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See APPENDIX D—ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2021, Note 10, for other obligations of the City not payable from its General Fund. Overlapping Debt Set forth below is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc. and effective August 1, 2022. The Debt Report is included for general information purposes only. Neither the City nor the Underwriter has reviewed the Debt Report for completeness or accuracy and neither the City nor the Underwriter makes any representation in connection therewith. The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City. In many cases, long-term obligations issued by a public agency are payable only from the General Fund or other revenues of such public agency. The contents of the Debt Report are as follows: (1) the first column indicates the public agencies which have outstanding debt as of the date of the Debt Report and whose territory overlaps the City; (2) the second column shows the respective percentage of the assessed valuation of the overlapping public agencies identified in column 1 which is represented by property located in the City; and (3) the third column is an apportionment of the dollar amount of each public agency’s outstanding debt (which amount is not shown in the table) to property in the City, as determined by multiplying the total outstanding debt of each agency by the percentage of the City’s assessed valuation represented in column 2.
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Table 19 CITY OF MONTEBELLO DIRECT AND OVERLAPPING BONDED DEBT as of August 1, 2022 CITY OF MONTEBELLO 2021-22 Assessed Valuation: $7,054,531,080 OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 8/1/22 Metropolitan Water District 0.208% $ 41,964 Los Angeles Community College District 0.705 28,205,147 El Rancho Unified School District 0.004 3,731 Los Angeles Unified School District 0.001 102,373 Montebello Unified School District 36.143 53,953,036 TOTAL GROSS OVERLAPPING TAX AND ASSESSMENT DEBT $82,306,251 Less: Los Angeles Unified School District General Obligation Bonds, Election of 2005 Series H and J Qualified School Construction Bonds: Amount accumulated in Interest and Sinking Fund and Set Aside for Repayment 1,549 TOTAL NET OVERLAPPING TAX AND ASSESSMENT DEBT $82,304,702 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Los Angeles County General Fund Obligations 0.398% $ 10,653,334 Los Angeles County Superintendent of Schools Certificates of Participation 0.398 13,546 Los Angeles County Sanitation District No. 2 Authority 9.085 137,902 Los Angeles County Sanitation District No. 15 Authority 0.702 10,907 Los Angeles Unified School District Certificates of Participation 0.001 1,207 Montebello Unified School District Certificates of Participation 36.143 1,913,772 City of Montebello General Fund Obligations 100.000 69,786,441(1) City of Montebello Pension Obligation Bonds 100. 143,015,000 TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $225,532,109 Less: City of Montebello Obligations supported from golf and hotel revenues 10,628,340 City of Montebello Obligations Pension Obligation Bonds supported by Transit Fund 38,142,101 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $176,761,668 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): 100.000 % $13,668,389 GROSS COMBINED TOTAL DEBT $321,506,749(2) NET COMBINED TOTAL DEBT $272,734,759 Ratios to 2021-22 Assessed Valuation: Total Gross Overlapping Tax and Assessment Debt ........................ 1.17% Total Net Overlapping Tax and Assessment Debt ........................... 1.17% Total Gross Direct Debt ($212,801,441) ............................... 3.02% Total Net Direct Debt ($164,031,000) ................................... 2.33% Gross Combined Total Debt ............................................................. 4.56% Net Combined Total Debt ................................................................ 3.87% Ratios to Redevelopment Successor Agency Incremental Valuation ($2,259,537,762): Total Overlapping Tax Increment Debt 0.60% Source: California Municipal Statistics, Inc. (1) Excludes issue to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
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STATE BUDGET INFORMATION Information regarding the State Budget is regularly available at various State-maintained websites. The fiscal year 2022-23 State Budget further described below can be found at the website of the Department of Finance, www.dof.ca.gov, under the heading “California Budget.” Additionally, an impartial analysis of the State’s Budgets is posted by the Office of the Legislative Analyst at www.lao.ca.gov. The information referred to is prepared by the respective State agency maintaining each website and not by the City, and neither the City nor the Underwriter takes responsibility for the continued accuracy of the internet addresses or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by these references. State Budget Process. Through the State budget process, the State enacts legislation that significantly impacts the source, amount and timing of the receipt of revenues by local agencies, including the City. As in recent years, State budget deficits can result in legislation that adversely impacts local agency budgets. The State’s fiscal year begins on July 1 and ends on June 30. The annual budget is proposed by the Governor by January 10 of each year for the next fiscal year (the “Governor’s Budget”). Under State law, the annual proposed Governor’s Budget cannot provide for projected expenditures more than projected revenues and balances available from prior fiscal years. Following the submission of the Governor’s Budget, the Legislature takes up the proposal. Under the State Constitution, money may be drawn from the Treasury only through an appropriation made by law. The primary source of the annual expenditure authorizations is the Budget Act as approved by the Legislature and signed by the Governor. The Budget Act must be approved by a two-thirds majority vote of each House of the Legislature. The Governor may reduce or eliminate specific line items in the Budget Act or any other appropriations bill without vetoing the entire bill. Such individual line-item vetoes are subject to override by a two-thirds majority vote of each House of the Legislature. Appropriations also may be included in legislation other than the Budget Act. Bills containing appropriations (except for K-14 education) must be approved by a two-thirds majority vote in each House of the Legislature and be signed by the Governor. Bills containing K-14 education appropriations only require a simple majority vote. Continuing appropriations, available without regard to fiscal year, may also be provided by statute or the State Constitution. Funds necessary to meet an appropriation need not be in the State Treasury at the time such appropriation is enacted; revenues may be appropriated in anticipation of their receipt. Recent State Budgets. Certain information about the State budgeting process and the State Budget is available through several State sources. A convenient source of information is the State’s website, where recent official statements for State bonds are posted. The references to internet websites shown below are shown for reference and convenience only; the information contained within the websites has not been reviewed by the City and is not incorporated herein by reference. The State Treasurer’s Internet home page at www.treasurer.ca.gov, under the heading “Financial Information,” posts the State’s audited financial statements. In addition, the “Financial Information” section includes the State’s Rule 15c2-12 filings for State bond issues. The “Financial Information” section also includes the “Overview of the State Economy and Government, State Finances, State Indebtedness, Litigation” from the State’s most current Official Statement, which discusses the State budget and the State budget process in greater detail.
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The State Legislative Analyst’s Office (“LAO”) prepares analyses of the proposed and adopted State budgets. The analyses are accessible on the Legislative Analyst’s Internet home page at www.lao.ca.gov under the heading “Products.” 2022-23 State Budget The Governor signed the fiscal year 2022-23 State budget on June 27, 2022, which was amended through a series of legislative bills, many of which were signed by the Governor on June 30, 2022 (as amended, the “2022-23 State Budget”). The 2022-23 State Budget projects a budget surplus of $7.8 billion, down from a surplus of $22.4 billion in the state’s 2021-22 fiscal year. The 2022-23 State Budget projects a decline in general fund revenue levels of $10 billion from fiscal year 2021-22 levels (from $232.7 billion to $222.6 billion) caused primarily from reduced corporation tax collections. The 2022-23 State Budget offsets the reduction in revenues with a $8.6 billion reduction to general fund expenditures as compared to fiscal year 2021-22 levels (from $242.9 billion to $234.3 billion) with the largest reductions in expenditures occurring in expenditures for government operations. The 2022-23 State Budget projects a draw-down of the State’s operating reserve from $18.2 billion in fiscal year 2021-22 to $3.5 billion, but project increases in the state’s public school system stabilization account (from $7.3 billion to $9.5 billion) and rainy-day fund (from $20.3 billion to $23.3 billion). The State Appropriations Limit, or Gann Limit, caps the amount of revenues from proceeds of taxes that can be appropriated by the State, which serves to constrain State spending. Any excess revenues appropriated above the State’s limit over a two-year period must ultimately be reallocated evenly between schools and taxpayer refunds. The 2022-23 State Budget projects the State to be $11 billion below the limit based on statutory changes enacted as part of the 2022-23 State Budget, which includes expanding the definition of State subventions that must first be accounted for in local limits and revising levels of excluded spending in 2021-22. Legislative Analyst’s Office Analysis. An analysis by the non-partisan, Legislative Analyst’s Office (the “LAO”), published on the LAO website on August 12, 2022 (the “LAO Analysis”), has identified approximately $70.2 billion of discretionary general spending in the 2022-23 State Budget. The $70.2 billion amount includes: (1) the $36.4 billion in spending using the overall general fund surplus and (2) the $33.8 billion surplus within the school and community college budget. Schools and community colleges will receive the largest spending allocations reflecting the significant growth in Proposition 98. For non-educational discretionary spending choices, the LAO Analysis determined that roughly 95% of the surplus was devoted to one-time or temporary purposes, with most spending amounts were dedicated to resources and the environment, transportation, health, and housing and homelessness. The following is a summary of certain significant areas of general fund discretionary spending identified by the LAO Analysis in the 2022-23 State Budget. Reference should be made to the complete LAO Analysis and the 2022-23 State Budget for additional detail. One‑Time Refund Payments to California Taxpayers. The 2022-23 State Budget includes $9.5 billion in general fund spending for a one‑time tax refund payment, the Better for Families tax refund. Payments will be made to taxpayers with adjusted gross incomes (“AGI”) below $500,000 (for joint filers) and $250,000 (for single filers). The payment amount is based on AGI, with larger payments going to taxpayers with lower income levels. For example, a married couple with two children whose AGI was
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$100,000 will receive $1,050. A similar family with AGI of $300,000 will receive $600. The Stated intent of the refund is to help offset higher costs resulting from recent inflation. Energy Package. The 2022-23 State Budget includes a total of $8.1 billion across five years from the general fund for energy‑related activities. This includes $4.3 billion, $2.3 billion in 2021‑22 and $2 billion in 2022‑23, appropriated for specific activities, such as actions to ensure there is adequate Statewide electricity supply over the next few years, financial support to cover unpaid household energy bills that accrued during the pandemic and incentives for long‑duration storage projects. Drought Response and Resilience. The 2022-23 State Budget includes $2 billion from the general fund to respond to current drought conditions, as well as for activities to prepare for future droughts. This includes $1.2 billion, $1.14 billion in 2021‑22 and $55 million in 2022‑23, appropriated for specific activities such as actions to improve water conservation, drinking water supplies and projects, grants for repairs to community water systems and steps to protect fish and wildlife from drought impacts. Wildfire Resilience and Response. The 2022-23 State Budget provides a total of $800 million over three years from the general fund for improving landscape health and wildfire resilience. The 2022-23 State Budget also provides roughly $850 million in 2022‑23, of which about $500 million is ongoing, almost entirely from the general fund, for various augmentations aimed at enhancing the State’s wildfire response. These augmentations mainly support additional personnel and equipment at the California Department of Forestry and Fire Protection, but also provide wildfire response resources for the Governor’s Office of Emergency Services, California Military Department and California Conservation Corps. Zero‑Emissions Vehicles (ZEV). The 2022-23 State Budget provides a total of $6.1 billion over five years for Zero‑Emissions Vehicles (“ZEV”). programs. This includes $2.6 billion from various funds for specific programs, such as $1.5 billion from Proposition 98 general fund for zero‑emission school buses, $600 million from the Greenhouse Gas Reduction Fund for heavy‑duty vehicle incentives and $383 million in federal funds for ZEV fueling infrastructure. Retention Payments for Workers in Certain Health Care Facilities. The 2022-23 State Budget includes roughly $1.1 billion from the general fund in 2021‑22 to provide one‑time retention payments to eligible workers in certain health care facilities, including hospitals and skilled nursing facilities. Eligible workers could receive up to $1,500 from the State. A similar payment is being included in labor bargaining agreements for State employees, paid using a mix of general fund and other funds. Behavioral Health. The 2022-23 State Budget includes roughly $2 billion in general fund expenditures in 2022‑23, approved in the prior year, as part of the multiyear Children and Youth Behavioral Health Initiative. This initiative funds a variety of programs administered by multiple State departments intended to transform behavioral health service delivery for children and youth under age 25. In addition, the 2022-23 State Budget includes $1 billion from the general fund in 2022‑23 ($1.5 billion general fund over two years) to establish a State‑level Behavioral Health Bridge Housing program, which will support the creation of immediate, clinically enhanced housing settings for people experiencing homelessness with serious behavioral health conditions. Medi‑Cal Coverage Expansion to Remaining Undocumented Populations. In recent years, the State has taken steps to expand eligibility for comprehensive Medi‑Cal coverage to undocumented residents under the age of 26 as well as those over the age of 49. The 2022-23 State Budget expands eligibility for
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comprehensive Medi‑Cal coverage to otherwise‑eligible undocumented residents between the ages of 26 and 49 beginning no later than January 1, 2024. Housing and Homelessness. The 2022‑23 State Budget authorizes an additional $4.8 billion from the general fund over three years to nearly 20 major housing and homelessness programs within the Business, Consumer Services, and Housing Agency and the Housing and Community Development Department. Most of the funding is one time or temporary. However, the 2022-23 State Budget does provide $34 million in ongoing funding beginning in 2023‑24 for housing assistance for foster youth and former foster youth. Most of the funding, $2.9 billion from the general fund, is primarily for housing‑related proposals, while $1.9 billion from the general fund is allocated primarily towards homelessness‑related programs. Some of the major uses of housing and homelessness funding in the 2022‑23 State Budget would support encampment resolutions; provide flexible aid to local governments to help address homelessness in their communities; fund affordable housing development; and establish a new homeownership program. The 2022-23 State Budget also provides funding that could be used to help address homelessness and/or housing affordability in other program areas, including the health, courts, and higher education areas. For additional information regarding the 2022-23 State Budget, please see the Department of Finance website at ebudget.ca.gov. For additional information regarding the LAO Analysis, please see the Legislative Analyst’s Office website at lao.ca.gov. The City can take no responsibility for the continued accuracy of the above-referenced internet address as for the or for the accuracy, completeness, or timeliness of information posted therein, and such information is not incorporated herein by reference. Though the City does not expect that the 2022-23 State Budget will have a materially negative effect on its finances, the City cannot predict such impacts with certainty. Additionally, the City cannot predict the accuracy of any projections made in the 2022-23 State Budget. Future State Budgets. The City receives a portion of its funding from the State. Changes in the revenues received by the State can affect the amount of funding, if any, to be received from the State by the City and other cities in the State. In addition, the City cannot predict the outcome of current and future State budget negotiations, the impact that such budgets will have on its finances and operations or what actions will be taken in the future by the State Legislature and Governor to deal with changing State revenues and expenditures. Current and future State budgets will be affected by national and State economic conditions and other factors over which the City has no control. See also “RISK FACTORS—Dependence on State for Certain Revenues.” CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS The constitutional and statutory provisions discussed in this section have the potential to affect the ability of the City to levy taxes and spend tax proceeds for operating and other purposes. Article XIIIA of the California Constitution On June 6, 1978, California voters approved an amendment (commonly known as both Proposition 13 and the Jarvis-Gann Initiative) to the California Constitution. This amendment, which added Article XIIIA to the California Constitution, among other things affects the valuation of real property for the
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purpose of taxation in that it defines the full cash property value to mean “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value,” or thereafter, the appraised value of real property newly constructed, or when a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or a reduction in the consumer price index or comparable local data at a rate not to exceed 2% per year or reduced in the event of declining property value caused by damage, destruction or other factors including a general economic downturn. The amendment further limits the amount of any ad valorem tax on real property to one percent of the full cash value except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978, and 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. Legislation enacted by the California Legislature to implement Article XIIIA provides that all taxable property is shown at full assessed value as described above. In conformity with this procedure, all taxable property value included in this Official Statement (except as noted) is shown at 100% of assessed value and all general tax rates reflect the $1 per $100 of taxable value. Tax rates for voter approved bonded indebtedness and pension liability are also applied to 100% of assessed value. The voters of the State subsequently approved various measures which further amended Article XIIIA. One such amendment generally provides that the purchase or transfer of (i) real property between spouses or (ii) the principal residence and the first $1,000,000 of the Full Cash Value of other real property between parents and children, do not constitute a “purchase” or “change of ownership” triggering reappraisal under Article XIIIA. Other amendments permitted the State Legislature to allow persons over the age of 55 who meet certain criteria or “severely disabled homeowners” who sell their residence and buy or build another of equal or lesser value within two years in the same county, to transfer the old residence’s assessed value to the new residence. Other amendments permit the State Legislature to allow persons who are either 55 years of age or older, or who are “severely disabled,” to transfer the old residence’s assessed value to their new residence located in either the same or a different county and acquired or newly constructed within two years of the sale of their old residence. In the November 1990 election, the voters approved an amendment of Article XIIIA to permit the State Legislature to exclude from the definition of “new construction” certain additions and improvements, including seismic retrofitting improvements and improvements utilizing earthquake hazard mitigation technologies constructed or installed in existing buildings after November 6, 1990. Article XIIIA has also been amended to provide that there would be no increase in the Full Cash Value base in the event of reconstruction of the property damaged or destroyed in a disaster. Section 51 of the Revenue and Taxation Code permits county assessors who have reduced the assessed valuation of a property because of natural disasters, economic downturns or other factors, to subsequently “recapture” such value (up to the pre-decline value of the property) at an annual rate higher than 2%, depending on the assessor’s measure of the restoration of value of the damaged property. Section 4 of Article XIIIA also provides that cities, counties and special districts cannot, without a two-thirds vote of the qualified electors, impose special taxes, which has been interpreted to include special fees more than the cost of providing the services or facility for which the fee is charged, or fees levied for general revenue purposes.
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Both the California State Supreme Court and the United States Supreme Court have upheld the validity of Article XIIIA. Article XIIIB of the California Constitution On November 6, 1979, California voters approved Proposition 4, the Gann Initiative, which added Article XIIIB to the California Constitution. In June 1990, Article XIIIB was amended by the voters through their approval of Proposition 111. Article XIIIB of the California Constitution limits the annual appropriations of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted annually for changes in the cost of living, population and services rendered by the governmental entity. The “base year” for establishing such appropriation limit is Fiscal Year 1978-79. Increases in appropriations by a governmental entity are also permitted (1) if financial responsibility for providing services is transferred to the governmental entity, or (2) for emergencies so long as the appropriations limits for the three years following the emergency are reduced to prevent any aggregate increase above the Constitutional limit. Decreases are required where responsibility for providing services is transferred from the government entity. Appropriations subject to Article XIIIB include generally any authorization to expend during the fiscal year the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds. Appropriations subject to limitation pursuant to Article XIIIB do not include debt service on indebtedness existing or legally authorized as of January 1, 1979, on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for such purpose, appropriations required to comply with mandates of courts or the Federal government, appropriations for qualified outlay projects, and appropriations by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to any entity of government from (1) regulatory licenses, user charges, and user fees to the extent such proceeds exceed the cost of providing the service or regulation, (2) the investment of tax revenues and (3) certain State subventions received by local governments. As amended by Proposition 111, the appropriations limit is tested over consecutive two-year periods. Any excess of the aggregate “proceeds of taxes” received by the City over such two-year period above the combined appropriations limits for those two years is to be returned to taxpayers by reductions in tax rates or fee schedules over the subsequent two years. As amended in June 1990, the appropriations limit for the City in each year is based on the limit for the prior year, adjusted annually for changes in the costs of living and changes in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of government. The change in the cost of living is, at the City’s option, either (1) the percentage change in California per capita personal income, or (2) the percentage change in the local assessment roll for the jurisdiction due to the addition of nonresidential new construction. The measurement of change in population is a blended average of statewide overall population growth and change in attendance at local school and community college (“K-14”) districts. Article XIIIB permits any government entity to change the appropriations limit by vote of the electorate in conformity with statutory and Constitutional voting requirements, but any such voter-approved change can only be effective for a maximum of four years.
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Articles XIIIC and XIIID (Proposition 218) of the California Constitution On November 5, 1996, the voters of the State approved Proposition 218, a constitutional initiative, entitled the “Right to Vote on Taxes Act” (“Proposition 218”). Proposition 218 added Articles XIIIC and XIIID to the California Constitution and contained several interrelated provisions affecting the ability of local governments, including the City, to levy and collect both existing and future taxes and assessments, fees and charges. Section 2 of Article XIIIC requires majority voter approval for the imposition, extension or increase of general taxes and requires two thirds voter approval for the imposition, extension or increase of special taxes. These voter approval requirements of Article XIIIC reduce the flexibility of the City to raise revenues by the levy of general or special taxes and, given such voter approval requirements, no assurance can be given that the City will be able to enact, impose, extend or increase any such taxes in the future to meet increased expenditure requirements. Although a portion of the City’s General Fund revenues are derived from general taxes purported to be governed by Proposition 218, all of such taxes were either imposed, extended or increased prior to the effective date of Proposition 218 or in accordance with the requirements of Proposition 218. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges, such as the TOT, Proposition 172 revenues, or storm water fees which support the City’s General Fund. TOT and other local taxes, assessments, fees and charges, could be subject to reduction or repeal by initiative under Proposition 218. Section 3 of Article XIIIC expressly extends the initiative power to give voters the power to reduce or repeal local taxes, assessments, fees and charges, regardless of the date such taxes, assessments, fees or charges were imposed. Section 3 expands the initiative power to include reducing or repealing assessments, fees and charges that had previously been considered administrative rather than legislative matters and therefore beyond the initiative power. This extension of the initiative power is not limited by the terms of Article XIIIC to fees imposed after November 6, 1996, the effective date of Proposition 218, and absent other legal authority could result in the reduction in any existing taxes, assessments or fees and charges imposed prior to November 6, 1996. “Fees” and “charges” are not expressly defined in Article XIIIC or in SB 919, the Proposition 218 Omnibus Implementation Act enacted in 1997 to prescribe specific procedures and parameters for local jurisdictions in complying with Article XIIIC and Article XIIID (“SB 919”). However, on July 24, 2006, the California Supreme Court ruled in Bighorn-Desert View Water Agency v. Virjil (Kelley) (the “Bighorn Decision”) that charges for ongoing water delivery are fees and charges within the meaning Section 3 of Article XIIIC. The California Supreme Court held that such water service charges may, therefore, be reduced or repealed through a local voter initiative pursuant to Section 3 of Article XIIIC. The Bighorn Decision has been interpreted to mean that ongoing water delivery charges are also property-related fees and charges within the meaning of Article XIIID. In the Bighorn Decision, the Supreme Court stated that nothing in Section 3 of Article XIIIC authorizes initiative measures that impose voter-approval requirements for future increases in fees or charges for water delivery. The Supreme Court stated that water providers may determine rates and charges upon proper action of the governing body and that the governing body may increase a charge which was not affected by a prior initiative or impose an entirely new charge.
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The Supreme Court further stated in the Bighorn Decision that it was not holding that the initiative power is free of all limitations and was not determining whether the initiative power is subject to the statutory provision requiring that water and wastewater service charges be set at a level that will pay debt service on bonded debt and operating expenses. Such initiative power could be subject to the limitations imposed on the impairment of contracts under the contract clause of the United States Constitution. Additionally, SB 919 provides that the initiative power provided for in Proposition 218 “shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after (the effective date of Proposition 218) assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights” protected by the United States Constitution. Article XIIIC also removes many of the limitations on the initiative power in matters of reducing or repealing any local tax, assessment, fee or charge. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. “Assessments,” “fees” and “charges” are not defined in Article XIIIC, and it is unclear whether these terms are intended to have the same meanings for purposes of Article XIIIC as for Article XIIID described below. If not, the scope of the initiative power under Article XIIIC potentially could include any General Fund local tax, assessment, or fee not received from or imposed by the federal or State government or derived from investment income. If the City is unable to continue to collect assessment revenues for a particular program, the program might have to be curtailed and/or funded by the City’s General Fund. Given the approval requirements imposed by Article XIIID, the City is unable to predict whether it will be able to continue to collect assessment revenues for these programs. If the City chose to fund any such programs from the General Fund instead, the General Fund budget would be affected. Article XIIID defines a “fee” or “charge” as any levy other than an ad valorem tax, special tax, or assessment imposed by an agency upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property-related service. A “property-related service” is defined as “a public service having a direct relationship to a property ownership” herein. Article XIIID further provides that reliance by an agency on any parcel map (including an assessor’s parcel map) may be considered a significant factor in determining whether a fee or charge is imposed as an incident of property ownership. In the Bighorn Decision, the Supreme Court stated that ongoing water delivery charges are also property-related fees and charges within the meaning of Article XIIID. Article XIIID requires that any agency imposing or increasing any property-related fee or charge must provide written notice thereof to the record owner of each identified parcel upon which such fee or charge is to be imposed and must conduct a public hearing with respect thereto. The proposed fee or charge may not be imposed or increased if a majority of owners of the identified parcels file written protests against it. As a result, if and to the extent that a fee or charge imposed by a local government for water service is ultimately determined to be a “fee” or “charge” as defined in Article XIIID, the local government’s ability to increase such fee or charge may be limited by a majority protest. In addition, Article XIIID also includes a number of limitations applicable to existing fees and charges including provisions to the effect that (i) revenues derived from the fee or charge shall not exceed the funds required to provide the property-related service; (ii) such revenues shall not be used for any purpose other than that for which the fee or charge was imposed; (iii) the amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel; and (iv) no such fee or charge may be imposed for a service unless that
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service is actually used by, or immediately available to, the owner of the property in question. Property-related fees or charges based on potential or future use of a service are not permitted. Depending on the interpretation of what constitutes a “property-related fee” under Article XIIID, there could be future restrictions on the ability of the City’s General Fund to charge its enterprise funds for various services provided. If fees and charges of enterprise funds cannot be appropriately increased or are reduced pursuant to exercise of the initiative power, the City may have to decide whether to supplement any deficiencies in these enterprise funds with moneys from the General Fund or to curtail service, or both. The interpretation and application of Proposition 218 will ultimately be determined by the courts or through implementing legislation with respect to several the matters described above, and it is not possible at this time to predict with certainty the outcome of such determination or the nature or scope of any such legislation. Both Articles XIIIA and XIIIB, as well as Articles XIIIC and XIIID described above, were adopted as measures that qualified for the ballot pursuant to California’s constitutional initiative process. From time-to-time other initiative measures could be adopted, affecting the ability of the City to increase revenues and to increase appropriations. Proposition 1A of 2004 The California Constitution and existing statutes give the legislature authority over property taxes, sales taxes and the VLF. The legislature has authority to change tax rates, the items subject to taxation and the distribution of tax revenues among local governments, schools, and community college districts. The State has used this authority for many purposes, including increasing funding for local services, reducing State costs, reducing taxation, addressing concerns regarding funding for particular local governments, and restructuring local finance. The California Constitution generally requires the State to reimburse the local governments when the State “mandates” a new local program or higher level of service. Due to the ongoing financial difficulties of the State, it has not provided in recent years reimbursements for many mandated costs. In other cases, the State has “suspended” mandates, eliminating both responsibility of the local governments for complying with the mandate and the need for State reimbursements. The 2004 Budget Act, related legislation and the enactment of Proposition 1A of 2004 (described below) dramatically changed the State-local fiscal relationship. These constitutional and statutory changes implemented an agreement negotiated between the Governor and local government officials (the “State-local agreement”) in connection with the 2004 Budget Act. One change related to the reduction of the VLF rate from 2% to 0.65% of the market value of the vehicle. To protect local governments, which had previously received all VLF revenues, the 1.35 percent reduction in VLF revenue to cities and counties from this rate change was backfilled by an increase in the amount of property tax revenues they receive. This worked to the benefit of local governments, because the backfill amount annually increases in proportion to the growth in secured roll property tax revenues, which has historically grown at a higher rate than VLF revenues. Proposition 1A of 2004 requires the State to provide local governments with equal replacement revenues.
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On November 3, 2004, the voters of the State approved Proposition 1A (“Proposition 1A of 2004”). Proposition 1A of 2004 amended the State Constitution to, among other things, reduce the Legislature’s authority over local government revenue sources by placing restrictions on the State’s access to local governments’ property tax, sales tax, and VLF revenues as of November 3, 2004. Pursuant to Proposition 1A of 2004, the State can borrow up to 8% of local property tax revenues but only if the Governor proclaims such action is necessary due to a severe State fiscal hardship and two-thirds of both houses of the State Legislature approve the borrowing. Any amounts borrowed are required to be repaid within three years. Proposition 1A of 2004 also permits the State to borrow from local property tax revenues for no more than two fiscal years within a period of 10 fiscal years, and only if previous borrowings have been repaid. In addition, the State cannot reduce the local sales tax rate or restrict the authority of the local governments to impose or change the distribution of the statewide local sales tax. Proposition 1A of 2004 generally prohibits the State from mandating activities on cities, counties, or special districts without providing the funding needed to comply with the mandates, and if the State does not provide funding for the activity that has been determined to be mandated, the requirement on cities, counties, or special districts to abide by the mandate is suspended. Proposition 1A of 2004 also expanded the definition of what constitutes a mandate to encompass State action that transfers to cities, counties, and special districts financial responsibility for a required program for which the State previously had partial or complete responsibility. The State mandate provisions of Proposition 1A of 2004 do not apply to schools or community colleges or to mandates relating to employee rights. Pursuant to statutory changes made in conjunction with amendments to the fiscal year 2008-09 State Budget Act, the Fiscal Year 2009-10 State Budget Act and related budget legislation adopted by the State Legislature and signed by the Governor in February 2012 (collectively, the “February 2012 Budget Package”), the VLF rate increased from 0.65% to 1.15% effective May 19, 2012. Of this 0.50% increase, 0.35% will flow to the State general fund, and 0.15% will support various law enforcement programs previously funded by the State general fund. Proposition 22 Proposition 22 (“Proposition 22”), which was approved by California voters in November 2010, prohibits the State, even during a period of severe fiscal hardship, from delaying the distribution of tax revenues for transportation, redevelopment, or local government projects and services and prohibits fuel tax revenues from being loaned for cash-flow or budget balancing purposes to the State general fund or any other State fund. Due to the prohibition with respect to State’s ability to take, reallocate, and borrow money raised by local governments for local purposes, Proposition 22 supersedes certain provisions of Proposition 1A of 2004. See “ – Proposition 1 A of 2004” herein. In addition, Proposition 22 generally eliminates the State’s authority to temporarily shift property taxes from cities, counties, and special districts to schools, temporarily increase schools’ and community college districts’ share of property tax revenues, prohibits the State from borrowing or redirecting redevelopment property tax revenues or requiring increased pass-through payments thereof, and prohibits the State from reallocating vehicle license fee revenues to pay for State imposed mandates. In addition, Proposition 22 requires a two-thirds vote of each house of the State Legislature and a public hearing process to be conducted to change the amount of fuel excise tax revenues shared with cities and counties. The LAO states that Proposition 22 will prohibit the State from enacting new laws that require redevelopment agencies to shift funds to schools or other agencies. Proposition 22 prohibits the State from borrowing sales taxes or excise taxes on motor vehicle fuels or changing the allocations of those taxes among local government except pursuant to specified procedures involving public notices and hearings. In addition, Proposition 22 requires that the State apply the formula
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setting forth the allocation of State fuel tax revenues to local agencies revert to the formula in effect on June 30, 2009. The LAO anticipated that Proposition 22 would require the State to adopt alternative actions to address its fiscal and policy objectives, particularly with respect to short-term cash flow need. The City does not believe that Proposition 22 will have a significant impact on its revenues and expenditures. Proposition 26 Proposition 26 (“Proposition 26”), which was approved by California voters on November 2, 2010, revises the California Constitution to expand the definition of “taxes.” Proposition 26 re-categorizes many State and local fees as taxes and specifies a requirement of two-thirds voter approval for taxes levied by local governments. Proposition 26 requires the State obtain the approval of two-thirds of both houses of the State Legislature for any proposed change in State statutes, which would result in any taxpayer paying a higher tax. Proposition 26 eliminates the previous practice whereby a tax increase coupled with a tax reduction that resulted in an overall neutral fiscal effect was subject only to a majority vote in the State Legislature. Furthermore, pursuant to Proposition 26, any increase in a fee above the amount needed to provide the specific service or benefit is deemed to be a tax and the approval thereof will require such two-thirds vote of approval to be effective. In addition, for State imposed fees and charges, any fee or charge adopted after January 1, 2010, with a majority vote of approval of the State Legislature which would have required a two-thirds vote of approval of the State Legislature if Proposition 26 were effective at the time of such adoption is repealed as of November 2011 absent the re-adoption by the requisite two-thirds vote. Proposition 26 amends Article XIII C of the State Constitution to state that a “tax” means a levy, charge or exaction of any kind imposed by a local government, except (1) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (2) 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 costs to the local government of providing the service or product; (3) a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (4) a charge imposed for entrance to or use of local government property or the purchase rental or lease of local government property; (5) a fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government as a result of a violation of law; (6) a charge imposed as a condition of property development; or (7) assessments and property related fees imposed in accordance with the provisions of Proposition 218. Proposition 26 applies to any levy, charge or exaction imposed, increased, or extended by local government on or after November 3, 2010, unless exempted, as stated above. Accordingly, fees adopted prior to that date are not subject to the measure until they are increased or extended or if it is determined that an exemption applies. As of the date hereof, none of the City’s fees or charges has been challenged in a court of law in connection with the requirements of Proposition 26. If the local government specifies how the funds from a proposed local tax are to be used, the approval will be subject to a two-thirds voter requirement. If the local government does not specify how the funds from a proposed local tax are to be used, the approval will be subject to a fifty percent voter requirement. Proposed local government fees that are not subject to Proposition 26 generally are subject to
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the approval of a majority of the governing body. In general, proposed property charges will be subject to a majority vote of approval by the governing body although certain proposed property charges will also require approval by a majority of the affected property owners. Proposition 19 On November 3, 2020, State voters approved a constitutional amendment entitled Property Tax Transfers, Exemptions and Revenue for Wildfire Agencies and Counties Amendment (“Proposition 19”), which will: (i) expand special rules that give property tax savings to homeowners that are over the age of 55, severely disabled, or whose property has been impacted by a natural disaster or contamination, when they buy a different home; (ii) narrow existing special rules for inherited properties; and (iii) broaden the scope of legal entity ownership changes that trigger reassessment of properties. The City cannot make any assurance as to what effect the implementation of Proposition 19 will have on assessed valuation of real property in the City. Future Initiatives Articles XIIIA, XIIIB, XIIIC and XIIID, Propositions 1A, 22, 26 and 19 were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time, other initiative measures could be adopted, which may place further limitations on the ability of the State, the City or local districts to increase revenues or to increase appropriations which may affect the City’s revenues or its ability to expend its revenues. RISK FACTORS This section provides a general overview of certain risk factors which should be considered, in addition to the other matters set forth in this Official Statement, in evaluating an investment in the Series 2022B Bonds. This section is not meant to be a comprehensive or definitive discussion of the risks associated with an investment in the Series 2022B Bonds, and the order in which this information is presented does not necessarily reflect the relative importance of various risks. Potential investors in the Series 2022B Bonds are advised to consider the following factors, among others, and to review this entire Official Statement to obtain information essential to the making of an informed investment decision. Any one or more of the risk factors discussed below, among others, could lead to a decrease in the market value and/or in the marketability of the Series 2022B Bonds. There can be no assurance that other risk factors not discussed herein will not become material in the future. Bonds are Unsecured General Fund Obligations of the City The obligation of the City to make Lease Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The Indenture does not create a pledge, lien or encumbrance upon the funds of the City. Pursuant to law, the Series 2022B Bonds are payable from any available funds of the City. The City covenants in the Facility Lease to punctually pay the interest on and principal of every Bond in strict conformity with the terms thereof and of the Indenture. The City is liable and may become liable on other obligations payable from general revenues, some of which may have a priority over payments of the principal of, and interest on, the Series 2022B Bonds, or which the City, in its discretion, may determine to pay prior to the principal of, and interest on, the Series 2022B Bonds.
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A variety of national, state or regional factors, which are beyond the control of the City could reduce the City’s General Fund revenues or increase the City’s General Fund expenditures. If the amounts which the City is obligated to pay in a Fiscal Year exceed the City’s revenues for such year, the City may choose to make some payments rather than making other payments, including payments on the Series 2022B Bonds, based on the perceived needs of the City. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues or is required to expend available revenues to preserve the public health, safety and welfare. See “STATE CONSTITUTIONAL LIMITATIONS ON CITY REVENUES AND APPROPRIATIONS.” The City has the capacity to enter into other obligations payable from the City’s General Fund without the consent of or prior notice to the Owners of the Series 2022B Bonds and has expressly reserved the right to issue or incur other obligations for any of its corporate purposes. To the extent that additional obligations are incurred by the City, the funds available to make payments of the principal of, and interest on, the Series 2022B Bonds may be decreased. In the event the City’s revenue sources are less than its total obligations, the City could choose to fund other activities before making payment of the principal of, and interest on, the Series 2022B Bonds. The same result could occur if State constitutional expenditure limitations were to prohibit the City from appropriating and spending all of its otherwise available revenues. Limitation on Remedies; Bankruptcy The enforceability of the rights and remedies of the Holders of the Series 2022B Bonds are subject to several limitations, including bankruptcy, moratorium, insolvency or other laws affecting creditor’s rights or remedies and is subject to general principles of equity (regardless of whether such enforceability is considered in equity or at law), to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against governmental entities in the State. In addition, the rights and remedies of the Owners may be limited by and are subject to the provisions of federal bankruptcy laws and to other laws or equitable principles that may affect the enforcement of creditors’ rights. The City is a governmental unit and therefore cannot be the subject of an involuntary case under the United States Bankruptcy Code (the “Bankruptcy Code”). However, the City is a municipality and therefore may seek voluntary protection from its creditors pursuant to Chapter 9 of the Bankruptcy Code for purposes of adjusting its debts. If the City is in bankruptcy, the parties (including the Trustee and the Owners) may be prohibited from taking any action to collect any amount from the City or to enforce any obligation of the City, unless the permission of the bankruptcy court is obtained. These restrictions may also prevent the Trustee from making payments to the holders of the Series 2022B Bonds from funds in the Trustee’s possession. The City may be able, without the consent and over the objection of the Trustee or the Owners, to alter the priority, interest rate, payment terms, maturity dates, payment sources, covenants, and other terms or provisions of the Indenture and the Series 2022B Bonds, if the bankruptcy court determines that the alterations are fair and equitable. There may be delays in payments on the Series 2022B Bonds while the court considers any of these issues. There may be other possible effects of a bankruptcy of the City that could result in delays or reductions in payments on the Series 2022B Bonds or result in losses to the Owners. Regardless of any
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specific adverse determinations in a City bankruptcy proceeding, the fact of a City bankruptcy proceeding could have an adverse effect on the liquidity and value of the Series 2022B Bonds. The opinion to be delivered by Bond Counsel concurrently with the execution and delivery of the Series 2022B Bonds will be subject to various limitations on remedies including those related to bankruptcy and the various other legal opinions to be delivered concurrently with the issuance of the Series 2022B Bonds will be similarly qualified. See APPENDIX E—FORM OF OPINION OF BOND COUNSEL. If the City fails to comply with its covenants under the Facility Lease or fails to pay Lease Payments, there can be no assurance of the availability of remedies adequate to protect the interest of the Beneficial Owners of the Series 2022B Bonds. Abatement In the event of loss or substantial interference in the use and possession by the City of all or any portion of the Project caused by material damage, title defect, destruction to or condemnation of the Project, Lease Payments will be subject to abatement. See “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS—Abatement of Lease Payments.” In the event that such component of the Project, if damaged or destroyed by an insured casualty, could not be replaced during the period of in which proceeds of rental interruption insurance, if any, will be available in lieu of Lease Payments, or in the event that casualty insurance proceeds or condemnation proceeds are insufficient to provide for complete repair or replacement of such component of the Project or prepayment of the Series 2022B Bonds, there could be insufficient funds to make payments to Owners in full. It is not always possible to predict the circumstances under which abatement of rental may occur. In addition, there is no statute, case or other law specifying how such an abatement of rental should be measured. For example, it is not clear whether fair rental value is established as of commencement of the lease or at the time of the abatement. If the latter, it may be that the value of the Project is substantially higher or lower than its value at the time of issuance of the Series 2022B Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the Series 2022B Bonds. If damage, destruction, title defect or eminent domain proceedings with respect to the Project results in abatement of the Lease Payments related to such Project and if such abated Lease Payments, if any, together with moneys from rental interruption or use and occupancy insurance, if any (in the event of any insured loss due to damage or destruction), and eminent domain proceeds, if any, are insufficient to make all payments of principal and interest with respect to the Series 2022B Bonds during the period that the Project is being replaced, repaired or reconstructed, then all or a portion of such payments of principal and interest may not be made. Reduction in Lease Payments due to abatement as provided in the Lease Agreement does not constitute a default thereunder, and no remedy is available to the Series 2022B Bond Owners under the Lease Agreement or the Indenture for nonpayment under such circumstances. See APPENDIX B—SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—LEASE AGREEMENT. Limited Recourse on Default; No Acceleration The ability of the City to comply with its covenants under the Lease Agreement 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 AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.”
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Failure by the City to make Lease Payments, or failure to pay Additional Rental Payments or to observe and perform any other terms, covenants or conditions contained in the Lease Agreement or in the Indenture for a period of 30 days after written notice of such failure and request that it be remedied has been given to the City by the Authority or the Trustee, constitute Events of Default under the Lease Agreement. Such events permit the Trustee or the Authority to pursue any and all remedies available. However, notwithstanding anything in the Lease Agreement or in the Indenture to the contrary, there is no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments that are not then in default to be immediately due and payable. The Trustee is not empowered to sell the Project and use the proceeds of such sale to prepay the Series 2022B Bonds or pay debt service on the Series 2022B Bonds. Following an event of default, the Authority or the Trustee may elect either to terminate the Lease Agreement and seek to collect damages from the City or to maintain the Lease Agreement in effect and seek to collect the Lease payments as they become due. See APPENDIX B—SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—LEASE AGREEMENT. In the event of a default, there is no remedy of acceleration of the total Lease payments due over the term of the Lease Agreement. The City will be liable only for Lease Payments on an annual basis and, in the event of a default, the Authority or Trustee would be required to seek a separate judgment each year for that year’s defaulted Lease Payments. Any such suit for money damages would be subject to limitations on legal remedies against municipalities in California, including a limitation on enforcement of judgments against funds of a fiscal year other than the fiscal year in which the Lease Payments were due and against funds needed to serve the public welfare and interest. Cash Management The City has numerous internal or external means to manage its cash flow, including but not limited to interfund borrowing, intrafund borrowing and tax and revenue anticipation notes which may be employed to the extent the City Council is required to make budget adjustments to maintain a balanced budget. If the City does not take required actions and the budget remains out of balance, the cash requirements of the City may exceed available cash flow. The ability of the City to borrow on an interim basis to meet any cash shortfalls also may be limited if the budget remains out of balance for a sustained period. The City has the legal authority to issue “warrants” in place of cash to meet various types of expenditures or appropriations as an additional means to manage its cash flow. See “CITY FINANCIAL INFORMATION.” COVID-19 Pandemic The COVID-19 Pandemic has affected travel, commerce, investment values, and financial markets globally, and is widely expected to continue to affect economic output worldwide and within the City, the County, and the State. While federal and state governments (including California) have enacted legislation and taken executive actions seeking to mitigate the negative public health and economic impacts of the Pandemic, no assurances can be given that these interventions will have the intended effects, or that these interventions will continue in the future. The economic impacts on the City resulting from the COVID-19 Pandemic are discussed under “CITY FINANCIAL INFORMATION.” The ultimate impact of the COVID-19 Pandemic on the City’s operations and finances is unknown. The City has developed what it believes to be reasonable budgeted projections of the magnitude of these impacts on its revenues and on its expenditures, but the COVID-19 Pandemic is ongoing, and the City cannot predict how and when it will be resolved.
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Additional information about the State’s and the County’s current status can be found at the State’s website, www.covid19.ca.gov and at the County’s website www.publichealth.lacounty.gov for up-to-date information regarding COVID-19 restrictions in place in the State and in the County. Reference to the State’s and the County’s website is included in this Official Statement for general information only and information on such website is not included in this Official Statement by reference to such website. Concentration of Revenue Sources The City relies on, among other things, a 0.75% voter-approved sales tax known as Measure H. Together with the City’s portion of the State Sales Tax, the City’s combined General Fund sales tax revenues have represented approximately 37% of the City’s total General Fund revenues in recent years. An economic downturn or other reduction in commercial activity within the City resulting in lower sales tax collections could materially and adversely impact the City’s revenues and its ability to make principal payments on the Series 2022B Bonds when due. For additional discussion of sales and use taxes and of Measure H, see “CITY FINANCIAL INFORMATION –Primary Sources of General Fund Revenues and –Sales and Use Taxes.” Impact of Enterprise Operations on the City’s General Fund In prior years, City has made transfers from its General Fund to cover operating losses in the Golf Course Fund. While the construction of the Project and other improvements to the City Golf Course are expected to reduce or eliminate the need for transfers from the City’s General Fund to the Golf Course Fund, the City cannot project whether the revenues in the Golf Course Fund will exceed expenditures for current and future years. If and to the extent such Golf Course Fund revenues do not exceed Golf Course Fund expenditures, additional transfers out from the City’s General Fund may be required. The City’s General Fund faces risks of unbudgeted expenditures if it becomes obligated to make debt service payments with respect to the HGI Bonds or the H2S Bonds or with respect to the Series 2022B Bonds. While the City does not anticipate needing to make transfers from its General Fund to pay debt service on the HGI Bonds, the H2S Bonds, or the Series 2022B Bonds, changing economic circumstances could make such transfers necessary in the future if the net revenues from the Hilton Garden Inn are insufficient to pay debt service on the HGI Bonds, net revenues from the Home2Suites are insufficient to pay debt service on the H2S Bonds, or Sublease Payments from Topgolf Montebello are insufficient to debt service payments on the Series 2022B Bonds. See “RISK FACTORS—Impact of Enterprise Operations on the City’s General Fund” and “RISK FACTORS—Ability of the City’s General Fund to Make Lease Payments.” Construction Risks, Project Completion The proceeds of the Series 2022B Bonds will be used to pay the costs of acquisition and construction of the Project. As of the date of this Official Statement, construction has not yet commenced. The Series 2022B Bonds are being sold based upon bids received as of the date of this Official Statement for construction of the Project and reasonable estimates of the costs associated with the acquisition by the Authority of the Project. There can be no assurance that the Project will be completed for the costs and within the time period described in this Official Statement or that the proceeds of the Series 2022B Bonds available to pay the costs of acquisition and construction of the Project will be sufficient. Failure to complete, a delay in completion or subsequent damage to the Project could delay or preclude the opening of the Project
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as expected. Moreover, such a delay in completion or damage to the Project during construction could increase the costs of constructing the Project so that Series 2022B Bond proceeds are insufficient. Additionally, failure in General Contractor or subcontractor performance and integrity, the bankruptcy of the General Contractor or subcontractors, the unavailability and increased cost of labor and materials, among other unexpected factors, could cause such a failure of timely, on-budget completion. Although the Authority believes it has funded interest on the Series 2022B Bonds and construction contingency in adequate amounts to permit acquisition and construction of the Project, there can be no assurance that the Project will be completed by the General Contractor for the costs and within the time set forth in this Official Statement. See “THE PROJECT—Construction of Project. Force Majeure Should there be a delay of construction caused by an event which is beyond the reasonable control of the General Contractor to avoid or mitigate, then the obligation of the General Contractor to perform its duties under the Construction Contract may be suspended during the period which such inability caused. With respect to the construction of the Project, such delays may only be caused by earthquakes and other acts of god (excluding floods and adverse weather conditions which the General Contractor has provided for in the construction schedule and will not extend the time for performance under the Construction Contract); war, civil commotion or riots; orders, restraints or prohibitions by the United States of America or a state, board, department, commission or agency having jurisdiction over the Project, provided that such orders, restraints or prohibitions are not in any way related to acts or omissions of the Project Contractor or any of its subcontractors; the City’s failure to provide approvals of the Project work in accordance with schedules and procedures established to date by the City or the City’s imposition of any additional permit requirements or approvals other than those established by the City to date, provided that such failure or imposition is not in any way related to any acts or omissions of the General Contractor or any of its subcontractors. Competition Generally Consumers have a wide variety of options when deciding how to spend their leisure time and discretionary entertainment dollars. The Project will compete for consumers’ time and discretionary entertainment dollars against a broad range of other out-of-home entertainment options, as well as increasingly sophisticated forms of home-based entertainment. Other out-of-home entertainment options against which the Project will compete include other dining and entertainment venues, sports activity centers, traditional driving ranges and other establishments offering simulated golf or multi-sport experiences (including Toptracer Range and Full Swing licensees), arcades and entertainment centers, movie theaters, sporting events, bowling alleys, nightclubs, casinos, bars and restaurants. In many cases, these businesses, or the entities operating them, are larger and have significantly greater financial resources and name recognition, longer operating histories, and concepts with which consumers may be more familiar, and are better established in the markets where venues are located or are planned to be located. As a result, these competitors may be able to invest greater resources or implement more aggressive strategies to attract consumers, including with respect to pricing, and, accordingly, may succeed in attracting those who would otherwise come to the Project. Home-based entertainment options against which the Project compete include internet and video gaming, as well as movies, television and other on-demand content from streaming services. Further, in some cases consumer demand has shifted towards home-based entertainment options and away from out-of-home entertainment, like that which will be offered at the Project, as a result of the impact of the ongoing COVID-19 Pandemic, which may result in greater competition from home-based entertainment options in the future. The failure of the Project to compete
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favorably against these other out-of-home and home-based entertainment options could the ability of Topgolf Montebello to make the sublease payments to the City as required by the Sublease. Consumer and corporate discretionary spending on entertainment and leisure is affected by consumer tastes and preferences, which are subject to change, and there can be no guarantee that golf-oriented entertainment, like that offered at the Project, will continue to appeal to consumers, particularly given the recent shift in consumer spending away from out-of-home entertainment in light of the ongoing COVID-19 Pandemic. Declines in guest traffic and/or guest spending at the Project, whether resulting from unfavorable economic conditions or changes in consumer preferences, will reduce revenue generated by the Project. Competition—Other Competing Golf Courses and Driving Ranges The Project will compete for customers with other Topgolf facilities, golf courses, and driving ranges in the region. The Project will be located adjacent to the City Golf Course. While the relationship between the Project and the City Golf Course is expected to be synergistic in many aspects, potential customers of the Project may opt to play a full round of golf on the City Golf Course instead of visiting the Project. There are two other Topgolf locations in the southland area, Topgolf El Segundo (located approximately 25 miles away from the Project) and Topgolf Ontario (located approximately 35 miles away from the Project). Topgolf Ontario opened on March 1, 2022, and Topgolf El Segundo opened on April 15, 2022. In addition to the other two Topgolf locations in the area and the City Golf Course located adjacent to the Project, there are several other existing golf courses and driving ranges that are competitive with the Project. A list of the locations of certain other golf courses located within 15 miles the Project is provided below. The list below is not intended to be definitive, but instead shows that the Project will face significant competition from existing nearby Golf-related courses and facilities. CERTAIN OTHER GOLF FACILITIES LOCATED WITHIN 15 MILES OF THE PROJECT Facility Location Pico Rivera Golf Club Pico Rivera Rio Hondo Golf Club Downey Bell Gardens Golf Course Bell Gardens Monterey Park Golf Club Monterey Park Alhambra Golf Course Alhambra South Gate Golf Course South Gate California Country Club Whittier Los Amigos Golf Course Downey Arroyo Seco Golf Course South Pasadena Don Knabe Golf Center Norwalk Friendly Hills Country Club Whittier La Mirada Golf Course La Mirada Los Feliz Golf Course Los Angeles Arcadia Golf Course Arcadia Santa Anita Golf Course Arcadia
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Competition from other existing and proposed golf courses and driving range facilities like those listed above could impact the ability of Topgolf Montebello to make sublease payments under the Sublease, the ability of Topgolf International to make any payments required under the Guaranty, and consequently the ability of the City to make the Lease Payments under the Lease Agreement. Reliance on Brand Name Recognition of Topgolf and Competent Management of the Project The rental rates and prices charged at the Project by Topgolf Montebello are dependent in part on national brand name recognition of Topgolf. While the Sublease has an initial term of 20 years, there can be no assurance that Topgolf Montebello will remain the operator of the Project through the maturity of the Bonds. In addition, Topgolf Montebello and the City have the right to terminate the Sublease under certain circumstances. Should Topgolf Montebello no longer operate the project the City may experience difficulties in reletting the Project and the Project may struggle to generate an operating profit. Risks Related to the Sublease [TO COME] Risks Related to the Guarantor [TO COME] Ability of the City’s General Fund to Make Lease Payments Lease Payments are the primary source of security for the Series 2022B Bonds if Sublease Payments are insufficient to make debt service payments on the Series 2022B Bonds and Topgolf International does not make payment under the Guaranty. While the City does not anticipate needing to make transfers from its General Fund to pay debt service on the Series 2022B Bonds, however changing economic circumstances could make such transfers necessary in the future if the Sublease Payments from Topgolf Montebello under the Sublease are insufficient to pay debt service on the Series 2022B Bonds and Topgolf International does not make payment under the Guaranty. The maximum annual debt service on the Series 2022B Bonds is $________. In the unlikely event that the City does not is obligated to make all or a portion of the Lease Payments from its General Fund without also receiving the Sublease Payments or payments under the Guaranty, substantial adjustments to the City’s General Fund budget would be required. Such adjustments may include, but would not be limited to, reductions in staffing or direct services to the community with such changes requiring reorganization or other changes to how services are delivered. Under this scenario, major reductions to services provided by the City would be required, resulting in a negative impact to the community. Such budget adjustments would need to be accomplished over an extended period, and would negatively impact the City’s budget, staffing levels and service provision for a number of years. Natural Disasters General. From time to time, the City has been and could be subject to natural calamities, including, but not limited to, earthquake, flood or wildfire, that may adversely affect economic activity in the City, and which could have a negative impact on City finances. There can be no assurance that the occurrence of any
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natural calamity would not cause substantial damage to persons, property and structures in the City and could have a substantial negative effect on the City’s General Fund. Whitter Narrows Dam. The Army Corps of Engineers is beginning a $500-million repair project for the 62-year-old Whittier Narrows Dam (the “Dam”). The Dam, a 56-foot-tall earth dam, is located along the Rio Hondo and the San Gabriel Rivers and collects runoff from the uncontrolled drainage areas upstream along with releases into the San Gabriel River from the Santa Fe Dam. The reservoir portion of the Dam, with a capacity of 67,060 acre-feet, is surrounded by the cities of South El Monte (to the north), Industry (to the east), Pico Rivera (to the south), and Montebello (to the south). The Army Corps of Engineers has determined that the Dam no longer meets federal tolerable-risk guidelines and could fail in the event of a very large, very rare storm, like storms which occurred in California between December 1861 and January 1862. If such a storm were to occur, water could flow over the crest of the Dam or seepage could erode the sandy soil underneath it. These types of failures could have catastrophic effects on several Southern California communities including the City. In response to these potential dangers, the Army Corps of Engineers has classified the Dam’s repairs as the highest priority of any of the 13 “high risk” dams in the country. The construction of the repairs to the Dam started in 2021 and the repairs are expected to be completed in 2025. An extreme storm that results in a flood could significantly damage property within the City. The City cannot predict when flood or extreme storm events will occur, when or whether the repairs described above will be completed, whether other mitigation measures will be implemented, or whether FEMA or other funds will be available to the City in the event of a failure of the Dam. Significant flooding in the City because of the failure of the Dam could have materially adverse consequences for the City’s finances and operations, including the ability to make the payments due on the Series 2022B Bonds. Drought. The State is currently experiencing drought conditions. The Governor of the State has issued targeted emergency drought proclamations to nearly all counties across the State, including the County. The emergency drought proclamations allow for the set-aside of certain state regulatory requirements until the subsistence of drought conditions. The City and the County are presently experiencing drought conditions and are likely to continue to be affected by drought conditions in the future. Earthquake Risk. Any natural disaster or other physical calamity, including earthquake, may have the effect of damaging property in the City. The seismic safety element of the City’s General Plan lists ground shaking as the primary seismic risk to the City from a major earthquake along three faults located between 6 and 14 miles away from the City. A great earthquake along the San Andreas Fault, 33 miles from the City, would result in strong ground shaking. Risks of ground failure (such as liquefaction, landslides and rockfalls) are considered limited in the City. Ground displacement is not considered a significant risk because no active or potentially active faults are known to be present within the limits of the City. Climate Change/Adaptation/Mitigation Generally. Projections of the impacts of global climate change on the City are complex and depend on many factors that are outside the City’s control. The various scientific studies that forecast the amount and timing of adverse impacts of climate change are based on assumptions contained in such studies, but actual events may vary materially. Also, the understanding of climate change and its effects continues to evolve. Accordingly, the City is unable to forecast with certainty when and where the adverse impacts of climate change will occur or the extent of such impacts. While the impacts of climate change may be mitigated by the City’s future investment in adaptation strategies, the
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City can give no assurance about the net effects of those strategies and whether the City will be required to take additional adaptive mitigation measures. Endangered Species During recent years, there has been an increase in activity at both the State and federal level related to the potential classification of certain plant and animal species found in California as endangered species. An increase in the number of endangered species is expected to curtail development in certain areas of the State. At present, the City is not known to be inhabited by any plant or animal species currently classified as threatened or endangered under either the State or federal endangered species acts or which either the California Fish and Game Commission or the United States Fish and Wildlife Service has proposed for addition to these respective threatened or endangered species lists. Notwithstanding this fact, new species are periodically proposed to be added to the State and federal protected lists on a regular basis. Hazardous Substances One of the most serious risks in terms of the potential reduction in the value or use of a parcel of property is a claim about a hazardous substance. In general, the owners, lessors and/or lessees of a parcel of real property may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but California laws about hazardous substances are also stringent and similar in application. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether the owner (or operator) has contributed to or caused contamination with the hazardous substances. The effect, therefore, should property in the City be affected by a hazardous substance, is to reduce both marketability and the value of property by the costs of remedying the condition. While the City is not currently aware of any such condition, it is possible that such hazardous substance conditions do currently exist, and that the City has not been made aware of their existence. Potential Impact of State Financial Condition on the City During the 2008-09 recession, the State faced a structural deficit that resulted in substantial annual deficits and reductions in expenditures. Although the State has had a budget surplus in the more recent fiscal years, according to the State there remain several major risks and pressures that threaten the State’s financial condition, including the threat of recession, potential changes to federal fiscal policies and unfunded long-term liabilities of more than $200 billion related to pensions and other post-retirement benefits. These risks and financial pressures could result in future reductions or deferrals in amounts payable to the City. The State’s financial condition and budget policies affect local public agencies throughout California. To the extent that the State budget process results in reduced revenues to the City, the City will be required to adjust its budget. State budget policies can also impact conditions in the local economy and could have an adverse effect on the local economy and the City’s major revenue sources. No prediction can be made by the City as to whether the State will encounter budgetary problems in future fiscal years, and if it were to do so, it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the City cannot predict the outcome of future State budget negotiations, the impact that such budgets will have on City finances and operations or what actions will be taken in the future by the Legislature and the Governor to deal with changing State revenues and expenditures. There can be no assurance that actions taken by the State to address its financial condition will not materially adversely affect the financial condition of the City. Current and future State budgets will
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be affected by national and State economic conditions and other factors over which the City has no control (see “STATE BUDGET INFORMATION”). The ability of the State to divert funds from the City has been limited by Proposition 1A and Proposition 22, which are discussed herein. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS.” Pension Benefit Liability Many factors influence the amount of the City’s pension benefit liabilities, including, without limitation, inflationary factors, changes in statutory provisions of CalPERS retirement system laws, changes in the level of benefits provided or in the contribution rates of the City, increases or decreases in the number of covered employees, changes in actuarial assumptions or methods (including but not limited to the assumed rate of return), mortality rates, and differences between actual and anticipated investment experience of CalPERS. Any of these factors could give rise to additional liability of the City to its pension plans because of which the City would be obligated to make additional payments to its pension plans to fully fund the City’s obligations to its pension plans. The City has issued Pension Obligations Bonds in May 2020 secured by revenue from the City’s Retirement Tax, a 1946 voter approved property tax override assessment. The City’s General Fund is responsible for any amounts due on the City’s Pension Obligation Bonds and any future liability to CalPERS not otherwise satisfied by the Retirement Tax. Additionally, any current and future retirement related expenses above and beyond the amount of available Retirement Tax will be borne directly by the City’s General Fund. For additional discussion, see “OTHER FINANCIAL INFORMATION – Employee Retirement Plans.” Risks Related to Cyber Security The City relies on computers and technology to conduct its operations. The City and its departments face cyber threats from time to time including, but not limited to, hacking, viruses, malware and other forms of technology attacks. The City owns and operates its own enterprise class data network serving the municipal city government and its operations. The City has retained information technology professionals to support, maintain and protect these operations locally in a purpose-built and physically secure environment. This network and its operations are governed by and in compliance with all applicable governmental regulations as well as the City’s own administrative regulations. Within the City’s operations and guidance is an active cyber-security program designed to protect from, and to quickly identify and mitigate, a multitude of complex security threats. While no network is completely immune from all possible compromise, the City exercises its due diligence in protecting the data it possesses and the systems it operates. To date, there have been no significant cyber-attacks on the City’s computers and technologies. The City has had an outside security consultant perform an assessment of its overall level of cyber security and the adequacy of its information technology systems and practices. The outside consultant’s report identified deficiencies, which the City has acknowledged. The City has adopted a 5-year corrective action plan designed to remedy the issues identified in the security consultant’s report and to bring the City in compliance with current best practices. While the City is routinely maintaining its technology systems and continuously implementing new information security controls, no assurances can be given that the City’s security and operational control measures will be successful in guarding against all cyber threats and attacks. The results of any attack on the
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City’s computer and technology could negatively impact the City’s operations, and the costs related to such attacks could be substantial. Secondary Market Risk There can be no assurance that there will be a secondary market for purchase or sale of the Series 2022B Bonds, and from time to time there may be no market for them, depending upon prevailing market conditions, the financial condition or market position of firms who may make the secondary market and the financial condition of the City. Changes in Law There can be no assurance that the electorate of the State will not at some future time adopt additional initiatives or that the Legislature will not enact legislation that will amend the laws or the Constitution of the State resulting in a reduction of the General Fund revenues of the City and consequently, having an adverse effect on the security for the Series 2022B Bonds. TAX MATTERS In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) on the Series 2022B Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), but is exempt from State of California personal income tax. Except for certain exceptions, the excess of the stated redemption price at maturity of a Series 2022B Bond over the issue price of a Series 2022B Bond (the first price at which a substantial amount of the Series 2022B Bonds of the same maturity is to be sold to the public) constitutes original issue discount. Original issue discount accrues under a constant yield method. The amount of original issue discount deemed received by the Beneficial Owner of a Series 2022B Bond will increase the Beneficial Owner’s basis in the Series 2022B Bond. Beneficial Owners of Series 2022B Bonds should consult their own tax advisor with respect to taking into account any original issue discount on the Series 2022B Bonds. The amount by which a Series 2022B Bond Beneficial Owner’s original basis for determining loss on sale or exchange in the applicable Series 2022B Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which the Beneficial Owner of a Series 2022B Bond may elect to amortize under Section 171 of the Code. Such amortizable bond premium reduces the Series 2022B Bond Beneficial Owner’s basis in the applicable Series 2022B Bond (and the amount of taxable interest received) and is deductible for federal income tax purposes. The basis reduction as a result of the amortization of Series 2022B Bond premium may result in the Beneficial Owner of a Series 2022B Bond realizing a taxable gain when a Series 2022B Bond is sold by the Beneficial Owner for an amount equal to or less (under certain circumstances) than the original cost of the Series 2022B Bond to the Beneficial Owner. The Beneficial Owners of the Series 2022B Bonds that have a basis in the Series 2022B Bonds that is greater than the principal amount of the Series 2022B Bonds should consult their own tax advisors with respect to whether or not they should elect to amortize such premium under Section 171 of the Code.
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In the event of a legal defeasance of a Series 2022B Bond, such bond might be treated as retired and “reissued” for federal tax purposes as of the date of the defeasance, potentially resulting in recognition of taxable gain or loss to the applicable Series 2022B Bond Beneficial Owner generally equal to the difference between the amount deemed realized from the deemed redemption and reissuance of the Series 2022B Bond and the Beneficial Owner’s adjusted tax basis in such bond. The federal income tax discussion set forth above with respect to the Series 2022B Bonds is included for general information only and may not be applicable depending upon a Beneficial Owner’s particular situation. The ownership and disposal of the Series 2022B Bonds and the accrual or receipt of interest with respect to the Series 2022B Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. BEFORE PURCHASING ANY OF THE SERIES 2022B BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR INDEPENDENT TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES RELATING TO THE SERIES 2022B BONDS AND THE TAXPAYER’S PARTICULAR CIRCUMSTANCES. The form of Bond Counsel’s proposed opinion with respect to the Series 2022B Bonds is attached hereto in APPENDIX E—PROPOSED FORM OF BOND COUNSEL OPINION. CONSIDERATIONS FOIR ERISA AND OTHER BENEFIT PLAN INVESTORS The Employee Retirement Income Security Act of 1974, as amended (“ERISA”), imposes certain fiduciary obligations and prohibited transaction restrictions on employee pension and welfare benefit plans subject to Title I of ERISA (“ERISA Plans”). Section 4975 of the Code imposes essentially the same prohibited transaction restrictions on tax-qualified retirement plans described in Section 401(a) and 403(a) of the Code, which are exempt from tax under Section 501(a) of the Code, other than governmental and church plans as defined herein (“Qualified Retirement Plans”), and on Individual Retirement Accounts (“IRAs”) described in Section 408(b) of the Code (collectively, “Tax-Favored Plans”). Certain employee benefit plans such as governmental plans (as defined in Section 3(32) of ERISA) (“Governmental Plans”), and, if no election has been made under Section 410(d) of the Code, church plans (as defined in Section 3(33) of ERISA) (“Church Plans”), are not subject to ERISA requirements. Additionally, such Governmental Plans and Church Plans are not subject to the requirements of Section 4975 of the Code but may be subject to applicable federal, state or local law (“Similar Laws”) which is, to a material extent, similar to the foregoing provisions of ERISA or the Code. Accordingly, assets of such plans may be invested in the Series 2022 Bonds without regard to the ERISA and Code considerations described below, subject to the provisions of Similar Laws. In addition to the imposition of general fiduciary obligations, including those of investment prudence and diversification and the requirement that a plan’s investment be made in accordance with the documents governing the plan, Section 406 of ERISA and Section 4975 of the Code prohibit a broad range of transactions involving assets of ERISA Plans and Tax-Favored Plans and entities whose underlying assets include plan assets by reason of ERISA Plans or Tax-Favored Plans investing in such entities (collectively, “Benefit Plans”) and persons who have certain specified relationships to the Benefit Plans (“Parties In Interest” or “Disqualified Persons”), unless a statutory or administrative exemption is available. The definitions of “Party In Interest” and “Disqualified Person” are expansive. While other entities may be encompassed by these definitions, they include, most notably: (1) fiduciary with respect to a plan; (2) a person providing services to a plan; (3) an employer or employee organization any of whose employees or members are covered by the plan; and (4) the owner of an IRA. Certain Parties in Interest (or Disqualified
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Persons) that participate in a prohibited transaction may be subject to a penalty (or an excise tax) imposed pursuant to Section 502(i) of ERISA (or Section 4975 of the Code) unless a statutory or administrative exemption is available. Without an exemption an IRA owner may disqualify his or her IRA. Certain transactions involving the purchase, holding or transfer of the Series 2022 Bonds might be deemed to constitute prohibited transactions under ERISA and Section 4975 of the Code if assets of the Authority were deemed to be assets of a Benefit Plan. Under final regulations issued by the United States Department of Labor (the “Plan Assets Regulation”), the assets of the Authority would be treated as plan assets of a Benefit Plan for the purposes of ERISA and Section 4975 only of the Code if the Benefit Plan acquires an “equity interest” in the Authority and none of the exceptions contained in the Plan Assets Regulation is applicable. An equity interest is defined under the Plan Assets Regulation as an interest in an entity other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features. Although there is little guidance on this matter, it appears that the Series 2022 Bonds should be treated as debt without substantial equity features for purposes of the Plan Assets Regulation. This determination is based upon the traditional debt features of the Series 2022 Bonds, including the reasonable expectation of purchasers of Series 2022 Bonds that the Series 2022 Bonds will be repaid when due, traditional default remedies, as well as the absence of conversion rights, warrants and other typical equity features. However, without regard to whether the Series 2022 Bonds are treated as an equity interest for such purposes, though, the acquisition or holding of Series 2022 Bonds by or on behalf of a Benefit Plan could be considered to give rise to a prohibited transaction if the Authority, the Borrower, the Corporation, the Underwriter or the Trustee, or any of their respective affiliates, is or becomes a Party in Interest or a Disqualified Person with respect to such Benefit Plan. Most notably, ERISA and the Code generally prohibit the lending of money or other extension of credit between an ERISA Plan or Tax-Favored Plan and a Party in Interest or a Disqualified Person, and the acquisition of any of the Series 2022 Bonds by a Benefit Plan would involve the lending of money or extension of credit by the Benefit Plan. In such a case, however, certain exemptions from the prohibited transaction rules could be applicable depending on the type and circumstances of the plan fiduciary making the decision to acquire a Series 2022 Bond. Included among these exemptions are: Prohibited Transaction Class Exemption (“PTCE”) 96-23, regarding transactions effected by certain “in-house asset managers”; PTCE 90-1, regarding investments by insurance company pooled separate accounts; PTCE 95-60, regarding transactions effected by “insurance company general accounts”; PTCE 91-38, regarding investments by bank collective investment funds; and PTCE 84-14, regarding transactions effected by “qualified professional asset managers.” Further, the statutory exemption in Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code provides for an exemption for transactions involving “adequate consideration” with persons who are Parties in Interest or Disqualified Persons solely by reason of their (or their affiliate’s) status as a service provider to the Benefit Plan involved and none of whom is a fiduciary with respect to the Benefit Plan assets involved (or an affiliate of such a fiduciary). There can be no assurance that any class or other exemption will be available with respect to any particular transaction involving the Series 2022 Bonds, or that, if available, the exemption would cover all possible prohibited transactions. By acquiring a Series 2022 Bond (or interest therein), each purchaser and transferee (and if the purchaser or transferee is a plan, its fiduciary) is deemed to represent and warrant that either (i) it is not acquiring the Series 2022 Bond (or interest therein) with the assets of a Benefit Plan, Governmental Plan or Church Plan; or (ii) the acquisition and holding of the Series 2022 Bond (or interest therein) will not give
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rise to a nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or Similar Laws. A purchaser or transferee who acquires Series 2022 Bonds with assets of a Benefit Plan represents that such purchaser or transferee has considered the fiduciary requirements of ERISA, the Code or Similar Laws and has consulted with counsel with regard to the purchase or transfer. Because the Authority, the Borrower, the Corporation, the Underwriter or the Trustee or any of their respective affiliates may receive certain benefits in connection with the sale of the Series 2022 Bonds, the purchase of the Series 2022 Bonds using plan assets of a Benefit Plan over which any of such parties has investment authority or provides investment advice for a direct or indirect fee may be deemed to be a violation of the prohibited transaction rules of ERISA or Section 4975 of the Code or Similar Laws for which no exemption may be available. Accordingly, any investor considering a purchase of Series 2022 Bonds using plan assets of a Benefit Plan should consult with its counsel if the Authority, the Borrower, the Corporation, the Underwriter or the Trustee or any of their respective affiliates has investment authority or provides investment advice for a direct or indirect fee with respect to such assets or is an employer maintaining or contributing to the Benefit Plan. Any ERISA Plan fiduciary considering whether to purchase the Series 2022 Bonds on behalf of an ERISA Plan should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code to such an investment and the availability of any of the exemptions referred to above. Persons responsible for investing the assets of Tax-Favored Plans that are not ERISA Plans should seek similar counsel with respect to the prohibited transaction provisions of the Code and the applicability of Similar Laws. CERTAIN LEGAL MATTERS The validity of the Series 2022B Bonds and certain other legal matters are subject to the approving opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel. A complete copy of the proposed form of Bond Counsel opinion is contained in APPENDIX E—PROPOSED FORM OF BOND COUNSEL OPINION. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Bond Counsel and Disclosure Counsel will receive compensation from the City contingent upon the sale and delivery of the Series 2022B Bonds. From time to time, Bond Counsel represents the Underwriter on matters unrelated to the Series 2022B Bonds. Quint & Thimmig LLP is acting as Disclosure Counsel for the City. Certain legal matters will be passed upon for the Underwriter by Nixon Peabody LLP, Los Angeles, California, and for the Trustee by its counsel. Counsel to the Underwriter will receive compensation contingent upon the issuance of the Series 2022B Bonds. ABSENCE OF LITIGATION To the best knowledge of the City and the Authority, there is no action, suit or proceeding pending or threatened either restraining or enjoining the execution or delivery of the Series 2022B Bonds, the Facility Lease, the Site Lease or the Indenture, or in any way contesting or affecting the validity of the foregoing or any proceedings of the Authority or the City taken with respect to any of the foregoing. UNDERWRITING The Series 2022B Bonds are being purchased by Cabrera Capital, Inc. (the “Underwriter”). The
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Underwriter will purchase the Series 2022B Bonds from the Authority at an aggregate purchase price of $__________ (representing the principal amount of the Series 2022B Bonds less an Underwriter’s discount of $__________). The purchase agreement relating to the Series 2022B Bonds provides that the Underwriter will purchase all of the Series 2022B Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in such purchase agreement, the approval of certain legal matters by counsel and certain other conditions. The initial offering prices that are stated on the inside front cover page of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Series 2022B Bonds to certain dealers (including dealers depositing Series 2022B Bonds into investment trusts), dealer banks, banks acting as agent and others at prices lower than said public offering prices. RATING Standard & Poor’s Financial Services LLC (“S&P”) has assigned the Series 2022B Bonds the rating of “A”. Such rating reflects only the views of S&P and any desired explanation of the significance of such rating should be obtained from S&P. Generally, a rating agency bases its ratings on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by S&P, if in the judgment of S&P, circumstances so warrant. Any such downward revision or withdrawal of the rating may have an adverse effect on the market price of the Series 2022A Bonds. None of the Authority, the City or the Underwriter has undertaken any responsibility to bring to the attention of the owners of the Series 2022A Bonds a proposed change in or withdrawal of the rating or to oppose any such proposed revision or withdrawal. MUNICIPAL ADVISOR Urban Futures, Inc., Tustin, California (the “Municipal Advisor”), served as municipal advisor to the Authority and the City with respect to the sale of the Series 2022B Bonds. The Municipal Advisor will receive compensation contingent upon the sale and delivery of the Series 2022B Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities. CONTINUING DISCLOSURE The City has covenanted for the benefit of the Owners of the Series 2022A Bonds to provide annually certain financial information and operating data relating to the Series 2022A Bonds and the City (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events. For a complete listing of items of information which will be provided in each Annual Report and further description of the City’s undertaking with respect to the Annual Report and certain enumerated events, see APPENDIX F—FORM OF CONTINUING DISCLOSURE CERTIFICATE. The Annual Report is to be provided by the City not later than nine months following the end of the City’s fiscal year (which presently
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ends on June 30), commencing with the report for the fiscal year ending June 30, 2022, and due March 31, 2023. The Annual Report will be filed by the City with the Municipal Securities Rulemaking Board. These covenants have been made in order to assist the Underwriter in complying with SEC Rule 15c2-12(b)(5). Within the last five years, there have been certain failures regarding filings relating to the City’s Successor Agency: With respect to the Successor Agency to the Community Redevelopment Agency of the City of Montebello Subordinate Tax Allocation Refunding Bonds, Series 2015A, (1) a table showing total tax revenues was omitted for 2017 to 2021 fiscal years, (2) a table showing subordinate pledged tax revenues was filed late as follows: (a) 2018 fiscal year, filed 1,031 days late and four CUSIP numbers were not tagged to the filing, and (b) 2017 fiscal year, filed 666 days late and four CUSIP numbers were not tagged to the filing. With respect to the Successor Agency to the Community Redevelopment Agency of the City of Montebello Subordinate Tax Allocation Refunding Bonds, Series 2015B, tables showing total tax revenues and subordinate pledged tax revenues were omitted for 2017 to 2018 fiscal years. With respect to the Community Redevelopment Agency of the City of Montebello 2002 Housing Tax Allocation Parity Bonds, for fiscal years 2017 to 2021, all-in debt service coverage provided in the annual reports was sufficient, but the all-in debt service coverage calculations used in annual reports were incorrect. With respect to the Community Redevelopment Agency of the City of Montebello Taxable Housing Tax Allocation Bonds, 1997 Series B, for fiscal years 2017 to 2018, all-in debt service coverage provided in the annual reports was sufficient, but the all-in debt service coverage calculations used in annual reports were incorrect. All required corrective filings have been made. Otherwise, within the last five years, the City has not failed to comply with continuing disclosure obligations related to any of the Authority’s , the City’s or the Successor Agency’s outstanding obligations pursuant to SEC Rule 15c2-12(b)(5). FINANCIAL STATEMENTS OF THE CITY Included as APPENDIX D—ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2021, are the City’s audited financial statements for the Fiscal Year ended June 30, 2021, together with the report thereon dated January 26, 2022, of the Auditor. The Auditor has not undertaken to update the audited financial statements of the City or its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by the Auditor with respect to any event after its report dated January 26, 2022. MISCELLANEOUS References are 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 reports for
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full and complete statements of the contents thereof. Copies of the Indenture, the Facility Lease, the Site Lease and other documents are available, upon request, and upon payment to the City of a charge for copying, mailing and handling, from the City Clerk at the City of Montebello, 1600 West Beverly Boulevard, Montebello, California 90640. 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 Authority or the City and the purchasers or Owners of any of the Series 2022B Bonds. The execution and delivery of this Official Statement have been duly authorized by the Authority and the City. MONTEBELLO PUBLIC FINANCING AUTHORITY By Executive Director CITY OF MONTEBELLO By City Manager
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APPENDIX A GENERAL, ECONOMIC AND DEMOGRAPHIC INFORMATION RELATING TO THE CITY AND THE COUNTY The following information concerning the City of Montebello and Los Angeles County is included only for the purpose of supplying general information regarding the City and the County. The Series 2022B Bonds are not a debt of the County, the State or any of its political subdivisions, and none of the County, the State nor any of their political subdivisions, except for the City, are liable therefor. Although reasonable efforts have been made to include up-to-date information in this Appendix A, some of the information is not current due to delays in reporting of information by various sources. It should not be assumed that the trends indicated by the following data would continue beyond the specific periods reflected herein. Introduction The City of Montebello (the “City”) is situated in eastern Los Angeles County, California (the “County”). The City encompasses 8.2 square miles and is located 9 miles east of downtown Los Angeles. The City has access to three freeways: the San Gabriel River Freeway (State Highway 605) to the east, the Santa Ana Freeway (Interstate 5) to the south and the Pomona Freeway (State Highway 60) to the north. The City is a balanced community with light industry, residential areas, and commercial centers. It is bordered to the north by the cities of Los Angeles Park and Rosemead, to the east by the City of Pico Rivera, and to the west by the City of Commerce. Other surrounding cities include the cities of Bell Gardens, Whittier, South El Monte and Los Angeles. The City was incorporated as a general law city in 1920. The City operates under the Council-Manager member form of government. The five City Council members, including the Mayor, are elected to four-year terms on alternate slates every two years. The Mayor and the Mayor Pro Tem are selected by the City Council to serve two-year terms. The City Council appoints a City Manager. The population of the City was estimated to be 64,247 as of January 1, 2019. The County is in the Southern region of the State of California (the “State”). The County boarders 70 miles of coast on the Pacific Ocean and encompasses mountain ranges, valleys, forests, islands, lakes, rivers and desert. It is one of California’s original 27 counties and was established on February 18, 1850. It is one of the nation’s largest counties with 4,084 square miles and has the largest population of any county in the nation - nearly 10 million residents who account more than one quarter of California’s population. As a subdivision of the state, the County is charged with providing numerous services that affect the lives of all residents, including law enforcement, tax collection, public health protection, public social services, elections and flood control. The County is home to 88 incorporated cities and many unincorporated areas. In between the large desert portions of the County ― which make up around 40% of its land area ― and the heavily urbanized central and southern portions, sit the San Gabriel Mountains, containing the Angeles National Forest. The County is a charter county governed by a five-member elected Board of Supervisors. Each member serves alternating four-year terms and is elected by residents from their respective supervisorial districts to serve four-year terms. The other elected officials of the County are the Assessor, District Attorney and Sheriff. The County is the third-largest metropolitan economy in the world, with a Nominal GDP of over $700 billion—larger than the GDPs of Belgium, Norway, and Taiwan. The County serves as the central trade district for the western United States and the gateway to the Asian economies. The County is one of the most ethnically diverse counties in the U.S. The county seat, the City of Los Angeles, is also California’s most populous city and the nation’s second largest city with about 4 million people.
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Population The table below summarizes population of the City, the County, and the State for the last five years. CITY OF MONTEBELLO, LOS ANGELES COUNTY, and CALIFORNIA Population Year City of Montebello Los Angeles County State of California 2018 63,837 10,192,593 39,519,535 2019 63,558 10,163,139 39,605,361 2020 63,264 10,135,614 39,648,938 2021 62,180 9,931,338 39,303,157 2022 61,622 9,861,224 39,185,605 Source: California Department of Finance, E-4 Population Estimate for Cities, Counties, and the State, 2010-22, with 2010 Census Benchmark. Employment The following table summarizes historical employment and unemployment for the County, the State, and the United States: LOS ANGELES COUNTY, CALIFORNIA, and UNITED STATES Civilian Labor Force, Employment, and Unemployment (Annual Averages) Unemployment Year Area Labor Force Employment Unemployment Rate (1) 2017 Los Angeles County 5,123,900 4,883,600 240,300 4.7% California 19,312,000 18,393,100 918,900 4.8 United States 160,320,000 153,337,000 6,982,000 4.4 2018 Los Angeles County 5,136,300 4,896,500 239,800 4.7 California 19,398,200 18,582,800 815,400 4.2 United States 162,075,000 155,761,000 6,314,000 3.9 2019 Los Angeles County 5,121,600 4,894,300 227,300 4.4 California 19,411,600 18,627,400 784,200 4.0 United States 163,539,000 157,538,000 6,001,000 3.7 2020 Los Angeles County 4,921,500 9,291,700 629,800 12.8 California 18,821,200 16,913,100 1,908,100 10.1 United States 160,742,000 147,795,000 12,947,000 8.1 2021(2) Los Angeles County 4,994,100 4,548,900 445,200 8.9 California 18,923,200 17,541,900 1,381,200 7.3 United States 161,204,000 152,581,000 8,623,000 5.3 Source: California Employment Development Department, Monthly Labor Force Data for Counties, Annual Average 2010-21, and US Department of Labor. (1) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures available in this table. (2) Latest available full-year data.
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Major Employers in the City and Industries in the County The following table lists the top 10 employers within the City for the 2021 calendar year. CITY OF MONTEBELLO Top 10 Employers For the 2021 Calendar Year(1) % of Employer Employees Total Montebello Unified School District 1,264 4.51% Beverly Hospital 945 3.38 City of Montebello 431 1.54 JCPenny 215 .77 Bimbo Bakery 315 1.13 Macy’s 308 1.10 Rio Hondo Convalescent Hospital 202 .72 Monarch Litho Inc. 170 .61 Wilbur Curtis CO 160 .57 Kaiser Permanente Montebello 124 .44 Total Top 10 4,134 14.76 Source: City of Montebello 2020-21 Annual Comprehensive Financial Report. (1) Latest available full-year data. The table below sets forth the principal industries in the County in 2021. LOS ANGELES COUNTY 2021 PRINCIPAL INDUSTRIES Industry # of Employees % of Total Educational & Health Services 839,300 19.91% Trade, Transportation and Utilities 804,600 19.09 Professional & Business Services 598,800 14.21 Government g558,700 13.26 Leisure & Hospitality 438,300 10.40 Manufacturing 306,900 7.28 Financial Activities 209,300 4.97 Information 177,000 4.20 Construction 148,100 3.51 Other Services 127,100 3.02 Ten Largest Industries 4,208,100 99.85 All Other Industries 6,400 .15 Total 4,214,500 100.00 Source: Los Angeles County 2020-21 ACFR.
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Construction Activity The following table reflects the five-year history of building permit valuation for the City and the County: CITY OF MONTEBELLO Building Permits and Valuation (Dollars in Thousands) 2017 2018 2019 2020 2021(2) Permit Valuation: New Single-family $ 35 $ 251 $ 5,023 $ 1,020 $ 1,977 New Multi-family 5,044 5,956 3,400 420 340 Res. Alterations/Additions 3,738 4,952 5,758 1,810 1,046 Total Residential 9,682 11,159 14,182 3,250 3,364 Total Nonresidential 9,350 9,558 50,750 3,0899 3,185 Total All Building 19,033 20,718 64,932 6,340 6,550 New Dwelling Units: Single Family 1 3 33 6 28 Multiple Family 35 72 15 2 6 Total 36 75 48 8 34 LOS ANGELES COUNTY Building Permits and Valuation (Dollars in Thousands) 2017 2018 2019 2020 2021(2) Permit Valuation: New Single-family $ 2,352,614 $ 2,277,101 $ 1,967,219 $ 1,874,304 $ 2,085,629 New Multi-family 3,257,833 3,222,530 2,961,257 2,789,673 3,026,725 Res. Alterations/Additions 1,757,904 1,941,369 1,625,839 1,014,422 908,148 Total Residential 7,368,352 7,441,001 6,554,315 5,678,400 6,020,503 Total Nonresidential 6,037,502 6,694,097 6,589,601 3,513,049 1,863,348 Total All Building 13,405,855 14,135,098 13,143,917 9,191,449 7,883,851 New Dwelling Units: Single Family 5,456 6,070 5,738 6,198 7,327 Multiple Family 17,023 17,152 15,884 14,056 16,718 Total 22,479 23,222 21,626 20,254 23,045 Source: Construction Industry Research Board: “Building Permit Summary.” Note: Columns may not sum to totals due to independent rounding. (1) Latest available full year data. Household Effective Buying Income “Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, State and local), nontax payments (fines, fees, penalties, etc.) and personal
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contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.” The following table summarizes the median household effective buying income for the City, the County, the State and the nation for the past five years. CITY OF MONTEBELLO, LOS ANGELES COUNTY, STATE OF CALIFORNIA AND UNITED STATES Median Household Effective Buying Income 2017 2018 2019 2020 2021 City of Montebello $ 44,962 $ 46,113 $ 48,508 $ 52,012 $ 61,201 Los Angeles County 54,720 56,831 60,174 62,353 71,404 California 59,646 62,637 65,870 67,956 77,058 United States 50,735 52,841 55,303 56,790 64,448 Source: Nielsen, Inc.
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Appendix B Page 1
APPENDIX B SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS The following is a summary of the provisions of the Indenture, the Site Lease, the Facility Lease and the Assignment Agreement. This summary is not intended to be definitive, and Owners of the Series 2022B Bonds should refer to the documents for the complete text thereof. Copies of the documents summarized herein are available from the City. [TO COME]
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Appendix C Page 1
APPENDIX C SUBLEASE
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Appendix D Page 1
APPENDIX D ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2021
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Appendix E Page 1
APPENDIX E PROPOSED FORM OF BOND COUNSEL OPINION [Closing Date] Montebello Public Financing Authority Montebello, California Re: $__________* Montebello Public Financing Authority Lease Revenue Bonds, Series 2022B (Topgolf Project)(Federally Taxable) Ladies and Gentlemen: We have acted as bond counsel to the Montebello Public Financing Authority (the “Authority”) in connection with the issuance by the Authority of $______* Montebello Public Financing Authority Lease Revenue Bonds, Series 2022B (Topgolf Project)(Federally Taxable) (the “Bonds”), pursuant to the provisions of Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Bond Law”), and pursuant to an Indenture, dated as of October 1, 2022 (the “Indenture”), by and among the Authority, the City of Montebello (the “City”) and The Bank of New York Mellon Trust Company, N.A., as Trustee. The Bonds will be principally secured by lease payments to be made by the City pursuant to a Facility Lease, dated as of October 1, 2022 (the “Lease”), by and between the Authority and the City. We have examined the law and such certified proceedings and other documents, agreements, opinions and matters as we deem necessary to render this opinion. This opinion is based on current statutory and constitutional law and published court decisions as of the date hereof. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed thereto in the Indenture. As to questions of fact material to our opinion, we have relied upon representations of the Authority contained in the Indenture and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation. We have assumed the genuineness of all documents and signatures presented to us, the authenticity of documents submitted as originals and the conformity to originals of documents submitted as copies. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions referred to in the preceding paragraphs of this opinion. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture, the Lease and the Site Lease. We call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Lease, the Site Lease, the Assignment Agreement and the Tax Certificate may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, by the application of equitable principles and the exercise of judicial discretion in appropriate cases and by the limitations on legal remedies against cities and public agencies in the State of California. Based upon the foregoing we are of the opinion, under existing law, as follows: 1. The Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State of California with the full power to enter into the Indenture and the Lease, to perform the agreements on its part contained therein and to issue the Bonds. 2. The Indenture and the Lease have each been duly authorized, executed and delivered by the Authority and the Indenture and the Lease constitute the valid and binding obligations of the Authority enforceable * Preliminary, subject to change.
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against the Authority in accordance with their respective terms. The Indenture creates a valid pledge of the Lease Payments and other moneys pledged under the Indenture, subject to the provisions of the Indenture. 3. The Indenture and the Lease have each been duly authorized, executed and delivered by the City and the Indenture and the Lease constitute the valid and binding obligations of the City enforceable against the City in accordance with their respective terms. 4. The Bonds have been duly and validly authorized by the Authority and are legal, valid and binding limited obligations of the Authority, enforceable in accordance with their terms and the terms of the Indenture. The Bonds are limited obligations of the Authority payable solely from the Lease Payments and other moneys pledged under the Indenture as provided in the Indenture, but are not a debt of the City, the State of California or any other political subdivision thereof within the meaning of any constitutional or statutory limitation, and, neither the faith and credit nor the taxing power of the City, the State of California, or any of its political subdivisions is pledged for the payment thereof. The Authority has no taxing power. 5. Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) on the Bonds is not excluded from gross income for federal income tax purposes 6. Interest (and original issue discount) on the Bonds is exempt from personal income taxes imposed in the State of California. 7. The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bond Owner will increase the Bond Owner’s basis in the applicable Bond. Original issue discount that accrues to the Bond Owner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals (as described in paragraph 5 above) and is exempt from State of California personal income tax. 8. The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium which must be amortized under Section 171 of the Internal Revenue Code of 1986, as amended (the “Code”); such amortizable Bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Owner. Except as set forth in paragraphs (5), (6), (7) and (8) above, we express no opinion as to any tax consequences related to the Bonds. Other provisions of the Code may give rise to adverse federal income tax consequences to particular Bondholders. The scope of this opinion is limited to matters addressed above and no opinion is expressed hereby regarding other federal tax consequences that may arise due to ownership of the Bonds. Before purchasing any of the Bonds, all potential purchasers should consult their independent tax advisors with respect to the tax consequences relating to the 2022 Bonds and the taxpayer’s particular circumstances. The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. Our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.
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The opinions expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Our engagement as Bond Counsel with respect to the Bonds terminates upon the issuance of the Bonds and we have not undertaken to determine, or to inform any person, whether any such actions or events are taken (or not taken) or do occur (or do not occur). We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement relating to the Bonds or other offering material relating to the Bonds and expressly disclaim any duty to advise the owners of the Bonds with respect to matters contained in the Official Statement and any supplements or updates thereto. Respectfully submitted,
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Appendix F Page 1
APPENDIX F FORM OF CONTINUING DISCLOSURE CERTIFICATE This CONTINUING DISCLOSURE CERTIFICATE (the “Disclosure Certificate”) is executed and delivered by the CITY OF MONTEBELLO, CALIFORNIA (the “City”) in connection with the execution and delivery by the Montebello Public Financing Authority (the “Authority”) of its $______* Montebello Public Financing Authority Lease Revenue Bonds, Series 2022B (Topgolf Project)(Federally Taxable) (the “Series 2022B Bonds”). The Series 2022B Bonds are being executed and delivered pursuant to an Indenture, dated as of October 1, 2022, by and among the Authority, the City of Montebello (the “City”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Indenture”). The Series 2022B Bonds are payable from the Lease payments to be made by the City under the Facility Lease, dated as of October 1, 2022 (the “Facility Lease”), between the Authority, as lessor, and the City, as lessee. This Disclosure Certificate is being entered into by the City for the benefit of the Owners and Beneficial Owners of the Series 2022B Bonds and in order to assist the Underwriter in complying with the Rule (defined below). Section 1. Definitions. In addition to the definitions set forth above and in the Indenture which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 1, the following capitalized terms shall have the following meanings: “Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Annual Report Date” means the date that is nine months after the end of the City’s fiscal year (currently March 31 based on the City’s fiscal year end of June 30). “Dissemination Agent” shall mean, initially, Urban Futures, Inc., or any successor Dissemination Agent designed in writing by the City, and which has been filed with the then current Dissemination Agent a written acceptance of such designation. “Fiscal Year” means any twelve–month period beginning on July 1 in any year and extending to the next succeeding June 30, both dates inclusive, or any other twelve–month period selected and designated by the City as its official fiscal year period under a certificate of the City filed with the Trustee. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. “Official Statement” means the final official statement executed by the City in connection with the issuance of the Series 2022B Bonds. “Participating Underwriter” means Cabrera Capital, Inc., the original underwriter of the Series 2022B Bonds. “Rule” means Rule 15c2–12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time. “Significant Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. * Preliminary, subject to change.
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Section 2. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Series 2022B Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2– 12(b)(5). Section 3. Provision of Annual Reports. (a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 31, 2023, with the report for fiscal year 2021-22 provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Significant Event under Section 5(b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder. (b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City in a timely manner shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) With respect to each Annual Report, the Dissemination Agent shall: (i) determine each year prior to the Annual Report Date the then–applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following: (a) The City’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Unless otherwise provided in the audited financial statements filed on or prior to the annual filing deadline for Annual Reports provided for in Section 3 above, financial information and operating data with respect to the City for preceding fiscal year, as follows: [TO BE DETERMINED] (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
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(d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) The City shall give, or cause to be given, notice of the occurrence of any of the following Significant Events with respect to the Series 2022B Bonds: (i) Principal and interest payment delinquencies; (ii) Non–payment related defaults, if material; (iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) 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 security, or other material events affecting the tax status of the security; (vii) Modifications to rights of security holders, if material; (viii) Bond calls, if material, and tender offers; (ix) Defeasances; (x) Release, substitution, or sale of property securing repayment of the securities, if material; (xi) Rating changes; (xii) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person; (xiii) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an 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; (xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material; (xv) The incurrence of a financial obligation of the City or other obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City or other obligated person, any of which affect security holders, if material; and (xvi) A default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City or other obligated person, any of which reflect financial difficulties.
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(b) The City shall or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Significant Event. Notwithstanding the foregoing, notice of Significant Events described in subsection (a)(viii) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Series 2022B Bonds under the Indenture. (c) The City acknowledges that the events described in subparagraphs (a)(ii), (a)(vii), (a)(viii) (if the event is a bond call), (a)(x), (a)(xiii), (a)(xiv) and (a) (xv) of this Section 5 contain the qualifier “if material.” The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that the City determines the event’s occurrence is material for purposes of U.S. federal securities law. The City intends that the words used in paragraphs (xv) and (xvi) and the definition of “financial obligation” to have the meanings ascribed thereto in the Rule. (d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(xii) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City or an obligated person in a proceeding under the United States 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 City or an 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 City. Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Series 2022B Bonds. If such termination occurs prior to the final maturity of the Series 2022B Bonds, the City shall give notice of such termination in the same manner as for a Significant Event under Section 5(b). Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing 30 days’ written notice to the City. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of Sections 3(a), 4, 5(a), 5(b) or 5(c), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Series 2022B Bonds, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Series 2022B Bonds, after considering any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by holders of the Series 2022B Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Series 2022B Bonds.
Appendix F Page 5
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. The Dissemination Agent shall not be obligated to enter into any amendment increasing or affecting its duties or obligations hereunder. A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Significant Event under Section 5(b). Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Significant Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Significant Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Significant Event. Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Series 2022B Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) Article VIII of the Indenture is hereby made applicable to this Disclosure Certificate as if this Disclosure Certificate were (solely for this purpose) contained in the Indenture. The Dissemination Agent shall be entitled to the protections and limitations from liability afforded to the Trustee thereunder. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Series 2022B Bond holders or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Series 2022B Bonds. (b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.
Appendix F Page 6
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Series 2022B Bonds and shall create no rights in any other person or entity. Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument. Date: [Closing Date] CITY OF MONTEBELLO By Name Title ACKNOWLEDGED: URBAN FUTURES, INC., as Dissemination Agent By Authorized Officer
Appendix F Page 7
EXHIBIT A NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT Name of Obligor: City of Montebello Name of Issue: Montebello Public Financing Authority Lease Revenue Bonds, Series 2022B (Topgolf Project)(Federally Taxable) Date of Issuance: [Closing Date] NOTICE IS HEREBY GIVEN that the Obligor has not provided an Annual Report with respect to the above-named Issue as required by the Continuing Disclosure Certificate, dated [Closing Date], furnished by the Obligor in connection with the Issue. The Obligor anticipates that the Annual Report will be filed by _________________. Date: ________________ URBAN FUTURES, INC., as Dissemination Agent By Authorized Officer
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Appendix G Page 1
APPENDIX G BOOK-ENTRY ONLY SYSTEM The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Series 2022B Bonds, payment of principal, premium, if any, accreted value and interest on the Series 2022B Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Series 2022B Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. 1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Series 2022B Bonds (the “Securities”). The Securities will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Security certificate will be issued for each maturity of the Securities in the aggregate principal amount of such maturity and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. 2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has an S&P Global Ratings highest rating: “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information set forth on such website is not incorporated herein by reference. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an
Appendix G Page 2
authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Principal, redemption price and interest payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. If applicable, a Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to tender/remarketing agent, and shall affect delivery of such Securities by causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s records, to tender/remarketing agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Securities to tender/remarketing agent’s DTC account. 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the Authority or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. The Authority may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
Appendix E Page 1
APPENDIX E PROPOSED FORM OF BOND COUNSEL OPINION [Closing Date] Montebello Public Financing Authority Montebello, California Re: $__________* Montebello Public Financing Authority Lease Revenue Bonds, Series 2022B (Topgolf Project)(Federally Taxable) Ladies and Gentlemen: We have acted as bond counsel to the Montebello Public Financing Authority (the “Authority”) in connection with the issuance by the Authority of $______* Montebello Public Financing Authority Lease Revenue Bonds, Series 2022B (Topgolf Project)(Federally Taxable) (the “Bonds”), pursuant to the provisions of Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Bond Law”), and pursuant to an Indenture, dated as of October 1, 2022 (the “Indenture”), by and among the Authority, the City of Montebello (the “City”) and The Bank of New York Mellon Trust Company, N.A., as Trustee. The Bonds will be principally secured by lease payments to be made by the City pursuant to a Facility Lease, dated as of October 1, 2022 (the “Lease”), by and between the Authority and the City. We have examined the law and such certified proceedings and other documents, agreements, opinions and matters as we deem necessary to render this opinion. This opinion is based on current statutory and constitutional law and published court decisions as of the date hereof. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed thereto in the Indenture. As to questions of fact material to our opinion, we have relied upon representations of the Authority contained in the Indenture and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation. We have assumed the genuineness of all documents and signatures presented to us, the authenticity of documents submitted as originals and the conformity to originals of documents submitted as copies. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions referred to in the preceding paragraphs of this opinion. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture, the Lease and the Site Lease. We call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Lease, the Site Lease, the Assignment Agreement and the Tax Certificate may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, by the application of equitable principles and the exercise of judicial discretion in appropriate cases and by the limitations on legal remedies against cities and public agencies in the State of California. Based upon the foregoing we are of the opinion, under existing law, as follows: 1. The Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State of California with the full power to enter into the Indenture and the Lease, to perform the agreements on its part contained therein and to issue the Bonds. 2. The Indenture and the Lease have each been duly authorized, executed and delivered by the Authority and the Indenture and the Lease constitute the valid and binding obligations of the Authority enforceable * Preliminary, subject to change.
Appendix E Page 2
against the Authority in accordance with their respective terms. The Indenture creates a valid pledge of the Lease Payments and other moneys pledged under the Indenture, subject to the provisions of the Indenture. 3. The Indenture and the Lease have each been duly authorized, executed and delivered by the City and the Indenture and the Lease constitute the valid and binding obligations of the City enforceable against the City in accordance with their respective terms. 4. The Bonds have been duly and validly authorized by the Authority and are legal, valid and binding limited obligations of the Authority, enforceable in accordance with their terms and the terms of the Indenture. The Bonds are limited obligations of the Authority payable solely from the Lease Payments and other moneys pledged under the Indenture as provided in the Indenture, but are not a debt of the City, the State of California or any other political subdivision thereof within the meaning of any constitutional or statutory limitation, and, neither the faith and credit nor the taxing power of the City, the State of California, or any of its political subdivisions is pledged for the payment thereof. The Authority has no taxing power. 5. Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) on the Bonds is not excluded from gross income for federal income tax purposes 6. Interest (and original issue discount) on the Bonds is exempt from personal income taxes imposed in the State of California. 7. The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bond Owner will increase the Bond Owner’s basis in the applicable Bond. Original issue discount that accrues to the Bond Owner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals (as described in paragraph 5 above) and is exempt from State of California personal income tax. 8. The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium which must be amortized under Section 171 of the Internal Revenue Code of 1986, as amended (the “Code”); such amortizable Bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Owner. Except as set forth in paragraphs (5), (6), (7) and (8) above, we express no opinion as to any tax consequences related to the Bonds. Other provisions of the Code may give rise to adverse federal income tax consequences to particular Bondholders. The scope of this opinion is limited to matters addressed above and no opinion is expressed hereby regarding other federal tax consequences that may arise due to ownership of the Bonds. Before purchasing any of the Bonds, all potential purchasers should consult their independent tax advisors with respect to the tax consequences relating to the 2022 Bonds and the taxpayer’s particular circumstances. The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. Our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.
Appendix E Page 3
The opinions expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Our engagement as Bond Counsel with respect to the Bonds terminates upon the issuance of the Bonds and we have not undertaken to determine, or to inform any person, whether any such actions or events are taken (or not taken) or do occur (or do not occur). We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement relating to the Bonds or other offering material relating to the Bonds and expressly disclaim any duty to advise the owners of the Bonds with respect to matters contained in the Official Statement and any supplements or updates thereto. Respectfully submitted,
ITEM # 6
CITY OF MONTEBELLO
CITY COUNCIL AND PUBLIC FINANCING AUTHORITY AGENDA STAFF REPORT
TO:
Honorable Mayor and City Council Members
FROM:
René Bobadilla, P.E., City Manager
BY:
James Enriquez, Director of Public Works
SUBJECT: MONTEBELLO MUNICIPAL GOLF COURSE RENOVATION PROJECT (CP NO. 894) – IRRIGATION PUMP PURCHASE ORDER
DATE: September 28, 2022
RECOMMENDATION(S):
It is recommended that the City Council:
1) By a four-fifths vote of the City Council, authorize the dispensing of a formal bidding procedure for the purchase of the irrigation pump station for the Montebello Municipal Golf Course Renovation Project (CP No. 894), in accordance with Montebello Municipal Code Chapter 3.20.050; and
2) Approve a Purchase Order with MCI Flowtronex in the amount not-to-exceed $295,000 for the irrigation pump station and authorize the City Manager to execute the Purchase Order; and
3) Take such additional, related, action that may be desirable.
FISCAL IMPACT:
On September 14, 2022, the City Council authorized the sale of lease revenue bonds (Series 2002A) in an amount not-to-exceed $16.5 million to fund the design and construction of this project. The recommended purchase order in the amount not-to- exceed $295,000 is a project construction expense and will be paid from bond proceeds.
Staff will create a separate capital project fund to track related design and construction
CITY COUNCIL AND PUBLIC FINANCING AUTHORITY AGENDA REPORT - MEETING OF SEPTEMBER 28, 2022
costs related to the Golf Course Renovation Project. Once the bonds are issued (approximately by mid-October), proceeds will be used to reimburse the City for all related design and construction costs for this project. Subsequent actions will be presented to the City Council to appropriate funds for this capital project. No budget amendment is necessary at this time for this Irrigaton Pump purchase with Flowtronex.
BACKGROUND:
The City Council approved a Sublessee Development and Participation Agreement (SDPA) with Topgolf on March 24, 2021 for the Driving Range Relocation Project (“DRR Project”). The DRR Project is adjacent to the Montebello Municipal Golf Course Renovation Project (“GCR Project”) and is located along the Via Campo frontage of the golf course campus.
The GCR Project proposes to renovate a portion of the existing Montebello Municipal Golf Course property located immediately south of the DRR Project and northwest of the Quiet Cannon event center. The GCR project area is approximately 72.5 acres of the golf course campus. The proposed project will replace the existing 18-hole golf course with a new and modern first-class championship golf course complex that will complement the adjacent Topgolf facility and existing hotels and Quiet Cannon event center. The project will include a new 9-hole championship golf course with a new club house and putting green complex as well as a new 6-hole/10-hole Par 3 golf course with lights.
The construction of the Golf Course Renovation Project will be phased as follows:
Phase 1 – Golf course rough site work construction (Civil Contractor) including rough grading, underground and utilities construction, pavement and concrete flatwork; and
Phase 2 – Golf course construction (Golf Course Contractor) including finished grading, construction of golf course features (i.e. tee boxes, fairways, greens and sand traps), turf and landscaping; and
Phase 3 – Clubhouse construction.
On August 1, 2022, the City Council authorized the publishing of the Notice Inviting Bids for all three phases. Bids for Phase 1 were opened on September 22, 2022 and staff is currently analyzing the bids received. The publishing of the Phases 2 and 3 Notices Inviting Bids is anticipated in the next 30 days.
The recommended purchase order with MCI Flowtronex is for the purchase and installation of the new irrigation pump station for the irrigation of the renovated golf course turf and surrounding landscaping. Analysis by the landscape architect determined that the existing reclaimed water service connection does not have adequate pressure and volume to adequately service the irrigation system. Therefore, the largest lake near Via San Clemente will be utilized as a reservoir for the new pump station which will supply the irrigation system.
Pre-fabricated irrigation pump stations of this type are a specialty built-to-order item.
CITY COUNCIL AND PUBLIC FINANCING AUTHORITY AGENDA REPORT - MEETING OF SEPTEMBER 28, 2022
Therefore, the lead time for the design and fabrication of these stations is typically an issue for meeting construction schedules, only complicated by the continuing supply chain issues impacting all areas of the economy. As a result, the landscape architect for the project has been in close communication with the three industry leading fabricators (MCI Flowtronex, Rain Bird, and Watertronics) during the development of the design of the project. All three fabricators have quoted a 20 to 28 week delivery period from the date a deposit is paid. It is critical that this order be placed now in order to ensure the irrigation pump is installed by April 2023 when the grass seeding is scheduled to begin.
Depending on seasonal weather conditions, grass seeding must begin in April in order to make a late 2023 golf course opening date. Failure to meet this date may require installation of sod in lieu of grass planting at an additional cost of $3 million. Alternatively, and if seasonal weather conditions are not favorable beyond the normal April start of grass seeding season, the opening of the golf course could be delayed by one year in order to seed grass the following growing season in 2024.
ENVIRONMENTAL IMPACT:
On August 1, 2022, the City Council approved the Notice of Exemption pursuant to the California Environmental Quality Act (CEQA) Guidelines Section 15301, since the recommended improvements are categorically exempt under Class 1(c) for existing facilities.
ANALYSIS:
Although the recommended action is to dispense with bidding procedures by a four-fifths vote of the City Council in accordance with MMC Chapter 3.20.050, three industry leading fabricators of these types of specialty build-to-order irrigation pump stations were contacted for informal quotes in order to ensure a fair market-value price. The three fabricators contacted included MCI Flowtronex, Rain Bird, and Watertronics. The cost comparison completed by the project Landscape Architect is included in Attachment A.
The analysis verified compliance with the project specifications as well as price comparison verifying that MCI Flowtronex offers the lowest all-inclusive total price at $266,534, excluding tax.
Therefore, approval of a purchase order with MCI Flowtronex for a not-to-exceed amount of $295,000 is recommended -- this amount includes anticipated sales tax. Approval will allow the prompt payment of a deposit in order to ensure delivery of the equipment by April 2023, in time for the start of the grass growing season and essential for keeping the project on-schedule.
DISCUSSION:
N/A
SUMMARY:
The City Council is being asked to dispense with a formal bidding procedure in
CITY COUNCIL AND PUBLIC FINANCING AUTHORITY AGENDA REPORT - MEETING OF SEPTEMBER 28, 2022
accordance with MMC Chapter 3.20.050 and approve a purchase order with MCI Flowtronex in an amount not-to-exceed $295,000 for the purchase of the irrigation pump station for the Montebello Municipal Golf Course Renovation Project. Informal quotes were obtained in order to determine that the quoted price for the irrigation pump was a fair market price. At this time, no budget amendment is necessary, as subsequent City Council action will be sought to appropriate necessary funds for the design and construction fo the golf course renovation project. Upon approval by the City Council of the recommended actions, staff will execute the purchase order with MCI Flowtronex in order to initiate the fabrication of the irrigation pump station.
ATTACHMENT(S)
1. Attachment A - Pump Station Cost Comparison
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CITY OF MONTEBELLO GOLF COURSE
PUMP STATION COMPARISION
BTG SPEC ITEM SPEC SECTION MCI/FLOWTRONEX RAIN BIRD WATERTRONCIS PREFABRICATED/SKID MOUNTED 4.0.A Y Y Y Y-YES
INVERTER DUTY MOTOR 4.1.B Y Y Y N=NO
SILENT CHECK AND BUTTERFLY VALVE PER MOTOR 4.1.C Y Y Y U=UNKNOWN PILOT OPERATED PRESSURE RELIEF 4.1.D Y Y Y
FLOW SENSOR 4.1.E Y Y Y
AIR RELEASE 4.1.F Y Y Y
DISCHARGE PIPE 4.1.H Y Y Y
400A MAIN DISCONNECT 4.2.B.(1) Y Y Y
DUAL CONTACTOR PUMP STARTER 4.2.B.(2) Y Y Y
LOW LAKE LEVEL SENSOR 4.2.B.(3) Y Y Y
LOW DISCHARGE PRESSURE SHUT-OFF 4.2.B.(4) Y Y Y
HIGH DISCHARGE PRESSURE SHUT-OFF 4.2.B.(5) Y Y Y
PHASE FAILURE/LOW VOLTAGE SAFETY 4.2.B.(6) Y U Y
VFD FAULT SHUTDOWN 4.2.B.(7) Y Y Y
MOTOR OVERLOAD SHUTDOWN 4.2.B.(8) Y Y Y
PRESSURE TRANSDUCER 4.2.B.(9) Y Y Y
NEMA RATED ELECTRIC PANEL 4.2.B.(10) Y Y Y
PLC CONTROLS 4.2.B.(11) Y Y Y
CIRCUIT PROTECTION-MIN 200,000 AMP 4.2.B.(12) Y Y Y
AUXILLARY POWER SUPPLY 4.3 Y Y Y
MONITOR INTERFACE 4.4 Y Y Y
SELF CLEANING FILTER 4.5.A Y Y Y
MINIMUM 1 YEAR FACTORY WARRANTY 4.6.B Y Y Y
COMPLETE STATION UL LISTED ASSEMBLY 4.6.C Y Y Y
PERFORMANCE CRITERIA: TECHNICAL DATA SHEET
1600 GPM @ 115 PSI DISCHARGE Y Y Y
5 HP PRESSURE MAINTENANCE PUMP Y Y Y
2X75 HP MAIN PUMPS Y Y Y
4" RELIEF VALVE Y Y-SIZE UNK Y
ELECTROMAGNETIC FLOW SENSOR Y Y Y
12" DISCHARGE DOGLEG Y Y Y
2 X 300MICRON FILTER Y SINGLE FILTER Y
AUXILLIARY POWER MIN 2KVA Y Y Y
LAKE SCREEN Y Y Y
FUSION BONDED EPOXY FOR ONSKID PIPING Y N Y
FLITERS ARE STAINLESS STEEL Y Y Y
ONSKID PUMP STATION ENCLOSURE Y Y Y
TOTAL PRICE (INCLUDING ALL OPTIONS TO MEET SPEC) 263,334.00$ 245,427.00$ 242,747.00$
TAX INCLUDED N U N
FREIGHT INCLUDED Y Y Y
CRANE FOR OFFLOAD INCLUDED Y N N
FACTORY STARTUP INCLUDED Y Y Y
PRICE IS AFTER
NOTE: CERTAIN COMMUNICATIONS OPTION PRICING REBATE
MAY NOT BE INCLUDED IN THESE PRICES
PUMP STATION PRICE BREAKDOWN
BASE PRICE 207,107.00$ 242,747.00$
TAXES NOT INCLUDED NOT INCLUDED
ESTIMATED FREIGHT 7,800.00$ INCLUDED
FACTORY SET 6,500.00$ INCLUDED
INCLUDES CRANE INCLUDED NOT INCLUDED
FACTORY STARTUP 3,500.00$ INCLUDED
ON-SKID ENCLOSURE 38,427.00$ 39,404.00$ (I missed this on the original review)
TOTAL 263,334.00$ 282,151.00$
OPTIONS OUTSIDE SPEC
CELL CONNECT (RECOMMENDED) 3,200.00$
WYE STRAINER BYPASS (NOT NEEDED) 9,685.00$
WITH COMMUNICATIONS OPTIONS 266,534.00$
WITH ALL OPTIONS 276,219.00$
ITEM # 7
CITY OF MONTEBELLO
CITY COUNCIL AND PUBLIC FINANCING AUTHORITY AGENDA STAFF REPORT
TO:
Honorable Mayor and City Council Members
FROM:
René Bobadilla, P.E., City Manager
BY:
Paul Espinosa, Police Chief
SUBJECT: WAIVE SECOND READING AND ADOPT ORDINANCE NO. 2453 AMENDING MONTEBELLO MUNICIPAL CODE CHAPTER 2.20 TO ADD
A MILITARY EQUIPMENT USE POLICY
DATE: September 28, 2022
RECOMMENDATION(S):
It is recommended that the City Council:
1) Waive the Second Reading of and adopt Ordinance No. 2453 establishing a Military Equipment Use Policy in compliance with Assembly Bill 481 (“AB 481”); and
2) Take such additional, related, action that may be desirable.
FISCAL IMPACT:
There is no fiscal impact associated with recommended actions.
BACKGROUND:
On June 22, 2022, the Montebello Police Department (“MPD”) presented a Military Equipment Use Policy (“Policy”) (Attachment “A”) to the City Council and received approval of the Policy. On August 24, 2022, Ordinance No. 2453 (Attachment “B”) establishing the Montebello Police Department’s (“MPD”) Policy was introduced by the City Council. In accordance with the requirements of AB 481, the Policy was made available to the public on the MPD website on May 27, 2022 and a public hearing was held on September 14, 2022.
CITY COUNCIL AND PUBLIC FINANCING AUTHORITY AGENDA REPORT - MEETING OF SEPTEMBER 28, 2022
ENVIRONMENTAL IMPACT:
N/A
ANALYSIS:
N/A
DISCUSSION:
Assembly Bill 481 codified in Government Code sections 7070 through 7075, requires a law enforcement agency (“LEA”) to obtain approval from the applicable governing body, via adoption of a Military Equipment Use Policy (the “Policy”) by ordinance prior to the LEA funding, acquiring, or using military equipment. “Military equipment” as defined under AB 481 includes, but is not limited to, unmanned aerial or ground vehicles, armored vehicles, command and control vehicles, pepper balls, less lethal shotguns, less lethal 40mm projectile launchers, long range acoustic devices, and flashbangs.
Notwithstanding the definition stated above, “military equipment” does not include general equipment not designated as prohibited or controlled by the federal Defense Logistics Agency, per Government Code section 7070(c)(16).
The MPD does not currently have any military equipment that is prohibited or controlled by the Federal Defense Logistics Agency.
SUMMARY:
Staff recommends that the City Council conduct the second reading of and adopt Ordinance No. 2453 establishing the Military Equipment Use Policy.
ATTACHMENT(S)
1. Attachment A - Military Equipment Use Policy
2. Attachment B - AB 481 Ordinance No. 2453
NEXT STEPS:
N/A
Copyright Lexipol, LLC 2022/03/20, All Rights Reserved. Published with permission by Montebello Police Department Military Equipment - 1 Policy 707 Montebello Police Department Montebello PD Policy Manual Military Equipment 707.1 PURPOSE AND SCOPE The purpose of this policy is to provide guidelines for the approval, acquisition, and reporting requirements of military equipment (Government Code § 7070; Government Code § 7071; Government Code § 7072) for the Montebello Police Department (“Department”). 707.1.1 DEFINITIONS Definitions related to this policy include (Government Code § 7070): Governing body – The elected or appointed body that oversees the Department. Military equipment – Includes but is not limited to the following: • Unmanned, remotely piloted, powered aerial or ground vehicles. • Mine-resistant ambush-protected (MRAP) vehicles or armored personnel carriers. • High mobility multipurpose wheeled vehicles (HMMWV), two-and-one-half-ton trucks, five-ton trucks, or wheeled vehicles that have a breaching or entry apparatus attached. • Tracked armored vehicles that provide ballistic protection to their occupants. • Command and control vehicles that are either built or modified to facilitate the operational control and direction of public safety units. • Weaponized aircraft, vessels, or vehicles of any kind. • Battering rams, slugs, and breaching apparatuses that are explosive in nature. This does not include a handheld, one-person ram. • Firearms and ammunition of .50 caliber or greater, excluding standard-issue shotguns and standard-issue shotgun ammunition. • Specialized firearms and ammunition of less than .50 caliber, including firearms and accessories identified as assault weapons in Penal Code § 30510 and Penal Code § 30515, with the exception of standard-issue handguns. • Any firearm or firearm accessory that is designed to launch explosive projectiles. • Noise-flash diversionary devices and explosive breaching tools. • Munitions containing tear gas or OC, excluding standard, service-issued handheld pepper spray. • TASER® Shockwave, microwave weapons, water cannons, and long-range acoustic devices (LRADs). • Kinetic energy weapons and munitions. • Any other equipment as determined by a governing body or a state agency to require additional oversight.
Copyright Lexipol, LLC 2022/03/20, All Rights Reserved. Published with permission by Montebello Police Department Military Equipment - 2 Montebello Police Department Montebello PD Policy Manual Military Equipment
707.2 POLICY It is the policy of the Montebello Police Department that members of this Department comply with the provisions of Government Code § 7071 with respect to military equipment. 707.3 MILITARY EQUIPMENT COORDINATOR The Chief of Police should designate a member of this Department to act as the military equipment coordinator. The responsibilities of the military equipment coordinator include but are not limited to: (a) Acting as liaison to the governing body for matters related to the requirements of this policy. (b) Identifying Department equipment that qualifies as military equipment in the current possession of the Department, or the equipment the Department intends to acquire that requires approval by the governing body. (c) Conducting an inventory of all military equipment at least annually. (d) Collaborating with any allied agency that may use military equipment within the jurisdiction of Montebello Police Department (Government Code § 7071). (e) Preparing for, scheduling, and coordinating the annual community engagement meeting to include: 1. Publicizing the details of the meeting. 2. Preparing for public questions regarding the [department/office]’s funding, acquisition, and use of equipment. (f) Preparing the annual military equipment report for submission to the Chief of Police and ensuring that the report is made available on the Department website (Government Code § 7072). (g) Establishing the procedure for a person to register a complaint or concern, or how that person may submit a question about the use of a type of military equipment, and how the Department will respond in a timely manner. 707.4 MILITARY EQUIPMENT INVENTORY The following constitutes a list of qualifying equipment for the Department: • The Montebello Police Department does not currently have any "Military Equipment" that is prohibited or controlled by the Federal Defense Logistics Agency per CA Government Code 7070(c)(16). 707.5 APPROVAL The Chief of Police or the authorized designee shall obtain approval from the governing body by way of an ordinance adopting the military equipment policy. As part of the approval process, the
Copyright Lexipol, LLC 2022/03/20, All Rights Reserved. Published with permission by Montebello Police Department Military Equipment - 3 Montebello Police Department Montebello PD Policy Manual Military Equipment Chief of Police or the authorized designee shall ensure the proposed military equipment policy is submitted to the governing body and is available on the Department website at least 30 days prior to any public hearing concerning the military equipment at issue (Government Code § 7071). The military equipment policy must be approved by the governing body prior to engaging in any of the following (Government Code § 7071): (a) Requesting military equipment made available pursuant to 10 USC § 2576a. (b) Seeking funds for military equipment, including but not limited to applying for a grant, soliciting or accepting private, local, state, or federal funds, in-kind donations, or other donations or transfers. (c) Acquiring military equipment either permanently or temporarily, including by borrowing or leasing. (d) Collaborating with another law enforcement agency in the deployment or other use of military equipment within the jurisdiction of this Department. (e) Using any new or existing military equipment for a purpose, in a manner, or by a person not previously approved by the governing body. (f) Soliciting or responding to a proposal for, or entering into an agreement with, any other person or entity to seek funds for, apply to receive, acquire, use, or collaborate in the use of military equipment. (g) Acquiring military equipment through any means not provided above. 707.6 COORDINATION WITH OTHER JURISDICTIONS Military equipment should not be used by any other law enforcement agency or member in this jurisdiction unless the military equipment is approved for use in accordance with this policy. 707.7 ANNUAL REPORT Upon approval of a military equipment policy, the Chief of Police or the authorized designee should submit a military equipment report to the governing body for each type of military equipment approved within one year of approval, and annually thereafter for as long as the military equipment is available for use (Government Code § 7072). The Chief of Police or the authorized designee should also make each annual military equipment report publicly available on the Department website for as long as the military equipment is available for use. The report shall include all information required by Government Code § 7072 for the preceding calendar year for each type of military equipment in Department inventory. 707.8 COMMUNITY ENGAGEMENT Within 30 days of submitting and publicly releasing the annual report, the Department shall hold at least one well-publicized and conveniently located community engagement meeting, at which the Department should discuss the report and respond to public questions regarding the funding, acquisition, or use of military equipment. Any member of the public can submit a question, comment or concern by contacting the Montebello Police Department.
ORDINANCE NO. 2453
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
MONTEBELLO, CALIFORNIA, ADDING SECTION 2.20.050 “MILITARY EQUIPMENT USE POLICY” TO CHAPTER 2.20, TITLE 2, OF THE
MONTEBELLO MUNICIPAL CODE ESTABLISHING A MILITARY
EQUIPMENT USE POLICY IN COMPLIANCE WITH ASSEMBLY BILL
481
RECITALS
WHEREAS, on September 30, 2021, Governor Gavin Newsom signed into law Assembly Bill 481 (“AB 481”) (creating Government Code section 7070, et seq.), relating to the use of military equipment by California law enforcement agencies; and
WHEREAS, AB 481 seeks to provide transparency, oversight, and an opportunity for meaningful public input on decisions regarding whether and how military equipment is funded, acquired, or used; and
WHEREAS, AB 481 requires that a law enforcement agency possessing and using qualifying military equipment must prepare a written and publicly released military equipment use policy document covering the inventory, description, purpose, use, acquisition, maintenance, fiscal impacts, procedures, training, oversight, and complaint process applicable to the Montebello Police Department’s use of such equipment; and
WHEREAS, the Military Equipment Use Policy (“Policy”) and supporting information must be approved by the governing body by ordinance and reviewed annually; and
WHEREAS, Government Code section 7070(c)((16) states that “military equipment” does not include general equipment not designed as prohibited or controlled by the federal Defense Logistics Agency; and
WHEREAS, the Montebello Police Department does not yet possess those items of equipment that qualify as “military equipment” under AB 481, but may possess such items in the future; and
WHEREAS, the City Council of the City of Montebello (“City”), having received the information required under AB 481 regarding the Montebello Police Department’s use of military equipment as defined in said law, deems it to be in the best interest of the City to approve the Military Equipment Use Policy as set forth herein.
ORDINANCE NO. 2453
2 NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF MONTEBELLO HEREBY ORDAINS AS FOLLOWS:
SECTION 1. The above recitals are true and correct and made part of this Ordinance.
SECTION 2. AMENDMENTS; ADDITIONS. Section 2.20.050, “Military Equipment Use Policy,” is added to Chapter 2.20, “Police and Fire Departments,” of Title 2, “Administration and Personnel,” of the Montebello Municipal Code and will read as follows (additions in double underline):
TITLE 2 – ADMINISTRATION AND PERSONNEL
CHAPTER 2.20 – POLICE AND FIRE DEPARTMENTS
2.20.050 Military Equipment Use Policy
A. The City Council has made the following determinations:
1. In the event that the Montebello Police Department (“Department”) obtains equipment that qualifies as “military equipment” under Assembly Bill 481, the military equipment will be identified in the Montebello Military Equipment Use Policy (“Policy”) and will be necessary where there is no reasonable alternative that can achieve the same objective of officer and civilian safety;
2. The Policy will safeguard the public’s welfare, safety, civil rights, and civil liberties;
3. The military equipment identified in the Policy will be reasonably cost effective compared to available alternatives that can achieve the same objective of officer and civilian safety, if any.
B. The Department has submitted a proposed Policy to the City Council and has made those documents available on the Department’s website for at least 30 days prior to the public hearing concerning the military equipment use issue.
C. The Policy was considered by the City Council as an agenda item in an open session of a regular meeting, noticed in accordance with the Ralph M. Brown Act, at which public comment was permitted.
D. The Policy shall be made publicly available on the Department’s website for as long as the military equipment is available for use.
ORDINANCE NO. 2453
3 E. The Department shall submit an annual military equipment report to the City Council, containing the information required in Government Code section 7072, and the City Council shall determine whether each type of military equipment identified in that report has complied with the standards for approval set forth section (A)(1-3) above. The City Council shall review this ordinance and vote on whether to renew it, on an annual basis at a regular meeting, in accordance with Government Code section 7071(e)(2).
SECTION 3. EFFECTIVE DATE. This Ordinance shall become effective thirty (30) days after approval by the Council.
SECTION 4. PUBLICATION. The City Clerk shall certify to the adoption of this Ordinance and shall cause the same to be published or posted according to law.
APPROVED AND ADOPTED this 28th day of September, 2022.
_______________________________
Kimberly A. Cobos-Cawthorne, Mayor
ATTEST:
________________________
Christopher Jimenez, City Clerk
APPROVED AS TO FORM:
__________________________
Arnold M. Alvarez-Glasman, City Attorney
ORDINANCE NO. 2453
4 I HEREBY CERTIFY that the foregoing Ordinance was introduced at the regular meeting of the City Council on the 24th day of August, 2022 and was adopted by the City Council of the City of Montebello at its meeting held on the 28 th day of September, 2022 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
________________________
Christopher Jimenez, City Clerk
ITEM # 8
CITY OF MONTEBELLO
CITY COUNCIL AND PUBLIC FINANCING AUTHORITY AGENDA STAFF REPORT
TO:
Honorable Mayor and City Council Members
FROM:
René Bobadilla, P.E., City Manager
BY:
Fernando Pelaez, Fire Chief
SUBJECT: APPROVE RECEIPT OF A GRANT AWARD FROM THE FEDERAL EMERGENCY MANAGEMENT AGENCY FISCAL YEAR 2021
ASSISTANCE TO FIREFIGHTERS GRANT PROGRAM AND
APPROPRIATE FUNDS IN FISCAL YEAR 2022-23
DATE: September 28, 2022
RECOMMENDATION(S):
It is recommended that the City Council:
1) Approve the appropriation of $183,848 awarded to the Fire Department by the Federal Emergency Management Agency (FEMA), Fiscal Year 2021 Assistance to Firefighters Grant (AFG) Program; and
2) Amend the Fiscal Year 2022-23 budget by increasing appropriations by $183,848 in Expense Account No. 265-85-857-6010.10 (Grants, Fire, Assistance to Firefighters Grant, Machinery and Equipment) and Revenue Account No. 265-99-4198.20 (Grants, Miscellaneous Grants, Assistance to Firefighters); and
3) Take such additional, related, action that may be desirable.
FISCAL IMPACT:
The FEMA Fiscal Year 2021 AFG Program awarded the Montebello Fire Department $183,848 for the installation of diesel exhaust capturing equipment at all three fire stations (Attachments A). Staff requested and received permission to apply for this grant at the City Council meeting held on December 8, 2021 (Attachment B). The City has
CITY COUNCIL AND PUBLIC FINANCING AUTHORITY AGENDA REPORT - MEETING OF SEPTEMBER 28, 2022
been successful in being awarded funds, and the City Council is now being asked to amend the Fiscal Year 2022-23 budget by increasing appropriations by $183,848 in Expense Account No. 265-85-857-6010.10 (Grants, Fire, Assistance to Firefighters Grant, Machinery and Equipment) and Revenue Account No. 265-99-4198.20 (Grants, Miscellaneous Grants, Assistance to Firefighters).
BACKGROUND:
The Fiscal Year 2021 AFG Program is one of three grant programs that constitute FEMA’s focus on enhancing the safety of the public and firefighters with respect to fire and fire-related hazards. The AFG Program provides financial assistance directly to eligible fire departments, nonaffiliated emergency medical service (EMS) organizations, and State Fire Training Academies (SFTAs) for critical training and equipment. The AFG Program has awarded approximately $7.7 billion in grant funding to provide critically needed resources that equip and train emergency personnel to recognized standards, enhance operational efficiencies, foster interoperability, and support community resilience.
The City applied for funding under the Operations and Safety related activities category of this grant program (Attachment B). The awarded funds will provide for the installation of diesel exhaust capturing equipment at all three fire stations. The project will include the removal and replacement of more than twenty year old, outdated diesel exhaust capturing equipment from the three fire stations as well as the initial installation of diesel exhaust capturing equipment. The existing equipment that was installed in 2001 is now at the end of its service life. The health and wellness of fire personnel is of the utmost importance to the Department, leveraging these grant funds will improve ventilation and air quality at the City’s fire stations.
ENVIRONMENTAL IMPACT:
This item is not subject to the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, sections:
15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment); 15060(c)(3) (the activity is not a project as defined in Section 15378); and 15061(b)(3), because the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Because there is no possibility that this item may have a significant adverse effect on the environment, the item is exempt from CEQA.
ANALYSIS:
N/A
DISCUSSION:
N/A
CITY COUNCIL AND PUBLIC FINANCING AUTHORITY AGENDA REPORT - MEETING OF SEPTEMBER 28, 2022
SUMMARY:
That the City Council approve the appropriation of $183,848 awarded to the Fire Department by the FEMA Fiscal Year 2021 AFG Program (Attachment A) and Amend the Fiscal Year 2022-23 budget by increasing appropriations by $183,848 in Expense Account No. 265-85-857-6010.10 (Grants, Fire, Assistance to Firefighters Grant, Machinery and Equipment) and Revenue Account No. 265-99-4198.20 (Grants, Miscellaneous Grants, Assistance to Firefighters).
ATTACHMENT(S)
1. Attachment A - AFG FY2021 Grant Award Letter
2. Attachment B - Regular Meeting Agenda, December 8, 2021
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Award Letter
U.S. Department of Homeland Security
Washington, D.C. 20472
Effective date: 08/23/2022
Angelica Palmeros
MONTEBELLO, CITY OF
1600 WEST BEVERLY BLVD. FINANCE DEPARTMENT
MONTEBELLO, CA 90640
EMW-2021-FG-06070
Dear Angelica Palmeros,
Congratulations on behalf of the Department of Homeland Security. Your application submitted for the Fiscal Year (FY) 2021 Assistance to Firefighters Grant (AFG) Grant funding opportunity has been approved in the amount of $183,848.18 in Federal funding. As a condition of this grant, you are required to contribute non-Federal funds equal to or greater than 10.0% of the Federal funds awarded, or $18,384.82 for a total approved budget of $202,233.00. Please see the FY 2021 AFG Notice of Funding Opportunity for information on how to meet this cost share requirement.
Before you request and receive any of the Federal funds awarded to you, you must establish acceptance of the award through the FEMA Grants Outcomes (FEMA GO) system. By accepting this award, you acknowledge that the terms of the following documents are incorporated into the terms of your award:
Summary Award Memo - included in this document
Agreement Articles - included in this document
Obligating Document - included in this document
2021 AFG Notice of Funding Opportunity (NOFO) - incorporated by reference Please make sure you read, understand, and maintain a copy of these documents in your official file for this award.
Sincerely,
PAMELA WILLIAMS
Assistant Administrator, Grant Programs
Summary Award Memo
Program: Fiscal Year 2021 Assistance to Firefighters Grant Recipient: MONTEBELLO, CITY OF
UEI-EFT: J8RSDMN5KCQ7
DUNS number: 066677386
Award number: EMW-2021-FG-06070
Summary description of award
The purpose of the Assistance to Firefighters Grant program is to protect the health and safety of the public and firefighting personnel against fire and fire-related hazards. After careful consideration, FEMA has determined that the recipient's project or projects submitted as part of the recipient's application and detailed in the project narrative as well as the request details section of the application - including budget information - was consistent with the Assistance to Firefighters Grant Program's purpose and was worthy of award.
Except as otherwise approved as noted in this award, the information you provided in your application for Fiscal Year (FY) 2021 Assistance to Firefighters Grants funding is incorporated into the terms and conditions of this award. This includes any documents submitted as part of the application.
Amount awarded table
The amount of the award is detailed in the attached Obligating Document for Award.
The following are the budgeted estimates for object classes for this award (including Federal share plus your cost share, if applicable):
ITEM #____
CI
TY OF MONTEBELLO
CIT
Y COUNCIL AGENDA STAFF REPORT
TO: H
onorable Mayor and City Council Members
FR
OM: René Bobadilla, P.E., City Manager
BY: F
ire Chief Fernando Pelaez, Fire Department
SUBJ
ECT: Approval to Submit Application for the Department of Homeland Security (DHS) / Federal Emergency Management Agency (FEMA) Fiscal Year 2021 Assistance to Firefighters Grant Program (AFG) DAT
E: December 8, 2021
RECOMMENDATION(S):
It
is recommended that the City Council:
1) Approv
e the submission of the grant application for Department of Homeland Security (DHS), Fiscal Year 2021 Assistance to Firefighters Grant (AFG) Program; and
2) Tak
e such additional, related, action that may be desirable.
FISCAL IMPACT
Th
e Department of Homeland Security (DHS)/ Federal Emergency Management Agency (FEMA), Fiscal Year 2021 Assistance to Firefighters Grant (AFG) Program currently has a funding opportunity to submit a competitive grant application. Depending on the scope of the project, the City could potentially receive up to $475,000 for the project with a 10% local matching funds requirement. If a grant is awarded and once the amount is determined, staff will return to the City Council with a request to appropriate the funds.
BACKGROUND
Th
e Fiscal Year 2021 Assistance to Firefighters Grant (AFG) Program is one of three grant programs that constitute the Department of Homeland Security (DHS) / Federal Emergency Management Agency’s (FEMA’s) focus on enhancing the safety of the public and firefighters with respect to fire and fire- related hazards. The AFG Program provides 25
CITY COUNCIL AGENDA REPORT – MEETING OF DECEMBER 8, 2021 Approval to Submit Application for the Department of Homeland Security (DHS) / Federal Emergency Management Agency (FEMA) Fiscal Year 2021 Assistance to Firefighters Grant Program (AFG)
financial assistance directly to eligible fire departments, nonaffiliated emergency medical service (EMS) organizations, and State Fire Training Academies (SFTAs) for critical training and equipment. The AFG Program has awarded approximately $7.7 billion in grant funding to provide critically needed resources that equip and train emergency personnel to recognized standards, enhance operational efficiencies, foster interoperability, and support community resilience.
DISCUSSION
The Department of Homeland Security (DHS)/ Federal Emergency Management Agency (FEMA), is accepting applications for the Assistance to Firefighters Grant (AFG). The objectives of the AFG program are to provide critically needed resources that equip and train emergency personnel to recognized standards, enhance operational efficiencies, foster interoperability, and support community resilience. This grant provides three activities: 1) Operations and Safety, 2) Vehicle Acquisition, and 3) Regional Projects.
The Department is seeking to submit a grant proposal seeking funding that will be intended to be used towards enhancement of all three (3) of the Department’s fire stations and support training, applying under the appropriate category based on specific needs .
The additional funding resources would provide much needed operational infrastructure that will support the Fire Department’s overall strategic goals in the delivery of fire services to the community.
SUMMARY
That the City Council approve the submission of the grant proposal application for the Department of Homeland Security (DHS)/ Federal Emergency Management Agency (FEMA), Fiscal Year 2021 Assistance to Firefighters Grant (AFG) Program.
ATTACHMENT(S):
None.
ITEM # 9
CITY OF MONTEBELLO
CITY COUNCIL AND PUBLIC FINANCING AUTHORITY AGENDA STAFF REPORT
TO:
Honorable Mayor and City Council Members
FROM:
René Bobadilla, P.E., City Manager
BY:
Adrianna Kendricks, Director of Transportation
SUBJECT: AUTHORIZATION TO ISSUE A REQUEST FOR PROPOSALS (RFP NO. 23-2) FOR THE MAINTENANCE HOSE REELS REPLACEMENT
DATE: September 28, 2022
RECOMMENDATION(S):
It is recommended that the City Council:
1) Approve issuing a Maintenance Hose Reels Request for Proposal, No. 23- 2 (RFP No. 23-2); and
2) Take such additional, related, action that may be desirable.
FISCAL IMPACT:
There is no fiscal impact related to issuing RFP No. 23-2 for maintenance hose reels replacement services (see Attachment “A”). Once a contractor is selected for award, the City Council will be requested to approve an agreement and amend the Fiscal Year 2022- 23 Budget as needed to appropriate funds. The requested services will be funded with PTMISEA STATE 10/11, PTMISEA STATE 18/19, and SB1 SGR 21/22 funds -- all Transit related restricted revenue sources.
BACKGROUND:
The City of Montebello is soliciting proposals from highly-qualified contractors to remove, dispose of, and replace existing hose reels located at the Transportation Department’s corporate yard facility with high performance and dual pedestal framed hose reels
CITY COUNCIL AND PUBLIC FINANCING AUTHORITY AGENDA REPORT - MEETING OF SEPTEMBER 28, 2022
designed for heavy-duty jobs that require high-frequency use, extra strength, and durability. Montebello Bus Lines (MBL) serves 13 cities as the fourth-largest municipal bus system in Los Angeles County and operates a fleet of 66 buses. To provide reliable and efficient public transportation services to the residents of Montebello and neighboring communities, MBL relies on its Maintenance Division to have the state-of-the-art equipment required to maintain MBL’s fleet.
The existing hose reels are original to the Transportation Facility that was built in 1996.
The hose reels have exceeded the useful life expectancy and are inoperable due to extensive usage. MBL’s Maintenance Division determined the condition of the hose reels as unrepairable or suitable for the original purposes. The replacement of the existing hose reels with heavy-duty high performance and dual pedestal framed hose reels will provide MBL with the needed resources to maintain the fleet and provide safe, reliable, and efficient public transportation services to the City and surrounding communities.
Once approved, the notice inviting proposals will be published using Planetbids.com, Masstransitmag.com, Transittalent.com, and the Wave Newspaper, beginning September 29, 2022. All bids will be submitted through the Planetbids.com platform. The due date for all proposals will be October 27, 2022. It is anticipated that a Contractor will be selected in November, with an award of a professional services agreement brought before the City Council for consideration shortly thereafter.
ENVIRONMENTAL IMPACT:
N/A
ANALYSIS:
MBL requests authority to issue RFP No. 23-2 to identify a contractor for the assessment, removal, disposal, and replacement of existing hose reels with heavy-duty high performance and dual pedestal framed hose reels. The hose reels replacement will improve the efficiency and productivity of MBL’s daily business operations and maintenance of the fleet. The selected contractor will possess the necessary aptitude and experience required to complete the project objective to assess MBL’s current facility and to remove, dispose, replace, install, and test the heavy-duty dual pedestal framed hose reels.
A selection process will be used to evaluate proposals based on various qualitative components, and award an agreement based on a combination of price and qualitative considerations. Qualitative considerations include a management plan, quality of proposed personnel, qualifications and experience, and technical approach.
Proposals will be evaluated based on the basis of the following qualitative and quantitative factors with the weighted value set forth below:
CITY COUNCIL AND PUBLIC FINANCING AUTHORITY AGENDA REPORT - MEETING OF SEPTEMBER 28, 2022
DISCUSSION:
N/A
SUMMARY:
Staff recommends that the City Council approve the issuance of RFP No. 23-2, attached hereto in substantial form, for the maintenance hose reels replacement; and direct staff to take such additional, related, action that may be desirable.
ATTACHMENT(S)
1. Attachment A - Request for Proposal (RFP) No. 23-2
NEXT STEPS:
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City of Montebello
Request for Proposals (RFP) No. 23-2
Maintenance Hose Reels Replacement
Date Issued: September 29, 2022
Proposals Due: October 27, 2022
ONLINE PROPOSAL SUBMITTAL ONLY THROUGH PLANET BIDS
NOTE: Updates, changes or addendums to the RFP are posted at:
https://pbsystem.planetbids.com/portal/33072/portal-home
RFP No. 23-2
City of Montebello 2
TABLE OF CONTENTS
INTRODUCTION ..................................................................................................................................................... 5 COVER LETTER ....................................................................................................................................................... 6 TIMETABLE & SCHEDULE OF EVENTS ...................................................................................................................... 7 SECTION 1 – INSTRUCTIONS TO PROPOSERS .......................................................................................................... 8 PROPOSAL FORMAT AND SUBMITTAL ....................................................................................................................... 8 Organizational Information Required From the Contractor .................................................................................. 9 EXAMINATION OF PROPOSAL DOCUMENTS .............................................................................................................. 9 SECTION 2 – GENERAL TERMS AND CONDITIONS ................................................................................................. 10 ADDENDA ................................................................................................................................................................ 10 CLARIFICATIONS ...................................................................................................................................................... 10 DISCREPANCIES AND MISUNDERSTANDINGS .......................................................................................................... 10 WITHDRAWAL OF PROPOSALS ................................................................................................................................ 11 REFERENCES ............................................................................................................................................................ 11 PROPOSAL SIGNATURES .......................................................................................................................................... 11 PRE-CONTRACTUAL EXPENSES ................................................................................................................................ 11 PERFORMANCE GUARANTEE ................................................................................................................................... 11 CITY OF MONTEBELLO RIGHTS ................................................................................................................................. 12 STATE CREDENTIALS AND TAXES ............................................................................................................................. 12 RESPONSIBILITY FOR COMPLIANCE WITH LEGAL REQUIREMENTS .......................................................................... 12 CONFIDENTIALITY AND PUBLIC RECORD ................................................................................................................. 12 JOINT OFFERS .......................................................................................................................................................... 12 COMPANY PERSONNEL ............................................................................................................................................ 13 SINGLE PROPOSAL RESPONSE .................................................................................................................................. 13 PROTEST PROCEDURES ............................................................................................................................................ 13 INCORPORATION OF PROPOSAL INTO AGREEMENT ................................................................................................ 13 TIME OF COMPLETION ............................................................................................................................................. 13 PAYMENT ................................................................................................................................................................. 14 CONTRACT DOCUMENTS: ORAL CHANGES / CONTRACT TERMINATION ................................................................ 14 SCOPE OF CONTRACT ............................................................................................................................................... 14 PERFORMANCE OF WORK ....................................................................................................................................... 14 ACCESS TO SITE ........................................................................................................................................................ 14 PREPARATION .......................................................................................................................................................... 15 OWNERSHIP OF DATA .............................................................................................................................................. 15 AWARD OF CONTRACT ............................................................................................................................................ 15
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PROPOSALS EVALUATION ........................................................................................................................................ 16 POINT OF CONTACT ................................................................................................................................................. 17 EVALUATION CRITERIA ............................................................................................................................................ 18 SECTION 3 – QUALIFICATIONS.............................................................................................................................. 19 MINIMUM NECESSARY QUALIFICATIONS ................................................................................................................ 19 SECTION 4 – SCOPE OF WORK .............................................................................................................................. 19 PROJECT OVERVIEW ................................................................................................................................................ 19 REELS SPECIFICATION .............................................................................................................................................. 20 TESTING ................................................................................................................................................................... 20 WARRANTY .............................................................................................................................................................. 20 SECTION 5 – FORM OF CONTRACT (SAMPLE) ....................................................................................................... 21 SECTION 6 – EXHIBITS .......................................................................................................................................... 32 EXHIBIT A ................................................................................................................................................................. 32 Proposal Submission Check List ........................................................................................................................... 32 EXHIBIT B ................................................................................................................................................................. 33 Letter of Transmittal............................................................................................................................................ 33 EXHIBIT C ................................................................................................................................................................. 35 Certificates, Licenses, Permits, and Registrations ............................................................................................... 35 EXHIBIT D ................................................................................................................................................................. 36 Indemnification and Hold Harmless Agreement and Waiver of Subrogation and Contribution ......................... 36 EXHIBIT E.................................................................................................................................................................. 37 References ........................................................................................................................................................... 37 EXHIBIT F .................................................................................................................................................................. 38 Insurance ............................................................................................................................................................. 38 EXHIBIT G ................................................................................................................................................................. 39 Cost Proposal Sheet ............................................................................................................................................. 39 EXHIBIT H ................................................................................................................................................................. 40 Statement of Disadvantaged Business Enterprise (DBE) Participation ............................................................... 40 EXHIBIT I .................................................................................................................................................................. 41 Bidder’s List of Subcontractor (DBE and Non-DBE) ............................................................................................. 41 EXHIBIT J .................................................................................................................................................................. 43 Debarment and Suspension Certification ............................................................................................................ 43 EXHIBIT K ................................................................................................................................................................. 44 Performance Bond ............................................................................................................................................... 44
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INTRODUCTION
The City of Montebello (“City”) is soliciting proposals from highly-qualified contractors to remove, dispose, and replace existing hose reels, as well as associated components (e.g., meters, water bibs, grease guns, jumper hoses, etc.), with high performance and dual pedestal framed hose reels designed for heavy -duty jobs that require high-frequency use, extra strength, and durability. The Contractor will conduct an assessment of the existing hose reel system located at the Transportation Department’s (“MBL”) facility.
As the fourth-largest municipal bus system in Los Angeles County, MBL prou dly serves 4.5 million passengers a year throughout the communities of Alhambra, Bell Gardens, San Gabriel, Boyle Heights, Commerce, Downtown Los Angeles, East Los Angeles, La Mirada, Montebello, Monterey Park, Pico Rivera, Rosemead, South Gate, and Whitti er. In order to provide reliable and efficient public transportation services to the residents of Montebello and neighboring communities, MBL relies on the Maintenance Division to have state- of-the-art equipment required to maintain MBL’s fleet.
The awarde d Contractor (“Contractor”) will possess the necessary aptitude and ex perience required to complete the project objective and install the dual pedestal framed hose reels.
The City reserves the right to reject any or all proposals, waive information or irr egularities to the extent permitted by law in any proposal received, and be the sole judge of the merits of the respective proposals received.
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COVER LETTER
DATE: September 29th, 2022
ATTENTION: PROSPECTIVE PROPOSERS
SUBJECT: REQUEST FOR PROPOSAL (RFP) NO. 23-2
TITLE: CITY OF MONTEBELLO and MONTEBELLO BUS LINES
MAINTENANCE HOSE REELS REPLACEMENT
The City of Montebello (“City”), Montebello Bus Lines (“MBL”), is soliciting proposals (“Proposals”) from highly- qualified contractors (“Contractors”) to provide the technical expertise required for the removal of existing hose reels, as well as associated components (e.g., meters, water bibs, grease guns, jumper hoses, etc.) at the City’s transportation facility. The Contractor will replace the existing hose reels with high performance and dual pedestal framed hose reels designed for heavy-duty jobs that require high-frequency use, extra strength, and durability.
A Pre-Proposal Meeting will be held on Thursday, October 6, 2022 . The meetin g will convene at 10:00 AM Pacific Standard Time in the Transportation Facility located at 400 South Taylor Avenue, Montebello. A facility walk-thru will follow the meeting. Proposers must abide by all Federal, State, local, and City coronavirus (COVID-19) protective measures (e.g., face coverings) at all times while onsite.
It is highly recommended that all potential proposers (“Proposers”) attend this important meeting. All correspondence, communications, and contact concerning any aspect of this solicitation or offers shall be only with the following person [or his designated representative if applicable] (hereinafter, the “City’s Point of Contact”).
Name: Rohan Anderson
Title: Senior Procurement Analyst
Address: City of Montebello, Transportation Facility
400 S. Taylor Ave.,
Montebello, CA 90640
Telephone: (323) 558-1625 ext.104
E-mail: [email protected]
Only substantive inquiries will receive a response. All substantive questions submitted in writing as outlined below will be responded to according to the guidelines contained herein. Responses will be in writing and will be provided to all prospective Proposers and placed on the City’s website. Responses to questions or comments regarding this RFP provided by any other department, or employee, other than the contact person set forth above shall not be considered valid and the City will not be bound by any such comments or responses.
Inquiries received via telephone or orally in person will not receive a response.
Proposals must be received by Thursday, October 27, 2022, 3:00 PM Pacific Standard Time and submitted in accordance with the instructions contained in this RFP. No exceptions will be granted regardless of reason or circumstances.
All Proposals must contain an original signature by an authorized officer of the company.
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The successful Proposer will be required to comply with all applicable Equal Opportunity Laws and Regulations.
The City hereby notifies all prospective Proposers that the City will require each Proposer affirmatively demonstrate that Disadvantaged Business Enterprises are afforded full opportunity to participate in the performance of co ntracts and subcontracts financed in part or whole under this RFP, and will not be discriminated against on the grounds of race, color, gender, age, or national origin in consideration for an award.
The City reserves the right to reject any or all proposals, to accept all or any part of any proposal, to waive any informality or minor irregularities in any proposal received to the extent permitted by law and where such action best serves the interest of the City, and to be the sole judge of the merits of the respective proposal received.
The City is committed to ensuring that no person is excluded from participation in, or denied the benefits of its programs and/or services based on race, color, or national origin per FTA Circular 4704.1 and Title VI of the Civil Rights Act of 1964, as amended ("Title VI"). In addition to Title VI, NTS also prohibits discrimination based on sex, age, or disability.
Any person who believes he or she has been subjected to discrimination under Title VI can file a complaint with MBL. For more information on MBL’s Civil Rights Program, and the procedures to file a complaint, contact:
Name: Adrianna Kendricks
Title: Director of Transportation
Address: City of Montebello, Transportation Facility
400 S. Taylor Ave.,
Montebello, CA 90640
Telephone: (323) 558-1625
Fax Number: (323) 887-4643
E-mail: RideMBL.com
You may also contact the Federal Coordination and Compliance Office, Civil Rights Division at the Title VI Hotline: 888-TITLE-06 (888-848-5306) or send a letter to:
U.S. Department of Justice
Civil Rights Division
Federal Coordination and Compliance Section, NWB
950 Pennsylvania Avenue, N.W. Washington, D.C. 20530
More information on Title VI is available from the Justice Department online at www.justice.gov
TIMETABLE & SCHEDULE OF EVENTS
Scheduled Tasks Scheduled Date
Issuance of RFP Thursday September 29, 2022
Pre-Proposal Meeting Thursday October 6, 2022 at 10:00 AM PST Deadline to Submit Questions Tuesday October 13, 2022 at 3:00 PM PST Responses to Questions Provided Tuesday October 18, 2022 Deadline to Submit Proposals Thursday October 27, 2022 at 3:00 PM PST Presentations & Intent to Award Week of November 10, 2022
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SECTION 1 – INSTRUCTIONS TO PROPOSERS
PROPOSAL FORMAT AND SUBMITTAL
Proposals can be submitted via the PlanetBids.com Portal, accesse d through the City ’s official website at https://www.cityofmontebello.com/rfp-bids/bid-opportunities.html.
Deadline to Submit Proposals Thursday October 27, 2022, at 3:00 PM PST
All proposals must contain an original signature by an authorized officer of the company. Proposals received after the date and time listed above will not be considered.
The following proposal format with the required contents has been developed to enable a consistent proposal evaluation. Failure to submit the requested documents may render the proposal non-responsive and rejected.
Proposals shall not include any unnecessarily elaborate or promotional material. Proposals may not be modified or corrected after being opened unless an addendum is issued requesting resubmissions. Proposals will not be valid until all information has been verified and Proposers references have been checked. All proposals shall be accompanied by a completed and signed letter of transmittal provided as a part of this RFP.
All requests for exceptions or deviations as a result of this RFP shall be clearly identifiable by a separate section of the Proposer’s submitted proposal for review by the City. It shall be the right of the City to accept or reject any portion of the submitted requests.
Proposals shall be submitted in accordance with the form prescribed herein. Failure to respond in this manner may render the p roposal non-responsive. Unauthorized conditions, limitation s, or provisions attached to a proposal will render the p roposal non -conforming and non -responsive and may caus e its rejection. The completed p roposal shall be without interlineations, alterations, or erasures. Propos er submitting basic conforming p roposals may choose to submit alternate p roposals as complete and separate offers, if the alternate proposal offers technical or other improvements or modifications, which are to the overall benefit of the City. Any and all alternate proposals must be submitted in writing and included with the original proposal, conforming to the requirements as stated herein. No verbal modifications will be accepted.
Proposals shall be typed single -spaced and sub mitted on 8 ½ by 11 inch paper in the following format and include the sections specified below:
Proposal Submission Check List (EXHIBIT A)
Proposal and Organizational Information Required From the Contractor (SECTION 1) Letter of Transmittal (EXHIBIT B)
Certificates, Licenses, Permits, and Registrations (EXHIBIT C) Indemnification and Hold Harmless Agreement and Waiver of Subrogation and Contribution ( EXHIBIT D) References ( EXHIBIT E)
Project Portfolio References ( SECTION 3)
Insurance (SECTION F)
Cost Proposal (EXHIBIT G)
Statement of Disadvantaged Business Enterprise Participation ( EXHIBIT H) Bidder’s List of Subcontractor (DBE and Non-DBE) (EXHIBIT I) Debarment and Suspension Certification (EXHIBIT J)
Performance Bond (EXHIBIT K)
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ORGANIZATIONAL INFORMATION REQUIRED FROM THE CONTRACTOR A. Cover Letter
Introduction of firm signed by an authorized Principal of the firm. Name, address, and phone number of firm.
Years in business providing services described herein. Brief statement of understanding of the services to be performed. Include the name an d signature of binding official authorized to answer ques tions regarding the firm’s proposal.
B. Qualifications and Experience of Firm and/or Team
Describe other contracts (at least three) similar in scope, size or discipline to the required services described herein, performed or undertaken within the past five years. Describe projects that sub -contractors have performed with a similar scope, size, or discipline within the past five years.
Provide references, including name, address, email address, and telephone number of a contact person for each project identified and described.
Provide and identify the firm’s financial condition documentation Indicate commencement dates, duration, and type of operation. Provide a list of all public transportation clients in California.
C. Project Manager(s) and Key Project Personnel
Clearly identify the professional staff person(s) who would be assigned as Project Manager(s) and provide resumes. The resume should indicate the abilities, qualifications, education, and experience of these individuals.
D. Work Plan and Scope of Work (SOW)
Include an SOW that at least meets the minimum requirements of the RFP. Acknowledge any requirements of the scope that cannot be met and are not part of the supplier’s proposal.
Include a detailed implementation plan.
E. Project Schedule
Account for each activity in the SOW and bidder’s approach to work. Define a realistic timeline, measured in days, to complete SOW after award.
F. Subcontractors and Work by Others
Identify any subcontractor to serve on the project with their qualifications. Describe all work needed to complete the SOW not included in the proposal. Include work to be completed by MBL with duration estimates. Any work not included in “Work Done by Others” will be considered work the bidder will do.
G. Contract
The City has included its standard co ntract in Section 5. Identify all exceptions to the agreement that would prevent your Firm from executing it. The City will consider and discuss exceptions during negotiations.
H. Completeness of Proposal Statement
Provide a table of contents. Respond to all items listed in the submission requirements section and provide all other documents requested.
EXAMINATION OF PROPOSAL DOCUMENTS
By submitting a proposal, Proposer represents that: (1) Proposer has thoroughly examined and become familiar with the SOW required under this RFP, (2) Proposer comprehends all conditions that may impact the proposal, (3) Proposer has reviewed all addenda, and (3) Proposer is capable of providing the equipment, goods and services necessary to perform the SOW and/or meet the specifications outlined in this RFP, in a manner that
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meets the City’s objectives. Failure to examine the documents and inform itself shall be at the Proposers’ own risk. A Proposer shall have no claim against the City based upon ignorance of or misunderstanding of the RFP documents. Once the award has been made, failure of a Proposer to have read all of the conditions, instructions and the agreement shall not be cause to alter any term of the agreement nor shall such failure provi de valid grounds for a Proposer to withdraw its proposal or to seek additional compensation.
SECTION 2 – GENERAL TERMS AND CONDITIONS
ADDENDA
Any changes made by the City to the requirements in this RFP will be made by written addenda. Any written addenda issued to this RFP shall be incorporated into the terms and conditions of any resulting Agreement.
The City will not be bound by any modifications to or deviations from the requirements set forth in this RFP as the result of oral instructions. The City reserves the right to revise or withdraw this RFP at any time and for any reason.
CLARIFICATIONS
Should a Proposer require clarifications of this RFP, the Proposer shall notify the contact person identified in this RFP in writing. Should the City, in its sole discretion, determine that the point in question is not clearly and fully set forth; the City will issue a written addendum clarifying the matter. The said addendum shall be posted on the PlanetBids.com web page.
All questions, clarifications, or comments must be submitted to or no later than the time and date listed in the TIMETABLE & SCHEDULE OF EVENTS of this RFP. No questions will be answered individually by the City.
Requests for clarification, questions, and comments must be clearly posted on the PlanetBids Q & A section.
The City is not responsible for failure to respond to a request that has not been submitted in accordance with this section.
Responses by the City to the clarifications, comments , and questions will be communicated via PlanetBids.
Every attempt will be made to provide responses to all Proposers in accordance with the procurement schedule for this RFP. Inquiries received after the deadline will not be accepted and will be returned to the sender without a response.
Requests for clarifications and questions should be formatted in the following manner:
1. Section
2. Paragraph number
3. Page number
4. Text of passage being questioned
5. Question
DISCREPANCIES AND MISUNDERSTANDINGS
Proposing Companies must satisfy themselves by personal examination of any worksites, drawings, SOW and by any other means as they may believe necessary, as to the actual physical conditions, requirements , and difficulties under which the work must be performed. No Proposing Company shall at any time after submission of the p roposal, make any claim or a ssertion that there was any misunderstanding or lack of information regarding the nature or amount of work necessary for the satisfactory completion of the job. Any errors, omissions, or discrepancies found in any plans, specifications, or other documents provided, shall be called to the attention of the Buyer and clarified prior to the submission of proposals.
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WITHDRAWAL OF PROPOSALS
Proposers may withdraw their proposals in writing, provided that such requests are received by the City prior to the scheduled deadline for proposal submission or within six months following the scheduled deadline for proposal submission when no contract has been awarded.
REFERENCES
All reference information requested in this RFP and specified in the form included in this RFP must be submitted with the proposal. Refer to Exhibit E.
At the discretion of the Evaluation Committee, the City may elect to perform site visits at the Proposer’s customer locations. These optional site visits will be in addit ion to any presentations and/or technical demonstrations. Some or all RFP Evaluation Committee members would travel, at City expense, to sites at which finalist Proposers are performing like services. The purpose of such visits shall be to provide the evaluation team with an increased understanding of the process and assess the Proposer’s implementation and performance.
PROPOSAL SIGNATURES
If an individual makes the p roposal it shall be signed and the full name and address of the Proposer shall be given.
If a partnership makes the p roposal, it shall be signed with the partnership name, by a member of the partnership who shall sign by name and the name and address of each partner shall be given.
If a corporation prepares the p roposal, the name of the corporat ion shall be provided and signed by two (2) duly authorized Officers and, if available, stamped with the corporate seal, and the names and titles of all officers of the corporation shall be given. If a corporation provides a certified letter stating that o ne (1) duly authorized officer's signature is binding for the corporation, this will suffice to omit the secon d signature requirement in the proposal. A certified letter is to be included in the proposal accompanied with the Letter of Transmittal.
PRE-CONTRACTUAL EXPENSES
The City will be under no obligation for payment of pre -contractual expenses. Pre-contractual expenses are defined as expenses incurred by Proposer in:
Preparing the proposal in response to this request.
Submitting that proposal to the City.
Negotiating with the City any matter related to this proposal, and/or Any other expenses incurred by the Proposer prior to date of award.
PERFORMANCE GUARANTEE
A Performance Guarantee in the amount of 100% of the Contract value is required by the City to ensure faithful performance of the Contract. The performance bond shall be provided by the Contractor and shall remain in full force for the term of the Agreement.
The successful Contractor shall certify that it will provide the requisite Performance Guarantee to the City within ten (10) business days from Contract execution (Exhibit K). The City requires all performance bonds to be provided by a fully qualified surety company acceptable to the City and listed as a company currently authorized under 31 C.F.R. part 22 as possessing a Certificate of Authority as described hereunder. The City may require additional performance bond pro tection when the contract price is increased. The increase in
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protection shall generally equal 100 percent of the increase in the contract price. The City may secure additional protection by directing the Contractor to increase the amount of the existing b ond or to obtain an additional bond.
CITY OF MONTEBELLO RIGHTS
In its discretion, the City reserves the right to:
1. Reject any and/or all proposals for no reason or any reason including but not limited to the following:
a. The p roposal is incomplete, non -responsive, obscure, irregular , or lack s necessary detail and specificity.
b. The Proposer, in the sole judgment of the City, lacks the qualifications, experience, and/or responsibility necessary to provide the services.
c. The Proposer failed or neglected to complete and submit any information within the time specified by the City, and as may be otherwise required herein.
2. Reject any p roposal that, in the opinion of the City , is so unbalanced in comparison to other p roposals received and/or to the City’s internal estimates that it does not accurately reflect the cost to perform.
3. Accept all or any part of a proposal.
4. Cancel the entire RFP;
5. Issue subsequent RFPs;
6. Waive any errors or informalities in any proposal, to the extent permitted by law.
STATE CREDENTIALS AND TAXES
The Proposer shall be appropriately licensed in accordance with the laws of the State of California for the work to be performed. The cost for any required licenses and/or permits shall be the responsibility of the successful Proposer. The successful Proposer is liable for any and all taxes due as a result of the contract.
RESPONSIBILITY FOR COMPLIANCE WITH LEGAL REQUIREMENTS
The Proposer’s products, services, and facilities shall be in full compliance with all applicable Federal, State , and local regulations, standards, and ordinances, regardless of whether or not they are referred to in the RFP.
CONFIDENTIALITY AND PUBLIC RECORD
All Proposers are hereby put on notice that each proposal received shall become the exclusive property of the City and, unless the City’s prior written agreement to maintain all or part of a proposal confidential as a trade secret is first obtained, each proposal shall be subject to disclosure pursuant to the California Public Records Act and/or the Federal Freedom of Information A ct. The City shall not in any way be liable or responsible for the disclosure of any proposals or portions thereof absent such agreement; nor shall such agreement preclude the City from disclosing any proposal or portion thereof where such disclosure is required by law.
JOINT OFFERS
Where two or more Proposers desire to submit in response to this RFP, they shall do so on a prime -sub Contractor basis rather than as a joint venture. The City intends to contract with a single firm and not with multiple firms doing business as a joint venture. Any proposal submitted on behalf of any form of joint venture or partnership between two (2) existing Proposers may be considered collusive and may be rejected as non- responsive.
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COMPANY PERSONNEL
It shall be the burden of the successful Proposer to ensure all personnel possesses qualifications and/or experience. All personnel required in performing the services herein shall be secured at the expense of the successful Proposer. Personnel shall not be employees of or have an y contractual relationship with the City.
Successful Proposer’s personnel shall conduct themselves in a professional manner to all City employees at all times. Rude or discourteous behavior by the successful Proposer will not be tolerated and the offense can be justification for termination of contract. All sub -Contractors of successful Proposer shall abide by all the requirements set forth in this section.
SINGLE PROPOSAL RESPONSE
If only one proposal is received in response to this RFP, a detailed cost/price proposal may be requested of the Proposer. A cost or cost and price analysis and evaluation and/or audit of the cost may be performed in order to determine if the price is fair and reasonable. If the City determines a cost analysis is required, Proposer must be prepared to provide, upon request, cost summaries of estimated costs (i.e. labor, equipment, supplies, overhead costs, etc.) and documentation supporting all cost elements.
PROTEST PROCEDURES
All protests must be filed in accordance with the following:
1. The protest must be in writing and identify the solicitation (RFP) number.
2. The protest must be submitted by some return receipt method or guarantee of delivery that insures that the protest was received in a timely manner. The City is not respon sible for lost or delayed deliverables.
3. The party’s standing to protest must be identified.
4. Identification of the specific provision, law, regulation, specification, procedure, or policy violated.
5. A statement of the relief requested.
Protests related to the content of the RFP shall be received no later t han ten (10) days prior to the p roposal due date; or within five (5) days after proposal opening. If the Protest does not comply with the preceding requirements it may not be evaluated and may be returned to the Protestor.
All protests shall be submitted to the contact person identified in this solicitation. If the solicitation is funded with Federal Transit Administration (FTA) monies, a protest may be filed with the FTA. However, the FTA only accepts protests alleging that a grantee failed to have written protest procedures or did not comply with those procedures or protests that involve a conflict of interest or fraud.
INCORPORATION OF PROPOSAL INTO AGREEMENT
This RFP and the Proposer’s response, including all promises, warranties, commitments, and representations made in the successful proposal, shall be binding and incorporated by reference in the City’s contract with the successful Proposer.
TIME OF COMPLETION
The Contract time shall commence from the dat e on the Notice to Proceed (NTP) as authorized in writing by the City. The services shall be completed within the time period specified in the Request for Proposal. In case the services under the terms of these provisions and related professional contract shall be necessarily delayed because of strikes, injunctions, government controls, or by reasons of any cause or circumstances beyond the control of the CONTRACTOR, the time of completion shall be extended by a number of days to be determined in each instance by mutual agreement between CONTRACTOR and MBL.
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PAYMENT
A separate invoice, referencing the respective purchase order number, shall be issued in duplicate for each invoice shown in the payment schedule, and addressed to:
City of Montebello
Attn: Accounts Payable
1600 West Beverly Boulevard
Montebello, California, 90640
Payment will be made within thirty (30) days after acceptance and approval of the invoice.
Payment Schedule: Monthly; provide one (1) invoice monthly.
CONTRACT DOCUMENTS: ORAL CHANGES / CONTRACT TERMINATION Oral Changes : Oral changes and oral change orders are not permitted. All proposed changes must be submitted in writing to, and approved by, MBL prior to becoming a contract modification.
Contract Termination: M BL may terminate any resulting contract for convenience at any time by giving the successful contractor (hereinafter, the “Contractor” or “ CONTRACTOR”) written notice thereof. Upon termination, MBL shall pay the CONTRACTOR allowable cost incurred to date of termination, and those costs deemed reasonably necessary by MBL to effect such termination, determined in accordance with Part 1-8.705- 1 of the Federal Procurement Regulations (41CFR 1 -8) or other applicable portion(s) of said Regulations. In addition, MBL shall pay th e CONTRACTOR a percentage of the project, which relates to c ontract work accomplished to date of termination. The effective date of termination shall be the date of Notice of Termination.
In the event the CONTRACTOR breaches the terms or violates the conditions of the c ontract, and does not within ten days, thereafter, cure such breach of violation, MBL may immediately terminate the contract for default. CONTRACTOR shall be liable for any and all costs incurred by MBL as a result of such default.
SCOPE OF CONTRACT
CONTRACTOR shall provide all services necessary as per the SOW described in this Request for Proposal.
PERFORMANCE OF WORK
It is the intent of these specifications to provide only services of the highest quality. The cost to be quoted and submitted shall include all items of service and any other costs necessary to fully complete the work pursuant to the provisions. It is the aim of these specifications that the CONTRACTOR provides complete services of the type prescribed. Any items omitted from such specifications which are clearly necessary for the completion of such services shall be considered a portion of such services, although not directly specified or called for in these specifications. No advantage shall be taken by the CONTRACTOR in the omission of any detail which goes to make the services complete, even though such detail is not mentioned in these specifications.
ACCESS TO SITE
The Contractor shall have limi ted use of the p roject site for installation operations during the installation period. The use of the site will be limited to the work area. The Contractor shall not disturb other areas of the site without the City’s approval.
Driveways, Walkways, and Entrances: Keep entry driveways and personnel entrances serving premises clear and available to the City and emergency vehicles at all times. Maintain access to existing walkways, corridors,
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and other adjacent occupied or used facilities. Do not close or obstruct walkways, corridors, or other occupied or used facilities without written permission from the City’s Project Manager (PM) or their designee.
MBL will occupy the facility during the entire installation period. Cooperate with the City’s PM or their designee during installation operations to minimize interference with MBL’s business operations.
PREPARATION
Provide temporary barricades and other protection required to prevent injury to people and damage to adjacent buildings and facilities to remain. Provide and maintain shoring, bracing, and structural supports as required to preserve stability and prevent movement, settlement, or collapse of construction and finishes to remain.
Provide protection to ensure the safe passage of people around selective demolition areas and to and from occupied portions of the building.
Protect walls, ceilings, floors, and other existing finish work that are to remain or that are exposed during selective demolition operations.
OWNERSHIP OF DATA
Any and all forms of data and other information generated by or used by the Contractor is the property of the City and shall not be used by the Contractor for any purpose whatsoever except to perform the requested services by the City.
AWARD OF CONTRACT
The agreement (“Agreement”) resulting from this RFP will be awarded to the responsive and responsibl e Proposer whose proposal, conforming to the requirements of the RFP, is determined to be the most advantageous (“Best Value” as described in the Federal Transit Administration Circular 4220.1F) to the City, based on the Evaluation Criteria. No agreement s hall exist until the City C ouncil or the City Manager has awarded the Agreement and it has been mutually executed. The City reserves the right to:
(a) Accept all or any part of a proposal;
(b) Reject any or all proposals for any reason;
(c) Waive any informality or minor errors to the extent permitted by law; (d) Award the Agreement as the interest of the City may require; (e) Cancel the entire RFP; or
(f) Issue subsequent RFP’s.
An Evaluation Committee comprised of MBL staff in accordance with the Proposal Evaluation Criteria set forth in Evaluation Criteria section of this RFP, will evaluate all the proposals. During the evaluation period, the City may interview some or all the proposing firms. Proposers should be aware; however, that award may be made without interviews or further discussions.
The City may negotiate contract terms with the selected Proposer prior to award, and expressly reserves the right to negotiate with several Proposers simultaneously and, thereafter, to award a contract to the Proposer offering the most favorable terms to the City. However, negotiations may or may not be conducted with Proposers; therefore, the proposal submitted should contain the most favorable terms and conditions, since the selection and award may be made without discussion with any Proposer.
No agreement shall exist until the City Council or City Manager has awarded the Agreement and it has been mutually executed. The City reserves the right to reject any and all p roposals for any reason, to waive any informality or minor errors as determined by the City in any proposal and to award the Agreement as the best
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interests of the City may require. The award, if any, may be made by the City within ninety (90) calendar days after the opening of the proposals.
PROPOSALS EVALUATION
Selection criteria include such price and qualitative considerations as qualifications and experiences of Contractor, subcontractor, and proposed project personnel; technical approach and design; management plan (e.g., personnel, workload, timeline, etc.); and past performance record. The award selection is based upon consideration of a combination of technical and price factors to determine the offer deemed most advantageous and of the greatest value to the City.
An Evaluation Committee comprised of City staff will evaluate all proposals in accordance with the proposal Evaluation Criteria set forth in this RFP. Interviews with the highest-ranked firms may or may not be requested by the City. Selection may be made strictly from the information provided in the Proposal. However, the City reserves the right to conduct interviews with and request presentations from any, all, or some respondents.
On the completion of the initial Pass/Fail review, the committee will ev aluate proposals using the two -step process. Technical proposals will be reviewed and scored first without consideration for price. The committee will then open the cost and price proposals and evaluate and score them accordingly. During the technical evaluation, the committee, at its sole discretion may contact any or all the Proposers with specific questions or requests for clarification. After both the technical and cost/price proposals have been evaluated and scored, the committee will arrive at a “comprehensive proposal score” for each proposal. A list of top-ranked proposals within a competitive range will be developed based upon the total comprehensive scores provided by committee members. At this time, the committee may decide that the evaluation pro cess is complete and submit a final recommendation to the Director of Transportation.
If the committee determined it to be necessary, it may then conduct interviews and negotiations with short - listed Proposers. As no other interview dates are available, Proposers who are unable to attend their interview as scheduled may be eliminated from further participation. The interview may consist of a short presentation by the Proposer after which MBL may ask questions and/or request clarification related to any elem ent of a proposal and its qualifications. MBL may also enter negotiations with the Proposer.
At the conclusion of interviews and negotiations, the evaluation committee may choose to proceed using one of the following processes:
The committee may find it ne cessary to re-score the proposals in light of information gained during the interviews and negotiations process. The proposals will be scored in the same manner as the original proposals.
The committee may ask the Proposers to consider the dialog of negotiations and revise their proposals.
A deadline will be set for submission of the revised proposals. If a Proposer is unable to meet the deadline or chooses not to revise its proposal, its existing proposal will be rescored along with revised proposals in the same manner as the original proposals. Proposers remaining within the competitive range may be asked to submit a Best and Final Offer (BAFO). In the BAFO request, the Proposers may be asked to provide additional information, confirm or clarify issues an d submit a final cost/price offer. A deadline for submission will be stipulated. The BAFO’s will be scored in the same manner as the original proposals. After the BAFO’s are evaluated and scored, the evaluation committee may recommend a proposal with the h ighest final ranking or a short list of top ranked proposals within the competitive range whose offers(s) are the most advantageous to MBL.
MBL will evaluate the offers based on the following criteria: Pass/Fail Criteria Proposer has demonstrated at least 5 years of related services experience. (P/F)
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Proposer has demonstrated previous experience working for or with public agencies, transit entities, or corporations on related project. (P/F)
If the Proposer does not meet any of the criteria mentioned above, their proposal may not be considered for evaluation.
All proposals submitted may be subject to clarifications and further negotiation. All agreements resulting from negotiations that differ from what is represented within the RFP or in the respondent’s res ponse shall be documented and included as part of the final contract agreement.
POINT OF CONTACT
This RFP is issued by the City, and the Senior Procurement Analyst will be the sole point of contact (“Point of Contact”) during the RFP submission and procure ment process. Communications initiated by respondents to this RFP with members of the City Council, or officers, personnel or employees of the City, other than as coordinated by the Point of Contact, may be grounds for disqualification. Any inquiries or requests during this submission or procurement process shall be submitted in writing to the following Point of Contact:
City of Montebello, Transportation Department
Name: Rohan Anderson
Title: Senior Procurement Analyst
Address: 400 S. Taylor Ave.,
Montebello, CA 90640
Telephone: (323) 558-1625 ext.104
E-mail: [email protected]
If the Point of Contact determines a response to any such inquiry is warranted, said response will be issued to all prospective Proposers via PlanetBids.com
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EVALUATION CRITERIA
Award will be made to the Offeror whose pro posal offers the best value to the City. Proposals that meet the pass/ fail criteria now will be evaluated in accordance with the following criteria:
QUALITATIVE AND QUANTITATIVE CONSIDERATIONS
Proposers’ proposals will be evaluated based on the basis of the following qualitative and quantitative factors with the weighted value set forth below:
# Categories Weighted
Points (Pts)
1 Project Management Plan
The proposal shall contain a detailed explanation of the project and not a reiteration of the RFP itself. The information offered should be a compendium of the Proposer’s knowledge of the standards outlined in the SOW.
10 pts
2 Proposed Project Team
Qualifications and experience of management and staff and other personnel, comprehensiveness of plan, and team’s familiarity with the requested provision services. 20 pts
3 Firm Qualifications and Experience
Demonstrate experience completing related projects of the same or similar magnitude.
Present a catalog of experience and expertise most advantageous to the City. 15 pts
4 Technical Approach
Understanding of the RFP requirements and illustrating the ability to meet performance objectives, compli ance with all technical and administrative requirements, financial viability, accounting, and reporting.
25 pts
5 Price
The Proposer’s Price Proposal will be compared to the Proposal with the Best Value to the City. The best value responsive price will receive the total weighted value for this criterion.
30 pts
TOTAL 100 pts
The best value responsive price will receive the total weighted score for the price (30 pts).
All other price proposals will be scored as follows:
Final Price Proposal Score = Proposal Price Rating x Weighted Points
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SECTION 3 – QUALIFICATIONS
The Contractor may be required to present proof of satisfactorily completed projects and products of similar work completed for past client companies, organizations, or municipalities that display good standing status without claims or pending claims against such work.
MINIMUM NECESSARY QUALIFICATIONS
The following are the minimum necessary qualifications to provide services:
List and describe a minimum of three (3) projects or experiences, similar in nature to the Project contemplated in this RFP, which the Proposer is currently performing or has performed within the last thirty-six (36) months.
Within the past five (5) years, have not declared bankruptcy and/or defaulted on a contractor; Within the past three (3) years, have been placed in receivership and/or denied credit. Within the past five (5) years, h ave not assessed any penalties for non -compliance with any federal, state, local, city, or county labor laws and/or regulations. Currently not under investigation for any charge and/or claim for noncompliance with any federal, state, local, city, or county labor laws and/or regulations, including without limitation prevailing wage laws and apprenticeship laws.
Licensed to do business in the State of California.
Certifications and Licenses (if required)
Experience with agencies and projects of similar size and scope. Financial Capacity.
SECTION 4 – SCOPE OF WORK
PROJECT OVERVIEW
The project objective is to remove, dispose, and replace existing hose reels, as well as associated components (e.g., meters, water bibs, grease guns, jumper hoses, nozzles, etc.), with high performance and dual pedestal framed hose reels designed for heavy-duty jobs that require high-frequency use, extra strength, and durability.
All couplers, meters, and nozzles must match or be retrofitted with MBL’s current tools and dispensed fluids.
The hose reel system must be bled and tested before being placed into service.
The Contractor must provide a complete asset list describing at a minimum the hose reels’ identification number, fluid type, location, and color. Each hose reel must be labeled with reflective outdoor vinyl labels for easy identification from the ground view. Additional hose reels may be acquired should the need be identified following the Contractor’s assessment of the existing hose reel system.
The project site includes three locations: Chassis Wash, Corporate Shop, and Fueling Station.
I. CHASSIS WASH
One (1) Air Hose Reel
II. CORPORATE SHOP
Thirteen (13) Air Hose Reel
Six (6) Coolant Hose Reel
Six (6) Grease Hose Reel
Twenty (20) Oil Hose Reel
III. FUELING STATION
Three (3) Air Hose Reel
Two (2) Coolant Hose Reel
Four (4) Oil Hose Reel
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The Contractor shall keep the premises and surrounding area free from the accumulation of waste materials or rubbish caused by operations under the agreement. At completion of the SOW, the Contractor shall remove and clean up all byproducts, debris, and rubbish caused by the operations under the agreement. If Contractor fails to clean up, the City may do so, and the cost thereof shall be charged to Contractor.
REELS SPECIFICATION
The equipment must be approved equal to the following Graco XD Series specifications:
AIR HOSE REELS
o Graco XD Series Size 20, Red Color Finish
o 3/8” x 50’ Hose
COOLANT HOSE REELS
o Graco XD Series Size 20, Yellow Color Finish
o 3/8” x 50’ Hose
GREASE HOSE REELS
o Graco XD Series Size 20, Yellow Color Finish
o 3/8” x 50’ Hose
OIL HOSE REELS
o Graco XD Series Size 20, Yellow Color Finish
o 3/8” x 50’ Hose
GREASE GUNS
o Graco Grease Gun
o Graco Z Swivel and Alemite 6509-E Tip Swivel
o Graco 24” Whip Hose and Coupler
METERS
o Graco Mechanical Quarts Meters
o Flex Hose with Non-drip Tips
WATER BIBS
o Water Dispensing Bibs with Rubber Tips
TESTING
Following installation, the Contractor shall perform an acceptance test as recommended by the manufacturer.
A test outline shall be provided to the MBL for approval prior to performing the test. The test program shall show that the equipment meets all of the conditions described by the specification and that the equipment will perform as intended.
WARRANTY
A. Upon completion of the installation, the awarded Contractor shall provide a three (3) year warranty repairs against manufacturing defects in materials, function, and workmanship.
B. Warranty repairs shall include materials, freight of any kind, travel expenses, mileage, labor, and any other related expenses necessary to correct defects.
C. In the event of a failure of the hose reels during the warranty period, the Contractor will be required to repair the hose reels within 10 days of notification.
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SECTION 5 – FORM OF CONTRACT (SAMPLE)
PROFESSIONAL SERVICES AGREEMENT FOR
MAINTENANCE HOSE REELS REPLACEMENT
THIS AGREEMENT (“Agreement”) is made and entered into on …………………….., 2022, by the CITY OF MONTEBELLO, a municipal corporation (hereinafter referred to as “CITY”) and …………………………….. (Hereinafter referred to as “ CONTRACTOR”). CITY and CONTRACTOR are sometimes referred to he rein individual as a “Party,” and jointly as the “Parties.”
RECITALS
WHEREAS, CITY desires to retain a qualified professional contractor to replace and install the Maintenance Hose Reels (“Project”); and
WHEREAS, CONTRACTOR represents the degree of specialized expertise contemplated within California Government Code, Section 37103, and is qualified to perform such services by virtue of its experience and the training, education, and expertise of its principals and employees; and
WHEREAS, no official or employee of CITY has a financial interest, within the provisions of Sections 1090 – 1092 of the California Government Code, in the subject matter of this Agreement; and
WHEREAS, CONTRACTOR responded to CITY’s Request for Proposal d ated September 29, 2022 (RFP No. [23-2]), as such is set forth fully in Exhibit “A” hereto and incorporated fully herein by this reference (hereinafter “Contractor Proposal”).
NOW THEREFORE, in consideration of performance by the Parties of the covenants and conditions herein contained, the Parties hereto agree as follows:
SECTION 1. SERVICES / COMPENSATION.
A. CONTRACTOR shall provide to CITY those services that are set forth fully in the Scope of Services, as such is set forth fully in Exhibit “A” hereto and incorporated fully herein by this reference (hereinafter “Professional Services”).
B. CONTRACTOR shall complete the Scope of Services within the time set forth in the Schedule of Performance, as such is set forth in Exhibit “B” hereto and incorporated fully herein by this reference.
C. CONTRACTOR shall be compensated a sum not-to-exceed $………………(the “Maximum Compensation”) for performance of the Professional Services as set forth in the Schedule of Compensation attached hereto as Exhibit “C” and incorporated fully herein by this reference (“Compensation”). CONTRACTOR shall provide an itemized billing statement to CITY each month for Professional Services performed.
CONTRACTOR shall not incur fees or costs which exceed the Maximum Compensation without the prior written consent of CITY.
D. CITY will be invoiced at the end of the first billing period following commencement of work and at the end of each billing period thereafter. Payment in full of an invoice must be received by CONTRACTOR within thirty (30) days of the date of such invoice.
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E. Work performed shall be deemed approved and accepted by CITY as and when invoiced unless CITY objects within fifteen (15) days of invoice date by written notice specifically stating the details in which CITY believes such work is incomplete or defective, and the inv oice amount(s) in dispute. CITY shall pay undisputed amounts as provided for in the preceding paragraph.
F. Failure of CITY to submit full payment of an invoice within thirty (30) days of the date thereof subjects this agreement and the work herein contempla ted to suspension or termination at CONTRACTOR's discretion.
SECTION 2. TERM.
This Agreement shall commence on ………………, 2022 , and shall terminate upon completion of the Scope of Services set forth herein, unless terminated sooner as provided in Section 8 herein.
The Parties agree that Sections 4(B), 9, 10, 11, 13, 16, 17, 18, and 19 shall survive for three (3) years following the expiration or termination of this Agreement.
SECTION 3. CONTRACT DOCUMENTS.
For purpose of this Agreement, the contract documents for the aforesaid Project shall consist of (and are outlined in the following order of preference):
A. RFP No. 23-2;
B. Proposer’s [DATE] Proposal for Transit Relocation Feasibility Analysis and all referenced specifications, details, and appendices (Exhibit “A” – “C”); C. All required bonds, insurance certificates, permits, notices, schedules, forms, certifications and affidavits; and
D. Any and all addenda or supplemental agreements clarifying, or extending the work contemplated as may be required to insure its completion in acceptable manner.
All of the provisions of said Contract Documents constitute a material part hereof and shall be hereby incorporated by reference as though fully set forth herein.
SECTION 4. PERFORMANCE.
A. CONTRACTOR shall at all times, faithfully, competently, and to the best of its ability, experience and talent, perform all tasks described herein.
B. CONTRACTOR shall employ, at a minimum, generally accepted standards and practices utilized by companies engaged in providing similar services, as are required of CONTRACTOR hereunder, in meeting its obligations under this Agreement.
C. CONTRACTOR shall be knowledgeabl e of and subject to all CITY ordinances, rules and regulations, standard operating procedures, and the supervisory chain of command.
D. CONTRACTOR shall have the right to retain, subject to CITY's written approval, additional individuals, Contractors, or sub -Contractors to assist in the completion of services as herein defined.
Compensation for additional individuals, Contractors, or sub -Contractors shall be the sole and
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exclusive responsibility of the CONTRACTOR.
E. CONTRACTOR shall maintain full and accurate records with respect to all matters covered under this Agreement for a period of three (3) years unless otherwise provided for in Exhibit “A.” Upon CITY providing twenty-four (24) hours advanced prior notice, CONTRACTOR shall make all records, invoices, time cards, cost control sheets and other records maintained by CONTRACTOR in connection with this Agreement available during CONTRACTOR regular working hours to CITY for review and audit by CITY.
F. All reports, documents, or other written material developed by CONTRACTOR in the performance of this Agreement shall be and remain the property of CITY without restriction or limitation upon its use or dissemination by CITY. Such material shall not be the subject of a copyright application by CONTRACTOR. Any alt eration or reuse by CITY of any such materials on any project other than the Project shall be at CITY’s sole risk unless CITY compensates CONTRACTOR for such reuse.
SECTION 5. WORK PRODUCT.
A. All data, documents, discussion, or other information developed or received by CONTRACTOR or provided for performance of this Agreement are deemed confidential and shall not be disclosed by CONTRACTOR without prior written consent by CITY. CITY shall gran t such consent if disclosure is legally required. All such written products shall be returned to CITY upon the termination or expiration of this Agreement. CONTRACTOR agrees that the covenants contained in this Article shall survive the expiration or termination of this Agreement.
B. Documents are provided in CONTRACTOR’s standard software formats. CITY recognizes that electronic or magnetic data and its transmission can be easily damaged, may not be compatible with CITY’s software formats and systems, may develop inaccuracies during conversion or use, and may contain viruses or other destructive programs, and that software and hardware operating systems may become obsolete. As a condition of delivery of electronic or magnetic data, CITY agrees to defend indemnify and hold CONTRACTOR, its sub -contractors, agents and empl oyees harmless from and against all claims, loss, damages, expense and liability arising from or connected with its use, reuse, misuse, modification or misinterpretation. In no event shall CONTRACTOR be liable for any loss of use, profit or any other damage.
SECTION 6. EXTRA SERVICES.
No extra services over and above the Compensation shall be rendered by CONTRACTOR under this Agreement unless such extra services first shall have been duly authorized in writing by CITY’s City Manager (“City Manager”).
SECTION 7. CITY SUPERVISION.
The Transportation Director shall have the right of general supervision of all work performed by CONTRACTOR and shall be CITY’s agent with respect to obtaining CONTRACTOR’s compliance hereunder.
No payment for services rendered under this Agreement shall be made without the prior approval of the City Manager.
SECTION 8. TERMINATION.
In the event that either Party hereto fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, the non -defaulting party shall give the defaulting party written
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notice of the default, the nature of the default, and of the steps necessary to cure the default.
A. Termination for Cause. In the event that any of the provisions of the Agreement are violated by either party, the non-defaulting Party may terminate the Agreement by serving written notice upon the other Party, listing the violation(s) and its intent to terminate such Agreement unless within ten (10) days after the serving of such notice, such violation shall cease or be rectified, the contract shall upon the expiration of an additional thirty (30) days cease and terminate. Violations by CONTRACTOR which cannot be corrected within ten (10) days, said contract shall at the option of CITY cease and terminate upon the giving of like notice. In the event of any such termination for default by CONTRACTOR, CITY may take over the work and prosecute the same to completion by contract or otherwise for the account and at the expense of CONTRACTOR. CONTRACTOR and his sureties shall be liable to CITY for any excess cost occasioned in the event of any such termination. This change shall not be construed to prevent the termination, for other causes authorized by law or other provisions of this contract. In the event of a termination for cause, CONTRACTOR shall only be entitled to the Compensation for those Professional Services satisfactory performed on or before the effective date of termination.
B. Termination for Convenience. CITY shall have the option, at its sole discretion and without cause, to terminate this Agreement in whole, or in part, after giving written notice to CONTRACTOR at least five (5) business days before the termination is to be effective. Upon the termination of this Agreement as provided herein, CITY shall provide to CONTRACTOR the part of Compensation which would otherwise be payable to CONTRACTOR for services CONTRACTOR had completed as of the date of termination, less the amount of all previous payment with respect to the Compensation. Further, upon such a termination for convenience by CITY, the Parties agree that CONTRACTOR shall be reimbursed for any “non-refundable” costs that CONTRACTOR has incurred for its services under this Agreement, provided that: (1) such “non - refundable” costs were incurred by CONTRACTOR prior to the date of termination; (2) that CONTRACTOR provides CITY with adequate proof that CONTRACTOR incurred the costs, and is unable to be seek a refund for such costs; and (3) such costs were within the SOW or services to be performed under this Agreement. Such “non -refundable” costs may include, but are not limited to, travel reservations incurred by CONTRACTOR for its performance of services under this Agreement. CONTRACTOR agrees to cease all work under this Agreement on or before the effective date of any notice of termination.
SECTION 9. EMPLOYMENT OF CITY EMPLOYEES.
No regular employee of CITY shall be employed by CONTRACTOR during the Term of this Agreement.
SECTION 10. NON-LIABILITY OF CITY OFFICIALS AND EMPLOYEES.
No official or employee of CITY shall be personally liable to CONTRACTOR in the event of any default or breach by CITY, or for any amount which may become due to CONTRACTOR.
SECTION 11. INDEPENDENT CONTRACTOR.
A. CONTRACTOR is and shall, at all times, remain as to CITY a wholly independent contractor. Neither CITY nor any of its elected officials, officers, employees or agents shall have control over the conduct of CONTRACTOR except as expressly set forth in this Agreement. CONTRACTOR shall not at any time or in any manner represent that he is in any manner an elected official, officer, employee or agent of CITY. No employee benefits shall be available to CONTRACTOR in connection with the performance of this Agreement. Exc ept as provided in this Agreement, CITY shall not pay salary, wages, or other compensation to CONTRACTOR for performance hereunder for CITY. CITY shall not be liable for compensation to CONTRACTOR, CONTRACTOR’s employees or CONTRACTOR’s sub-Contractor for
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injury or sickness arising out of performing services hereunder.
B. The parties further acknowledge and agree that nothing in this Agreement shall create or be construed to create a partnership, joint venture, employment relationship or any other relationship except as set forth in this Agreement.
C. CITY shall not deduct from the Compensation paid to CONTRACTOR any sums required for Social Security, withholding taxes, FICA, state disability insurance or any other federal, state or local tax or charge which may or may not be in effect or hereinafter enacted or required as a charge or withholding on the compensatio n paid to CONTRACTOR. CITY shall have no responsibility to provide CONTRACTOR, its employees or sub-Contractor with workers’ compensation insurance or any other insurance.
SECTION 12. PERS ELIGIBILITY INDEMNITY.
A. In the event that CONTRACTOR or any employee, agent, or sub -Contractor of CONTRACTOR providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an em ployee of CITY, CONTRACTOR shall indemnify, defend, and hold harmless CITY for the payment of any employee and/or employer contributions for PERS benefits on behalf of CONTRACTOR or its employees, agents, or sub -Contractors, as well as for the payment of a ny penalties and interest on such contributions, which would otherwise be the responsibility of CITY.
B. Notwithstanding any other agency, state or federal policy, rule, regulation, law or ordinance to the contrary, CONTRACTOR and any of its employees, agen ts, and sub -Contractor providing service under this Agreement shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by CITY, including but not limited to eligibility t o enroll in PERS as an employee of CITY and entitlement to any contribution to be paid by CITY for employer contribution and/or employee contributions for PERS benefits.
SECTION 13. LEGAL RESPONSIBILITIES.
CONTRACTOR shall at all times observe and compl y with all applicable laws, ordinances, codes and regulations of the federal, state and local governments including, but not limited to the Montebello Municipal Code. CITY, and its appointed or elected officers, employees, or agents, shall not be liable a t law or in equity occasioned by failure of CONTRACTOR to comply with this section.
SECTION 14. INDEMNIFICATION.
CONTRACTOR agrees to, and shall defend, indemnify, protect and hold harmless, CITY, its elected and appointed boards, officers, officials, employees, agents and volunteers from and against any and all claims, demands, lawsuits, defense costs, civil, penalties, expens es, causes of action, and judgments at law or in equity, or liability of any kind or nature which CITY, its elected and appointed boards, officers, officials, employees, agents and volunteers may sustain or incur or which may be imposed upon them for injuries or deaths of persons, or damage to property arising out of CONTRACTOR’s negligent or wrongful act, or omission under the terms of this Agreement, except only liability arising out of the sole negligence of CITY.
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SECTION 15. INSURANCE COVERAGE.
During the Term of this Agreement, CONTRACTOR shall carry, maintain, and keep in full force and effect all of the following minimum scope of insurance against claims for death or injuries to persons or damages to property that may arise from or in connecti on with CONTRACTOR’s performance of this Agreement.
Such insurance shall be of the types and in the amounts as set forth below:
Commercial General Liability (CGL): Broad-form, Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis for bodily injury and property damage, including premise-operations, products- completed operations, broad form property damage, blanket contractual liability, independent contractors, personal injury or bodily injury, and advertising injury, with limits n o less than Two Million Dollars and Zero Cents ($2,000,000), combined single limits, per occurrence. If a general aggregate limit applies, the limit shall be twice the required occurrence limit.
Business Automobile Liability Insurance: For owned vehicles, hired, and non-owned vehicles, Insurance Services Office Form Number CA 0001 covering, Code 1 (any auto), or if CONTRACTOR has no owned autos, Code 8 (hired) and 9 (non -owned), with limit no less than One Million Dollars and Zero Cents ($1,000,000.00) per accident for bodily injury and property damage.
Worker’s Compensation insurance as required by the laws of the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit of no less than One Million Dolla rs and Zero Cents ($1,000,000.00) per accident for bodily injury or disease. CONTRACTOR agrees to waive, and to obtain endorsements from its workers’ compensation insurer waiving subrogation rights under its workers’ compensation insurance policy against CITY, its elected and appointed boards, officers, officials, employees, agents and volunteers for losses arising from work performed by CONTRACTOR for CITY and to require each of its sub-Contractors, if any, to do likewise under their workers’ compensation insurance policies.
By executing this Agreement, CONTRACTOR further certifies as follows:
I am aware of, and will comply with, Section 3700 of the Labor Code, requiring every employer to be insured against liability of Workers’ Compensation or to undertake self-insurance before commencing any of the work contemplated herein.
If applicable, Professional Errors and Omissions (E&O) Liability insurance appropriate to the CONTRACTOR’s profession, with limit no less than Two Million Dollars and Zero Cents ($2,000,000.00) per occurrence or claim, Two Million Dollars and Zero Cents ($2,000,000.00) aggregate. Architects’ and engineers’ coverage shall be endorsed to include contractual liability. If the policy is written as a “claims made” policy, the retroactivity date shall be prior to the start of work set forth herein, CONTRACTOR shall obtain and maintain said E&O liability insurance during the Term of this Agreement and for five (5) years after completion of work hereunder. If coverage is canceled or non -renewed, and not replaced with another claims-made policy form with a retroactive date prior to the effective date of this Agreement, CONTRACTOR shall purchase “extended reporting” coverage for a minimum of five (5) years after completion of the work.
If CONTRACTOR maintains higher limits than the minimums shown above, CITY requires and shall be entitled to coverage for the higher limits maintained by CONTRACTOR. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to CITY.