directives
2.10 Claims Review and Analysis ■ Issue summary including the applicable contract language, interpretation, public contract code rules, and a summary of the GC’s position including the cost and time impacts to any dispute or claim situation that may develop ■ 10 claims requiring review and analysis
2.11 Inspection and Observation Services ■ Please see Task 2.6 Onsite Inspection and Photo and Video Documentation for proposed services.
2.12 Record Drawings ■ Weekly updates to the CM’s as-built/conformed set of record drawings and specifications ■ CM’s and GC’s as-built record drawings to the design engineer at the conclusion of the project
2.13 Start-Up and Commissioning Support ■ Review comments to of test plans and procedures, commissioning schedule
■ Startup meeting agendas and meeting notes
■ Test records
■ 20 startup coordination meetings
■ Startup & commissioning duration approx. 5 months
2.14 Project Closeout Services
■ Final punch list
■ Staff report package to the City Council recommending final acceptance of the project
■ O&M manuals provided from the GC
■ Warrantees and guarantees provided from the GC
■ Project file ■ 8 O&M manuals (hard copy vs electronic) Scope of Services Summary In RFP Scope Recommended and Included Scope Additional Support Tasks
EXHIBIT A
#22..
- 838 -
City of Modesto | River Trunk Pump Station Improvements Project (Project 1) | July 16, 2024 33 Task RFP Scope Item Deliverables Assumptions
CONSTRUCTION PHASE SERVICES CONT.
2.15 Public Outreach
■ One Draft and one Final Outreach Plan
■ Development and maintenance of a stakeholder database of up to 750 entries
■ Implementation of outreach plan during construction
■ Draft/final website content developed monthly
■ Draft/final social media content developed every month ■ Coordination related to establishing and maintaining a 24-hour toll free project information line
■ Draft and final script for project information line
■ Develop and maintain a log documenting all public
comments and inquiries received and share with project
team on a monthly basis
■ Develop content for Facebook, X, and Instagram
■ Draft and final meeting logistics plan for virtual public meeting ■ Draft and final content for 4x6 postcard design and
notification
■ Draft and final content for doorhanger notifications
■ Coordination for printing, production and distribution of up to four (4) postcard mailings for construction updates and public meeting notifications (up to 750 postcards per mailing)
■ Assistance with development of public meeting presentation ■ Draft and final meeting summary, First draft to be provided within two weeks of virtual public meeting
■ Attendance at one project kickoff meeting
■ Respond to all calls received on project information line within 24 hours of receipt (except for weekends)
■ Coordinate up to two (2) rounds of review on the content and design for each postcard, mailer, fact sheet, doorhanger, eblast traffic notification, social media post, and public meeting logistics sheet ■ Attendance of 1 staff member at the weekly construction progress meetings
■ Provide 2 staff members to participate in the team dry run and virtual public meeting and at any required stakeholder briefings ■ Evaluate and comment on potential public outreach concerns during the Constructability Review
■ Virtual participation in the Pre-Construction Conference
OPTIONAL TASKS
3.01 A Day Without SCADA®
■ Conduct initial cybersecurity readiness assessment and facilitate a 1-hour interactive webinar ■ Develop tailored phishing and ransomware attack scenarios and evaluate participant incident response ■ Create and distribute comprehensive training and follow-up materials ■ Client grants access to necessary systems and data
■ Client provides timely feedback and input
■ Client ensures relevant staff participation in the drill and meetings
3.02 Formal Partnering ■ Partnering agendas and notes ■ Quarterly facilitated partnering sessions will be conducted through the duration of the project (10 total session)
3.03 Trenchless Installation, Shoring, and Dewatering
Additional Support Services
■ Daily inspection reports
■ Photo and video documentation of project progress
■ Response to the GC’s overall QC plan and individual QC plans
■ Non-compliance notices
■ Stop notices (when appropriate)
■ Running QC deficiencies report
■ Full-time inspection for microtrunnel drives
Scope of Services Summary In RFP Scope Recommended and Included Scope Additional Support Tasks
EXHIBIT A
#22..
- 839 -
34 These reports and any revisions needed to the SWPPP will be confirmed by West Yost, issued to the City designated Legally Responsible Person (LRP) for approval and entry into the Stormwater Multiple Application and Report Tracking System (SMARTS), and will be retained in the field SWPPP files. Any other environmental documentation (i.e., CEQA, mitigation measures, etc.) made available by the City will be reviewed and enforced.
1.4 PRE-CONSTRUCTION CONFERENCE/
NOTICE TO PROCEED
West Yost will schedule the Pre-Construction Conference meeting, held in person at City offices, within one week from issuance of Notice to Proceed (NTP). We will also prepare the meeting agenda, conduct the meeting, and prepare
the meeting summary notes. Open items will be carried
over to the first Progress Meeting. The City will prepare the construction contract NTP and issue it to the GC.
1.5 ESCROW BID DOCUMENT REVIEW
The CM team will organize the review of the low bid GC’s escrow bid documents (EBDs) to confirm that required and pertinent information is received from the apparent low bidder that comprises the complete cost estimate for the project.
1.6 PRE-CONSTRUCTION PHOTOGRAPH
AND VIDEO DOCUMENTATION
The West Yost CM team and lead construction inspectors
will walk the project alignment with the GC during the preconstruction period to photograph and video the existing conditions prior to the start of the construction work.
2.0 Construction Phase Services
Construction phase services consist of 15 sub tasks as described below and one optional subtask for City consideration.
2.1 MOBILIZATION
The West Yost team will work with the GC to establish
a field office for the CM and Inspection teams. Per the contract specifications, the GC will provide the office space and equipment to furnish the CM team trailer. The CM will review the GC’s proposed list of equipment and determine what, if any, additional items are needed or not necessary.
2.2 PROJECT CONTROLS AND
GENERAL ADMINISTRATION
West Yost will be the point of contact for all matters related to the administration of the construction contract with the GC selected for the project. All incoming and outgoing correspondence related to the project will be through the West Yost CM. This includes maintaining the project records in the web based DCS, e-Builder, provided by the City.
1.0 Pre-Construction Services
Pre-construction activities consist of seven sub tasks as described below.
1.1 CONSTRUCTION MANAGEMENT
WORK PLAN (CMWP)
West Yost will prepare a CMWP that will establish the
procedures for administering the construction contract.
Content will include at a minimum, project overview,
project staffing plan, staff contacts, safety considerations, expectations for operating procedures for processing
submittals and RFIs, change management process, approval processes for change orders and progress payments,
retention, withholds, certified payrolls, safety management, coordinating work with external agencies, O&M manuals,
training, and as-built records.
1.2 COMMUNICATIONS AND CORRESPONDENCE
(DOCUMENT MANAGEMENT)
Our CM team is proficient with the City’s Document Control System (DCS) of choice, e-Builder, as we are currently or have managed other City projects utilizing this software.
West Yost will be the administrator of the DCS and will provide training to any project team member needing to
learn how to use the DCS. The DCS will be used for tracking for submittals and RFI processing, incoming and outgoing correspondence, RFPs, Change Orders, Daily Inspection
Reports, meeting minutes, drawing markups, and document storage for all project-related materials.
1.3 ENVIRONMENTAL COMPLIANCE
AND PERMITTING
West Yost will generate a permit inventory matrix and
tracking log to monitor compliance with each permit
applicable to the Project. The matrix will be generated prior to start of construction to verify construction requirements are understood at initiation of the project. The matrix will be reviewed during the Pre-Construction conference described in Task 1.5. We expect the GC shall obtain a
no-fee encroachment permit from the City of Modesto,
and others per contract requirements. The encroachment
permit and other permits as necessary will be tracked within in the inventory matrix.
This project is also considered a Linear Underground/
Overhead Project (LUP) Type 2 and the job site(s) is equal to or greater than one acre. Therefore, the General Permit and Stormwater Pollution Prevention Plan (SWPPP) will
be required and administered accordingly. The proper
administration of the SWPPP will be monitored by West
Yost. Preparation and transmittal of the pre- and postevent inspection reports prepared by the GC’s Qualified SWPPP Practitioner (QSP) will be tracked by the CM team.
EXHIBIT A
#22..
- 840 -
City of Modesto | River Trunk Pump Station Improvements Project (Project 1) | July 16, 2024 35 Shoring installation of the Headworks West
Trunk structure
verify the correct information and level of detail is included on West Yost invoices. Each invoice will include a summary of labor expenditures, direct costs, and billed subconsultant charges. Billing statements will be organized such that the billing categories correspond with the scope of service tasks.
Detailed monthly progress reports documenting services by the West Yost team will be submitted with each invoice.
2.4 PROCESSING PROGRESS PAYMENTS
Progress Payments: The CM and CIs will review the
updated Monthly Progress Payments, compare the
amounts identified by the GC, and either accept the
amount requested or negotiate a different amount. A
summary document will be prepared and signed off by the West Yost CM and the GC certifying the amount due. The
progress payment request will be transmitted to the City for approval, processing, and payment.
Labor Compliance: West Yost will confirm receipt of the monthly certified payroll reports (CPRs) submitted by the GC and perform spot checks of the GC’s CPRs to confirm
general accuracy and completeness. We will register the CM services portion of the contract on the California
Department of Industrial Relations (DIR) website and will upload our certified payroll records for the prevailing wage inspection positions. Monthly interviews of at least one of each labor classification for the GC and all subcontractors will be conducted to gather the standard required DIR
information to complete our labor compliance audits.
We will also monitor the GC’s compliance with uploading their CPRs to the DIR website.
2.5 COMMUNICATIONS AND COORDINATION
West Yost will perform the following activities:
Weekly Progress Reports: We will prepare a weekly
progress report that will be provided to the City’s PM the following Monday of every prior week’s construction.
The weekly report will include captioned photos of the
construction activities performed during the week, a brief description of the tasks performed, and any outstanding issues noted to date, which will be carried over to the next week until resolution.
Monthly Progress Reports: We will prepare monthly status reports to communicate to the City and outside agencies (if necessary) the progress of the work performed for the previous months work. The reporting will predominantly
be through job site photos and captions. Additional
information will include status of the contract schedule; submittals and RFIs received and processed; a list of
executed, pending, and potential change orders; trends are presented; project issues are summarized; and the status of the CM budget/contract is presented. The monthly
Schedule Management: West Yost will arrange and conduct a Pre-Construction Schedule Review meeting and review
the GC’s baseline CPM schedule. We will also enforce
specification requirements for monthly updates to confirm that the schedule meets the contract requirements and the monthly updates document correct progress, adjustments, changes, and summaries. If there are challenges/delays
in obtaining an acceptable schedule from the GC, West
Yost will recommend an appropriately valued withhold
to subsequent progress payments to motivate the GC to
corrective action. If the schedule appears to be slipping, a Recovery Schedule will be requested from the GC and the responsible party will be determined. Our scope includes the issuance of the Weekly Statement of Contract Time
report that
identifies the
conditions of
each day’s work,
weather, and
other impacts
beyond the
control of the
GC and any time
extensions that
were authorized
in a change order
or resulting from
weather impacts.
Site Safety: West Yost will provide safety-related equipment to its project staff. We will conduct biweekly safety meetings with our field staff and report any incidents to the City. We will monitor the safety program and practices of the GC to confirm they are providing a safe work site for our staff members and those of the City. Safety will be the first item on our standing progress meeting agenda. If unsafe acts or potentially unsafe situations are found during inspections or general observations of the work, we will immediately notify the GC to act. Any incidents that occur will be followed up on with the GC after receipt of their incident report. The report will be shared with the City.
2.3 PROJECT INVOICES
West Yost will generate monthly project invoices for CM services. As a part of this task, we will meet with City staff in a project kick-off meeting to review West Yost project management activities associated with project execution.
This meeting will take place within three weeks our NTP for the CM&I services and include review of the West Yost scope, budget and schedule, review of the project team, confirmation of communication protocols and scheduling
for project management check-in meetings with the City, and discussion of any special invoicing requirements to
EXHIBIT A
#22..
- 841 -
36 ■ A list of construction labor that was on-site that day, their labor classification, and which GC they work for
■ A summary of important discussions that took place in the field that were relevant to project administration
■ A list of materials or equipment deliveries that occurred that day
■ A list of visitors to the site
■ Any conversations with the public or an affected
property owner
■ Documentation of special days, such as holidays and days impacted by weather.
Materials Testing: Crawford & Associates, our materials testing & special inspection subconsultant, will perform standard materials testing, quality assurance sampling, and testing of soil and concrete placement. We anticipate most of the special inspections required will consist of pipe trench subgrade and backfill materials and asphalt concrete (AC) compaction testing. However, other special inspection services such as concrete quality assurance, sampling,
and compressive strength testing can also be provided for concrete curb & gutter and sidewalk.
2.7 SUBMITTAL REVIEW AND MANAGEMENT
West Yost will
generate a list
of anticipated
submittals.
The list will
be reviewed
with the City to
determine what
submittals the
City will want to
review and what
submittals can be
reviewed solely
by the engineer of record. The CM team will receive all shop drawings, product data, certifications, work plans, schedules, etc. typically required of construction contracts and confirm that they are uploaded in the PMIS by the
GC. The submittals that are related to the design shall be forwarded to the City for review and comment. We will
input the review comments into the PMIS and formally
return the submittal to the GC. Logs will be maintained showing submittals in for review, submittals that have
been returned with Amend and Resubmit status, and
submittals not yet transmitted by the GC. Constructionrelated submittals such as work plans, safety plans, SWPPPs, shoring plans, etc. will be reviewed with the submittal and comments transmitted to the City for their records. The status of submittals will be reviewed as part of the weekly report will include information on schedule adherence,
cost management, project issues, and the status of the CM contract.
Weekly Progress Meetings: We will prepare weekly
progress meeting agendas and conduct the weekly progress meetings with the GC, City staff, environmental consultants (if necessary), and other members of the project team.
The meeting will be used to review overall progress,
coordination, and communication related to safety,
submittals, RFIs, changes, progress payments, coordination with operations, progress schedules, and quality. If other special meetings are necessary, such as monthly internal project management meetings with the City and Design
Engineer, West Yost will prepare agendas, conduct, and
collect summaries of the discussions and issue meeting
notes. Open items will be tracked to completion. The
meeting notes will be published through eBuilder.
General Communications: We verbally communicate,
generate, and issue appropriate documents to identify
field issues the GC must address that encountered
during construction.
2.6 ONSITE INSPECTION AND PHOTO
AND VIDEO DOCUMENTATION
Daily Quality Control / Inspection: We will provide the dayto-day quality assurance inspection of the GC’s performance of the work. This will include confirming compliance with the contract plans, specs, approved submittals, applicable RFI responses, and approved change orders. If work is observed or tested to be in non-compliance with the contract, a verbal notice followed by a Non-Compliance Notice (NCN) will
be issued to the GC. If an NCN is issued, a corresponding payment value will be withheld on the monthly progress
payment until the issue is satisfactorily resolved. Daily inspection reports will be written and kept in e-Builder.
We produce complete, clear, and concise reports and other required documentation for the project, emphasizing quality requirements to the General Contractor. This is achieved through pre-activity quality control meetings where we
review planned work, contract requirements, submittals, RFIs, and change orders to confirm mutual understanding.
Sample reports have been provided in Appendix C.
The reports will contain:
■ Summary of the work activities performed by the GC and its subcontractors, important discussions, and photos and videos of the work performed.
■ A list of construction equipment on-site—either active or inactive
Pipeline alignment from Highway 99 to the
7th Street Bridge
EXHIBIT A
#22..
- 842 -
City of Modesto | River Trunk Pump Station Improvements Project (Project 1) | July 16, 2024 37 entitlement, the resolution will use an issue escalation process to resolve the matter at higher management levels of West Yost, the City, and the GC. If an equitable agreement still cannot be made, we will direct the GC to follow the guidelines in the front-end documents for filing a claim and then follow the requirements of the contract in resolving disputes in a more formal manner.
2.11 INSPECTION AND OBSERVATION SERVICES
Please see Task 2.6 Onsite Inspection and Photo and Video Documentation for proposed services.
2.12 RECORDS DRAWINGS
Each month as part of the progress payment approval
process (Task 2.4), we will review the GC’s record set of as-built drawings and specifications. Notations such as RFI responses, clarifications, and change orders will be checked.
The progress payments may be withheld until the record
drawings are maintained to an acceptable level. At project closeout, the GC will transmit their as-built record drawings to West Yost. West Yost will review these updated plans and compare them with our version of the as-built conditions.
If found to be acceptable, the West Yost CM will formally transmit those documents to the designer for incorporation into the final CAD drawing files.
2.13 START-UP AND COMMISSIONING SUPPORT
The CM team will confirm that the GC complies with
the contract requirements for preparing test plans and
procedures, and adequately plans the work needed to
leak test all newly installed piping and manholes prior to tie-in to the City’s existing sewer conveyance system. As needed startup meetings will be conducted by West Yost
to review performance related to actual testing and issues found during the testing activities. Testing activities will be witnessed by West Yost and when appropriate City
operations and maintenance staff will be integrated into the activities so that when the operation of the new facilities is transferred to their control the transition will be smooth. ■ Facilitate planning required to schedule, sequence, and define activities to test, startup and commission the
facility
■ Schedule training and assist where required
■ Schedule coordination meetings
2.14 PROJECT CLOSEOUT SERVICES
The CM will arrange a final inspection once the construction GC requests Substantial Completion. The inspection will create a final punch list of work items to be completed. The punch list will be transmitted to the GC with the decision on the Substantial Completion request. The remainder of the construction progress meetings (see Task 2.5) including identification or proposed equipment substitutions. The review and training plans and startup and commissioning plans will be conducted under Task 2.13.
2.8 REQUEST FOR INFORMATION
MANAGEMENT (RFIS)
The CM team will receive all RFIs generated and issued
by the GC and will be initially reviewed by West Yost then forwarded to the design consultant. Responses by the
design consultant will be reviewed for completeness and, if found satisfactory, returned to the GC. If the response appears to have changed the contract scope, quality,
or time, a potential change order (PCO) number will be
assigned and used to track its resolution to closeout.
Logs will be generated and discussed during the weekly
progress meetings, and a separate change order meeting
can be coordinated to discuss any potential changes and negotiations in detail.
2.9 CHANGE ORDER MANAGEMENT
We will create and maintain a PCO log that will be used to track project issues and known changes that have been
identified by the GC through RFIs and/or Change Order
Requests and by City-initiated changes. Management of
the individual PCO will involve preparing a rough order-ofmagnitude cost estimate and reviewing/estimating potential time impacts. Each item will be reviewed with the City to obtain their concurrence that the item is valid. If the work is necessary, negotiations will attempt to obtain a fair price for the work. If a fair price cannot be reached, or there is no time to negotiate, we will direct the work to proceed on time & materials via a Field Order/Directive. A final price will be summarized and agreed upon. West Yost will prepare formal change orders per City internal procedures. Once fully agreed the costs will be included in the GC’s schedule of values and West Yost will confirm the correct percent complete by which to authorize payment for each progress payment request submitted by the GC.
2.10 CLAIMS REVIEW AND ANALYSIS
West Yost will notify the City and will track and review all claims submitted by the GC. West Yost’s review will be centered on the entitlement and merit of the claim.
If the attempts to resolve claims/disputes with the GC
at the field level are not successful, the CM will lead an informal partnering effort to resolve them with the GC.
The resolution process will involve a detailed review and summary of the contract wording and presentation to
ascertain a fair interpretation of the contract requirements to present to the City. After reviewing findings with the City, a meeting will be held with the GC to present the findings and to hear their position. If there is a dispute with
EXHIBIT A
#22..
- 843 -
38 ■ Information sharing tactics specific to
■ Construction outreach
■ Metrics for tracking the effectiveness of communications Stakeholder Database: The CM team and Circlepoint
will develop and maintain a stakeholder database to be
used for the efficient distribution of project information.
The database will include residents and businesses in the project area, key stakeholders, elected officials, and other interested parties. It will be maintained and updated over the course of the project. It is assumed the database will contain up to 750 entries.
Public Outreach Implementation: The CM team and
Circlepoint will work closely to implement the approved public outreach plan. Circlepoint staff
will develop regular website and social
media content to keep stakeholders
informed of construction progress. We
assume that this content will be shared
on the City’s website and through the
social media platforms it utilizes. We
will also develop traffic eblast alerts
that can be shared via the City’s email
system and will provide a list of eblast
recipients. We will establish a 24-hour
toll-free information line for the public
to make inquiries about the project.
The number will be provided for display
on the GC’s construction signs. The
number will be included on all project materials, directing the public to call with questions or concerns. Circlepoint shall regularly monitor calls and voicemail messages to the toll-free number and respond within 24 hours. All calls will be triaged with the CM team to ensure the appropriate
response is provided to the caller and a log of all calls and contact with the public will be maintained. The log will contain the date, contact information from caller, nature of call, description of any follow-up calls, and resolutions. The log will be regularly transmitted to the CM team and City staff for review.
Virtual Public Information Meeting: Circlepoint and the CM team will conduct a virtual public outreach meeting
for the project. Circlepoint will draft content, design, and coordinate review and approval to provide notification of the meeting by both letter/postcard notification and door hangers to all property owners and residents within 500 feet of the improvements. The virtual meeting will be conducted via an online platform such as Teams or Zoom. Circlepoint will work with the CM team and the City to develop a
PowerPoint presentation with basic project information
including the purpose, need, and public benefits of the project; estimated start and completion dates; contact
information for CM staff; and a summary of anticipated
contract will be to confirm that the items on the punch list have been addressed and any other remaining deliverables received (i.e., O&M manuals, as-builts, certificates of proper installation (COPIs), etc.). West Yost will confirm that aspects of the project administration have been completed, address any outstanding stop notices, and request that all suppliers and subcontractors come forward if payments for their
services have not been made or other payment issues exist so that the release of retention can be made by the City.
West Yost will collect and transmit to the City warranties, guarantees, and operations and maintenance manuals.
The project file will also be transmitted to the City in electronic format.
2.15 PUBLIC OUTREACH
West Yost’s subconsultant, Circlepoint,
will work in close collaboration with
the CM team and City staff to develop
and implement a comprehensive Public
Outreach Plan. The plan will serve
as a roadmap for communications
over the course of the project from
preconstruction through project
completion, and will highlight the
public outreach tools and methods
to be implemented for ongoing
communication with key stakeholders
about various elements of the project,
including the overall construction timeline and significant project milestones.
The Public Outreach Plan will recognize the dynamic nature of the project, from pre-construction to completion and provide a selection of readily available and flexible tools for disseminating consistent, reliable project information.
The plan will outline core messaging, identify audiences and key stakeholders, and include the communication
channels, platforms and methods that will be established and maintained to keep the public informed, and outline communications implementation during construction.
The Public Outreach Plan will include the following elements, to inform implementation of all public outreach activities:
Public Outreach Plan: We will work closely with the City to develop a comprehensive Public Outreach Plan that
includes the following elements, and further defines public outreach activities:
■ Outreach goals and desired outcomes
■ Target audiences and key stakeholders
■ Core messaging and communication channels
60-inch Fiberglass Reinforced Polymer Mortar
Pipe (FRPMP) installation for Project 2
EXHIBIT A
#22..
- 844 -
City of Modesto | River Trunk Pump Station Improvements Project (Project 1) | July 16, 2024 39 traffic impacts. Circlepoint will prepare a comprehensive logistics plan for the meeting, coordinate a dry run prior to the virtual meeting, and provide a draft summary of the virtual public meeting within two weeks of its occurrence.
Collateral Materials Development: Distributing printed
materials like construction notices or doorhangers is an effective way to reach project neighbors with critically important and often time-sensitive information about
construction activities. We will develop informative and well-designed materials to inform residents of upcoming construction activity and other important information
about the project. Circlepoint will develop draft content and design for each of the outreach materials described in the Public Outreach Plan and will coordinate printing and distribution for mailings. For the door hangers, Circlepoint will provide the content and coordinate approval and the contractor will be responsible for distribution.
3.0 Additional Support Services
Additional support services consist of 3 sub tasks as
described below.
3.01 A DAY WITHOUT SCADA®
In March of 2024, West Yost presented a brown bag to
the City to provide information about our A Day Without SCADA® (DWOS) exercise. West Yost’s approach to help
bridge reliability and trust between IT service providers and OT Operations teams is unique and effective, and we recommend conducting this training early in the project.
DWOS is a simulated tabletop exercise which tests the
knowledge, skills, and capabilities of staff, and highlights communication practices during failed or corrupted
technology events. This is conducted in a “no-risk” and safe learning environment that respects ideas and decisions by all participants. Previous clients have valued this exercise as critical to understanding their human resource capacity and technological limitations. Utilities find out their human and operational system’s strengths and areas for potential improvement when technology is not available. West
Yost will document the strengths and areas of potential improvement in an After-Action Report (AAR) that will help guide the next steps of assessment and alternatives analysis.
West Yost also specializes and utilizes communications skills and techniques to help unify the IT/OT team. We have been successful in several previous master plan efforts in helping each department understand the needs and requirements
that IT and OT environments demand. The outcomes of the information gathering and DWOS will enable West Yost and NID to build a clear understanding of what the IT/OT Master Plan should focus on and prioritize.
3.02 FORMAL PARTNERING
West Yost is offering professional partnering as an optional services. For construction projects, fostering collaboration and communication among stakeholders, including owners, contractors, designers, and subcontractors is essential.
Professional partnering services involve the facilitation of workshops and meetings to establish shared goals, clarify roles and responsibilities, and create a framework for
conflict resolution. By promoting a team-oriented approach, professional partnering services help to mitigate risks, enhance project efficiency, and ensure timely delivery
within budget constraints. Ultimately, this collaborative effort leads to improved project outcomes, greater
stakeholder satisfaction, and the successful realization of construction objectives.
3.03 TRENCHLESS PIPE INSTALLATION,
SHORING AND DEWATERING SUPPORT
Most of the Alignment A work will be performed via Micro Tunneling to avoid impact to the Gallo property. The
tunneling shafts range from 48 to 75 feet in depth. The plans allow for pipe jacking as an alternative to Micro Tunneling in areas along Alignments C and D. WY has
teamed with Delve Underground for their geotechnical
engineering expertise, which includes extensive experience designing and overseeing projects with large trenchless pipe installation and dewatering components.
The expertise Delve brings that will be encompassed in their scope of services, includes the following:
Micro Tunneling/Pipe Jacking
■ Verify that the Microtunnel Boring Machine (MTBM)
system can achieve the specified drive lengths and depths “West Yost led the Hillsboro Water Department
through a DWOS exercise in 2022, one of the most
profound outcomes for us was to learn our human
resource capabilities without the tools of technology,
and how we depended on one person who “knew it
all”. What would we do without that one person? It
emphasized the need for knowledge management
and staff training. We highly recommend the DWOS
exercise to any organization as an icebreaker to any
major technology planning effort.”
– Sophia Hobet, Water Operations Manager
City of Hillsboro, Oregon
EXHIBIT A
#22..
- 845 -
40 ■ Absent a detailed hydrogeologic study, dewatering
groundwater to facilitate pump station construction will be challenging and may not be practical as water level
needs to be lowered about 45 feet.
■ Groundwater extraction could impact residential/
agricultural wells and could result in ground settlement. ■ Stringent QA/QC practices must be enforced to confirm shoring is installed per the plans designed and stamped by a structural engineer licensed in the State of California. ■ Confirm a competent person delegated by the Contractor is monitoring any changes in soils conditions as excavation progresses to make sure shoring installed continues to be applicable.
■ Cal OSHA trench safety requirements must be observed
at all times while working in and/or around the vicinity of any excavation/trenching operations.
■ Review available geotechnical reports and/or conduct
a thorough geotechnical investigation to understand
ground conditions. This information helps in selecting the appropriate MTBM cutter head configuration based on
thetunnel face conditions. Different ground conditions
may require specific cutter designs.
■ Understand the method for removing excavated material to the slurry chamber. Consider the need for separating particles based on size during the excavation process.
■ Precisely control the alignment and grade during
microtunneling to ensure the pipeline follows the desired path. Deviations can lead to misalignment or excessive
bending stresses.
■ Choose an appropriate lining material (e.g., reinforced concrete, steel, or fiberglass) based on project
requirements. Consider factors such as corrosion
resistance, structural integrity, and ease of installation. ■ Launching and receiving shaft excavations and shoring should be closely monitored and confirmed to be installed per the contract documents and approved submittals.
■ Understand the location of and identify existing utilities or structures to avoid conflicts and utility disruptions.
■ Pump station shaft designated as jacking shaft for 100- foot drive to overflow structure – encumbers shaft if on critical path for short drive
■ 60-inch sewer enters pump station approximately 15 feet above shaft floor – sequencing of PS excavation with level where microtunneling occurs from.
■ For Alignment C at South 7th St/UPRR Crossing, a steel casing is required to be installed in one drive. Manhole required in middle of intersection at 33-inch sewer line. ■ The sequence of manhole construction through the single drive casing would be encumbered.
■ Geotechnical Report boring B-19 shows groundwater
above the alignment.
Dewatering and Structural Shoring
■ Addressing groundwater inflow and its control and
disposal is critical to making production goals.
■ Proper dewatering techniques and grouting may be
necessary to maintain stability and prevent water ingress. ■ Knowledge and experience with the local soil and
groundwater conditions can avoid many issues.
■ Appropriate disposal of the groundwater to the
wastewater or stormwater system is a potential
environmental concern.
EXHIBIT A
#22..
- 846 -
Principal Construction
Manager IV
Construction
Manager IV
Construction
Manager III
Resident
Inspector
(Prevailing
Wage - Group
2)
Resident
Inspector
(Prevailing
Wage - Group
2)
Resident
Inspector
(Prevailing
Wage - Group
2)
Engineering
Tech Manager
I
Principal Tech
Specialist I
Senior Tech
Specialist II
Senior Tech
Specialist I
Technical
Specialist II
Construction
Manager I
CM
Administrative
II
Technical
Analyst II QC Review
Costs
West Yost Associates P CM IV CM IV CM III RI_G2 RI_G2 RI_G2 ETM I PTS I STS II STS I TS II CM I CMA II TA II P Hours Fee Technology DUI CFD CPT ECS ASD BACC Sub. Other Total $403 $327 $327 $258 $254 $254 $254 $395 $363 $346 $332 $242 $228 $134 $181 $403 & Admin w/ markup Direct Costs PROJECT: River Trunk Pump Station Improvements Project Charles D. JP D. Ted D. Jason B./ James R. Jesse S. Steve P. Rick D. Joel C. Zane W. Tiana M./Tara M.
Kenny S./
Lino L.
Christian N. Amy R. Kim P. Raven L. Tim B. 0% 10%
Task 1 Pre-Construction Services
1.01 Construction Management Work Plan (CMWP) 2 24 40 24 24 24 2 140 $ 37,420 $ 7,562 $ 8,319 $ 45,739
1.02 Communications and Correspondence (Document Management) 24 24 24 80 80 232 $ 50,848 $ 13,178 $ 14,496 $ 65,344
1.03 Environmental Compliance and Permitting 8 24 24 8 8 72 $ 19,552 $ 19,552
1.04 Pre-Construction Conference/Notice to Proceed 8 16 16 2 2 2 2 2 10 8 2 70 $ 18,604 $ 5,565 $ 1,000 $ 1,560 $ 1,560 $ 10,653 $ 29,257
1.05 Escrow Bid Document Review 8 8 16 $ 5,232 $ 1,560 $ 1,560 $ 3,432 $ 8,664
1.06 Pre-Construction Photograph and Video Documentation 8 8 24 24 24 24 8 8 128 $ 32,608 $ 32,608 Subtotal, Task 1 (hours) 2 80 120 112 26 26 26 0 2 0 2 0 130 128 2 2 658 Subtotal, Task 1 ($) $ 26,160 806 $ $ 39,240 $ 28,896 $ 6,604 $ 6,604 $ 6,604 $ 726 $ 664 $ 29,640 $ 17,152 $ 362 $ 806 $ 164,264 $ 26,305 $ 1,000 $ 3,120 $ 3,120 $ 201,164 36,900 $ Task 2 Construction Phase Services
2.01 Mobilization 4 4 8 9 8 33 $ 7,804 $ 7,804
2.02 Project Controls and General Administration (Schedule Management) 60 120 60 80 120 440 $ 108,660 $ 4,575 $ 67,338 $ 44,892 $ 128,485 $ 237,145
2.03 Project Invoices 42 80 40 8 170 $ 58,230 $ 58,230
2.04 Processing Progress Payments 30 60 60 24 24 24 60 60 342 $ 84,918 $ 84,918
2.05 Communications and Coordination 240 1000 380 1200 2400 720 5940 1,229,040 $ $ 49,640 $ 69,660 $ 69,660 $ 207,856 $ 1,436,896
2.06 Onsite Inspection and Photo & Video Documentation (covered under Tasks 1.06 & 2.11) 0
2.07 Submittal Review and Management 25 50 50 10 20 60 100 100 415 $ 104,755 $ 104,755
2.08 Request for Information Management (RFIs) 25 50 50 10 20 40 50 50 295 $ 80,015 $ 80,015
2.09 Change Order Management 240 480 120 60 900 $ 288,180 $ 18,306 $ 61,920 $ 61,920 $ 156,360 $ 444,540
2.10 Claims Review and Analysis 240 240 80 560 $ 177,600 $ 18,668 $ 23,220 $ 23,220 $ 71,619 $ 249,219
2.11 Inspection and Observation Services 200 800 240 4200 2900 2900 560 100 11900 3,139,040 $ $ 350,510 $ 808,079 $ 75,000 $ 1,356,948 $ 4,495,988
2.12 Record Drawings 40 80 120 240 240 240 20 20 80 40 1120 303,500 $ $ 303,500
2.13 Start-Up and Commissioning (EI&C) Support 240 240 120 80 40 80 80 160 160 1200 372,600 $ $ 372,600
2.14 Project Closeout Services 8 40 80 60 24 24 24 20 20 20 40 80 2 442 $ 115,618 $ 115,618
2.15 Public Outreach 24 40 60 124 $ 36,408 $ 75,000 $ 82,500 $ 118,908 Subtotal, Task 2 (hours) 50 1488 3284 1416 4568 3188 3188 60 220 100 920 320 1539 2818 720 2 23881 Subtotal, Task 2 ($) $ 20,150 $ 486,576 $ 1,073,868 $ 365,328 $ 1,160,272 $ 809,752 $ 809,752 $ 23,700 $ 79,860 $ 34,600 $ 305,440 $ 77,440 $ 350,892 $ 377,612 $ 130,320 $ 806 $ 6,106,368 $ 441,699 $ 808,079 $ 75,000 $ 222,138 $ 199,692 $ 75,000 $ 8,110,137 2,003,769 $ Task 3 ODCs
3.01 Vehicle Usage 0 $ 183,700 $ 183,700
3.02 Drone Usage for Video Documentation 0 $ 5,000 $ 5,000 Subtotal, Task 3 (hours) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Subtotal, Task 3 ($) $ 188,700 $ 188,700
TOTAL (hours) 52 1,568 3,404 1,528 4,594 3,214 3,214 60 222 100 922 320 1,669 2,946 722 4 24,539 TOTAL ($) $ 20,956 $ 512,736 $ 1,113,108 $ 394,224 $ 1,166,876 $ 816,356 $ 816,356 $ 23,700 $ 80,586 $ 34,600 $ 306,104 $ 77,440 $ 380,532 $ 394,764 $ 130,682 $ 1,612 $ 6,270,632 $ 468,004 $ 808,079 $ 76,000 $ 225,258 $ 202,812 $ 75,000 $ 2,040,668 $ 188,700 $ 8,500,000 Level of Effort (LOE) % (Based on Construction Phase Max Hours, w/o Contingency Budget) 1% 32% 69% 31% 93% 65% 65% 1% 4% 2% 19% 6% 34% 60% 15% 0% Labor
EXHIBIT B
#22..
- 847 -
EXHIBIT C – Insurance Requirement for Professional Services Consultant shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder and the results of that work by the Consultant his agents, representatives, employees or subconsultants.
MINIMUM SCOPE AND LIMIT OF INSURANCE
Coverage shall be at least as broad as:
1. 1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $1,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.
2. Automobile Liability: ISO Form Number CA 00 01 covering any auto (Code 1), or if Contractor has no owned autos, hired, (Code 8) and non-owned autos (Code 9), with limit no less than $1,000,000 per accident for bodily injury and property damage.
3. Workers’ Compensation: as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease.
(Not required if consultant provides written verification, it has no employees)
4. Professional Liability (Errors and Omissions) Insurance appropriates to the Consultant’s profession, with limit no less than $2,000,000 per occurrence or claim, $2,000,000 aggregate.
If the consultant maintains broader coverage and/or higher limits than the minimums shown above, the City of Modesto requires and shall be entitled to the broader coverage and/or the higher limits maintained by the consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City of Modesto.
Umbrella or Excess Coverage
The Consultant may use Umbrella or Excess Policies to provide the liability limits as required in this agreement. This form of insurance will be acceptable provided that all of the Primary and Umbrella or Excess Policies shall provide all of the insurance coverages herein required, including, but not limited to, primary and non-contributory, additional insured, Self-Insured Retentions (SIRs), indemnity, and defense requirements. The Umbrella or Excess policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the underlying Commercial General Liability insurance. No insurance policies maintained by the Additional Insureds, whether primary or excess, and which also apply #22..
- 848 -
to a loss covered hereunder, shall be called upon to contribute to a loss until the Consultant’s primary and excess liability policies are exhausted.
The insurance policies are to contain, or be endorsed to contain, the following provisions:
Additional Insured Status
The City of Modesto, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Consultant including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Consultant’s insurance with coverage equal to ISO form CG 2010. If Completed Operations endorsement is required, a separate endorsement equal to ISO form CG 2037 is required.
Primary Coverage
The Additional Insured coverage under the Consultant’s policy shall be “primary and noncontributory” and will not seek contribution from the City’s insurance or self-insurance and shall be at least as broad as CG 20 01 04 13. The City of Modesto does not accept endorsements limiting the Consultant’s insurance coverage to the sole negligence of the Named Insured.
Notice of Cancellation
Each insurance policy required above shall provide that coverage shall not be canceled, except with notice to the City of Modesto.
Waiver of Subrogation
Consultant hereby grants to City of Modesto a waiver of any right to subrogation which any insurer of said Consultant may acquire against the City of Modesto by virtue of the payment of any loss under such insurance. Consultant agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City of Modesto has received a waiver of subrogation endorsement from the insurer.
Self-Insured Retentions
All Self-insured retentions must be disclosed to Risk Management for approval and shall not reduce the limits of liability. The City of Modesto may require the Consultant to purchase coverage with a lower retention or provide proof of the ability to pay losses and related investigations, claim administration, and defense expenses within the retention. Any and all deductibles and SIRs shall be the sole responsibility of consultant or subconsultant who procured such insurance and shall not apply to the Indemnified Additional Insured Parties.
Acceptability of Insurers
Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the City of Modesto.
Claims Made Policies (applicable to Professional Liability only) If any of the required policies provide claims-made coverage:
#22..
- 849 -
1. The Retroactive Date must be shown and must be before the date of the contract or the beginning of contract work.
2. Insurance must be maintained, and evidence of insurance must be provided for at least five (5) years after completion of the contract of work.
If coverage is canceled or non-renewed and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date, the Consultant must purchase “extended reporting” coverage for a minimum of five (5) years after completion of work.
Verification of Coverage
Consultant shall furnish the City of Modesto with original certificates and amendatory endorsements or copies of the applicable policy language affecting coverage required by this clause and a copy of the Declarations and Endorsements Pages of the CGL and any Excess policies listing all policy endorsements. All certificates and endorsements are to be received and approved by the City of Modesto Risk Services before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive the Consultant’s obligation to provide them. The City of Modesto reserves the right to require complete copies of all required insurance policies, including endorsements required by these specifications, at any time. City reserves the right to obtain a full copy of any insurance policy and endorsements.
Failure to exercise this right shall not constitute a waiver of right to exercise later.
Subconsultants
Consultants shall require and verify that all subconsultants, or other parties hired for this work, purchase and maintain coverage for indemnity and insurance requirements as least as broad as specified in this agreement to the extent they apply to the scope of the subconsultant’s work with the same certificate of insurance requirements and naming as additional insureds all parties to this contract.
Special Risks or Circumstances
City of Modesto reserves the right to reasonably modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.
Certificate Holder Address
Proper address for mailing certificates, endorsements and notices shall be:
City of Modesto
Attn: Risk Management
1010 10th Street
Modesto, CA 95354
#22..
- 850 -
-1-
ENGINEERING SUPPORT DURING CONSTRUCTION SERVICES AGREEMENT RIVER TRUNK REALIGNMENT – PUMP STATION PROJECT
THIS AGREEMENT, made and entered into in the City of Modesto, State of California, this day of , 2025, (“Effective Date”) by and between the CITY OF MODESTO, a municipal corporation of the State of California, hereinafter referred to as "City", and CAROLLO ENGINEERS, INC., a Delaware corporation, hereinafter referred to as "Consultant".
This Agreement is made with regard to the following recitals:
A. The City has determined that Engineering Support During Construction Services are necessary for the River Trunk Realignment – Pump Station Project.
B. CONSULTANT represents that it is qualified, willing and able to provide said services.
NOW, THEREFORE, in consideration of this agreement, and the mutual promises, covenants, and stipulations hereinafter contained, the parties agree as follows:
1. SCOPE OF SERVICES.
Consultant shall undertake and complete the preparation of the scope of work as set forth and described in the documents attached hereto and referred to as Exhibit "A" or "project". The Consultant shall perform the services as described in Exhibit "A" in a manner compatible with the standards of its profession, and shall produce a fully complete project that is acceptable to City.
2. TERM OF AGREEMENT.
This Agreement is effective as of the date first written above and will continue in effect until City's acceptance of and payment for all services authorized by City and #22..
- 851 -
-2-
performed by Consultant, unless terminated earlier in accordance with the provisions of the termination clause in this Agreement.
Consultant shall undertake and complete the preparation of the scope of work as set forth and described in the documents commonly referred to as “project” attached hereto as Exhibit "A" and made a part hereof. City hereby gives Consultant notice to proceed with the preparation of the project in the manner described in Exhibit "A", as of the Effective Date of this agreement. Consultant shall diligently proceed with the preparation of the project and agrees to complete said preparation within the time period set forth in Exhibit "A".
3. COMPENSATION.
Consultant agrees to accept a sum not to exceed FIVE MILLION SIX HUNDRED SEVENTY-FIVE THOUSAND AND 00/100 DOLLARS ($5,675,000) (maximum compensation) as full remuneration for performing all services and furnishing all staffing and materials for Modesto in accordance with Exhibit "A" attached hereto and for performance by Consultant of all of its duties and obligations under this Agreement, except that additional services may be compensated as described below.
The Compensation shall be paid pursuant in the manner and at the times set forth below:
City shall pay Consultant on a time and materials basis for Consultant’s actual costs for all work called for in Exhibit “A” to this Agreement. All work to be performed under this Agreement shall be billed at the hourly rates set forth in Exhibit “B” attached hereto, Consultant shall submit monthly invoices to City which include detailed tasks, hours worked, and billable rates for all work completed, and detailed receipts for any out-of-pocket costs paid by Consultant in connection with work performed on this project. Expenses for travel #22..
- 852 -
-3-
reimbursement shall comply with the City’s Administrative Directive 1.2 (AD 1.2), as amended periodically. The City’s AD 1.2 is available at the link below:
https://www.modestogov.com/DocumentCenter/View/24156/Citys-Administrative-Directive-12 Additional services may be authorized by the City Manager in an amount up to, but not to exceed ten percent (10%) of the agreed maximum compensation, or FIVE HUNDRED SIXTY-SEVEN THOUSAND FIVE HUNDRED AND 00/100 DOLLARS ($567,500). In the event that additional services are deemed necessary, the Consultant shall provide a written request to the City Manager indicating the reason for additional work, scope and cost of such work. The City Manager shall provide a written response to the request, either approving or denying the additional expenditure. If additional services are requested and approved, they will be billed at the hourly rates set forth in Exhibit “B” and may not exceed the amount requested and approved in writing by the City Manager. In that event, the new total compensation shall not exceed SIX MILLION TWO HUNDRED FORTY-TWO THOUSAND FIVE HUNDRED AND 00/100 DOLLARS ($6,242,500). If additional services in excess of this amount are deemed necessary by City Staff, an amendment to this Agreement will be required and must be approved by the City Council prior to commencing the work, as provided in Paragraph 9 of this agreement.
4. OBLIGATIONS OF CONSULTANT.
Throughout the term of this Agreement, Consultant shall possess, or secure all licenses, permits, qualifications and approvals legally required to conduct business.
Consultant warrants that it has all of the necessary professional capabilities and experience, as well as all tools, instrumentalities, facilities and other resources necessary to provide the City with the services contemplated by this Agreement. Consultant further warrants that it will follow the best current, generally accepted and professional practices to make findings, render opinions, #22..
- 853 -
-4-
prepare factual presentations, and provide professional advice and recommendations regarding this project.
In providing opinions of cost, financial analyses, economic feasibility projections, and schedules for potential projects, Consultant has no control over cost or price of labor and material; unknown or latent conditions of existing equipment or structures that may affect operation and maintenance costs; competitive bidding procedures and market conditions; time or quality of performance of third parties; quality, type, management, or direction of operating personnel; and other economic and operational factors that may materially affect the ultimate project cost or schedule. Therefore, Consultant makes no warranty that the City’s actual project costs, financial aspects, economic feasibility, or schedules will not vary from Consultant’s opinions, analyses, projections, or estimates.
Consultant is not responsible for damage or delay in performance caused by events beyond the reasonable control of Consultant. In the event Consultant’s services are suspended, delayed or interrupted for the convenience of the City or delays occur beyond the reasonable control of Consultant, an equitable adjustment in Consultant’s time of performance and cost of Consultant’s personnel and subcontractors may be made.
5. OBLIGATIONS OF CITY.
The City shall furnish Consultant available studies, reports, and other data pertinent to Consultant’s services; obtain or authorize Consultant to obtain or provide additional reports and data as required; furnish to Consultant services of others required for the performance of Consultant’s services hereunder, and Consultant shall be entitled to use and rely upon all such information and services provided by the City or others in performing Consultant’s services under this agreement.
#22..
- 854 -
-5-
6. PERFORMANCE BY KEY EMPLOYEE.
Consultant has represented to City that, Tim Taylor will be the person primarily responsible for the performance of the services referred to in this Agreement. City has entered into this Agreement in reliance on that representation by Consultant. Consultant therefore agrees that ten percent (10%) or more of the time to be devoted to the project that is the subject of this Agreement will be that of the above-named person.
7. OWNERSHIP OF DOCUMENTS/TITLE TO DATA.
Ownership of Documents
All reports, drawings, designs, graphics, working papers and other incidental work or materials furnished hereunder shall become and remain the property of the City, and may be used by City as it may require without any additional cost to City. No reports shall be used by the Consultant for purposes other than this contract without the express prior written consent of City.
Documents, including drawings and specifications, prepared by Consultant pursuant to this assignment are not intended or represented to be suitable for reuse by the City or others for this Project or on any other project. Any reuse of completed documents or use of partially completed documents without written verification or concurrence by Consultant for the specific purpose intended will be at the City’s sole risk and without liability or legal exposure to Consultant.
Title to Data
If, as a part of the agreement, Consultant is required to produce data such as, but not limited to, drawings, plans, specifications, calculations, models, flow diagrams, visual aids and other related materials, the originals of all such data generated under this agreement will be delivered to City upon the completion or termination of services under the contract. #22..
- 855 -
-6-
All materials, documents, data or information obtained from the City data files or any City medium furnished to Consultant in the performance of this Agreement will at all times remain the property of the City. Such data or information may not be used or copied for direct or indirect use by Consultant after termination of this Agreement without written consent of the City.
8. NEWS AND INFORMATION RELEASE.
Consultant agrees that it will not issue any news releases in connection with either the award of this Agreement, or any subsequent amendment of or efforts under this Agreement, without first obtaining review and approval of said news releases from City through the City Manager.
9. INTEREST OF CONTRACTOR.
Consultant warrants that it presently has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of services required to be performed under this Agreement. Consultant warrants that, in performance of this Agreement, Consultant shall not employ any person having any such interest. Consultant agrees to file a Statement of Economic Interests with the City Clerk at the start and end of this contract if so required at the option of City.
10. AMENDMENTS.
Both parties to this Agreement understand that it may become desirable or necessary during the execution of this Agreement, for City or Consultant to modify the scope of services provided for under this Agreement. Any material extension or change in the scope of work shall be discussed with City and the change and cost shall be memorialized in a written amendment to the original contract prior to the performance of the additional work. #22..
- 856 -
-7-
Until a change order is so executed, City will not be responsible to pay any charges Consultant may incur in performing such additional services, and Consultant shall not be required to perform any such additional services.
11. INDEPENDENT CONTRACTOR.
All acts of Consultant, its agents, officers, and employees and all others acting on behalf of Consultant relating to the performance of this Agreement, shall be performed as independent contractors and not as agents, officers, or employees of City. Consultant, by virtue of this Agreement, has no authority to bind or incur any obligation on behalf of City.
Consultant has no authority or responsibility to exercise any rights or power vested in the City.
No agent, officer, or employee of the City is to be considered an employee of Consultant. It is understood by both Consultant and City that this Agreement shall not under any circumstances be construed or considered to create an employer-employee relationship or a joint venture.
Consultant, its agents, officers and employees are and, at all times during the terms of this Agreement, shall represent and conduct themselves as independent contractors and not as employees of City.
Consultant shall determine the method, details and means of performing the work and services to be provided by Consultant under this Agreement. Consultant shall be responsible to City only for the requirements and results specified in this Agreement, and, except as expressly provided in this Agreement, shall not be subjected to City's control with respect to the physical action or activities of the Consultant in fulfillment of this Agreement. Consultant has control over the manner and means of performing the services under this Agreement.
Consultant is permitted to provide services to others during the same period service is provided to City under this Agreement. If necessary, Consultant has the responsibility for employing #22..
- 857 -
-8-
other persons or firms to assist Consultant in fulfilling the terms and obligations under this Agreement.
If in the performance of this Agreement any third persons are employed by Consultant, such persons shall be entirely and exclusively under the direction, supervision, and control of Consultant. All terms of employment including hours, wages, working conditions, discipline, hiring, and discharging or any other term of employment or requirement of law shall be determined by the Consultant.
It is understood and agreed that as an independent contractor and not an employee of City neither the Consultant or Consultant's assigned personnel shall have any entitlement as a City employee, right to act on behalf of the City in any capacity whatsoever as an agent, or to bind the City to any obligation whatsoever.
It is further understood and agreed that Consultant must issue W-2 forms or other forms as required by law for income and employment tax purposes for all of Consultant's personnel.
As an independent contractor, Consultant hereby indemnifies and holds City harmless from any and all claims that may be made against City based upon any contention by any third party that an employer-employee relationship exists by reason of this Agreement.
12. ASSIGNMENT.
Neither this Agreement nor any portion thereof shall be subcontracted or assigned without the express prior written consent of the City in each and every instance.
13. PATENT/COPYRIGHT MATERIALS.
Unless otherwise expressly provided in the contract, Consultant shall be solely responsible for obtaining the right to use any patented or copyrighted materials in the #22..
- 858 -
-9-
performance of this Agreement. Consultant shall furnish a warranty of such right to use to City at the request of City.
14. NOTICES.
Notice required by this Agreement shall be given in writing and shall be deemed given and effective upon receipt provided that such are delivered in accordance with the provisions of this Section. Notices shall be delivered either by: (a) personal delivery (including delivery by an overnight courier service which obtains confirmation of receipt); or (b) by facsimile, provided that such transmission is followed by delivery by an overnight courier service which obtains confirmation of receipt; or (c) postage prepaid, return receipt requested, certified mail; or (d) by electronic transmission subject to reasonable proof that the notice was both transmitted and received. Each such notice shall be sent to the parties at the address respectively set forth below or to such other address as a party may designate by written notice given in accordance with the provisions of this Section:
FOR CONSULTANT: Name: Carollo Engineers, Inc.
Address: 2880 Gateway Oaks Drive
Suite 300
Sacramento, CA 95833
Attention: Tim Taylor
Phone: (916) 576-4713
Email: [email protected]
FOR CITY: Name: City of Modesto
Address: 1010 10th Street
Suite 4600
Modesto, CA 95354
Attention: Cristian Ciotau
Phone: (209) 577-5260
Email: [email protected]
#22..
- 859 -
-10-
15. INSURANCE REQUIREMENTS.
During the term of this Agreement, CONSULTANT shall maintain in full force and effect at its own cost and expense the insurance coverage as set forth in Exhibit C, attached hereto and incorporated herein, and shall otherwise comply with the other provisions of Exhibit C. CONSULTANT is responsible for uploading updated insurance documentation to the City’s “PINS Advantage” program.
16. TERMINATION OF AGREEMENT.
Termination by City for Default of Consultant
Should Consultant default in the performance of this Agreement or materially breach any of its provisions, at its option, City may terminate this Agreement by giving written notification to Consultant. The termination date shall be the effective date of the notice. For the purposes of this section, material breach of this Agreement shall include, but not be limited to, any of the following: failure to perform required services or duties, willful destruction of City's property by Consultant, dishonesty or theft.
Termination by City for Convenience
The City may also terminate the Consultant's performance under the Agreement, either in whole or in part, at its own discretion, or when conditions encountered during the Work make it impossible or impracticable to proceed, or when the City is prevented from proceeding with the Agreement by act of God, by law, or by official action of a public authority, or upon a determination by the City that such termination is in the best interest and convenience of the City, or whenever the City is prohibited from completing the Work for any reason. The City shall provide no less than ten (10) calendar days written notice of its intent to terminate the Agreement for convenience, and shall endeavor to provide the Consultant with consultation with the City prior to termination.
#22..
- 860 -
-11-
Post-Termination Procedure
Upon receipt of a written notice of termination pursuant to either of the foregoing paragraphs, the Consultant shall:
a. Cease its work as directed in the notice of termination as of the termination date and see to it that its employees, subconsultants and agents are notified of such termination and act as specified in the notice of termination;
b. Terminate all orders and Subcontractors except as necessary to complete any portion of the Work that is not terminated; c. If directed in writing by the City to do so, assign all right, title and interest in subcontracts and materials in progress to City, in which case the City will have the right at its discretion to settle, or pay any or all claims arising out of the termination of such subconsultants, but in no event shall recovery by any Consultant or subconsultant include lost profits for portions of the Work not completed or undertaken, including materials not delivered; d. Deliver or otherwise make available to the City all data, drawings, specifications, reports, estimates, summaries and such other information and material as may have been accumulated by the Consultant in performing the Work whether completed or in process; e. Settle outstanding liabilities and claims, subject to the approval of City;
f. Complete performance of such part of the Work as has not been terminated;
#22..
- 861 -
-12-
g. Take such other actions as may be necessary, or as may be directed by the City for the protection and preservation of the Work and/or property related to the Work;
h. If City so requests, and at City's cost, Consultant shall provide sufficient oral or written status reports to make City reasonably aware of the status of Consultant's work on the project. i. The Consultant understands and agrees that City may, in City's sole discretion, refuse to pay Consultant for that portion of Consultant's services which were performed by Consultant on the project prior to the termination date and which remain
unacceptable and/or not useful to City as of the termination date.
City will pay Consultant an amount based on the percentage of satisfactory work completed in accordance with the notice of termination. The final payment to the Consultant after termination for convenience shall be limited to amounts due and owing under the Agreement at time of termination, including the following:
a. The cost of settling and paying valid claims arising out of the termination of the Work such as subconsultant agreements or contracts for materials;
b. The Agreement price allocable to the portion of the Work properly performed or goods supplied to the work site by the Consultant as of the date of termination, as determined in accordance with the notice of termination, reduced by any sums previously paid to the Consultant.
Authorization to Terminate Agreement
#22..
- 862 -
-13-
Termination of the Agreement may be invoked by the City Manager, or his/her designee, subject to the right of the Consultant to appeal the City Manager, or his/her designee’s, decision to the City Council. The Consultant shall appeal by notifying the City Clerk in writing within ten (10) calendar days of receipt of written notification from City of termination of the Agreement. In the event that termination of this Agreement is upheld by the City Council, any cessation of payment of delay claims, extended claims, Eichleay claims, or any other claims for delay shall be retroactive to the date of termination selected by the City Manager, or his/her designee.
17. CERTIFIED PAYROLL REQUIREMENT.
For consultants performing field work on public works contracts on which prevailing wages are required: The Consultant shall comply with the provisions of Section 1776 of the California Labor Code, regarding payroll records, and shall require its subconsultants and subcontractors to comply with that section as may be required by law.
18. INDEMNITY.
The Consultant shall hold the City, its agents, officers, employees, and volunteers, harmless from and save, defend and indemnify them against any and all claims, losses, liabilities, judgments or damages from every cause, including but not limited to injury to person or property or wrongful death, including reasonable costs and expenses of defense of any judicial or administrative action, arising directly or indirectly out of any negligent or intentional act or omission of Consultant, or its agents, officers, employees, or volunteers relating to or during the performance of its obligations under this Agreement. In no event shall the cost to defend charged to the Consultant exceed the Consultant’s proportionate percentage of fault.
However, notwithstanding the foregoing, in the event one or more defendants is unable to pay its #22..
- 863 -
-14-
share of defense costs due to bankruptcy or dissolution of the business, the Consultant shall meet and confer with other parties regarding unpaid defense costs.
Consultant's obligation to defend, indemnify, and hold the City, its agents, officers, and employees harmless under the provisions of this paragraph is not limited to or restricted by any requirement in this Agreement for Consultant to procure and maintain a policy of insurance.
19. DISPUTE RESOLUTION.
All claims, controversies, or disputes arising out of, or relating to the formation of this Agreement, or the breach, termination execution, enforcement, interpretation, or validity of this Agreement, including the determination of the scope or applicability of this contract provision shall be determined by binding arbitration in Modesto, California by one arbitrator, except as otherwise specified in this Agreement. The American Arbitration Association shall administer the arbitration under its Arbitration Rules then in effect, subject to the modifications of those rules contained in this paragraph. This agreement to arbitrate shall be specifically enforceable under the prevailing law of any court having jurisdiction, and the award rendered by the arbitrator may be entered in any court having jurisdiction. The appropriate venue for any arbitration or court proceeding relating to or arising out of this provision shall be in Stanislaus County, California.
This paragraph is not intended to and does not waive the claim filing requirements found in California Government Code section 900 et seq. In the event that a timely and legally sufficient, arbitrable claim is filed by Consultant with City, and the claim is rejected in whole or in part by City, this paragraph shall result in the conclusive, final, and binding resolution of all the issues presented in the claim by Consultant so long as any issues presented by the claim are arbitrable. Claims rejected by City or by operation of law, shall be submitted by #22..
- 864 -
-15-
Consultant to arbitration pursuant to the Arbitration Rules of the American Arbitration Association within ninety (90) days after mailing of the written rejection by City to Consultant.
Otherwise, the claim or claims shall be deemed waived in their entirety.
The “fast track’ rules of the American Arbitration Association shall apply to any claim or counterclaim less than ONE HUNDRED FIFTY THOUSAND AND 00/100 ($150,000.00) DOLLARS. In arbitration not proceeding under the “fast track” rules, the arbitrator shall have the power to order that depositions be taken and other discovery be made.
Both City and Consultant shall have the right, upon written notice, to take no more than three (3) depositions of the other as a matter of right in an arbitration proceeding under the “fast track” rules.
Whether or not City and Consultant may be engaged in interstate commerce, any controversy or dispute mentioned above shall be determined by, and the parties shall be bound by, the substantive law of the State of California, and not the Federal Arbitration Act at 9 USC Section 1 et seq.
The arbitrator may grant any remedy or relief deemed by the arbitrator just and equitable under the circumstances, whether or not such relief could be awarded in a court of law. The arbitrator shall be empowered to award monetary sanctions against a party for failure of cooperation in the arbitration. The arbitrator shall, in written award, allocate all the costs of the arbitration, including the fees of the arbitrator and the reasonable attorney fees of the prevailing party, against the party who did not prevail. The prevailing party shall be the party in whose favor the majority of the central issues in the case are resolved.
Notwithstanding anything in this provision to the contrary, the arbitrator shall have no power to award punitive damages or other damages not measured by the party’s actual damages (excluding litigation costs and fees) against any party. This limitation of the #22..
- 865 -
-16-
arbitrator’s powers under this Agreement shall not operate as an exclusion of the issue of punitive damages from this Agreement to Arbitrate sufficient to vest jurisdiction in a court with respect to that issue.
Consultant shall include in all subcontracts a specification whereby the subcontractor consents to being joined in an arbitration between City and Consultant involving the work of the subcontractor to be joined. Consultant’s failure to do so shall be a breach of this Agreement.
The parties hereby waive any rights provided by Title 9.2 of the California Code of Civil Procedure, Section 1296. The arbitrator’s award shall be deemed final, conclusive and binding to the fullest extent allowed by California law.
20. ENTIRE AGREEMENT.
This Agreement and its exhibits contain the entire understanding between Consultant and City. Additional or new terms contained in this Agreement which vary from Consultant's proposal are controlling and are deemed accepted by Consultant by shipment of any article or other commencement of performance hereunder. All previous proposals, offers and communications relative to this Agreement, whether oral or written, are hereby superseded except to the extent that they have been incorporated into this Agreement. No future waiver of or exception to any of the terms, conditions, and provisions of this Agreement shall be considered valid unless specifically agreed to in writing by all the parties.
21. PARTIAL INVALIDITY.
If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way. #22..
- 866 -
-17-
22. WAIVER.
The waiver by any party to this Agreement of a breach of any provision hereof shall be in writing and shall not operate or be construed as a waiver of any other or subsequent breach hereof unless specifically stated in writing.
23. AUDIT.
The City's duly authorized representative shall have access at all reasonable times to all reports, contract records, contract documents, contract files, and personnel necessary to audit and verify Consultant's charges to City under this Agreement.
Consultant agrees to retain reports, records, documents, and files related to charges under this Agreement for a period of four (4) years following the date of final payment for Consultant services. City's representative shall have the right to reproduce any of the aforesaid documents.
24. GOVERNING LAW.
This Agreement shall be governed according to the laws of the State of California.
25. HEADINGS NOT CONTROLLING.
Headings used in the Agreement are for reference purposes only and shall not be considered in construing this Agreement.
26. COMPLIANCE WITH LAWS.
Consultant shall insure compliance with all safety and hourly requirements for employees, in accordance with federal, state, and county safety and health regulations and laws. Consultant shall fully comply with all applicable federal, state, and local laws, ordinances, regulations and permits.
#22..
- 867 -
-18-
27. CITY BUSINESS LICENSE.
Consultant will have a City of Modesto business license.
28. THIRD PARTIES.
The services to be performed by Consultant are intended solely for the benefit of the City. No person or entity not a signatory to this Agreement shall be entitled to rely on Consultant’s performance of its services hereunder, and no right to assert a claim against Consultant by assignment or indemnity rights or otherwise shall accrue to a third party as a result of this Agreement or the performance of Consultant’s services hereunder.
IN WITNESS WHEREOF, the City of Modesto, a municipal corporation, has authorized the execution of this Agreement in duplicate by its City Manager and attestation by its City Clerk under authority of Resolution No. 2025- __ , adopted by the Council of the City of Modesto on the day of , 2025, and CAROLLO ENGINEERS, INC. has caused this agreement to be duly executed in duplicate as of the Effective Date. (Signatures on Next Page)
#22..
- 868 -
SCOPE OF SERVICES
Engineering Services during Construction
For the
River Trunk Realignment Project
River Trunk Pump Station Project
PURPOSE OF PROJECT
The purpose of this task order is for the Consultant to provide Engineering Services during Construction (ESDC) for the City of Modesto’s (City) River Trunk Realignment Project (Project).
More specifically, the River Trunk Pump Station Project. A more detailed description of the project is provided below.
River Trunk Pump Station Project
The River Trunk Pump Station Project includes the construction of the following:
• Approximately 3,051 lineal feet of 48-inch gravity sewer pipeline installed via trenchless method (Alignment A) with a diversion structure and vortex drop structure.
• Approximately 327 lineal feet of 27-inch gravity pipeline installed via open cut method (Alignment A1).
• Approximately 336 lineal feet of 15-inch gravity pipeline installed via open cut method (Alignment B).
• Approximately 1,611 lineal feet of 36-inch gravity pipeline installed via a combination of trenchless and open cut method (Alignment C). • The River Trunk Pump Station (40 mgd) facilities including the overflow structure, pump station wet well and structure, five (5) pumps, intermediate overflow structure, electrical building, emergency power generator facility, biofilter odor control facility, metering vault facility, ancillary pump station facilities. • Approximately 2,650 lineal feet of dual force (30/42 inch) forcemain pipeline installed via a combination of trenchless and open cut method (Alignment D); and • All sanitary sewer manholes, junction structures, and other appurtenances.
The construction is expected to be completed over a 42 month time frame after the City has issued a Notice-to-Proceed (NTP) to the selected general contractor (Contractor).
EXHIBIT A
#22..
- 869 -
SCOPE OF SERVICES
The scope of services is defined by the following tasks and the attached scope assumptions.
TASK 1.0 - ENGINEERING SERVICES DURING CONSTRUCTION (ESDC) Task 1.01 - Project Administration and Management. Consultant will administer the Project and subconsultants to maintain internal project schedule and budget under this task. The Project progress and budget status will be included in monthly progress reports that will be attached to billing invoices. The internal project schedule will be developed and maintained under this task and will closely follow the Contractor's construction schedules.
Task 1.02 - Attend Pre-construction Conference. Consultant will attend the pre-construction conference and answer questions as directed by the City. Meeting agenda and minutes to be developed by the City’s Construction Manager.
Task 1.03 - Conduct Biological Surveys. Consultant will conduct pre-construction biological surveys as required by the Mitigation Monitoring and Reporting (MMR) Program Summary, dated October 2019.
Rare Plant Surveys
Consultant will perform an Elderberry Shrub Survey (Spring/Summer 2026) of the entire project site (pump station and alignment) and prepare an email report, as described in Mitigation Measure BIO-5. Consultant will perform a Rare Plant Habitat Assessment/Survey (Summer/Fall 2025) of the entire project site (pump station and alignment) and prepare a brief report, as described in Mitigation Measure BIO-1. All work will be completed by a botanist.
Rare Species Surveys
Consultant will perform a Turtle and Bird Surveys (Spring/Summer 2026) for northwestern pond turtle, burrowing owls, Swainson's hawks and other nesting birds at and near the project site, as described in Mitigation Measures BIO-8, BIO-9, BIO-10 and BIO-12 and prepare a letter report with maps and photographs. Follow-up surveys will be required each time work moves in to a new area, or if there is a pause of construction for more than 14 days. The findings of each follow-up survey will be summarized in an "email addendum" to the Spring/Summer 2026 report. It is assumed that three (3) additional surveys will be needed during 2026.
Task 1.04 - Review Contractor’s Submittals. Review and comment on acceptability of Contractor’s submittals for the City will be provided under this task. Consultant will review and respond to product submittals and shop drawing submittals from the Contractor forwarded by the City’s Construction Manager. Review comments will be returned to the City’s Construction Manager for processing and distribution to the Contractor and other parties.
Task 1.05 - Respond to Requests for Information (RFI). Consultant will respond to Contractor's RFI's. This scope also assumes the CM will consider and evaluate validity of RFI's, questions, and modification requests prior to forwarding them to Consultant.
Task 1.06 - Attend Progress Meetings/Site Visits. The project specifications require progress meetings to be conducted on a weekly basis. It is anticipated that the City's construction manager will schedule and administer the meetings and Consultant's design engineering staff will attend meetings as required. Additionally, after the progress meetings are completed a
EXHIBIT A
#22..
- 870 -
formal site visit will also be conducted on the same day to optimize staff time. This effort is in addition to that described under Task 1.08 herein.
Task 1.07 - Review Proposed Change Orders (CO). Consultant will review changes in project scope or time, as requested by the CM. Consultant's scope of work shall include review of the Contractor furnished supporting information, discussions with Contractor and CM in the field and preparation of technical documents (supplemental drawings, specifications, etc.) to assist the CM with the preparation of the change order.
Task 1.08 - Design Engineer Oversight. Consultant will provide on-site field design support services to assist the City and City’s Construction Manager with coordination between field construction activities and the office engineering team. This effort includes participation in the weekly progress meeting. The design engineer’s on-site effort is assumed to end when the project reaches substantial completion.
Task 1.09 - Develop Operations & Maintenance (O&M) Manual. Consultant will assemble documentation provided by equipment vendors in an Operations and Maintenance (O&M) Manual to assist City staff with the new equipment start-up and operations. Consultant will provide the City an electronic O&M Manual with all of the new equipment installed under this project for use by the City's operation staff. Consultant will use the City's existing electronic lift station O&M Manual template.
Task 1.10 - Assist with Startup and Training. When the Contractor has completed installation of all new equipment under this project and is prepared to begin start up, commissioning and testing, Consultant will assist Contractor and City staff with start-up of the pump station.
In addition, Consultant will prepare for and provide operator training for the new pump station equipment outside of vendor required training. Training will include one, 8-hour training session.
Printed training information will be provided for reference.
Task 1.11 - Prepare Punch List. When the project has reached substantial completion, Consultant's design engineering staff including the project manager, project engineer, structural engineer, mechanical engineer, and electrical engineer will walk the project site in the presence of the CM, City staff, and Contractor and establish a list of items ("Punch List") to be completed.
This list will be issued as an attachment to the “Certificate of Substantial Completion.” Task 1.12 - Provide Record Drawings. The Contractor is required to provide the City and CM a final set of marked-up record (as-built) drawings. After substantial completion, Consultant will review the final version of the Contractor’s record (as-built) drawings compiled by the CM.
Consultant will then prepare a set of record drawings based on the Contractor’s mark-ups in electronic format and deliver the electronic documents to the City. Record drawings will be prepared using Consultant's standard record drawing format.
EXHIBIT A
#22..
- 871 -
Scope Deliverables:
• Consultant internal monthly status reports
• Consultant internal project schedules.
• Biological survey reports (PDF electronic format)
• Submittal responses (PDF electronic format)
• RFI responses (PDF electronic format)
• CO responses (PDF electronic format)
• Site visit notes (PDF electronic format)
• O&M Manual (PDF electronic format)
• Training material (PDF electronic format)
• Punch List (PDF electronic format)
• Record Drawings (PDF electronic format)
TIME OF PERFORMANCE
Engineering services during construction are assumed to start in Fall 2025 and will continue for a period of 42 months. The 42-month duration is based on 36 months of construction (NTP through substantial completion) for the project and six (6) months for completion of record drawings and project close-out.
EXHIBIT A
#22..
- 872 -
https://carolloh2o-my.sharepoint.com/personal/ttaylor_carollo_com/Documents/Documents/Data/Modesto/9551D10/Contracts/ESDC/02 Original Files/01A Modesto River Trunk Project 1 ESDC Scope Assumptions.doc Page 1 of 1
SCOPE ASSUMPTIONS
Engineering Services during Construction
For the
River Trunk Realignment Project
River Trunk Pump Station Project
ASSUMPTIONS
• Project duration is estimated to be 42 months.
• City to perform construction inspection and construction management services. • Construction progress meetings will be a hybrid of in-person and virtual attendance. • City’s Construction Manager to lead the Pre-Construction meeting as well as all construction progress meetings.
• Submittals and RFI’s are initiated, submitted and logged into the document processing system for the project by the Contractor, which are then reviewed and forwarded as necessary by the City’s Construction Manager.
• The City’s Construction Manager will perform preliminary review of shop drawings to confirm format and presentation meet the requirements of the contract documents. • The City’s Construction Manager will be responsible for review of all of the Contractor construction management related submittals including Contractor schedule, schedule of values, and progress payment requests.
• The City’s Construction Manager will be responsible for incorporating Consultant's technical documents into change order documents for the City's approval prior to issuing them to the Contractor.
• Design Engineer Oversight to include a project manager for one (1) day per week, project engineer for two (2) days per week and a staff engineer for one (1) day every other week over the course of the construction schedule. • Consultant will rely solely on markups prepared by the Contractor and City’s Construction Manager to develop Record Drawings.
• All Submittal, Request for Information and Contract Change Order review tasks are based on the assumptions below:
Submittal, RFI and CO Basis of Assumptions
Task Initial Revised
No. Description No. Hours No. Hours
1.04 Review Contractor Submittals 350 8 175 4
1.05 Respond to RFI's 250 6 0 0
1.07 Review Proposed CO's 50 6 0 0
EXHIBIT A
#22..
- 873 -
EXHIBIT B
ESTIMATED ENGINEERING HOURS AND COSTS
City of Modesto
River Trunk Pump Station Project
Sellman
Taylor
Marshall
Baune
Davidson
Coulter
Struct. Elect. I&C Civil PECE
SP SP SP PP PP PP PP PP PP PP PP AP
Rates $425 $425 $425 $425 $279 $279 $279 $279 $279 $279 $279 $250 $194 $174 Hours Budget $18.00
Moore
Biological 10.0%
Column 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Task 1 - Engineering Services during Construction (Project No. 1 - RTPS)
1.01 Project Administration and Management 40 504 0 40 40 0 0 0 0 0 0 0 0 168 792 $288,592 $14,256 $0 $13,000 $0 $17,400 $3,500 $0 $0 $33,900 $3,390 $0 $5,000 $56,546 $345,138
1.02 Attend Pre-construction Conference 4 4 0 4 4 0 0 0 0 0 0 4 4 4 28 $8,688 $504 $0 $1,700 $0 $1,700 $3,500 $0 $0 $6,900 $690 $0 $150 $8,244 $16,932
1.03 Conduct Biological Resources Surveys 2 4 0 8 16 0 0 0 16 0 0 0 0 8 54 $16,270 $972 $0 $0 $0 $0 $0 $80,000 $0 $80,000 $8,000 $0 $0 $88,972 $105,242
1.04 Review Contractor’s Submittals 16 40 0 160 240 300 440 440 440 0 440 880 0 104 3500 $971,596 $63,000 $0 $15,000 $0 $20,000 $30,000 $0 $0 $65,000 $6,500 $548 $0 $135,048 $1,106,644
1.05 Respond to RFI’s 12 16 0 80 120 120 120 120 80 40 80 560 120 40 1508 $405,860 $27,144 $0 $6,500 $0 $12,500 $7,500 $0 $0 $26,500 $2,650 $0 $0 $56,294 $462,154
1.06 Attend Progress Meetings/Site Visits 0 288 0 576 576 384 384 384 0 0 384 0 0 40 3016 $963,408 $54,288 $0 $20,000 $0 $10,000 $25,000 $0 $0 $55,000 $5,500 $0 $5,500 $120,288 $1,083,696
1.07 Review Proposed Change Orders 8 12 0 32 40 24 32 32 32 0 32 32 16 8 300 $88,164 $5,400 $0 $6,000 $0 $18,000 $10,000 $0 $0 $34,000 $3,400 $0 $0 $42,800 $130,964
1.08 Design Engineer Oversight 1152 0 0 0 0 0 0 0 2304 0 0 576 0 0 4032 $1,276,416 $72,576 $0 $10,000 $0 $5,000 $35,000 $0 $0 $50,000 $5,000 $0 $75,000 $202,576 $1,478,992
1.09 Develop Operations & Maintenance Manuals 4 8 0 80 120 0 80 80 0 0 80 240 80 40 812 $222,020 $14,616 $0 $2,500 $0 $0 $0 $0 $0 $2,500 $250 $0 $0 $17,366 $239,386
1.10 Assist with Startup and Training 16 40 0 40 80 16 160 160 40 0 160 160 80 40 992 $275,144 $17,856 $0 $1,500 $0 $0 $0 $0 $0 $1,500 $150 $0 $5,000 $24,506 $299,650
1.11 Prepare Punch List 4 8 0 8 40 16 16 16 16 4 16 64 0 16 224 $61,880 $4,032 $0 $1,600 $0 $0 $0 $0 $0 $1,600 $160 $0 $150 $5,942 $67,822
1.12 Provide Record Drawings 4 8 40 24 40 16 16 16 16 0 16 534 534 16 1280 $305,660 $23,040 $0 $6,000 $0 $0 $0 $0 $0 $6,000 $600 $3,080 $0 $32,720 $338,380 Task 1 Total Hours 1262 932 40 1052 1316 876 1248 1248 2944 44 1208 3050 834 484 16538 Task 1 Total Budget $536,350 $396,100 $17,000 $447,100 $367,164 $244,404 $348,192 $348,192 $821,376 $12,276 $337,032 $762,500 $161,796 $84,216 $4,883,698 $297,684 $0 $83,800 $0 $84,600 $114,500 $80,000 $0 $362,900 $36,290 $3,628 $90,800 $791,302 $5,675,000 Total Hours 1262 932 40 1052 1316 876 1248 1248 2944 44 1208 3050 834 484 16538 Total Costs $ 536,350 $ 396,100 $ 17,000 $ 447,100 $ 367,164 $ 244,404 $ 348,192 $ 348,192 $ 821,376 $ 12,276 $ 337,032 $ 762,500 $ 161,796 $ 84,216 $ 4,883,698 $ 297,684 $ - $ 83,800 $ - $ 84,600 $ 114,500 $ 80,000 $ - $ 362,900 $ 36,290 $ 3,628 $ 90,800 $ 791,302 $ 5,675,000 DM
TASK
CAROLLO OTHER DIRECT COSTS COST SUMMARY
PIC/PM PM QA/QC PE Mech.
CADD Tech. Clerical
Subtotals
Northstar
Blackwater
Hydraulic
Odell
Crawford Subtotals Total Cost
Subconsultant
Misc. Costs
and
Bennett Trenchless Printing Travel Total ODCs
https://carolloh2o-my.sharepoint.com/personal/ttaylor_carollo_com/Documents/Documents/Data/Modesto/9551D10/Contracts/ESDC/02 Original Files/9551D.10 Modesto River Trunk ESDC Budget Project No 01.xlsx EXHIBIT B #22..
- 874 -
EXHIBIT C – Insurance Requirement for Professional Services Consultant shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder and the results of that work by the Consultant his agents, representatives, employees or subconsultants.
MINIMUM SCOPE AND LIMIT OF INSURANCE
Coverage shall be at least as broad as:
1. 1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $1,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.
2. Automobile Liability: ISO Form Number CA 00 01 covering any auto (Code 1), or if Contractor has no owned autos, hired, (Code 8) and non-owned autos (Code 9), with limit no less than $1,000,000 per accident for bodily injury and property damage.
3. Workers’ Compensation: as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease.
(Not required if consultant provides written verification, it has no employees)
4. Professional Liability (Errors and Omissions) Insurance appropriates to the Consultant’s profession, with limit no less than $2,000,000 per occurrence or claim, $2,000,000 aggregate.
If the consultant maintains broader coverage and/or higher limits than the minimums shown above, the City of Modesto requires and shall be entitled to the broader coverage and/or the higher limits maintained by the consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City of Modesto.
Umbrella or Excess Coverage
The Consultant may use Umbrella or Excess Policies to provide the liability limits as required in this agreement. This form of insurance will be acceptable provided that all of the Primary and Umbrella or Excess Policies shall provide all of the insurance coverages herein required, including, but not limited to, primary and non-contributory, additional insured, Self-Insured Retentions (SIRs), indemnity, and defense requirements. The Umbrella or Excess policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the underlying Commercial General Liability insurance. No insurance policies maintained by the Additional Insureds, whether primary or excess, and which also apply #22..
- 875 -
to a loss covered hereunder, shall be called upon to contribute to a loss until the Consultant’s primary and excess liability policies are exhausted.
The insurance policies are to contain, or be endorsed to contain, the following provisions:
Additional Insured Status
The City of Modesto, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Consultant including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Consultant’s insurance with coverage equal to ISO form CG 2010. If Completed Operations endorsement is required, a separate endorsement equal to ISO form CG 2037 is required.
Primary Coverage
The Additional Insured coverage under the Consultant’s policy shall be “primary and noncontributory” and will not seek contribution from the City’s insurance or self-insurance and shall be at least as broad as CG 20 01 04 13. The City of Modesto does not accept endorsements limiting the Consultant’s insurance coverage to the sole negligence of the Named Insured.
Notice of Cancellation
Each insurance policy required above shall provide that coverage shall not be canceled, except with notice to the City of Modesto.
Waiver of Subrogation
Consultant hereby grants to City of Modesto a waiver of any right to subrogation which any insurer of said Consultant may acquire against the City of Modesto by virtue of the payment of any loss under such insurance. Consultant agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City of Modesto has received a waiver of subrogation endorsement from the insurer.
Self-Insured Retentions
All Self-insured retentions must be disclosed to Risk Management for approval and shall not reduce the limits of liability. The City of Modesto may require the Consultant to purchase coverage with a lower retention or provide proof of the ability to pay losses and related investigations, claim administration, and defense expenses within the retention. Any and all deductibles and SIRs shall be the sole responsibility of consultant or subconsultant who procured such insurance and shall not apply to the Indemnified Additional Insured Parties.
Acceptability of Insurers
Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the City of Modesto.
Claims Made Policies (applicable to Professional Liability only) If any of the required policies provide claims-made coverage:
#22..
- 876 -
1. The Retroactive Date must be shown and must be before the date of the contract or the beginning of contract work.
2. Insurance must be maintained, and evidence of insurance must be provided for at least five (5) years after completion of the contract of work.
If coverage is canceled or non-renewed and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date, the Consultant must purchase “extended reporting” coverage for a minimum of five (5) years after completion of work.
Verification of Coverage
Consultant shall furnish the City of Modesto with original certificates and amendatory endorsements or copies of the applicable policy language affecting coverage required by this clause and a copy of the Declarations and Endorsements Pages of the CGL and any Excess policies listing all policy endorsements. All certificates and endorsements are to be received and approved by the City of Modesto Risk Services before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive the Consultant’s obligation to provide them. The City of Modesto reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time. City reserves the right to obtain a full certified copy of any insurance policy and endorsements. Failure to exercise this right shall not constitute a waiver of right to exercise later.
Subconsultants
Consultants shall require and verify that all subconsultants, or other parties hired for this work, purchase and maintain coverage for indemnity and insurance requirements as least as broad as specified in this agreement to the extent they apply to the scope of the subconsultant’s work with the same certificate of insurance requirements and naming as additional insureds all parties to this contract.
Special Risks or Circumstances
City of Modesto reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.
Certificate Holder Address
Proper address for mailing certificates, endorsements and notices shall be:
City of Modesto
Attn: Risk Management
1010 10th Street
Modesto, CA 95354
#22..
- 877 -
P a g e 1 of 11 River Trunk Realignment - River Trunk Pump Station Bid Tabulation Wednesday, July 2, 2025
Project Title: River Trunk Realignment - River Trunk Pump Station Project ID #: 2025-25
Account #: 100646
Vault ID #: 12-D-00549
Bid Opening: 7/1/2025 at 11:00 AM
Basis of Award: By Base Bid Designer: Carollo Engineers Design Manager: Cristian Ciotau
Project Description: This project will reroute sanitary sewer flows out of the current River Trunk Pipeline between the Gallo Winery property and the Sutter Avenue Primary Treatment Facility (SAPTF). The existing River Trunk runs adjacent to the Tuolumne River and is at risk of failure during a large storm event. The Project includes a new gravity sewer pipeline from the Gallo Property, under Dry Creek, to the new River Trunk Pump Station located at the intersection of Morton Boulevard and B Street. Sanitary sewer flow will then be pumped in a new dual force-main, across the flood plain, to the intersection of Tuolumne Boulevard and Neece Drive. The City is currently completing construction of a new gravity pipeline from the intersection of Tuolumne Boulevard and Neece Drive to the Sutter Avenue Treatment Plant. The Project also includes new gravity pipelines to reroute flows from existing local collection pipelines to the new River Trunk Pump Station.
Item # Item Description Units Quantity Unit Price Extension Apparent Low Bidder
Shimmick Construction Company, Inc
(707) 410-5070 530 Technology Dr., Suite 300, Irvine, CA 92618 Base Bid
1 Mobilization and Demobilization (Not to be LS 1 $4,596,000.00 $4,596,000.00 greater than 4% of the Total Base Bid Price)
2 EXCAVATION SHORING (RIVER TRUNK LS 1 $13,005,000.00 $13,005,000.00 PUMP STATION) Secant Pile Shoring or
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707
and Section 02160
3 EXCAVATION SHORING (VORTEX LS 1 $2,350,000.00 $2,350,000.00 MANHOLE) Sheeting, Shoring, and Bracing,
Or Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
4 EXCAVATION SHORING (DIVERSION LS 1 $475,000.00 $475,000.00 STRUCTURE) Sheeting, Shoring, and Bracing,
Or Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
5 EXCAVATION SHORING (OVERFLOW LS 1 $4,300,000.00 $4,300,000.00 STRUCTURE Secant Pile Shoring or
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707
#22..
- 878 -
P a g e 2 of 11 River Trunk Realignment - River Trunk Pump Station and Section 02160
6 EXCAVATION SHORING (FLOW METER LS 1 $550,000.00 $550,000.00 VAULT) Sheeting, Shoring, and Bracing,
Or Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
7 ALL OTHER EXCAVATIONS - Sheeting LS 1 $10,000.00 $10,000.00 Shoring, and Bracing, or Equivalent Method
for the Protection of Life and Limb in Trenches
and Open Excavation, Pursuant to California
Labor Code §6707 and Sections
02260 and 02261
8 Commissioning (not to be less than 1% of LS 1 $1,160,000.00 $1,160,000.00 the Total Base Bid Price)
9 Site Safety – Barricades, Trenching, LS 1 $75,000.00 $75,000.00 Temporary K-Rail, Lighting, Signage,
Fencing, and Housekeeping
10 Traffic Control LS 1 $80,000.00 $80,000.00
11 SWPPP Installation and Maintenance LS 1 $850,000.00 $850,000.00 12 Construction CPM Baseline Schedule and LS 1 $50,000.00 $50,000.00 Monthly Updates
13 Subsurface Utility Investigations LS 1 $260,000.00 $260,000.00 14 Dewatering LS 1 $450,000.00 $450,000.00
15 Existing Building Demolition LS 1 $320,000.00 $320,000.00 16 River Trunk Pump Station Site Facilities LS 1 $41,402,503.00 $41,402,503.00 17 Pre-negotiated Submersible Screw LS 1 $3,375,997.00 $3,375,997.00 Centrifugal Pumps per Section 11313R
18 Diversion Structure LS 1 $1,000,000.00 $1,000,000.00 19 Vortex Drop Structure LS 1 $1,100,000.00 $1,100,000.00 20 E&J Gallo Site Improvements LS 1 $975,000.00 $975,000.00 21 Tuolumne Blvd Junction Structure LS 1 $25,000.00 $25,000.00 Modifications
22 Temporary Bypass Pumping LS 1 $230,000.00 $230,000.00 23 48-inch Sanitary Sewer Gravity Pipelines LF 203 $2,950.00 $598,850.00 within E&J Gallo Property (Open Cut)
24 MH for 48-inch Sanitary Sewer (Alignment EA 6 $67,000.00 $402,000.00 A) within E&J Gallo Property (Open Cut)
25 48-inch Sanitary Sewer Gravity Pipeline LF 174 $5,500.00 $957,000.00 within E&J Gallo Property (Trenchless)
26 24-inch Sanitary Sewer Gravity Pipelines LF 132 $2,350.00 $310,200.00 within E&J Gallo Property
27 MH for 24-inch Sanitary Sewer within E&J EA 3 $66,000.00 $198,000.00 Gallo Property
28 48-inch Sanitary Sewer Gravity Pipeline - LF 2895 $4,700.00 $13,606,500.00 Alignment A from Vortex Drop Structure to
Overflow Structure
29 MH for Alignment A Sanitary Sewer EA 3 $325,000.00 $975,000.00 30 Sanitary Sewer Gravity Pipeline - Alignment LF 392 $1,550.00 $607,600.00 A1 From SSMH A1 to SSMH A1-3
31 MH for Alignment A1 Sanitary Sewer EA 5 $68,000.00 $340,000.00 32 15-inch Sanitary Sewer Gravity Pipeline – LF 79 $1,600.00 $126,400.00 Alignment B from SSMH C11 to SSMH B1
33 MH for Alignment B 15-inch Sanitary Sewer EA 1 $52,000.00 $52,000.00 34 Sanitary Sewer Gravity Pipeline –Alignment LF 1534 $2,200.00 $3,374,800.00 C (Open Cut)
35 Sanitary Sewer Gravity Pipeline – LF 271 $4,500.00 $1,219,500.00 #22..
- 879 -
P a g e 3 of 11 River Trunk Realignment - River Trunk Pump Station Alignment C (Trenchless) from SSMH C3 to
36 MH for Alignment C Sanitary Sewer EA 11 $140,000.00 $1,540,000.00 37 30-inch Sanitary Sewer Force Main – LF 2535 $1,650.00 $4,182,750.00 Alignment D (Open Cut)
38 30-inch Sanitary Sewer Force Main LF 350 $4,500.00 $1,575,000.00 –Alignment D (Trenchless)
39 42-inch Sanitary Sewer Force Main – LF 2785 $1,850.00 $5,152,250.00 Alignment D (Open Cut)
40 42-inch Sanitary Sewer Force Main – LF 383 $4,600.00 $1,761,800.00 Alignment D (Trenchless)
41 Alignment D Force Main Manholes EA 4 $120,000.00 $480,000.00 42 Roadway Restoration on Tuolumne Blvd SY 2611 $150.00 $391,650.00 and B Street
43 Allowance for Unanticipated Underground LS 1 $100,000.00 $100,000.00 Utilities
44 Allowance for Inspection of UPRR Crossing LS 1 $100,000.00 $100,000.00 45 Allowance for San Joaquin Valley Air LS 1 $5,000.00 $5,000.00 Pollution Control District
46 Allowance for Tree Removal and LS 1 $20,000.00 $20,000.00 Replacement
47 Allowance for Pump Station Tools LS 1 $35,000.00 $35,000.00 48 All Other Contract Work Not Specifically LS 1 $10,000.00 $10,000.00 Identified in This Bid Schedule
49 60-inch Sanitary Sewer Gravity Main LF 148 $5,400.00 $799,200.00 (Trenchless) from the Overflow Structure to
the River Trunk PS
Total: $115,560,000.00
Percent From Engineer's Estimate: 9.02%
Steve P. Rados, Inc.
(714) 835-4612 2002 E. McFadden Ave., #200, Santa Ana, CA 92735 Base Bid
1 Mobilization and Demobilization (Not to be LS 1 $5,300,000.00 $5,300,000.00 greater than 4% of the Total Base Bid Price)
2 EXCAVATION SHORING (RIVER TRUNK LS 1 $15,000,000.00 $15,000,000.00 PUMP STATION) Secant Pile Shoring or
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707
and Section 02160
3 EXCAVATION SHORING (VORTEX LS 1 $2,500,000.00 $2,500,000.00 MANHOLE) Sheeting, Shoring, and Bracing,
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
4 EXCAVATION SHORING (DIVERSION LS 1 $350,000.00 $350,000.00 STRUCTURE) Sheeting, Shoring, and Bracing,
Or Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
5 EXCAVATION SHORING (OVERFLOW LS 1 $5,000,000.00 $5,000,000.00 STRUCTURE Secant Pile Shoring or
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707
and Section 02160
#22..
- 880 -
P a g e 4 of 11 River Trunk Realignment - River Trunk Pump Station 6 EXCAVATION SHORING (FLOW METER LS 1 $300,000.00 $300,000.00 VAULT) Sheeting, Shoring, and Bracing,
Or Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
7 ALL OTHER EXCAVATIONS - Sheeting LS 1 $10,000,000.00 $10,000,000.00 Shoring, and Bracing, or Equivalent Method
for the Protection of Life and Limb in Trenches
and Open Excavation, Pursuant to California
Labor Code §6707 and Sections
02260 and 02261
8 Commissioning (not to be less than 1% of LS 1 $1,350,000.00 $1,350,000.00 the Total Base Bid Price)
9 Site Safety – Barricades, Trenching, LS 1 $15,000.00 $15,000.00 Temporary K-Rail, Lighting, Signage,
Fencing, and Housekeeping
10 Traffic Control LS 1 $800,000.00 $800,000.00
11 SWPPP Installation and Maintenance LS 1 $450,000.00 $450,000.00 12 Construction CPM Baseline Schedule and LS 1 $50,000.00 $50,000.00 Monthly Updates
13 Subsurface Utility Investigations LS 1 $125,000.00 $125,000.00 14 Dewatering LS 1 $1,000,000.00 $1,000,000.00
15 Existing Building Demolition LS 1 $350,000.00 $350,000.00 16 River Trunk Pump Station Site Facilities LS 1 $56,846,653.00 $56,846,653.00 17 Pre-negotiated Submersible Screw LS 1 $3,375,997.00 $3,375,997.00 Centrifugal Pumps per Section 11313R
18 Diversion Structure LS 1 $750,000.00 $750,000.00
19 Vortex Drop Structure LS 1 $1,000,000.00 $1,000,000.00 20 E&J Gallo Site Improvements LS 1 $1,500,000.00 $1,500,000.00 21 Tuolumne Blvd Junction Structure LS 1 $30,000.00 $30,000.00 Modifications
22 Temporary Bypass Pumping LS 1 $550,000.00 $550,000.00 23 48-inch Sanitary Sewer Gravity Pipelines LF 203 $2,600.00 $527,800.00 within E&J Gallo Property (Open Cut)
24 MH for 48-inch Sanitary Sewer (Alignment EA 6 $110,000.00 $660,000.00 A) within E&J Gallo Property (Open Cut)
25 48-inch Sanitary Sewer Gravity Pipeline LF 174 $2,900.00 $504,600.00 within E&J Gallo Property (Trenchless)
26 24-inch Sanitary Sewer Gravity Pipelines LF 132 $2,800.00 $369,600.00 within E&J Gallo Property
27 MH for 24-inch Sanitary Sewer within E&J EA 3 $160,000.00 $480,000.00 Gallo Property
28 48-inch Sanitary Sewer Gravity Pipeline - LF 2895 $2,800.00 $8,106,000.00 Alignment A from Vortex Drop Structure to
Overflow Structure
29 MH for Alignment A Sanitary Sewer EA 3 $125,000.00 $375,000.00 30 Sanitary Sewer Gravity Pipeline - Alignment LF 392 $2,600.00 $1,019,200.00 A1 From SSMH A1 to SSMH A1-3
31 MH for Alignment A1 Sanitary Sewer EA 5 $65,000.00 $325,000.00 32 15-inch Sanitary Sewer Gravity Pipeline – LF 79 $2,100.00 $165,900.00 Alignment B from SSMH C11 to SSMH B1
33 MH for Alignment B 15-inch Sanitary Sewer EA 1 $70,000.00 $70,000.00 34 Sanitary Sewer Gravity Pipeline –Alignment LF 1534 $2,300.00 $3,528,200.00 C (Open Cut)
35 Sanitary Sewer Gravity Pipeline – LF 271 $2,600.00 $704,600.00 Alignment C (Trenchless) from SSMH C3 to
#22..
- 881 -
P a g e 5 of 11 River Trunk Realignment - River Trunk Pump Station 36 MH for Alignment C Sanitary Sewer EA 11 $62,000.00 $682,000.00 37 30-inch Sanitary Sewer Force Main – LF 2535 $1,200.00 $3,042,000.00 Alignment D (Open Cut)
38 30-inch Sanitary Sewer Force Main LF 350 $2,500.00 $875,000.00 –Alignment D (Trenchless)
39 42-inch Sanitary Sewer Force Main – LF 2785 $1,300.00 $3,620,500.00 Alignment D (Open Cut)
40 42-inch Sanitary Sewer Force Main – LF 383 $2,500.00 $957,500.00 Alignment D (Trenchless)
41 Alignment D Force Main Manholes EA 4 $82,000.00 $328,000.00 42 Roadway Restoration on Tuolumne Blvd SY 2611 $150.00 $391,650.00 and B Street
43 Allowance for Unanticipated Underground LS 1 $100,000.00 $100,000.00 Utilities
44 Allowance for Inspection of UPRR Crossing LS 1 $100,000.00 $100,000.00 45 Allowance for San Joaquin Valley Air LS 1 $5,000.00 $5,000.00 Pollution Control District
46 Allowance for Tree Removal and LS 1 $20,000.00 $20,000.00 Replacement
47 Allowance for Pump Station Tools LS 1 $35,000.00 $35,000.00 48 All Other Contract Work Not Specifically LS 1 $10,000.00 $10,000.00 Identified in This Bid Schedule
49 60-inch Sanitary Sewer Gravity Main LF 148 $4,600.00 $680,800.00 (Trenchless) from the Overflow Structure to
the River Trunk PS
Total: $134,326,000.00
Percent From Engineer's Estimate: 26.72%
Mountain Cascade Inc.
(925) 373-8370 555 Exchange Court, Livermore, CA 94551
Base Bid
1 Mobilization and Demobilization (Not to be LS 1 $3,300,000.00 $3,300,000.00 greater than 4% of the Total Base Bid Price)
2 EXCAVATION SHORING (RIVER TRUNK LS 1 $10,000,000.00 $10,000,000.00 PUMP STATION) Secant Pile Shoring or
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707
and Section 02160
3 EXCAVATION SHORING (VORTEX LS 1 $1,200,000.00 $1,200,000.00 MANHOLE) Sheeting, Shoring, and Bracing,
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
4 EXCAVATION SHORING (DIVERSION LS 1 $450,000.00 $450,000.00 STRUCTURE) Sheeting, Shoring, and Bracing,
Or Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
5 EXCAVATION SHORING (OVERFLOW LS 1 $3,500,000.00 $3,500,000.00 STRUCTURE Secant Pile Shoring or
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707
and Section 02160
6 EXCAVATION SHORING (FLOW METER LS 1 $650,000.00 $650,000.00 #22..
- 882 -
P a g e 6 of 11 River Trunk Realignment - River Trunk Pump Station VAULT) Sheeting, Shoring, and Bracing,
Or Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
7 ALL OTHER EXCAVATIONS - Sheeting LS 1 $7,800,000.00 $7,800,000.00 Shoring, and Bracing, or Equivalent Method
for the Protection of Life and Limb in Trenches
and Open Excavation, Pursuant to California
Labor Code §6707 and Sections
02260 and 02261
8 Commissioning (not to be less than 1% of LS 1 $1,400,000.00 $1,400,000.00 the Total Base Bid Price)
9 Site Safety – Barricades, Trenching, LS 1 $350,000.00 $350,000.00 Temporary K-Rail, Lighting, Signage,
Fencing, and Housekeeping
10 Traffic Control LS 1 $1,500,000.00 $1,500,000.00
11 SWPPP Installation and Maintenance LS 1 $800,000.00 $800,000.00 12 Construction CPM Baseline Schedule and LS 1 $225,000.00 $225,000.00 Monthly Updates
13 Subsurface Utility Investigations LS 1 $300,000.00 $300,000.00 14 Dewatering LS 1 $650,000.00 $650,000.00
15 Existing Building Demolition LS 1 $400,000.00 $400,000.00 16 River Trunk Pump Station Site Facilities LS 1 $47,630,000.00 $47,630,000.00 17 Pre-negotiated Submersible Screw LS 1 $3,375,997.00 $3,375,997.00 Centrifugal Pumps per Section 11313R
18 Diversion Structure LS 1 $700,000.00 $700,000.00
19 Vortex Drop Structure LS 1 $1,400,000.00 $1,400,000.00 20 E&J Gallo Site Improvements LS 1 $600,000.00 $600,000.00 21 Tuolumne Blvd Junction Structure LS 1 $60,000.00 $60,000.00 Modifications
22 Temporary Bypass Pumping LS 1 $1,200,000.00 $1,200,000.00 23 48-inch Sanitary Sewer Gravity Pipelines LF 203 $6,000.00 $1,218,000.00 within E&J Gallo Property (Open Cut)
24 MH for 48-inch Sanitary Sewer (Alignment EA 6 $365,000.00 $2,190,000.00 A) within E&J Gallo Property (Open Cut)
25 48-inch Sanitary Sewer Gravity Pipeline LF 174 $3,200.00 $556,800.00 within E&J Gallo Property (Trenchless)
26 24-inch Sanitary Sewer Gravity Pipelines LF 132 $4,500.00 $594,000.00 within E&J Gallo Property
27 MH for 24-inch Sanitary Sewer within E&J EA 3 $225,000.00 $675,000.00 Gallo Property
28 48-inch Sanitary Sewer Gravity Pipeline - LF 2895 $2,800.00 $8,106,000.00 Alignment A from Vortex Drop Structure to
Overflow Structure
29 MH for Alignment A Sanitary Sewer EA 3 $200,000.00 $600,000.00 30 Sanitary Sewer Gravity Pipeline - Alignment LF 392 $4,500.00 $1,764,000.00 A1 From SSMH A1 to SSMH A1-3
31 MH for Alignment A1 Sanitary Sewer EA 5 $350,000.00 $1,750,000.00 32 15-inch Sanitary Sewer Gravity Pipeline – LF 79 $700.00 $55,300.00 Alignment B from SSMH C11 to SSMH B1
33 MH for Alignment B 15-inch Sanitary Sewer EA 1 $75,000.00 $75,000.00 34 Sanitary Sewer Gravity Pipeline –Alignment LF 1534 $4,300.00 $6,596,200.00 C (Open Cut)
35 Sanitary Sewer Gravity Pipeline – LF 271 $2,600.00 $704,600.00 Alignment C (Trenchless) from SSMH C3 to
36 MH for Alignment C Sanitary Sewer EA 11 $250,000.00 $2,750,000.00 #22..
- 883 -
P a g e 7 of 11 River Trunk Realignment - River Trunk Pump Station 37 30-inch Sanitary Sewer Force Main – LF 2535 $2,200.00 $5,577,000.00 Alignment D (Open Cut)
38 30-inch Sanitary Sewer Force Main LF 350 $3,000.00 $1,050,000.00 –Alignment D (Trenchless)
39 42-inch Sanitary Sewer Force Main – LF 2785 $2,600.00 $7,241,000.00 Alignment D (Open Cut)
40 42-inch Sanitary Sewer Force Main – LF 383 $3,200.00 $1,225,600.00 Alignment D (Trenchless)
41 Alignment D Force Main Manholes EA 4 $200,000.00 $800,000.00 42 Roadway Restoration on Tuolumne Blvd SY 2611 $300.00 $783,300.00 and B Street
43 Allowance for Unanticipated Underground LS 1 $100,000.00 $100,000.00 Utilities
44 Allowance for Inspection of UPRR Crossing LS 1 $100,000.00 $100,000.00 45 Allowance for San Joaquin Valley Air LS 1 $5,000.00 $5,000.00 Pollution Control District
46 Allowance for Tree Removal and LS 1 $20,000.00 $20,000.00 Replacement
47 Allowance for Pump Station Tools LS 1 $35,000.00 $35,000.00 48 All Other Contract Work Not Specifically LS 1 $4,063,000.00 $4,063,000.00 Identified in This Bid Schedule
49 60-inch Sanitary Sewer Gravity Main LF 148 $5,000.00 $740,000.00 (Trenchless) from the Overflow Structure to
the River Trunk PS
Total: $136,865,797.00
Percent From Engineer's Estimate: 29.12%
Flatiron Dragados West LLC (Previously known as Flatiron West Inc.) (707) 742-6000 1200 Concord Avenue, Suite 465 Concord, CA 94520 Base Bid
1 Mobilization and Demobilization (Not to be LS 1 $7,000,000.00 $7,000,000.00 greater than 4% of the Total Base Bid Price)
2 EXCAVATION SHORING (RIVER TRUNK LS 1 $14,000,000.00 $14,000,000.00 PUMP STATION) Secant Pile Shoring or
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707
and Section 02160
3 EXCAVATION SHORING (VORTEX LS 1 $2,000,000.00 $2,000,000.00 MANHOLE) Sheeting, Shoring, and Bracing,
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
4 EXCAVATION SHORING (DIVERSION LS 1 $300,000.00 $300,000.00 STRUCTURE) Sheeting, Shoring, and Bracing,
Or Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
5 EXCAVATION SHORING (OVERFLOW LS 1 $7,000,000.00 $7,000,000.00 STRUCTURE Secant Pile Shoring or
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707
and Section 02160
6 EXCAVATION SHORING (FLOW METER LS 1 $350,000.00 $350,000.00 VAULT) Sheeting, Shoring, and Bracing,
Or Equivalent Method for the Protection of Life
#22..
- 884 -
P a g e 8 of 11 River Trunk Realignment - River Trunk Pump Station and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
7 ALL OTHER EXCAVATIONS - Sheeting LS 1 $10,000,000.00 $10,000,000.00 Shoring, and Bracing, or Equivalent Method
for the Protection of Life and Limb in Trenches
and Open Excavation, Pursuant to California
Labor Code §6707 and Sections
02260 and 02261
8 Commissioning (not to be less than 1% of LS 1 $1,800,000.00 $1,800,000.00 the Total Base Bid Price)
9 Site Safety – Barricades, Trenching, LS 1 $800,000.00 $800,000.00 Temporary K-Rail, Lighting, Signage,
Fencing, and Housekeeping
10 Traffic Control LS 1 $1,000,000.00 $1,000,000.00
11 SWPPP Installation and Maintenance LS 1 $700,000.00 $700,000.00 12 Construction CPM Baseline Schedule and LS 1 $35,000.00 $35,000.00 Monthly Updates
13 Subsurface Utility Investigations LS 1 $500,000.00 $500,000.00 14 Dewatering LS 1 $1,000,000.00 $1,000,000.00
15 Existing Building Demolition LS 1 $500,000.00 $500,000.00 16 River Trunk Pump Station Site Facilities LS 1 $56,440,000.00 $56,440,000.00 17 Pre-negotiated Submersible Screw LS 1 $3,375,997.00 $3,375,997.00 Centrifugal Pumps per Section 11313R
18 Diversion Structure LS 1 $1,000,000.00 $1,000,000.00 19 Vortex Drop Structure LS 1 $1,500,000.00 $1,500,000.00 20 E&J Gallo Site Improvements LS 1 $1,800,000.00 $1,800,000.00 21 Tuolumne Blvd Junction Structure LS 1 $10,000.00 $10,000.00 Modifications
22 Temporary Bypass Pumping LS 1 $300,000.00 $300,000.00 23 48-inch Sanitary Sewer Gravity Pipelines LF 203 $5,000.00 $1,015,000.00 within E&J Gallo Property (Open Cut)
24 MH for 48-inch Sanitary Sewer (Alignment EA 6 $100,000.00 $600,000.00 A) within E&J Gallo Property (Open Cut)
25 48-inch Sanitary Sewer Gravity Pipeline LF 174 $6,000.00 $1,044,000.00 within E&J Gallo Property (Trenchless)
26 24-inch Sanitary Sewer Gravity Pipelines LF 132 $3,000.00 $396,000.00 within E&J Gallo Property
27 MH for 24-inch Sanitary Sewer within E&J EA 3 $80,000.00 $240,000.00 Gallo Property
28 48-inch Sanitary Sewer Gravity Pipeline - LF 2895 $4,000.00 $11,580,000.00 Alignment A from Vortex Drop Structure to
Overflow Structure
29 MH for Alignment A Sanitary Sewer EA 3 $365,000.00 $1,095,000.00 30 Sanitary Sewer Gravity Pipeline - Alignment LF 392 $8,000.00 $3,136,000.00 A1 From SSMH A1 to SSMH A1-3
31 MH for Alignment A1 Sanitary Sewer EA 5 $100,000.00 $500,000.00 32 15-inch Sanitary Sewer Gravity Pipeline – LF 79 $3,500.00 $276,500.00 Alignment B from SSMH C11 to SSMH B1
33 MH for Alignment B 15-inch Sanitary Sewer EA 1 $75,000.00 $75,000.00 34 Sanitary Sewer Gravity Pipeline –Alignment LF 1534 $8,000.00 $12,272,000.00 C (Open Cut)
35 Sanitary Sewer Gravity Pipeline – LF 271 $10,000.00 $2,710,000.00 Alignment C (Trenchless) from SSMH C3 to
36 MH for Alignment C Sanitary Sewer EA 11 $125,000.00 $1,375,000.00 37 30-inch Sanitary Sewer Force Main – LF 2535 $4,000.00 $10,140,000.00 Alignment D (Open Cut)
#22..
- 885 -
P a g e 9 of 11 River Trunk Realignment - River Trunk Pump Station 38 30-inch Sanitary Sewer Force Main LF 350 $8,000.00 $2,800,000.00 –Alignment D (Trenchless)
39 42-inch Sanitary Sewer Force Main – LF 2785 $4,000.00 $11,140,000.00 Alignment D (Open Cut)
40 42-inch Sanitary Sewer Force Main – LF 383 $8,000.00 $3,064,000.00 Alignment D (Trenchless)
41 Alignment D Force Main Manholes EA 4 $150,000.00 $600,000.00 42 Roadway Restoration on Tuolumne Blvd SY 2611 $300.00 $783,300.00 and B Street
43 Allowance for Unanticipated Underground LS 1 $100,000.00 $100,000.00 Utilities
44 Allowance for Inspection of UPRR Crossing LS 1 $100,000.00 $100,000.00 45 Allowance for San Joaquin Valley Air LS 1 $5,000.00 $5,000.00 Pollution Control District
46 Allowance for Tree Removal and LS 1 $20,000.00 $20,000.00 Replacement
47 Allowance for Pump Station Tools LS 1 $35,000.00 $35,000.00 48 All Other Contract Work Not Specifically LS 1 $50,000.00 $50,000.00 Identified in This Bid Schedule
49 60-inch Sanitary Sewer Gravity Main LF 148 $8,000.00 $1,184,000.00 (Trenchless) from the Overflow Structure to
the River Trunk PS
Total: $177,746,797.00
Percent From Engineer's Estimate: 67.69%
Engineer's Estimate
Base Bid
1 Mobilization and Demobilization (Not to be LS 1 $3,730,920.00 $3,730,920.00 greater than 4% of the Total Base Bid Price)
2 EXCAVATION SHORING (RIVER TRUNK LS 1 $15,562,220.00 $15,562,220.00 PUMP STATION) Secant Pile Shoring or
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707
and Section 02160
3 EXCAVATION SHORING (VORTEX LS 1 $1,364,590.00 $1,364,590.00 MANHOLE) Sheeting, Shoring, and Bracing,
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
4 EXCAVATION SHORING (DIVERSION LS 1 $289,540.00 $289,540.00 STRUCTURE) Sheeting, Shoring, and Bracing,
Or Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707 and
Section 02260
5 EXCAVATION SHORING (OVERFLOW LS 1 $3,520,210.00 $3,520,210.00 STRUCTURE Secant Pile Shoring or
Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
Pursuant to California Labor Code §6707
and Section 02160
6 EXCAVATION SHORING (FLOW METER LS 1 $541,290.00 $541,290.00 VAULT Sheeting, Shoring, and Bracing,
Or Equivalent Method for the Protection of Life
and Limb in Trenches and Open Excavation,
#22..
- 886 -
P a g e 10 of 11 River Trunk Realignment - River Trunk Pump Station Pursuant to California Labor Code §6707 and
Section 02260)
7 ALL OTHER EXCAVATIONS - Sheeting LS 1 $8,809,160.00 $8,809,160.00 Shoring, and Bracing, or Equivalent Method
for the Protection of Life and Limb in Trenches
and Open Excavation, Pursuant to California
Labor Code §6707 and Sections
02260 and 02261
8 Commissioning (not to be less than 1% of LS 1 $236,240.00 $236,240.00 the Total Base Bid Price)
9 Site Safety – Barricades, Trenching, LS 1 $198,960.00 $198,960.00 Temporary K-Rail, Lighting, Signage,
Fencing, and Housekeeping
10 Traffic Control LS 1 $244,060.00 $244,060.00
11 SWPPP Installation and Maintenance LS 1 $300,850.00 $300,850.00 12 Construction CPM Baseline Schedule and LS 1 $311,580.00 $311,580.00 Monthly Updates
13 Subsurface Utility Investigations LS 1 $217,280.00 $217,280.00 14 Dewatering LS 1 $745,960.00 $745,960.00
15 Existing Building Demolition LS 1 $423,270.00 $423,270.00 16 River Trunk Pump Station Site Facilities LS 1 $32,675,957.00 $32,675,957.0 17 Pre-negotiated Submersible Screw LS 1 $3,375,997.00 $3,375,997.00 Centrifugal Pumps per Section 11313R
18 Diversion Structure LS 1 $590,800.00 $590,800.00
19 Vortex Drop Structure LS 1 $1,735,500.00 $1,735,500.00 20 E&J Gallo Site Improvements LS 1 $181,980.00 $181,980.00 21 Tuolumne Blvd Junction Structure LS 1 $215,360.00 $215,360.00 Modifications
22 Temporary Bypass Pumping LS 1 $374,440.00 $374,440.00 23 48-inch Sanitary Sewer Gravity Pipelines LF 203 $1,542.00 $313,026.00 within E&J Gallo Property (Open Cut)
24 MH for 48-inch Sanitary Sewer (Alignment EA 6 $100,000.00 $600,000.00 A) within E&J Gallo Property (Open Cut)
25 48-inch Sanitary Sewer Gravity Pipeline LF 174 $4,470.00 $777,780.00 within E&J Gallo Property (Trenchless)
26 24-inch Sanitary Sewer Gravity Pipelines LF 132 $1,800.00 $237,600.00 within E&J Gallo Property
27 MH for 24-inch Sanitary Sewer within E&J EA 3 $80,000.00 $240,000.00 Gallo Property
28 48-inch Sanitary Sewer Gravity Pipeline - LF 2895 $3,630.00 $10,508,850.00 Alignment A from Vortex Drop Structure to
Overflow Structure
29 MH for Alignment A Sanitary Sewer EA 3 $155,000.00 $465,000.00 30 Sanitary Sewer Gravity Pipeline - Alignment LF 392 $2,000.00 $784,000.00 A1 From SSMH A1 to SSMH A1-3
31 MH for Alignment A1 Sanitary Sewer EA 5 $155,000.00 $775,000.00 32 15-inch Sanitary Sewer Gravity Pipeline – LF 79 $1,500.00 $118,500.00 Alignment B from SSMH C11 to SSMH B1
33 MH for Alignment B 15-inch Sanitary Sewer EA 1 $175,000.00 $175,000.00 34 Sanitary Sewer Gravity Pipeline –Alignment LF 1534 $850.00 $1,303,900.00 C (Open Cut)
35 Sanitary Sewer Gravity Pipeline – LF 271 $4,750.00 $1,287,250.00 Alignment C (Trenchless) from SSMH C3 to
36 MH for Alignment C Sanitary Sewer EA 11 $150,000.00 $1,650,000.00 37 30-inch Sanitary Sewer Force Main – LF 2535 $650.00 $1,647,750.00 Alignment D (Open Cut)
38 30-inch Sanitary Sewer Force Main LF 350 $4,400.00 $1,540,000.00 #22..
- 887 -
P a g e 11 of 11 River Trunk Realignment - River Trunk Pump Station –Alignment D (Trenchless)
39 42-inch Sanitary Sewer Force Main – LF 2785 $750.00 $2,088,750.00 Alignment D (Open Cut)
40 42-inch Sanitary Sewer Force Main – LF 383 $4,600.00 $1,761,800.00 Alignment D (Trenchless)
41 Alignment D Force Main Manholes EA 4 $100,000.00 $400,000.00 42 Roadway Restoration on Tuolumne Blvd SY 2611 $250.00 $652,750.00 and B Street
43 Allowance for Unanticipated Underground LS 1 $100,000.00 $100,000.00 Utilities
44 Allowance for Inspection of UPRR Crossing LS 1 $100,000.00 $100,000.00 45 Allowance for San Joaquin Valley Air LS 1 $5,000.00 $5,000.00 Pollution Control District
46 Allowance for Tree Removal and LS 1 $20,000.00 $20,000.00 Replacement
47 Allowance for Pump Station Tools LS 1 $35,000.00 $35,000.00 48 All Other Contract Work Not Specifically LS 1 $1,500,000.00 $1,500,000.00 Identified in This Bid Schedule
49 60-inch Sanitary Sewer Gravity Main LF 148 $8,560.00 $1,266,880.00 (Trenchless) from the Overflow Structure to
the River Trunk PS
Total: $106,000,000.00
#22..
- 888 -
Norton Rose Fulbright US LLP draft of 9/1/25
299002140.4
SIXTH SUPPLEMENTAL
WASTEWATER REVENUE BOND INDENTURE
by and between the
CITY OF MODESTO, CALIFORNIA
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Successor Trustee
Dated as of November 1, 2025
(Supplemental to the Wastewater Revenue
Bond Indenture dated as of April 1, 2005)
#22..
- 889 -
299002140.4 -iSIXTH SUPPLEMENTAL
WASTEWATER REVENUE BOND INDENTURE
Table of Contents
Page
ARTICLE XVII
THE SERIES 2025 BONDS
SECTION 17.01 Definitions ........................................................................................................3 SECTION 17.02 Reserved ...........................................................................................................3 SECTION 17.03 Authorization; Terms of the Series 2025 Bonds...............................................3 SECTION 17.04 Redemption of Series 2025 Bonds ...................................................................5 SECTION 17.05 Selection of Series 2025 Bonds for Redemption..............................................5 SECTION 17.06 Notice of Redemption of Series 2025 Bonds ...................................................5 SECTION 17.07 Partial Redemption of Series 2025 Bonds........................................................6 SECTION 17.08 Effect of Redemption of Series 2025 Bonds ....................................................6 SECTION 17.09 Form of Series 2025 Bonds ..............................................................................6 SECTION 17.10 Series 2025 Sinking Account............................................................................6 SECTION 17.11 Issuance of Series 2025 Bonds .........................................................................7 SECTION 17.12 Application of Proceeds of Series 2025 Bonds ................................................7 SECTION 17.13 Establishment and Application of Series 2025 Wastewater Enterprise Project Fund and Series 2025 Costs of Issuance Fund.....................................7 SECTION 17.14 Use of Depository.............................................................................................8 SECTION 17.15 Terms of Series 2025 Bonds Subject to the Indenture .....................................9 SECTION 17.16 Effective Date of Sixth Supplement ...............................................................10 SECTION 17.17 Execution in Counterparts; Electronic Delivery.............................................10 EXHIBIT A – Form of Series 2025 Bonds .................................................................................A-1 #22..
- 890 -
299002140.4
Sixth Supplemental Wastewater Revenue Bond Indenture
(Supplemental to the Wastewater Revenue Bond Indenture
dated as of April 1, 2005)
Authorizing the Issuance of
$[PAR AMOUNT] Aggregate Principal Amount of
City of Modesto, California
Wastewater Revenue Bonds, Series 2025
__________________________________________________
This SIXTH SUPPLEMENTAL WASTEWATER REVENUE BOND INDENTURE, dated as of November 1, 2025 (this “Sixth Supplement”), by and between the CITY OF MODESTO, CALIFORNIA (the “City”), a municipal corporation and charter city duly organized and existing under the Constitution and laws of the State of California, and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as successor trustee (the “Trustee”), W I T N E S S E T H :
WHEREAS, Section 200 of the Charter of the City of Modesto and the City of Modesto Wastewater Treatment Facilities Revenue Bond Law, constituting Chapter 6 of Title VIII of the Modesto Municipal Code (the “Bond Law”) authorizes the City to issue revenue bonds to finance the acquisition, construction, improvement, furnishing, equipping, remodeling, repair, reconstruction or rehabilitation of the wastewater treatment facilities of the City (the “Enterprise”); and
WHEREAS, the City has entered into a Wastewater Revenue Bond Indenture, dated as of April 1, 2005 (the “Master Indenture”), between the City and U.S. Bank National Association (which has been succeeded by The Bank of New York Mellon Trust Company, N.A.), as Trustee (the “Trustee”), providing for the issuance of wastewater revenue bonds thereunder; and WHEREAS, in accordance with the Bond Law and the Master Indenture, as supplemented by a First Supplemental Wastewater Revenue Bond Indenture, dated as of April 1, 2005 (the “First Supplemental Indenture”), a Second Supplemental Wastewater Revenue Bond Indenture, dated as of April 1, 2005 (the “Second Supplemental Indenture”), a Third Supplemental Wastewater Revenue Bond Indenture, dated as of December 1, 2006 (the “Third Supplemental Indenture”), a Fourth Supplemental Wastewater Revenue Bond Indenture, dated as of April 1, 2018 (the “Fourth Supplemental Indenture”) and a Fifth Supplemental Wastewater Revenue Bond Indenture, dated as of November 1, 2020 (the “Fifth Supplemental Indenture,” and together with the Master Indenture, the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture and the Fourth Supplemental Indenture, the “Indenture”), each by and between the City and the Trustee, the City has previously issued its City of Modesto, California Wastewater Revenue Refunding Bonds, Series 2005A (the “Series 2005A Bonds”), its City of Modesto, California Wastewater Revenue Refunding Bonds, Series 2005B (Taxable) (the “Series 2005B Bonds”), its City of Modesto, California Wastewater Revenue Bonds, Series 2006A (the “Series 2006 Bonds”), its City of Modesto, California Wastewater Revenue Refunding Bonds, Series 2018A (the “Series 2018A Bonds”), its City of Modesto, California Wastewater Revenue Refunding Bonds, Series 2020A (Federally Taxable) (the “Series 2020A Bonds”) and its City of #22..
- 891 -
299002140.4 2
Modesto, California Wastewater Revenue Refunding Bonds, Series 2020B (the “Series 2020B Bonds”); and
WHEREAS, the Series 2005A Bonds, the Series 2005B Bonds and the Series 2006A Bonds matured, were paid timely or were redeemed prior to maturity and are no longer outstanding; and WHEREAS, the Indenture provides that the City may issue any indebtedness, installment sale obligation, lease obligation or other obligation of the City for borrowed money having an equal lien and charge upon the Net Revenues, therefore payable on a parity with the Bonds (whether or not any Bonds are Outstanding under the Indenture), from time to time in accordance with the terms of the Indenture; and
WHEREAS, the City previously incurred an obligation (the “2011 State Loan”), pursuant to a Project Finance Agreement, dated as of August 26, 2011, as amended, by and between the State Water Resources Control Board, an administrative and regulatory agency of the State of California (the “SWRCB”), and the City, which 2011 State Loan constitutes Parity Debt pursuant to Section 3.05(c) of the Indenture; and
WHEREAS, the City previously issued a bond (the “Series 2015 Bond”), pursuant to a Bond Purchase Agreement, dated as of October 30, 2015, among the City, Capital One Public Funding, LLC, and The Bank of New York Mellon Trust Company, N.A., as paying agent, which Series 2015 Bond constitutes Parity Debt pursuant to Section 3.05(c) of the Indenture, and which refunded all of the Series 2005A Bonds and the November 1, 2023 and 2024 maturities of the Series 2006 Bonds; and
WHEREAS, the City previously incurred an obligation (the “2016 State Loan”), pursuant to a Project Finance Agreement, dated as of June 8, 2016, by and between the SWRCB and the City, which 2016 State Loan constitutes Parity Debt pursuant to Section 3.05(c) of the Indenture; and
WHEREAS, the outstanding 2011 State Loan was refunded with a portion of the proceeds of the Series 2020A Bonds and the Series 2020B Bonds and is no longer outstanding; and WHEREAS, the Indenture provides that the City may issue Bonds from time to time as authorized by a Supplemental Indenture; and
WHEREAS, this Sixth Supplement is supplemental to the Indenture; and WHEREAS, in order to provide moneys to finance certain improvements to the Enterprise, the City has determined that it is necessary and in the best interest of the City that the City enter into this Sixth Supplement in order to establish and declare, in conjunction with the Indenture, the terms and conditions upon which City of Modesto, California Wastewater Revenue Bonds, Series 2025 (the “Series 2025 Bonds”) shall be issued and secured and to secure the payment of the principal thereof and premium (if any) and interest thereon; and WHEREAS, the City has determined that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and the entering into of this Sixth Supplement do exist, have happened and have been #22..
- 892 -
299002140.4 3
performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Sixth Supplement; NOW, THEREFORE, the parties hereto agree, as follows:
ARTICLE XVII
THE SERIES 2025 BONDS
SECTION 17.01 Definitions. The terms defined in this Section shall, for all purposes of this Sixth Supplement and of any certificate, opinion or other document herein mentioned, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined. Terms defined in the Indenture not otherwise defined herein shall have the meanings specified therein.
Securities Depository
“Securities Depository” shall have the meaning assigned to such term in Section 17.14(A) hereof.
Series 2025 Bonds
“Series 2025 Bonds” means the City of Modesto, California Wastewater Revenue Bonds, Series 2025, as described in Section 17.03(A) hereof.
Series 2025 Costs of Issuance Fund
“Series 2025 Costs of Issuance Fund” means the fund by that name established pursuant to Section 17.13(b) hereof.
Series 2025 Wastewater Enterprise Project Fund
“Series 2025 Wastewater Enterprise Project Fund” means the fund by that name established pursuant to Section 17.13(a) hereof.
Sixth Supplement
“Sixth Supplement” means this Sixth Supplemental Wastewater Revenue Bond Indenture, dated as of November 1, 2025, between the City and the Trustee.
SECTION 17.02 Reserved.
SECTION 17.03 Authorization; Terms of the Series 2025 Bonds. (A) An additional Series of Bonds to be issued under the Indenture is hereby created.
Such Series shall be known as the “City of Modesto, California Wastewater Revenue Bonds, Series 2025” and shall be issued in the aggregate principal amount of $[PAR AMOUNT] in accordance with the Bond Law and this Indenture. The Series 2025 Bonds shall be issued for the #22..
- 893 -
299002140.4 4
purposes of (i) financing the acquisition and construction of improvements to the Enterprise and (ii) paying the Costs of Issuance in connection with the issuance and delivery of the Series 2025 Bonds.
(B) The Series 2025 Bonds shall be issued in fully registered form and shall be initially registered in the name of “Cede & Co.,” as nominee of The Depository Trust Company. The Series 2025 Bonds shall be evidenced by one Series 2025 Bond maturing on each of the maturity dates as set forth in subsection 17.03(C) in a denomination corresponding to the total principal amount of the Series 2025 Bonds of such maturity. Each Series 2025 Bond may be assigned by the Trustee a distinctive number or letter and number, and a record of the same shall be maintained by the Trustee. Registered ownership of the Series 2025 Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 17.14.
(C) The Series 2025 Bonds shall be dated the date of delivery, shall be bonds which are Current Interest Indebtedness, shall be issued in denominations of $5,000 or any integral multiple thereof, and shall bear interest from the date thereof at the following rates per annum and shall mature on November 1 in the following years in the following amounts:
Maturity Date
(November 1) Principal Amount Interest Rate
$ %
The Series 2025 Bonds maturing on November 1, 20[__] through November 1, 20[__], inclusive, are designated Serial Bonds. The Series 2025 Bonds maturing on November 1, 20[__] and November 1, 20[__] are designated as Term Bonds.
Interest on the Series 2025 Bonds shall be payable commencing on May 1, 2026 and semiannually thereafter on November 1 and May 1 of each year in lawful money of the United States of America by check mailed by first-class mail on each interest payment date to the Owner thereof as of the close of business on the fifteenth (15th) day of the calendar month immediately preceding such interest payment date; provided, that upon the written request of an Owner of one million dollars ($1,000,000) or more in aggregate principal amount of Series 2025 Bonds received by the Trustee prior to the applicable Record Date (which such request shall remain in effect until rescinded in writing by such Owner), interest shall be paid by wire transfer in immediately available funds. Interest on the Series 2025 Bonds shall be computed on the basis of a 360-day year of twelve 30-day months. The principal of and premium, if any, on the Series 2025 #22..
- 894 -
299002140.4 5
Bonds are payable when due upon presentation thereof at the Corporate Trust Office of the Trustee, in lawful money of the United States of America.
So long as the Series 2025 Bonds are maintained in book-entry form, payments of principal, premium, if any, and interest shall be made by the Trustee to the Securities Depository by wire transfer.
The Trustee shall provide to Bondholders CUSIP number identification, with appropriate dollar amounts for each CUSIP number, on all redemption payments and interest payments, whether by check or by wire transfer.
SECTION 17.04 Redemption of Series 2025 Bonds.
(A) Optional Redemption. The Series 2025 Bonds maturing on or after November 1, 20[__] shall be subject to redemption prior to their respective stated maturities, at the option of the City, from any source of available funds, as a whole or in part on any date (by such maturities as may be specified by the City and by lot within a maturity), on or after November 1, 20[__], at a Redemption Price equal to 100% of the principal amount of such Series 2025 Bonds called for redemption, plus accrued interest to the date fixed for redemption, without premium. (B) Mandatory Sinking Fund Redemption. The Series 2025 Bonds maturing on November 1, 20[__] shall also be subject to mandatory redemption prior to their stated maturity, in part, by lot, commencing on November 1, 20[__] and on each November 1 thereafter, from Mandatory Sinking Account Payments required by and as specified in Section 17.10 for the Series 2025 Bonds maturing on November 1, 20[__], at a redemption price equal to the principal amount thereof plus accrued interest thereon to the date fixed for redemption, without premium.
The Series 2025 Bonds maturing on November 1, 20[__] shall also be subject to mandatory redemption prior to their stated maturity, in part, by lot, commencing on November 1, 20[__] and on each November 1 thereafter, from Mandatory Sinking Account Payments required by and as specified in Section 17.10 for the Series 2025 Bonds maturing on November 1, 20[__], at a redemption price equal to the principal amount thereof plus accrued interest thereon to the date fixed for redemption, without premium.
(C) Special Mandatory Redemption From Insurance or Condemnation Proceeds. The Series 2025 Bonds shall also be subject to redemption as a whole or in part on any date, among such maturities as designated by the City and by lot within a maturity, to the extent of hazard insurance proceeds not used to repair or rebuild the Enterprise or condemnation proceeds received with respect to the Enterprise to be used for such purpose pursuant to Sections 6.06 or 6.07 of the Indenture, at a Redemption Price equal to the principal amount of the Series 2025 Bonds called for redemption plus interest accrued thereon to the date fixed for redemption, without premium.
SECTION 17.05 Selection of Series 2025 Bonds for Redemption. Whenever provision is made in this Sixth Supplement for the redemption of less than all of the Series 2025 Bonds of any maturity (and interest rate), the Trustee shall select the Series 2025 Bonds to be redeemed, from all Series 2025 Bonds of the respective maturity (and interest rate) not previously called for redemption, in authorized denominations, by lot in any manner which the Trustee in its #22..
- 895 -
299002140.4 6
sole discretion shall deem appropriate. The Trustee shall promptly notify the City in writing of the Series 2025 Bonds so selected for redemption.
SECTION 17.06 Notice of Redemption of Series 2025 Bonds. The City shall notify the Trustee at least forty-five (45) days prior to the redemption date for Series 2025 Bonds pursuant to Section 17.04(A) or (C). Notice of redemption of any Series 2025 Bonds shall be sent by the Trustee, by approved means, not less than twenty (20) nor more than sixty (60) days prior to the redemption date, (i) to the respective Owners of any Series 2025 Bonds designated for redemption at their addresses appearing on the bond registration books of the Trustee, (ii) to the Securities Depositories, and (iii) to the Information Services. Notice of redemption shall be given in the form and in accordance with the terms of the Indenture.
SECTION 17.07 Partial Redemption of Series 2025 Bonds. Upon surrender of any Series 2025 Bond redeemed in part only, the City shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the City, a new Series 2025 Bond of authorized denominations, and of the same maturity and interest rate, equal in aggregate principal amount to the unredeemed portion of the Series 2025 Bond surrendered.
SECTION 17.08 Effect of Redemption of Series 2025 Bonds. Notice of redemption having been duly given as aforesaid, and moneys for payment of the Redemption Price of, together with interest accrued to the redemption date on, the Series 2025 Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Series 2025 Bonds (or portions thereof) so called for redemption shall become due and payable at the Redemption Price specified in such notice, together with interest accrued thereon to the date fixed for redemption, interest on the Series 2025 Bonds so called for redemption shall cease to accrue, said Series 2025 Bonds (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture, and the Owners of said Series 2025 Bonds shall have no rights in respect thereof except to receive payment of said Redemption Price and accrued interest.
All Series 2025 Bonds redeemed pursuant to the provisions of this Article shall be cancelled upon surrender thereof and destroyed.
SECTION 17.09 Form of Series 2025 Bonds. The Series 2025 Bonds and the certificate of authentication and registration to be executed thereon shall be in substantially the form set forth as Exhibit A hereto. The Series 2025 Bond designation letters and numbers, maturity dates, principal amounts, and interest rates and yields to maturity shall be inserted therein in conformity with Section 17.03.
SECTION 17.10 Series 2025 Sinking Account. An account is hereby established within the Principal Fund created by Section 5.01 of the Indenture to be designated the “Series 2025 Sinking Account.” On each Business Day prior to the following payment dates, the Trustee shall transfer from the Principal Fund to the Series 2025 Sinking Account an amount equal to the payment due on such date as set forth below:
Series 2025 Bonds Due November 1, 20[__]
#22..
- 896 -
299002140.4 7
Mandatory Sinking
Account Payment Dates
(November 1)
Mandatory Sinking
Account Payments
$
†
____________
† Final Maturity
Series 2025 Bonds Due November 1, 20[__]
Mandatory Sinking
Account Payment Dates
(November 1)
Mandatory Sinking
Account Payments
$
†
____________
† Final Maturity
Moneys in the Series 2025 Sinking Account shall be applied as provided in Section 5.01(B) and Section 5.03(B) of the Indenture.
SECTION 17.11 Issuance of Series 2025 Bonds. At any time after the execution and delivery of this Sixth Supplement, the City may execute and the Trustee shall authenticate and deliver the Series 2025 Bonds in the aggregate principal amount of $[PAR AMOUNT] upon the Order of the City.
SECTION 17.12 Application of Proceeds of Series 2025 Bonds. The proceeds of the sale of the Series 2025 Bonds, in the amount of $[___] (computed as $[PAR AMOUNT].00 aggregate principal amount of the Series 2025 Bonds, plus a [net] original issue premium of $_________, less $[____] Underwriters’ discount), shall be received by the Trustee on behalf of the City and disbursed or held in trust and set aside as follows:
(i) The Trustee shall transfer to the City for deposit in the Series 2025 Wastewater Enterprise Project Fund $[____], to be applied in accordance with Section 17.13(a).
(ii) The Trustee shall deposit in the Series 2025 Costs of Issuance Fund $[____], to be applied in accordance with Section 17.13(b) hereof. Moneys in the Series 2025 Costs of Issuance Fund shall be held uninvested.
The Trustee may establish temporary funds or accounts to facilitate such transfers. #22..
- 897 -
299002140.4 8
SECTION 17.13 Establishment and Application of Series 2025 Wastewater Enterprise Project Fund and Series 2025 Costs of Issuance Fund. (a) The City shall establish, maintain and hold in trust a separate fund designated as the “Series 2025 Wastewater Enterprise Project Fund.” The moneys in the Series 2025 Wastewater Enterprise Project Fund shall be used and withdrawn by the City to pay the costs of acquisition, construction, improvement, furnishing, equipping, remodeling, repair, reconstruction or rehabilitation of the wastewater treatment facilities of the City; or incidental of, or in connection with, the operation of the Enterprise. Moneys on deposit in the Series 2025 Wastewater Enterprise Project Fund shall be invested in Investment Securities. Interest, profit and other income received from the investment of moneys in the Series 2025 Wastewater Enterprise Project Fund shall be credited to such fund except as otherwise provided herein. Interest, profit or other income derived from the investment of moneys may also be deposited in the Rebate Fund in an amount determined by the City to be required.
(b) The Trustee shall establish, maintain and hold in trust a separate fund designated as the “Series 2025 Costs of Issuance Fund,” which fund is hereby created and which fund the Trustee hereby agrees to maintain with the Trustee until April 1, 2026. The Trustee shall deposit to the Series 2025 Costs of Issuance Fund the amounts specified in Section 17.12 hereof. All money in the Series 2025 Costs of Issuance Fund shall be used and withdrawn by the Trustee to pay the Costs of Issuance of the Series 2025 Bonds upon receipt of a Requisition of the City filed with the Trustee, each of which shall be sequentially numbered and shall state the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. Each such Requisition of the City shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. On April 1, 2026 or upon the earlier Request of the City, any remaining balance in the Series 2025 Costs of Issuance Fund shall be transferred to the City and the Series 2025 Costs of Issuance Fund shall be closed.
SECTION 17.14 Use of Depository. Notwithstanding any provision of the Indenture or this Sixth Supplement to the contrary:
(A) The Series 2025 Bonds shall be issued in fully registered form, in authorized denominations and shall be initially registered in the name of “Cede & Co.”, as nominee of The Depository Trust Company (the “Securities Depository”), and shall be evidenced by one Series 2025 Bond maturing on each of the maturity dates as set forth in Section 17.03(C) in a denomination corresponding to the total principal amount of the Series 2025 Bonds of such maturity. Each Series 2025 Bond shall be assigned by the Trustee a distinctive number or letter or letter and number, and a record of the same shall be maintained by the Trustee.
Registered ownership of the Series 2025 Bonds, or any portions thereof, may not thereafter be transferred except:
(i) To any successor of the Securities Depository or its nominee, or to any substitute depository designated pursuant to clause (ii) of this subsection (A) (a “Substitute Depository”); provided that any successor of the Securities Depository or Substitute Depository shall be qualified under any applicable laws to provide the services proposed #22..
- 898 -
299002140.4 9
to be provided by it;
(ii) To any Substitute Depository not objected to by the Trustee, upon (1) the resignation of the Securities Depository or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the City that the Securities Depository or its successor (or any Substitute Depository or its successor) is no longer able to carry out its functions as depository; provided that any such Substitute Depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or
(iii) To any person as provided below, upon (1) the resignation of the Securities Depository or its successor (or Substitute Depository or its successor) from its functions as depository; provided that no Substitute Depository which is not objected to by the Trustee can be obtained, or (2) a determination by the City that it is in the best interests of the City to remove the Securities Depository or its successor (or any Substitute Depository or its successor) from its function as depository.
(B) In the case of any transfer pursuant to clause (i) or clause (ii) of Section 17.14(A), upon receipt of all Outstanding Series 2025 Bonds by the Trustee, together with a Certificate of the City to the Trustee, a single new Series 2025 Bond for each maturity shall be executed and delivered, registered in the name of such successor or such Substitute Depository, or their nominees, as the case may be, all as specified in such Certificate of the City. In the case of any transfer pursuant to clause (iii) of Section 17.14(A) hereof, upon receipt of all Outstanding Series 2025 Bonds by the Trustee together with a Certificate of the City to the Trustee, new Series 2025 Bonds shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such a Certificate of the City, subject to the limitations of Section 17.03 hereof; provided the Trustee shall not be required to deliver such new Series 2025 Bonds within a period less than 60 days from the date of receipt of such a Certificate of the City. (C) In the case of partial redemption, cancellation or an advance refunding of any Series 2025 Bonds evidencing all or a portion of the principal maturing in a particular year, the Securities Depository shall make an appropriate notation on the Series 2025 Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee. (D) The City and the Trustee shall be entitled to treat the person in whose name any Series 2025 Bond is registered as the Owner thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the City; and the City and the Trustee shall have no responsibility for transmitting payments to, communication with, notifying, or otherwise dealing with any beneficial owners of the Series 2025 Bonds. Neither the City nor the Trustee will have any responsibility or obligations, legal or otherwise, to the beneficial owners or to any other party including the Securities Depository or its successor (or Substitute Depository or its successor), except to the Owner of any Series 2025 Bond. (E) So long as all Outstanding Series 2025 Bonds are registered in the name of “Cede & Co.” or its registered assign, the City and the Trustee shall cooperate with “Cede & Co.,” as sole registered Owner, and its registered assigns in effecting payment of the principal of and redemption premium, if any, and interest on the Series 2025 Bonds by arranging for payment in such manner #22..
- 899 -
299002140.4 10
that funds for such payments are properly identified and are made immediately available on the date they are due.
SECTION 17.15 Terms of Series 2025 Bonds Subject to the Indenture. Except as in this Sixth Supplement expressly provided, every term and condition contained in the Indenture shall apply to the Sixth Supplement and to the Series 2025 Bonds with the same force and effect as if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to the Sixth Supplement.
The Sixth Supplement and all the terms and provisions herein contained shall form part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. The Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof, as supplemented and amended hereby.
SECTION 17.16 Effective Date of Sixth Supplement. The Sixth Supplement shall take effect upon its execution and delivery.
SECTION 17.17 Execution in Counterparts; Electronic Delivery. This Sixth Supplement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Sixth Supplement may be delivered by the delivery of signed signature pages by electronic means, facsimile transmissions, or by e-mail with a portable document (.pdf file) copy attached, and any printed or copied versions of any signature page so delivered shall have the same force and effect as an originally signed version of such signature page. Signatures of this Sixth Supplement made my electronic means shall be accompanied by an email, contemporaneous or otherwise, confirming the use of such means. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 900 -
S-1
Modesto 2025 - Sixth Supplemental Indenture
IN WITNESS WHEREOF, the parties hereto have executed the Sixth Supplement by their officers thereunto duly authorized as of the day and year first written above.
CITY OF MODESTO, CALIFORNIA
By:
Director of Finance
ATTEST:
By:
City Clerk
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A. as Trustee
By:
Authorized Officer
#22..
- 901 -
299002140.4 A-1
EXHIBIT A
(FORM OF SERIES 2025 BOND)
Unless this Series 2025 Bond is presented by an authorized representative of The Depository Trust Company, New York, New York (“DTC”) to the Department or its agent for registration of transfer, exchange or payment, and any Series 2025 Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of DTC and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.
No. __ $__________
CITY OF MODESTO, CALIFORNIA
WASTEWATER REVENUE BONDS,
SERIES 2025
Maturity Date
Interest Rate Per
Annum Dated Date CUSIP
November 1, 20__ % ______, 2025
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
The CITY OF MODESTO, CALIFORNIA a municipal corporation and chartered city duly organized and existing under the Constitution and the laws of the State of California (the “City”), for value received, hereby promises to pay (but only out of the Net Revenues of the City’s wastewater Enterprise and other funds hereinafter referred to) to the registered owner named above or registered assigns, on the maturity date specified above (subject to any right of prior redemption or payment as provided in the hereinafter mentioned Indenture), the principal sum specified above together with interest thereon from the dated date specified above until the principal hereof shall have been paid, at the interest rate per annum specified above, payable on May 1, 2026, and semiannually thereafter on November 1 and May 1 in each year. Interest hereon is payable in lawful money of the United States of America by (except as otherwise provided in the hereinafter mentioned Indenture) check mailed by first-class mail on each interest payment date to the registered owner as of the close of business on the 15th day of the calendar month immediately preceding such interest payment date. The principal hereof and premium, if any, hereon are #22..
- 902 -
299002140.4 A-2
payable when due upon presentation hereof at the Corporate Trust Office (as defined in the Indenture) of The Bank of New York Mellon Trust Company, N.A., as trustee (together with any successor as trustee under said Indenture, the “Trustee”), in lawful money of the United States of America.
This bond is one of a duly authorized issue of City of Modesto, California Wastewater Revenue Bonds, Series 2025 (the “Series 2025 Bonds”) dated _____, 2025 (the “Dated Date”) of the series and designation indicated on the face hereof. Said authorized issue of Series 2025 Bonds is not limited in aggregate principal amount, except as otherwise provided in said Indenture, and consists or may consist of one or more series of varying denominations, dates, maturities, interest rates and other provisions, as in said Indenture provided, all issued and to be issued pursuant to the provisions of Section 200 of the Charter of the City and the City of Modesto Wastewater Treatment Facilities Revenue Bond Law, constituting Chapter 6 of Title VIII of the Modesto Municipal Code. This Series 2025 Bond is issued pursuant to a Wastewater Revenue Bond Indenture, dated as of April 1, 2005, by and between the City and the Trustee, providing for the issuance of the Series 2025 Bonds, and a Sixth Supplemental Wastewater Revenue Bond Indenture, dated as of November 1, 2025 (the “Sixth Supplement”), by and between the City and the Trustee, authorizing the issuance of a series of bonds of which this Series 2025 Bond is one (said indenture as amended and supplemented, including as supplemented by the Sixth Supplement collectively, the “Indenture”). Reference is hereby made to the Indenture for a description of the terms under which the Series 2025 Bonds are issued and to be issued, the provisions with regard to the nature and extent of the Net Revenues of the Enterprise (as those terms are defined in the Indenture), and the rights of the registered owners of the Series 2025 Bonds; and all the terms of the Indenture are hereby incorporated herein and constitute a contract between the City and the registered owner from time to time of this Series 2025 Bond, and to all the provisions thereof the registered owner of this Series 2025 Bond, by its acceptance hereof, consents and agrees.
Additional Bonds may be issued, and indebtedness may be incurred, on a parity with the Bonds of this authorized issue, but only subject to the conditions and limitations contained in the Indenture.
The Series 2025 Bonds and the Parity Debt (as defined in the Indenture) are payable from, and are secured by a pledge of and lien on, the Net Revenues of the City’s wastewater Enterprise and all amounts held by the Trustee under the Indenture (except for amounts held in the Rebate Fund), subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions provided in the Indenture.
The Series 2025 Bonds are revenue obligations of the City and are payable as to both principal and interest, and any premium upon redemption thereof, exclusively from Net Revenues of the City’s wastewater Enterprise and certain other funds pledged under the Indenture. The Series 2025 Bonds are special, limited obligations of the City. The Series 2025 Bonds shall not be deemed to constitute a debt or liability of the City, the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory provision, or a pledge of the faith and credit of the City, the State of California or of any political subdivision thereof, but shall be payable, except to the extent of certain amounts held under the Indenture pledged therefor, solely from Net Revenues. Neither the faith and credit nor the taxing power of the City, the State of California or of any political subdivision thereof is pledged to the payment of the principal of, premium, if any, or the interest on the Series 2025 Bonds. The issuance of the Series 2025 Bonds shall not directly or indirectly or contingently obligate the City, the State of California or any #22..
- 903 -
299002140.4 A-3
political subdivision thereof to levy or to pledge any form of taxation whatsoever therefor or to make any appropriation for their payment.
The Series 2025 Bonds shall be subject to redemption prior to maturity as set forth in the Indenture.
This Series 2025 Bond is transferable or exchangeable for other authorized denominations by the registered owner hereof, in person or by its duly authorized attorney, at the Corporate Trust Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Series 2025 Bond.
Upon such transfer or exchange a new fully registered Series 2025 Bond or Series 2025 Bonds, of authorized denomination or denominations, of the same series, tenor, maturity and interest rate for the same aggregate principal amount will be issued to the registered owner in exchange herefor.
The City, the Trustee and any paying agent may deem and treat the registered owner hereof as the absolute owner hereof for all purposes, and the City, the Trustee and any paying agent shall not be affected by any notice to the contrary.
The rights and obligations of the City and of the registered owners of the Series 2025 Bonds may be modified or amended at any time in the manner, to the extent, and upon the terms provided in the Indenture, which provide, in certain circumstances, for modifications and amendments without the consent of or notice to the registered owners of the Series 2025 Bonds.
It is hereby certified and recited that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by this Series 2025 Bond, and in the issuing of this Series 2025 Bond, do exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State of California, and that this Series 2025 Bond, together with all other indebtedness of the City pertaining to the Net Revenues, is within every debt and other limit prescribed by the Constitution and the statutes of the State of California, and is not in excess of the amount of Series 2025 Bonds permitted to be issued under the Indenture or otherwise.
This Series 2025 Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been manually signed by the Trustee.
Capitalized terms used but not defined herein shall have the meanings assigned to them in the Indenture.
#22..
- 904 -
299002140.4 A-4
IN WITNESS WHEREOF, THE CITY OF MODESTO, CALIFORNIA has caused this Series 2025 Bond to be executed in its name and on its behalf by the Director of Finance and the City Manager and countersigned by the City Clerk by their manual or facsimile signatures and the seal of the City to be reproduced hereon, and this Series 2025 Bond to be dated the Dated Date set forth above.
CITY OF MODESTO, CALIFORNIA
By:
Director of Finance
By:
City Manager
[Seal]
ATTEST:
By:
City Clerk
#22..
- 905 -
299002140.4 A-5
[FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION] This is one of the Series 2025 Bonds described in the within mentioned Indenture and registered on the date set forth below.
Dated: ________, 20__
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By:
Authorized Officer
#22..
- 906 -
299002140.4 A-6
[FORM OF ASSIGNMENT]
For value received ______________________________ hereby sell, assign and transfer unto ______________________________ the within Series 2025 Bond and hereby irrevocably constitute and appoint ______________________________ attorney, to transfer the same on the books of the City at the office of the Trustee, with full power of substitution in the premises .
NOTE: The signature to this Assignment
must correspond with the name on the face of
the within registered bond in every particular,
without alteration or enlargement or any
change whatsoever.
Dated: ______________________________
Signature Guaranteed by:
NOTE : Signature must be guaranteed by an
eligible guarantor institution.
#22..
- 907 -
NP DRAFT 8/21/25
1 $[PAR AMOUNT]
CITY OF MODESTO, CALIFORNIA
WASTEWATER REVENUE BONDS,
SERIES 2025
BOND PURCHASE AGREEMENT
[_______], 2025
City of Modesto
1010 10th Street
Modesto, California 95354
Ladies and Gentlemen:
The undersigned, Siebert Williams Shank & Co., LLC, the underwriter (the “Underwriter”) of $[_________] aggregate principal amount of City of Modesto, California, Wastewater Revenue Bonds, Series 2025 (the “Series 2025 Bonds”), hereby offers to enter into this Bond Purchase Agreement (the “Purchase Agreement”) with you, the City of Modesto, California (the “City”), which, upon the City’s acceptance of this offer, will be binding upon the City and the Underwriter. This offer is made subject to acceptance by you prior to 11:59 P.M., Pacific Daylight Time, on the date hereof. If this offer is not so accepted, this offer will be subject to withdrawal by the Underwriter upon notice delivered to you at any time prior to acceptance. Upon acceptance, this Purchase Agreement shall be in full force and effect in accordance with its terms and shall be binding upon the City and the Underwriter. All capitalized terms used herein not otherwise defined herein shall have the respective meanings ascribed thereto in the Official Statement and the Indenture (each, as herein defined).
The City acknowledges that the Underwriter has made the following statements (i) the Underwriter is not acting as a municipal advisor to the City within the meaning of Section 15B of the Securities Exchange Act, as amended, (ii) the purchase and sale of the Series 2025 Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the City and the Underwriter, (iii) in connection with such transaction, the Underwriter is acting solely as principal and not as financial or municipal advisors, agents or fiduciaries of the City, the Underwriter has financial and other interests that differ from those of the City (iv) the Underwriter has not assumed (individually or collectively) a fiduciary responsibility in favor of the City with respect to the offering of the Series 2025 Bonds or the process leading thereto (whether or not any Underwriter, or any affiliate of any Underwriter, has advised or is currently advising the City on other matters), (v) the only obligations the Underwriter has to the City with respect to the transaction contemplated hereby expressly are set forth in this Purchase Agreement and as otherwise required by law, and (vi) the City has consulted with its own legal and financial advisors to the extent it deemed appropriate in connection with the offering of the Series 2025 Bonds.
Section 1. Purchase, Sale and Delivery of the Series 2025 Bonds. (a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter hereby agrees to purchase and the City agrees to sell and deliver to the Underwriter all (but not less than all) of the Series 2025 Bonds. #22..
- 908 -
2 (b) The Series 2025 Bonds shall be issued pursuant to the City of Modesto Wastewater Treatment Facilities Revenue Bond Law, constituting Chapter 6 of Title VIII of the Modesto Municipal Code, the Constitution and laws of the State of California (the “State”) and a Wastewater Revenue Bond Indenture, dated as of April 1, 2005, by and between the City and [The Bank of New York Trust Company, N.A.], as successor trustee (the “Trustee”) (as heretofore supplemented and amended, the “Master Indenture”), and as supplemented by a Sixth Supplemental Wastewater Revenue Bond Indenture, dated as of [________] 1, 2025, by and between the City and the Trustee (the “Sixth Supplemental Indenture,” and, together with the Master Indenture, the “Indenture”). The Series 2025 Bonds shall be dated the Closing Date (as hereinafter defined). The Series 2025 Bonds shall have the maturities, be subject to redemption and bear interest at the rates per annum and at the prices and yields shown on Exhibit A hereto. The Series 2025 Bonds shall be substantially in the form described in, and shall be issued and secured under, the provisions of the Indenture. The Series 2025 Bonds are payable as to interest thereon, principal thereof, and any redemption premiums thereon, solely from the Net Revenues derived from the operation of the facilities comprising the Enterprise and the moneys and securities held by the Trustee in the funds under the Indenture. All Net Revenues are pledged to secure the payment of the principal of and redemption premium, if any, and interest on the Series 2025 Bonds, and any Parity Debt, including:
(i) the City of Modesto, California, Wastewater Revenue Refunding Bond, Series 2015 (the “Series 2015 Bond”), issued to Capital One Public Funding, LLC, (ii) a revolving fund loan from the State of California, issued in 2016 (the “2016 State Loan”), (iii) the City of Modesto, California Wastewater Revenue Refunding Bonds, Series 2018A (the “Series 2018A Bonds”), (iv) the City of Modesto, California Wastewater Revenue Refunding Bonds, Series 2020A (Federally Taxable) (the “Series 2020A Bonds”) and (v) the City of Modesto, California, Wastewater Revenue Refunding Bond, Series 2020B (the “Series 2020B Bonds,” and together with the Series 2015 Bond, the 2016 State Loan, the Series 2018A Bonds, and the Series 2020A Bonds, the “Existing Parity Debt”). The pledge of Net Revenues to the Series 2025 Bonds and the Existing Parity Debt is on parity with the pledge of Net Revenues for the benefit of the owners of any additional Bonds or Parity Debt to be issued in the future pursuant to the Indenture. The Series 2025 Bonds are being issued to provide funds to (i) finance the costs of the planning, design, acquisition, construction and improvement of the City’s wastewater treatment and conveyance facilities and (ii) pay the costs of issuance of the Series 2025 Bonds.
(c) The aggregate purchase price for the Series 2025 Bonds will be $[________] (consisting of the aggregate principal amount of the Series 2025 Bonds [plus/less an original issue premium/discount] of $[________] and less an Underwriter’s discount of $[________]). (d) At 8:00 o’clock A.M., California time, on [_________], 2025, or at such other time or on such other date as we mutually agree upon (the “Closing Date”), the City will, subject to the terms and conditions hereof, cause to be delivered to the Underwriter, at a location or locations to be designated by the Underwriter in Jersey City, New Jersey, the Series 2025 Bonds (delivered through the book entry system of The Depository Trust Company), duly executed, at such other place as shall have been mutually agreed upon by the City, the other documents mentioned herein. The Underwriter will accept such delivery and pay the Purchase Price in immediately available funds (such delivery and payment being herein referred to as the “Closing”) to the order of the Trustee. (e) The Underwriter intends to make an initial bona fide public offering of the Series 2025 Bonds at the initial offering prices set forth in the Official Statement (as hereinafter defined) and in accordance with the priority of order instructions from the City, if any, or as otherwise applicable in accordance with the rules of the Municipal Securities Rulemaking Board (the “MSRB”). #22..
- 909 -
3 The Underwriter shall take all required steps to ensure that orders submitted during any retail order period meet the conditions of the City and the requirements of MSRB rules. Subsequent to the initial public offering the Underwriter reserves the right to change the public offering prices as the Underwriter deems necessary or desirable, in their sole discretion, in connection with the marketing of the Series 2025 Bonds (but in all cases as otherwise required by law), and may offer and sell the Series 2025 Bonds to certain dealers, unit investment trusts and money market funds, certain of which may be sponsored or managed by the Underwriter at prices lower than the public offering prices (but in all cases as otherwise required by law); provided that the Underwriter shall not change the interest rates on the Series 2025 Bonds.
(f) The City will undertake, pursuant to a Continuing Disclosure Agreement, dated as of the Closing Date (the “Continuing Disclosure Agreement”) to provide certain annual financial information and notices of the occurrence of certain events. A form of this undertaking is set forth in the Preliminary Official Statement (as hereinafter defined) and will also be set forth in the Official Statement.
Section 2. Use and Preparation of Official Statement. The City hereby ratifies, confirms and approves of the use and distribution by the Underwriter prior to the date hereof of the Preliminary Official Statement dated [_________], 2025, relating to the Series 2025 Bonds (which, together with all appendices thereto, is referred to herein as the “Preliminary Official Statement”). The City has deemed final the Preliminary Official Statement as of its date for purposes of Rule 15c2-12 promulgated by the Securities Exchange Act of 1934 (“Rule 15c2-12”), as amended, except for the omission of such information as is specified in Rule 15c2-12(b)(1). The City hereby agrees to deliver or cause to be delivered to the Underwriter, no later than the earlier of (i) seven (7) business days after the date hereof or (ii) one (1) business day prior to the Closing Date, in order to permit the Underwriter to comply with Rule 15c2-12 of the Securities and Exchange Commission (“SEC”), and the applicable rules of the MSRB, with respect to distribution of the Official Statement, conformed copies of the final Official Statement (in word-searchable PDF format), dated the date hereof (including all information previously permitted to have been omitted by Rule 15c2-12 and any amendments or supplements to such Official Statement as have been approved by the City and the Underwriter) (the “Official Statement”) in sufficient quantity to enable the Underwriter to comply with the rules of the Securities and Exchange Commission and the MSRB. The City hereby approves of the use and distribution by the Underwriter of the Official Statement in connection with the offer and sale of the Series 2025 Bonds. At the time of or prior to the Closing Date, the Underwriter shall file a copy of the Official Statement with the MSRB.
Section 3. Reserved.
Section 4. Establishment of Issue Price.
(a) The Underwriter agrees to assist the City in establishing the issue price of the Series 2025 Bonds and shall execute and deliver to the City at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit C, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the City and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Series 2025 Bonds.
#22..
- 910 -
4 (b) [Except as otherwise set forth in Exhibit A attached hereto,] the City will treat the first price at which 10% of each maturity of the Series 2025 Bonds (the “10% test”) is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the City the price or prices at which it has sold to the public each maturity of Series 2025 Bonds. [If at that time the 10% test has not been satisfied as to any maturity of the Series 2025 Bonds, the Underwriter agrees to promptly report to the City the prices at which it sells the unsold Series 2025 Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Series 2025 Bonds of that maturity or (ii) the 10% test has been satisfied as to the Series 2025 Bonds of that maturity, provided that, the Underwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the City or bond counsel.] For purposes of this Section, if certain Series 2025 Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Series 2025 Bonds.
(c) [The Underwriter confirms that it has offered the Series 2025 Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Series 2025 Bonds for which the 10% test has not been satisfied and for which the City and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the City to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-theoffering-price rule remains applicable to any maturity of the Series 2025 Bonds, the Underwriter will neither offer nor sell unsold Series 2025 Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(1) the close of the fifth (5th) business day after the sale date; or (2) the date on which the Underwriter has sold at least 10% of that maturity of the Series 2025 Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter will advise the City promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Series 2025 Bonds to the public at a price that is no higher than the initial offering price to the public] (d) The Underwriter confirms that:
(i) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Series 2025 Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Series 2025 Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Series 2025 Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Series 2025 #22..
- 911 -
5 Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter, and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Series 2025 Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Series 2025 Bonds to the public (each such term being used as defined below), and
(C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Series 2025 Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Series 2025 Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Series 2025 Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Series 2025 Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Series 2025 Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer,and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. (e) The City acknowledges that, in making the representations set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Series 2025 Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Series 2025 Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Series 2025 Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Series 2025 Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Series 2025 Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Series 2025 Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The City further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a third-party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Series 2025 Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Series 2025 Bonds. (f) The Underwriter acknowledges that sales of any Series 2025 Bonds to any person that is a related party to an underwriter participating in the initial sale of the Series 2025 Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section. Further, for purposes of this section:
#22..
- 912 -
6 (i) “public” means any person other than an underwriter or a related party, (ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Series 2025 Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Series 2025 Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Series 2025 Bonds to the public),
(iii) a purchaser of any of the Series 2025 Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and
(iv) “sale date” means the date of execution of this Bond Purchase Agreement by all parties.
Section 5. Representations, Warranties and Agreements of the City. The City hereby represents, warrants and agrees with the Underwriter as follows:
(a) The City is a charter city and municipal corporation of the State, duly organized and validly existing under and by virtue of its charter and the Constitution and the laws of the State. (b) The City has the legal right and power to issue and deliver the Series 2025 Bonds and to execute and deliver, and to perform its obligations under, the Indenture, the Continuing Disclosure Agreement and this Purchase Agreement (collectively, the “City Documents”). The City has duly authorized the issuance and delivery of the Series 2025 Bonds and the execution and delivery of, and performance of its obligations under, the City Documents and, as of the date hereof, such authorizations are in full force and effect and have not been amended, modified, or rescinded. When executed and delivered by the respective parties thereto, the City Documents will constitute legal, valid, and binding obligations of the City in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws, the application of equitable principles relating to or affecting creditors’ rights generally, the exercise of judicial discretion in appropriate cases, and the limitations on legal remedies against cities in the State. The City has complied, and will at the Closing be in compliance in all respects, with its obligations under the City Documents. (c) The Series 2025 Bonds will be issued in accordance with the Indenture and will conform in all material respects to the descriptions thereof contained in the Official Statement. The Indenture creates a valid pledge of, first lien upon, Net Revenues. #22..
- 913 -
7 (d) The information in the Preliminary Official Statement and the Official Statement (excluding any information provided by the Underwriter or with respect to DTC and the book-entry only system) is true and correct in all material respects, and the information in the Preliminary Official Statement and the Official Statement do not contain any misstatement of any material fact and does not omit any statement necessary to make the statements, in the light of the circumstances in which such statements were made, not misleading.
(e) To assist the Underwriter in complying with the Rule, the City will undertake, pursuant to the Continuing Disclosure Agreement, to provide annual reports and notices of certain events.
A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official Statement. The Preliminary Official Statement and the Official Statement describe all incidences, if any, during the last five years in which the City has failed to comply with previous undertakings to provide annual continuing disclosure reports and notices of material events. (f) The City covenants with the Underwriter that for twenty-five days after the Closing Date (the “Delivery Period”), if any event occurs that might or would cause the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the City shall notify the Underwriter thereof, and if in the opinion of the Underwriter such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will cooperate with the Underwriter in the preparation of an amendment or supplement to the Official Statement, in a form and in a manner approved by the Underwriter and the City. (g) The City will advise the Underwriter promptly of any proposal to amend or supplement the Preliminary Official Statement or the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter. The City will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Preliminary Official Statement or the Official Statement in connection with the offering, sale, or distribution of the Series 2025 Bonds. (h) If the Preliminary Official Statement or the Official Statement is supplemented or amended, the Preliminary Official Statement or the Official Statement, as so supplemented or amended, as of the date of such supplement or amendment, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(i) The City is not in breach of or in default under any applicable constitutional provision, law, or administrative rule or regulation of the State or the United States, or any applicable judgment, decree, consent, or other agreement to which the City is a party, and no event has occurred and is continuing that, with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any of the foregoing.
(j) The authorization, execution, and delivery by the City of the City Documents, and compliance by the City with the provisions thereof, do not and will not conflict with or constitute a breach of or default by the City under any applicable constitutional provision, law, or administrative rule or regulation of the State or the United States, or any applicable judgment, decree, consent, or other agreement to which it is bound or by which its properties may be affected. (k) No authorization, consent, or approval of, or filing or registration with, any Governmental Authority (as defined below) or court is, or under existing requirements of law will be, necessary for the valid execution and delivery of, or performance by the City of its obligations under, the #22..
- 914 -
8 City Documents, other than any authorization, consent, approval, filing, or registration as may be required under the Blue Sky or securities laws of any state in connection with the offering, sale, or issuance of the Series 2025 Bonds. All authorizations, consents, or approvals of, or filings or registrations with, any Governmental Authority or court necessary for the valid issuance of, and performance by the City of its obligations under, the Series 2025 Bonds will have been duly obtained or made prior to the issuance of the Series 2025 Bonds (and disclosed to the Underwriter). As used herein, the term “Governmental Authority” refers to any legislative body or governmental official, department, commission, board, bureau, agency, instrumentality, body, or public benefit corporation.
(l) The City shall furnish such information, execute such instruments, and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order (i) to qualify the Series 2025 Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and (ii) to determine the eligibility of the Series 2025 Bonds for investment under the laws of such states and other jurisdictions, and shall use its best efforts to continue such qualifications in effect so long as required for the distribution of the Series 2025 Bonds; provided, however, that the City shall not be required to execute a general consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction.
(m) At the time of acceptance hereof, except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending and served or, to the best of the City’s knowledge, threatened (i) in any way questioning the existence of the City or the titles of the officers of the City to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Series 2025 Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Series 2025 Bonds, or in any way contesting or affecting the validity of the Series 2025 Bonds, the City Documents or the consummation of the transactions contemplated thereby or hereby, or contesting the exclusion of the interest on the Series 2025 Bonds from taxation or contesting the powers of the City or its authority to issue the Series 2025 Bonds; (iii) which may result in any material adverse change relating to the City or relating to the financial condition of the Enterprise or the City’s ability to pay debt service on the Series 2025 Bonds; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained or contains any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence. (n) Other than in the ordinary course of its business or as contemplated by the Official Statement, between the date of this Purchase Agreement and the Closing Date the City will not, without the prior written consent of the Underwriter, offer or issue any certificates, bonds, notes, or other obligations for borrowed money or incur any material liabilities, direct or contingent, payable from or secured by a lien on the Net Revenues superior to or equal to the lien of the Series 2025 Bonds on the Net Revenues. (o) The financial statements of, and other financial information regarding, the City contained in the Preliminary Official Statement and the Official Statement fairly present the financial position and results of the operations of the City, including the operations of the Enterprise, as of the dates and for the periods therein set forth, and, to the best of the City’s knowledge, (i) the audited financial statements have been prepared in accordance with generally accepted accounting principles consistently applied, and (ii) the other financial information has been determined on a basis substantially consistent with that of the City’s audited financial statements included in the Official Statement. #22..
- 915 -
9 (p) Except as otherwise described in the Preliminary Official Statement and the Official Statement, there shall not have been any material adverse changes in the financial condition of the Enterprise since June 30, 2024.
(q) Any certificate signed by any authorized official of the City and delivered to the Underwriter pursuant to this Purchase Agreement shall be deemed a representation and warranty by the City to the Underwriter as to the truth of the statements therein made.
Section 6. Conditions to the Obligations of the Underwriter. The Underwriter hereby enters into this Purchase Agreement in reliance upon the representations and warranties of the City contained herein and the representations and warranties to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the City of its obligations both on and as of the date hereof and as of the Closing Date. Accordingly, the Underwriter’s obligations under this Purchase Agreement to purchase, to accept delivery of and to pay for the Series 2025 Bonds shall be subject, at the option of the Underwriter, to the following additional conditions:
(a) The Underwriter shall receive copies of the Official Statement (including all information previously permitted to have been omitted by Rule 15c2-12 and any amendments or supplements as have been approved by the Underwriter), in such reasonable quantity as provided in Section 2 hereof;
(b) The representations and warranties of the City contained herein shall be true and correct on the date hereof and on the Closing Date, as if made on and at the Closing; (c) At the Closing, the Indenture, the Continuing Disclosure Agreement and this Purchase Agreement shall have been duly authorized, executed and delivered by the respective parties thereto, and the Preliminary Official Statement and the Official Statement shall have been duly authorized, executed and delivered by the City, all in substantially the forms heretofore submitted to the Underwriter, with only such changes as shall have been agreed to in writing by the Underwriter, and shall be in full force and effect; and there shall be in full force and effect such resolution or resolutions of the City Council of the City, in the opinion of Norton Rose Fulbright US LLP as Bond and Disclosure Counsel (“Bond Counsel” and “Disclosure Counsel”), shall be necessary or appropriate in connection with the transactions contemplated hereby; (d) At or prior to the Closing Date, the Underwriter shall have received the following documents, in each case satisfactory in form and substance to the Underwriter:
(1) The Preliminary Official Statement, the Official Statement and each supplement or amendment, if any, thereto, executed on behalf of the City; (2) Copies of the Indenture, this Purchase Agreement and the Continuing Disclosure Agreement, each duly executed and delivered by the respective parties thereto;
(3) The approving opinion of Bond Counsel, dated the Closing Date and addressed to the City, in substantially the form attached to the Official Statement as Appendix D thereto, and letters of such counsel, dated the Closing Date and addressed to the Underwriter and the Trustee, to the effect that such opinion may be relied upon #22..
- 916 -
10 by the Underwriter and the Trustee to the same extent as if such opinion were addressed to it;
(4) The supplemental opinion of Bond Counsel, dated the Closing Date and addressed to the Underwriter, in substantially the form attached hereto as Exhibit B.
(5) [Reserved];
(6) an opinion of the City Attorney of the City, in form and substance satisfactory to the Underwriter, dated the Closing Date, addressed to the City and the Underwriter, to the effect that:
(i) the City is a charter city and municipal corporation duly organized and validly existing under the laws of the State;
(ii) the resolution of the City approving and authorizing the execution and delivery of the City Documents (the “City Resolution”) was duly adopted at a meeting of the City Council of the City that was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the City Resolution is in full force and effect and has not been modified, amended, or rescinded;
(iii) the City Documents have been duly authorized, executed, and delivered by the City and, assuming due authorization, execution, and delivery by the other parties thereto, such documents constitute the legal, valid, and binding agreements of the City enforceable in accordance with their terms, subject to laws relating to bankruptcy, insolvency, or other laws affecting the enforcement of creditors’ rights generally, the application of equitable principles if equitable remedies are sought, the exercise of judicial discretion in appropriate cases, and the limitations on legal remedies against cities in the State; (iv) to the best knowledge of such counsel, the execution and delivery by the City of the City Documents, and compliance by the City with the provisions thereof, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute a breach of or default under any law, administrative regulation, court decree, resolution, or agreement to which the City is subject to or by which it is bound;
(v) to the best knowledge of such counsel, the Preliminary Official Statement as of its date and as of [________], 2025, and the Official Statement as of its date and as of the Closing Date (excluding therefrom financial statements and other statistical data included in the Preliminary Official Statement and the Official Statement, and any information provided by the Underwriter or with respect to DTC and the book-entry only system, as to which no view need be expressed) did not and does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (vi) except as otherwise disclosed in the Preliminary Official Statement and the Official Statement, to the best knowledge of such counsel after #22..
- 917 -
11 reasonable investigation, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental agency or body, pending or, to the best knowledge of such counsel after due investigation, threatened against the City, challenging the creation, organization or existence of the City, or the validity of the City Documents or seeking to restrain or enjoin the City’s obligations under the City Documents or in any way contesting or affecting the validity of the City Documents or any of the transactions referred to therein or contemplated thereby or contesting the authority of the City to enter into or perform its obligations under any of the City Documents, or under which a determination adverse to the City would have a material adverse effect upon the financial condition or the revenues of the City, or which, in any manner, questions or affects the right or ability of the City to enter into the City Documents or affects in any manner the right or ability of the City to pay debt service on the Series 2025 Bonds; and
(vii) no authorization, approval, consent, or other order of the State or any other governmental authority or agency within the State having jurisdiction over the City is required for the valid authorization, execution, and delivery by the City of the City Documents;
(7) The opinion of counsel to the Trustee, dated the Closing Date and addressed to the City and the Underwriter, to the effect that (i) the Trustee has duly authorized, executed and delivered the Indenture; and (ii) the Indenture constitutes a legally valid and binding obligation of the Trustee, enforceable against the Trustee in accordance with its terms, except that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws in effect from time to time affecting the rights of creditors generally and except to the extent that the enforceability thereof may be limited by the application of general principles of equity;
(8) The opinion of Disclosure Counsel, dated the Closing Date and addressed to the City and the Underwriter, to the effect that based upon their participation in the preparation of the Preliminary Official Statement and the Official Statement as Disclosure Counsel and without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Preliminary Official Statement and the Official Statement, nothing has come to their attention which would cause them to believe that the Preliminary Official Statement as of its date and as of [__________], 2025 and the Official Statement as of its date and as of the Closing Date (except that no opinion or belief need be expressed as to any financial, statistical or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, or information about DTC or the book-entry only system, or the information contained in the Appendix B and F to the Preliminary Official Statement and the Official Statement), contained or contains any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (9) A certificate or certificates, dated the Closing Date, signed by a duly authorized official of the City satisfactory to the Underwriter, in form and substance satisfactory to the Underwriter, to the effect that (i) the representations and warranties #22..
- 918 -
12 of the City contained in this Purchase Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date and (ii) no event affecting the City has occurred or information become known since the date of the Preliminary Official Statement and the Official Statement which either makes untrue or incorrect in any material respect as of the Closing Date any statement or information contained in the Preliminary Official Statement and the Official Statement relating to the City or is not reflected in the Preliminary Official Statement and the Official Statement but should be reflected therein in order to make the statements and information therein relating to the City not misleading in any material respect;
(10) A certificate, dated the Closing Date, signed by a duly authorized official of the Trustee, satisfactory in form and substance to the Underwriter, to the effect that: (i) the Trustee is a national banking association organized and existing under and by virtue of the laws of the United States of America; having the full power and being qualified to enter into and perform its duties under the Indenture; (ii) the Trustee is duly authorized to enter into the Indenture; (iii) the execution and delivery of the Indenture and compliance with the provisions on the Trustee’s part contained therein, will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Trustee is a party or is otherwise subject (except that no representation, warranty or agreement is made with respect to any federal or state securities or Blue Sky laws or regulations), nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets held by the Trustee pursuant to the lien created by the Indenture under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Indenture; (iv) it has not been served with any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, nor is any such action, to the best of such official’s knowledge after reasonable investigation, threatened against the Trustee affecting the existence of the Trustee, or the titles of its officers to their respective offices, or seeking to prohibit, restrain or enjoin the collection of the funds to be applied to pay the principal, premium, if any, and interest with respect to the Series 2025 Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Indenture, or contesting the powers of the Trustee or its authority to enter into, adopt or perform its obligations under any of the foregoing, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Indenture; and (v) subject to the provisions of the Indenture and applicable law, the Trustee will apply the proceeds from the Series 2025 Bonds to the purposes specified in the Indenture;
(11) A certified copy of the general resolution of the Trustee authorizing the execution and delivery of the Indenture;
(12) A certified copy of the resolution of the City authorizing the execution and delivery of the Sixth Supplemental Indenture, this Purchase Agreement, the Continuing Disclosure Agreement and the Official Statement; #22..
- 919 -
13 (13) copies of the statements with respect to the sale of the Series 2025 Bonds required to be delivered to the California Debt and Investment Advisory Commission;
(14) a copy of the Blanket Letter of Representations to DTC relating to the Series 2025 Bonds signed by the City;
(15) Evidence that the ratings on the Series 2025 Bonds as set forth in the Official Statement are in full force and effect as of the Closing Date; (16) An opinion of Underwriter’s Counsel, dated the Closing Date and addressed to the Underwriter, in form and substance acceptable to the Underwriter; (17) A Tax Certificate with respect to the Series 2025 Bonds, together with Form 8038-G, in form satisfactory to Bond Counsel, signed by an appropriate officer of the City;
(18) Such additional legal opinions, certificates, proceedings, instruments, insurance policies or evidences thereof and other documents as the Underwriter or Bond Counsel may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the representations of the City herein and of the statements and information contained in the Preliminary Official Statement and the Official Statement, and the due performance or satisfaction by the City at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the City in connection with the transactions contemplated hereby and by the Indenture.
If the City shall be unable to satisfy the conditions to the Underwriter’s obligations contained in this Purchase Agreement or if the Underwriter’s obligations shall be terminated for any reason permitted herein, all obligations of the Underwriter hereunder may be terminated by the Underwriter at, or at any time prior to, the Closing Date by written notice to the City and neither the Underwriter nor the City shall have any further obligations hereunder.
Section 7. Termination. The Underwriter may terminate this Purchase Agreement, without liability therefor, by written notification by the Underwriter to the City if at any time subsequent to the date of this Purchase Agreement and at or prior to the Closing Date any of the following shall have occurred and be continuing as of the date of termination:
(a) an amendment to the Constitution of the United States or the State of California shall have been passed or legislation shall have been introduced in or enacted by the Congress of the United States or the legislature of any state having jurisdiction of the subject matter or legislation pending in the Congress of the United States shall have been amended or legislation shall have been recommended to the Congress of the United States or to any state having jurisdiction of the subject matter or otherwise endorsed for passage (by press release, other form of notice or otherwise) by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Underwriters, or legislation shall have been proposed for consideration by either such Committee by any member thereof or presented as an option for consideration by either such Committee by the staff of such Committee or #22..
- 920 -
14 by the staff of the Joint Committee on Taxation of the Congress of the United States, or legislation shall have been favorably reported for passage to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or a decision shall have been rendered by a court of the United States or of the State of California or the Tax Court of the United States, or a ruling shall have been made or a regulation or temporary regulation shall have been proposed or made or any other release or announcement shall have been made by the Treasury Department of the United States, the Internal Revenue Service or other federal or State of California authority, with respect to federal or State of California taxation upon revenues or other income of the general character to be derived by the City or upon interest received on obligations of the general character of the Series 2025 Bonds which may have the purpose or effect, directly or indirectly, of affecting the tax status of the City, its property or income, its securities (including the Series 2025 Bonds) or the interest thereon, or any tax exemption granted or authorized by State of California legislation which, in the reasonable judgment of the Underwriter, materially and adversely affects the market price or marketability, at the initial offering prices set forth in the Official Statement, of the Series 2025 Bonds;
(b) legislation shall have been enacted, introduced in the Congress or recommended for passage by the President of the United States, or a decision shall be rendered by a court established under Article III of the Constitution of the United States or by the Tax Court of the United States, or an order, ruling, regulation (final, temporary or proposed) or official statement shall be issued or made by or on behalf of the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter to the effect that obligations of the general character of the Series 2025 Bonds, or the Series 2025 Bonds themselves, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under the Trust Indenture Act of 1939, as amended;
(c) the declaration of war or engagement or significant escalation in major military hostilities by the United States or any other national emergency (or the escalation thereof) or calamity relating to the effective operation of the government of, or the financial community in, the United States shall occur which, in the reasonable judgment of the Underwriter, materially and adversely affects the market price or marketability of the Series 2025 Bonds at the initial offering prices set forth in the Official Statement;
(d) the declaration of a general banking moratorium by federal, New York or California authorities, or the general suspension of trading on any national securities exchange; (e) the imposition by the New York Stock Exchange or other national securities exchange, or any governmental authority, of any material restrictions not now in force with respect to the Series 2025 Bonds or obligations of the general character of the Series 2025 Bonds or securities generally, or the material increase of any such restrictions now in force, including those relating to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; (f) an order, decree or injunction of any court of competent jurisdiction, or order, ruling, regulation or official statement by the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Series 2025 Bonds, or the issuance, offering or sale of the Series 2025 Bonds, including any or all underlying obligations, as #22..
- 921 -
15 contemplated hereby or by the Preliminary Official Statement and the Official Statement, is or would be in violation of the federal securities laws as amended and then in effect; (g) the withdrawal or downgrading or placement on credit watch with negative outlook of any rating of the Series 2025 Bonds by a national rating agency which, in the reasonable judgment of the Underwriter, materially and adversely affects the market price or marketability, at the initial offering prices set forth in the Official Statement, of the Series 2025 Bonds; or (h) any event occurs, or information becomes known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement or the Official Statement, or has the effect that the Preliminary Official Statement or the Official Statement contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (i) There shall have occurred since the date of this Purchase Agreement any materially adverse change in the affairs or financial condition of the Issuer, except for changes which the Preliminary Official Statement or the Official Statement discloses are expected to occur. (j) A general suspension of trading in securities on the New York Stock Exchange or other national securities exchange, the establishment of minimum or maximum prices on any such exchange, the establishment of material restrictions (not in force as of the date hereof) upon trading securities generally by any governmental authority or any national securities exchange, or a general banking moratorium declared by federal, State of New York, or State officials authorized to do so. (k) Any state blue sky or securities commission or other governmental agency or body in a state in which ten percent (10%) or more of the Bonds have been sold shall have withheld registration, exemption, or clearance of the offering of the Bonds as described herein, or issued a stop order or similar ruling relating thereto, provided that such withholding or stop order is not due to the malfeasance, misfeasance, or nonfeasance of the Underwriter. (l) A material disruption in securities settlement, payment, or clearance services shall have occurred and shall be continuing on the Closing Date. (m) The purchase of and payment for the Bonds by the Underwriter, or the resale of the Bonds by the Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency, or commission, which prohibition shall occur subsequent to the date hereof, and is not the result of the Underwriter’s acts or failure to act.
Section 8. Expenses. The Underwriter shall be under no obligation to pay and the costs of printing of the Series 2025 Bonds, the Preliminary Official Statement and the Official Statement, the cost of duplicating the Indenture, the Continuing Disclosure Agreement, the fees of accountants, financial advisors and consultants to the City and the fees of rating agencies, the initial fee of the Trustee and its counsel in connection with the issuance of the Series 2025 Bonds and the fees and expenses of Bond Counsel and Disclosure Counsel shall be paid by the City from the proceeds of the Series 2025 Bonds. In the event that the Series 2025 Bonds for any reason are not issued, or to the extent proceeds of the Series 2025 Bonds are insufficient or unavailable therefor, any fees, costs and expenses owed by the City, which otherwise would have been paid from the proceeds of the Series 2025 Bonds, shall be paid by the City. All out of pocket expenses of the Underwriter, including #22..
- 922 -
16 traveling and other expenses, the California Debt and Investment Advisory Commission fee and the fees and expenses of Underwriter’s Counsel shall be paid by the Underwriter.
The City shall pay for any reasonable expenses (included in the expense component of the Underwriter’s discount) incurred by the Underwriter on behalf of the City, with the express written approval of the City, in connection with the marketing, issuance and delivery of the Series 2025 Bonds, including, but not limited to, reasonable costs of meals, transportation, and lodging of the City’s employees and representatives.
Section 9. Notices. Any notice or other communication to be given under this Purchase Agreement may be given by delivering the same in writing to the respective parties at the following address:
Underwriter: Siebert Williams Shank & Co., LLC
1901 Harrison Street, Suite 1400
Oakland, CA 94612
Attention: David Stinfil
City: City of Modesto
1010 10th Street
Modesto, CA 95354
Attention: City Manager
Section 10. Survival of Representations and Warranties. The representations and warranties of the City set forth in or made pursuant to this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Purchase Agreement and regardless of any investigations or statements as to the results thereof made by or on behalf of the Underwriter and regardless of delivery of and payment for the Series 2025 Bonds.
Section 11. Effectiveness and Counterpart Signatures. This Purchase Agreement (i) shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by duly authorized officers of the City and shall be valid and enforceable as of the time of such acceptance and (ii) contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements, prior writings and representations with respect thereto.
This Purchase Agreement may be executed in several counterparts, including counterparts that are manually executed and counterparts that are executed with an electronic signature, all or any of which shall be regarded for all purposes as one original and shall constituted and be but one and the same instrument. The person associated with any such signature shall be deemed to have had the intent to sign this Purchase Agreement with an electronic signature and that agrees that execution of this Purchase Agreement by electronic signature is attributable to such person. All parties executing this Purchase Agreement expressly agree under the California Uniform Electronic Transactions Act (“UETA”) (California Civil Code §1633.1 et seq.), that this Purchase Agreement and all other agreements, certificates, opinions and similar records (“documents”) relating to the Series 2025 Bonds constitute a “transaction” under the UETA and expressly agree to allow all aspects of the transaction to which the UETA can apply to be conducted by electronic means. For these purposes, a signature by fax, e-mail, or other electronic technology on a document relating to the Series 2025 Bonds shall #22..
- 923 -
17 constitute an “electronic signature” to an “electronic record” under the UETA with respect to this specific transaction.
An “electronic signature” means a signature that is executed by symbol attached to or logically associated with a record and includes facsimile signatures or signatures transmitted by electronic mail in so-called PDF format. All parties to this Purchase Agreement (i) agree that an electronic signature, whether digital or encrypted, of a party to this Purchase Agreement or any other electronic record associated with the Series 2025 Bonds is intended to authenticate this writing and to have the same force and effect as a manual signature; (ii) intended to be bound by the signatures (whether original, faxed, or electronic) on any document relating to the Series 2025 Bonds sent or delivered by facsimile or electronic mail or other electronic means; (iii) are aware that the other party(ies) will rely on such signatures; and, (iv) hereby waive any defenses to the enforcement of the terms of this Purchase Agreement or any other document related to Series 2025 Bonds based on the foregoing forms of signature.
Section 12. Parties in Interest. This Purchase Agreement is made solely for the benefit of the City and the Underwriter (including the successors or assigns of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof.
Section 13. Headings. The headings of the sections of this Purchase Agreement are inserted for convenience only and shall not be deemed to be a part hereof. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 924 -
S-1
Section 14. Governing Law. This Purchase Agreement shall be construed in accordance with the laws of the State of California.
Very truly yours,
SIEBERT WILLIAMS SHANK & CO., LLC.
as Underwriter
By:
Authorized Signatory
ACCEPTED:
CITY OF MODESTO, CALIFORNIA
By:
City Manager
#22..
- 925 -
A-1
EXHIBIT A
MATURITY SCHEDULE
$[__________]
CITY OF MODESTO, CALIFORNIA
WASTEWATER REVENUE BONDS,
SERIES 2025
Maturity Date
(November 1)
Principal
Amount Interest Rate Yield
____________________________
* All maturities are 10% Test Maturities (Sale Date).
T Term Bonds
#22..
- 926 -
A-2
THE SERIES 2025 BONDS REDEMPTION
Optional Redemption. The Series 2025 Bonds maturing on or after November 1, 20__, shall be subject to redemption prior to their respective stated maturities, at the option of the City, from any source of available funds, as a whole or in part on any date (by such maturities as may be specified by the City and by lot within a maturity), on or after November 1, 20__, (the “Par Call Date”) at a Redemption Price equal to 100% of the principal amount of such Series 2025 Bond called for redemption, plus accrued interest to the date fixed for redemption, without premium.
Mandatory Sinking Fund Redemption. The Series 2025 Bonds maturing on November 1, 20__ and November 1, 20__ shall also be subject to mandatory redemption prior to their stated maturity, in part, by lot, from Mandatory Sinking Account Payments commencing on November 1, 20__ for the Series 2025 Bonds maturing on November 1, 20__ and commencing on November 1, 20__ for the Series 2025 Bonds maturing on November 1, 20__, and on each November 1 thereafter at a redemption price equal to the principal amount thereof plus accrued interest thereon to the date fixed for redemption, without premium as follows:
Series 2025 Bonds maturing on November 1, 20__
Redemption Dates
(November 1) Principal Amount
(maturity)
Series 2025 Bonds maturing on November 1, 20__
Redemption Dates
(November 1) Principal Amount
(maturity)
Special Mandatory Redemption From Insurance or Condemnation Proceeds. The Series 2025 Bonds are subject to redemption as a whole or in part on any date, among such maturities as designated by the City and by lot within a maturity, to the extent of hazard insurance proceeds not used to repair or rebuild the Enterprise or condemnation proceeds received with respect to the Enterprise to be used for such purpose pursuant to the Indenture, at a Redemption Price equal to the principal amount of such Series 2025 Bonds called for redemption plus interest accrued thereon to the date fixed for redemption, without premium.
#22..
- 927 -
B-1
EXHIBIT B
FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL
A supplemental opinion or opinions of Bond Counsel addressed to the Underwriter, in substantially the form and to the following effect:
(i) The statements contained in the Preliminary Official Statement and the Official Statement on the cover page and under the captions “THE SERIES 2025 BONDS,” “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2025 BONDS,” and “TAX MATTERS” and in APPENDICES C, D and E, insofar as such statements expressly purport to summarize certain provisions of the Series 2025 Bonds, the Indenture and the Continuing Disclosure Agreement and the final approving opinion of Bond Counsel, fairly and accurately summarize the information presented therein in all material respects; provided, that Bond Counsel is not required to express any opinion with respect to any financial, statistical or numerical information contained therein; (ii) The Series 2025 Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Indenture is exempt from qualification as an indenture pursuant to the Trust Indenture Act of 1939, as amended; and (iii) The Purchase Agreement has been duly authorized, executed and delivered by the City, and, assuming due authorization, execution and delivery by the Underwriter, constitutes the legal, valid and binding agreement of the City enforceable against the City in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or other laws affecting the enforcement of creditors’ rights generally and equitable remedies if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and limitations on remedies against public agencies, and except as the enforceability of the indemnification or waiver provisions may be limited by applicable securities laws or public policy.
#22..
- 928 -
C-1
EXHIBIT C
FORM OF ISSUE PRICE CERTIFICATE
$[PAR AMOUNT]
CITY OF MODESTO, CALIFORNIA
WASTEWATER REVENUE BONDS,
SERIES 2025
The undersigned, on behalf of Siebert Williams Shank & Co., LLC, (the “Underwriter”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”) of the City of Modesto (the “Issuer”).
1. Sale of the Bonds. As of the date of this certificate, for each Maturity of the Bonds, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.
2. Defined Terms.
(a) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(b) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (c) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is [________], 2025. (d) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail or other third-party distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the Underwriter’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the tax certificate with respect to the Bonds and with respect to compliance with the federal income tax rules affecting the Bonds, and by Norton Rose Fulbright US LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
#22..
- 929 -
C-2
SIEBERT WILLIAMS SHANK & CO., LLC
as Underwriter
By: ________________________________
Name: ________________________________
Title: ________________________________
Dated: ___________________
#22..
- 930 -
299002620.3 1
DISCLOSURE DISSEMINATION AGENT AGREEMENT
This Disclosure Dissemination Agent Agreement (the “Disclosure Agreement”), dated as of [_______], 2025, is executed and delivered by the City of Modesto, California (the “Issuer”) and Digital Assurance Certification, L.L.C., as exclusive Disclosure Dissemination Agent (the “Disclosure Dissemination Agent” or “DAC”) for the benefit of the Holders (hereinafter defined) of the Bonds (hereinafter defined) and in order to assist the Issuer in processing certain continuing disclosure with respect to the Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time (the “Rule”).
The services provided under this Disclosure Agreement solely relate to the execution of instructions received from the Issuer through use of the DAC system and do not constitute “advice” within the meaning of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). DAC will not provide any advice or recommendation to the Issuer or anyone on the Issuer’s behalf regarding the “issuance of municipal securities” or any “municipal financial product” as defined in the Act and nothing in this Disclosure Agreement shall be interpreted to the contrary.
DAC is not a “Municipal Advisor” as such term is defined in Section 15B of the Securities Exchange Act of 1934, as amended, and related rules.
SECTION 1. Definitions. Capitalized terms not otherwise defined in this Disclosure Agreement shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, in the Official Statement (hereinafter defined). The capitalized terms shall have the following meanings:
“Annual Filing Date” means the date, set in Sections 2(a) and 2(f) hereof, by which the Annual Report is to be filed with the MSRB.
“Annual Financial Information” means annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement. “Annual Report” means an Annual Report containing Annual Financial Information described in and consistent with Section 3 of this Disclosure Agreement. “Audited Financial Statements” means the annual financial statements of the Issuer for the prior fiscal year, certified by an independent auditor as prepared in accordance with generally accepted accounting principles or otherwise, as such term is used in paragraph (b)(5)(i)(B) of the Rule and specified in Section 3(b) of this Disclosure Agreement.
“Bonds” means the bonds as listed on the attached Exhibit A, with the 9-digit CUSIP numbers relating thereto.
“Certification” means a written certification of compliance signed by the Disclosure Representative stating that the Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure delivered to the Disclosure Dissemination Agent is the Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure required to be submitted to the MSRB under this Disclosure Agreement. A Certification shall accompany each such document submitted to the Disclosure Dissemination Agent by the Issuer and include the full name of the Bonds and the 9-digit CUSIP numbers for all Bonds to which the document applies.
“Disclosure Dissemination Agent” means Digital Assurance Certification, L.L.C, acting in its capacity as Disclosure Dissemination Agent hereunder, or any successor Disclosure Dissemination Agent designated in writing by the Issuer pursuant to Section 9 hereof.
“Disclosure Representative” means the Director of Finance or his or her designee, or such other person as the Issuer shall designate in writing to the Disclosure Dissemination Agent from time to time as the person responsible for providing Information to the Disclosure Dissemination Agent. #22..
- 931 -
299002620.3 2
“Failure to File Event” means the Issuer’s failure to file an Annual Report on or before the Annual Filing Date.
“Financial Obligation” as used in this Disclosure Agreement is defined in the Rule, as may be amended, as (i) a debt obligation; (ii) derivative instrument entered into in connection with, or pledged as a security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “Financial Obligation” shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
“Force Majeure Event” means: (i) acts of God, war, or terrorist action; (ii) failure or shut-down of the Electronic Municipal Market Access system maintained by the MSRB; or (iii) to the extent beyond the Disclosure Dissemination Agent’s reasonable control, interruptions in telecommunications or utilities services, failure, malfunction or error of any telecommunications, computer or other electrical, mechanical or technological application, service or system, computer virus, interruptions in Internet service or telephone service (including due to a virus, electrical delivery problem or similar occurrence) that affect Internet users generally, or in the local area in which the Disclosure Dissemination Agent or the MSRB is located, or acts of any government, regulatory or any other competent authority the effect of which is to prohibit the Disclosure Dissemination Agent from performance of its obligations under this Disclosure Agreement. “Holder” means any person (a) having the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax purposes. “Information” means, collectively, the Annual Reports, the Audited Financial Statements, the Notice Event notices, the Failure to File Event notices, the Voluntary Event Disclosures and the Voluntary Financial Disclosures.
“MSRB” means the Municipal Securities Rulemaking Board, or any successor thereto, established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934. “Notice Event” means any of the events enumerated in paragraph (b)(5)(i)(C) of the Rule and listed in Section 4(a) of this Disclosure Agreement.
“Obligated Person” means any person, including the Issuer, who is either generally or through an enterprise, fund, or account of such person committed by contract or other arrangement to support payment of all, or part of the obligations on the Bonds (other than providers of municipal bond insurance, letters of credit, or other liquidity facilities), as shown on Exhibit A.
“Official Statement” means that Official Statement prepared by the Issuer in connection with the Bonds, as listed in Exhibit A.
“Trustee” means the institution, if any, identified as such in the document under which the Bonds were issued. “Voluntary Event Disclosure” means information of the category specified in any of subsections (e)(vi)(1) through (e)(vi)(10) of Section 2 of this Disclosure Agreement that is accompanied by a Certification of the Disclosure Representative containing the information prescribed by Section 7(a) of this Disclosure Agreement.
“Voluntary Financial Disclosure” means information of the category specified in any of subsections (e)(vii)(1) through (e)(vii)(9) of Section 2 of this Disclosure Agreement that is accompanied by a Certification of the Disclosure Representative containing the information prescribed by Section 7(b) of this Disclosure Agreement.
#22..
- 932 -
299002620.3 3
SECTION 2. Provision of Annual Reports.
(a) The Issuer shall provide, annually, an electronic copy of the Annual Report and Certification to the Disclosure Dissemination Agent, together with a copy for the Trustee, not later than the Annual Filing Date. Promptly upon receipt of an electronic copy of the Annual Report and the Certification, the Disclosure Dissemination Agent shall provide an Annual Report to the MSRB not later than the 25th day of February following the end of each fiscal year of the Issuer, commencing with the fiscal year ending June 30, 2025. Such date and each anniversary thereof is the Annual Filing Date. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 3 of this Disclosure Agreement.
(b) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination Agent has not received a copy of the Annual Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail) to remind the Issuer of its undertaking to provide the Annual Report pursuant to Section 2(a). Upon such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination Agent with an electronic copy of the Annual Report and the Certification no later than two (2) business days prior to the Annual Filing Date, or (ii) instruct the Disclosure Dissemination Agent in writing that the Issuer will not be able to file the Annual Report within the time required under this Disclosure Agreement, state the date by which the Annual Report for such year will be provided and instruct the Disclosure Dissemination Agent to immediately send a Failure to File Event notice to the MSRB in substantially the form attached as Exhibit B, which may be accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.
(c) If the Disclosure Dissemination Agent has not received an Annual Report and Certification by 6:00 p.m. Eastern time on Annual Filing Date (or, if such Annual Filing Date falls on a Saturday, Sunday or holiday, then the first business day thereafter) for the Annual Report, a Failure to File Event shall have occurred and the Issuer irrevocably directs the Disclosure Dissemination Agent to immediately send a Failure to File Event notice to the MSRB in substantially the form attached as Exhibit B without reference to the anticipated filing date for the Annual Report, which may be accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.
(d) If Audited Financial Statements of the Issuer are prepared but not available prior to the Annual Filing Date, the Issuer shall, when the Audited Financial Statements are available, provide at such time an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certification, together with a copy for the Trustee, if any, for filing with the MSRB.
(e) The Disclosure Dissemination Agent shall:
(i) verify the filing specifications of the MSRB each year prior to the Annual Filing Date; (ii) upon receipt, promptly file each Annual Report received under Sections 2(a) and 2(b) hereof with the MSRB;
(iii) upon receipt, promptly file each Audited Financial Statement received under Section 2(d) hereof with the MSRB;
(iv) upon receipt, promptly file the text of each Notice Event received under Sections 4(a) and 4(b)(ii) hereof with the MSRB, identifying the Notice Event as instructed by the Issuer pursuant to Section 4(a) or 4(b)(ii) hereof (being any of the categories set forth below) when filing pursuant to Section 4(c) of this Disclosure Agreement:
1. “Principal and interest payment delinquencies;”
2. “Non-Payment related defaults, if material;”
#22..
- 933 -
299002620.3 4
3. “Unscheduled draws on debt service reserves reflecting financial difficulties;”
4. “Unscheduled draws on credit enhancements reflecting financial difficulties;”
5. “Substitution of credit or liquidity providers, or their failure to perform;”
6. “Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;”
7. “Modifications to rights of holders of the Bonds, if material;”
8. “Bond calls, if material, and tender offers;”
9. “Defeasances;”
10. “Release, substitution, or sale of property securing repayment of the securities, if material;”
11. “Rating changes;”
12. “Bankruptcy, insolvency, receivership or similar event of the obligated person;”1
13. “The consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;”
14. “Appointment of a successor or additional trustee, or the change of name of a trustee, if material;”
15. “Incurrence of a Financial Obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect security holders, if material; and
16. “Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties.”
(v) upon receipt (or irrevocable direction pursuant to Section 2(c) of this Disclosure Agreement, as applicable), promptly file a completed copy of Exhibit B to this Disclosure Agreement with the MSRB, identifying the filing as “Failure to provide annual financial information as required” when filing pursuant to Section 2(b)(ii) or Section 2(c) of this Disclosure Agreement;
1 This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an Obligated Person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Obligated Person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Obligated Person.
#22..
- 934 -
299002620.3 5
(vi) upon receipt, promptly file the text of each Voluntary Event Disclosure received under Section 7(a) hereof with the MSRB, identifying the Voluntary Event Disclosure as instructed by the Issuer pursuant to Section 7(a) (being any of the categories set forth below) when filing pursuant to Section 7(a) of this Disclosure Agreement:
1. “amendment to continuing disclosure undertaking;”
2. “change in obligated person;”
3. “notice to investors pursuant to bond documents;”
4. “certain communications from the Internal Revenue Service; other than those communications included in the Rule;”
5. “secondary market purchases;”
6. “bid for auction rate or other securities;”
7. “capital or other financing plan;”
8. “litigation/enforcement action;”
9. “change of tender agent, remarketing agent, or other on-going party;”
10. “other event-based disclosures;”
(vii) upon receipt, promptly file the text of each Voluntary Financial Disclosure received under Section 7(b) hereof with the MSRB, identifying the Voluntary Financial Disclosure as instructed by the Issuer pursuant to Section 7(b) (being any of the categories set forth below) when filing pursuant to Section 7(b) of this Disclosure Agreement:
1. “quarterly/monthly financial information;”
2. “change in fiscal year/timing of annual disclosure;”
3. “change in accounting standard;”
4. “interim/additional financial information/operating data;”
5. “budget;”
6. “investment/debt/financial policy;”
7. “information provided to rating agency, credit/liquidity provider or other third party;”
8. “consultant reports;” and
9. “other financial/operating data.”
(viii) provide the Issuer evidence of the filings of each of the above when made, which shall be by means of the DAC system, for so long as DAC is the Disclosure Dissemination Agent under this Disclosure Agreement.
#22..
- 935 -
299002620.3 6
(f) The Issuer may adjust the Annual Filing Date upon change of its fiscal year by providing written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent, Trustee (if any) and the MSRB, provided that the period between the existing Annual Filing Date and new Annual Filing Date shall not exceed one year.
(g) Anything in this Disclosure Agreement to the contrary notwithstanding, any Information received by the Disclosure Dissemination Agent before 6:00 p.m. Eastern time on any business day that it is required to file with the MSRB pursuant to the terms of this Disclosure Agreement and that is accompanied by a Certification and all other information required by the terms of this Disclosure Agreement will be filed by the Disclosure Dissemination Agent with the MSRB no later than 11:59 p.m. Eastern time on the same business day; provided, however, the Disclosure Dissemination Agent shall have no liability for any delay in filing with the MSRB if such delay is caused by a Force Majeure Event provided that the Disclosure Dissemination Agent uses reasonable efforts to make any such filing as soon as possible.
SECTION 3. Content of Annual Reports.
(a) Each Annual Report shall contain Annual Financial Information with respect to the Issuer, including the information provided in the Official Statement with respect to the City in the most recent Fiscal Year in Tables 3-7, Tables 10-17 and Table 18; provided that, with respect to Tables 13 and 17, the City will provide such information on an “as available” basis.
(b) Audited Financial Statements as described in the Official Statement will be included in the Annual Report. If audited financial statements are not available, then unaudited financial statements, prepared in accordance with Generally Accepted Accounting Principles as described in the Official Statement will be included in the Annual Report. In such event, Audited Financial Statements (if any) will be provided pursuant to Section 2(d).
Any or all of the items listed above may be included by specific reference from other documents, including official statements of debt issues with respect to which the Issuer is an “obligated person” (as defined by the Rule), which have been previously filed with the Securities and Exchange Commission or available on the MSRB Internet Website. If the document incorporated by reference is a final official statement, it must be available from the MSRB.
The Issuer will clearly identify each such document so incorporated by reference.
If the Annual Financial Information contains modified operating data or financial information different from the Annual Financial Information agreed to in the continuing disclosure undertaking related to the Bonds, the Issuer is required to explain, in narrative form, the reasons for the modification and the impact of the change in the type of operating data or financial information being provided.
SECTION 4. Reporting of Notice Events.
(a) The occurrence of any of the following events with respect to the Bonds constitutes a Notice Event:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults, if material;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;
#22..
- 936 -
299002620.3 7
7. Modifications to rights of Bond holders, if material;
8. Bond calls, if material, and tender offers;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds, if material;
11. Rating changes;
12. Bankruptcy, insolvency, receivership or similar event of the Obligated Person; Note to subsection (a)(12) of this Section 4: For the purposes of the event described in subsection (a)(12) of this Section 4, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an Obligated Person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Obligated Person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Obligated Person.
13. The consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;
14. Appointment of a successor or additional trustee or the change of name of a trustee, if material; and
15. Incurrence of a Financial Obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect security holders, if material; and
16. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties.
The Issuer shall, in a timely manner not later than nine (9) business days after its occurrence, notify the Disclosure Dissemination Agent in writing of the occurrence of a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection (c) and shall be accompanied by a Certification. Such notice or Certification shall identify the Notice Event that has occurred (which shall be any of the categories set forth in Section 2(e)(iv) of this Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event). (b) The Disclosure Dissemination Agent is under no obligation to notify the Issuer or the Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will within two business days of receipt of such notice (but in any event not later than the tenth business day after the occurrence of the Notice Event, if the Issuer determines that a Notice Event has occurred), instruct the Disclosure Dissemination Agent that either (i) a Notice #22..
- 937 -
299002620.3 8
Event has not occurred and no filing is to be made or (ii) a Notice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuant to subsection (c) of this Section 4, together with a Certification. Such Certification shall identify the Notice Event that has occurred (which shall be any of the categories set forth in Section 2(e)(iv) of this Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event). (c) If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in subsection (a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure Dissemination Agent shall promptly file a notice of such occurrence with MSRB in accordance with Section 2 (e)(iv) hereof. This notice may be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.
SECTION 5. CUSIP Numbers. The Issuer will provide the Dissemination Agent with the CUSIP numbers for (i) new bonds at such time as they are issued or become subject to the Rule and (ii) any Bonds to which new CUSIP numbers are assigned in substitution for the CUSIP numbers previously assigned to such Bonds.
SECTION 6. Additional Disclosure Obligations. The Issuer acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, and that the duties and responsibilities of the Disclosure Dissemination Agent under this Disclosure Agreement do not extend to providing legal advice regarding such laws.
The Issuer acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to execution of the mechanical tasks of disseminating information as described in this Disclosure Agreement.
SECTION 7. Voluntary Filing.
(a) The Issuer may instruct the Disclosure Dissemination Agent to file a Voluntary Event Disclosure with the MSRB from time to time pursuant to a Certification of the Disclosure Representative. Such Certification shall identify the Voluntary Event Disclosure (which shall be any of the categories set forth in Section 2(e)(vi) of this Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information. If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in this Section 7(a) to file a Voluntary Event Disclosure, the Disclosure Dissemination Agent shall promptly file such Voluntary Event Disclosure with the MSRB in accordance with Section 2(e)(vi) hereof. This notice may be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-2. (b) The Issuer may instruct the Disclosure Dissemination Agent to file a Voluntary Financial Disclosure with the MSRB from time to time pursuant to a Certification of the Disclosure Representative. Such Certification shall identify the Voluntary Financial Disclosure (which shall be any of the categories set forth in Section 2(e)(vii) of this Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information. If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in this Section 7(b) hereof to file a Voluntary Financial Disclosure, the Disclosure Dissemination Agent shall promptly file such Voluntary Financial Disclosure with the MSRB in accordance with Section 2(e)(vii) hereof. This notice may be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-3. (c) The parties hereto acknowledge that the Issuer is not obligated pursuant to the terms of this Disclosure Agreement to file any Voluntary Event Disclosure pursuant to Section 7(a) hereof or any Voluntary Financial Disclosure pursuant to Section 7(b) hereof.
(d) Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information through the Disclosure Dissemination Agent using the means of dissemination set forth in this Disclosure Agreement or including any other information in any Annual Report, Audited Financial Statements, Notice #22..
- 938 -
299002620.3 9
Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure, in addition to that required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure.
SECTION 8. Termination of Reporting Obligation. The obligations of the Issuer and the Disclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to the Bonds upon the legal defeasance, prior redemption or payment in full of all of the Bonds, when the Issuer is no longer an obligated person with respect to the Bonds, or upon delivery by the Disclosure Representative to the Disclosure Dissemination Agent of an opinion of counsel expert in federal securities laws to the effect that continuing disclosure is no longer required.
SECTION 9. Disclosure Dissemination Agent. The Issuer has appointed Digital Assurance Certification, L.L.C. as exclusive Disclosure Dissemination Agent under this Disclosure Agreement. The Issuer may, upon thirty days written notice to the Disclosure Dissemination Agent and the Trustee, replace or appoint a successor Disclosure Dissemination Agent. Upon termination of DAC’s services as Disclosure Dissemination Agent, whether by notice of the Issuer or DAC, the Issuer agrees to appoint a successor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities of Disclosure Dissemination Agent under this Disclosure Agreement for the benefit of the Holders of the Bonds. Notwithstanding any replacement or appointment of a successor, the Issuer shall remain liable to the Disclosure Dissemination Agent until payment in full for any and all sums owed and payable to the Disclosure Dissemination Agent. The Disclosure Dissemination Agent may resign at any time by providing thirty days’ prior written notice to the Issuer.
SECTION 10. Remedies in Event of Default. In the event of a failure of the Issuer or the Disclosure Dissemination Agent to comply with any provision of this Disclosure Agreement, the Holders’ rights to enforce the provisions of this Agreement shall be limited solely to a right, by action in mandamus or for specific performance, to compel performance of the parties’ obligation under this Disclosure Agreement. Any failure by a party to perform in accordance with this Disclosure Agreement shall not constitute a default on the Bonds or under any other document relating to the Bonds, and all rights and remedies shall be limited to those expressly stated herein.
SECTION 11. Duties, Immunities and Liabilities of Disclosure Dissemination Agent. (a) The Disclosure Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Disclosure Dissemination Agent’s obligation to deliver the information at the times and with the contents described herein shall be limited to the extent the Issuer has provided such information to the Disclosure Dissemination Agent as required by this Disclosure Agreement. The Disclosure Dissemination Agent shall have no duty with respect to the content of any disclosures or notice made pursuant to the terms hereof. The Disclosure Dissemination Agent shall have no duty or obligation to review or verify any Information or any other information, disclosures or notices provided to it by the Issuer and shall not be deemed to be acting in any fiduciary capacity for the Issuer, the Holders of the Bonds or any other party. The Disclosure Dissemination Agent shall have no responsibility for the Issuer’s failure to report to the Disclosure Dissemination Agent a Notice Event or a duty to determine the materiality thereof. The Disclosure Dissemination Agent shall have no duty to determine, or liability for failing to determine, whether the Issuer has complied with this Disclosure Agreement. The Disclosure Dissemination Agent may conclusively rely upon Certifications of the Issuer at all times.
The obligations of the Issuer under this Section shall survive resignation or removal of the Disclosure Dissemination Agent and defeasance, redemption or payment of the Bonds. (b) The Disclosure Dissemination Agent may, from time to time, consult with legal counsel (either inhouse or external) of its own choosing in the event of any disagreement or controversy, or question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder, and shall not incur any liability and shall be fully protected in acting in good faith upon the advice of such legal counsel. The reasonable fees and expenses of such counsel shall be payable by the Issuer.
#22..
- 939 -
299002620.3 10
(c) All documents, reports, notices, statements, information and other materials provided to the MSRB under this Disclosure Agreement shall be provided in an electronic format and accompanied by identifying information as prescribed by the MSRB.
SECTION 12. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Issuer and the Disclosure Dissemination Agent may amend this Disclosure Agreement and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to both the Issuer and the Disclosure Dissemination Agent to the effect that such amendment or waiver does not materially impair the interests of Holders of the Bonds and would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule; provided neither the Issuer or the Disclosure Dissemination Agent shall be obligated to agree to any amendment modifying their respective duties or obligations without their consent thereto.
Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the right to adopt amendments to this Disclosure Agreement necessary to comply with modifications to and interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission from time to time by giving not less than 20 days written notice of the intent to do so together with a copy of the proposed amendment to the Issuer. No such amendment shall become effective if the Issuer shall, within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination Agent in writing that it objects to such amendment.
SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Trustee, if any, for the Bonds, the Disclosure Dissemination Agent, the underwriters, and the Holders from time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 14. Governing Law. This Disclosure Agreement shall be governed by the laws of the State of Florida (other than with respect to conflicts of laws).
SECTION 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 940 -
S-1
The Disclosure Dissemination Agent and the Issuer have caused this Continuing Disclosure Agreement to be executed, on the date first written above, by their respective officers duly authorized.
DIGITAL ASSURANCE CERTIFICATION, L.L.C., as
Disclosure Dissemination Agent
By:_______________________________________
Name:____________________________________
Title:_____________________________________
CITY OF MODESTO, CALIFORNIA
as Issuer
By:_______________________________________
Name:____________________________________
Title:_____________________________________
#22..
- 941 -
299002620.3 12
EXHIBIT A
NAME AND CUSIP NUMBERS OF BONDS
Name of Issuer City of Modesto, California
Obligated Person(s) City of Modesto, California
Name of Bond Issue: Wastewater Revenue Bonds, Series 2025 Date of Issuance: [_____], 2025
Date of Official Statement [_____], 2025
CUSIP Number: [___]
CUSIP Number: [___]
CUSIP Number: [___]
CUSIP Number: [___]
CUSIP Number: [___]
CUSIP Number: [___]
CUSIP Number: [___]
CUSIP Number: [___]
CUSIP Number: [___]
CUSIP Number: [___]
CUSIP Number: [___]
CUSIP Number: [___]
#22..
- 942 -
299002620.3 13
EXHIBIT B
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Issuer: City of Modesto, California
Obligated Person: City of Modesto, California
Name(s) of Bond Issue(s): Wastewater Revenue Bonds, Series 2025 Date(s) of Issuance: [_____], 2025
Date(s) of Disclosure [_____], 2025
Agreement:
CUSIP Number:
NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect to the above-named Bonds as required by the Disclosure Agreement between the Issuer and Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent. [The Issuer has notified the Disclosure Dissemination Agent that it anticipates that the Annual Report will be filed by ______________].
Dated: _____________________________
Digital Assurance Certification, L.L.C., as Disclosure
Dissemination Agent, on behalf of the Issuer
__________________________________________
cc: Director Finance of the City of Modesto
#22..
- 943 -
299002620.3 14
EXHIBIT C-1
EVENT NOTICE COVER SHEET
This cover sheet and accompanying “event notice” will be sent to the MSRB, pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(C) and (D).
Issuer’s and/or Other Obligated Person’s Name:
City of Modesto, California
Issuer’s Six-Digit CUSIP Number:
_____________________________________________________________________________________________ _____________________________________________________________________________________________ or Nine-Digit CUSIP Number(s) of the bonds to which this event notice relates:
_____________________________________________________________________________________________ Number of pages attached: _____
____ Description of Notice Events (Check One):
1. “Principal and interest payment delinquencies;”
2. “Non-Payment related defaults, if material;”
3. “Unscheduled draws on debt service reserves reflecting financial difficulties;”
4. “Unscheduled draws on credit enhancements reflecting financial difficulties;”
5. “Substitution of credit or liquidity providers, or their failure to perform;”
6. “Adverse tax opinions, IRS notices or events affecting the tax status of the security;”
7. “Modifications to rights of securities holders, if material;”
8. “Bond calls, if material;” Tender offers;
9. “Defeasances;”
10. “Release, substitution, or sale of property securing repayment of the securities, if material;”
11. “Rating changes;”
12. “Bankruptcy, insolvency, receivership or similar event of the obligated person;”
13. “Merger, consolidation, or acquisition of the obligated person, if material;”
14. “Appointment of a successor or additional trustee, or the change of name of a trustee, if material;”
15. “Incurrence of a Financial Obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect security holders, if material;” and
16. “Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties.” ____ Failure to provide annual financial information as required.
I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly:
Signature:
_____________________________________________________________________________________________ Name: _____________________________________Title:______________________________________________ Digital Assurance Certification, L.L.C.
315 E. Robinson Street
Suite 300
Orlando, FL 32801
407-515-1100
Date: ________________
#22..
- 944 -
299002620.3 15
EXHIBIT C-2
VOLUNTARY EVENT DISCLOSURE COVER SHEET
This cover sheet and accompanying “voluntary event disclosure” will be sent to the MSRB, pursuant to the Disclosure Dissemination Agent Agreement dated as of [_____], 2025 between the Issuer and DAC.
Issuer’s and/or Other Obligated Person’s Name:
City of Modesto, California
Issuer’s Six-Digit CUSIP Number:
_____________________________________________________________________________________________ _____________________________________________________________________________________________ or Nine-Digit CUSIP Number(s) of the bonds to which this notice relates:
_____________________________________________________________________________________________ Number of pages attached: _____
____ Description of Voluntary Event Disclosure (Check One):
1. “amendment to continuing disclosure undertaking;”
2. “change in obligated person;”
3. “notice to investors pursuant to bond documents;”
4. “certain communications from the Internal Revenue Service;”
5. “secondary market purchases;”
6. “bid for auction rate or other securities;”
7. “capital or other financing plan;”
8. “litigation/enforcement action;”
9. “change of tender agent, remarketing agent, or other on-going party;” and
10. “other event-based disclosures.”
I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly:
Signature:
_____________________________________________________________________________________________ Name: _____________________________________Title: _____________________________________________ Digital Assurance Certification, L.L.C.
315 E. Robinson Street
Suite 300
Orlando, FL 32801
407-515-1100
Date: ________________________
#22..
- 945 -
299002620.3 1
EXHIBIT C-3
VOLUNTARY FINANCIAL DISCLOSURE COVER SHEET
This cover sheet and accompanying “voluntary financial disclosure” will be sent to the MSRB, pursuant to the Disclosure Dissemination Agent Agreement dated as of [_____], 2025, between the Issuer and DAC.
Issuer’s and/or Other Obligated Person’s Name:
City of Modesto, California
Issuer’s Six-Digit CUSIP Number:
_____________________________________________________________________________________________ _____________________________________________________________________________________________ or Nine-Digit CUSIP Number(s) of the bonds to which this notice relates:
_____________________________________________________________________________________________ Number of pages attached: _____
____ Description of Voluntary Financial Disclosure (Check One):
1. “quarterly/monthly financial information;”
2. “change in fiscal year/timing of annual disclosure;”
3. “change in accounting standard;”
4. “interim/additional financial information/operating data;”
5. “budget;”
6. “investment/debt/financial policy;”
7. “information provided to rating agency, credit/liquidity provider or other third party;”
8. “consultant reports;” and
9. “other financial/operating data.”
I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly:
Signature:
_____________________________________________________________________________________________ Name: _____________________________________Title: _____________________________________________ Digital Assurance Certification, L.L.C.
315 E. Robinson Street
Suite 300
Orlando, FL 32801
407-515-1100
Date: _______________________________
#22..
- 946 -
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Norton Rose Fulbright US LLP draft of 9/17/25
PRELIMINARY OFFICIAL STATEMENT DATED [___], 2025
298712901.7
NEW ISSUE – BOOK-ENTRY ONLY RATING: S&P “[__]”
See “RATINGS” herein
In the opinion of Norton Rose Fulbright US LLP, San Francisco, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming compliance with certain covenants in the documents pertaining to the Series 2025 Bonds and requirements of the Internal Revenue Code of 1986, as amended, as described herein, interest on the Series 2025 Bonds is not included in the gross income of the owners thereof for federal income tax purposes. In the further opinion of Bond Counsel, interest on the Series 2025 Bonds is not treated as an item of tax preference for purposes of the federal alternative minimum tax on individuals. Bond Counsel is also of the opinion that, under existing law, interest on the Series 2025 Bonds is exempt from personal income taxes of the State of California. See “TAX MATTERS” herein. $[PAR AMOUNT]*
CITY OF MODESTO, CALIFORNIA
WASTEWATER REVENUE BONDS,
SERIES 2025
Dated: Date of Delivery Due: November 1, as shown on the inside front cover hereof The Wastewater Revenue Bonds, Series 2025 (the “Series 2025 Bonds”) are being issued by the City of Modesto (the “City”) to provide funds to (i) finance the costs of the planning, design, acquisition, construction and improvement of the City’s wastewater treatment and conveyance facilities and (ii) pay the costs of issuance of the Series 2025 Bonds, as more fully described herein. The Series 2025 Bonds are being issued pursuant to Chapter 6 of Title VIII of the Modesto Municipal Code and a Wastewater Revenue Bond Indenture, dated as of April 1, 2005, as supplemented and amended, by and between the City and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the “Trustee”), including as supplemented by a Sixth Supplemental Wastewater Revenue Bond Indenture, dated as of [____] 1, 2025, by and between the City and the Trustee.
Interest on the Series 2025 Bonds is payable on May 1 and November 1 of each year, commencing on May 1, 2026. Principal of the Series 2025 Bonds is payable on the dates set forth on the inside front cover hereof.
The Series 2025 Bonds are being issued in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository of the Series 2025 Bonds. Individual purchases of interests in the Series 2025 Bonds will be made in book-entry form only, in the principal amount of $5,000 or any integral multiple thereof.
Purchasers of such interests will not receive certificates representing their interests in the Series 2025 Bonds. Principal of, redemption premium, if any, and interest on the Series 2025 Bonds are payable directly by the Trustee to DTC, which is obligated in turn to remit such principal, redemption premium, if any, and interest to DTC Participants for subsequent disbursement to the Beneficial Owners of the Series 2025 Bonds, as described herein.
The Series 2025 Bonds are subject to optional redemption, mandatory sinking fund redemption and special mandatory redemption prior to their respective maturities as described herein.
The Series 2025 Bonds will not be secured by a reserve fund.
THE SERIES 2025 BONDS AND THE INTEREST THEREON ARE PAYABLE SOLELY FROM THE NET REVENUES DERIVED BY THE CITY FROM THE OPERATION OF THE CITY’S WASTEWATER ENTERPRISE (THE “ENTERPRISE”). THE PRINCIPAL OF AND INTEREST ON THE SERIES 2025 BONDS, AND ANY PREMIUMS UPON THE REDEMPTION OF ANY THEREOF, ARE NOT A
DEBT OF THE CITY, OR A LEGAL OR EQUITABLE PLEDGE, CHARGE, LIEN OR ENCUMBRANCE UPON ANY PROPERTY OF THE
CITY OR UPON ANY OF ITS INCOME, RECEIPTS OR REVENUES EXCEPT THE NET REVENUES AND OTHER FUNDS PLEDGED TO THE PAYMENT THEREOF AS PROVIDED IN THE INDENTURE.
This cover page contains certain information for general reference only. It is not intended to be a summary of the security for or the terms of the Series 2025 Bonds. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used on this cover page not otherwise defined shall have the meanings set forth herein.
Maturity Schedule
(See inside cover)
The Series 2025 Bonds will be offered when, as and if issued and received by the Underwriter, subject to the approval of validity by Norton Rose Fulbright US LLP, San Francisco, California, Bond. Counsel. Certain legal matters will be passed upon for the Underwriter by Orrick, Herrington & Sutcliffe LLP; for the City by the City Attorney and by Norton Rose Fulbright US LLP, Disclosure Counsel. It is anticipated that the Series 2025 Bonds will be available for delivery through the DTC book-entry system by Fast Automated Securities Transfer (FAST) on or about _______, 2025.
Siebert Williams Shank & Co., LLC
Dated: __________, 2025
*
Preliminary, subject to change.
#22..
- 947 -
298712901.7
MATURITY SCHEDULE
$[PAR AMOUNT]*
CITY OF MODESTO, CALIFORNIA
WASTEWATER REVENUE BONDS,
SERIES 2025
$________ Serial Bonds
Maturity Date
(November 1) Principal Amount Interest Rate Yield
CUSIP†
(Base Number
_____)
$ % %
$_________ ____% Series 2025 Term Bond maturing November 1, 20__ Yield ____% Price _____ CUSIP† _____ $_________ ____% Series 2025 Term Bond maturing November 1, 20__ Yield ____% Price _____ CUSIP† _____ * Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein are provided by CUSIP Global Services, managed by FactSet Research Systems Inc. on behalf of the American Bankers Association. CUSIP numbers have been assigned by an independent company not affiliated with the City and are included solely for the convenience of the holders of the Series 2025 Bonds. The City is not responsible for the selection or use of these CUSIP numbers and no representation is made as to their correctness on the Series 2025 Bonds or as indicated above. The CUSIP number for a specific bond is subject to being changed after the issuance of the bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of such bonds. #22..
- 948 -
298712901.7
CITY OF MODESTO, CALIFORNIA
1010 10th Street
P.O. Box 642
Modesto, California 95353
CITY COUNCIL
Sue Zwahlen, Mayor
Nick Bavaro, Vice Mayor
Rosa Escutia-Braaton
Eric E. Alvarez
Chris Ricci
Jeremiah Williams
David Wright
CITY OFFICIALS
Joseph Lopez, City Manager
Jose M. Sanchez, City Attorney
DeAnna Christensen, Director of Finance
William Wong, Director of Utilities
__________
SPECIAL SERVICES
Bond and Disclosure Counsel
Norton Rose Fulbright US LLP
San Francisco, California
Trustee
The Bank of New York Mellon Trust Company, N.A.
San Francisco, California
Municipal Advisor
PFM Financial Advisors LLC
San Francisco, California
#22..
- 949 -
298712901.7
All the information which the City of Modesto intends to present investors regarding the City and the Series 2025 Bonds is contained in this Official Statement. While the City maintains an internet website for various purposes, none of the information on that website is intended to assist investors in making any investment decision, or to provide any continuing information, with respect to the Series 2025 Bonds or any other obligations of the City.
Moreover, none of the information on the website is incorporated herein by reference. No dealer, broker, salesperson or other person has been authorized by the City or the Underwriter to give any information or to make any representations other than those contained in this Official Statement in connection with the offering made hereby and, if given or made, such other information or representations must not be relied upon as having been authorized by the City or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Series 2025 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the Series 2025 Bonds.
The information set forth herein has been obtained from sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness. The information and expression of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. All summaries of documents contained herein are made subject to the provisions of such documents and do not purport to be complete statements of any or all such provisions. ___________________________________
The Underwriter has provided the following sentence for inclusion in this Official Statement:
The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. ___________________________________
The issuance and sale of the Series 2025 Bonds have not been registered under the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, in reliance upon exemptions provided thereunder by Sections 3(a)2 and 3(a)12, respectively, for the issuance and sale of municipal securities. ___________________________________
CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS IN
THIS OFFICIAL STATEMENT
Certain statements included in this Official Statement constitute “Forward- Looking Statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used, such as “plan,” “expect,” “estimate,” “budget” and other similar words and include, but are not limited to, statements that describe possible future connections to and revenues and expenses of the Enterprise.
The achievement of certain results or other expectations contained in such forward-looking statements involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts. While the City has agreed to provide certain on-going financial and operating data (see “CONTINUING DISCLOSURE” and Appendix E hereto), it does not plan to issue any updates or revisions to those forward-looking statements if or when its expectations or events, conditions or circumstances on which statements are based change. ___________________________________
#22..
- 950 -
TABLE OF CONTENTS
Page
298712901.7 i
INTRODUCTION ..........................................................................................................................................................1 Purpose .............................................................................................................................................................1 Authority for Issuance ......................................................................................................................................1 The City ............................................................................................................................................................1 The Wastewater Enterprise...............................................................................................................................1 Security and Sources of Payment for the Series 2025 Bonds...........................................................................2 Parity Debt........................................................................................................................................................2 Rate Covenant...................................................................................................................................................2 Continuing Disclosure ......................................................................................................................................3 Other Matters....................................................................................................................................................3 ESTIMATED SOURCES AND USES OF FUNDS ......................................................................................................3 THE SERIES 2025 BONDS ...........................................................................................................................................3 General Description..........................................................................................................................................3 Redemption.......................................................................................................................................................4 Selection of Series 2025 Bonds for Redemption..............................................................................................4 Notice of Redemption.......................................................................................................................................4 Effect of Redemption........................................................................................................................................5 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2025 BONDS.......................................................5 Net Revenue Pledge; Parity Debt .....................................................................................................................5 No Reserve Fund ..............................................................................................................................................6 Flow of Funds...................................................................................................................................................6 Rate Covenant...................................................................................................................................................7 Additional Bonds and Parity Debt....................................................................................................................7 Outstanding Parity Debt ...................................................................................................................................8 Debt Service Requirements ............................................................................................................................10 WASTEWATER SYSTEM..........................................................................................................................................12 Introduction.....................................................................................................................................................12 Service Area....................................................................................................................................................12 System Description.........................................................................................................................................12 Permits ............................................................................................................................................................14 Master Plan, Capital Improvement Plan and Future Capital Needs ...............................................................15 Management ...................................................................................................................................................18 Employees.......................................................................................................................................................18 Wastewater System Users...............................................................................................................................19 PCE Litigation ................................................................................................................................................20 WASTEWATER SYSTEM FINANCES .....................................................................................................................20 Rate Setting and Budget Process ....................................................................................................................20 Proposition 218 Process..................................................................................................................................21 Rates ...............................................................................................................................................................21 Financial Information .....................................................................................................................................23 Retirement Programs ......................................................................................................................................24 Insurance.........................................................................................................................................................30 Historical Debt Service Coverage ..................................................................................................................30 Projected Debt Service Coverage ...................................................................................................................32 RISK FACTORS...........................................................................................................................................................34 General............................................................................................................................................................34 Earthquakes, Floods and Other Natural Disasters ..........................................................................................34 #22..
- 951 -
TABLE OF CONTENTS
(continued)
Page
298712901.7 ii
System Demand/Concentrated Customers .....................................................................................................35 System Expenses ............................................................................................................................................35 Rate Process....................................................................................................................................................35 Permits and Regulation...................................................................................................................................36 Statutory and Regulatory Compliance............................................................................................................36 Limitations on Remedies and Bankruptcy......................................................................................................36 Cybersecurity..................................................................................................................................................37 Limited Obligations........................................................................................................................................37 Public Health Emergencies.............................................................................................................................38 Loss of Tax-Exemption ..................................................................................................................................38 Federal Policy Risks Generally ......................................................................................................................38
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND WASTEWATER RATES AND CHARGES.......................................................................................................................................................38 Tax Limitations – Proposition 13 ...................................................................................................................38 Spending Limitations......................................................................................................................................39 Proposition 218...............................................................................................................................................39 Proposition 26.................................................................................................................................................41 Other Initiatives ..............................................................................................................................................42 TAX MATTERS...........................................................................................................................................................42 ABSENCE OF LITIGATION ......................................................................................................................................44 FINANCIAL STATEMENTS ......................................................................................................................................44 RATINGS .....................................................................................................................................................................44 UNDERWRITING........................................................................................................................................................45 MUNICIPAL ADVISOR..............................................................................................................................................45 LEGAL PROCEEDINGS .............................................................................................................................................45 CONTINUING DISCLOSURE....................................................................................................................................45 MISCELLANEOUS .....................................................................................................................................................46 APPENDIX A – CERTAIN INFORMATION REGARDING THE CITY OF MODESTO................................A-1 APPENDIX B – CITY OF MODESTO COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR 2023-24.........................................................................................................B-1 APPENDIX C – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE........................................C-1 APPENDIX D – PROPOSED FORM OF OPINION OF BOND COUNSEL......................................................D-1 APPENDIX E – FORM OF CONTINUING DISCLOSURE AGREEMENT......................................................E-1 APPENDIX F – BOOK-ENTRY ONLY SYSTEM..............................................................................................F-1 #22..
- 952 -
298712901.7
$[PAR AMOUNT]*
CITY OF MODESTO, CALIFORNIA
WASTEWATER REVENUE BONDS,
SERIES 2025
INTRODUCTION
This Introduction is qualified in its entirety by reference to the more detailed information included and referred to elsewhere in this Official Statement. The offering of the Series 2025 Bonds to potential investors is made only by means of the entire Official Statement. Terms used in this Introduction and not otherwise defined shall have the respective meanings assigned to them elsewhere in this Official Statement. See Appendix C – “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE—Definitions.”
Purpose
The purpose of this Official Statement, which includes the cover page and appendices hereto, is to set forth certain information concerning the offering by the City of Modesto (the “City”) of its $[PAR AMOUNT]* Wastewater Revenue Bonds, Series 2025 (the “Series 2025 Bonds”). Descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each such document for complete details of all terms and conditions thereof.
The Series 2025 Bonds are being issued by the City to provide funds to (i) finance the costs of the planning, design, acquisition, construction and improvement of the City’s wastewater treatment and conveyance facilities and (ii) pay the costs of issuance of the Series 2025 Bonds, as more fully described herein. See “ESTIMATED SOURCES AND USES OF FUNDS.” The facilities to be funded in whole or in part from the proceeds of the Series 2025 Bonds are expected to include: (i) the River Trunk Pump Station and (ii) approximately 2,500 feet of 48-inch gravity pipeline.
Authority for Issuance
The Series 2025 Bonds are being issued pursuant to (a) the City of Modesto Wastewater Treatment Facilities Revenue Bond Law, constituting Chapter 6 of Title VIII of the Modesto Municipal Code (as amended, the “Bond Law”), pursuant to its authority under the Charter of the City of Modesto, and the Constitution and laws of the State of California and (b) a Wastewater Revenue Bond Indenture, dated as of April 1, 2005, by and between the City and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the “Trustee”), as amended and supplemented, including as supplemented by a Sixth Supplemental Wastewater Revenue Bond Indenture, dated as of [____] 1, 2025 (as amended and supplemented, the “Indenture”), by and between the City and the Trustee, providing for the issuance of the Series 2025 Bonds.
The City
The City, which has a population of approximately 219,765 as of January 1, 2025, is the county seat of Stanislaus County and was incorporated in 1884. It covers approximately 37.4 square miles. The City operates under a council-manager form of government pursuant to a charter adopted in 1963. The City is located in central California, approximately 93 miles east of the City and County of San Francisco. See Appendix A – “CERTAIN INFORMATION REGARDING THE CITY OF MODESTO.”
The Wastewater Enterprise
The City’s wastewater facilities are comprised of the wastewater collection system and the treatment and disposal facilities located at its water quality control facilities. The City’s wastewater collection and treatment system * Preliminary, subject to change.
#22..
- 953 -
298712901.7 2
(the “Enterprise”) services the entire City and additionally accepts some sewage flow from parts of the City of Ceres and some unincorporated communities in the County of Stanislaus, including the unincorporated community of Empire. The service outside the City is described in various individual contracts with the individual agencies. The current population of the area served by the Enterprise is approximately 236,000, but the City’s wastewater master plan estimates that it could grow to approximately 270,900 by 2035.
Security and Sources of Payment for the Series 2025 Bonds The payment of the principal of, redemption premium, if any, and interest on the Series 2025 Bonds is secured equally and ratably, along with the payment of any additional Bonds and “Parity Debt” (defined in the Indenture as any indebtedness, installment sale obligation, lease obligation or other obligation of the City for borrowed money having an equal lien and charge upon the Net Revenues, therefore payable on a parity with the Bonds (whether or not any Bonds are Outstanding) issued under the Indenture, by a first lien on and pledge of the “Net Revenues” (defined under the Indenture to mean, with respect to any period, the amount of the Gross Revenues received during such period less the amount of Operating Expenses becoming payable during such period) derived from the operation of the facilities comprising the Enterprise and the moneys and securities held by the Trustee in the funds under the Indenture. Moneys held by the Trustee under the Indenture secure the Bonds and any Parity Debt. Following the issuance of the Series 2025 Bonds, the City’s other outstanding Parity Debt (the “Existing Parity Debt”) will consist of: (i) a revolving fund loan from the State of California, issued in 2016 (the “2016 State Loan”), in the current outstanding principal amount of $23,619,235.66 , (ii) the City of Modesto, California Wastewater Revenue Refunding Bonds, Series 2018A in the current outstanding principal amount of $10,630,000 (the “Series 2018A Bonds”), (iii) the City of Modesto, California, Wastewater Revenue Refunding Bonds, Series 2020A (Federally Taxable) (the “Series 2020A Bonds”), in the current outstanding principal amount of $41,585,000 , and (iv) the City of Modesto, California, Wastewater Revenue Refunding Bonds, Series 2020B (the “Series 2020B Bonds”), in the current outstanding principal amount of $25,470,000. As of the date hereof, the aggregate outstanding principal amount of the Existing Parity Debt is $101,304,235.66.
The pledge of Net Revenues to the Existing Parity Debt and the Series 2025 Bonds is on a parity with the pledge of Net Revenues for the benefit of the owners of any additional Bonds or Parity Debt to be issued pursuant to the Indenture. The Series 2018A Bonds, the Series 2020A Bonds, the Series 2020B Bonds, the Series 2025 Bonds and any other Series of bonds to be issued under the Indenture are sometimes collectively referred to herein as the “Bonds.” As of the date of issuance of the Series 2025 Bonds, the Series 2018A Bonds, the Series 2020A Bonds, the Series 2020B Bonds and the Series 2025 Bonds will be the only Bonds issued and outstanding under the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2025 BONDS—Net Revenue Pledge; Parity Debt.”
The Series 2025 Bonds will not be secured by a reserve fund.
Parity Debt
The Series 2025 Bonds are being issued on a parity with the Existing Parity Debt. The City may at any time issue or incur Parity Debt payable from the Net Revenues and other funds as provided in the Indenture and secured by a lien and charge on a parity with the lien and charge securing the Bonds and the Existing Parity Debt, subject to the conditions set forth in the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2025 BONDS—Additional Bonds and Parity Debt.”
Rate Covenant
The City covenants under the Indenture that so long as any of the Series 2025 Bonds are outstanding, the City will fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Enterprise which are sufficient to yield Net Revenues in each Fiscal Year equal to at least 1.25 times the Debt Service on the Bonds and Parity Debt becoming due and payable during such Fiscal Year. See Appendix C – “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.” However, the City’s ability to increase such rates, fees and charges is subject to the limitations imposed by Proposition 218. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND WASTEWATER RATES AND CHARGES—Proposition 218—Article XIIIC and —Article XIIID.”
#22..
- 954 -
298712901.7 3
Continuing Disclosure
The City has covenanted for the benefit of the owners and beneficial owners of the Series 2025 Bonds to provide certain financial information and operating data relating to the City by not later than the 25th of February following the end of the City’s Fiscal Year (presently June 30), commencing with the report for the Fiscal Year 2024- 25, which report shall be due February 25, 2026, and to provide notices of occurrence of certain enumerated events, if material. See “CONTINUING DISCLOSURE” herein and Appendix E – “FORM OF CONTINUING DISCLOSURE AGREEMENT.”
Other Matters
This Official Statement speaks only as of its date, and the information and expressions of opinion contained herein are subject to change without notice, and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof.
All references to and summaries of provisions of the Indenture are qualified in their entirety by reference to the full Indenture, copies of which are available for inspection at the offices of the City in Modesto, California or at the corporate trust office of the Trustee in San Francisco, California.
ESTIMATED SOURCES AND USES OF FUNDS
The following table sets forth the estimated sources and uses of funds with respect to the Series 2025 Bonds.
Sources of Funds
Principal Amount $
Plus: Original Issue Premium
Total Sources $
Uses of Funds
Series 2025 Wastewater Enterprise Project Fund $
Costs of Issuance(1)
Total Uses $
(1) Includes underwriter’s discount, legal and advisory fees, printing costs, rating agency fee and other miscellaneous expenses.
THE SERIES 2025 BONDS
General Description
The Series 2025 Bonds are being issued in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository of the Series 2025 Bonds. Individual purchases of ownership interests in the Series 2025 Bonds will be made in bookentry form only in denominations of $5,000 or any integral multiple thereof. See Appendix F – “BOOK-ENTRY ONLY SYSTEM.”
The Series 2025 Bonds will be dated their date of initial delivery, and will bear interest at the rates and mature in the amounts and on the dates set forth on the inside front cover page of this Official Statement. Interest on the Series 2025 Bonds is payable on May 1 and November 1 of each year, commencing on May 1, 2026, calculated on the basis of a 360-day year comprised of twelve 30-day months. Principal of, redemption premium, if any, and interest on the Series 2025 Bonds are payable by the Trustee to DTC, which is obligated in turn to remit such principal and interest to DTC Participants for subsequent disbursement to the Beneficial Owners of the Series 2025 Bonds. #22..
- 955 -
298712901.7 4
Redemption
Optional Redemption. The Series 2025 Bonds maturing on or after November 1, 20__, shall be subject to redemption prior to their respective stated maturities, at the option of the City, from any source of available funds, as a whole or in part on any date (by such maturities as may be specified by the City and by lot within a maturity), on or after November 1, 20__, (the “Par Call Date”) at a Redemption Price equal to 100% of the principal amount of such Series 2025 Bond called for redemption, plus accrued interest to the date fixed for redemption, without premium.
Mandatory Sinking Fund Redemption. The Series 2025 Bonds maturing on November 1, 20__ and November 1, 20__ shall also be subject to mandatory redemption prior to their stated maturity, in part, by lot, from Mandatory Sinking Account Payments commencing on November 1, 20__ for the Series 2025 Bonds maturing on November 1, 20__ and commencing on November 1, 20__ for the Series 2025 Bonds maturing on November 1, 20__, and on each November 1 thereafter at a redemption price equal to the principal amount thereof plus accrued interest thereon to the date fixed for redemption, without premium as follows:
Series 2025 Bonds maturing on November 1, 20__
Redemption Dates
(November 1) Principal Amount
(maturity)
Series 2025 Bonds maturing on November 1, 20__
Redemption Dates
(November 1) Principal Amount
(maturity)
Special Mandatory Redemption From Insurance or Condemnation Proceeds. The Series 2025 Bonds are subject to redemption as a whole or in part on any date, among such maturities as designated by the City and by lot within a maturity, to the extent of hazard insurance proceeds not used to repair or rebuild the Enterprise or condemnation proceeds received with respect to the Enterprise to be used for such purpose pursuant to the Indenture, at a Redemption Price equal to the principal amount of such Series 2025 Bonds called for redemption plus interest accrued thereon to the date fixed for redemption, without premium.
Selection of Series 2025 Bonds for Redemption
Pursuant to the Indenture, when less than all of the Series 2025 Bonds of any maturity (and interest rate) is being redeemed, the Trustee selects the Series 2025 Bonds to be redeemed, from all Series 2025 Bonds of the respective maturity (and interest rate) not previously called for redemption, in authorized denominations, by lot in any manner which the Trustee in its sole discretion deems appropriate.
Notice of Redemption
Notice of redemption of any Series 2025 Bonds shall be sent by the Trustee, by approved means, not less than 20 nor more than 60 days prior to the redemption date, (i) to the respective Owners of any Bonds designated for redemption at their addresses appearing on the bond registration books of the Trustee, (ii) to the Securities Depositories, and (iii) to the Information Services, which consists of the Municipal Securities Rulemaking Board #22..
- 956 -
298712901.7 5
(“MSRB”) through the Electronic Municipal Market Access System referred to as “EMMA,” at www.emma.msrb.org, or in accordance with then current guidelines of the Securities Exchange Commission. Failure by the Trustee to give notice to any one or more of the MSRB or the Securities Depositories or failure of any Owner to receive notice or any defect in any such notice shall not affect the sufficiency of the proceedings for redemption.
Effect of Redemption
Notice of redemption having been duly given as described above, and moneys for payment of the Redemption Price of, together with interest accrued to the redemption date on, the Series 2025 Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Series 2025 Bonds (or portions thereof) so called for redemption shall become due and payable at the Redemption Price specified in such notice, together with interest accrued thereon to the date fixed for redemption, interest on the Series 2025 Bonds so called for redemption shall cease to accrue, said Bonds (or portions thereof) shall cease to be entitled to any benefit or security under the Indenture, and the Owners of said Bonds shall have no rights in respect thereof except to receive payment of said Redemption Price and accrued interest.
SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2025 BONDS Net Revenue Pledge; Parity Debt
The Series 2025 Bonds are revenue obligations of the City and are payable, as to both principal and interest and any premium upon redemption thereof, exclusively from Net Revenues and from the other funds pledged under the Indenture. All Net Revenues are pledged to secure the payment of the principal of and redemption premium, if any, and interest on the Bonds, including the Series 2025 Bonds, and any Parity Debt, including the Existing Parity Debt, in accordance with their terms, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture. The pledge of Net Revenues to the Series 2025 Bonds and the Existing Parity Debt is on parity with the pledge of Net Revenues for the benefit of the owners of any additional Bonds or Parity Debt to be issued pursuant to the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2025 BONDS—Additional Bonds and Parity Debt.” The Net Revenues are irrevocably pledged to the punctual payment of the principal of and redemption premium, if any, and interest on the Outstanding Bonds, including the Series 2025 Bonds. “Gross Revenues” are defined under the Indenture to mean all gross income and revenue received by the City from the ownership and operation of the Enterprise, including (a) all fees and charges received by the City for the services of the Enterprise, (b) all other income and revenue howsoever derived by the City from the ownership and operation of the Enterprise or arising from the Enterprise, and (c) all sums deposited, or required under the Indenture to be deposited, in the Sewer Enterprise Fund: but excluding (x) the proceeds of any ad valorem property taxes received by the City to pay debt service on any outstanding obligations of the City, (y) any contributed capital (other than connection fees), and (z) any moneys received as a result of litigation arising out of perchloroethylene (PCE) contamination that are to be expended on capital costs of the Enterprise. See “WASTEWATER SYSTEM—PCE Litigation” herein.
“Operating Expenses” are defined under the Indenture to mean the reasonable and necessary costs of maintaining and operating the Enterprise, calculated on the basis of generally accepted accounting principles, including (among other things) the reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Enterprise in good repair and working order, and reasonable amounts for administration, overhead, insurance, taxes (if any) and other similar costs, but excluding (a) depreciation, replacement and obsolescence charges or reserves therefor or other bookkeeping entries of a similar nature, and (b) interest on the Bonds and any Parity Debt.
The Series 2025 Bonds are special, limited obligations of the City. The Series 2025 Bonds shall not be deemed to constitute a debt or liability of the City, the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory provision, or a pledge of the faith and credit of the City, the State of California or of any political subdivision thereof, but shall be payable, except to the extent of certain amounts held under the Indenture pledged therefor, solely from Net Revenues. Neither the faith and credit nor #22..
- 957 -
298712901.7 6
the taxing power of the City, the State of California or of any political subdivision thereof is pledged to the payment of the principal of, premium, if any, or the interest on the Series 2025 Bonds. The issuance of the Series 2025 Bonds shall not directly or indirectly or contingently obligate the City, the State of California or any political subdivision thereof to levy or to pledge any form of taxation whatsoever therefor or to make any appropriation for their payment.
The Indenture provides that all funds and accounts created pursuant to the Indenture constitute trust funds in favor of the Owners of the Outstanding Bonds, until so applied for the purpose set forth in the Indenture.
No Reserve Fund
The Series 2025 Bonds will not be secured by a reserve fund.
The Trustee is required by the Indenture to establish and maintain and hold in trust, so long as Bonds or Parity Debt to be secured thereby remain outstanding, a special fund designated as the “Parity Reserve Fund.” No Bonds or Parity Debt are currently secured by a Parity Reserve Fund. As of the date of delivery of the Series 2025 Bonds, the Reserve Fund Requirement for the Parity Reserve Fund will be $0. The Indenture permits funding of the Parity Reserve Fund in the future. The City does not currently plan to fund the Parity Reserve Fund or deposit thereto a letter of credit, surety bond, or insurance policy. See Appendix C – “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”
See “—Outstanding Parity Debt” for a description of Parity Debt for which a separate reserve has been established.
Flow of Funds
The City has covenanted that all Gross Revenues, when and as received, will be received, deposited and held by the City in the Sewer Enterprise Fund and will be accounted for through and held in trust in the Sewer Enterprise Fund, and the City has no beneficial right or interest in any of such moneys except only as provided in the Indenture.
The City has covenanted and agreed to maintain the Sewer Enterprise Fund at all times so long as any Bonds are Outstanding under the Indenture. All Gross Revenues and Net Revenues, whether held by the City or deposited with the Trustee, all as provided in the Indenture, are disbursed, allocated, and applied solely to the uses and purposes described below.
All amounts in the Sewer Enterprise Fund required to pay Operating Expenses of the Enterprise will be applied for such purpose from time to time by the City. So long as any Bonds are Outstanding, the City will transfer the remaining moneys in the Sewer Enterprise Fund to the Trustee as required for deposit into the following respective funds (each of which the Trustee established, maintains and holds in trust for the benefit of the Owners of the Bonds) in the following amounts, in the following order of priority, the requirements of each such fund (including the making up of any deficiencies in any such fund resulting from lack of Net Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any deposit is made to any fund subsequent in priority; provided that on a parity with such deposits the Trustee may set aside or transfer amounts with respect to outstanding Parity Debt as provided in the proceedings for such Parity Debt (which will be proportionate in the event such amounts are insufficient to provide for all deposits required as of any date to be made with respect to the Bonds and such Parity Debt):
Interest Fund. The City will transfer to the Trustee and the Trustee will set aside in the Interest Fund on or before the third Business Day prior to each interest payment date therefor an amount equal to the interest becoming due and payable on the Outstanding Bonds (excluding interest for which there are moneys on deposit in the Interest Fund from the proceeds of any Series of Bonds or other source to pay such interest).
Principal Fund; Sinking Accounts. The City will transfer to the Trustee and the Trustee shall set aside in the Principal Fund on or before the third Business Day prior to each principal or mandatory sinking fund payment date therefor an amount equal to (a) the amount of Bond Obligation becoming due and payable on the Outstanding Serial Bonds, plus (b) the mandatory sinking fund payments to be paid into the respective #22..
- 958 -
298712901.7 7
Sinking Accounts for the Term Bonds; provided that if the City certifies to the Trustee that any principal payments are expected to be refunded on or prior to their respective due dates or paid from excess amounts on deposit in the Parity Reserve Fund or other bond reserve fund upon such payment, no amounts need be set aside towards such principal to be so refunded or paid. All of the aforesaid mandatory sinking fund payments shall be made without priority of any payment into any one such Sinking Account over any other such payment.
Parity Reserve Fund. Upon the occurrence of any deficiency in the Parity Reserve Fund established pursuant to the Indenture, the City will transfer to the Trustee and the Trustee shall set aside in the Parity Reserve Fund an amount equal to the aggregate amount of each unreplenished prior withdrawal from the Parity Reserve Fund until there is on deposit in the Parity Reserve Fund an amount equal to the Reserve Fund Requirement. See “ – No Reserve Fund” above.
Any Net Revenues remaining in the Sewer Enterprise Fund after the foregoing transfers described above, except as otherwise provided in a Supplemental Indenture, will be held free and clear of the Indenture by the City and it may use and apply such Net Revenues for any lawful purpose of the City, including the redemption of Bonds upon the terms and conditions set forth in the Supplemental Indenture relating to such Bonds and the purchase of Bonds as and when and at such prices as it may determine.
If on any principal payment date, interest payment date or mandatory sinking fund redemption date the amounts on deposit in the Interest Fund and Principal Fund, including the Sinking Accounts therein, are insufficient to make such payments, the Trustee shall immediately notify the City, by telephone or facsimile, of such deficiency and direct that the City transfer the amount of such deficiency to the Trustee on such payment date. The City has covenanted and agreed to transfer to the Trustee from any Net Revenues in its possession the amount of such deficiency on the principal, interest or mandatory redemption date referenced in such notice.
Rate Covenant
The rates for use of the Enterprise are set by the City Council and are not subject to review by any state or local governmental agency. The City has covenanted that it will fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Enterprise during each Fiscal Year which (together with other funds accumulated from Gross Revenues and which are lawfully available to the City for payment of any of the following amounts during such Fiscal Year) are at least sufficient to pay all Operating Expenses estimated to become due and payable in such Fiscal Year, Debt Service on the Bonds and any Parity Debt becoming due and payable during such Fiscal Year, all other payments required by the Indenture and any Parity Debt instruments and all payments required to meet any obligations of the City which are charges, liens, encumbrances upon or payable from the Gross Revenues or Net Revenues. In addition, the City has covenanted that it will fix, prescribe, revise and collect rates, fees and charges so as to yield Net Revenues during such Fiscal Year equal to at least 1.25 times the Debt Service coming due and payable in such Fiscal Year on the Bonds and any Parity Debt. For a further description of the City’s rate covenant, see Appendix C – “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE—Covenants—Rates and Charges.” The City may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary, but such fees and charges shall not be reduced so as to be insufficient to provide adequate Gross Revenues for such purposes. See “CONSTITUTIONAL LIMITATIONS ON TAXES AND WASTEWATER RATES AND CHARGES—Articles XIIIC and XIIID of the California Constitution.” Additional Bonds and Parity Debt
The City may at any time issue additional Series of Bonds or Parity Debt payable from the Net Revenues and other funds and secured by a lien and charge on a parity with the lien and charge securing the Outstanding Bonds on a parity with the Series 2025 Bonds and the Existing Parity Debt, subject to the following conditions precedent, among others: (a) no Event of Default has occurred and is continuing; (b) there is deposited in the Parity Reserve Fund an amount of money so as to increase the amount on deposit therein to the Reserve Fund Requirement, provided that Parity Debt may be secured by a separate reserve fund or by no reserve fund; and (c) the Net Revenues, calculated on sound accounting principles, as shown by the books of the City for the latest Fiscal Year or any more recent 12-month period selected by the City ending not more than 60 days prior to the adoption of the Supplemental Indenture pursuant to which such Series of Bonds are issued or the instrument pursuant to which such Parity Debt is issued, as shown by #22..
- 959 -
298712901.7 8
the books of the City, plus, at the option of the City, any or all of the items designated in (i) and (ii) below, but excluding connection charges, shall at least equal 125% of the Maximum Annual Debt Service on all Bonds and Parity Debt to be Outstanding immediately subsequent to the issuance of such Series of Bonds or Parity Debt. The items any or all of which may be added to such Net Revenues for the purpose of issuing or incurring additional Series of Bonds or Parity Debt under the Indenture are the following:
(i) An allowance for Net Revenues from any additions to or improvements or extensions, of the Enterprise to be made with the proceeds of such additional Series of Bonds or Parity Debt, and also for Net Revenues from any such additions, improvements or extensions which have been made from moneys from any source but in any case which, during all or any part of such Fiscal Year or such 12-month period, were not in service, all in an amount equal to 95% of the estimated additional average annual Net Revenues to be derived from such additions, improvements and extensions for the first 36-month period in which each addition, improvement or extension is respectively to be in operation, all as shown by a certificate of the City filed with the Trustee.
(ii) An allowance for earnings arising from any increase in the charges made for service from the Enterprise which has become effective prior to the incurring of such additional Series of Bonds or Parity Debt but which, during all or any part of such Fiscal Year or such 12-month period, was not in effect, in an amount equal to 95% of the amount by which the Net Revenues would have been increased if such increase in charges had been in effect during the whole of such Fiscal Year or such 12-month period, all as shown by a certificate of the City filed with the Trustee.
In the event additional assets or revenues are included within the definition of “Net Revenues” by a Supplemental Indenture, such additional assets or revenues shall be included in the calculations described above, as appropriate, as if such additional assets or revenues had always been included in Net Revenues. “Maximum Annual Debt Service” is defined under the Indenture as the greatest amount of principal and interest becoming due and payable on all Bonds and Parity Debt in the Fiscal Year in which the calculation is made or any successive Fiscal Year using the principles and assumptions set forth under the definition of Debt Service. “Debt Service” is defined under the Indenture to mean, during any period of computation, the amount of principal and interest becoming due and payable on all Bonds and Parity Debt for such period, determined by totaling the following amounts: (a) the Bond Obligation of all Outstanding Serial Bonds and all Parity Debt coming due and payable by their terms in such period; (b) the minimum Bond Obligation of all Outstanding Term Bonds and all Parity Debt scheduled to be redeemed by operation of mandatory sinking fund deposits in such period, together with any premium thereon; and (c) the interest which would be due during such period on the aggregate principal amount of Bonds and Parity Debt which would be Outstanding in such period if the Bonds or Parity Debt are retired as scheduled, but deducting and excluding from such aggregate amount the amount of Bonds or Parity Debt no longer Outstanding; provided that for purposes of determining compliance with the test for the issuance of additional Bonds or Parity Debt and the rate covenant and the amount of the Reserve Fund Requirement, certain provisions shall be applied as described in Appendix C – “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE—Definitions.” Nothing in the Indenture prohibits or impairs the authority of the City to issue (i) Bonds at any time to refund outstanding Bonds or Parity Debt, provided, however, that the Maximum Annual Debt Service with respect to any such refunding Bonds does not exceed 1.10 times the Maximum Annual Debt Service with respect to the Bonds or Parity Debt being refunded; or (ii) bonds or other obligations which are unsecured or which are secured by a lien on Net Revenues which is subordinate to the lien established under the Indenture, upon such terms and in such principal amount as the City may determine.
Outstanding Parity Debt
Following delivery of the Series 2025 Bonds, the other Existing Parity Debt will consist of the 2016 State Loan, the Series 2018A Bonds, the Series 2020A Bonds and the Series 2020B Bonds. The pledge of Net Revenues to the 2016 State Loan, the 2018A Bonds, the Series 2020A Bonds, the Series 2020B Bonds and the Series 2025 Bonds is on a parity with the pledge of Net Revenues for the benefit of the owners of any additional Bonds or Parity Debt to be issued pursuant to the Indenture. As of the date of issuance of the Series 2025 Bonds, the Series 2018A #22..
- 960 -
298712901.7 9
Bonds, the Series 2020A Bonds, the Series 2020B Bonds and the Series 2025 Bonds will be the only Bonds issued and outstanding under the Indenture.
The 2016 State Loan is a revolving fund loan from the State of California, which was drawn down in the amount of $29,747,007.59, of which $23,619,235.66 will be outstanding as of November 1, 2025 upon payment of scheduled principal due on such date. Under the terms of the installment sale agreement and grant, the City makes approximately equal annual payments of principal and interest each December 31 until maturity in 2047. The 2016 State Loan bears interest at a fixed rate of 1.0% per annum. The City has established in its funds and accounts, and has funded with cash, a restricted reserve for the 2016 State Loan equal to one year’s annual debt service on the 2016 State Loan. This reserve is not security for the Series 2025 Bonds.
The Series 2018A Bonds were issued by the City on April 19, 2018 in the original aggregate principal amount of $11,340,000, of which $10,630,000 will be outstanding as of November 1, 2025 upon payment of scheduled principal due on such date. The Series 2018A Bonds mature in varying amounts starting November 1, 2025 until final maturity on November 1, 2036 at interest rates ranging from 4.0% to 5.0%.
The Series 2020A Bonds were issued by the City on November 10, 2020 in the original aggregate principal amount of $68,840,000, of which $41,585,000 will be outstanding as of November 1, 2025 upon payment of scheduled principal due on such date. The outstanding Series 2020A Bonds mature in varying amounts from November 1, 2025 through November 1, 2026, and November 1, 2031 through final maturity on November 1, 2035 at interest rates ranging from 0.985% to 2.479%.
The Series 2020B Bonds were issued by the City on November 10, 2020 in the original aggregate principal amount of $25,470,000, all of which will be outstanding as of November 1, 2025. The Series 2020B Bonds mature in varying amounts starting November 1, 2026 through final maturity on November 1, 2030 at an interest rate of 5.0%. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 961 -
298712901.7 10
Debt Service Requirements
The debt service requirements of the Existing Parity Debt and the Series 2025 Bonds are shown in the following table on a fiscal year basis, assuming no optional or special mandatory redemption of the Series 2025 Bonds or prepayment of the Existing Parity Debt prior to maturity thereof.
Fiscal
Year
Ending
June 30
Existing Parity
Debt Total
Series 2025
Principal
Series 2025
Interest Total Debt Service
2026 $ 10,135,685.29 $ $ $
2027 10,139,273.79
2028 10,133,597.54
2029 10,136,597.54
2030 10,132,347.54
2031 10,134,972.54
2032 10,132,821.37
2033 10,137,067.80
2034 10,131,439.80
2035 10,131,998.22
2036 10,130,809.44
2037 2,397,536.64
2038 1,152,161.64
2039 1,152,161.64
2040 1,152,161.64
2041 1,152,161.64
2042 1,152,161.64
2043 1,152,161.64
2044 1,152,161.64
2045 1,152,161.64
2046 1,152,161.64
2047 1,152,161.64
2048 1,216,054.72
Total $126,611,818.64 $ $ $
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 962 -
298712901.7 11
SERVICE AREA MAP
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 963 -
298712901.7 12
WASTEWATER SYSTEM
Introduction
The City manages, operates, and maintains four utilities. Two of these are wastewater related—water quality control facilities (the “WQC”) and the wastewater collection system (the “WWC”). The Enterprise consists of the treatment and disposal facilities located at the WQC and the piping, pump stations and related appurtenances of the WWC.
Service Area
The Enterprise services customers in the current City limits, a portion of north Ceres, the unincorporated community of Empire, and isolated unincorporated Stanislaus County land within the City’s Sphere of Influence (“SOI”). Consistent with the City’s updated Urban Area General Plan, the service area includes the City’s SOI boundary, Empire, and north Ceres. The City provides wastewater (sewer) service in these areas to a population of approximately 236,000.
Population and land use projections prepared for the 2016 Wastewater Master Plan (defined below) indicate that the areas extending to the SOI boundaries will only be partially developed by the end of 2035. Full build-out of the SOI is not expected until the year 2057. Under the 2016 Wastewater Master Plan, by 2035, the number of municipal customers is projected to increase to a total service population of 270,900.
Wastewater from north Ceres and unincorporated areas is treated by the City under sewer service agreements with such jurisdictions. The City collects wastewater from north Ceres under a contract with no scheduled termination date, and Ceres has no readily-available alternative facilities and services. The City does not bill the customers directly; Ceres bills the customers and the City directly charges Ceres as a single customer. In addition to municipal customers, the City serves the industrial customers in the Beard Industrial Park. The industrial customers include seasonal canneries and year-round food processors. The canneries’ wastewater during canning season (July through September) is segregated in a different pipeline from domestic customers. The canneries pay a different rate than other customers. While the wastewater load produced by the canneries is significant, the cannery process water is directly land-applied at the Jennings Ranch (described below) instead of undergoing the wastewater treatment process.
The City is home to a number of food processors with summer food processing sewer discharges, currently roughly equivalent to a contributing population of more than 1,000,000 persons.
System Description
General. The current wastewater system (the “System”) of the Enterprise consists of a collection system with over 70 miles of trunk sewers (greater than 15”) and approximately 663 miles of sanitary sewers. There are 43 wastewater lift stations. Another 32 miles of sewers that are privately owned or are associated with north Ceres are connected to the City’s collection system. Aside from localized septic systems, all wastewater generated within the service area of the Enterprise receives treatment at the City’s wastewater treatment facilities. Trunk sewers, sanitary sewers and lift stations have been built as development occurs and are rehabilitated or replaced as needed. Overall, the age of pipes and lift stations in the Enterprise range from new to 60-70 years old. A program for rehabilitating and replacing sewer pipes and lift stations is included as part of the capital improvement plan for the Enterprise. See “—Master Plan, Capital Improvement Plan and Future Capital Needs.” The City’s treatment facilities treat over 7.7 billion gallons of wastewater annually. The average daily domestic flow into the City’s treatment system is currently about 21 million gallons per day (mgd). The Enterprise’s firm capacity is approximately 31 mgd.
The City’s treatment facilities consist of two treatment plants that operate in series, connected by two 6.5 mile-long outfall pipelines. The Regional Water Recycling Facility - Sutter Campus (“Sutter Facility”) is located at the south end of Sutter Avenue adjacent to the Tuolumne River. The Sutter Facility provides primary treatment and solids handling. At the Sutter Facility, settleable and floatable organic and inorganic constituents are removed from #22..
- 964 -
298712901.7 13
wastewater through screening, grit removal and primary clarification. Solids from the primary clarifiers are then processed through anaerobic digesters. The Sutter Facility is subject to flooding from high river levels in the adjacent Tuolumne River. See “RISK FACTORS—Earthquakes, Floods and Other Natural Disasters.” The Sutter Facility has been built and upgraded in phases beginning in the 1960’s. The City is studying the feasibility of relocating the primary treatment equipment at the Sutter Facility to the Jennings Facility in the future. Such relocation may be 10- 15 years or more in the future. See “—Master Plan, Capital Improvement Plan and Future Capital Needs.” Primary effluent from the Sutter Facility is pumped through the two 6.5-mile-long outfall pipelines to the Jennings Treatment Facility (“Jennings Facility”), located next to the San Joaquin River on Jennings Road near West Zeering Road for additional treatment. The Jennings Facility was originally constructed beginning in the late 1960’s and has since been upgraded, including as described in the following paragraphs. The Jennings Facility includes secondary treatment facilities, tertiary treatment facilities, and a 2,526-acre ranch (the “Jennings Ranch”). The secondary treatment facilities at the Jennings Facility primarily consist of three fixed-film reactor towers, 334 acres of oxidation ponds, and 126 acres of recirculation channels. Secondary effluent from the Jennings Facility is used for irrigation of the City’s ranch land. Historically, secondary treated wastewater was disinfected and discharged to the San Joaquin River during the months of October – May under the 2008 National Pollutant Discharge Elimination System (“NPDES”) permit. The 2008 NPDES permit has since expired and has been replaced by the 2023 General Order for tertiary treated discharge to the San Joaquin River (the “2023 General Order”) and the 2022 NPDES permit for tertiary treated discharge to the Delta-Mendota Canal (“DMC”) as part of the North Valley Regional Recycled Water Program (“NVRRWP”). The 2022 NPDES permit is scheduled to expire in July 2027, and the 2023 General Order is schedule to expire in October 2028. See also “—Permits” below.
Prior to the expiration of the 2008 NPDES permit, the City began upgrading its wastewater treatment facilities to provide biological nutrient removal (“BNR”) and tertiary treatment, which produces highly treated water that is suitable for year-round discharge to the San Joaquin River. The 2.3 mgd Phase 1 Tertiary Treatment Facility was built in 2010, and the 12.6 mgd Phase 2 BNR/Tertiary Treatment Facility was completed in 2015. Both facilities are located at the Jennings Facility and consist of fine screens, biological nutrient removal aeration basins, membrane bio-reactor basins, and ultraviolet disinfection. Because the tertiary water is also suitable for recycling, the City completed the construction of a new recycled water pump station, pipelines and appurtenances for the NVRRWP, which is currently delivering up to 14.9 mgd of the City’s recycled water to the Del Puerto Water District. This $50 million project was funded by the 2016 State Loan and a $15 million State grant under Proposition 1, the Water Quality, Supply, and Infrastructure Improvement Act of 2014 (“Proposition 1”). The Del Puerto Water District reimburses the City for:
(1) all 2016 State Loan debt service, (2) one-half of the debt service cost savings resulting from the Proposition 1 grant (which savings were reimbursed prior to the fiscal year ended June 30, 2021), (3) costs to operate and maintain the recycled water delivery facilities up to $175 per acre-foot, and (4) pays up to $30 per acre-foot premium for the recycled water if (3) is less than $175 per acre-foot. Water sales revenue (items (3) and (4) in the prior sentence) to the Del Puerto Water District commenced in January 2018 and totaled $1,045,709 in Fiscal Year 2024-25. If the City does not meet a specified tertiary treatment capacity goal by January 2028, the foregoing reimbursement formula would be subject to minor downward adjustment (estimated by the City at $200,000 spread over a term of years).
While the City currently does not expect to timely satisfy such treatment capacity goal, the City is currently considering re-negotiating such adjustment terms with the Del Puerto Water District. The Del Puerto Water District revenues (without such adjustment) are included in the projections provided in the table under the heading, “WASTEWATER SYSTEM FINANCES—Projected Debt Service Coverage.” Such agreement between the City and the Del Puerto Water District has a term ending in January 2058, subject to extension by mutual agreement of the parties.
During the three-month canning season, between early July through late September, segregated cannery process water is separately piped to the Sutter Facility for preliminary treatment and then pumped directly to the Jennings Facility, where it is blended with secondary effluent from the storage ponds and used for irrigation at the Jennings Ranch.
The Enterprise currently generates approximately 5.0 mgd of secondary treated effluent. It uses low-capitalintensive irrigation as its primary discharge method. Approximately 3.6 billion gallons of both secondary and tertiary #22..
- 965 -
298712901.7 14
treated wastewater is discharged to the City-owned Jennings Ranch annually. The Jennings Ranch is managed in a public/private partnership in which the lessee uses the reclaimed water to grow fodder crops.
Seventy-six commercial and industrial facilities are currently permitted under the City’s mandatory pretreatment program. Periodic monitoring is performed to ensure compliance with local and federal limits and to confirm that high quality effluent is available for irrigation, discharge to the San Joaquin River, and to minimize impacts to the treatment facilities.
Permits
The Central Valley Regional Water Quality Control Board (the “Regional Water Quality Board”) regulates water quality in the Central Valley under the authority of the Federal Clean Water Act and California’s Porter-Cologne Water Control Act. The Regional Water Quality Board issues wastewater discharge permits through the NPDES.
Wastewater treatment plants are required under the State and federal law to meet various requirements for the operation, treatment, monitoring and disposal/discharge of wastewater.
The City currently discharges its recycled water into the DMC under the requirements of the 2022 NPDES permit. In addition, the City received the 2023 General Order to permit river discharge. The 2023 General Order expires in July 2028. The City’s recent wastewater treatment upgrades previously described meet the 2023 General Order requirements. The tertiary treatment facilities (described above) are currently permitted to discharge a combined total of 14.9 mgd average daily discharge flow to the DMC or the San Joaquin River and may be expanded to 27.3 mgd average daily discharge flow upon completion of future tertiary treatment plant upgrades. However, since the NVRRWP started, there has not been any discharge into the San Joaquin River.
Land discharge is regulated by a separate Waste Discharge Requirement permit (the “1999 WDR Permit”).
About 3 billion gallons of wastewater are disposed of each year to land on the Jennings Ranch. On average approximately 2 billion gallons per year of treated secondary effluent, plus 1 billion gallons of cannery waste, are discharged to Jennings Ranch land. Land discharge limitations onto the Jennings Ranch are based on biochemical oxygen demand (“BOD”) loading for the combined secondary-treated and cannery process water and are set forth in the table below.
TABLE 1
BOD Loading
Secondary Effluent Only
BOD 30-day Maximum
Loading Rate
50 lbs/day
BOD Daily Maximum 300 lbs/day
Combined Cannery and Secondary Effluent
(During Canning Season Only)
BOD 7-Day Average 400 lbs/day
BOD 30-Day Average 150 lbs/day
BOD Seasonal Average 100 lbs/day
Other reporting requirements include effluent groundwater monitoring and pond monitoring. In addition, the City is regulated under the 1994 Biosolids Application Permit (94-030). Under this permit, the City must ensure that biosolids and other organic residuals are applied in accordance with agronomic rates. This means that the number of tons per hectare or acre is determined based on the amount of nutrients in the biosolids/residuals and the amount of nutrients needed by the crop being grown which includes salinity. The City closely monitors these requirements and has been in full compliance.
#22..
- 966 -
298712901.7 15
Master Plan, Capital Improvement Plan and Future Capital Needs The City has a Wastewater Master Plan that it updates periodically. The City’s Wastewater Master Plan was most recently updated in 2016 and includes a description of the Capital Improvement Plan (“CIP”). Each wastewater master plan derives its name not from the year of adoption, but from the year in which the initial studies and report are completed. Initial studies and the report for the 2016 Wastewater Master Plan (“2016 Wastewater Master Plan”) began in 2016. The 2016 Wastewater Master Plan was adopted in January 2020 following completion of the environmental impact report required by the California Environmental Quality Act. The 2016 Wastewater Master Plan addresses deficiencies and identifies improvements that will help the City adapt to changing conditions. Major topics that are addressed in the 2016 Wastewater Master Plan include:
Lower population projections and wastewater flows.
Changes in the City’s Planning Area and General Plan land use. Updating the hydraulic model.
Approach for maximizing production and off-site delivery of recycled water with the Biological Nutrient Removal (“BNR”)/Tertiary Treatment Facilities.
Construction of new primary treatment and solids handling facilities at the Jennings Facility to replace the aging facilities at the Sutter Facility.
Reliability improvements at the Sutter Plant headworks (screening and grit removal). Reduction of domestic wastewater loadings on the existing secondary treatment system resulting from the operation of the BNR/tertiary facilities.
Improved reliability and expanded capacity for the cannery process water flows. Potential regulatory requirements and compliance strategies related to the land application of treated municipal effluent, cannery process water, and biosolids.
In November 2021, an Updated Engineer’s Report (the “2021 Updated Engineer’s Report”) provided an updated basis for establishing sewer service charges and connection fees to fund the CIP for the Enterprise. The 2021 Updated Engineer’s Report included project costs, project phasing, and cost development methodologies used to allocate costs to different categories of customers.
In 2016, a cost of service study (the “2016 City of Modesto Sewer Rate and Fee Study”) was conducted in order to match projected rate increases to the needed capital improvements for the existing rate base and for new development. The majority of funding for capital wastewater projects is allocated for critical capacity projects and deferred maintenance projects. After conducting a Proposition 218 hearing, the City Council adopted a 5-year sewer rate increase schedule, from Fiscal Year 2016-17 through Fiscal Year 2020-21, and new capacity fees in 2016, reflecting the results and recommendations of the 2016 City of Modesto Sewer Rate and Fee Study.
In 2021, the most-recent cost of service study (the “2021 City of Modesto Sewer Rate and Fee Study”) conducted a comprehensive review of the wastewater rates and charges. A rate update was needed due to infrastructure improvements identified in the 2016 Wastewater Master Plan and to fund operations as costs rise. After conducting a Proposition 218 hearing, the City Council adopted a new 5-year sewer rate increase schedule, from Fiscal Year 2021- 22 through Fiscal Year 2026-27, reflecting the results and recommendations of the 2021 City of Modesto Sewer Rate and Fee Study. The City is currently planning to conduct a new cost of service study in 2026 and propose revised wastewater rates and charges in 2027.
The City reviews these rates annually. On April 12, 2022, by Resolution 2022-196, the City Council approved rate increases effective July 1, 2022 and scheduled annual increases of approximately 3.5% for most charge types to be effective on each July 1 through July 1, 2026. See “WASTEWATER SYSTEM FINANCES—Rates.” Set forth below is a table setting forth projected sources and uses of funds for the Enterprise’s CIP through Fiscal Year 2030-31, based, in part, on the 2016 Wastewater Master Plan and the 2021 Updated Engineer’s Report.
The City does not currently anticipate issuing additional Bonds or Parity Debt other than the Series 2025 Bonds to fund the Enterprise’s CIP through June 30, 2031. City management believes that the capital improvements shown in the table below will maintain the Enterprise in compliance with all applicable legal requirements and prudent industry standards. The City regularly re-prioritizes its CIP based on affordability (customer rates), System needs, minimum #22..
- 967 -
298712901.7 16
debt service coverage policy of 1.50x, and a minimum fund balance policy of 25% of operating expenses plus oneyear of 2016 State Loan debt service. The projections may be affected by various factors and there can be no assurance that they will be achieved and any variation from projected sources and uses of funds may be material. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 968 -
298712901.7 17
TABLE 2
CITY OF MODESTO
Wastewater System
Capital Improvement Plan Projects
Project Detail FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 Total Project Expenditures Included In Pay As You Go
(Included in Wastewater Master Plan) Priority Projects $25,370,000 $22,210,000 $ 8,000,000 $ 5,500,000 $5,150,000 $ 4,125,000 $ 70,355,000 Collection System -Capacity 20,000,000 41,290,000 41,290,000 41,290,000 - - 143,870,000 Collection System -Rehab 1,250,000 860,000 - - - 2,586,318 4,696,318 Existing Collections 25,000 - - - - - 25,000
Existing Wastewater Treatment 3,325,000 - - - - - 3,325,000 Preliminary Costs for Sutter Facility Relocation 515,000 515,000 515,000 515,000 515,000 21,065,700 23,640,700 Total Capital Improvement Plan $50,485,000 $64,875,000 $49,805,000 $47,305,000 $5,665,000 $27,777,018 $245,912,018 - Grants 1,000,000 - - - - - 1,000,000
- Bonds/Parity Debt(1) 10,000,000 20,000,000 20,000,000 10,000,000 - - 60,000,000 - Internally Generated Funds (Wastewater Funds)(2) 39,485,000 44,875,000 29,805,000 37,305,000 5,665,000 27,777,018 184,912,018 Total Sources of Funding $50,485,000 $64,875,000 $49,805,000 $47,305,000 $5,665,000 $27,777,018 $245,912,018 __________________
(1) Represents an estimated $60,000,000 of Series 2025 Bonds proceeds. (2) Reflects currently adopted rate increases per annum as indicated in Table 19 for fiscal years ending June 30, 2026 and 2027 and assumes no rate increases are approved for fiscal years ending June 30, 2028 through 2031. See “Table 19 -- CITY OF MODESTO WASTEWATER ENTERPRISE PROJECTED DEBT SERVICE COVERAGE” below. Rate increases for Fiscal Year ended June 30, 2025 were implemented. On April 12, 2022, the City Council approved a rate increase of approximately 3.5% for most charge types for Fiscal Year ending June 30, 2026, which went into effect on July 1, 2025, and for Fiscal Year ending June 30, 2027, which goes into effect on July 1, 2026. Rate increases for Fiscal Years ending June 30, 2028 and beyond have not yet had a Proposition 218 hearing or been approved by the City Council.
Source: City of Modesto Department of Finance.
#22..
- 969 -
298712901.7 18
Management
The Enterprise is operated under the management and control of the City Council. Currently, day-to-day management is provided by William Wong, Director of Utilities; Jeff Daniels, Wastewater Division Manager; Ben Koehler, WQC Superintendent - Chief Plant Operator; Robert Englent, Wastewater Collections Systems Superintendent; Cristian Ciotau, Engineering Division Manager under the general supervision of Allison Van Guilder, Deputy City Manager and Joseph Lopez, City Manager.
Brief resumes of the senior staff of the Enterprise are presented below:
William Wong – Director of Utilities. Will Wong has a Bachelor of Science degree in Civil Engineering from University of California at Davis and is a California-licensed Civil Engineer. He has over 31 years of experience working on water and wastewater infrastructure projects and has been with the City for over 24 years. He is currently the City’s Director of Utilities, overseeing the Department’s Wastewater Operations and Maintenance, Water Operations and Maintenance, and Engineering Services Divisions.
Jeff Daniels – Wastewater Division Manager. Jeff Daniels has over 24 years of experience in the water industry. He has been with the City for approximately 24 years, and held multiple positions within the Water Services Division, including the Water Division Manager. For the past 2 years, he has managed the Wastewater Services Division, which duties include: the oversight of the City’s wastewater collections system, Sutter Primary and Jennings Secondary, Tertiary treatment facilities.
Ben Koehler – WQC Superintendent - Chief Plant Operator. Ben Koehler has over 14 years of experience in the wastewater industry. He has been with the City for approximately 12 years. For the past 6 years, he has managed the Sutter Primary and Jennings Secondary and Tertiary treatment facilities. He is currently the WQC Superintendent - Chief Plant Operator whose responsibility is to oversee the entire operation of the City’s wastewater treatment facilities. He actively coordinates with the Utilities Engineering staff to ensure to ensure the City has the plans and equipment to meet compliance with current regulatory requirements.
Robert Englent – Wastewater Collections Systems Superintendent. Robert Englent has been in the wastewater industry for 31 years, holds a California Water Environment Association (“CWEA”) wastewater collections Grade IV certification and a California General Engineering Contractors license (inactive). His experience includes management of wastewater collection systems, asset management, computerized maintenance management systems, planning/scheduling, purchasing, and warehouse management. He currently oversees all aspects of operation, maintenance, repair, and replacement of the wastewater and storm water collections systems.
Cristian C. Ciotau – Engineering Division Manager. Cristian C. Ciotau has a degree in Construction Engineering from Polytechnic University of Timisoara, Romania and is a California-licensed Civil Engineer and California-licensed Structural Engineer. He has over 27 years of experience in civil and structural engineering projects and has been with the City for over 9 years. He is currently the City’s Engineering Division Manager of Utilities, overseeing the Utilities Engineering Department,
The City conducts internal succession planning for senior management, which includes formal training and lines of succession.
Employees
The Director of Utilities has primary responsibility for the management of the wastewater treatment facilities and wastewater collection system, as well as for the water system and storm drains. As of July 1, 2025, 259 full-time City employees are allocated to the Enterprise. Employees are represented by the Modesto City Employees Association and Modesto Confidential and Management Association whose current Memorandum of Understanding expires June 30, 2027. The City has never experienced a labor strike. #22..
- 970 -
298712901.7 19
Wastewater System Users
The Enterprise’s customer base consists primarily of residential accounts although a portion of revenues comes from industrial customers. The breakdown of accounts by category and percentage of total operating revenues are as follows for Fiscal Year 2024-25:
TABLE 3
CITY OF MODESTO
WASTEWATER SYSTEM
Customer Base by Type of Account
Fiscal Year 2024-25
Category Number of Accounts
Percentage of
Total Accounts
Percentage of Total
Operating Revenues
Residential 59,499 95.0% 59.48%
Commercial 3,104 5.0 17.18
Industrial 50 0.1 23.34
Total 62,653 100.0 100.0%
Source: City of Modesto Department of Finance.
The 10 largest users of the Enterprise accounted for approximately 23.28% of total service charge revenue in Fiscal Year 2024-25, seven of which are included in the industrial category in the prior table. The largest users, in terms of amounts billed to each during the past Fiscal Year, are listed below:
TABLE 4
CITY OF MODESTO
WASTEWATER SYSTEM
Ten Largest Users of Sewer Facilities
As of June 30, 2025
Users
Sewer Fee
Operating Revenue
% of Sewer Fee
Operating Revenue
1) Foster Farms $ 2,944,610 4.47%
2) E & J Gallo 2,869,240 4.36
3) Stanislaus Food Products 2,786,816 4.23
4) City of Ceres 1,706,494 2.59
5) Frito-Lay Inc. 1,302,704 1.98
6) Sunopta 1,264,318 1.92
7) Del Monte Foods(1) 860,563 1.31
8) Nestle Food Company 845,221 1.28
9) Modesto City School District 394,863 0.60
10) Memorial Hospital 356,618 0.54
Total (Top Ten Customers) $15,331,447 23.28%
Total (All Customers) $ 65,862,905
(1) [According to news reports, Del Monte Foods has filed for bankruptcy but plans to keep operating its Modesto fruit cannery. No assurance is given regarding the continued operation of the cannery.] See “RISK FACTORS - System Demand/Concentrated Customers” herein.
Source: City of Modesto Department of Finance.
The Del Puerto Water District makes payments to the Wastewater Fund for recycled water, including costs to operate and maintain the recycled water delivery facilities, up to the amount of $175 per acre foot. See #22..
- 971 -
298712901.7 20
“WASTEWATER SYSTEM—System Description—General” above. In addition, the Del Puerto Water District will pay or reimburse the City for: (1) all 2016 State Loan debt service, and (2) one-half of the debt service cost savings resulting from the Proposition 1 grant (which savings were reimbursed prior to the fiscal year ended June 30, 2021).
In Fiscal Year 2023-24 these payments and reimbursements were $2,626,407 and are expected to be approximately $2,325,000 in Fiscal Year 2024-25. The Del Puerto Water District revenues are included in the projections provided in the table under the heading, “WASTEWATER SYSTEM FINANCES—Projected Debt Service Coverage.” PCE Litigation
The City of Modesto Redevelopment Agency brought an action in 1998 against numerous defendants, alleging causes of action for strict liability, negligence, negligence per se, continuing trespass, private and public nuisance, private and public nuisance per se, response costs and declaratory relief under the Carpenter-Presley-Tanner Hazardous Substance Account Act (Health & Safety Code Section 25300 et seq.), ultrahazardous activity, and cost recovery under the Polanco Redevelopment Act (Health & Safety Code Section 33459 et seq.) (San Francisco County Superior Court Case No. 999345). Because the City had to provide certain related cleanup efforts, simultaneously with the filing of that action, the City, along with the City of Modesto Sewer District No. 1, brought another action against a nearly identical group of defendants seeking damages for solvent contamination under many of the same legal theories; but this action did not include a Polanco Redevelopment Act cause of action (San Francisco County Superior Court Case No. 999643). The defendants included chlorinated solvent manufacturers, distributors of solvents and dry cleaning equipment, chlorinated solvent equipment manufacturers, and dry cleaning retailers.
The complaints alleged that two cleaning solvents, perchloroethylene (“PERC” or “PCE”) and trichloroethylene, cause risks to health and the environment, that dry cleaners customarily dumped solvent wastewater into the public sewer systems, and that dry cleaners experienced a habitual problem of chlorinated solvents leaking into the environment. According to the complaints, the defendants who manufactured and supplied solvents and equipment instructed dry cleaners that chlorinated solvents could be discharged into sewers and/or failed to issue recalls or warnings regarding the equipment and solvents.
The plaintiffs, including the City, tried five “bellwether” suits before a jury from February to June of 2006, and won a verdict for compensatory damages of $3.1 million and a verdict for punitive damages of $175 million, later lowered to $12 million. In October of 2007, the plaintiffs reached an agreement with one of the defendants, Vulcan Materials Company (“Vulcan”), pursuant to which Vulcan agreed to pay the plaintiffs $20 million to settle the actions pending against Vulcan. The City’s water system and its wastewater system were each credited with half of net amount of the settlement after payment of litigation fees and expenses and certain other costs (approximately $6.5 million each), but the money may be expended only for projects that will remediate PCE. From 2009 to 2011 the City tried the remainder of the case, with mixed results, and all parties appealed.
In 2018 the First District Court of Appeal issued an opinion largely in the City’s favor and remanded the case for further proceedings. After several years of discovery, motion practice and unsuccessful attempts at mediation, an additional bellwether suit was tried to a jury in October of 2022. The jury awarded the City $4 million in compensatory damages against PPG Industries (“PPG”) and The Dow Chemical Company (“Dow”) and $56 million in punitive damages against Dow. The court subsequently reduced the punitive damages to $16 million. The City, PPG and Dow are now simultaneously involved in attempts to settle the case and in preparing to try the next bellwether site.
After adding settlements received over the course of the PCE litigation to date and deducting litigations and remediation expenses, the City had a cash balance from settlement revenue of $13,596,774 as of June 30, 2025.
WASTEWATER SYSTEM FINANCES
Rate Setting and Budget Process
The City reviews its budgetary progress on a quarterly basis. In accordance with California law, the City Council may, from time to time and at its discretion, fix, alter, change, amend or revise any user fees, connection charges and all other fees related to the Enterprise. Proposition 218, passed by the California electorate in 1996 potentially affects the City’s ability to impose future rate increases, and no assurance can be given that future rate #22..
- 972 -
298712901.7 21
increases will not encounter majority protest opposition under Proposition 218. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND WASTEWATER RATES AND CHARGES—Proposition 218— Article XIIIC and —Article XIIID.”
Proposition 218 Process
In November 1996, citizens of the State of California passed a Constitutional amendment known as Proposition 218. This amendment changed the process for increasing property-related fees within the state. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND WASTEWATER RATES AND CHARGES—Proposition 218—Article XIIIC and —Article XIIID” herein. For the City, sewer rates are treated as a property-related fee and, pursuant to Proposition 218, require a protest hearing by the property owners prior to instituting a rate increase. Under the protest hearing process, property owners within the service area are mailed a rate increase notice and protest form detailing the proposed rate increase. To oppose the rate increase, the property owner must return the protest form to the City. To support the rate increase, there is no action required on the part of the property owner. If a significant number of protests are returned to the City no later than the end of the protest hearing, the City may not approve the proposed rate increase. If the protest fails with 50% or less, then the City can approve a rate increase not to exceed the rate increase detailed in the protest form. The scheduled rate increases for the services of the Enterprise for the period through June 30, 2027 were approved following the procedures required by Proposition 218. The City expects to undertake its next rate study process in early 2026 covering wastewater rates for Fiscal Year 2027-28 through 2032-33.
Rates
The Enterprise collects its sewer service charges on the City’s monthly utility bill, which includes water, sewer, storm drain and garbage. If charges are not paid, the City begins the process of initiating a lien on the user’s property and may discontinue sewer service to the user. Historically, less than 1% of billed amounts for sewer service charges has been written off as bad debt. In March 2020, in connection with the COVID-19 pandemic, the Enterprise instituted a program which allowed small businesses in the City to defer their utility payments for up to 90 days. This program expired on July 31, 2020 and did not have a significant impact on payments to the Enterprise. Annual receivable delinquencies have averaged approximately 5% of Net Revenues since fiscal year 2024-25.
For the average single-family residence, the current monthly sewer charge is $47.89 as of July 1, 2025.
A schedule of commercial sewer rates is set forth below as of July 1, 2025:
TABLE 5
CITY OF MODESTO
Schedule of Commercial Sewer Rates
Commercial Group(1) Monthly Account Charge
Additional Charge Per
100 cubic feet (ccf) of Waste
Group 1(2) $5.41 $4.26
Group 2(3) 5.41 5.60
Group 3(4) 5.41 6.98
Group 4(5) 5.41 8.63
(1) Commercial group based on biochemical oxygen demand and total suspended solids levels. Footnotes 2-5 below provide common examples of facilities in the applicable commercial group. (2) No food, just toilets or working facilities.
(3) Commercial laundromats, service stations, hotels without food. (4) Industrial laundromats, hotels with food.
(5) Restaurants, bakeries, auto steam, markets.
Source: City of Modesto.
#22..
- 973 -
298712901.7 22
A schedule of industrial sewer rates is set forth below as of July 1, 2025:
TABLE 6
CITY OF MODESTO
Schedule of Industrial Sewer Rates
Flow Charge Per Million Gallons $4,146.33
Biochemical Oxygen Demand Charge Per 1,000 Pounds 309.10 Suspended Solids Charge Per 1000 Pounds 576.32
Source: City of Modesto.
Residential, commercial and industrial rates have increased during the past five years. Below are the approximate residential rate increases (expressed as a percentage revenue increase across all residential customer subclasses) for the last five years, as well as the increase for fiscal year 2025-26. As part of its annual budget process, the City may lower rates if its excess revenues allow the City to maintain its covenants and compliance with its coverage and reserve policies while imposing such lower rates. Currently, the City does not anticipate rates to be lowered as part of the fiscal year 2025-26 budget process.
TABLE 7
CITY OF MODESTO
Schedule of Residential Sewer Rate Increases
Fiscal Year
Residential Rate
Percent Increase
2020-21 4.0%
2021-22 4.0
2022-23 3.5
2023-24 3.5
2024-25 3.5
2025-26 3.5
Source: City of Modesto.
Comparative Monthly Wastewater Service Charges. The City’s single family residential charges as of July 1, 2025 are set forth in the table below with a comparison to other Central Valley cities.
TABLE 8
CITY OF MODESTO
WASTEWATER SYSTEM
Monthly Sewer Charge Comparison
Residential Service
As of July 1, 2025
City Monthly Residential Charge
Tracy $58.18
Stockton 57.36
Lodi 50.18
Modesto 47.89
Turlock 47.25
Source: City of Modesto.
#22..
- 974 -
298712901.7 23
Connection Fees. The Enterprise imposes connection fees on an on-time basis to new users of the sewer system and to users that significantly expand their usage. The fees have three components:
Connection charge: $2,643 per Equivalent Dwelling Unit for residential units.
Commercial and industrial property are charged based on type of business.
Sub-trunk sewer charge: $645 per acre
Connection (lateral) charge: $33 per linear foot of lot frontage adjacent to the sewer line Connection fees are treated as contributed capital and are used only for capital projects, not for operations.
Comparative Connection Fees. The Connection Fees and a comparison of the City’s Connection Fees to those of other Central Valley and Northern California cities are set forth in the table below.
TABLE 9
CITY OF MODESTO
WASTEWATER SYSTEM
Wastewater Connection Fees Comparison
As of July 1, 2024
City Connection Fee
Lodi(1) $3,548.00
Modesto 2,643.00
Turlock 2,461.00
Stockton 2,332.34
Tracy 2,267.00
Fresno(2) 2,119.00
(1) Connection fees are based on the size of the water meter. (2) Connection fees are based on the size of the lot & location.
Source: City of Modesto.
The City does not currently impose standby charges or assessments for its Wastewater System.
Financial Information
The accounts of the City are organized on the basis of funds and account groups. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures, or expenses as appropriate. Government resources are allocated to and accounted for in #22..
- 975 -
298712901.7 24
individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds and accounts are grouped as follows:
Governmental Funds General Fund
Operating Grants Fund
Housing and Community Development Fund
Transportation Special Tax Fund
Proprietary Funds Water Fund
Sewer Fund
Other Fund Types Private Purpose Trust Fund
Investment Trust Funds
Internal Service Funds
Enterprise funds are used to account for operations that are financed in a manner similar to private business enterprises in that the costs of providing goods and services to the general public on a continuing basis are financed or recovered primarily through user charges. The City accounts for the operations of the sewer, storm drain, and water systems, airport, golf, community center, parking, and compost on this basis. Enterprise funds are accounted for using the accrual basis of accounting. Unbilled utility services receivables are recorded at year-end. Property and equipment owned by enterprise funds are stated at historical cost where available and at estimated cost when original cost is not available. Depreciation is charged to operations using the straight-line method over the estimated useful lives of the assets, which are 30 years for buildings, 20 years for improvements, 3 to 10 years for furnishings and equipment and 50 years for pipelines.
See Appendix B – “CITY OF MODESTO ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR FY 2023-24” for the City’s comprehensive annual financial report.
Retirement Programs
Pension Plans. The City’s permanent employees, including Enterprise employees, are covered by the California Public Employees Retirement System (“CalPERS”) through agent multiple-employer defined benefit plans administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website at www.calpers ca.gov. The foregoing internet address is included for reference only, and the information on the internet site is not incorporated by reference herein.
The City’s defined benefit pension plans, the Miscellaneous Plan and the City’s Safety Plan, provide retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members (who must be public employees) and beneficiaries. Benefit provisions and all other requirements of the plans are established by State statute, including the Public Employees’ Pension Reform Act of 2013 which primarily affects new pension plan members enrolled after 2012, and City resolutions. No employees assigned to the Enterprise participate in the City’s Safety Plan.
#22..
- 976 -
298712901.7 25
Set forth below is a table summarizing the funding status of the City’s Miscellaneous Plan for the four Fiscal Years ended June 30, 2024:
TABLE 10
CITY OF MODESTO
Funding Status
Fiscal Years 2020-21 through 2023-24
Valuation Date
(June 30)
Accrued
Liability
Market Value of
Assets (MVA)
Unfunded
Accrued
Liability Funded Ratio
Annual
Covered Payroll
2021 $535,680,756 $428,374,564 $107,306,192 80.0 $52,444,358 2022 555,907,846 384,566,962 171,340,884 69.2 52,811,919 2023 573,091,357 396,573,606 176,517,751 69.2 55,806,668 2024 596,643,099 422,763,580 173,879,519 70.9 64,861,651 Source: CalPERS, Actuarial Valuation for the Miscellaneous Plan of the City of Modesto as of June 30, 2024.
The CalPERS Board of Administration has adjusted and may in the future further adjust certain assumptions used in the CalPERS actuarial valuations, which adjustments may increase the City’s required contributions to CalPERS in future years. One of the most significant factors used in determining the liability and the funding requirements is the rate of return that investments will yield prior to making payments, known as the discount rate.
Since Fiscal Year 2014-15, CalPERS has incrementally decreased the discount rate from 7.75% to 6.80%. Most recently, effective July 1, 2022, CalPERS lowered the discount rate from 7.00% to 6.80%. See “Table 13—CITY OF MODESTO Required and Projected Future Employer Contribution Miscellaneous Plan Fiscal Years 2025-26 through 2020-31” below. The City has taken into account projected increases in the CalPERS contribution rates in its forecasts shown in the table under the heading, “WASTEWATER SYSTEM FINANCES—Projected Debt Service Coverage.” Effective for the Fiscal Year ended June 30, 2015, the City adopted Governmental Accounting Standards Board (“GASB”) Statement No. 68, affecting the reporting of pension liabilities for accounting purposes. Under GASB Statement No. 68, the City is required to report the Net Pension Liability (i.e., the difference between the Total Pension Liability and the Pension Plan’s Net Position or market value of assets) in its financial statements.
In accordance with applicable State law, the contribution rate for all public employers is determined annually by the actuary and is effective on the July 1 following notice of a change in rate. Funding contribution amounts are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate applied to annual payroll is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the actuarially determined amounts, net of contributions by employees, necessary to fund the benefits for its members, using the actuarial basis recommended by CalPERS actuaries and actuarial consultants and adopted by the CalPERS Board of Administration. The cost of the Miscellaneous Plan is funded through bi-weekly contributions from employees and from employer contributions by the City.
The employer contribution rates are established, and may be amended, by CalPERS. Set forth below is a table showing the City’s required employer and employee contribution rates for the Miscellaneous Plan (as a #22..
- 977 -
298712901.7 26
percentage of annual covered payroll) for the four Fiscal Years ended June 30, 2026. The City does not pick up any payments on behalf of its employees.
TABLE 11
CITY OF MODESTO
Employer and Employee Contribution Rates
Fiscal Years 2022-23 through 2025-26
Fiscal Year
Employee Contribution
Rate as Percentage of
Annual Covered Payroll
Employer Contribution
Rate as Percentage of
Annual Covered Payroll
2022-23 7.00% 28.78%
2023-24 7.37 29.67
2024-25 7.42 32.33
2025-26 7.47 33.03
Source: CalPERS, Actuarial Valuations for the Miscellaneous Plan of the City of Modesto as of June 30, 2021, 2022, 2023 and 2024 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 978 -
298712901.7 27
The Enterprise is allocated its portion of the City’s required contribution for the Miscellaneous Plan. This allocation is based on eligible employee wages. Set forth below is a table showing the City’s required contributions to its CalPERS Miscellaneous Plan for the four Fiscal Years ended June 30, 2021 through 2024 and the amount in each year allocated to the Enterprise:
TABLE 12
CITY OF MODESTO
WASTEWATER SYSTEM
Miscellaneous Plan Required Contributions
for the City and Enterprise Allocation
Fiscal Years 2020-21 through 2023-24
Fiscal Year
City Required
Contribution(1)
Amount Allocated to the
Enterprise
2020-21 $17,340,374 $7,663,597
2021-22 18,369,162 7,777,076
2022-23 20,058,970 8,333,984
2023-24 22,095,790 8,840,170
(1) City Contribution consists of the normal cost plus the UAL payment. Figures are for the City as a whole for its Miscellaneous Plan only.
Sources: CalPERS GASB 68 Accounting Report Prepared for City of Modesto Miscellaneous Plan, Measurement Date June 30, 2024; City of Modesto Finance Department.
The City has made all actuarially required payments to CalPERS for its Pension Plans on a timely basis.
CalPERS provided the City with the following projected contributions from Fiscal Year ended June 30, 2026 through June 30, 2031:
TABLE 13
CITY OF MODESTO
Required and Projected Future Employer Contributions
Miscellaneous Plan
Fiscal Years 2026-27 through 2031-32
Fiscal Year Total Contributions(1) Allocated to Enterprise 2025-26 $20,022,731 $ 8,413,982
2026-27 21,124,159 8,876,826
2027-28 22,061,051 9,270,528
2028-29 24,096,261 10,125,767
2029-30 24,635,153 10,352,221
2030-31 25,189,297 10,585,084
(1) Total contribution consists of the normal cost plus the UAL payment. Figures are for the City as a whole for its Miscellaneous Plan only.
Source: CalPERS, Actuarial Valuation for the Miscellaneous Plan of the City of Modesto as of June 30, 2024; City of Modesto Finance Department.
Approximately 42% of these contributions are expected to be allocable to the Enterprise as indicated in the table above and these amounts are included in the line item “Total Operating Expenditures, Net of Depreciation” shown in the projected debt service coverage table. See “Projected Debt Service Coverage” below.
Future increases in required CalPERS contributions will impact the City’s reserve levels and require future action to either reduce expenses through service reductions or increase revenues through tax or service rate increases. #22..
- 979 -
298712901.7 28
The City’s ability to increase taxes is subject to Constitutional limitations. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND WASTEWATER RATES AND CHARGES—Proposition 218— Article XIIIC and —Article XIIID.” The City cannot provide any assurances that the City’s required contributions to CalPERS in future years will not significantly increase (or otherwise vary) from any past or current projected levels of contributions.
Retiree Health Benefits. In addition to the pension benefits described above, the City’s single-employer “other post-employment benefits” plan (“OPEB Plan”) provides health care benefits to employees who retire from the City based on certain criteria related to their hired and retirement dates, their employee bargaining unit, and their grandfathered sick leave at retirement.
All full-time employees hired before January 1, 2011, except firefighters (whose benefits differ), are eligible to convert their accumulated grandfathered sick leave towards a contribution for future health care costs at retirement (sick leave conversion). The City has no obligation to pay health insurance allowance for retirees with no grandfathered sick leave. Any employee who retires after January 1, 2017, or retirees who elect a buy-out option, receives a contribution to a Retiree Health Savings Account. Those employees are then removed from the City’s medical plan and ineligible to re-enroll.
As of June 30, 2024 actuarial valuation, 693 current and former City employees were covered by OPEB Plan membership. The OPEB plan and its contribution requirements are established by Memoranda of Understanding with the applicable employee bargaining units and may be amended by the agreements between the City and the bargaining units. The annual contribution is based on the actuarially determined contribution.
The City’s contributions toward the cost of its OPEB program are generally funded on a pay-as-you-go basis.
The City’s OPEB liability for the Fiscal Years ended June 30 of 2024 and 2025 are set forth below:
TABLE 14
CITY OF MODESTO
Schedule of Changes in the OPEB Liability and Related Ratios Fiscal Years 2023-24 through 2024-25
FY 2023-24 FY 2024-25
Measurement Period June 30, 2023 June 30, 2024
Total OPEB liability
Service cost $672,081 $679,094
Interest 1,076,573 1,090,081
Changes of assumptions 906,060 3,396,023
Changes due to plan experience - 13,237
Benefit payments (2,487,735) (2,340,023)
Net change in total OPEB liability 166,979 2,838,412
Total OPEB liability ‐ beginning 20,325,417 20,492,396
Total OPEB liability ‐ ending $20,492,396 $23,330,808
Covered‐employee payroll $54,018,721 $53,447,711
Total OPEB liability as a Percentage of Covered-Employee Payroll 37.94% 43.65% Source: Athena Actuarial Study of the City of Modesto, measured as of June 30, 2024 #22..
- 980 -
298712901.7 29
The following table provides a schedule of contributions for the City’s OPEB liability that is based on the most recent actuarial valuation with June 30, 2024 measurement date actuarial valuations.
TABLE 15
CITY OF MODESTO
Schedule of OPEB Contributions
Fiscal Year 2021-22 through 2024-25
Fiscal Year 2021-22 2022-23 2023-24 2024-25
Actuarially Determined Contribution (ADC) $ 2,686,307 $ 2,208,621 $ 2,210,205 $ 2,509,426 Contributions in Relation to the ADC (4,114,604) (2,487,735) (2,340,023) (2,462,961) Contribution Deficiency (Excess) (1,428,297) (279,114) (129,818) 46,465 Covered-Employee Payroll $52,727,185 $54,018,720 $53,447,711 $56,237,965 Contributions as a Percentage of CoveredEmployee Payroll 7.83% 4.61% 4.38% 4.38% Source: City of Modesto, Annual Comprehensive Financial Report for Fiscal Year ended June 30, 2024; Athena Actuarial Study of the City of Modesto, measured as of June 30, 2024; City of Modesto Department of Finance.
Beginning in the Fiscal Year ended June 30, 2018, the City adopted Governmental Accounting Standards Board (“GASB”) Statement No. 75, affecting the reporting of OPEB liabilities for accounting purposes. GASB No. 75 requires the OPEB liability of the City to be measured as the portion of the present value of projected benefit payments to be provided to current active and inactive employees that is attributed to those employees’ past periods of service (total OPEB liability), less the amount of the OPEB plan’s fiduciary net position.
Additional information regarding the City’s retirement plans and OPEB, including information regarding the assumptions used to determine the pension and OPEB liabilities and funding requirements, can be found in Note 20 and the Required Supplementary Information to the City’s audited financial statements included in the City’s annual comprehensive financial report for the Fiscal Year ended June 30, 2024, attached hereto as Appendix B.
The Enterprise is allocated its portion of the City’s required contribution for OPEB. This allocation is based on eligible employee wages. Set forth below is a table showing the City’s required and actual contributions to its OPEB Plan for the three Fiscal Years ended June 30, 2022 through 2025. On average, approximately 31.5% of the actual contributions in each year were allocated to the Enterprise.
TABLE 16
CITY OF MODESTO
Other Post-Employment Benefits (OPEB)
Historical Employer and Employee
Contribution Rates for the City
Fiscal Years 2021-22 through 2024-25
Fiscal Year
City Required
Contribution
Actual
Contribution
Actual Amount Allocated
to the Enterprise
2021-22 2,686,307 4,114,604 $916,102
2022-23 2,208,621 2,487,735 545,957
2023-24 2,210,205 2,340,023 513,968
2024-25 2,509,426 2,462,961 536,840
Source: Athena Actuarial Study of the City of Modesto, measured as of June 30, 2024; City of Modesto Department of Finance. #22..
- 981 -
298712901.7 30
The City projects the following OPEB contributions for calendar years 2025 through 2027:
TABLE 17
CITY OF MODESTO
Projected Future Employer OPEB Contributions
Calendar Years 2025 through 2027
Calendar Year Total Contribution Allocable to the Enterprise 2025 $2,509,426 $551,894
2026 2,477,005 544,764
2027 2,451,101 539,067
Source: Athena Actuarial Study of the City of Modesto, measured as of June 30, 2024; City of Modesto Department of Finance.
Approximately 23% of these contributions are expected to be allocable to the Enterprise as noted in the table above and such amounts are included in “Total Operating Expenditures, Net of Depreciation” shown in the projected debt service coverage table. See “WASTEWATER SYSTEM FINANCES—Projected Debt Service Coverage” below.
Future increases in OPEB contributions will impact the City’s reserve levels and require future action to either reduce expenses through service reductions or increase revenues through tax or service rate increases. The City’s ability to increase taxes is subject to Constitutional limitations. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND WASTEWATER RATES AND CHARGES—Proposition 218— Article XIIIC and —Article XIIID.” The City cannot provide any assurances that the City’s required contributions OPEB in future years will not significantly increase (or otherwise vary) from any past or current projected levels of contributions.
Insurance
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to and illnesses of employees; and natural disasters. The City maintains the Insurance Internal Service Fund to account for and finance its risks of loss. Under this program, the City is self-insured for the following risks up to the maximum amount per claim/occurrence as follows: workers’ compensation $750,000; liability $1,000,000. The City purchases commercial insurance for property loss, airport liability, miscellaneous coverage, and for claims in excess of the preceding self-insured limits. For liability claims, the City is one of thirteen members of the Authority for California Cities Excess Liability risk pool. This pool covers City claims between $1,000,000 and $10,000,000. Commercial insurance covers claims over $10,000,000 in several excess layers for a total coverage of $65,000,000 per claim. Settled claims have not exceeded this commercial coverage in any of the past five Fiscal Years.
The City currently maintains insurance against damage to the Enterprise. Coverage thereunder is covered by a commercial property insurance policy with a blanket limit of $300,000,000, but damage resulting from earthquakes is not covered.
Historical Debt Service Coverage
The following table shows debt service coverage for the Sewer Enterprise Fund for the Fiscal Years ended June 30, 2021 through June 30, 2025.
#22..
- 982 -
298712901.7 31
TABLE 18
CITY OF MODESTO SEWER ENTERPRISE
HISTORICAL DEBT SERVICE COVERAGE
Fiscal Years Ended June 30, 2021 through June 30, 2025
Fiscal Year Ended June 30 2021 2022 2023 2024 2025(1)
GROSS REVENUES:
Operating Revenue
Service Charges $ 59,247,019 $ 61,597,926 $ 61,315,195 $ 65,692,343 $66,207,418 Del Puerto Water District (Debt Service) 1,440,202 1,152,162 1,152,162 1,154,016 1,443,371 Del Puerto Water District (O&M) 1,017,555 912,682 1,033,255 1,016,001 1,053,911 Del Puerto Water District (DPWD Water Sales) 606,586 448,770 433,410 471,193 301,593 Interest Income 773,428 938,078 1,574,588 2,373,873 2,367,999 Rental Income 506,279 507,076 394,300 508,717 504,647
Miscellaneous Income 81,234 87,928 59,547 84,621 2,537,892 Change in Fair Market Value (297,257) (3,916,688) (816,434) 3,563,329 1,937,677 Direct Charges/Cost Distribution 1,707,600 1,687,671 1,883,391 1,894,381 2,213,336 Transfers from Other Funds 523,095 516,565 515,949 1,333,493 149,368 Development Fees(2) 1,406,301 1,138,868 877,682 766,400 1,506,837 TOTAL GROSS REVENUES $ 67,012,042 $ 65,071,038 $ 68,423,045 $ 78,858,367 $80,224,049 OPERATING EXPENSES:
Operating Expenditures, Net of Depreciation $ 27,212,317 $ 29,897,731 $ 30,253,159 $ 33,625,415 $42,390,193 Allocated Indirect Administration Costs 861,656 868,862 838,808 694,386 761,122 Property Taxes(3) 61,248 70,686 68,942 65,313 63,505
Recycled Water 1,004,846 943,119 895,590 1,055,674 830,492 Other Uses (Transfers Out) 47,843 371,807 (4,442,306) 5,054,890 6,559,006 TOTAL OPERATING EXPENSES(4) $ 29,187,910 $ 32,152,205 $ 27,614,193 $ 40,495,678 50,604,318 NET OPERATING REVENUES $ 37,824,132 $ 32,918,833 $ 40,808,852 $ 38,362,689 $29,619,731 DEBT SERVICE(5):
2011 State Loan $ 6,129,643 $ - $ - $ - $ -
2016 State Loan 1,154,674 1,154,447 1,158,065 1,137,505 1,156,020 Series 2015 Bond 2,777,645 2,777,113 2,778,010 976,526 907,985 Series 2018A Bonds 561,093 559,236 562,456 558,465 560,341 Series 2020A Bonds 984,571 6,464,587 6,468,403 6,462,023 6,461,440 Series 2020B Bonds 953,085 1,277,048 1,279,212 1,278,235 1,279,212 TOTAL DEBT SERVICE $ 12,560,711 $ 12,232,431 $ 12,246,146 $ 10,412,754 $10,364,998 NET REVENUES AFTER DEBT SERVICES $ 25,263,421 $ 20,686,402 $ 28,562,706 $ 27,949,935 $19,254,733 DEBT SERVICE COVERAGE 3.01x 2.69x 3.33x 3.68x 2.86x
(Net Operating Revenues/ Total Debt Service)
Capital Projects Funded by Wastewater $ 12,423,208 $ 8,662,510 $ 27,631,960 $ 39,077,131 $29,038,616 Fund Balance $103,192,814 $115,216,706 $116,147,452 $105,020,256 $95,236,373 ____________
(1) Estimated, based on unaudited results.
(2) Development fees are connection charges. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2025 BONDS—Additional Bonds and Parity Debt” for a discussion of how connection charges are treated for additional bonds purposes. (3) Property taxes paid for property outside of City limits. (4) Increase in Fiscal Year ended June 30, 2024 related to increase in operating expenses and transfer out. The operating expenses increased due to mainly to additional activity for biosolids removal. The City anticipates all expenses for this additional activity to be incurred by end of Fiscal Year ending June 30, 2026. The other increases are related to staff salary and benefit increases and increases to the City internal service funds which are reflected in future projected fiscal years. The transfer was related to the a stormwater to sanitary cross-connection removal project.
(5) See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2025 BONDS—Outstanding Parity Debt.” Source: City of Modesto Department of Finance.
#22..
- 983 -
298712901.7 32
Projected Debt Service Coverage
The following table sets forth projected operating revenues, Operating Expenses and debt service coverage for the Sewer Enterprise Fund for the Fiscal Years ending June 30, 2026 through June 30, 2030. The projections of amounts, and timing for receipts and disbursements in the table, are updated for growth assumptions and assume projected rate increases (See “WASTEWATER SYSTEM FINANCES—Rates”). The following table also assumes no unscheduled redemption of the Series 2025 Bonds or redemption or prepayment of the Existing Parity Debt. The following projections are based on the City’s current circumstances and currently available information and are believed to be reasonable. The projections may be affected by various factors and there can be no assurance that they will be achieved and any variation from projected operating results may be material. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 984 -
298712901.7 33
TABLE 19
CITY OF MODESTO WASTEWATER ENTERPRISE
PROJECTED DEBT SERVICE COVERAGE
Fiscal Years Ending June 30, 2026 through June 30, 2030 Fiscal Year Ending June 30 2026 2027 2028(1) 2029(1) 2030(1) Prop 218 Rate Increase 3.5% 3.5% NA NA NA
Rate Increase Effective Date 7/1/2025 7/1/2026 NA NA NA GROSS REVENUES:
Operating Revenue
Service Charges $67,315,194 $69,668,688 $69,596,188 $69,596,188 $69,596,188 Del Puerto Water District (Debt Service) 1,158,910 1,158,867 1,158,867 1,158,867 1,152,162 Del Puerto Water District (O&M) 1,040,235 1,062,540 1,085,290 1,108,496 1,132,166 Del Puerto Water District (DPWD Water Sales) 495,000 495,000 495,000 495,000 495,000 Interest Income 2,075,351 1,638,517 1,062,292 777,227 104,452 Rental Income 522,744 522,744 522,744 522,744 522,744
Miscellaneous Income 65,000 68,250 71,663 75,246 79,008 Change in Fair Market Value 949,189 749,397 485,853 355,475 224,880 Direct Charges/Cost Distribution 3,608,931 3,681,110 3,754,732 3,829,826 3,906,423 Transfers from Other Funds 60,192 48,375 47,880 47,025 51,919 Development Fees(2) 565,500 565,501 565,502 565,503 565,504 GROSS OPERATING REVENUES $77,856,246 $79,658,988 $78,846,011 $78,531,597 $77,830,446
OPERATING EXPENSES
Total Operating Expenditures, Net of Depreciation(3) $45,093,173 $45,995,036 $46,914,937 $47,853,236 $48,833,978 Property Taxes(4) 90,750 92,565 94,416 96,305 98,231
Recycled Water 1,115,235 1,137,540 1,160,290 1,183,496 1,183,496 Other Uses (Transfers Out) 68,640 68,640 68,640 68,640 68,640 TOTAL OPERATING EXPENSES $46,367,798 $47,293,781 $48,238,284 $49,201,677 $50,184,345 NET OPERATING REVENUES $31,488,448 $32,365,207 $30,607,727 $29,329,920 $27,646,101 DEBT SERVICE(5)
2016 State Loan $1,158,867 $1,158,867 $1,158,867 $1,158,867 $1,152,162 Series 2018A Bonds 1,253,697 1,251,150 1,242,900 1,247,775 1,245,525 Series 2020A Bonds 6,469,747 5,999,338 843,536 843,536 843,536 Series 2020B Bonds 1,280,747 1,736,625 6,895,000 6,893,125 6,891,125 Series 2025 Bonds* 1,819,562 3,698,625 3,700,250 3,699,625 3,701,625 TOTAL DEBT SERVICE $11,982,620 $13,844,605 $13,840,553 $13,842,928 $13,833,973 NET REVENUES AFTER DEBT SERVICE $19,505,828 $18,520,602 $16,767,174 $15,486,992 $13,812,128 DEBT SERVICE COVERAGE 2.63x 2.34x 2.21x 2.12x 2.00x
(Net Operating Revenues/ Total Debt Service)
Fund Balance Applied to Fund Capital Projects(6) $39,485,000 $44,875,000 $29,805,000 $37,305,000 $5,665,000 Projected Ending Fund Balance $74,939,723 $48,585,322 $35,547,493 $13,729,483 $21,876,612 Minimum Reserve Required by City Policy(7) $12,750,817 $12,982,312 $13,218,438 $13,459,286 $13,698,248 ________________
* Preliminary, subject to change.
(1) Rate increases for these years subject to Proposition 218 process and City Council approval. The City anticipates initiating a rate increase process in January 2026 with a proposed effective date in July 2027.
(2) Development fees are connection charges. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2025 BONDS—Additional Bonds and Parity Debt” for a discussion of how connection charges are treated for additional bonds purposes. (3) Includes projected costs associated with CalPERS contributions based on the CalPERS, Actuarial Valuation for the Miscellaneous Plan of the City of Modesto as of June 30, 2024.
(4) Property taxes paid for property outside of City limits, including north Ceres and the former Empire Sanitation District. (5) See “SECURITY AND SOURCES OF PAYMENT OF THE SERIES 2025 BONDS—Outstanding Parity Debt.” (6) Reflects projected capital project program funding levels assuming currently adopted rate increases per annum for fiscal years ending June 30, 2026 and 2027 and assumes no rate increases are approved for fiscal years ending June 30, 2028 through 2030. (7) Per City Policy, the City maintains a minimum reserve of 25% of Operating Expense plus one year of annual debt service on the 2016 State Loan.
Source: City of Modesto Department of Finance.
#22..
- 985 -
298712901.7 34
RISK FACTORS
The following section describes certain risk factors affecting the payment of and security for the Series 2025 Bonds. The following discussion of risks is not meant to be an exhaustive list of the risks associated with the purchase of the Series 2025 Bonds and does not necessarily reflect the relative importance of the various risks. Potential investors are advised to consider the following factors, along with all other information in this Official Statement, in evaluating the Series 2025 Bonds. There can be no assurance that other risk factors will not become material in the future.
General
The payment of principal of and interest on the Series 2025 Bonds is secured solely by a pledge of the Net Revenues and certain funds under the Indenture. The realization of the Net Revenues is subject to, among other things, the capabilities of management of the City, the ability of the City to provide wastewater services to its users, and the ability of the City to establish and maintain wastewater fees and charges sufficient to provide the required debt service coverage as well as pay for Operating Expenses.
Among other matters, drought, general and local economic conditions and changes in law and government regulations (including initiatives and moratoriums on growth) could adversely affect the amount of Net Revenues realized by the City. See “System Demand/Concentrated Customers” below.
Earthquakes, Floods and Other Natural Disasters
Earthquakes, floods or other natural disasters could interrupt operation of the Enterprise and cause increased costs and thereby interrupt the ability of the City to realize Net Revenues. The City is not obligated under the Indenture to have earthquake or flood insurance. According to the California Geological Survey website, the City is not one of the 100 incorporated cities within California on an Earthquake Fault Zone. The primary treatment plant site that was impacted by the 1997 Tuolumne River flooding was upgraded in Fiscal Year 1998-99 with a new Headworks and Cannery Segregation Project. This project mitigated the critical functions of the facility and the impact on those critical process and functional units at the facility from a hundred-year flood event. Both the City’s treatment facilities were affected by both the Tuolumne and San Joaquin Rivers flooding in 2016. A collapsed River Sewer Trunk line increased the hydraulic flows and overloaded the treatment facilities until the repairs were made. The River Trunk Relocation Project moves the River Trunk away from the river and thus helps to protect this critical pipeline from flooding events. The first two phases of the River Trunk Relocation Project that started construction in 2021 and 2022 have been essentially completed. The City has [completed the design and advertised for construction bid] of the River Trunk Pump Station (to be funded with proceeds of the Series 2025 Bonds) which, once construction is complete, will mitigate this issue in the future. The City maintains flood insurance for Enterprise facilities located in areas surrounding the Tuolumne River. See “WASTEWATER SYSTEM—System Description” and “—Master Plan, Capital Improvement Plan and Future Capital Needs” for further information regarding planned updates to the facilities of the Enterprise to mitigate flood risk.
The 2016 Wastewater Master Plan did include a Flood Risk Analysis for the Sutter and Jennings Plants. The analysis concluded that not only is the Sutter Plant vulnerable to flooding from the adjacent Tuolumne River, but that providing flood protection at the Sutter Plant would not be feasible. Additionally, the analysis concluded that the levee protecting the Jennings Plant is an uncertified federal levee which would require flood control improvements as a separate program with the State and Federal agencies. In 2024, the local maintaining reclamation district completed a seepage berm improvement project to address issues identified in a 2012 United States Army Corp of Engineers inspection report.
While fire can lead to damage to Enterprise property and properties in its service area, the Enterprise’s facilities and service area are not currently located in any areas designated as a moderate, high or very high fire hazard severity zone under state and local jurisdiction fire hazard severity zone maps.
There is evidence that increasing concentrations of greenhouse gases have caused and will continue to cause a rise in temperatures around the world, which will result in a wide range of changes in climate patterns. Moreover, #22..
- 986 -
298712901.7 35
there is evidence that a warming trend occurred during the latter part of the 20th century and will likely continue through the 21st century. Numerous scientific studies on global climate change show that, among other effects on the global ecosystem, sea levels will rise, extreme temperatures will become more common, and extreme weather events will become more frequent as a result of increasing global temperatures attributable to atmospheric pollution. For example, the Fourth National Climate Assessment, published by the U.S. Global Change Research Program, in November 2018 (NCA4) finds that more frequent and intense extreme weather and climate-related events, as well as changes in average climate conditions, are expected to continue to damage infrastructure, ecosystems and social systems over the next 25 to 100 years.
Earthquakes, fire, floods, droughts and other natural disasters could adversely affect the service area of the Enterprise, leading to reduced demand for wastewater service.
System Demand/Concentrated Customers
There can be no assurance that the demand for wastewater services will occur as described in this Official Statement. Reduction in levels of demand could require an increase in rates or charges in order to comply with the covenants to fix rates and charges so as to produce Net Revenues equal to 125% of Debt Service. Moreover, although industrial users account for only 34 of the over 61,000 accounts utilizing the Enterprise as of June 2025, they are responsible for approximately 23.34% of the sewer fee operating revenues of the Enterprise; and the overwhelming majority of the industrial users are associated with the food or beverage industries. Seven of the ten largest customers of the Enterprise in Fiscal Year 2024-25 are in this category and accounted for approximately 19.55% of sewer fee operating revenue as of June 30, 2025. See “WASTEWATER SYSTEM—Wastewater System Users.” Thus, any changes in these industries and/or the particular customers who utilize the services of the Enterprise which would reduce their wastewater discharge could adversely affect the revenues of the Enterprise.
The City allocates capacity in the Enterprise to major industrial users through the issuance of Wastewater Discharge Permits. Pursuant to Section 5-6.403 of the City’s Municipal Code, whenever the annual flow from a major industrial user for a calendar year falls below 80% of the capacity allocation shown in the applicable Wastewater Discharge Permit, the major industrial user must pay a minimum sewer service charge for such calendar year based on 80% of such capacity allocation. This requirement is intended to assure that the City will receive at least 80% of the sewer service charges based on the capacity allocated to major industrial users. However, it may limit the ability of the City to reallocate unused allocated capacity in order to maximize the potential sewer fee revenue of the Enterprise.
System Expenses
There can be no assurance that the City’s expenses will be consistent with the descriptions in this Official Statement. Increases in expenses could require a significant increase in rates or charges in order to pay for City wastewater projects and comply with the rate covenant. The treatment needs are expected to be affected by growth and tightened regulatory requirements in the future. Preliminary cost estimates for capital improvements required to service build out in the City (currently expected in 2035) are in the range of $663.44 million based on current build out and permit requirements assumptions. These preliminary cost estimates were measured in 2021 dollars. See “WASTEWATER SYSTEM—Master Plan, Capital Improvement Plan and Future Capital Needs.” State or federal legislation or other actions could reduce or eliminate grant funding available for capital improvements.
Rate Process
The passage of Proposition 218 by the California electorate potentially affects the City’s ability to impose future rate increases, and no assurance can be given that future rate increases will not encounter majority protest opposition under Proposition 218. See “CONSTITUTIONAL LIMITATIONS ON TAXES AND WASTEWATER RATES AND CHARGES—Articles XIIIC and XIIID of the California Constitution.” #22..
- 987 -
298712901.7 36
Permits and Regulation
The wastewater operations of the City are subject to discharge permits from the State Water Resources Control Board. A number of these permits will be modified from time to time to show increased capacity. The major sewer permits are two surface water discharge permits (the 2022 NPDES DMC Permit and the 2023 General Order NPDES Permit) and two land discharge permits (the 1999 WDR Permit and the 1994 Biosolids Application Permit).
See “WASTEWATER SYSTEM—Permits.”
The City’s tertiary treated effluent discharge to the DMC and San Joaquin River is regulated by the State through the NPDES Permit program. The permits include specific “effluent limitations” that are typically maximum allowable discharge concentrations for certain constituents. Those constituents that require effluent limitations, and the process for determining the effluent limitation concentration are based on water quality objectives in the San Joaquin River Basin Plan, the implementation of these objectives using the State Implementation Plan (“SIP”), and observed concentrations in the wastewater treatment facility effluent . The SIP also allows the City to perform additional water quality studies related to permit compliance and effluent limitations. These can be considered during the permit renewal process and can be critical to establishing accurate effluent limitations that are protective of the San Joaquin River basin and based on the best available science. Failure to comply with provisions or requirements of the NPDES permits, or violation of other applicable laws or regulations governing discharges from the facilities, may subject the discharger to administrative or civil liabilities, criminal penalties, and/or other enforcement remedies to ensure compliance. Additionally, certain violations may subject the Discharger to civil or criminal enforcement from appropriate local, state, or federal law enforcement entities.
In 2022 and 2023 the City successfully completed the process of renewing both NPDES permits and is currently working to revise and renew the land discharge WDR permit. The process includes the review of effluent water quality, receiving water quality, and/or groundwater quality. The City maintains three discharge permits to allow for regulatory flexibility, redundancy, and emergency discharge capabilities. In the event that the federal government, acting through the Environmental Protection Agency, or the State of California, acting through the Regional State Water Resources Control Board, or additional federal or state agencies, should impose stricter water quality standards upon the Enterprise, the City’s expenses could increase accordingly and rates and charges would have to be increased to offset those expenses. It is not possible to predict the direction federal or state regulation will take with respect to water quality standards, although it is likely that, over time, both will impose more stringent standards with attendant higher costs. See “WASTEWATER SYSTEM—Permits.”
Statutory and Regulatory Compliance
Laws and regulations governing treatment and discharge of wastewater are enacted and promulgated by federal, State and local government agencies. Compliance with these laws and regulations is and will continue to be costly, and, as more stringent standards are developed, such costs will likely increase.
Claims against the City for failure to comply with applicable laws and regulations could be significant. Such claims may be payable from assets of the City and constitute Operating Expenses or from other legally available sources. In addition to claims by private parties, changes in the scope and standards for wastewater systems such as that operated by the City may also lead to administrative orders issued by federal or State regulators. Future compliance with such orders can also impose substantial additional costs on the Enterprise. No assurance can be given that the cost of compliance with such laws, regulations and orders would not adversely affect the ability of the City to generate Net Revenues in amounts that are sufficient to pay the Bonds and the Parity Debt.
Limitations on Remedies and Bankruptcy
The ability of the City to increase sewer services charges and to comply with its covenants under the Indenture and to generate Net Revenues sufficient to pay principal of and interest on the Series 2025 Bonds and Parity Debt may be adversely affected by actions and events outside of the control of the City and may be adversely affected by actions taken (or not taken) by voters, property owners, taxpayers or payers of assessments, fees and charges. See “CONSTITUTIONAL LIMITATIONS ON TAXES AND WASTEWATER RATES AND CHARGES—Articles XIIIC and XIIID of the California Constitution.” Furthermore, any remedies available to the owners of the Series 2025 #22..
- 988 -
298712901.7 37
Bonds upon the occurrence of an event of default under the Indenture are in many respects dependent upon judicial actions which are often subject to discretion and delay and could prove both expensive and time consuming to obtain.
In addition to the limitations on remedies contained in the Indenture, the rights and obligations under the Series 2025 Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against cities in the State of California. The enforcement of the remedies provided in the Indenture could prove both expensive and time consuming. The Series 2025 Bondholders and the Trustee could be prohibited or severely restricted from taking any steps to enforce their rights under the Indenture. Various legal opinions to be delivered concurrently with the issuance of the Series 2025 Bonds will be so qualified. In addition, the opinion to be delivered by Norton Rose Fulbright US LLP, Bond Counsel, concurrently with the issuance of the Series 2025 Bonds, will also state that the enforceability of the Indenture is subject to the limitations on the imposition of fees and charges by the City relating to the Enterprise under Article XIIIC and XIIID of the California Constitution. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix D hereto. In the event the City fails to comply with its covenants under the Indenture or to pay principal of or interest on the Series 2025 Bonds, there can be no assurance that available remedies will be adequate to fully protect the interests of the holders of the Series 2025 Bonds.
Cybersecurity
The Enterprise relies on a complex technology environment to conduct its daily operations. As a recipient and provider of personal, confidential, and sensitive information the City and its respected departments experience multiple cybersecurity threats which include but not limit to, social engineering, malware, denial-of-service and other attacks on endpoints. The City has put several preventive measures in place to safeguard against cybersecurity threats.
These measures include cybersecurity awareness training, firewalls, email filtering, web content filtering, endpoint protection, and ensuring that operating systems, network equipment, and endpoint devices are up-to-date with the latest patches. Additionally, advanced segmentation and monitoring techniques are employed to detect and respond to potential threats within the network, while real-time endpoint detection and response systems help identify and mitigate any malicious activity on devices.
On February 3, 2023, the City experienced a cybersecurity attack on its information technology systems. The attack was quickly isolated by City staff and was limited to a single department. City services remained available to the residents of the City despite the attack. As part of the City’s pre-planned response to any cybersecurity attack, the City immediately engaged its cybersecurity insurance company who promptly assigned a group of cyberattack response experts to block additional intrusions, analyze and investigate the nature and scope of the attack, and to recover and restore the City’s systems. The recovery process lasted approximately 5 weeks. Some files accessed by the threat actor responsible for the attack may have included some personally identifiable information. On April 11, 2023, the City Council approved the purchase of cybersecurity tools to further efforts to protect the City’s network infrastructure.
The City currently maintains insurance coverage with respect to certain information security and privacy liability claims which include the Enterprise. Nonetheless, future cybersecurity attacks could affect the operation and finances of the City and the Enterprise.
Limited Obligations
The Series 2025 Bonds are special, limited obligations of the City and are not secured by a legal or equitable pledge or charge or lien upon any property of the City or any of its income or receipts, except the Net Revenues of the Enterprise. The obligation of the City to make debt service payments on the Series 2025 Bonds does not constitute an obligation of the City to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation.
The City is obligated under the Indenture to make debt service payments on the Series 2025 Bonds solely from Net Revenues. There is no assurance that the City can succeed in operating the Enterprise such that the Net Revenues in the amounts projected in this Official Statement will be realized. #22..
- 989 -
298712901.7 38
Public Health Emergencies
A pandemic, epidemic or outbreak of an infectious disease can have significant adverse health and financial impacts on global and local economies. For example, beginning in 2020, the COVID 19 pandemic negatively affected economic activity throughout the world, including the United States and the State of California. The initial impacts of stay-at home orders globally were unprecedented, with commerce, travel, asset values and financial markets experiencing disruptions worldwide. While the COVID 19 pandemic impacted the City in certain respects, the City did not experience a material adverse impact to the Enterprise’s operations or its ability to meet its financial obligations as a result of the COVID 19 pandemic. While the declarations of COVID 19 as a public health emergency have been lifted, future pandemics and other widespread public health emergencies can and do arise from time to time. The City cannot predict whether another national or localized outbreak of highly contagious or epidemic disease in the future could negatively impact Enterprise operations and finances and/or the economy of its service area.
Loss of Tax-Exemption
As discussed under the caption “TAX MATTERS,” interest on the Series 2025 Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Series 2025 Bonds were issued, as a result of future acts or omissions of the City in violation of its covenants in connection with the Series 2025 Bonds or as a result of legislation. Should such an event of taxability occur, the Bonds are not subject to special redemption and will remain outstanding until maturity or until redeemed under other redemption provisions set forth in the Indenture.
Federal Policy Risks Generally
Federal policies involving taxation, appropriations, borrowing (including the federal debt ceiling), climate change and other environmental matters, clean energy, trade (including tariffs), and other topics can shift, sometimes dramatically, from one Administration or Congress to another and such policy shifts may be inconsistent with the policy priorities of the State and/or the City. Recently, the new federal Administration has begun implementing several such policy shifts, including, among other things, through the revocation of certain policy initiatives of the prior federal administration, delays in appropriations, and instructing the United States Attorney General to identify and take certain action to limit the enforcement of State and local laws, regulations, causes of action, policies, and practices burdening the development, production or use of domestic energy resources that are determined to be unconstitutional, preempted by federal law or otherwise unenforceable, prioritizing those relating to climate change, environmental, social and governance initiatives, environmental justice, carbon or greenhouse gas emissions. Such policy shifts have been proposed or promulgated through presidential executive orders and other official and unofficial actions at the federal level. Certain of these actions have been the subject of judicial challenges. In addition to shifts in federal policy, the federal government has recently begun conducting large-scale layoffs across federal agencies, which could impact the work and function of such entities upon which the City or the Enterprise may rely. The City is unable to predict with certainty the outcome of the recent federal executive orders, proposals or other policy actions, nor the potential impact (positive or negative) any such changes in federal policy may have on the Enterprise’s future operations.
CONSTITUTIONAL AND STATUTORY LIMITATIONS
ON TAXES AND WASTEWATER RATES AND CHARGES
Tax Limitations – Proposition 13
Article XIIIA of the State Constitution, known as Proposition 13, was approved by the voters in June 1978.
Section 1(a) of Article XIIIA limits the maximum ad valorem tax on real property to 1% of “full cash value,” and provides that such tax shall be collected by the counties and apportioned according to State statutes. Section 1(b) of Article XIIIA provides that the 1% limitation does not apply to ad valorem taxes levied to pay interest or redemption charges on (1) indebtedness approved by the voters prior to July 1, 1978, and (2) any bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition.
#22..
- 990 -
298712901.7 39
Section 2 of Article XIIIA defines “full cash value” to mean the county assessor’s valuation of real property as shown on the Fiscal Year 1975-76 tax bill, or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred. The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or to reflect a reduction in the consumer price index or comparable data for the taxing jurisdiction, or may be reduced in the event of declining property value caused by substantial damage, destruction or other factors. Legislation enacted by the State Legislature to implement Article XIIIA provides that, notwithstanding any other law, local agencies may not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters as described above. Such legislation further provides that each county will levy the maximum tax permitted by Article XIIIA, which is $1.00 per $100 of assessed market value. The legislation further establishes the method for allocating the taxes collected by each county among the taxing agencies in the county.
Since its adoption, Article XIIIA has been amended a number of times. These amendments have created a number of exceptions to the requirement that property be reassessed when purchased, newly constructed or a change in ownership has occurred. These exceptions include certain transfers of real property between family members, certain purchases of replacement dwellings for persons over age 55 and by property owners whose original property has been destroyed in a declared disaster, and certain improvements to accommodate disabled persons and for seismic upgrades to property. These amendments have resulted in marginal reductions in the property tax revenues of the City.
Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation in future years.
The effect of Article XIIIA on the City’s finances has been to restrict ad valorem tax revenues for general purposes to the statutory allocation of the 1% levy while leaving intact the power to levy ad valorem taxes in whatever rate or amount may be required to pay debt service on its outstanding general obligation bonds and unissued bonds authorized prior to July 1, 1978. Both the California State Supreme Court and the United States Supreme Court have upheld the validity of Article XIIIA.
Spending Limitations
At the statewide special election of November 6, 1979, the voters approved an initiative entitled “Limitation of Government Appropriations” which added Article XIIIB to the California Constitution. Under Article XIIIB, State and local governmental entities have an annual “appropriations limit” which limits the ability to spend certain moneys which are called “appropriations subject to limitation” (consisting of tax revenues, state subventions and certain other funds) in an amount higher than the “appropriations.”
Proposition 218
On November 5, 1996, the voters of the State approved Proposition 218, the so-called “Right to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which contain a number of provisions affecting the ability of local governments to levy and collect both existing and future taxes, assessments, fees and charges.
Article XIIID. Article XIIID established procedural requirements for imposition of assessments, which are defined as any charge on real property for a special benefit conferred upon the real property. Standby charges are classified as assessments. Procedural requirements include the conducting of a public hearing and an election by mailed ballot, with notice to the record owner of each parcel subject to the assessment. The assessment may not be imposed if a majority of the ballots returned oppose the assessment, with each ballot weighted according to the proportional financial obligation of the affected parcel. The City does not currently impose standby charges or assessments for its Wastewater System.
Article XIIID conditions the imposition or increase of any “fee” or “charge” upon there being no written majority protest after a required public hearing and, for fees and charges other than for sewer, water or refuse collection services, voter approval. Article XIIID defines “fee” or “charge” to mean levies (other than ad valorem or special #22..
- 991 -
298712901.7 40
taxes or assessments) imposed by a local government upon a parcel or upon a person as an incident of the ownership or tenancy of real property, including a user fee or charge for a “property-related service.” One of the requirements of Article XIIID is that before a property-related fee or charge may be imposed or increased, a public hearing upon the proposed fee or charge must be held and notice must be mailed to the record owner of each identified parcel of land upon which the fee or charge is proposed for imposition. In the public hearing if written protests of the proposed fee or charge are presented by a majority of the owners of affected identified parcel(s), an agency may not impose the fee or charge.
Article XIIID provides that nothing in Proposition 218 shall be construed to affect existing laws relating to the imposition of fees or charges as a condition of property development.
The California Supreme Court decisions in Richmond v. Shasta Community Services District, 32 Cal. 4th 409 (2004) (“Richmond”), and Bighorn Desert View Water Agency v. Verjil, 39 Cal. 4th 206 (2006) (“Bighorn”) have clarified uncertainty surrounding the applicability of Section 6 of Article XIIID to service fees and charges. In Richmond, the California Supreme Court upheld a Court of Appeal decision that water connection fees (which included a capacity charge for capital improvements to the water system and a fire suppression charge) imposed by the Shasta Community Services District were not property related fees or charges subject to Article XIIID because a water connection fee results from the property owner’s voluntary decision to apply for the connection. In both Richmond and Bighorn, however, the Court stated that a fee for ongoing water service through an existing connection is imposed “as an incident of property ownership” within the meaning of Article XIIID, rejecting, in Bighorn, the water agency’s argument that consumption based water charges are not imposed “as an incident of property ownership” but as a result of the voluntary decisions of customers as to how much water to use.
The City has followed the notice, hearing and protest procedures in Article XIIID in connection with wastewater rate increases since its Fiscal Year 2016–17 rate increases, and plans to follow such notice, hearing and protest procedures in connection with future rate increases.
In addition to the procedural requirements of Article XIIID, under Article XIIID all property-related fees and charges, including those which were in existence prior to the passage of Proposition 218 in November 1996, must meet the following substantive standards:
(1) Revenues derived from the fee or charge cannot exceed the funds required to provide the propertyrelated service. (2) Revenues derived from the fee or charge must not be used for any purpose other than that for which the fee or charge was imposed.
(3) The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership must not exceed the proportional cost of the service attributable to the parcel. (4) No fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Fees or charges based on potential or future use of a service are not permitted. Standby charges, whether characterized as charges or assessments, must be classified as assessments and cannot be imposed without compliance with Section 4 of Article XIIID (relating to assessments).
(5) No fee or charge may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services where the service is available to the public at large in substantially the same manner as it is to property owners.
On April 20, 2015, the California Fourth District Court of Appeal issued a decision in Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano, 235 Cal.App.4th 1493 (2015), holding that the City of San Juan Capistrano’s tiered water rates (or inclining block rates) that were in effect from February 1, 2010 through June 30, 2014 violated the requirement of Proposition 218 that a fee or charge for property-related services, such as water delivery, must be proportional to the cost of providing service. In interpreting Proposition 218, the Court of Appeal #22..
- 992 -
298712901.7 41
emphasized that tiered water rates, or inclining block rates, that go up progressively in relation to usage are compatible with Proposition 218. However, the court concluded that Article XIIID requires that each tier must reflect the actual costs of service for property owners falling in each of the tiers. The court further concluded that the city had the burden of proof to demonstrate compliance with Proposition 218 and that the city failed to meet its burden of proof in demonstrating that its tiered water rates corresponded to the actual costs of providing service to each tier.
In June 2021, a San Diego Superior Court ruled that Otay Water District failed to demonstrate that its tiered water rates were proportional to the cost of service attributable to each customer’s parcel, as required by Proposition 218. The Court specifically found that the rates were based on “non-cost objectives such as conservation” and that the record did not contain sufficient support for the peaking factors utilized to calculate demand and allocate costs to different tiers of usage. On appeal to the 4th District, the Court of Appeal affirmed the finding that the rates do not comply with Proposition 218. Specifically, the Court of Appeal determined that (1) the tiered pricing structure was based on generalized assumptions and industry standards, rather than customer-specific data; (2) Otay improperly set certain rate components based on conservation concerns, rather than cost; and (3) the rate structure disproportionately burdened single family residential customers with a tiered rate structure, while allowing commercial and irrigation customers to utilize uniform rates. The City believes that its rate structure is distinguishable from the structure deemed unconstitutional in Otay and is consistent with Proposition 218 and the Constitution.
It is City policy to conduct periodic cost of service studies. The City currently expects to undertake a new study prior to the end of Fiscal Year 2026-27 to cover rates for the Enterprise between Fiscal Year 2027-28 and 2032- 2033. The City believes that its established and proposed rates for wastewater service comply with the substantive standards of Article XIIID. However, due to the uncertainties of evolving case law and potential future judicial interpretations of Proposition 218, the City is unable to predict at this time whether Proposition 218 could be interpreted, for example, to further limit fees and charges for wastewater services and/or to require stricter standards for the allocation of costs among customers and customer classes. See “WASTEWATER SYSTEM FINANCES— Rates.”
Article XIIIC. Article XIIIC provides that the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge and that the power of initiative to affect local taxes, assessments, fees and charges shall be applicable to all local governments. Article XIIIC does not define the terms “local tax,” “assessment,” “fee” or “charge.” The California Supreme Court held in Bighorn that the provisions of Article XIIIC applied to rates and fees charged for domestic water use. In the decision, the Court noted that the decision did not address whether an initiative to reduce fees and charges could override statutory rate setting obligations. The City and its City Attorney do not believe that Article XIIIC grants to the voters within the City the power to repeal or reduce rates and charges in a manner that would be inconsistent with the contractual obligations of the City.
The interpretation and application of Proposition 218 will likely be subject to further judicial determinations, and the City is unable to predict the outcome of such determinations, or what, if any, further implementing legislation will be enacted. No assurance can be given that that the courts will not further interpret Article XIIIC and Article XIIID to limit the ability of the City to impose, levy, charge and collect increased fees and charges for wastewater services, or the voters of the City will not, in the future, approve initiatives which seek to repeal, reduce or prohibit the future imposition or increase of assessments, fees or charges, including the City’s wastewater service fees and charges, which are the source of Net Revenues pledged to the payment of debt service on the Series 2025 Bonds.
Proposition 26
Proposition 26, which amended Articles XIIIA and XIIIC of the California Constitution, was approved by the electorate at the November 2, 2010 election. Proposition 26 imposes a majority voter approval requirement on local governments such as the City with respect to certain fees and charges for general purposes, and a two-thirds voter approval requirement with respect to certain fees and charges for special purposes, unless the fees and charges are expressly excluded. Proposition 26, according to its supporters, was intended to prevent the circumvention of tax limitations imposed by the voters in California Constitution Articles XIIIA, XIIIC and XIIID pursuant to Proposition 13, approved in 1978, Proposition 218, approved in 1996, and other measures. Proposition 26 expressly excludes from its scope “a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable cost to the local government of #22..
- 993 -
298712901.7 42
providing the service or product” and “assessments and property-related fees imposed in accordance with the provisions of Article XIIID.” The City believes that its wastewater fees and charges meet the criteria for exclusion under Proposition 26 and that the initiative is not intended to, and would not, apply to fees for wastewater services charged by the City. The City is unable to predict, however, how Proposition 26 will be interpreted by the courts or what its ultimate impact will be.
Other Initiatives
Articles XIIIA, XIIIB, XIIIC and XIIID and Proposition 26 were adopted as measures that qualified for the ballot pursuant to California’s initiative process. From time to time other initiatives have been and could be proposed and adopted affecting the City’s revenues or ability to increase revenues. Neither the nature and impact of these measures nor the likelihood of qualification for ballot or passage can be anticipated by the City.
TAX MATTERS
Federal Tax Exemption
In the opinion of Norton Rose Fulbright US LLP, San Francisco, California, Bond Counsel to the City, under existing statutes, regulations, rulings and judicial decisions, and assuming compliance by the City with certain covenants in the Indenture, the Tax Certificate and other documents pertaining to the Series 2025 Bonds and requirements of the Internal Revenue Code of 1986 (the “Code”) regarding the use, expenditure and investment of proceeds of the Series 2025 Bonds and the timely payment of certain investment earnings to the United States, interest on the Series 2025 Bonds is not included in the gross income of the owners of the Series 2025 Bonds for federal income tax purposes. Failure to comply with such covenants and requirements may cause interest on the Series 2025 Bonds to be included in gross income retroactive to the date of issuance of the Series 2025 Bonds.
In the further opinion of Bond Counsel, interest on the Series 2025 Bonds is not treated as an item of tax preference for purposes of the federal alternative minimum tax on individuals. Bond Counsel expresses no opinion regarding the applicability of the federal corporate alternative minimum tax to the adjusted financial statement income of certain corporations.
Ownership of, or the receipt of interest on, tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain foreign corporations doing business in the United States, certain S corporations with excess passive income, individual recipients of Social Security or Railroad Retirement benefits, taxpayers that may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations and taxpayers who may be eligible for the earned income tax credit. Bond Counsel expresses no opinion with respect to any collateral tax consequences and, accordingly, prospective purchasers of the Series 2025 Bonds should consult their tax advisors as to the applicability of any collateral tax consequences.
Certain requirements and procedures contained or referred to in the Indenture, the Tax Certificate or other documents pertaining to the Series 2025 Bonds may be changed, and certain actions may be taken or not taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax-exempt obligations. Bond Counsel expresses no opinion as to the effect of any change to any document pertaining to the Series 2025 Bonds or of any action taken or not taken where such change is made or action is taken or not taken without the approval of Norton Rose Fulbright US LLP or in reliance upon the advice of counsel other than Norton Rose Fulbright US LLP with respect to the exclusion from gross income of the interest on the Series 2025 Bonds for federal income tax purposes.
Bond Counsel’s opinion is not a guarantee of result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and judicial decisions and the representations and covenants of the City described above. No ruling has been sought from the Internal Revenue Service (the “IRS”) with respect to the matters addressed in the opinion of Bond Counsel, and Bond Counsel’s opinion is not binding on the IRS. The IRS #22..
- 994 -
298712901.7 43
has an ongoing program of examining the tax-exempt status of the interest on municipal obligations. If an examination of the Series 2025 Bonds is commenced, under current procedures the IRS is likely to treat the City as the “taxpayer,” and the owners of the Series 2025 Bonds would have no right to participate in the examination process. In responding to or defending an examination of the tax-exempt status of the interest on the Series 2025 Bonds, the City may have different or conflicting interests from the owners. Additionally, public awareness of any future examination of the Series 2025 Bonds could adversely affect the value and liquidity of the Series 2025 Bonds during the pendency of the examination, regardless of its ultimate outcome.
Tax Accounting Treatment of Bond Premium and Original Issue Discount Bond Premium. To the extent a purchaser acquires a Series 2025 Bond at a price in excess of the amount payable at its maturity, such excess will constitute “bond premium” under the Code. The Code and applicable Treasury Regulations provide generally that bond premium on a tax-exempt obligation is amortized over the remaining term of the obligation (or a shorter period in the case of certain callable obligations) based on the obligation’s yield to maturity (or shorter period in the case of certain callable obligations). The amount of premium so amortized reduces the owner’s basis in such obligation for federal income tax purposes, though such amortized premium is not deductible for federal income tax purposes. This reduction in basis will increase the amount of any gain (or decrease the amount of any loss) recognized for federal income tax purposes upon a sale or other taxable disposition of the obligation.
Bond Counsel is not opining on the accounting for bond premium or the consequence to a Series 2025 Bond purchaser of purchasing a Series 2025 Bond with bond premium. Accordingly, persons considering the purchase of Series 2025 Bonds with bond premium should consult their own tax advisors with respect to the determination of bond premium on such Series 2025 Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of such Series 2025 Bonds.
Original Issue Discount. The excess, if any, of the stated redemption price at maturity of Series 2025 Bonds of a particular maturity over the initial offering price to the public of the Series 2025 Bonds of that maturity at which a substantial amount of the Series 2025 Bonds of that maturity is sold to the public is “original issue discount.” Original issue discount accruing on a Series 2025 Bond is treated as interest excluded from the gross income of the owner thereof for federal income tax purposes under the same conditions and limitations as are applicable to interest payable on such Series 2025 Bond. Original issue discount on a Series 2025 Bond of a particular maturity purchased pursuant to the initial public offering at the initial public offering price at which a substantial amount of the Series 2025 Bonds of that maturity is sold to the public accrues on a semiannual basis over the term of the Series 2025 Bond on the basis of a constant yield; and within each semiannual period accrues on a ratable daily basis. The amount of original issue discount on a Series 2025 Bond accruing during each period is added to the adjusted basis of such Series 2025 Bond, which will affect the amount of taxable gain upon disposition (including sale, redemption or payment on maturity) of such Series 2025 Bond. The Code includes certain provisions relating to the accrual of original issue discount in the case of purchasers that purchase Series 2025 Bonds other than at the initial offering price.
Bond Counsel is not opining on the accounting for or consequence to a Series 2025 Bond purchaser of purchasing a Series 2025 Bond with original issue discount. Accordingly, persons considering the purchase of Series 2025 Bonds with original issue discount should consult their own tax advisors with respect to the determination of original issue discount on such Series 2025 Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of such Series 2025 Bonds.
Information Reporting and Backup Withholding
Interest paid on the Series 2025 Bonds will be subject to information reporting in a manner similar to interest paid on taxable obligations. Although such reporting requirement does not, in and of itself, affect the excludability of such interest from gross income for federal income tax purposes, such reporting requirement causes the payment of interest on the Series 2025 Bonds to be subject to backup withholding if such interest is paid to beneficial owners who (a) are not “exempt recipients,” and (b) either fail to provide certain identifying information (such as the beneficial owner’s taxpayer identification number) in the required manner or have been identified by the IRS as having failed to report all interest and dividends required to be shown on their income tax returns. Generally, individuals are not exempt recipients, whereas corporations and certain other entities are exempt recipients. Amounts withheld under the backup withholding rules from a payment to a beneficial owner are allowed as a refund or credit against such beneficial owner’s federal income tax liability so long as the required information is furnished to the IRS. #22..
- 995 -
298712901.7 44
State Tax Exemption
In the further opinion of Bond Counsel, interest on the Series 2025 Bonds is exempt from personal income taxes imposed by the State of California.
Future Developments
Existing law may change to reduce or eliminate the benefit to owners of the Series 2025 Bonds of the exclusion of the interest on the Series 2025 Bonds from gross income for federal income tax purposes or of the exemption of interest on the Series 2025 Bonds from State of California personal income taxation. Any proposed legislation, including any legislation which may be currently under consideration, whether or not enacted, or administrative action, whether or not taken, could also affect the value and marketability of the Series 2025 Bonds.
Prospective purchasers of the Series 2025 Bonds should consult their own tax advisors with respect to any proposed or future change in tax law.
A copy of the form of opinion of Bond Counsel relating to the Series 2025 Bonds is included in Appendix D hereto.
ABSENCE OF LITIGATION
There is no action, suit or proceeding known to be pending or threatened, restraining or enjoining the execution or delivery of the Series 2025 Bonds or the Indenture or in any way contesting or affecting the validity of the foregoing or any proceedings of the City taken with respect to any of the foregoing. There is no action, suit or proceeding known by the City to be pending or threatened, restraining or enjoining the City in any way which could have a material adverse effect on the Enterprise, the ability of the City to increase rates or to pay scheduled debt service on the Series 2025 Bonds.
FINANCIAL STATEMENTS
The City’s Annual Comprehensive Financial Report (“ACFR”) for the Fiscal Year ended June 30, 2024, is included in Appendix B to this Official Statement. The ACFR as of and for year ended June 30, 2024 has been audited by Vasquez + Company LLP, certified public accountants (the “Auditor”), as stated in its report appearing in Appendix B. The Series 2025 Bonds are special, limited obligations of the City payable solely from the Net Revenues and other funds pledged under the Indenture.
The financial statements of the City are public documents and the City has not requested nor did the City obtain permission from the Auditor to include the ACFR and the Auditor’s report in an Appendix to this Official Statement. Accordingly, the Auditor has made no representation in connection with inclusion of the audit herein that there has been no material change in the financial condition of the City or the Enterprise since the most recent audit was concluded. The Auditor has not been engaged to perform and have not performed, since the date of its report included in Appendix B, any procedures on the financial statements addressed in that report. The Auditor also has not performed any procedures relating to this Official Statement.
RATINGS
S&P Global Ratings (“S&P”) has assigned a rating of “[__]” to the Series 2025 Bonds. Generally, rating agencies base their ratings on information and material furnished directly to them and on investigations, studies and assumptions made by them. The ratings reflect only the views of such organizations and an explanation of the significance of such rating may be obtained from the rating agency furnishing such rating at the following address:
S&P, 55 Water Street, New York, New York 10041. There is no assurance that the rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by such rating agency, if, in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Series 2025 Bonds. #22..
- 996 -
298712901.7 45
UNDERWRITING
The Series 2025 Bonds are being purchased by Siebert Williams Shank & Co., LLC (the “Underwriter”) at a purchase price of $________, such amount being equal to the principal amount of the Series 2025 Bonds, plus a original issue premium of $________, less an underwriting discount of $______. The obligation of the Underwriter to make such purchase is subject to certain terms and conditions set forth in the purchase contract related to the Series 2025 Bonds. The purchase contract relating to the Series 2025 Bonds provides that the Underwriter will purchase all of the Series 2025 Bonds if any are purchased. The Series 2025 Bonds may be offered and sold by the Underwriter to certain dealers and others at prices lower than such public offering price, and such public offering price may be changed, from time to time, by the Underwriter.
MUNICIPAL ADVISOR
The City has retained PFM Financial Advisors LLC, San Francisco, California, as municipal advisor with respect to the issuance of the Series 2025 Bonds. PFM Financial Advisors LLC is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. PFM Financial Advisors LLC is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. PFM Financial Advisors LLC will receive compensation contingent upon the sale and delivery of the Series 2025 Bonds.
LEGAL PROCEEDINGS
The validity of the Series 2025 Bonds and certain other legal matters are subject to the approving opinion of Norton Rose Fulbright US LLP, San Francisco, California, Bond Counsel. A copy of the proposed form of the opinion of Bond Counsel is attached as Appendix D hereto. Certain legal matters will be passed upon for the Underwriter by Orrick, Herrington & Sutcliffe LLP; for the City by the City Attorney and by Norton Rose Fulbright US LLP, San Francisco, California, Disclosure Counsel. Bond Counsel has undertaken no responsibility for the accuracy, completeness and fairness of this Official Statement.
Norton Rose Fulbright US LLP has served as Disclosure Counsel to the City and in such capacity has advised the City with respect to the requirements of applicable securities laws and participated with responsible City officials and staff in conferences and meetings where information contained in this Official Statement was reviewed for accuracy and completeness. Disclosure Counsel is not responsible for the accuracy or completeness of the information presented in this Official Statement and has not undertaken to independently verify any of such information. Rather, the City is solely responsible for the accuracy and completeness of the information contained in this Official Statement.
Upon the delivery of the Series 2025 Bonds, Norton Rose Fulbright US LLP will deliver a letter to the City and the Underwriter concerning certain matters with respect to the Official Statement. No purchaser or holder of the Series 2025 Bonds, or other person or party other than the City and the Underwriter, will be entitled to rely on such letter or on the fact that Norton Rose Fulbright US LLP has acted as Disclosure Counsel to the City.
CONTINUING DISCLOSURE
The City has covenanted for the benefit of the owners of the Series 2025 Bonds to provide certain financial information and operating data and the City by not later than the 25th of February following the end of the City’s Fiscal Year (presently June 30) commencing with the report for the City’s Fiscal Year 2024-25 (the “Annual Reports”), which shall be due February 25, 2026, and to provide notices of the occurrence of certain enumerated events, if deemed by the City to be material. The Annual Reports will be filed by Digital Assurance Certification, L.L.C. (“DAC”), as Dissemination Agent on behalf of the City, with the Municipal Securities Rulemaking Board (“MSRB”) through its Electronic Municipal Market Access System (“EMMA”). The notices of material events will be filed by DAC, as Dissemination Agent on behalf of the City, with the MSRB through EMMA with copies to the City and the Underwriter. The specific nature of the information to be contained in the Annual Reports or the notices of material events is set forth in Appendix E – “FORM OF CONTINUING DISCLOSURE AGREEMENT.” These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) of the Securities #22..
- 997 -
298712901.7 46
and Exchange Commission (the “Rule”). The City’s Department of Finance has taken responsibility for ongoing compliance with the Rule.
[Except as set forth in this paragraph,] during the five years preceding the date of this Official Statement, the City has not failed to comply in all material respects with its prior continuing disclosure obligations entered into in connection with the Rule. [Add disclosures, if needed.][To be revised upon review of DAC report.]
MISCELLANEOUS
Reference is made herein to certain documents and reports which are brief summaries thereof which do not purport to be complete or definitive, and reference is made to such documents and complete statement of the contents thereof.
Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or holder of any Series 2025 Bonds. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 998 -
S-1
The execution and delivery of this Official Statement has been duly authorized by the City Council of the City.
CITY OF MODESTO, CALIFORNIA
By:
Director of Finance
#22..
- 999 -
298712901.7
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
#22..
- 1000 -
298712901.7 A-1
APPENDIX A
CERTAIN INFORMATION REGARDING THE CITY OF MODESTO
The following information with respect to the City is presented for information purposes only. The Series 2025 Bonds do not constitute an indebtedness of the City within the meaning of any constitutional, statutory or charter limitations and the City is not obligated to levy any ad valorem taxes therefor or to use any other funds of the City to pay debt service on the Series 2025 Bonds.
General Description
The City, which is the county seat of Stanislaus County (the “County”), was incorporated in 1884. It covers approximately 37.4 square miles. The City operates under a council-manager form of government pursuant to a charter adopted in 1963. The City is located in central California approximately 93 miles east of the City and County of San Francisco.
The City Council appoints the City Clerk and Auditor, the City Attorney, and the City Manager. The City Manager heads the executive branch of government, implements City Council directives and policies, and manages the administrative and operational functions through the various department heads who are appointed by the City Manager.
The City provides the full range of services normally associated with a municipality, including public safety (police and fire), highways and streets, sanitation, health and social services, culture-recreation, public improvements, planning and zoning and general administrative services. The City also provides parking and airport facilities and water, sewer and bus service. The school districts in the City are separate governmental entities which receive no funding from the City.
Population
The following table represents historical population statistics for the City, the County and the State.
TABLE A-1
CITY OF MODESTO
Population Estimate(1)
Calendar Year City of Modesto Stanislaus County State of California 2021 218,745 551,722 39,369,530
2022 217,860 549,272 39,179,680
2023 217,833 548,423 39,228,444
2024 219,705 553,614 39,420,663
2025 219,765 555,765 39,529,101
(1) As of January 1.
Source: California State Department of Finance, Population Estimates for City, County and State Population, 2021-2025. #22..
- 1001 -
298712901.7 A-2
Employment
The following table summarizes the civilian labor force, employment and unemployment in the County for the calendar years 2020 through 2024. These figures are county-wide statistics and may not necessarily accurately reflect employment trends in the City.
TABLE A-2
MODESTO METROPOLITAN STATISTICAL AREA
Industry Employment and Labor Force
(Annual Averages)
2020 2021 2022 2023 2024
Civilian Labor Force 244,300 243,000 245,100 249,300 253,600 Employment 217,900 222,900 231,700 233,600 236,200
Unemployment 26,400 20,100 13,300 15,700 17,500
Unemployment Rate 10.8% 8.3% 5.4% 6.3% 6.9%
Wage and Salary Employment:
Total Farm 14,500 14,000 13,900 12,500 12,700
Total Nonfarm 173,200 178,600 186,000 188,500 191,200
Mining, Logging and Construction 9,800 10,700 11,300 10,700 11,100 Manufacturing 21,300 22,000 23,000 23,700 23,400
Wholesale Trade 5,900 5,600 5,600 5,500 5,700
Retail Trade 21,900 23,000 23,100 22,800 22,800
Transportation, Warehousing, Utilities 9,000 9,100 10,100 10,700 10,200 Information 800 800 800 800 700
Financial Activities 5,100 4,900 5,000 4,800 4,800
Professional and Business Services 15,100 15,400 15,200 14,600 14,400 Private Education and Health Services 34,600 35,000 35,600 36,900 38,900 Leisure and Hospitality 15,800 18,200 20,500 20,900 20,600 Other Services 5,100 5,500 6,000 6,100 6,100
Federal Government 900 700 700 700 700
State Government 2,100 2,000 2,100 2,200 2,300
Local Government 25,900 25,700 27,000 28,300 29,600
Total All Industries 187,700 192,600 199,900 201,000 203,900 Note: Totals may not add up because of rounding.
Source: Labor Market Information Division of the California State Employment Development Department, March 2024 Benchmark. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 1002 -
298712901.7 A-3
Major Employees
The following table summarizes the principal employers in the County of Stanislaus as of June 30, 2024.
TABLE A-3
COUNTY OF STANISLAUS
Largest Employers
as of June 30, 2024
No. Company Name
No.
Employees
1. Modesto City Schools 5,188
2. Ceres Unified School District 5,106
3. Stanislaus County 4,273
4. Kaiser 3,800
5. E & J Gallo Winery 3,700
6. Emanuel Medical 3,419
7. Memorial Medical Center 3,018
8. Turlock Unified School District 2,670
9. Doctors Medical Center 2,600
10. Foster Farms 2,362
Source: County of Stanislaus Annual Comprehensive Financial Report Fiscal Year Ended June 30, 2024 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 1003 -
298712901.7 A-4
Commercial Activity
The following table shows the dollar volume of taxable transactions in the City of Modesto from calendar years 2020 through 2024.
TABLE A-4
CITY OF MODESTO
Taxable Transactions
Calendar Years 2020 through 2024
(in Thousands of Dollars)
Retail Outlets 2020 2021 2022 2023 2024
Motor Vehicle and Parts
Dealers
$ 248,063 $ 287,959 $ 285,297 $ 274,422 $ 244,570
Home Furnishings and
Appliance Stores
136,481 179,746 154,258 151,647 130,793
Building Material And
Garden Equip. and Supplies
214,352 229,818 208,333 195,157 187,212
Food and Beverage Stores 179,921 189,237 190,114 189,101 186,471 Gasoline Stations
202,652 280,349 357,969 337,373 318,444
Clothing and Clothing
Accessories Stores
195,279 312,711 294,789 292,375 289,627
General Merchandise Stores 419,354 498,672 497,746 483,642 440,537 Food Services and Drinking
Places
358,932 485,841 530,905 547,046 557,530
Other Retail Group 274,862 304,882 301,592 285,535 275,890 Total Retail and Food
Services
$2,229,895 $2,769,215 $2,821,003 $2,756,298 $2,631,074
All Other Outlets $ 544,205 $ 700,790 $ 852,661 $ 746,894 $ 737,653 Totals All Outlets $2,774,100 $3,470,005 $3,673,665 $3,503,192 $3,368,726 Source: California Department of Tax and Fee Administration (Taxable Table 4) [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 1004 -
298712901.7 A-5
The following table shows the dollar volume of taxable transactions in the County of Stanislaus from calendar years 2020 through 2024.
TABLE A-5
COUNTY OF STANISLAUS
Taxable Transactions
Calendar Years 2020 through 2024
Retail Outlets 2020 2021 2022 2023 2024
Motor Vehicle and Parts Dealers $ 1,591,266 $ 1,918,425 $1,747,909 $ 1,689,736 $1,618,141 Home Furnishings and
Appliance Stores
295,718 368,219 345,133 264,726 261,301
Building Material and Garden
Equip. and Supplies
772,950 880,551 848,340 779,349 777,511
Food and Beverage Stores
402,906 424,792 439,078 436,035 436,976
Gasoline Stations
601,273 869,298 1,115,936 1,080,229 1,047,681
Clothing and Clothing
Accessories Stores
367,348 541,404 517,595 523,338 529,956
General Merchandise Stores 949,056 1,098,048 1,104,059 1,065,877 1,083,954 Food Services and Drinking
Places
743,125 994,901 1,074,992 1,118,764 1,149,613
Other Retail Group 1,207,596 1,600,292 1,498,681 1,775,336 1,783,265 Total Retail and Food Services $ 6,931,238 $ 8,695,930 $8,691,722 $ 8,733,391 $8,688,397 All Other Outlets $ 3,156,057 $ 3,640,635 $4,328,716 $ 4,070,406 $3,963,505 Totals All Outlets $10,087,295 $12,336,565 $13,020,438 $12,803,798 $12,651,902 Source: California Department of Tax and Fee Administration (Taxable Table 3) Construction Trends
“Single Family Housing,” includes detached, semi-detached, rowhouse and townhouse units. Rowhouses and townhouses are included when each unit is separated from the adjacent unit by an unbroken ground-to-roof party or fire wall. Condominiums are included in single-family when they are of zero-lot-line or zero-property-line construction; when units are separated by an air space; or, when units are separated by an unbroken ground-to-roof party or fire wall. “Multi-Family Housing,” includes duplexes, 3-4-unit structures and apartment-type structures with five units or more. Multifamily housing also includes condominium units in structures of more than one living unit that do not meet the above single-family housing definition. “Residential Alterations and Additions,” means alterations, additions, and conversions to residential structures, excluding special installation permits for electrical, plumbing, heating, air-conditioning, or similar mechanical work, or installation of fire escapes, elevators, signs, etc. “New Commercial,” includes new hotels and motels, office and bank buildings, stores and other mercantile buildings, parking garages, service stations, and amusement and recreational buildings. “New Industrial,” includes manufacturing plants and affiliated buildings. “Other New Nonresidential,” includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings, and miscellaneous nonresidential structures. “Nonresidential Alterations and Additions,” means alterations, additions, and conversions to nonresidential structures, excluding special installation permits for electrical, plumbing, healing, air-conditioning, or similar mechanical work, or installation of fire escapes, elevators and signs, etc. #22..
- 1005 -
298712901.7 A-6
Provided below is information regarding issued building permits for the City of Modesto for calendar years 2020 through 2024.
TABLE A-6
CITY OF MODESTO
Housing Unit Building Permits Issued
2020 2021 2022 2023 2024
Total Units 217 311 271 273 173
Units in Single Family 213 191 236 211 159
Units in All Multifamily 4 120 35 62 14
Units in 2-Unit - Multifamily 0 0 6 2 2
Units in 3 & 4 - Unit Multifamily 4 0 0 0 0
Units in 5+ - Unit Multifamily 0 120 29 60 12
Source: U.S. Department of Housing and Urban Development, HUD User, Office of Policy Development and Research, SOCDS (State of the Cities Data Systems) Building Permits.
Agriculture
The following table summarizes historical agricultural production within the County for calendar years 2019 through 2023.
TABLE A-7
STANISLAUS COUNTY
Agricultural Production
2019-2023
Commodity 2019 2020 2021 2022 2023
Apiary $ 109,523,000 $ 105,638,000 $ 111,811,000 $107,970,000 $99,844,000 Field Crops 214,113,000 172,816,000 219,525,000 273,149,000 200,498,000 Fruit and Nut Crops 1,484,057,000 1,365,573,000 1,376,029,000 962,169,000 1,056,480,000 Livestock & Poultry 636,561,000 608,798,000 503,209,000 584,393,000 662,659,000 Livestock & Poultry Products 659,186,000 782,421,000 849,181,000 1,222,566,000 823,099,000 Nursery Products 227,537,000 210,746,000 207,781,000 242,995,000 207,910,000 Organic Products 61,415,000 37,528,000 69,831,000 81,200,000 - (2)
Other Agriculture 25,018,000 29,047,000 31,628,000 35,933,000 29,921,000 Vegetable Crops 180,994,000 163,526,000 176,679,000 216,170,000 285,671,000 TOTALS(1) $3,598,404,000 $3,476,093,000 $3,545,672,000 $3,726,482,000 $3,366,082,000 (1) Totals may not calculate due to rounding.
(2) Included with Vegetable Crops.
Source: Stanislaus County Department of Agriculture.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
#22..
- 1006 -
APPENDIX B
CITY OF MODESTO ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR FISCAL YEAR 2023-24 #22..
- 1007 -
APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
#22..
- 1008 -
APPENDIX D
PROPOSED FORM OF OPINION OF BOND COUNSEL
#22..
- 1009 -
298712901.7 E-1
APPENDIX E
FORM OF CONTINUING DISCLOSURE AGREEMENT
DISCLOSURE DISSEMINATION AGENT AGREEMENT
This Disclosure Dissemination Agent Agreement (the “Disclosure Agreement”), dated as of [______], 2025, is executed and delivered by the City of Modesto, California (the “Issuer”) and Digital Assurance Certification, L.L.C., as exclusive Disclosure Dissemination Agent (the “Disclosure Dissemination Agent” or “DAC”) for the benefit of the Holders (hereinafter defined) of the Bonds (hereinafter defined) and in order to assist the Issuer in processing certain continuing disclosure with respect to the Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time (the “Rule”).
The services provided under this Disclosure Agreement solely relate to the execution of instructions received from the Issuer through use of the DAC system and do not constitute “advice” within the meaning of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). DAC will not provide any advice or recommendation to the Issuer or anyone on the Issuer’s behalf regarding the “issuance of municipal securities” or any “municipal financial product” as defined in the Act and nothing in this Disclosure Agreement shall be interpreted to the contrary.
DAC is not a “Municipal Advisor” as such term is defined in Section 15B of the Securities Exchange Act of 1934, as amended, and related rules.
SECTION 1. Definitions. Capitalized terms not otherwise defined in this Disclosure Agreement shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, in the Official Statement (hereinafter defined). The capitalized terms shall have the following meanings:
“Annual Filing Date” means the date, set in Sections 2(a) and 2(f) hereof, by which the Annual Report is to be filed with the MSRB.
“Annual Financial Information” means annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement. “Annual Report” means an Annual Report containing Annual Financial Information described in and consistent with Section 3 of this Disclosure Agreement. “Audited Financial Statements” means the annual financial statements of the Issuer for the prior fiscal year, certified by an independent auditor as prepared in accordance with generally accepted accounting principles or otherwise, as such term is used in paragraph (b)(5)(i)(B) of the Rule and specified in Section 3(b) of this Disclosure Agreement.
“Bonds” means the bonds as listed on the attached Exhibit A, with the 9-digit CUSIP numbers relating thereto.
“Certification” means a written certification of compliance signed by the Disclosure Representative stating that the Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure delivered to the Disclosure Dissemination Agent is the Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure required to be submitted to the MSRB under this Disclosure Agreement. A Certification shall accompany each such document submitted to the Disclosure Dissemination Agent by the Issuer and include the full name of the Bonds and the 9-digit CUSIP numbers for all Bonds to which the document applies.
“Disclosure Dissemination Agent” means Digital Assurance Certification, L.L.C, acting in its capacity as Disclosure Dissemination Agent hereunder, or any successor Disclosure Dissemination Agent designated in writing by the Issuer pursuant to Section 9 hereof.
#22..
- 1010 -
298712901.7 E-2
“Disclosure Representative” means the Director of Finance or his or her designee, or such other person as the Issuer shall designate in writing to the Disclosure Dissemination Agent from time to time as the person responsible for providing Information to the Disclosure Dissemination Agent. “Failure to File Event” means the Issuer’s failure to file an Annual Report on or before the Annual Filing Date.
“Financial Obligation” as used in this Disclosure Agreement is defined in the Rule, as may be amended, as (i) a debt obligation; (ii) derivative instrument entered into in connection with, or pledged as a security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “Financial Obligation” shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
“Force Majeure Event” means: (i) acts of God, war, or terrorist action; (ii) failure or shut-down of the Electronic Municipal Market Access system maintained by the MSRB; or (iii) to the extent beyond the Disclosure Dissemination Agent’s reasonable control, interruptions in telecommunications or utilities services, failure, malfunction or error of any telecommunications, computer or other electrical, mechanical or technological application, service or system, computer virus, interruptions in Internet service or telephone service (including due to a virus, electrical delivery problem or similar occurrence) that affect Internet users generally, or in the local area in which the Disclosure Dissemination Agent or the MSRB is located, or acts of any government, regulatory or any other competent authority the effect of which is to prohibit the Disclosure Dissemination Agent from performance of its obligations under this Disclosure Agreement. “Holder” means any person (a) having the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax purposes. “Information” means, collectively, the Annual Reports, the Audited Financial Statements, the Notice Event notices, the Failure to File Event notices, the Voluntary Event Disclosures and the Voluntary Financial Disclosures.
“MSRB” means the Municipal Securities Rulemaking Board, or any successor thereto, established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934. “Notice Event” means any of the events enumerated in paragraph (b)(5)(i)(C) of the Rule and listed in Section 4(a) of this Disclosure Agreement.
“Obligated Person” means any person, including the Issuer, who is either generally or through an enterprise, fund, or account of such person committed by contract or other arrangement to support payment of all, or part of the obligations on the Bonds (other than providers of municipal bond insurance, letters of credit, or other liquidity facilities), as shown on Exhibit A.
“Official Statement” means that Official Statement prepared by the Issuer in connection with the Bonds, as listed in Exhibit A.
“Trustee” means the institution, if any, identified as such in the document under which the Bonds were issued. “Voluntary Event Disclosure” means information of the category specified in any of subsections (e)(vi)(1) through (e)(vi)(10) of Section 2 of this Disclosure Agreement that is accompanied by a Certification of the Disclosure Representative containing the information prescribed by Section 7(a) of this Disclosure Agreement.
“Voluntary Financial Disclosure” means information of the category specified in any of subsections (e)(vii)(1) through (e)(vii)(9) of Section 2 of this Disclosure Agreement that is accompanied by a #22..
- 1011 -
298712901.7 E-3
Certification of the Disclosure Representative containing the information prescribed by Section 7(b) of this Disclosure Agreement.
SECTION 2. Provision of Annual Reports.
(a) The Issuer shall provide, annually, an electronic copy of the Annual Report and Certification to the Disclosure Dissemination Agent, together with a copy for the Trustee, not later than the Annual Filing Date. Promptly upon receipt of an electronic copy of the Annual Report and the Certification, the Disclosure Dissemination Agent shall provide an Annual Report to the MSRB not later than the 25th day of February following the end of each fiscal year of the Issuer, commencing with the fiscal year ending June 30, 2025. Such date and each anniversary thereof is the Annual Filing Date. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 3 of this Disclosure Agreement.
(b) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination Agent has not received a copy of the Annual Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail) to remind the Issuer of its undertaking to provide the Annual Report pursuant to Section 2(a). Upon such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination Agent with an electronic copy of the Annual Report and the Certification no later than two (2) business days prior to the Annual Filing Date, or (ii) instruct the Disclosure Dissemination Agent in writing that the Issuer will not be able to file the Annual Report within the time required under this Disclosure Agreement, state the date by which the Annual Report for such year will be provided and instruct the Disclosure Dissemination Agent to immediately send a Failure to File Event notice to the MSRB in substantially the form attached as Exhibit B, which may be accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.
(c) If the Disclosure Dissemination Agent has not received an Annual Report and Certification by 6:00 p.m. Eastern time on Annual Filing Date (or, if such Annual Filing Date falls on a Saturday, Sunday or holiday, then the first business day thereafter) for the Annual Report, a Failure to File Event shall have occurred and the Issuer irrevocably directs the Disclosure Dissemination Agent to immediately send a Failure to File Event notice to the MSRB in substantially the form attached as Exhibit B without reference to the anticipated filing date for the Annual Report, which may be accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.
(d) If Audited Financial Statements of the Issuer are prepared but not available prior to the Annual Filing Date, the Issuer shall, when the Audited Financial Statements are available, provide at such time an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certification, together with a copy for the Trustee, if any, for filing with the MSRB.
(e) The Disclosure Dissemination Agent shall:
(i) verify the filing specifications of the MSRB each year prior to the Annual Filing Date; (ii) upon receipt, promptly file each Annual Report received under Sections 2(a) and 2(b) hereof with the MSRB;
(iii) upon receipt, promptly file each Audited Financial Statement received under Section 2(d) hereof with the MSRB;
(iv) upon receipt, promptly file the text of each Notice Event received under Sections 4(a) and 4(b)(ii) hereof with the MSRB, identifying the Notice Event as instructed by the Issuer pursuant to Section 4(a) or 4(b)(ii) hereof (being any of the categories set forth below) when filing pursuant to Section 4(c) of this Disclosure Agreement:
1. “Principal and interest payment delinquencies;”
#22..
- 1012 -
298712901.7 E-4
2. “Non-Payment related defaults, if material;”
3. “Unscheduled draws on debt service reserves reflecting financial difficulties;”
4. “Unscheduled draws on credit enhancements reflecting financial difficulties;”
5. “Substitution of credit or liquidity providers, or their failure to perform;”
6. “Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;”
7. “Modifications to rights of holders of the Bonds, if material;”
8. “Bond calls, if material, and tender offers;”
9. “Defeasances;”
10. “Release, substitution, or sale of property securing repayment of the securities, if material;”
11. “Rating changes;”
12. “Bankruptcy, insolvency, receivership or similar event of the obligated person;”4
13. “The consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;”
14. “Appointment of a successor or additional trustee, or the change of name of a trustee, if material;”
15. “Incurrence of a Financial Obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect security holders, if material; and
16. “Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties.”
(v) upon receipt (or irrevocable direction pursuant to Section 2(c) of this Disclosure Agreement, as applicable), promptly file a completed copy of Exhibit B to this Disclosure Agreement with the MSRB, identifying the filing as “Failure to provide annual financial 4 This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an Obligated Person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Obligated Person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Obligated Person.
#22..
- 1013 -
298712901.7 E-5
information as required” when filing pursuant to Section 2(b)(ii) or Section 2(c) of this Disclosure Agreement;
(vi) upon receipt, promptly file the text of each Voluntary Event Disclosure received under Section 7(a) hereof with the MSRB, identifying the Voluntary Event Disclosure as instructed by the Issuer pursuant to Section 7(a) (being any of the categories set forth below) when filing pursuant to Section 7(a) of this Disclosure Agreement:
1. “amendment to continuing disclosure undertaking;”
2. “change in obligated person;”
3. “notice to investors pursuant to bond documents;”
4. “certain communications from the Internal Revenue Service; other than those communications included in the Rule;”
5. “secondary market purchases;”
6. “bid for auction rate or other securities;”
7. “capital or other financing plan;”
8. “litigation/enforcement action;”