Agenda packet — Morgan Hill City Council, June 26, 2024 (part 2 of 4)

City of Morgan Hill
Reassessment District No. 2015-1 (Morgan Hill Ranch) Closeout Analysis Report 9 PASSED AND ADOPTED THIS _____ day of ____________, 2024, by the following vote of the City Council of the City of Morgan Hill:

AYES:

NOES:

ABSENT:

ABSTAIN:

City Clerk
City of Morgan Hill

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City of Morgan Hill
Reassessment District No. 2015-1 (Morgan Hill Ranch) Closeout Analysis Report 10

7. LEVY AND COLLECTION SUMMARY
The following pages provide a summary of the levies and collections for the Reassessment District.

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City of Morgan Hill
Delinquency Summary Report
As of: 05/06/2024
Delinquent
Amount %
Billed
Installments
Paid
Installments
Delinquent
Installments
Delinquent
District Due Date Installments %
Billed
Amount
Paid
Amount
Delinquent
Amount
RAD 2015-1 - RAD No. 2015-1 (Morgan Hill Ranch)
08/01/2016 Billing:
12/10/2016 $371,840.61 $371,840.61 $0.00 0.00% 281 281 0 0.00% 04/10/2017 $371,840.61 $371,840.61 $0.00 0.00% 281 281 0 0.00% Subtotal: $743,681.22 $743,681.22 $0.00 0.00% 562 562 0 0.00% 08/01/2017 Billing:
12/10/2017 $371,052.22 $371,052.22 $0.00 0.00% 280 280 0 0.00% 04/10/2018 $371,052.22 $371,052.22 $0.00 0.00% 280 280 0 0.00% Subtotal: $742,104.44 $742,104.44 $0.00 0.00% 560 560 0 0.00% 08/01/2018 Billing:
12/10/2018 $371,628.32 $371,628.32 $0.00 0.00% 280 280 0 0.00% 04/10/2019 $371,628.32 $371,628.32 $0.00 0.00% 280 280 0 0.00% Subtotal: $743,256.64 $743,256.64 $0.00 0.00% 560 560 0 0.00% 08/01/2019 Billing:
12/10/2019 $369,012.48 $369,012.48 $0.00 0.00% 280 280 0 0.00% 04/10/2020 $369,012.48 $369,012.48 $0.00 0.00% 280 280 0 0.00% Subtotal: $738,024.96 $738,024.96 $0.00 0.00% 560 560 0 0.00% 08/01/2020 Billing:
12/10/2020 $370,650.73 $370,650.73 $0.00 0.00% 288 288 0 0.00% 04/10/2021 $370,650.73 $370,650.73 $0.00 0.00% 288 288 0 0.00% Subtotal: $741,301.46 $741,301.46 $0.00 0.00% 576 576 0 0.00% 08/01/2021 Billing:
12/10/2021 $274,623.41 $274,623.41 $0.00 0.00% 284 284 0 0.00% 04/10/2022 $274,623.41 $274,623.41 $0.00 0.00% 284 284 0 0.00% Subtotal: $549,246.82 $549,246.82 $0.00 0.00% 568 568 0 0.00% 08/01/2022 Billing:
12/10/2022 $27,585.84 $27,446.98 $138.86 0.50% 284 283 1 0.35% 04/10/2023 $27,585.84 $27,446.98 $138.86 0.50% 284 283 1 0.35% Subtotal: $55,171.68 $54,893.96 $277.72 0.50% 568 566 2 0.35% Copyright © 2012 by NBS Page 1 of 2 05/06/2024 02:27:17PM

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City of Morgan Hill
Reassessment District No. 2015-1 (Morgan Hill Ranch) Closeout Analysis Report 11

8. FINAL DEBT SERVICE SCHEDULE
The following page provides a summary of the final debt service schedule for the Reassessment District, which shows the final debt service payment made on September 2, 2023.

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City of Morgan Hill
RAD No. 2015-1 (Morgan Hill Ranch)
Current Debt Service Schedule
Bonds Dated: 11/05/2015
Bonds Issued: $4,415,000.00
Payment
Date CUSIP
Interest
Rate Balance Principal Interest
Payment
Total
Annual
Total
Call
Premium Status
03/02/2016 .0000% $4,415,000.00 $0.00 $38,454.65 $38,454.65 $0.00 3.0000% Paid 09/02/2016 2.6800 4,415,000.00 159,000.00 59,161.00 218,161.00 256,615.65 3.0000 Paid 03/02/2017 0.0000 4,256,000.00 .00 57,030.40 57,030.40 .00 3.0000 Paid 09/02/2017 2.6800 4,256,000.00 615,000.00 57,030.40 672,030.40 729,060.80 3.0000 Paid 03/02/2018 0.0000 3,641,000.00 .00 48,789.40 48,789.40 .00 3.0000 Paid 09/02/2018 2.6800 3,641,000.00 630,000.00 48,789.40 678,789.40 727,578.80 3.0000 Paid 03/02/2019 0.0000 3,011,000.00 .00 40,347.40 40,347.40 .00 3.0000 Paid 09/02/2019 2.6800 3,011,000.00 648,000.00 40,347.40 688,347.40 728,694.80 3.0000 Paid 03/02/2020 0.0000 2,363,000.00 .00 31,664.20 31,664.20 .00 3.0000 Paid 09/02/2020 2.6800 2,363,000.00 660,000.00 31,664.20 691,664.20 723,328.40 3.0000 Paid 03/02/2021 0.0000 1,703,000.00 .00 22,820.20 22,820.20 .00 3.0000 Paid 09/02/2021 2.6800 1,703,000.00 681,000.00 22,820.20 703,820.20 726,640.40 0.0000 Paid 03/02/2022 0.0000 1,022,000.00 .00 13,694.80 13,694.80 .00 0.0000 Paid 09/02/2022 2.6800 1,022,000.00 700,000.00 13,694.80 713,694.80 727,389.60 0.0000 Paid 03/02/2023 0.0000 322,000.00 .00 4,314.80 4,314.80 .00 0.0000 Paid 09/02/2023 2.6800 322,000.00 322,000.00 4,314.80 326,314.80 330,629.60 0.0000 Paid Grand Total: $4,415,000.00 $534,938.05 $4,949,938.05 $4,949,938.05 Copyright © 2012 by NBS Page 1 of 1 05/06/2024 02:29:31PM

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RESOLUTION NO. 24-_____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORGAN HILL

DECLARING THE REMAINING REASSESSMENT REVENUE FUND BALANCE

TO BE SURPLUS, ORDERING THE DISPOSITION OF SUCH SURPLUS, AND

APPROVING THE CLOSEOUT ANALYSIS REPORT PREPARED BY NBS FOR THE REASSESSMENT DISTRICT 2015-1 (MORGAN HILL RANCH)
WHEREAS, the City Council of the City of Morgan Hill (the “City”) has, by previous resolution and related actions, undertaken proceedings pursuant to the Municipal Improvement Act of 1913 to form the Reassessment District 2015-1 Morgan Hill Ranch (the “Reassessment District”); and,
WHEREAS, the City Council authorized the issuance of the City of Morgan Hill Limited Obligation Refunding Bonds Reassessment District No. 2015-1 (Morgan Hill Ranch) (the “Bonds”), pursuant to the Improvement Bond Act of 1915 to finance certain public improvements; and,
WHEREAS, the Reassessment District has undertaken such public improvements as are described in the Engineer’s Report; and,
WHEREAS, the City Council is satisfied that the public improvements for the Reassessment District have been fully completed; and,
WHEREAS, there exists an encumbered balance in the Reassessment Revenue Fund for the Reassessment District; and,
WHEREAS, the City Council now wishes to make provision for the determination of surplus funds for their appropriate disposition pursuant to the Fiscal Agent Agreement of the Bonds dated October 21, 2015.

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

Section 1. The City Council does hereby find, determine and resolve that all of the foregoing recitals are true and correct.

Section 2. A Notice of Completion of Public Improvements was completed and signed by the Public Services Director.

Section 3. The City Council hereby declares the remaining balance of the Reassessment Revenue Fund of the Reassessment District to be surplus.

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City of Morgan Hill
Resolution No. 24-_____

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Section 4. The City Council hereby orders the disposition of said surplus funds according to the Fiscal Agent Agreement of the Bonds dated October 21, 2015, as specified in the Closeout Analysis Report prepared by NBS for the Reassessment District.

Section 5. The City Council hereby approves the District Closeout Analysis Report prepared by NBS for the Reassessment District and agrees to transfer surplus funds to the City’s General Fund.

Section 6. This Resolution shall take effect immediately upon adoption.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Morgan Hill at its meeting held on this 26th day of June 2024 by the following vote:

AYES: COUNCIL MEMBERS: None
NOES: COUNCIL MEMBERS: None
ABSTAIN: COUNCIL MEMBERS: None
ABSENT: COUNCIL MEMBERS: None
APPROVED: ATTEST:
___________________________________ _______________________________ MARK TURNER, Mayor MICHELLE BIGELOW, City Clerk
 CERTIFICATION 
I, Michelle Bigelow, City Clerk of the City of Morgan Hill, California, do hereby certify that the foregoing is a true and correct copy of Resolution No. 24-_____ adopted by the City Council at the meeting held on the 26th day of June, 2024.

WITNESS MY HAND AND THE SEAL OF THE CITY OF MORGAN HILL.

DATE: _____________________ ___________________________________ MICHELLE BIGELOW, City Clerk

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City Council
Meeting Minutes
Mark Turner - Mayor
Marilyn Librers - Mayor Pro Tem
Gino Borgioli - Council Member
Rene Spring - Council Member
Yvonne Martinez Beltran - Council Member
Wednesday, June 19, 2024 6:00 PM
Council Chamber Building
17555 Peak Avenue, Morgan Hill, CA 95037

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June 19, 2024
2 CALL TO ORDER
Mayor Turner called the City Council meeting to order at 6:00 p.m.

ROLL CALL ATTENDANCE
City Clerk Michelle Bigelow called the roll.

PRESENT Rene Spring, Gino Borgioli, Yvonne Martinez Beltran, Mark Turner, Marilyn Librers
ABSENT None

DECLARATION OF POSTING AGENDA
City Clerk Michelle Bigelow declared the posting of the agenda.

SILENT INVOCATION

PLEDGE OF ALLEGIANCE

PROCLAMATIONS
Proclaiming the month of July 2024 as Parks and Recreation Month

RECOGNITIONS
Recognizing the 2024 outgoing Library, Culture, and Arts and Parks and Recreation Commissioners

CITY COUNCIL REPORTS
Council Member Borgioli shared that he has received many communications from members in his district regarding the Little Llagas Creek not being completed. Thanks to Chris Ghione, he was able to provide information to his constituents. He shared some of those details. He shared that the Santa Clara County Library District meeting was very interesting and mentioned that they are developing an automated handling system for other returned books.

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June 19, 2024
3 CITY MANAGER'S REPORT
City Manager Christina Turner recognized today as Juneteenth and shared information about the holiday's importance and symbolism. The Law Enforcement Torch Run will take place next Thursday, June 27th, at 11:00 a.m. from Vineyard Blvd to Cochrane Road.

CITY ATTORNEY'S REPORT
No report.

OTHER REPORTS
Council Member Martinez Beltran shared that she attended a Sister Cities Olive Oil tasting. She also attended events at Cisco and a fundraiser for the League of Cities.

She mentioned that there is a mandate to clean some of the waterways. There are about 1,000 unhoused residents living in the waterways. Due to her relationships with the Latino Caucus, she was able to work with the San Jose City Council to continue to preserve the Coyote area.

Mayor Turner thanked Council Member Martinez Beltran for her time and representation on the unhoused site issue. He shared that he received a letter from Congresswoman Zoe Lofgren and an American flag that flew over the U.S. Capitol for the Morgan Hill Veterans Memorial.

PUBLIC COMMENT
Public comment opened at 6:14 p.m. The following people were called to speak:

Rigo Gallardo
Eli Robles
Mattie Scariot
Sharon Luna
There being no further requests to speak, public comment closed.

ADOPTION OF AGENDA
MOTION:

Adopting the agenda as posted.

RESULT: Passed
MOVER: Council Member Borgioli
SECONDER: Council Member Spring
AYES: Council Member Spring, Council Member Borgioli, Council Member Martinez Beltran, Mayor Turner, Mayor Pro Tem Librers
NAYS: None

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June 19, 2024
4 ABSTAIN: None
ABSENT: None

CONSENT CALENDAR
Items appearing on the Consent Calendar are considered routine and may be approved by one motion. Pursuant to City Council Policies and Procedures (CP 97-01), any member of the Council or public may request to have an item removed from the Consent Calendar for comment and action.

MOTION:

Approving the consent calendar.

Brian Sullivan provided comments on Item 2.

There being no further requests to speak, public comment closed.

1. ACCEPT THE CALIFORNIA HIGHWAY PATROL CANNABIS TAX GRANT IN THE AMOUNT OF $344,230
Recommendation:

1. Adopt a Resolution Accepting the California Highway Patrol Cannabis Tax Grant in the amount of $344,230; and

2. Authorize the City Manager to execute the California Highway Patrol Cannabis Tax Grant agreement.

2. ADOPT AMENDED RESOLUTION PLACING A MEASURE ON THE BALLOT

TO ENACT A TWELVE CONSECUTIVE YEAR LIMIT ON COMBINED

MAYORAL, CITY COUNCIL, AND TREASURER SERVICE
Recommendation:

Adopt an amended resolution placing a measure on the ballot to enact a twelve

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June 19, 2024
5 consecutive year limit on combined Mayoral, City Council, and Treasurer service.

3. ADOPT A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE

A MEMORANDUM OF AGREEMENT TO PARTICIPATE IN THE REGIONAL

PUBLIC FACILITY RESILIENCY IMPLEMENTATION PROJECT AND SECURE GRANT FUNDS IN AN AMOUNT OF $3.6 MILLION
Recommendation:

1. Adopt a resolution authorizing the City Manager or her designee to negotiate and execute a Memorandum of Agreement as a Partner Agency for the purpose of securing grant funds in the amount of $3,599,871 from the United States Environmental Protection Agency’s Climate Pollution Reduction Grants program.

2. Authorize the City Manager or her designee to negotiate and execute any documents necessary to accept and effectuate the grants.

4. APPROVE A CONSULTANT AGREEMENT WITH CSG CONSULTANTS, INC.

FOR BUILDING PLAN REVIEW SERVICES FOR A TOTAL NOT TO EXCEED AMOUNT OF $320,000
Recommendation:

Approve the professional services agreement with CSG Consultants, Inc, for Building Division plan review services for a total not to exceed amount of $320,000.

5. APPROVE A TWO-YEAR CONSULTANT AGREEMENT WITH PLANET
FUTSAL, INC. DBA FUTSAL KINGZ TO PROVIDE YOUTH FUTSAL, SOCCER

CLASSES, AND CAMPS FOR A TOTAL NOT TO EXCEED AMOUNT OF
$150,000
Recommendation:

Authorize the City Manager to execute a two-year consultant agreement with Planet Futsal, Inc. DBA Futsal Kingz to provide youth futsal, soccer classes, and camps not to exceed to $150,000, with a one-year extension option, subject to budget appropriation.

6. APPROVE CONSULTANT AGREEMENT WITH HOUSEKEYS, INC FOR

BELOW MARKET RATE (BMR) HOMEOWNERSHIP AND RENTAL

PROGRAM ADMINISTRATION SERVICES
Recommendation:

1. Approve Consultant Agreement for Below Market Rate Housing (BMR) Homeownership and Rental Program services through June 30, 2028, for $2,489,095 from July 1, 2024 – June 30, 2028 with optional extension; and

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June 19, 2024
6 2. Authorize the City Manager to execute and administer the contract.

7. APPROVE ENGINEERING-RELATED CONSULTANT AGREEMENTS FOR

DESIGN PROFESSIONALS FOR ON-CALL ENGINEERING PLAN REVIEW &

TECHNICAL SUPPORT SERVICES, AND ON-CALL MAP REVIEW & CITY

SURVEYOR SERVICES
Recommendation:

Approve and authorize the City Manager to execute and administer six agreements to be specifically authorized by the City Manager:

1. CSG CONSULTANTS, INC. in the amount of $1,324,130, and $883,836 additional compensation on an extended two-year term, for a total agreement amount not to exceed $2,207,966 to provide both On-Call Engineering Plan Review & Technical Support Services, and On-Call Map Review & City Surveyor Services;

2. HARRIS & ASSOCIATES, INC. in the amount of $519,000, and $390,000 additional compensation on an extended two-year term, for a total agreement amount not to exceed $909,000 to provide On-Call Engineering Plan Review & Technical Support Services;

3. GHIRARDELLI ASSOCIATES, INC. in the amount of $126,000, and $96,000 additional compensation on an extended two-year term, for a total agreement amount not to exceed $222,000 to provide On-Call Engineering Plan Review & Technical Support Services;

4. ASSOCIATED ENGINEERING-SURVEYING SERVICE, INC., doing business as HANNA-BRUNETTI in the amount of $144,000, and $109,000 additional compensation on an extended two-year term, for a total agreement amount not to exceed $253,000 to provide On-Call Map Review & City Surveyor Services;

5. RUGGERI-JENSEN-AZAR (RJA) in the amount of $39,000, and $29,000 additional compensation on an extended two-year term, for a total agreement amount not to exceed $68,000 to provide On-Call Map Review & City Surveyor Services; and

6. MNS ENGINEERS, INC. in the amount of $39,000, and $29,000 additional compensation on an extended two-year term, for a total agreement amount not to exceed $68,000 to provide On-Call Map Review & City Surveyor Services.

8. APPROVE THE JUNE 5, 2024 CITY COUNCIL MEETING MINUTES Recommendation:

Approve minutes.

9. AWARD ON-CALL DOOR AND GATE REPAIR MAINTENANCE SERVICE

AGREEMENT WITH WEST COAST DOORS AND GATES FOR A TOTAL NOT

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June 19, 2024
7 TO EXCEED AMOUNT OF $200,000
Recommendation:

1. Award a two-year maintenance service agreement to West Coast Doors and Gates for a not to exceed amount of $200,000 for on-call door and gate repair services with three one-year extensions, subject to budget appropriation; and

2. Authorize the City Manager to execute and administer the Agreement.

OTHER BUSINESS

10. APPROVE THE REAL PROPERTY AGREEMENT WITH FATTORIA PUBLIC MARKET, INC. TO LEASE AND OPTION FOR SALE OF CITY OWNED

AGRICULTURAL PROPERTY FOR AGRI-TOURISM DEVELOPMENT
Recommendation:

1. Authorize the City Manager to execute an option to lease with future option of sale of City-owned Agricultural Property to Fattoria Public Market; and

2. Authorize the City Manager to execute future lease and sale agreements as outlined in the option agreement.

Public Services Director Chris Ghione provided the report.

Public comment opened at 6:36 p.m.

Nick Gaich was called to speak.

There being no further requests to speak, public comment closed.

MOTION:

Approving the recommended actions.

RESULT: Passed
MOVER: Council Member Borgioli
SECONDER: Council Member Martinez Beltran
AYES: Council Member Spring, Council Member Borgioli, Council Member Martinez Beltran, Mayor Turner, Mayor Pro Tem Librers
NAYS: None
ABSTAIN: None
ABSENT: None

11. CONSIDER UPDATES TO COUNCIL POLICY 97-01 REGARDING RULES

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June 19, 2024
8 FOR CONDUCT OF COUNCIL MEETINGS, PLACEMENT OF ITEMS ON THE

AGENDA, AND MATTERS TO BE RECONSIDERED
Recommendation:

Consider updates to City Council Policy CP 97-01 related to not taking a position on matters outside of the Morgan Hill City Council’s subject matter jurisdiction.

City Manager Christina Turner provided the report.

Public comment opened at 6:52 p.m. The following people were called to speak:

Brian Sullivan
Ron Foltz
There being no further requests to speak, public comment closed.

MOTION:

Approving amended Policy 97-01.

RESULT: Passed
MOVER: Council Member Borgioli
SECONDER: Mayor Pro Tem Librers
AYES: Council Member Borgioli, Mayor Turner, Mayor Pro Tem Librers NAYS: Council Member Spring, Council Member Martinez Beltran ABSTAIN: None
ABSENT: None

PUBLIC HEARINGS

12. ADOPT THE FISCAL YEAR (FY) 2024-25 AND 2025-26 OPERATING BUDGET, FY 2024-25 THROUGH 2029-30 CAPITAL IMPROVEMENT
PROGRAM BUDGET, ADOPT FY 2024-25 APPROPRIATIONS LIMIT,
APPROVE FY 2024-25 COMMUNITY FUNDING RECOMMENDATIONS,
ADOPT FY 2023-24 BUDGET AMENDMENT, AND ADOPT THE REVISED

SALARY SCHEDULES FOR AMERICAN FEDERATION OF STATE, COUNTY, AND MUNICIPAL EMPLOYEES; MANAGEMENT, PROFESSIONAL, AND
CONFIDENTIAL EMPLOYEES EFFECTIVE JUNE 23, 2024; AND ELECTED

OFFICIALS AND COUNCIL APPOINTED POSITIONS EFFECTIVE
DECEMBER 2024
Recommendation:

1. Open/Close Public Hearing; and

2. Adopt resolution to:
a. Adopt the FY 2024-25 and 2025-26 Operating Budget; and b. Adopt the FY 2024-25 through 2029-30 Capital Improvement Program Budget; and
c. Adopt the 2024-25 Appropriations Limit and Appropriations Limit

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June 19, 2024
9 Adjustment Factors; and

3. Approve the FY 2024-25 Community Funding recommendations; and

4. Adopt resolution to amend FY 2023-24 Budget; and

5. Adopt the revised salary schedules for American Federation of State, County, and Municipal Employees; Management, Professional, and Confidential Employees effective June 23, 2024; and Elected Officials and Council Appointed Positions effective December 2024.

Budget Manager Monica Delgado and Finance Director Dat Nguyen provided a presentation and report.

The meeting recessed at 8:04 p.m. and reconvened at 8:10 p.m.

The public hearing opened at 8:10 p.m. The following people were called to speak:

Mattie Scariot
Suman Ganapathy
Armando Benavides (Zoom)
There being no further requests to speak, the public hearing closed.

MOTION:

Approving the recommended actions.

FUTURE COUNCIL INITIATED AGENDA ITEMS
Council Member Martinez Beltran would like to review the City agreement with the Historical Society and help establish funding terms.

ADJOURNMENT
There being no further business, Mayor Turner adjourned the meeting at 8:33 p.m.

Minutes Prepared by:

Michelle Bigelow, City Clerk

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7 CITY COUNCIL STAFF REPORT
MEETING DATE: June 26, 2024
PREPARED BY:

Chris Ghione, Public Services Director
APPROVED BY: City Manager

AUTHORIZE EXECUTION OF COST SHARING AGREEMENT WITH

VALLEY WATER FOR THE UPPER LLAGAS FLOOD CONTROL
PROJECT PHASE 2B

RECOMMENDATION(S)

1. Authorize the City Manager to execute and administer a cost-share agreement with Valley Water for the construction of improvements supporting the Upper Llagas Creek Flood Control Project for up to $4.5 million; and

2. Authorize the City Manager to make minor modifications to the agreement as necessary with the approval of the City Attorney.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Protecting the Environment and Preserving Open Space and Agricultural Land Maintaining and Enhancing Infrastructure
Guiding Documents
Storm Drain Master Plan
REPORT NARRATIVE:

For decades, the City has supported Valley Water in efforts to complete the Upper Llagas Creek Flood Protection Project. Completing this project will provide flood control for the West Little Llagas Creek running through Morgan Hill, protecting homes and businesses. Valley Water has recently bid Phase 2B, which is the project's final phase.

This phase includes areas adjacent to West Little Llagas Creek between Watsonville Road and Ciolino Avenue and Main Avenue to Llagas Road and areas along Llagas Creek south of Morgan Hill. Once complete, the Flood Protection Project will be interconnected with the City's infrastructure. At this point, Valley Water intends to fund the primary elements of the project for flood control. The City intends to construct adjacent infrastructure improvements associated with the roadways, utilities, and trails adjacent to the project. The most significant improvements will be constructed on Hale Avenue just north of Main Avenue to Hillwood Lane, which includes roadway, lighting, and sidewalk construction/reconstruction/relocation intended to make the City infrastructure whole and up to current City standards. This will also include a traffic

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7 signal at Hale and Wright Avenues.

It is anticipated that this final phase of the Flood Control Project will begin later this year and take over three years to construct, with significant portions of the work required to occur over the summer. This will require the closure of Hale Avenue north of Main Avenue for some period of time. The City will work to mitigate traffic impacts on residents, as has been done during previous phases of the work. Attachment 1 provides an overall map of Valley Water's Project. On the map, the sections noted as Reach 8 and Reach 7b are the sections for which the City will be cost-sharing.

It is estimated that the improvements will cost approximately $4.1 million to construct, with exact pricing known after bids are received. The City has $4.5 million allocated in the Capital Improvement Program for this project in Fiscal Years 24/25, 25/26, and 26/27. The cost-sharing agreement is included as Attachment 2. The project plans and specifications are available on the Valley Water website:
- Valley Water Staff Report, Plans, Specifications
COMMUNITY ENGAGEMENT:

Inform
Significant communications and engagement have occurred on the previous phases of this project and Valley Water and the City intend to continue ongoing joint communication planning to inform residents of the timing of impacts associated with construction. The largest impacts related to the Flood Control Project will be construction on Hale Avenue north of Main Avenue intersection.

ALTERNATIVE ACTIONS:

The City could choose not to move forward with the cost sharing agreement and no associated improvements would be made with the work as Valley Water moves forward with the Flood Control Project. The City would need to implement a smaller project to make some improvements to ensure basic infrastructure integration is achieved.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

The City has taken numerous actions over the last several decades to support the Upper Llagas Creek Flood Protection Project. On March 6, 2019, the city council received an update report on the Project from Valley Water.

The City Council approved design consultant work with Woodard and Curran, Inc., on June 26, 2019, for $457,271 to design City improvements associated with Valley Water’s Flood Protection Project and an amendment for additional scope on September 23, 2020, for an additional $71,697.

The City Council approved a $748,000 cost-sharing agreement for Phase 1 of the Project on September 23, 2020, and a $3.5 million cost-sharing agreement for Phase 2A of the Project on November 18, 2020.

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7 On April 6, 2022, the City Council approved design consultant work with Mark Thomas and Company for $246,000 for consultant work associated with City improvements.

FISCAL AND RESOURCE IMPACT:

Funding for this project is allocated within the approved Capital Improvement Program in the Llagas Flood Control Project/Fund 303 ($3.5 million) and the Traffic Signal and Intersection Improvements Project/Fund 309 ($1.0 million). Expenses are not expected to be incurred until Fiscal Years 25/26 and 26/27.

CEQA (California Environmental Quality Act):

Environmental Impact Report & Categorical Exemption
An Environmental Impact Report (EIR) was certified for the Hale Avenue Extension and Santa Teresa Corridor Widening and Realignment Project in accordance with the California Environmental Quality Act (CEQA). Valley Water certified an Environmental Impact Report for the Flood Control Project. Additionally, relocation of infrastructure and utility work along existing roadways and associated with the Valley Water Project is exempt from CEQA per categorical exemption of Class 1, Existing Facilities.

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N
101
Est. 100-year ood area
PHASE 1 (4.2 miles)
PHASE 2A ( 0.8 miles)
Reach 4 2.4 miles
Reach 5 0.3 miles
Reach 7a 1.5 miles
Lake Silveira On-site mitgation El Toro
Elementary
School
Britton
School
Barrett
Elementary
School
Rucker
Elementary
School
Oakwood
Country
School
Galvan Park
Paradise
Park
Howard
Wiechert Park
Morgan Hill City Hall
and Civic Center
Morgan Hill
Community Center
San Martin/Gwinn
Elementary School
Reach 5
Reach 6
Reach 7b
Reach 8
Reach 14

0.2 miles

3.2 miles

1.1 miles

1.0 miles

3.4 miles
PHASE 2B (8.9 miles)
Reach 8 0.8 miles
South
County
Airport
Reach 8
Reach 6
Reach 7b
Reach 4
Reach 14
Reach 7a
PHASE 2B
PHASE 2B
PHASE 1
PHASE 2B
PHASE 1
PHASE 2B
PHASE 1
Reach 5
Reach 8
PHASE 2A
Reach 5
PHASE 2B
East Little Llagas Creek
Coyote
Reservoir
Uvas
Reservoir
Chesbro
Reservoir
West Branch Llagas Creek
Church Creek
New Creek
Tennant Creek
Center Creek
Hayes Creek
San Martin
Creek
Llagas Creek
West Little Llagas Creek
Madrone Channel
Lake Silveira
ChurchPercolation Ponds
Llagas Creek
Columbet Ave
Center Ave
Murphy Ave
Llagas Ave
Sycamorer Ave
Foothill Ave
Church Ave
Newl Ave
Buena Vista Ave
Rucker Ave
Watsonville Rd
Edmundson Ave
Peak Ave
E Middle Ave
W Middle Ave
Tennant Ave
E Dunne Ave
Fisher Ave
San Pedro Ave
Maple Ave
E Main Ave
Masten Ave
W San Martin Ave
Highland Ave
California Ave
Morgan Hill
San
Martin
Gilroy
Santa Teresa
Blvd
Monterey Rd
Llagas Rd

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Cost Sharing Agreement for City Improvements with the Upper Llagas Creek Flood Protection Project Phase 2B City of Morgan Hill/SCVWD
Version Date: 5/19/2024 Page 1 of 8

COST SHARING AGREEMENT

BY AND BETWEEN CITY OF MORGAN HILL

AND THE SANTA CLARA VALLEY WATER DISTRICT

FOR CONSTRUCTION OF CITY IMPROVEMENTS AS PART OF THE
UPPER LLAGAS CREEK FLOOD PROTECTION PROJECT, PHASE 2B
This agreement (AGREEMENT) is made and entered into as of the date it is fully executed, by and between the CITY OF MORGAN HILL (CITY), a municipal corporation of the State of California and the SANTA CLARA VALLEY WATER DISTRICT (DISTRICT), a special district of the State of California. CITY and DISTRICT may be referred to individually as a “Party” or collectively as the “Parties” or the “Parties to this Agreement.”

RECITALS
WHEREAS, DISTRICT is currently proceeding with the design and construction phases of its Upper Llagas Creek Flood Protection Project (DISTRICT PROJECT), for which a Final Environmental Impact Report was certified by the DISTRICT’S Board of Directors and the DISTRICT PROJECT was approved on June 10, 2014. The design phase for Phase 2B is completed, and the DISTRICT is currently advertising for bids, and will subsequently award a contract for Phase 2B construction (DISTRICT IMPROVEMENTS) of the DISTRICT PROJECT; and
WHEREAS, Parties have previously executed on October 29, 2020, a Cost Sharing Agreement (#A4406S) for the construction of CITY IMPROVEMENTS in cooperation with Phase 1 construction of the DISTRICT PROJECT which shall remain in full effect; and WHEREAS, Parties have previously executed on April 21, 2021, a Cost Sharing Agreement (#A4448S) for the construction of CITY IMPROVEMENTS in cooperation with Phase 2A construction of the DISTRICT PROJECT which shall remain in full effect; and WHEREAS, CITY has proposed improvements (CITY IMPROVEMENTS) be included in the DISTRICT IMPROVEMENTS, as generally defined within the City of Morgan Hill Capital Improvement Program, including infrastructure improvements associated with the Upper Llagas Flood Control project (CITY PROJECT); and
WHEREAS, the Parties mutually agree it is in the public’s best interests to achieve the economic benefits and efficiencies resulting from combining the design and construction of the Parties’ public improvement projects; and
WHEREAS, the DISTRICT is willing to include CITY IMPROVEMENTS in its DISTRICT IMPROVEMENTS, at CITY’S expense and in accordance with the terms and conditions set forth in this AGREEMENT.

WHEREAS, the DISTRICT and the CITY have jointly planned and designed the DISTRICT IMPROVEMENTS and CITY IMPROVEMENTS along existing West Little Llagas Creek between approximately Watsonville Avenue upstream to Llagas Road and Llagas Creek Drive intersection; and
NOW THEREFORE, in consideration of their mutual promises and agreements, and subject to the terms, conditions and provisions hereinafter set forth, the Parties hereto agree as follows:

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COST SHARING AGREEMENT

BY AND BETWEEN CITY OF MORGAN HILL

AND THE SANTA CLARA VALLEY WATER DISTRICT

FOR CONSTRUCTION OF CITY IMPROVEMENTS AS PART OF THE

AGREEMENT

1. DISTRICT - CITY IMPROVEMENTS DESCRIPTION

1.1. The DISTRICT IMPROVEMENTS scope of work:

1.1.1. Prepare complete design and construction documents for Phase 2B of the DISTRICT PROJECT, including incorporating the proposed CITY IMPROVEMENTS into the proposed DISTRICT IMPROVEMENTS;

1.1.2. Phase 2B consists of construction of Reach 6 of Llagas Creek from Highway 101 to Llagas Avenue, Reach 7B of West Little Llagas Creek from Watsonville Road to Ciolino Avenue, a portion of Reach 8 from approximately 200 feet north of the West Main Avenue and Hale Avenue intersection along West Little Llagas Creek to Llagas Road and Llagas Creek Drive intersection, and Reach 14 from the existing East Little Llagas Creek – Llagas Creek confluence upstream along East Little Llagas Creek to Sycamore Avenue;

1.1.3. Construction of the proposed approximately 14,800 linear feet of channel improvements (Reach 6), approximately 8,000 linear feet of channel improvements (Reach 7B), including construction of several new reinforced box culverts under-crossings at Spring Avenue, Cosmo Avenue, and Edes Street, approximately 3,200 linear feet of channel improvements (Reach 8), and construction of 12,200 linear feet of channel improvements (Reach 14);

1.1.4. Construct approximately 1,900 linear feet of twin reinforced concrete box culverts downstream of the proposed concrete inlet structure near the intersection of Wright Avenue and Hale Avenue;

1.1.5. Construction will include traffic control, detours, road work, utility relocations and coordination, fencing, soil testing as required for off-site disposal, concrete and other miscellaneous work, community outreach and coordination.

1.2. CITY’S IMPROVEMENTS scope of work:

1.2.1. Primary Scope of Work is the relocation, construction, and improvement of infrastructure within the City limits and adjacent to the DISRICT IMPROVEMENTS and shall be referred to as the CITY PROJECT.

1.2.2. CITY PROJECT shall include:
a. Utility relocations by PG&E, primarily relocating the existing overhead utility facilities to proposed underground facilities along the west side of Hale Avenue between West Main to Wright Avenue; b. Roadway and sidewalk re-construction/construction along Hale Avenue north of Main Avenue;
c. Multi-use pathway construction in various areas of the project; d. Construction/reconstruction of curb, gutter, and sidewalks along Hale Avenue;
e. Installation/relocation of Streetlights along Hale Avenue;

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COST SHARING AGREEMENT

BY AND BETWEEN CITY OF MORGAN HILL

AND THE SANTA CLARA VALLEY WATER DISTRICT

FOR CONSTRUCTION OF CITY IMPROVEMENTS AS PART OF THE

UPPER LLAGAS CREEK FLOOD PROTECTION PROJECT
Cost Sharing Agreement for City Improvements with the Upper Llagas Creek Flood Protection Project Phase 2B City of Morgan Hill/SCVWD
Version Date: 5/19/2024 Page 3 of 8
f. Traffic Signal at intersection of Hale Avenue and Wright Avenue; g. Sound wall/retaining walls;
h. Utility relocations, including installation of new vaults, pull boxes, and etc.;
i. Traffic control, detours, road work, fencing, irrigation infrastructure for future City irrigation and landscape project, and other miscellaneous work along Hale Avenue, including community outreach and coordination.

2. DISTRICT PROJECT LOCATION

2.1. The DISTRICT PROJECT is located from Llagas Creek at Buena Vista Avenue within the City of Gilroy, upstream and northerly along a portion of East Little Llagas Creek and northwesterly along a portion West Little Llagas Creek to Llagas Road within the northern portion of the City of Morgan Hill, as shown on Exhibit A, "Upper Llagas Creek Flood Protection Project” attached hereto and incorporated herein by this reference.

2.2. The DISTRICT IMPROVEMENTS, Phase 2B, consists of construction of flood protection improvements, including installation of mitigation plantings along Reach 6 of existing Llagas Creek from Highway 101 to Llagas Avenue, Reach 7B of existing West Little Llagas Creek from Watsonville Road to Ciolino Avenue, a portion of Reach 8 from approximately 200 feet north of the West Main Avenue and Hale Avenue intersection along West Little Llagas Creek to the Llagas Road and Llagas Creek Drive intersection, and Reach 14 from the existing East Little Llagas Creek – Llagas Creek confluence upstream along East Little Llagas Creek to Sycamore Avenue.

2.3. The proposed CITY IMPROVEMENTS are located along the DISTRICT PROJECT, all within the City of Morgan Hill, all within a portion of Reach 8 of the DISTRICT PROJECT, as shown on Exhibit A, "Upper Llagas Creek Flood Protection Project” attached hereto and incorporated herein by this reference.

3. SCOPE OF WORK

3.1. DISTRICT will perform the following:

3.1.1. Administer, design, and contract the construction of its DISTRICT IMPROVEMENTS, including incorporating the CITY IMPROVEMENTS, and coordination with appropriate local, state, federal, and regulatory agencies.

3.1.2. DISTRICT, as Lead Agency for its DISTRICT PROJECT, pursuant to the requirements of the California Environmental Quality Act (CEQA), will proceed with construction of the DISTRICT IMPROVEMENTS in accordance with the DISTRICT’s Final Environmental Impact Report certified on June 10, 2014, and permits, as authorized by appropriate regulatory agencies.

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COST SHARING AGREEMENT

BY AND BETWEEN CITY OF MORGAN HILL

AND THE SANTA CLARA VALLEY WATER DISTRICT

FOR CONSTRUCTION OF CITY IMPROVEMENTS AS PART OF THE

3.1.3. Ensure its obligations are met as Lead Agency under CEQA.

3.1.4. Construction of the proposed CITY IMPROVEMENTS will be completed as part of the DISTRICT IMPROVEMENTS. The DISTRICT will officially transfer the operations and maintenance responsibilities for the CITY IMPROVEMENTS to the CITY upon the construction completion of said CITY IMPROVEMENTS and after written acceptance by both the CITY and the DISTRICT. The CITY will own the CITY IMPROVEMENTS and is responsible for their sustained operations and maintenance responsibilities in perpetuity.

3.2. CITY will perform the following:

3.2.1. CITY, as Lead Agency for its CITY PROJECT, certified an Environmental Impact Report on August 23, 2017, pursuant to the requirements of the California Environmental Quality Act (CEQA) and as authorized by the appropriate agencies.

3.2.2. Provide DISTRICT with all documentation and information regarding its proposed CITY IMPROVEMENTS, so the DISTRICT PROJECT team preparing the DISTRICT IMPROVEMENTS design and construction documents, can include the design of these CITY IMPROVEMENTS in its DISTRICT IMPROVEMENTS per CITY’S requirements.

3.2.3. Promptly review the DISTRICT’S design team’s documents prepared for public bidding and award and provide input to DISTRICT confirming acceptance of the design and construction documents prior to DISTRICT proceeding with construction advertisement and bidding.

3.2.4. CITY shall coordinate with PG&E and the other utility owners on the planning, design, and construction, execute the necessary agreements, and pay in full for the work associated with the CITY-PG&E Rule 20 overhead to underground project proposed along Hale Avenue between West Main Avenue and Wright Avenue. CITY further acknowledges the Rule 20 project does not provide any benefit to the DISTRICT PROJECT, therefore the Rule 20 associated costs are CITY sole responsibility.

3.3. Designees:

3.3.1. The designated project manager for DISTRICT for the duration of the DISTRICT IMPROVEMENTS construction is Mr. Stephen M. Ferranti.

Except as superseded by existing DISTRICT Board of Directors, the DISTRICT Act, rule or practice, DISTRICT’s project manager has all the necessary authority to direct technical and professional work within the scope of the AGREEMENT and will serve as the principal point of contact with CITY.

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COST SHARING AGREEMENT

BY AND BETWEEN CITY OF MORGAN HILL

AND THE SANTA CLARA VALLEY WATER DISTRICT

FOR CONSTRUCTION OF CITY IMPROVEMENTS AS PART OF THE

3.3.2. The designated project manager for CITY for the duration of the DISTRICT IMPROVEMENTS, including CITY IMPROVEMENTS construction is Mr.

Chris Ghione. Except as superseded by existing CITY law, rule or practice, CITY’s project manager had all the necessary authority to review, approve, and accept technical and professional work within the scope of the AGREEMENT and served as the principal point of contact with DISTRICT.

4. COST-SHARING OF CITY IMPROVEMENTS CONSTRUCTED BY DISTRICT

4.1. DISTRICT advertised Phase 2B of the DISTRICT PROJECT on May 14, 2024 and publicly bid its DISTRICT IMPROVEMENTS and included the CITY IMPROVEMENTS as separate bid items. in order to ascertain the bidders’ proposed prices for the CITY IMPROVEMENTS.

4.2. CITY total costs based on the construction cost estimates associated with the CITY IMPROVEMENTS, is estimated at $4,100,000 for improvements noted in section 1.2.

4.3. DISTRICT will provide to the CITY the summary of bids submitted to the DISTRICT by the apparent low bidder (CONTRACTOR) for their review and their acceptance of the bid item costs for the CITY IMPROVEMENTS within two (2) working days after DISTRICT’s public bid opening which is anticipated to occur on or about June 26, 2024.

4.4. CITY will review the bid item costs for the CITY IMPROVEMENTS within five (5) working days and provide the DISTRICT with their decision of acceptance or not on each bid items identified above.

4.5. DISTRICT shall submit an invoice to the CITY for those CITY IMPROVEMENT Bid Items accepted by the CITY in approximately ninety (90) days after construction completion and City acceptance of the CITY IMPROVEMENTS, and CITY agrees to pay the DISTRICT in full within sixty (60) days upon receipt of the DISTRICT invoice. DISTRICT further agrees to invoice CITY within 90 calendar days after construction completion and City acceptance of the Project for those shared bid items involving both CITY IMPROVEMENTS and DISTRICT IMPROVEMENTS, including CITY’s prior written approved modifications, revisions, change orders, and/or extra work required in association with the CITY IMPROVEMENTS (Section 1.2). CITY agrees to pay the DISTRICT in full within sixty (60) days upon receipt of the DISTRICT invoice. DISTRICT agrees to provide to the CITY the supporting documentation with each DISTRICT invoice.

4.6. Modifications to DISTRICT’S contract with its CONTRACTOR.

4.6.1. DISTRICT agrees to provide CITY with written notice and documentation regarding any modifications, revisions, change orders, and/or extra work required in association with the CITY IMPROVEMENTS to CITY within seven (7) calendar days of DISTRICT becoming aware of or initiating such

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COST SHARING AGREEMENT

BY AND BETWEEN CITY OF MORGAN HILL

AND THE SANTA CLARA VALLEY WATER DISTRICT

FOR CONSTRUCTION OF CITY IMPROVEMENTS AS PART OF THE

4.6.2. CITY will respond to DISTRICT regarding such matters within seven (7) calendar days of receipt of such information and provide written direction to DISTRICT, if necessary and appropriate.

4.6.3. If CITY’s approval(s) results in an expense above the bid items amounts, CITY agrees to remit payment in full to DISTRICT within 60 calendar days of receipt of DISTRICT invoice, along with any supporting documentation for said additional costs associated with the CITY IMPROVEMENTS.

5. INSURANCE AND INDEMNIFICATION

5.1. In lieu of and notwithstanding the pro rata risk allocation, which might otherwise be imposed between the Parties pursuant to Government Code Section 895.6, the Parties agree that all losses or liabilities incurred by a Party shall not be shared pro rata but, instead, DISTRICT and CITY agree that, pursuant to Government Code Section 895.4, each of the Parties hereto shall fully indemnify and hold each of the other Parties, their officers, board members, employees, and agents, harmless from any claim, expense or cost, damage or liability imposed for injury (as defined in Government Code Section 810.8) occurring by reason of the negligent acts or omissions or willful misconduct of the indemnifying Party, its officers, employees, or agents, under or in connection with or arising out of any work, authority, or jurisdiction delegated to such Party under this AGREEMENT.

No Party, nor any officer, board member, or agent thereof shall be responsible for any damage or liability occurring by reason of the negligent acts or omissions or willful misconduct of the other Party hereto, its officers, board members, employees, or agents, under or in connection with or arising out of any work authority or jurisdiction delegated to such other Party under this AGREEMENT.

5.2. The rights, duties, and obligations of the Parties as set forth above in this Section 5 of this AGREEMENT will survive termination, suspension, completion, and expiration of this AGREEMENT.

6. ADDITIONAL PROVISIONS

6.1. A Party’s waiver of any term, condition, covenant, or breach of any term, condition or covenant shall not be construed as a waiver of any other term, condition, or covenant or breach of any other term, condition, or covenant.

6.2. This AGREEMENT contains the entire AGREEMENT between DISTRICT and CITY relating to the DISTRICT’S IMPROVEMENTS and CITY’S IMPROVEMENTS. Any prior agreements, promises, negotiations, or representations not expressly set forth in this AGREEMENT are of no force or effect.

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COST SHARING AGREEMENT

BY AND BETWEEN CITY OF MORGAN HILL

AND THE SANTA CLARA VALLEY WATER DISTRICT

FOR CONSTRUCTION OF CITY IMPROVEMENTS AS PART OF THE

6.3. If any term, condition, or covenant of this AGREEMENT is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions of this AGREEMENT shall be valid and binding on DISTRICT and CITY.

6.4. This AGREEMENT shall be governed and construed in accordance with the laws of the State of California.

6.5. This AGREEMENT may be executed in counterparts and will be binding as executed.

6.6. The term of this AGREEMENT shall commence upon execution of the AGREEMENT by both Parties and terminate upon completion of the DISTRICT IMPROVEMENTS, notification of completion by DISTRICT to CITY, and receipt by DISTRICT of payment in full by CITY.

6.7. All changes or extensions to this AGREEMENT must be in writing in the form of an amendment approved by both Parties.

6.8. Claims related to the design of DISTRICT’S IMPROVEMENTS will be administered by DISTRICT and Claims related to the design of CITY’S IMPROVEMENTS will be administered by the CITY. The obligations of both Parties, as stated in this paragraph, will survive termination, completion, suspension, and expiration of this AGREEMENT.

6.9. This AGREEMENT is entered into only for the benefit of the Parties executing this AGREEMENT and not for the benefit of any other individual, entity, or person.

7. TERMINATION

7.1. This AGREEMENT will terminate upon completion of the DISTRICT IMPROVEMENTS, notification of completion by DISTRICT to CITY, and receipt by DISTRICT of payment in full by CITY, or by mutual written consent and terms acceptable to both Parties.

8. NOTICES

8.1 All correspondence relating to the DISTRICT IMPROVEMENTS, including all written notices required by the terms and conditions of this AGREEMENT may be delivered by first class mail addressed to the appropriate Party at the following addresses:

DISTRICT:

Santa Clara Valley Water District
5750 Almaden Expressway
San Jose, CA 95118
Attn: Mr. Stephen M. Ferranti, P.E., Engineering Unit Manager Phone: (408) 630-2677

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COST SHARING AGREEMENT

BY AND BETWEEN CITY OF MORGAN HILL

AND THE SANTA CLARA VALLEY WATER DISTRICT

FOR CONSTRUCTION OF CITY IMPROVEMENTS AS PART OF THE

City of Morgan Hill
17575 Peak Avenue
Morgan Hill, CA 95037
Attn: Mr. Chris Ghione, Public Services Director
Phone: (408) 782-9154
E-mail: [email protected]
IN WITNESS WHEREOF, this AGREEMENT becomes effective upon full execution by the Parties as set forth below.
"CITY" "DISTRICT"

CITY OF MORGAN HILL SANTA CLARA VALLEY WATER DISTRICT
A Municipal corporation of the County of Santa Clara a Special District, created by the California Legislature By:______________________________ By:______________________________ Christina Turner Rick L. Callender, Esq.

City Manager Chief Executive Officer
Date: ____________________________
ATTEST:

Date: ____________________________
ATTEST:
_________________________________ _________________________________ Michelle Bigelow Michele L. King
City Clerk Clerk of the Board of Directors
APPROVED AS TO FORM: APPROVED AS TO FORM:
_________________________________ _________________________________ Donald Larkin Brian Hopper
City Attorney Senior Assistant District Counsel

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8 CITY COUNCIL STAFF REPORT
MEETING DATE: June 26, 2024
PREPARED BY:

David Gittleson, Associate Engineer
APPROVED BY: City Manager

AWARD THE EAST DUNNE HILLSIDE WATER RESERVOIR PROJECT
TO AZUL WORKS, INC. IN THE AMOUNT OF $8,296,000 AND

APPROVE CONSULTANT AGREEMENT WITH KENNEDY/JENKS

CONSULTANTS FOR CONSTRUCTION SUPPORT SERVICES FOR A
NOT TO EXCEED AMOUNT OF $300,000

RECOMMENDATION(S)

1. Approve the East Dunne Hillside Water Reservoir Project plans and specifications;

2. Award contract to Azul Works, Inc. for the East Dunne Hillside Water Reservoir Project in the amount of $8,296,000;

3. Authorize expenditures of construction contingency not to exceed $829,600;

4. Approve consultant agreement with Kennedy/Jenks Consultants for Construction Support Services for a not to exceed amount of $300,000; and

5. Authorize the City Manager to execute and administer the construction contract with Azul Works, Inc. and consultant agreement with Kennedy/Jenks Consultants.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Enhancing Public Safety
Maintaining and Enhancing Infrastructure
2024-2025 Strategic Priorities
Fiscal Sustainability
Guiding Documents
Fire Services Standards of Coverage
Water System Master Plan
REPORT NARRATIVE:

The East Dunne Hillside Water Reservoir Project involves the construction of an 850,000-gallon above-ground welded steel water supply reservoir (tank). The new reservoir will be located on the hillside adjacent to East Dunne Avenue (See attachment

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8 1). The Project also includes the installation of new piping, an access road, stormwater catchment, and treatment, concrete retaining walls, fencing, landscaping/irrigation, etc.

In addition, two existing water pumps currently in use at the East Dunne Booster Station will be replaced with larger water pumps to fill the new reservoir. The construction of the new reservoir will improve fire protection, provide water system redundancy and enhance the domestic water supply for the eastern side of Morgan Hill. To screen the reservoir as best as possible, the reservoir will be notched into the hillside and trees will be strategically placed to block views from neighboring homes. The Project is included in the City's Water Master Plan as well as the Capital Improvement Program.

The East Dunne Hillside Reservoir design was initially approved by the City Council in January 2016. A Draft Initial Study was also completed by Geier & Geier Consulting in November 2016. The project reached substantial completion in December 2018.

However, staffing levels and funding to construct the project were not in place, so the project was put on hold. In June 2023, the City Council approved a professional services agreement with Kennedy/Jenks Consultants to revise the plans and add stormwater compliance requirements in order to finalize the design. In 2024, the City was awarded a $4 million grant from the State Department of Water Resources to support the project.

The Plans and Specifications were completed by Kennedy/Jenks Consultants in April 2024. The bid period was held between May 3rd and May 29th, 2024. The bid opening was held on May 29, 2024, and three (3) bids were received as listed below:

1. Azul Works, Inc $8,296,000

2. Anvil Builders, Inc. $9,459,702

3. Shimmick Construction Company, Inc. $10,125,900
The lowest responsible bidder was Azul Works, Inc. at $8,296,000. The low bidder's bid amount of $8,296,000 is approximately 3.7% higher than the engineer's estimate of $8.0 million. The low bidder, Azul Works, Inc., has 24 years of experience as a public contractor and has constructed public works projects for the City of San Jose, the City of Napa, the City of Petaluma, and the East Bay Regional Parks District. Azul Works, Inc. has constructed two smaller water tanks within the last 6 years; however, a subcontractor specializing in constructing steel tanks (Crosno Construction) will be constructing this tank under the Azul Works, Inc. contract if awarded. Staff recommends the award of the contract to Azul Works, Inc. in the amount of $8,296,000. Due to possible unforeseen conditions, staff is requesting a ten (10) percent construction contingency for the project of $829,600.

Due to the complexity of the project and the specialized work involved in building a welded steel tank, staff is requesting approval from the City Council for construction support services from the design firm Kennedy/Jenks Consultants in an amount not to exceed $300,000. Services would include reviewing submittals, responding to Requests for Information (RFIs), design clarifications, change order assistance, meetings, site inspections, and producing as-built drawings, all on an as-needed basis (see

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8 attachment 2).

This project is scheduled to start in late July 2024 and be completed and operational within three years. The plans and specifications are available on the City's web page under the Government tab and on the Community Projects site.

Plans and Specifications
COMMUNITY ENGAGEMENT:

Inform: Staff has provided presentations regarding the project to the communities of Jackson Oaks and Holiday Lake Estates multiple times since 2015, but most recently on January 30, 2024. The presentations provide design elements and updates on the status of the project. Staff will continue community engagement prior to the start of the project and during the project.

ALTERNATIVE ACTIONS:

City Council could decide not to award the construction contract. The project could be value engineered and rebid in hopes of receiving lower bids. However, doing so will delay the construction of the project and may not result in lower costs. Council could also decide not to enter into a construction contract with Kennedy/Jenks for construction support services. However, it is common practice to have the design firm involved in the construction process to address design and constructability issues and review critical submittals.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

On January 20, 2016, the City Council approved a Professional Service Agreement with Kennedy Jenks Consultants to design the East Dunne Avenue Reservoir project for $390,278.

On August 24, 2016, the City Council approved a Second Amendment with Kennedy Jenks Consultants for a total contract price of $526,074.

On June 7, 2023, City Council approved a professional services agreement with Kennedy Jenks Consultants to complete the design for the East Dunne Avenue Hillside Water Reservoir project not to exceed $240,187.

On May 15, 2024, the City Council Adopted and certified the project Mitigated Negative Declaration and approved the Mitigation Monitoring and Reporting Program for the project.

On June 19, 2024, the City Council adopted the Fiscal Year 2024-25 and 2025-2026 Operating Budget and FY 2024-2025 through 2029-2030 Capital Improvement Program Budget.

FISCAL AND RESOURCE IMPACT:

Fiscal:

If approved, the total construction authorization for this project shall be $9,125,600

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8 which includes a 10% contingency of $829,600. The City received $4 million from the Urban Community Drought Relief Grant program through the State of California's Department of Water Resources for this project. The construction ($9,125,600) and support services ($300,000) were budgeted in the FY 24/25 through 2029/2030 Capital Improvement Budget, presented to the City Council on June 19, 2024.

CEQA (California Environmental Quality Act):

Project: An Initial Study (IS) and Mitigated Negative Declaration was updated by Raney Planning & Management to identify and mitigate all environmental impacts from the project. The Mitigated Negative Declaration and the Mitigation Monitoring and Reporting Plan were approved by City Council on May 15, 2024 and incorporated into the project specifications. The Mitigated Negative Declaration was filed with the County Recorder's Office on May 29, 2024.

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E DUNNE AVE

OAK VIEW CIR

RUSTLING OAK CT

FLAMING OAK LN

RUSTLING OAK LN
O
0 70 140 210 280 35
Feet

SITE MAP
East Dunne
Hillside Water Reservoir
Site of East Dunne
Hillside Water Reservoir
Engineering Division
Path: G:\R-14\PROJ\GIS\Marks\SITE MAPS\SiteMap_EDunne_HillsideReservoir.mxd

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1 Updated February 2024

CONSULTANT AGREEMENT FOR DESIGN PROFESSIONALS
Kennedy/Jenks Consultants
THIS AGREEMENT is entered into and becomes effective on _______________ (Effective Date), by and between the CITY OF MORGAN HILL, a municipal corporation, ("CITY"), and Kennedy/Jenks Consultants a California corporation ("CONSULTANT") hereinafter referred to collectively as “Parties.” In consideration of the promises and the mutual covenants contained in this Agreement, the Parties agree as follows:

1. City Authority. This Agreement is entered into pursuant to the action of the Morgan Hill City Council taken on June, 19, 2024.

2. Term of Agreement. This Agreement shall cover services rendered from the Effective Date of this Agreement until July 15, 2027 at which time CONSULTANT’S services shall be completed. The City Manager is authorized to extend the term of this Agreement provided the compensation does not exceed the City Manager's authority pursuant to Chapter 3.04 of the Morgan Hill Municipal Code, unless otherwise authorized by City Council. Any such extension shall be in writing and signed by both Parties to this Agreement.

3. Scope of Service. The services to be performed by CONSULTANT shall be to provide construction support services as further described in Exhibit A.

4. Compensation. CONSULTANT shall be compensated as follows:

4.1. Amount. $300,000.00. Total compensation to CONSULTANT under this Agreement during its initial term set forth in Section 2 above shall not exceed Three Hundred Thousand dollars and shall be billed based on the rate and basis set forth in Exhibit B.

If the City Manager extends the term of this Agreement pursuant to the provisions of Section 2 above, the City Manager shall have the authority to increase the maximum compensation allowed to be paid to CONSULTANT, so long as City Council has appropriated sufficient funds therefor, the Parties mutually agree to such amount in a writing signed by both Parties to this Agreement, and provided further that in no event shall such maximum compensation allowed for the term exceed the City Manager's authority pursuant to Chapter 3.04 of the Morgan Hill Municipal Code, unless otherwise authorized by City Council.

4.2. Billing. CONSULTANT shall provide CITY with an invoice containing the dated, detailed, and itemized descriptions of all services performed and expenses incurred (if such expenses are reimbursable pursuant to Exhibit B) by CONSULTANT on a monthly basis unless otherwise specified in Exhibit B. All invoices shall be sent to the CITY addressed to the department head or project manager identified below in Section 13 Notices. Any rate charged shall be prorated where services are interrupted or not provided for any rate period (for example, any monthly rate charge should be prorated when services were interrupted or provided for only part of the month). For services billed on an hourly rate, the minimum unit of billed time shall not exceed one tenth of one hour. CITY shall pay for services and expenses (if so provided in Exhibit B) up to the limit of compensation set forth above, that in the CITY’S judgment were necessary and reasonable. Services for work performed and expenses incurred in excess of the total compensation set forth in paragraph 4.1 above shall be at no cost to CITY.

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2 Updated February 2024

5. Termination. CITY or CONSULTANT shall have the right to terminate this Agreement, without cause, by giving thirty (30) days' written notice or less under urgent circumstances. Upon such termination, CONSULTANT shall submit to CITY an itemized statement of services performed for which compensation has not been paid. CITY may require CONSULTANT to complete certain work product or documents and CONSULTANT shall deliver to CITY all documents in its possession without additional compensation to CONSULTANT. The City Manager of CITY is authorized to terminate this Agreement, in whole or in part, on behalf of CITY.

5.1. Non-Appropriations. Notwithstanding anything contained in this Agreement to the contrary, if insufficient funds are appropriated, or funds are otherwise unavailable in the budget for CITY for any reason whatsoever in any fiscal year, for payments due under this Agreement, CITY will immediately notify CONSULTANT of such occurrence, and this Agreement shall terminate after the last day during the fiscal year for which appropriations shall have been budgeted for CITY or are otherwise available for payments.

6. Performance of Work. CONSULTANT represents that it is qualified by virtue of experience, training, education, and expertise to accomplish these services. Services shall be performed by CONSULTANT in accordance with professional practices in a manner consistent with a level of care, competence and skill exercised by qualified members of the CONSULTANT’S profession. By delivery of completed work, CONSULTANT certifies that the work conforms to the requirements of this Agreement and all applicable federal, state, and local laws. CONSULTANT shall perform all work and services under this Agreement in conformance with the time schedule set forth on Exhibit C, "Schedule of Performance," attached hereto and incorporated herein by this reference. CITY'S City Manager is authorized on behalf of CITY to modify the timeframes set forth on the Schedule of Performance within the term of this Agreement. If CONSULTANT desires to leave or store any of CONSULTANT’S equipment at a CITY site while CONSULTANT is performing work or service pursuant to this Agreement, CONSULTANT will first obtain the consent of CITY'S City Manager, or his/her delegate, to do so, and any such storage shall occur only in the manner and location allowed by such CITY official and entirely at CONSULTANT’S sole risk.

7. Insurance Requirements. CONSULTANT shall procure and provide proof of the insurance coverage required by this section in the form of certificates and endorsements. The required insurance must cover the activities of CONSULTANT, including its subcontractors, employees, and agents, relating to, or arising from, the performance of any work or service under this Agreement, and must remain in full force and effect at all times during the period covered by this Agreement. The coverages may be arranged under a single policy for the full limits required or by a combination of underlying policies with the balance provided by excess or “umbrella” policies, provided each such policy complies with the requirements set forth herein. Any deductibles or self-insured retentions must be declared to and approved by City. CONSULTANT further understands that the CITY reserves the right to modify the insurance requirements set forth herein, with thirty (30) days’ notice provided to CONSULTANT, at any time as deemed necessary to protect the interests of the CITY.

7.1. Insurance Types and Amounts.

7.1.1. Commercial General Liability (CGL). CONSULTANT shall maintain CGL against claims and liabilities for personal injury, death, or property damage providing protection in the minimum amount of: (i) one million dollars ($1,000,000.00) combined single limit for any one accident or occurrence, or (ii) the maximum amount of such insurance available to CONSULTANT under CONSULTANT’S

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combined insurance policies (including any excess or “umbrella” policies), whichever is greater.

7.1.2. Automobile Liability. CONSULTANT shall maintain Automobile Liability covering all owned, non-owned and hired automobiles (if CONSULTANT does not own automobiles, then CONSULTANT shall maintain Hired/Non-owned Automobile Liability) against claims and liabilities for personal injury, death, or property damage providing protection in the minimum amount of: (i) one million dollars ($1,000,000.00) combined single limit for any one accident or occurrence, or (ii) the maximum amount of such insurance available to CONSULTANT under CONSULTANT’S combined insurance policies (including any excess or “umbrella” policies), whichever is greater.

7.1.3. Workers’ Compensation Insurance and Employer’s Liability. CONSULTANT shall maintain Workers Compensation coverage, as required by law, in the minimum amount of: (i) one million dollars ($1,000,000.00) for any one accident or occurrence, or (ii) the maximum amount of such insurance available to CONSULTANT under CONSULTANT’S combined insurance policies (including any excess or “umbrella” policies), whichever is greater. If CONSULTANT is selfinsured, CONSULTANT shall provide its Certificate of Permission to Self-Insure, duly authorized by the Department of Industrial Relations.

7.1.4. Pollution (Environmental) Liability. If the performance of CONSULTANT’S work or service under this Agreement involves hazardous materials, contaminated soil disposal, and/or a risk of accidental release of fuel oil, chemicals or other toxic gases or hazardous materials, CONSULTANT shall procure and maintain Pollution Liability covering the CONSULTANT’S liability for bodily injury, property damage and environmental damage resulting from pollution and related cleanup costs arising out of the work or services to be performed under this Agreement.

Coverage shall be provided for both work performed on site, as well as during the transport of hazardous materials. Such coverage shall be in the minimum amount of: (i) one million dollars ($1,000,000.00) for any one accident or occurrence, or (ii) the maximum amount of such insurance available to CONSULTANT under CONSULTANT’S combined insurance policies (including any excess or “umbrella” policies), whichever is greater.

7.1.5. Professional Liability.

7.1.5.1. If the performance of CONSULTANT’S work or service under this Agreement involves professional and/or technical services (examples include, but are not limited to, architects, engineers, land surveyors, and appraisers), CONSULTANT shall procure and maintain either a claims made or occurrence Errors and Omission liability insurance in the minimum amount of: (i) one million dollars ($1,000,000.00) each claim, or (ii) the maximum amount of such insurance available to CONSULTANT under CONSULTANT’S combined insurance policies (including any excess or “umbrella” policies), whichever is greater. Further, if CONSULTANT maintains a claims-made policy, CONSULTANT shall provide written evidence of such insurance to the CITY for at least five (5) years after the completion of work performed under this Agreement.

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7.1.5.2. If the performance of CONSULTANT’S work or service under this Agreement relates to Information Technology or related services (examples include, but are not limited to computer programmers, software designers, hardware engineers, or other systems consultants), CONSULTANT shall procure and maintain a claims made Errors and Omission liability insurance, including Cyber Liability and Data Breach, in the minimum amount of: (i) one million dollars ($1,000,000.00) each claim, or (ii) the maximum amount of such insurance available to CONSULTANT under CONSULTANT’S combined insurance policies (including any excess or “umbrella” policies), whichever is greater.

7.1.6. Sexual Abuse/Molestation Liability (SML): If the performance of CONSULTANT’S work or service under this Agreement involves contact with minors, CONSULTANT shall procure and maintain Sexual Abuse and Molestation insurance in the minimum amount of: (i) two hundred thousand dollars ($200,000.00) each claim, or (ii) the maximum amount of such insurance available to CONSULTANT under CONSULTANT’S combined insurance policies (including any excess or “umbrella” policies), whichever is greater.

7.2. Endorsements. CONSULTANT shall provide proof of the following endorsements, listed for each policy for which endorsements are required, as outlined below:

7.2.1. General Liability and pollution liability (when pollution liability applies).

7.2.1.1. “Additionally Insured” - The City of Morgan Hill, its elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers are named as additional insureds on a form at least as broad as ISO Form CG 20 10 for ongoing operations.

7.2.1.2. “Waiver of Rights of Subrogation” - The insurer waives the right of subrogation against the City of Morgan Hill and CITY’S elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers; and

7.2.1.3. “Primary and Non-Contributing” - Insurance shall be endorsed to be primary and non-contributory and will not seek contribution from the City’s insurance or self-insurance and shall be at least as broad as ISO Form CG 20

01. 7.2.2. Workers Compensation.

If the performance of CONSULTANT’S work or service under this Agreement involves access to or activity on any property or premises owned or occupied by the CITY, including, but not limited to, CONSULTANT’S presence during site visits and meetings, then insurer waives the right of subrogation against the City of Morgan Hill and the CITY’S elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers.

7.3. Qualification of Insurers. All insurance required pursuant to this Agreement must be issued by a company licensed and admitted, or otherwise legally authorized to carry out insurance business in the State of California, and each insurer must have a current A.M.

Best's financial strength rating of “A” or better and a financial size rating of “VII” or better.

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7.4. Certificates. CONSULTANT shall furnish CITY of Morgan Hill with copies of all certificates as outlined herein, whether new or modified, promptly upon receipt. In the event of a claim or legal action, CONSULTANT shall promptly furnish CITY of Morgan Hill with copies of all policies outlined herein. No policy subject to the CONSULTANT’S agreement with the CITY shall be canceled or materially changed except after thirty (30) days' notice by the insurer to CITY. A "material change" is a change that results in noncompliance with any insurance requirements in this section 7. Certificates, including renewal certificates, may be mailed electronically to [email protected] or delivered to the Certificate Holder address provided herein.

Certificate Holder address:

City of Morgan Hill
Attn: Risk Management
17575 Peak Avenue
Morgan Hill, CA 95037

8. Non-Liability of Officials and Employees of the CITY. No official or employee of CITY shall be personally liable for any default or liability under this Agreement.

9. Compliance with Law.

9.1. CONSULTANT and its officers, employees, agents, and subcontractors shall comply with all applicable laws, ordinances, administrative regulations, and permitting requirements in carrying out their obligations under this Agreement. CONSULTANT and its officers, employees, agents, and subcontractors covenant there shall be no discrimination based upon any basis prohibited by State or Federal law, including but not limited to, race, color, creed, religion, gender, marital status, age, sexual orientation, national origin, mental disability, physical disability, medical condition, or ancestry, in any activity pursuant to this Agreement.

9.2. Compliance with Wage and Hour Laws: Consultant, and any subcontractor it employs to complete work under this Agreement, shall comply with all applicable federal, state, and local wage and hour laws. Applicable laws may include, but are not limited to, the Federal Fair Labor Standards Act and the California Labor Code.

Final Judgments, Decisions, and Orders: For purposes of this Section, a “final judgment, decision, or order” refers to one for which all appeals have been exhausted or the time to appeal has expired. Relevant investigatory government agencies include: the federal Department of Labor, the California Division of Labor Standards Enforcement, or any other governmental entity or division tasked with the investigation and enforcement of wage and hour laws.

Prior Judgments against CONSULTANT and/or its Subcontractors: BY SIGNING THIS

AGREEMENT, CONSULTANT AFFIRMS THAT IT HAS DISCLOSED ANY FINAL

JUDGMENTS, DECISIONS OR ORDERS FROM A COURT OR INVESTIGATORY GOVERNMENT AGENCY FINDING – IN THE FIVE (5) YEARS PRIOR TO EXECUTING THIS AGREEMENT – THAT CONSULTANT OR ITS SUBCONTRACTOR(S) HAS VIOLATED ANY APPLICABLE WAGE AND HOUR LAWS. CONSULTANT FURTHER

AFFIRMS THAT IT OR ITS SUBCONTRACTOR(S) HAS SATISFIED AND COMPLIED WITH – OR HAS REACHED AGREEMENT WITH THE CITY REGARDING THE

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MANNER IN WHICH IT WILL SATISFY – ANY SUCH JUDGMENTS, DECISIONS OR ORDERS.

Judgments or Decisions During Term of Contract: If at any time during the term of this Agreement, a court or investigatory government agency issues a final judgment, decision or order finding that CONSULTANT or an subcontractor it employs to perform work under this Agreement has violated any applicable wage and hour law, or CONSULTANT learns of such a judgment, decision, or order that was not previously disclosed, CONSULTANT shall inform the City Attorney, no more than fifteen (15) days after the judgment, decision or order becomes final or of learning of the final judgment, decision, or order.

CONSULTANT and its subcontractors shall promptly satisfy and comply with any such judgment, decision, or order, and shall provide the City Attorney with documentary evidence of compliance with the final judgment, decision, or order within five (5) days of satisfying the final judgment, decision, or order. The City reserves the right to require CONSULTANT to enter into an agreement with the City regarding the manner in which any such final judgment, decision, or order will be satisfied.

City’s Right to Withhold Payment: Where CONSULTANT or any subcontractor it employs to perform work under this Agreement has been found in violation of any applicable wage and hour law by a final judgment, decision or order of a court or government agency, the City reserves the right to withhold payment to CONSULTANT until such judgment, decision or order has been satisfied in full.

Material Breach: Failure to comply with any part of this Section constitutes a material breach of this Agreement. Such breach may serve as a basis for immediate termination of this Agreement and/or any other remedies available under this Agreement and/or law.

Notice to City Related to Wage Theft Prevention: Notice provided to the City Attorney as required under this Section shall be addressed to: City Attorney, City of Morgan Hill, 17575 Peak Avenue, Morgan Hill, CA 95037. The Notice provisions of this Section are separate from any other notice provisions in this Agreement and, accordingly, only notice provided to the above address satisfies the notice requirements in this Section.

10. Independent Contractor. CONSULTANT is an independent contractor and not an agent or employee of CITY.

11. Confidentiality. All data, documents, or other information received by CONSULTANT from CITY or prepared in connection with CONSULTANT’S services under this Agreement are deemed confidential and shall not be disclosed to any third party by CONSULTANT without prior written consent by CITY.

12. Conflict of Interest and Reporting. CONSULTANT shall at all times avoid conflict of interest or appearance of conflict of interest in performance of this Agreement.

13. Notices. All notices shall be personally delivered or mailed, via first class mail to the below listed address. These addresses shall be used for delivery of service of process. Notices shall be effective five (5) days after date of mailing, or upon date of personal delivery.

Address of CONSULTANT is as follows:

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Don Barraza, Project Manager
Kennedy/Jenks Consultants
2350 Mission College Boulevard, Suite 525
Santa Clara, CA 95054
Address of CITY is as follows:

Development Services Center
David Gittleson, P.E.

City of Morgan Hill
17575 Peak Avenue
Morgan Hill, CA 95037
with a copy to:

City Clerk
City of Morgan Hill
17575 Peak Avenue
Morgan Hill, CA 95037

14. Licenses, Permits and Fees. CONSULTANT shall obtain a City of Morgan Hill Business License, all permits and licenses to the extent required by ordinances, codes, and regulations of the federal, state, and local government.

15. Consultant's Proposal. If applicable, this Agreement shall include CONSULTANT'S proposal or bid which is incorporated herein. In the event of any inconsistency between the terms of the proposal and this Agreement, this Agreement shall govern.

16. Maintenance of Records.

16.1. Maintenance. CONSULTANT shall prepare, maintain, and preserve all reports and records that may be required by federal, state, and CITY rules and ordinances related to services provided under this Agreement. CONSULTANT shall maintain records for a period of at least 3 years after receipt of final payment under this Agreement. If any litigation, claim, negotiation, audit exception, or other action relating to this Agreement is pending at the end of the 3-year period, then CONSULTANT shall retain said records until such action is resolved.

16.2. Access to and Audit of Records. The CITY shall have the right to examine, monitor and audit all records, documents, conditions, and activities of the CONSULTANT and its subcontractors related to services under this Agreement. Pursuant to Government Code Section 8546.7, if this Agreement involves the expenditure of public funds in excess of $10,000, the Parties to this Agreement may be subject, at the request of the CITY or as part of any audit of the CITY, to the examination and audit of the State Auditor pertaining to matters connected with the performance of this Agreement for a period of three years after final payment under the Agreement.

16.3. Ownership of Work Product. All documents or other information developed or received by CONSULTANT for work performed under this Agreement shall be the property of CITY. CONSULTANT shall provide CITY with copies of these items upon demand or upon termination of this Agreement.

17. Familiarity with Work. By executing this Agreement, CONSULTANT represents that: (1) it has investigated the work to be performed; (2) it has investigated the site of the work and is aware of all conditions there; and (3) it understands the difficulties and restrictions of the work under this Agreement.

Should CONSULTANT discover any conditions materially differing from those inherent in the work or as represented by CITY, it shall immediately inform CITY and shall not proceed, except at CONSULTANT'S risk, until written instructions are received from CITY.

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18. Time of Essence. Time is of the essence in the performance of this Agreement.

19. No Assignment. Neither this Agreement nor any portion shall be assigned by CONSULTANT, without prior written consent of CITY. Any attempted assignment not first approved by CITY shall be void and, at CITY'S option, shall terminate this Agreement effective as of the date of such attempted assignment.

20. Attorney Fees. In any legal action, dispute or arbitration arising out of or relating to this Agreement, the prevailing party shall be entitled to an award of its reasonable attorney fees, costs and expenses incurred.

21. Defense and Indemnification.

21.1. Defense and Indemnification for Design Professional Services. Consistent with California Civil Code Section 2782.8, for design professional services to be performed under this agreement by a design professional, as that term is defined under said Section 2782.8, CONSULTANT shall, to the fullest extent permitted by law, indemnify, defend and hold harmless CITY, its elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers (“INDEMNITEES”) from and against any and all claims, liabilities, expenses, liens, or damages of any nature, including liability for bodily injury, property damage or personal injury, and including reasonable attorneys' fees and expenses, that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of CONSULTANT, and/or its agents, officers, employees, subcontractors, or independent contractors in performance of work hereunder or its failure to comply with any of its obligations contained in this Agreement (“CLAIM”) to the extent of CONSULTANT’S proportionate percentage of fault.

21.2. Defense and Indemnification for Non-Design Professional Services. For all services performed under this agreement not covered by Section 21.1 above, CONSULTANT shall, to the fullest extent permitted by law, indemnify, defend and hold harmless CITY, its elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers (“INDEMNITEES”) from and against any and all claims, liabilities, expenses, liens, or damages of any nature, including liability for bodily injury, property damage or personal injury, and including reasonable attorneys' fees and expenses, that arise out of, pertain to, or relate to the performance of this Agreement or the failure to comply with any obligations contained in this Agreement by CONSULTANT, and/or its agents, officers, employees, subcontractors, or independent contractors (“CLAIM”).

21.3. Exceptions. CONSULTANT is not required to indemnify INDEMNITEES against liability for bodily injury, property damage or personal injury, or any other loss, damage or expense arising from the sole negligence, active negligence, or willful misconduct of the CITY.

21.4. Not limited by insurance. The indemnity, defense and hold harmless provisions of this Agreement apply to all CLAIMS alleged against an INDEMNITEE, regardless of whether any insurance policies are applicable. Policy limits do not act as a limitation upon the amount of indemnification or defense to be provided by CONSULTANT.

21.5. Right to Offset. CITY shall have the right to offset against any compensation due CONSULTANT under this Agreement any amount due CITY from CONSULTANT as a result of CONSULTANT’S failure to pay CITY promptly any indemnification arising under

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this Section (21) and any amount due CITY from CONSULTANT arising from CONSULTANT’S failure either to (i) pay taxes on amounts received pursuant to this Agreement or (ii) comply with applicable workers' compensation laws.

21.6. Interpretation. This Section shall constitute an agreement or contract of indemnity, incorporating the interpretations under California Civil Code Section 2778. It is expressly understood and agreed that the obligation of the CONSULTANT to indemnify the INDEMNITEE shall be as broad and inclusive as permitted by the laws of the State of California and shall survive termination of this Agreement.

22. Entire Agreement; Modification; Conflicting Provisions. This Agreement constitutes the entire Agreement between the Parties and supersedes any previous agreements, oral or written. This Agreement may be modified, or provisions waived, only by a subsequent mutual written agreement executed by CITY and CONSULTANT. If the provisions contained in the main body of this Agreement conflict with any provision contained in an exhibit to this Agreement, the provisions of the main body of this Agreement shall govern and control over any provision contained in an exhibit to this Agreement.

23. Governing Law and Venue. This Agreement shall be construed in accordance with the laws of the State of California. This Agreement was entered into and is to be performed in the County of Santa Clara. Any action or dispute arising out of this Agreement shall only be brought in Santa Clara County.

24. Interpretation. This Agreement is a negotiated document and shall be deemed to have been drafted jointly by the Parties, and no rule of construction or interpretation shall apply against any particular Party based on a contention that the Agreement was drafted by one of the Parties including, but not limited to, California Civil Code § 1654, the provisions of which are hereby waived. This Agreement shall be construed and interpreted in a neutral manner.

25. Notice of Security and/or Privacy Incident. If CONSULTANT, or its subconsultant, suspect, discover or are notified of a data security incident or potential breach of security and/or privacy relating to CITY PII, PHI and/or PCI, CONSULTANT shall immediately, but in no event later than forty-eight (48) hours from suspicion, discovery or notification of the incident or potential breach, notify CITY of such incident or potential breach. CONSULTANT shall, upon CITY’s request, investigate such incident or potential breach, inform the CITY of the results of any such investigation, and assist the CITY in maintaining the confidentiality of such information. In addition to the foregoing, CONSULTANT shall provide CITY with any assistance necessary to comply with any state and/or federal laws requiring the provision of notice of any privacy incident or security breach with respect to any CITY PII, PHI and/or PCI to the affected or impacted individuals and/or organizations, in addition to any notification to applicable state and federal agencies. CONSULTANT agrees that it shall reimburse CITY for all expenses, costs, attorneys’ fees, and resulting fines, penalties, and damages associated with such incident, breach, investigation and/or notification.

26. Preservation of Agreement. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the rest of the Agreement shall remain in full force and effect and shall in no way be affected or invalidated.

27. Binding Agreement. Notwithstanding the provisions of Section 19 above, this Agreement shall bind any and all successors in interest, legal representatives and/or other permitted assignees or transferees of CONSULTANT in the same manner as if those successors in interest, legal representatives or other permitted assignees or transferees had entered into this Agreement originally.

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28. ☐ Data Sharing. This Agreement requires access by CONSULTANT to CITY’S Geographic Information System (GIS) DATA for CONSULTANT to perform the work. CITY agrees to provide the GIS DATA to CONSULTANT solely for the purpose of performance of contracted work with the CITY upon the terms and conditions specified in Exhibit D, incorporated herein by this reference.

29. Electronic Signatures. Unless otherwise prohibited by law or CITY policy, the Parties agree that an electronic copy of a signed contract, or an electronically signed contract, has the same force and legal effect as a contract executed with an original ink signature. The term “electronic copy of a signed contract” refers to a transmission by facsimile, electronic mail, or other electronic means of a copy of an original signed contract in a portable document format. The term “electronically signed contract” means a contract that is executed by applying an electronic signature using technology approved by the CITY.
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30. Authority to Execute. Those individuals who are signing this Agreement on behalf of entities represent and warrant that they are, respectively, duly authorized to sign on behalf of the entities and to bind the entities fully to each and all of the obligations set forth in this Agreement.

IN WITNESS THEREOF, these Parties have executed this Agreement on the day and year shown below.

AS SET FORTH IN CA. CORP. CODE § 313, TWO SIGNATURES ARE REQUIRED FOR CALIFORNIA CORPORATIONS:
(1) CHAIRPERSON OF THE BOARD, PRESIDENT, OR VICE PRESIDENT; AND (2) SECRETARY, ASSISTANT SECRETARY, CHIEF FINANCIAL OFFICER OR ASSISTANT TREASURER.

ATTEST: CITY OF MORGAN HILL
City Clerk/Deputy City Clerk City Manager
Michelle Bigelow Christina J. Turner
Print Name Print Name
Date: Date:

APPROVED AS TO FORM: Kennedy/Jenks Consultants
City Attorney By:

Donald A. Larkin
Print Name
Date:

Print Name and Title of Signer.

If Corporate: Chairman, President or Vice
President
Date:

By:

Date:

Print Name and Title of Signer.

If Corporate: Secretary, Assistant
Secretary, Chief Financial Officer or
Assistant Treasurer
U:\Legal Forms\Consultant Agreements\City Services Agreement For Design Professionals.Docx Vice President and Operations Manager Corporate Secretary By: Gerard P. Cavaluzzi June 24, 2024 June 24, 2024 Jamie E. Kolkey Page 220 of 478 12 Updated February 2024

EXHIBIT A

SCOPE OF SERVICES

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303 Second Street, Suite 300 South
San Francisco, California 94107
415-243-2150
FAX: 415-896-0999
7 June 2024
Mr. David Gittleson, P.E.

Associate Engineer
Utilities & Engineering Department
City of Morgan Hill
17575 Peak Avenue
Morgan Hill, California 95037
Subject: Proposal for As-Needed Engineering Services During Construction for the East Dunne Hillside Water Reservoir and Booster Pump Station Project
Dear Mr. Gittleson:

Kennedy/Jenks Consultants, Inc. (Kennedy Jenks) is pleased to submit this proposal to provide professional services for as-needed engineering services during construction (ESDC) for the East Dunne Hillside Water Reservoir and Booster Pump Station Project (Project). As requested by the City of Morgan Hill (City), these services will be provided on an as-needed basis for items pertaining to the facilities including the reservoir and the retaining walls on the reservoir and pump station sites.

It is understood that these services will be performed as a new contract between Kennedy Jenks and the City. The Scope of Work, assumptions, summary of tasks to be performed by the City, basis of compensation, schedule and terms and conditions for this proposal are included below.

Scope of Work
Kennedy Jenks will provide professional services for as-needed ESDC for the Project, working closely with City staff. Kennedy Jenks’ work is organized in four tasks as described in the following sections.

Phase 1 – Project Management and Quality Control
Task 1.1 – Project Management
Kennedy Jenks will set up the project within Kennedy Jenks’ accounting system, prepare subconsultant agreements, provide management and oversight of in-house project personnel and subconsultants

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Mr. David Gittleson, P.E.

City of Morgan Hill
7 June 2024

Page 2 ends

throughout the project, and will review and monitor project budget and progress on a regular basis.

Kennedy Jenks will prepare and submit monthly invoices electronically to the City in accordance with the Agreement. This task assumes a construction duration of 35 months from Notice to Proceed (NTP).

Task 1.1 Deliverables:

1. Monthly invoices (electronic, PDF format)
Task 1.2 - Quality Assurance and Quality Control (QA/QC) Each deliverable will receive a quality control review prior to submission to the City from a senior Kennedy Jenks engineer, not directly associated with the project. This includes QA/QC of all Submittal responses, Requests for Information (RFI) responses, design clarifications, and change order assistance.

Phase 2 – As-Needed ESDC
This Scope of Work and Fee Estimate provides an estimate of ESDC in support of Project elements including the reservoir and retaining walls for the Project.

Task 2.1 – Preconstruction Meeting
Kennedy Jenks will attend one, 2-hour virtual preconstruction meeting with the selected Contractor and City construction personnel to review construction project organization, roles and responsibilities associated with construction administration, construction related correspondence, observations and inspections, contract change orders, monthly progress estimates and payments, material testing, disinfection testing, project closeout, and record documents. The meeting will be attended by up to three Kennedy Jenks staff. This City will be responsible for facilitating the meeting and preparing the agenda and meeting minutes.

Task 2.2 – Construction Progress Meetings
Kennedy Jenks will attend up to 35 construction progress meetings (assuming one per month of construction) at the request of the City. Each progress meeting is anticipated to be held virtually, have a 1-hour duration, and will be attended by up to two Kennedy Jenks staff. The City will be responsible for facilitating the meeting and preparing the agenda and meeting minutes.

Task 2.3 – RFI Responses
Kennedy Jenks will assist City staff with preparing responses to Requests for Information (RFIs) related to structural specifications and drawings as requested by the City. Kennedy Jenks’ standard construction administration forms will be used for all RFI responses. It is the responsibility of the City to provide RFIs

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Mr. David Gittleson, P.E.

City of Morgan Hill
7 June 2024

Page 3 ends

received from the Contractor and to distribute all RFI responses to the Contractor. For budgeting purposes, this proposal assumes a total labor estimate of 80 hours based on assuming 4 hours per RFI response and a total of 20 RFIs. Budget for a senior level engineer to conduct a QA/QC review of each RFI is included under Task 1.2.

Task 2.3 Deliverables:

1. Responses to RFIs (Electronic, PDF format)
Task 2.4 – Design Clarifications
Kennedy Jenks will issue up to 2 Design Clarifications as requested by the City at approximately 16 hours per Design Clarification on average for reviewing and preparing a written response or clarification.

Budget for a senior level engineer to conduct a QA/QC review of each Design Clarification is included under Task 1.2
Task 2.4 Deliverables:

1. Design Clarifications (Electronic, PDF format)
Task 2.5 – Submittal Responses
Kennedy Jenks will review Contractor Submittals pertaining to the retaining walls and reservoir drawings and structural technical specifications as requested by the City for conformance with the Contract Documents. This task includes the review of up to 64 Submittals, including re-Submittals. The term Submittal used herein includes technical submittals, shop drawings, samples, operations and maintenance manuals, and product data required to be submitted by the Contractor. Review will be for substantial conformity with the intent of the Contract drawings and specifications. Such review shall be only for conformance with the design concepts and general compliance with the project’s Contract Documents. It shall not include review of quantities, dimensions, weights or gauges, fabrication processes, construction methods, coordination with the work of other trades, or construction safety precautions, all of which are the sole responsibility of the Contractor. Submittals lacking in clarity or completeness will be returned to the Contractor with appropriate comments.

Kennedy Jenks will prepare a review letter for each Submittal with the recommended disposition and review comments. Kennedy Jenks’ standard construction administration forms will be used for all submittal responses. Kennedy Jenks will provide submittal responses to the City and the City will be responsible for distribution of these documents to the Contractor. For budgeting purposes, this proposal assumes a total labor estimate of 320 hours for this task based on assuming 5 hours per Submittal response. Budget for a senior level engineer to conduct a QA/QC review of each Submittal is included under Task 1.2.

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Mr. David Gittleson, P.E.

City of Morgan Hill
7 June 2024

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Task 2.5 Deliverables:

1. Shop Drawing Review Letters responding to submittals (Electronic, PDF format) Task 2.6 – Change Order Assistance
Kennedy Jenks will review and consult with the City on change orders to the contract documents. For budgeting purposes, this proposal assumes a total labor estimate of 16 hours based on assuming 8 hours per change order assistance and a total of 2 change orders. Budget for a senior level engineer to conduct a QA/QC review of each submittal is included under Task 1.2.

Task 2.7: Record Drawings
Kennedy Jenks will prepare Record Drawings for the Project using the as-built drawing markups of construction changes provided by the Contractor. For estimating purposes, it is assumed that 76 drawings will be updated, each requiring on average 4 hours. Kennedy Jenks will provide one electronic and one full sized (22”x34”) paper hard copy of the Record Drawing set.

Task 2.5 Deliverables:

1. One full sized (22”x34”) paper hard copy of the Record Drawing set

2. Electronic files of Record Drawing set (AutoCAD and PDF format) Assumptions
The following assumptions were developed when preparing the Scope of Work, schedule, and estimated fee for the project.

1. Per discussions with the City, Kennedy Jenks’s schedule and compensation are based on providing the above services for a period of 35 months. If the schedule is extended beyond this period and project management funds are exhausted, a written request will be provided for additional funds.

2. Inspection services are not included as part of this scope of work.

3. It is assumed that Kennedy Jenks will be assisting the City with the ESDC services described above and Kennedy Jenks will not be responsible for distribution of materials to the Contractor.

4. Construction Management services, including construction management software for document control, are not included in this proposal.

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Mr. David Gittleson, P.E.

City of Morgan Hill
7 June 2024

Page 5 ends

5. This Scope of Work is based on quantities for reviews identified in the tasks. Additional reviews will require City authorization and an amendment to this contract.

Tasks Performed by City
The following tasks will be provided by the City:

1. The City is responsible for direct communication and coordination with the Contractor, as well as distribution of all materials to the Contractor.

2. The City will be responsible for all inspection services required for the Project

3. The City is responsible for tracking all Submittals and RFIs in a Master Log.

4. It is assumed that the City will be contracting a third party Construction Manager for this Project.

5. Participate in decision-making and provide a best-faith effort to make key decisions in a timely manner.

6. Monitor and manage communications with the residents and stakeholders including any public outreach efforts.

Basis of Compensation
Kennedy Jenks’ proposes that compensation this Scope of Work be on a time and expense reimbursement basis in accordance with the January 1, 2024 Schedule of Charges enclosed. Payments will be made monthly based on invoices, which describe services and list actual costs and expenses. A fee budget of $300,000 is proposed for the as-needed ESDC services of the reservoir and retaining walls.

This amount will not be exceeded without prior written authorization from the City.

A summary of the proposed budget by phase is provided below. The budget may be increased, if necessary, to provide additional services requested by the City.

Phase
Estimated Fee
Budget
Phase 1 – Project Management and Quality Control $80,467 Phase 2 – As-Needed Engineering Services During Construction $219,533 Total Contract Amount $300,000

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Proposal Fee Estimate (Assoc. Proj. Costs or Comm Charges as ODC) CLIENT Name:

PROJECT Description: E. Dunne Hillside Water Reservoir & BPS As-Needed ESDC Proposal/Job Number: Date:

City of Morgan Hill
6/7/2024
January 1, 2024 Rates KJ KJ KJ KJ KJ KJ
Total Labor + Subs
Classification:

P.J. Bourdaniotis, J. Salter, J. JindraEng-Sci-1Sr. CAD-DesignCAD-DesignSr. CAD-TechCAD-TechProject Assistant Aide
Total
LaborEscalation (per year)Assoc. Proj. CostsSub-MarkupODCsODCs Markup Total Labor + Subs
+ Expenses
Eng-Sci-9Eng-Sci-8D. BarrazaEng-Sci-7P.J. Bourdaniotis, J. Salter, J. JindraEng-Sci-6Eng-Sci-5R. DruffelRodriguezEng-Sci-4P. TranEng-Sci-3Eng-Sci-2Project AssistantAdmin. Assist. Inspector (M. Godinho)TotalLaborTotalSubsTotalExpenses Hourly Rate: $335 $320 $300 $275 $250 $230 $210 $190 $155 $195 $180 $165 $145 $145 $130 $105 $260 Hours Fees 4% $9.74 10% Fees 10% Fees Phase 1 - Project Management
Task 1.1 - Project Management 140 19 35 194 $44,447 $2,667 $1,890 $0 $0 $47,114 $0 $1,890 $49,004 Task 1.2 - Quality Assurance and Quality Control 96 96 $28,800 $1,728 $935 $0 $0 $30,528 $0 $935 $31,463 Phase 1 - Subtotal 0 0 96 0 140 19 0 0 0 0 0 0 0 35 0 0 0 290 $73,247 $4,395 $2,825 $0 $0 $0 $77,642 $0 $2,825 $80,467 Phase 2 - As-Needed ESDC
Task 2.1 – Preconstruction Meeting 2 2 2 6 $1,600 $0 $58 $0 $0 $1,600 $0 $58 $1,658 Task 2.2 – Construction Progress Meetings (35) 35 35 70 $16,800 $1,008 $682 $0 $0 $17,808 $0 $682 $18,490 Task 2.3 - RFI Responses (20) 30 30 20 80 $23,200 $1,392 $779 $0 $0 $24,592 $0 $779 $25,371 Task 2.4 – Design Clarifications (2) 16 16 32 $9,920 $595 $312 $0 $0 $10,515 $0 $312 $10,827 Task 2.5 – Submittal Responses (62) 128 128 64 320 $94,080 $5,645 $3,117 $0 $0 $99,725 $0 $3,117 $102,842 Task 2.6 – Change Order Assistance (2) 8 8 16 $4,960 $298 $156 $0 $0 $5,158 $0 $156 $5,314 Task 2.7 - Record Drawings (76) 19 57 152 228 $46,170 $5,540 $2,221 $0 $1,000 $100 $51,710 $0 $3,321 $55,031 Phase 2 - Subtotal 0 184 201 0 37 178 0 0 0 0 152 0 0 0 0 0 0 752 $196,730 $14,478 $7,324 $0 $1,000 $100 $211,109 $0 $8,424 $219,533 All Phases Total 0 184 297 0 177 197 0 0 0 0 152 0 0 35 0 0 0 1042 $269,977 $18,873 $10,149 $0 $1,000 $100 $288,751 $0 $11,249 $300,000 https://kjcnet-my.sharepoint.com/personal/racheldruffel-rodriguez_kennedyjenks_com/Documents/Desktop/MH/New/Newest/Morgan Hill_KJ 2024 fmPropFeeEstimate_PhaseTask_APCODC_6-7-24_v2.xlsm © 2019 Kennedy/Jenks Consultants, Inc.

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Mr. David Gittleson, P.E.

City of Morgan Hill
7 June 2024

Page 6 ends

Schedule
Kennedy Jenks proposes to complete the overall scope of work described above in accordance with the enclosed estimated construction schedule.

Terms and Conditions
This proposal is based on current projections of staff availability and costs and, therefore, is valid for 90 days following the date of this letter. Unless noted otherwise the terms and conditions of the Service Agreement for Design Professionals for the East Dunne Hillside Water Reservoir Project between Kennedy Jenks and the City dated 4 July 2023 are acceptable for use in a new agreement. If this proposal meets your approval, please forward an amended service agreement for design professionals for this work.

If you have any questions regarding this proposal, please contact Don Barraza at (415) 243-2483 or Rachel Druffel-Rodriguez at (858) 676-7532.

Very truly yours,
KENNEDY/JENKS CONSULTANTS, INC.

Donald L. Barraza, P.E.

Vice President, Principal Engineer
Rachel Druffel-Rodriguez, P.E.

Project Manager
AUTHORIZATION:

City of MORGAN HILL
By: ___________________________
(Signature)
___________________________
(Print Name)
Title: ___________________________
Date: ___________________________
Enclosure

1. Estimated Construction Schedule

2. Professional Services Schedule of Charges

3. Proposal Fee Estimate

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13 Updated February 2024

EXHIBIT B

SCHEDULE OF COMPENSATION RATES

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Client/Address: City of Morgan Hill
17575 Peak Avenue
Morgan Hill, California 95037
Contract/Proposal Date:

Schedule of Charges

PERSONNEL COMPENSATION
Classification Hourly Rate
Engineer-Scientist-Specialist 1...........................................................................$155 Engineer-Scientist-Specialist 2...........................................................................$190 Engineer-Scientist-Specialist 3...........................................................................$210 Engineer-Scientist-Specialist 4...........................................................................$230 Engineer-Scientist-Specialist 5...........................................................................$250 Engineer-Scientist-Specialist 6...........................................................................$275 Engineer-Scientist-Specialist 7...........................................................................$300 Engineer-Scientist-Specialist 8...........................................................................$320 Engineer-Scientist-Specialist 9...........................................................................$335 Senior CAD-Designer ........................................................................................$195 CAD-Designer ...................................................................................................$180 Senior CAD-Technician .....................................................................................$165 CAD-Technician ................................................................................................$145 Project Assistant................................................................................................$145 Administrative Assistant.....................................................................................$130 Aide...................................................................................................................$105 In addition to the above Hourly Rates, an Associated Project Cost charge of $9.74 per hour will be added to Personnel Compensation for costs supporting projects including telecommunications, software, information technology, internal photocopying, shipping, and other support activity costs related to the support of projects.

Direct Expenses
Reimbursement for direct expenses, as listed below, incurred in connection with the work, will be at cost plus ten percent for items such as:
a. Maps, photographs, 3rd party reproductions, 3rd party printing, equipment rental, and special supplies related to the work.
b. Consultants, soils engineers, surveyors, contractors, and other outside services. c. Rented vehicles, local public transportation and taxis, travel and subsistence. d. Project specific telecommunications and delivery charges. e. Special fees, insurance, permits, and licenses applicable to the work. f. Outside computer processing, computation, and proprietary programs purchased for the work.

Reimbursement for vehicles used in connection with the work will be at the federally approved mileage rates or at a negotiated monthly rate.

If prevailing wage rates apply, the above billing rates will be adjusted as appropriate.

Overtime for non-exempt employees will be billed at one and a half times the Hourly Rates specified above.

Rates for professional staff for legal proceedings or as expert witnesses will be at rates one and one-half times the Hourly Rates specified above.

Excise and gross receipts taxes, if any, will be added as a direct expense.

The foregoing Schedule of Charges is incorporated into the agreement for the services provided, effective January 1, 2024 through December 31, 2024. After December 31, 2024, invoices will reflect the Schedule of Charges currently in effect.

June 7, 2024 June 7, 2024 Page 230 of 478
14 Updated February 2024

EXHIBIT C

SCHEDULE OF PERFORMANCE
Estimated Construction duration: 3 years max.

Estimated start date: July 27, 2024 Estimated
Completion Date: May 20, 2027

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ID Task Name Duration Start Finish
1 Notice-to-Proceed 0 days Mon 6/17/24 Mon 6/17/24
2 Construction Phase 764 days Mon 6/17/24 Thu 5/20/27
3 Submittal Reviews 60 days Mon 6/17/24 Fri 9/6/24
4 Mobilization 8 days Mon 9/9/24 Wed 9/18/24
5 Demolition 20 days Thu 9/19/24 Wed 10/16/24
6 Grading 120 days Thu 10/17/24 Wed 4/2/25
7 Soil Nail Wall 60 days Thu 4/3/25 Wed 6/25/25
8 Concrete Wall 60 days Thu 6/26/25 Wed 9/17/25
9 Site Utilities 90 days Thu 9/18/25 Wed 1/21/26
10 Site Electrical 30 days Thu 1/22/26 Wed 3/4/26
11 Tank Construction 120 days Thu 3/5/26 Wed 8/19/26
12 Tank Lining and Coating 30 days Thu 8/20/26 Wed 9/30/26 13 Connect to Existing Lines 7 days Thu 10/1/26 Fri 10/9/26 14 Paving 50 days Mon 10/12/26 Fri 12/18/26
15 Irrigation 40 days Mon 12/21/26 Fri 2/12/27
16 Pump Station Modifications 35 days Mon 2/15/27 Fri 4/2/27 17 Test System 7 days Mon 4/5/27 Tue 4/13/27
18 Start Up 20 days Wed 4/14/27 Tue 5/11/27
19 Cleanup & Demobilize 7 days Wed 5/12/27 Thu 5/20/27
20 Construction Completion 0 days Thu 5/20/27 Thu 5/20/27 6/17
5/20
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2024 2025 2026
Task
Split
Milestone
Summary
Project Summary
External Tasks
External Milestone
Progress
Deadline
City of Morgan Hill
East Dunne Hillside Water Reservoir and Booster Pump Station Estimated Construction Schedule

Page 1 ends

Date: Wed 6/5/24

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9 CITY COUNCIL STAFF REPORT
MEETING DATE: June 26, 2024
PREPARED BY:

Dat Nguyen, Finance Director
APPROVED BY: City Manager
RECEIVE MONTHLY BUDGET UPDATE AND MAY 2024 FINANCIAL

AND INVESTMENT REPORTS

RECOMMENDATION(S)
Accept and file report.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Preserving and Cultivating Public Trust
2024-2025 Strategic Priorities
Fiscal Sustainability
Community Engagement
REPORT NARRATIVE:

As part of the City Council’s expectation to maintain a high level of transparency and to be responsible stewards of public funds, staff is providing this monthly budget update, along with the May 2024 financial and investment reports.

May 2024 Financial Report
The Revenue and Expense Summary through May 2024 is included on the first page of the monthly financial report. Overall, General Fund revenues totaled $43.1 million, or about 81% of the budget. This represents an increase of $2.3 million or about 6% from the prior year to date, mainly from higher property tax and recreation services revenues.

Expenditures, including encumbrances, amounted to $53.5 million, of which approximately $3.0 million is attributable to outstanding encumbrances, compared to prior year expenditures, including encumbrances, of $49.5 million. This represents an increase of $4.0 million, including encumbrances, compared to the prior year. Excluding the encumbrances, expenditures increased by about $3.2 million mainly due to new programs such as Innovative Transit, continued recovery in Recreation Services, as well as overall cost increases.

Budget Update
There has been no material change to the City’s revenue since the last budget update to the Council on June 19, 2024. For water revenue, Morgan Hill residents consumed about 3% less water through May compared to the prior three-year average. As such,

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9 no revenue stabilization water rate was implemented.

COMMUNITY ENGAGEMENT:

Inform
Finance staff prepares these financial reports to inform City officials, the Council, the Community, and various lenders and stakeholders about the organization's financial health. This assists each interested party in making sound financial and investment decisions.

ALTERNATIVE ACTIONS:

No alternative action is recommended, as this is a monthly financial report on City transactions which have already occurred.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

The City Council receives and files the financial and investment report each month. The Council receives monthly financial and investment reports under the Consent Agenda, and quarterly financial and investment reports are presented to the Council as an “Other Business” item.

FISCAL AND RESOURCE IMPACT:

The preparation of the report is a part of the Finance workplan.

CEQA (California Environmental Quality Act):

Not a Project
Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.

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FINANCE DEPARTMENT

CITY OF MORGAN HILL
May 31, 2024 - 92% of Year Complete
Prepared by:

Monthly Financial and Investment Reports

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CITY OF MORGAN HILL, CALIFORNIA
FINANCIAL STATEMENT ANALYSIS - FISCAL YEAR 2023-24
FOR THE MONTH ENDED MAY 2024 – 92% OF YEAR COMPLETE
 General Fund – Revenues through May totaled $43.1 million, or about 81% of the budgeted amount.

This represents an increase of $2.3 million or about 6% from the prior year to date, mainly from higher property tax and recreation services revenues. With respect to the property tax revenue forecast, the County estimates the City will receive approximately $19.0 million in property tax revenue for the current fiscal year, about $0.5 million more than the budget of $18.5 million. As for sales tax, HdL, the City's sales tax consultant revised the City's current fiscal year sales tax revenue estimate, before tax rebates, to $12.6 million, a slight improvement from prior estimate but still below the current budget by about $0.1 million.

The chart below shows historical General Fund revenues by major revenue category from FY19-20 through FY22-23 Actual, FY23-24 Budget, and YTD as of May 31, 2024.

General Fund expenditures and encumbrances through May totaled $53.5 million, of which approximately $3.0 million is attributable to outstanding encumbrances, compared to prior year expenditures, including encumbrances, of $49.5 million. This represents an increase of $4.0 million, including encumbrances, compared to the prior year. Excluding the encumbrances, expenditures increased by about $3.2 million mainly due to new programs such as Innovative Transit, continued recovery in Recreation Services, as well as overall cost increases.  Community Services – The Community Services Department’s recreation operations, as reflected in the schedule presented on page 7 of the Monthly Financial and Investments Reports, shows a negative impact to the General Fund of approximately $1.2 million as of May 31, 2024. Recreation Services revenues continue to recover from the pandemic and are on target with budget. $14.5 $16.0 $16.7 $18.1 $18.5 $13.2
$9.7 $11.0 $12.9 $12.7 $12.7
$9.6
$4.6
$4.4
$5.9 $5.7 $5.8
$4.5
$8.3 $5.7
$7.5 $9.3 $10.0
$9.5
$3.6
$9.7
$9.1 $6.6 $6.5
$6.3
$40.6
$46.8
$52.1 $52.4 $53.5
$43.1
0 10
20 30
40 50
60 FY19-20 FY20-21 FY21-22 FY22-23 Budget
FY23-24
YTD
FY23-24
Millions ($)
Historical GF Revenues
Property Tax Sales Tax Franchise and Hotel Taxes Service Charges Other

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CITY OF MORGAN HILL, CALIFORNIA
FINANCIAL STATEMENT ANALYSIS - FISCAL YEAR 2023-24
FOR THE MONTH ENDED MAY 2024 – 92% OF YEAR COMPLETE
The chart below shows the historical net impact of Recreation Operations to the general fund.

Due to longstanding governmental accounting and budgeting convention, the City’s recreation operations are not charged for indirect costs (known in Morgan Hill as “General Fund Administration”) from the central services departments of City Attorney, City Manager, and Administrative Services.

The City’s other governmental funds, such as Development Services, and the proprietary funds, such as Water and Wastewater, and the Information Services Fund, are assessed such charges through the City’s indirect cost allocation plan, prepared in compliance with the guidelines set forth in the Code of Federal Regulations Title 2, Chapter II, Part 200 (formerly OMB Circular No. A-87), which mandates certain calculation and cost allocation practices that must be followed in order to qualify for Federal grant funding, but which also represents best practice for non-grant funded City operations like utilities and information services.
 Development Services Fund – Revenues through May totaled $4.7 million compared to the prior year to date amount of approximately $5.3 million. Expenditures, including encumbrances, totaled $5.4 million.
 Debt Service Funds – Expenditures through May totaled $0.7 million. The debt service for the first half of the year includes both interest and principal, while the second half of the year will include interest only. Debt service payments were all scheduled when the bonds were issued and are budgeted for in the months delineated in the underlying bond documents. The General Fund’s portion of the annual debt service payments is approximately $200,000, less than one percent of the General Fund’s budgeted revenues.
($2.0)
($1.5)
($1.0)
($0.5)
$0.0
$0.5
FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24 Budget
Millions (S)
Historical Net GF Impact

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CITY OF MORGAN HILL, CALIFORNIA
FINANCIAL STATEMENT ANALYSIS - FISCAL YEAR 2023-24
FOR THE MONTH ENDED MAY 2024 – 92% OF YEAR COMPLETE
 Wastewater Operations – Revenues through May 31, 2024 totaled $12.6 million. Expenditures and outstanding encumbrances totaled $12.5 million or 80% of the budget. The table below shows historical Wastewater Operations revenues and expenditures from FY19-20 through FY22-23 Actual, FY23-24 Budget, and YTD as of May 31, 2024.
(amount in millions) FY19‐20 FY20‐21 FY21‐22 FY22‐23
Budget
FY23‐24
YTD
FY23‐24
Revenues 11.9                          13.3             14.9                15.3             15.6               12.6 Expenditures             12.3             13.3             14.8                16.0             15.6               12.5 Operating Margin              (0.4) ‐                              0.1                (0.7) ‐                               0.1 Operating Margin
without Encumbrances              (0.1) ‐                              0.1                (0.7) ‐                               0.2  Water Operations – Water Operations includes Utility Billing, Water Conservation, and Water Operations. Revenues through May 31, 2024 totaled $15.3 million. Water Operations expenditures, including outstanding encumbrances, totaled $17.9 million. Morgan Hill residents consumed about 3% less water through May compared to the prior three-year average. As such, no revenue stabilization water rate was implemented. The table below shows Water Operations revenues and expenditures from FY19-20 through FY22-23 Actual, FY23-24 Budget, and YTD as of May 31, 2024. (amount in millions) FY19‐20 FY20‐21 FY21‐22 FY22‐23
Budget
FY23‐24
YTD
FY23‐24
Revenues 15.3                          16.5             16.0               18.1               19.8                15.3 Expenditures 16.4                          16.5             15.2               18.0               20.3                17.9 Operating Margin (1.1)               ‐                               0.8                 0.1               (0.5)                 (2.6) Operating Margin
without Encumbrances               ‐ (0.1)                               0.8                 0.1               (0.5)                 (2.0)  Investments – One security was called, and one new security was purchased. Total interest earnings received on investments were $349,000 during the month.

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% OF ACTUAL PLUS % OF

FUND NAME ACTUAL BUDGET ENCUMBRANCES BUDGET
General 43,070,454 $ 81% $ 53,450,546 89%
Development Services 4,737,241 75% 5,431,254 85%
Wastewater Operations 12,647,446 81% 12,495,118 80%
Wastewater Other 12,851,519 131% 16,557,619 38%
Water Operations 15,276,421 77% 17,906,089 88%
Water Other 8,198,742 94% 4,422,371 24%
Other Special Revenues * 7,584,838 84% 5,747,643 61%
Capital Projects & Streets 14,019,446 97% 31,957,646 70% Debt Service 626,489 92% 678,016 100%
Internal Service 10,758,302 84% 11,293,088 83%
TOTAL FOR ALL FUNDS 129,770,900 $ 86% $ 159,939,391 69% * Includes all Special Revenue Funds except Development Services Fund and Street Funds.

REVENUES EXPENSES
0% 20% 40% 60% 80% 100% 120% 140%
General
Development Services
Wastewater Operations
Wastewater Other
Water Operations
Water Other
Other Special Revenues *
Capital Projects & Streets
Debt Service
Internal Service
Morgan Hill YTD Revenue & Expense Summary
May 31, 2024 - 92% of Year Complete
Revenues to Budget Expenses to Budget
Percentage of Actual to Budget
92%

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% OF PRIOR YEAR % CHANGE FROM

REVENUE CATEGORY BUDGET ACTUAL BUDGET TO DATE PRIOR YEAR Property Tax 18,472,000 $ 13,181,551 $ 71% 12,566,200 $ 5% Sales Tax 12,673,967 9,570,796 76% 9,603,643 0%
Franchise Tax 3,005,800 2,543,636 85% 2,204,302 15%
Hotel Tax 2,800,000 1,985,712 71% 2,094,179 -5%
Other Agencies 1,001,233 957,083 96% 1,085,449 -12%
Service Charges 10,036,079 9,503,295 95% 8,296,745 15%
Interest/Other 2,174,032 2,438,900 112% 2,199,403 11%
Transfers In 3,342,540 2,889,483 86% 2,716,858 6%
TOTAL REVENUES 53,505,651 $ 43,070,454 $ 81% 40,766,779 $ 6% 0% 20% 40% 60% 80% 100% 120%
Property Tax
Sales Tax
Franchise Tax
Hotel Tax
Other Agencies
Service Charges
Interest/Other
Transfers In
Total Revenues
Percent of Actual to Budget
Morgan Hill YTD General Fund Revenues
May 31, 2024 - 92% of Year Complete
92%

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ACTUAL PLUS PRIOR YTD PLUS % CHANGE FROM
EXPENDITURE CATEGORY BUDGET ENCUMBRANCES % OF BUDGET ENCUMBRANCES PRIOR YEAR Administration $ 6,489,162 $ 5,664,515 87% 5,562,482 $ 2% Community Services 17,780,940 15,512,110 87% 13,202,068 17% Police 23,056,204 20,731,241 90% 18,413,327 13%
Fire 9,139,905 8,387,560 92% 7,787,666 8%
Transfers Out 3,263,767 3,155,120 97% 4,540,039 -31%
TOTAL EXPENDITURES $ 59,729,978 $ 53,450,546 89% 49,505,582 $ 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110%
Administration
Community
Services
Police
Fire
Transfers Out
Total Expenditures
Percent of Actual to Budget
Morgan Hill YTD General Fund Expenditures
May 31, 2024 - 92% of Year Complete
92%

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City of Morgan Hill
Recreation Report - Fiscal Year 2023-24
For the Month Ended May 31, 2024
92% of Year Complete
% of
Budget May 2024 YTD Budget
Revenues
Membership Services & Rec Programs 5,656,265 $ 457,431 $ 5,430,758 $ Facility Rentals 1,203,269 75,655 1,425,788
Community Services 152,498 8,746 63,675
Transfers in 75,000 6,250 68,750
Total Revenues 7,087,032 $ 548,082 $ 6,988,971 $ 99%
Less: Expenditures
Membership & Program Services 7,268,962 $ 592,513 $ 6,431,903 $ Facility Rentals 573,524 64,766 546,187
Community Services 672,192 81,112 573,734
Total Expenditures 8,514,679 $ 738,390 $ 7,551,824 $ 89% Net Impact without encumbrances (1,427,647) $ (190,308) $ (562,853) $ Encumbrances - - 657,280
Net Impact with encumbrances (1,427,647) $ (190,308) $ (1,220,133) $

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The chart below shows cash balances by fund type reconciled to City's financial system:

City of Morgan Hill
Monthly Investment Report - May 31, 2024
The following are the snapshots of City's investment portfolio as of May 31, 2024. The first chart shows the portfolio composition by investment type:

LAIF - $0.1M
<1%
CA Class - $20.2M
10%
Treasury - $3.9M
2%
Money Market -
$3.7M
2%
Federal Agency Issues -
$148.6M
78%
Certificate of Deposits -
$1.3M
1%
Bond Reserves/Trust -
$14.1M
7%
Cash & Other Deposits - ($1.9M)
-1%
Investment Portfolio Composition - $190.0 Million
LAIF - $0.1M
CA Class - $20.2M
Treasury - $3.9M
Money Market - $3.7M
Federal Agency Issues -
$148.6M
Certificate of Deposits -
$1.3M
Bond Reserves/Trust -
$14.1M
Cash & Other Deposits -
($1.9M)
General Fund, $27.9M Community
Development, $1.0M
Water - Operations,
$2.0M
Water Other, $28.1M
Sewer - Operations,
$3.2M
Other Special Sewer Other, $41.9M
Revenue, $16.0M
Streets and Capital
Projects, $36.7M
Debt Service , $0.3M
Internal Service,
$26.0M
Agency Funds
(assessment
dists./refundable
deposits),
$6.9M
Cash Balances by Fund Type - $190.0 Million

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The following chart illustrates a yield comparison by month among the City's portfolio, LAIF and 2-Year US Treasury:

The chart below illustrates monthly average days to maturity of the City's portfolio along with the weighted average yield for the past two years:

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Yield Portfolio vs. Benchmarks
LAIF Yield 2 Yr US-Treasury

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%
0 100
200
300
400
500
600
700
800
900
1000
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
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Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Days Yield
Portfolio Yield and Maturity Trends
Avg Days to Maturity City

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City of Morgan Hill
Investment Portfolio Detail
As of May 31, 2024
Investment Settlement Cost Book % of Market YTM Next Call Date of Type CUSIP Date Value Value Portfolio Value at Cost Date Maturity L A I F $ 60,411 $ 60,411 0.0% $ 60,060 4.27% California C L A S S 20,218,094 20,218,094 10.6% 20,218,094 5.39% US Bank ‐ Portfolio of Securities
Dreyfus Treasury Agency MM 261908107 625,265 625,265 0.3% 625,265 5.20% Treasury Note 91282CCZ2 10/8/2021 1,987,656 1,994,215 1.0% 1,830,160 1.00% 9/30/2026 9/30/2026 Treasury Note 912828U24 6/13/2022 1,904,688 1,947,036 1.0% 1,873,600 3.16% 11/15/2026 11/15/2026 FFCB Bond 3133ELC28 5/27/2020 2,000,000 2,000,000 1.1% 1,914,680 0.73% 6/27/2024 5/27/2025 FHLMC Bond 3134GVYN2 6/3/2020 2,000,000 2,000,000 1.1% 1,954,520 0.60% 12/3/2024 12/3/2024 FHLMC Bond 3134GWZG4 10/20/2020 2,000,000 2,000,000 1.1% 1,880,820 0.60% 7/20/2024 10/20/2025 FHLMC Bond 3134GW3X2 10/27/2020 2,000,000 2,000,000 1.1% 1,881,980 0.63% 7/27/2024 10/27/2025 FFCB Bond 3133EMFR8 11/3/2020 2,000,000 2,000,000 1.1% 1,878,380 0.54% 6/3/2024 11/3/2025 FNMA Bond 3135GA4P3 11/18/2020 2,000,000 2,000,000 1.1% 1,878,000 0.65% 11/18/2024 11/18/2025 FHLMC Bond 3134GXEJ9 11/24/2020 2,000,000 2,000,000 1.1% 1,876,320 0.64% 8/24/2024 11/24/2025 FFCB Bond 3133EMHF2 11/24/2020 1,000,000 1,000,000 0.5% 936,630 0.60% 6/24/2024 11/24/2025 FHLMC Bond 3134GXCS1 11/25/2020 3,000,000 3,000,000 1.6% 2,813,490 0.63% 11/25/2024 11/25/2025 FHLMC Bond 3134GXFA7 11/30/2020 2,000,000 2,000,000 1.1% 1,876,140 0.65% 8/26/2024 11/26/2025 FFCB Bond 3133EMLC4 12/22/2020 2,000,000 2,000,000 1.1% 1,865,380 0.47% 6/22/2024 12/22/2025 FHLB Bond 3130AKQ74 1/22/2021 2,000,000 2,000,000 1.1% 1,861,440 0.63% 7/22/2024 1/22/2026 FNMA Bond 3135G06R9 1/28/2021 2,000,000 2,000,000 1.1% 1,859,540 0.55% 7/28/2024 1/28/2026 FHLB Bond 3130AKRN8 1/28/2021 2,000,000 2,000,000 1.1% 1,860,780 0.65% 7/28/2024 1/28/2026 FHLB Bond 3130ALCV4 2/24/2021 2,000,000 2,000,000 1.1% 1,858,200 0.75% 8/24/2024 2/24/2026 FHLB Bond 3130ALDB7 2/25/2021 2,000,000 2,000,000 1.1% 1,855,200 0.66% 8/25/2024 2/25/2026 FHLB Bond 3130AKZ25 2/26/2021 2,000,000 2,000,000 1.1% 1,855,680 0.65% 8/26/2024 2/26/2026 FHLB Bond 3130ALGS7 3/10/2021 2,000,000 2,000,000 1.1% 1,860,420 0.85% 6/10/2024 3/10/2026 FHLB Bond 3130ALEP5 3/16/2021 2,000,000 2,000,000 1.1% 1,854,020 0.70% 6/16/2024 3/16/2026 FHLB Bond 3130ALDN1 3/16/2021 2,000,000 2,000,000 1.1% 1,857,400 0.80% 6/16/2024 3/16/2026 FHLB Bond 3130AMNH1 6/9/2021 2,000,000 2,000,000 1.1% 1,853,540 1.08% 6/9/2024 6/9/2026 FHLB Bond 3130AMYJ5 6/30/2021 2,000,000 2,000,000 1.1% 1,846,380 1.00% 6/30/2024 6/30/2026 FHLB Bond 3130AMYP1 7/15/2021 3,000,000 3,000,000 1.6% 2,769,150 1.13% 7/15/2024 7/15/2026 FHLB Bond 3130AMYS5 7/15/2021 2,000,000 2,000,000 1.1% 1,909,600 0.85% 7/15/2024 7/15/2025 FHLB Bond 3130ANJC5 8/26/2021 2,000,000 2,000,000 1.1% 1,827,880 0.80% 8/26/2024 8/26/2026 FHLB Bond 3130ANLW8 8/26/2021 3,000,000 3,000,000 1.6% 2,754,360 1.00% 8/26/2024 8/26/2026 FHLB Bond 3130ANLZ1 8/26/2021 2,000,000 2,000,000 1.1% 1,832,060 0.90% 8/26/2024 8/26/2026 FHLB Bond 3130A8XY4 9/13/2021 2,103,340 2,047,129 1.1% 1,874,080 0.82% 9/11/2026 9/11/2026 FFCB Bond 3133EM4X7 9/28/2021 1,982,960 1,992,168 1.0% 1,829,720 0.98% 9/10/2026 9/10/2026 FHLB Bond 3130APCH6 9/29/2021 3,000,000 3,000,000 1.6% 2,752,260 1.13% 6/29/2024 9/29/2026 FHLB Bond 3130ANZE3 9/30/2021 2,000,000 2,000,000 1.1% 1,824,520 0.88% 9/30/2026 9/30/2026 FHLB Bond 3130AP6N0 9/30/2021 3,000,000 3,000,000 1.6% 2,747,160 1.05% 6/30/2024 9/30/2026 FHLB Bond 3130AP6M2 9/30/2021 3,000,000 3,000,000 1.6% 2,745,210 1.02% 6/30/2024 9/30/2026 FHLB Bond 3130APCG8 10/19/2021 2,000,000 2,000,000 1.1% 1,824,300 1.00% 7/19/2024 10/19/2026 FHLB Bond 3130APNX9 11/18/2021 2,000,000 2,000,000 1.1% 1,831,880 1.30% 11/18/2024 11/18/2026 FHLB Bond 3130AQHU0 1/19/2022 2,000,000 2,000,000 1.1% 1,879,480 1.74% 7/19/2024 1/19/2027 FHLB Bond 3130AQKT9 1/25/2022 2,000,000 2,000,000 1.1% 1,928,740 1.51% 7/25/2024 7/25/2025 FHLB Bond 3130AR4F5 3/10/2022 2,000,000 2,000,000 1.1% 1,971,260 3.48% 6/10/2024 3/10/2027 FHLMC Bond 3134GXUZ5 6/15/2022 2,000,000 2,000,000 1.1% 1,954,940 3.28% 12/15/2025 12/15/2025 FHLB Bond 3130ASPE3 7/28/2022 2,000,000 2,000,000 1.1% 1,963,500 4.30% 7/28/2024 7/28/2027 FNMA Bond 3135GACZ2 11/25/2022 2,000,000 2,000,000 1.1% 2,000,020 5.40% 8/25/2024 11/25/2024 FHLMC Bond 3134GY4B5 11/28/2022 2,000,000 2,000,000 1.1% 1,996,580 5.00% 8/15/2024 8/26/2024 FHLB Bond 3130AUP32 1/27/2023 2,250,000 2,250,000 1.2% 2,241,540 5.98% 7/27/2024 1/27/2028 FHLMCMTN Bond 3134GYGB2 1/30/2023 2,000,000 2,000,000 1.1% 1,986,320 5.20% 7/26/2024 1/26/2028 FHLMCMTN Bond 3134GYG22 2/16/2023 3,000,000 3,000,000 1.6% 2,975,910 5.13% 8/16/2024 11/16/2026 FHLB Bond 3130AVL83 4/6/2023 2,000,000 2,000,000 1.1% 1,995,980 5.20% 7/7/2024 10/7/2024 FHLB Bond 3130AXY36 12/18/2023 2,000,000 2,000,000 1.1% 1,998,560 5.88% 6/18/2024 12/18/2028 FHLMCMTN Bond 3134H1MK6 12/21/2023 2,000,000 2,000,000 1.1% 1,996,520 5.40% 6/21/2024 12/21/2026 FHLB Bond 3130AYAG1 12/28/2023 2,000,000 2,000,000 1.1% 1,995,180 5.50% 6/28/2024 12/28/2028 FHLB Bond 3130AYBT2 1/2/2024 2,000,000 2,000,000 1.1% 2,013,640 5.40% 7/2/2024 1/2/2029 FHLMCTN Bond 3134H1NA7 1/5/2024 2,000,000 2,000,000 1.1% 1,996,520 5.63% 6/5/2024 1/5/2029 FHLB Bond 3130AYGX8 1/11/2024 2,000,000 2,000,000 1.1% 1,997,580 5.63% 6/11/2024 1/11/2029

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Investment Settlement Cost Book % of Market YTM Next Call Date of Type CUSIP Date Value Value Portfolio Value at Cost Date Maturity FHLB Bond 3130AYF35 1/12/2024 2,000,000 2,000,000 1.1% 1,997,820 5.60% 7/12/2024 1/12/2029 FHLMCTN Bond 3134H1PC1 1/12/2024 2,000,000 2,000,000 1.1% 1,996,740 6.02% 7/12/2024 1/12/2029 FHLMCTN Bond 3134H1QG1 1/26/2024 3,000,000 3,000,000 1.6% 3,004,110 4.66% 7/26/2024 1/26/2029 FHLMCTN Bond 3134H1QMB 1/26/2024 2,000,000 2,000,000 1.1% 1,997,320 5.70% 6/26/2024 1/26/2029 FHLB Bond 3130AYLR5 2/2/2024 2,148,128 2,145,000 1.1% 2,134,961 5.25% 10/22/2024 1/22/2029 FHLMCTN Bond 3134HRW5 2/7/2024 2,000,000 2,000,000 1.1% 1,997,700 5.70% 6/7/2024 2/7/2029 FHLB Bond 3130AYXA9 2/12/2024 2,000,000 2,000,000 1.1% 1,989,820 5.50% 8/12/2024 2/12/2029 FHLMCTN Bond 3134H1SW4 2/15/2024 2,000,000 2,000,000 1.1% 1,994,140 5.63% 8/15/2024 2/15/2029 FHLMCTN Bond 3134H1TC7 2/15/2024 2,000,000 2,000,000 1.1% 1,994,720 5.65% 6/15/2024 2/15/2028 FHLMCTN Bond 3134H1TQ6 2/22/2024 2,000,000 2,000,000 1.1% 1,994,500 5.63% 8/22/2024 2/22/2027 FHLMCTN Bond 3134H1UN1 2/26/2024 1,200,000 1,200,000 0.6% 1,198,932 5.50% 2/26/2025 2/26/2029 FHLMCTN Bond 3134H1UN1 2/26/2024 2,000,000 2,000,000 1.1% 1,998,220 5.50% 2/26/2025 2/26/2029 FHLMCTN Bond 3134H1VC4 2/28/2024 2,000,000 2,000,000 1.1% 1,995,760 6.13% 8/28/2024 2/28/2029 FHLMCTN Bond 3134H1VR1 3/6/2024 2,000,000 2,000,000 1.1% 1,995,580 5.75% 9/6/2024 3/26/2029 FHLB Bond 3130B07A1 3/21/2024 4,000,000 4,000,000 2.1% 3,990,560 6.00% 6/21/2024 3/21/2029 FHLMCTN Bond 3134H1XV0 3/26/2024 2,000,000 2,000,000 1.1% 1,996,120 6.17% 6/26/2024 3/26/2029 FHLMCTN Bond 3134H1G31 4/17/2024 2,000,000 2,000,000 1.1% 2,003,000 6.05% 7/17/2024 4/17/2029 FHLMCMTN Bond 3134H1P56 5/28/2024 2,000,000 2,000,000 1.1% 1,996,960 6.00% 11/25/2024 5/25/2029 CD ‐ Zions Bancorp 98970LC43 3/31/2023 250,000 250,000 0.1% 249,998 5.40% 9/27/2024 9/27/2024 CD ‐ Morgan Stanley Bank 61690DGT9 11/8/2023 250,000 250,000 0.1% 253,023 5.05% 11/8/2028 11/8/2028 CD ‐ Morgan Stanley Private Bank 61768EE82 11/8/2023 250,000 250,000 0.1% 253,023 5.05% 11/8/2028 11/8/2028 CD ‐ American Express 02589AF98 11/8/2023 250,000 250,000 0.1% 252,528 5.00% 11/8/2028 11/8/2028 CD ‐ State Bank India 8562834U7 11/24/2023 250,000 250,000 0.1% 255,675 5.00% 11/24/2028 11/24/2028 Sub Total/Average $ 154,452,037 $ 154,450,814 81.3% 148,463,624 $ 3.00% WFB Money Market $ 3,083,581 $ 3,083,581 1.6% $ 3,083,581 5.20% Total City Managed/Average $ 177,814,123 $ 177,812,900 93.6% 171,825,359 $ 3.31% Bond Reserve Accounts ‐ Held By Trustees $ 6,610,368 $ 6,610,368 3.5% $ 6,610,368 Cash/Deposits $ (1,933,011) $ (1,933,011) ‐1.0% $ (1,933,011) PARS and CALPERS CERBT Trust $ 7,537,404 $ 7,537,404 4.0% $ 8,660,250 GRAND TOTAL/AVERAGE $ 190,028,885 $ 190,027,661 100.0% 185,162,967 $

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Invested Book Value % of Market
in Fund Yield End of Month Total Value
Investments
State Treasurer LAIF - City All Funds Pooled 4.27% $ 60,411 0.0% $ 60,060 California CLASS All Funds Pooled 5.39% 20,218,094 10.6% 20,218,094 US Bank - Portfolio of Securities All Funds Pooled 3.00% 154,450,814 81.3% 148,463,624 WFB MMA All Funds Pooled 5.20% 3,083,581 1.6% 3,083,581 SUBTOTAL $ 177,812,900 93.6% 171,825,359 $
Bond Reserve Accounts - held by trustees
Zions Bank - Civic Center/Library Facility
Blackrock Liq Fund Debt Service 4.95% 129 0.0% 129
Zions Bank - MH Police Facility Lease Revenue Bonds
Blackrock Liq Fund Debt Service 4.95% 165 0.0% 165
BNY - RDA Bonds
Dreyfus Cash Mgmt 521 Agency Fund 4.90% 5,989,354 3.2% 5,989,354 Zions Bank - Madrone Bus Park Taxable/ Tax Exempt 2015
Blackrock Liquidity Temp Fund-2015 Agency Fund 4.95% 0.3% 620,721 620,721 SUBTOTAL 6,610,368 3.5% 6,610,368
Other Cash/Deposits
General Checking All Funds (1,978,861) -1.0% (1,978,861) Workers' Comp Administrators Workers' Comp 30,000 0.0% 30,000 Petty Cash & Emergency Cash General Fund 15,850 0.0% 15,850 CALPERS CERBT - OPEB Trust 5,237,404 2.8% 6,032,836
PARS - PENSION Trust 2,300,000 1.2% ** 2,627,414
SUBTOTAL 5,604,393 2.9% 6,727,239
Total Cash and Investments $ 190,027,661 100.0% $ 185,162,967 ** As of 04/30/2024

CASH ACTIVITY SUMMARY
FY 2023-24
07/01/2023 Change in 5/31/2024
Fund Type Balance Cash Balance Balance
$ 32,352,753 $ (4,451,194) $ 27,901,559
1,831,559 (854,210) 977,350
2,585,170 (614,401) 1,970,769
23,673,105 4,406,236 28,079,341
907,428 2,313,164 3,220,592
44,135,046 (2,184,799) 41,950,248
13,030,597 2,987,803 16,018,400
40,486,238 (3,753,991) 36,732,248
342,534 (51,472) 291,062
25,139,787 820,591 25,960,378
General Fund
Development Services
Water - Operations
Water Other
Sewer - Operations
Sewer Other
Other Special Revenue
Streets and Capital Projects
Debt Service
Internal Service
Agency Funds (assessment dists./refundable deposits) 8,515,969 (1,590,254) 6,925,715 Total $ 193,000,187 $ (2,972,526) $ 190,027,661
Note: See Investment Porfolio Detail for maturities of "Investments." Market values are obtained from the City's investment brokers' monthly reports.

I certify that information on the investment report has been reconciled to the general ledger and bank statements and that there are sufficient funds to meet the expenditure requirements of the City for the next six months. The portfolio is in compliance with the City of Morgan Hill Investment Policy and all State laws and regulations.

Prepared by: ____________________________________ Approved by:

Gina Nazareno, Senior Accountant
Reviewed by: ____________________________________
Dat Nguyen, Finance Director Caitlin Jachimowicz, Treasurer

CITY OF MORGAN HILL CASH AND INVESTMENT REPORT
FOR THE MONTH OF MAY 31, 2024
FOR THE FISCAL YEAR OF 2023-24

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City of Morgan Hill
Year to Date Revenues - Fiscal Year 2023-24
For the Month Ended May 31, 2024
92% of Year Complete

CURRENT INCR (DECR)
ADOPTED AMENDED YTD % PRIOR FROM PRIOR %

BUDGET BUDGET ACTUAL OF BUDGET YTD YTD CHANGE
010 GENERAL FUND
TAXES
Property Tax - Secured/Unsecured $ 15,245,000 15,745,000 $ 11,914,805 76% $ 11,183,456 $ 731,349 7% Property Tax - RPTTF Residual Distribution 2,527,000 2,527,000 1,020,900 40% 987,196 33,704 3% Property Tax - Supplemental Roll 200,000 200,000 245,846 123% 395,548 (149,702) -38% Sales Tax 12,218,967 12,218,967 9,242,129 76% 9,301,272 (59,143) -1% Public Safety Sales Tax 455,000 455,000 328,666 72% 302,371 26,295 9% Transient Occupancy Taxes 2,800,000 2,800,000 1,985,712 71% 2,094,179 (108,467) -5% Franchise (Refuse ,Cable ,PG&E) 2,873,800 3,005,800 2,543,636 85% 2,204,302 339,334 15% Property Transfer Tax 510,000 510,000 376,776 74% 76,181 300,595 25% TOTAL TAXES 36,829,767 37,461,767 27,658,470 74% 26,768,919 889,551 3%

LICENSES/PERMITS
Business License 170,000 170,000 160,398 94% 146,960 13,438 9% Other Permits 83,975 53,975 103,744 124% 640,736 (536,993) -84% TOTAL LICENSES/PERMITS 223,975 253,975 264,142 104% 787,696 (523,554) -66%

FINES AND PENALTIES
Parking Enforcement 3,019 3,019 8,354 277% 6,489 1,865 29% Bails & Fines 47,875 47,875 49,346 103% 41,898 7,448 18% Administrative Citations 20,000 20,000 28,789 144% 23,661 5,128 461% TOTAL FINES AND PENALTIES 70,894 70,894 86,489 122% 53,515 32,974 62%

OTHER AGENCIES
Motor Vehicle in-Lieu 40,800 40,800 56,686 139% 47,613 9,073 19% Other Revenue - Other Agencies 1,001,233 971,089 957,083 96% 1,085,449 (128,366) -12% TOTAL OTHER AGENCIES 1,011,889 1,042,033 1,013,769 97% 1,133,062 (119,293) -11%

CHARGES CURRENT SERVICES
Police False Alarm Charge 33,248 33,248 29,720 89% 36,915 (7,195) -19% Business License Application Review 53,000 83,000 89,899 108% 46,179 43,720 95% Membership Services & Rec Programs 5,656,265 5,656,265 5,430,758 96% 4,773,647 657,111 14% Facility Rentals 1,203,269 1,203,269 1,425,788 118% 1,117,155 308,633 28% Community Services 152,498 152,498 63,675 42% 53,682 9,993 19% General Administration Overhead 1,822,869 1,822,869 1,633,380 90% 1,618,812 14,568 1% Other Charges Current Services 1,084,930 1,084,930 830,075 77% 650,355 179,720 28% TOTAL CURRENT SERVICES 10,006,079 10,036,079 9,503,295 95% 8,296,745 1,206,550 15%

OTHER REVENUE
Use of money/property 583,850 683,850 1,267,688 185% 770,338 497,350 65% Other Revenues 614,513 234,513 387,118 63% 239,646 147,472 62% TOTAL OTHER REVENUE 818,363 1,298,363 1,654,807 127% 1,009,984 644,823 64%

TRANSFERS IN
One Time Transfer 180,000 180,000 165,000 92% 165,000 0% (0) Public Safety Facilities Fund 50,000 50,000 45,833 92% 45,833 0% 0 Supplemental Law Enforcement Fund 100,000 100,000 100,000 100% 100,000 n/a - Countywide Solid Waste 373,000 468,680 341,917 73% 325,417 16,500 5% Streets 949,760 949,760 687,580 72% 654,179 33,401 5%
Park Maintenance 650,000 650,000 595,833 92% 595,837 0% (4) Sewer Operations 394,000 394,000 401,899 102% 343,750 58,149 17% Water Operations 394,000 394,000 408,330 104% 343,750 64,580 19% Open Space 81,100 81,100 74,342 92% 74,342 0% (0)
Park Development 75,000 75,000 68,750 92% - 68,750 n/a
TOTAL TRANSFERS IN 3,246,860 3,342,540 2,889,483 86% 2,716,858 172,625 6% TOTAL GENERAL FUND 52,207,827 53,505,651 43,070,454 81% 40,766,779 2,303,675 6%

SPECIAL REVENUE FUNDS
202 STREET MAINTENANCE
Gas Tax 2105 - 2107.5 954,952 954,952 681,435 71% 650,483 30,952 5% Interest / Other Revenue/Other Charges 78 78 6,145 7878% 2,449 3,696 66% 202 STREET MAINTENANCE 955,030 955,030 687,580 72% 654,179 33,401 5%

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City of Morgan Hill
Year to Date Revenues - Fiscal Year 2023-24
For the Month Ended May 31, 2024
92% of Year Complete

CURRENT INCR (DECR)
ADOPTED AMENDED YTD % PRIOR FROM PRIOR %

BUDGET BUDGET ACTUAL OF BUDGET YTD YTD CHANGE

SPECIAL REVENUE FUNDS
205 SUPPLEMENTAL LAW ENFORCEMENT FUND
Interest Income 1,905 1,905 9,636 506% 3,979 5,657 142% Police Grant/SLEF/JAG 100,000 100,000 186,159 186% 20,888 165,271 13% 205 SUPPLEMENTAL LAW ENFORCEMENT FUND 101,905 101,905 195,795 192% 169,250 26,545 16% 206 DEVELOPMENT SERVICES
Building Fees 3,455,600 3,495,600 2,988,178 85% 3,490,010 (501,832) -14% Planning Fees 1,645,444 1,645,444 1,250,814 76% 649,623 601,191 93% Engineering Fees 1,190,852 1,190,852 477,259 40% 890,552 (413,293) -46% Other Revenue/Current Charges - - 20,990 n/a 311,001 (290,011) -93% 206 DEVELOPMENT SERVICES 6,291,896 6,331,896 4,737,241 75% 5,341,186 (603,945) -11% 207 LONG RANGE PLANNING 1,013,392 1,013,392 824,677 81% 986,580 (161,903) -16% 215 and 216 HCD BLOCK GRANT
Interest Income/Other Revenue 325 325 1,685 519% 914 771 84% 215 and 216 HCD BLOCK GRANT 325 325 1,685 519% 914 771 84% 225 ASSET SEIZURE 1,298 1,298 2,580 199% 1,424 1,156 81% 229 LIGHTING AND LANDSCAPE 200,028 200,028 116,003 58% 111,890 4,113 4% 230 COMMUNITY FACILITIES DISTRICT 37,914 37,914 30,469 80% 27,938 2,531 9% 232 ENVIRONMENTAL PROGRAMS 590,223 590,223 552,860 94% 518,969 33,891 7% 234 MOBILE HOME PARK RENT STAB. 584 584 5,483 939% 6,614 (1,131) -17% 236 HOUSING MITIGATION 4,456,924 4,456,924 3,218,878 72% 870,883 2,347,995 270% 240 EMPLOYEE ASSISTANCE 20,889 20,889 7,654 37% 7,756 (102) -1% 246 COUNTYWIDE SOLID WASTE 1,645,138 1,944,000 2,111,570 109% 1,248,895 862,675 69% 247 ENVIRONMENT REMEDIATION 1,358 1,358 3,546 261% 1,931 1,615 84% 255 HOUSING SUCCESSOR AGENCY 239,202 239,202 513,638 215% 366,133 147,505 40% TOTAL SPECIAL REVENUE FUNDS 15,556,107 15,894,969 13,009,659 82% 10,314,542 2,695,117 26%

CAPITAL PROJECTS FUNDS
301 PARK DEVELOPMENT 2,008,505 1,673,505 851,324 42% 3,728,743 (2,877,419) -77% 302 PARK MAINTENANCE 363,038 363,038 87,258 24% 526,062 (438,804) -83% 303 LOCAL DRAINAGE 447,897 447,897 511,466 114% 1,007,297 (495,831) -49% 304 LOCAL DRAINAGE/NON AB1600 30,901 30,901 33,301 108% 107,970 (74,669) -69% 306 AGRICULTURE & OPEN SPACE PRESERVATION 4,036 4,036 194,030 4807% 76,992 117,038 152% 308 STREET CIP 4,486,656 4,486,656 3,788,750 84% 5,031,711 (1,242,961) -25% 309 TRAFFIC IMPACT 1,276,925 1,276,925 1,252,700 98% 7,160,711 (5,908,011) -83% 315 PUBLIC SAFETY FACILITIES IMPACT 801,703 801,703 774,687 97% 627,030 147,657 24% 346 PUBLIC FACILITIES NON-AB1600 822,102 966,667 208,965 22% 405,295 (196,330) -48% 347 PUBLIC FACILITIES IMPACT 176,602 176,602 293,666 166% 115,593 178,073 154% 348 LIBRARY 657,457 657,457 886,308 135% 186,160 700,148 376% 350 UNDERGROUNDING 22,520 22,520 260,769 1158% 23,523 237,246 1009% 355 SCHOOL PEDESTRIAN/TRAFFIC SAFETY 492,717 492,717 32,121 7% 214,745 (182,624) -85% 360 COMMUNITY/REC IMPACT FUND 1,142,697 1,142,697 1,253,462 110% 532,277 721,185 135% 375 QUIMBY FEE 610,860 610,860 2,903,060 475% 1,560,852 1,342,208 86% TOTAL CAPITAL PROJECTS FUNDS 13,009,616 13,489,181 13,331,866 99% 21,304,961 (7,973,095) -37%

DEBT SERVICE FUNDS
420 CIVIC CENTER DEBT 290,850 290,850 270,651 93% 269,961 690 0% 441 POLICE FACILITY BOND 387,792 387,792 355,838 92% 355,488 350 0% TOTAL DEBT SERVICE FUNDS 678,642 678,642 626,489 92% 625,449 1,040 0%

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City of Morgan Hill
Year to Date Revenues - Fiscal Year 2023-24
For the Month Ended May 31, 2024
92% of Year Complete

CURRENT INCR (DECR)
ADOPTED AMENDED YTD % PRIOR FROM PRIOR %

BUDGET BUDGET ACTUAL OF BUDGET YTD YTD CHANGE

ENTERPRISE FUNDS
640 WASTEWATER OPERATION
Sewer Service Fees 15,200,000 15,200,000 12,314,886 81% 12,370,597 (55,711) 0% Interest Income/Transfers 39,704 39,704 51,149 129% 33,325 17,824 53% Other Revenue/Current Charges 329,403 329,403 281,412 85% (75,505) 356,917 -21% 640 WASTEWATER OPERATION 15,569,107 15,569,107 12,647,446 81% 12,760,839 (113,393) -1% 641 WASTEWATER EXPANSION
Interest Income 40,173 40,173 530,995 1322% 323,312 207,683 64% Development Impact Fee 4,388,986 4,388,986 6,963,174 159% 2,721,524 4,241,650 156% Transfer From-643 (Sewer Replacement) - - - n/a (8,035,993) 8,035,993 -100% 641 WASTEWATER EXPANSION 4,429,159 4,429,159 7,494,170 169% 11,080,829 (3,586,659) -32% 642 WASTEWATER RATE STABILIZATION 192,000 192,000 252,558 132% 85,929 166,629 194% 643 WASTEWATER CAPITAL PROJECT 5,204,512 5,204,512 5,104,792 98% 6,246,360 (1,141,568) -18% TOTAL SEWER FUNDS 25,394,778 25,394,778 25,498,965 100% 30,173,957 (4,674,992) -15% 650 WATER OPERATION
Water Sales 18,500,000 18,500,000 13,866,844 75% 13,017,504 849,340 7% Meter Install & Service 50,000 50,000 76,872 154% 68,439 8,433 12% Transfers-In / Interest Income 606,318 606,318 611,121 101% 727,904 (116,783) -16% Other Revenue/Current Charges 630,464 630,464 721,585 114% (302,820) 1,024,405 -30% 650 WATER OPERATION 19,786,782 19,786,782 15,276,421 77% 14,838,252 438,169 3% 651 WATER EXPANSION
Interest Income/Other Revenue/Transfer 28,855 28,855 84,595 293% 42,154 42,441 101% Development Impact Fee 1,720,216 1,720,216 1,277,126 74% 580,458 696,668 83% 651 WATER EXPANSION 1 1,749,071 ,749,071 1,361,721 78% 738,822 622,899 84% 652 WATER RATE STABILIZATION - 84,781 - n/a 45,996 38,785 84% 653 WATER CAPITAL PROJECT 6,948,348 6,948,348 6,752,240 97% 4,816,760 1,935,480 40% TOTAL WATER FUNDS 28,484,201 28,484,201 23,475,164 82% 20,439,830 3,035,334 15% TOTAL ENTERPRISE FUNDS 53,878,979 53,878,979 48,974,128 91% 50,613,787 (1,639,659) -3%

INTERNAL SERVICE FUNDS
730 INFORMATION SYSTEMS 2,493,922 2,493,922 2,289,172 92% 2,055,166 234,006 11% 740 BUILDING MAINTENANCE 1,675,215 1,675,215 1,537,734 92% 1,517,782 19,952 1% 741 BUILDING REPLACEMENT 859,973 859,973 878,031 102% 800,613 77,418 10% 745 CIP ADMINISTRATION 2,059,092 2,059,092 1,152,211 56% 1,235,983 (83,772) -7% 760 UNEMPLOYMENT INSURANCE 2,940 2,940 7,204 245% 4,170 3,034 73% 770 WORKERS COMPENSATION 997,442 997,442 906,261 91% 800,025 106,236 13% 790 EQUIPMENT REPLACEMENT 1,725,990 1,725,990 1,269,528 74% 2,176,273 (906,745) -42% 791EMPLOYEE BENEFITS 849,796 849,796 783,850 92% 744,444 39,406 5% 795 GENERAL LIABILITY INSURANCE 2,103,483 2,103,483 1,934,310 92% 1,826,601 107,709 6% TOTAL INTERNAL SERVICE FUNDS 12,767,853 12,767,853 10,758,302 84% 11,161,057 (402,755) -4% TOTAL FOR ALL FUNDS 148,099,024 $ 150,215,275 $ 129,770,900 $ 86% 134,786,575 $ (5,015,675) $ -4%

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City of Morgan Hill
Year to Date Expenses - Fiscal Year 2023-24
For the Month Ended May 31, 2024
92% of Year Complete

CURRENT

FUND MONTH PERCENT OF
NO. FUND/ACTIVITY ACTUAL AMENDED YTD OUTSTANDING TOTAL TOTAL TO PRIOR

EXPENSES BUDGET EXPENSES ENCUMBRANCE ALLOCATED BUDGET YTD 010 GENERAL FUND
I. ADMINISTRATION
CITY COUNCIL 38,401 $ 435,652 $ 414,289 $ - $ 414,289 $ 95% 359,303 $ .

CITY ATTORNEY 95,553 1,081,241 811,924 137,435 949,359 88% 712,874 CITY MANAGER 70,831 886,041 641,206 20,034 661,240 75% 568,949 HUMAN RESOURCES 87,622 898,203 796,604 - 796,604 89% 734,182

COUNCIL SVCS & RECORDS MGMT
Council Svcs & Records Mgmt 58,369 628,281 479,153 - 479,153 76% 457,498 Elections 3,419 37,728 29,058 - 29,058 77% 217,152
COUNCIL SVCS & RECORDS MGMT 61,788 666,009 508,211 - 508,211 76% 674,650 FINANCE 191,693 2,522,016 1,785,091 549,722 2,334,812 93% 1,740,123 TOTAL ADMINISTRATION 545,888 6,489,162 4,957,325 707,190 5,664,515 87% 4,790,081 II. COMMUNITY SERVICES
Membership Services & Rec. Programs 592,513 7,268,962 6,431,903 614,474 7,046,377 97% 5,582,821 Recreation Facility Rentals 64,766 573,524 546,187 31,016 577,203 101% 431,705 Innovative Transit 52,498 850,612 552,181 259,770 811,951 95% 464,280 Community Services 81,112 672,192 573,734 11,790 585,524 87% 508,822 Park Maintenance 165,586 1,567,049 1,039,537 26,799 1,066,336 68% 1,051,869 Environmental Services 26,732 907,406 420,744 101,446 522,190 58% 212,343 Countywide Solid Waste Program 45,977 472,354 373,291 - 373,291 79% 329,304 Street Maintenance 286,744 3,025,578 2,554,548 26,814 2,581,362 85% 2,025,041 Downtown Maintenance 23,809 345,237 238,099 26,949 265,048 77% 155,067 Cable Television 7,029 74,940 80,729 - 80,729 108% 50,322 COMMUNITY SERVICES 1,346,766 15,757,854 12,810,954 1,099,058 13,910,011 88% 10,811,574 CODE COMPLIANCE 37,646 340,153 268,135 - 268,135 79% 181,666 INFRASTRUCTURE PLANNING & CONGESTION MGMT 415,141 44,764 380,556 - 380,556 92% 315,994 ECONOMIC DEVELOPMENT PROGRAMS 108,476 1,267,792 886,251 67,156 953,408 75% 685,945 TOTAL COMMUNITY SERVICES 1,537,652 17,780,940 14,345,896 1,166,214 15,512,110 87% 11,995,179 III. PUBLIC SAFETY
POLICE
PD Administration 164,424 1,735,700 1,477,943 30,059 1,508,001 87% 1,386,390 Field Operations 1,186,028 11,210,613 10,287,069 438,388 10,725,457 96% 8,871,973 Support Services 254,776 3,586,324 2,538,855 595,532 3,134,388 87% 2,475,406 Emergency Services/Haz Mat 28,940 222,865 225,587 - 225,587 101% 207,804 Special Operations 327,949 4,098,765 3,261,805 3,261,805 - 80% 3,549,500 Dispatch Services 2,201,937 230,959 1,876,003 - 1,876,003 85% 1,854,459 POLICE 2,193,077 23,056,204 19,667,262 1,063,979 20,731,241 90% 18,345,532 FIRE 730,039 9,139,905 8,290,525 97,036 8,387,560 92% 7,542,097 TOTAL PUBLIC SAFETY 2,923,116 32,196,109 27,957,787 1,161,015 29,118,802 90% 25,887,629 IV. TRANSFERS
Other 108,647 3,263,767 3,155,120 3,155,120 - 97% 4,540,039 TOTAL TRANSFERS 108,647 3,263,767 3,155,120 3,155,120 - 97% 4,540,039 TOTAL GENERAL FUND 5,115,303 59,729,978 50,416,128 3,034,419 53,450,546 89% 47,212,928

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City of Morgan Hill
Year to Date Expenses - Fiscal Year 2023-24
For the Month Ended May 31, 2024
92% of Year Complete

CURRENT

FUND MONTH PERCENT OF
NO. FUND/ACTIVITY ACTUAL AMENDED YTD OUTSTANDING TOTAL TOTAL TO PRIOR

EXPENSES BUDGET EXPENSES ENCUMBRANCE ALLOCATED BUDGET YTD

SPECIAL REVENUE FUNDS
202 STREET MAINTENANCE 433 954,952 687,580 - 687,580 72% 654,179 205 PUBLIC SAFETY/SUPP.LAW 107 101,289 101,182 - 101,182 100% 101,148 206 DEVELOPMENT SERVICES FUND
Planning 162,442 1,847,544 1,487,812 - 1,487,812 81% 1,444,371 Building 262,289 2,563,441 2,227,618 69,975 2,297,593 90% 2,007,787 Engineering 165,113 1,974,680 1,569,894 75,955 1,645,849 83% 1,625,654 206 DEVELOPMENT SERVICES FUND 589,845 6,385,665 5,285,324 145,930 5,431,254 85% 5,077,812 207 LONG RANGE PLANNING 93,146 1,581,133 765,375 18,178 783,553 50% 778,379 215/216 CDBG 7 83 76 - 76 92% 74
225 ASSET SEIZURE 65 782 717 - 717 92% 696
229 LIGHTING AND LANDSCAPE 13,683 234,554 141,366 3,818 145,183 62% 137,128 230 COMMUNITY FACILITIES DISTRICT 4,717 41,249 40,096 - 40,096 97% 29,893 232 ENVIRONMENT PROGRAMS 49,145 561,335 391,509 2,040 393,549 70% 425,679 234 MOBILE HOME PARK 76 907 831 - 831 92% 807
236 HOUSING MITIGATION 70,249 1,541,126 835,133 188,873 1,024,006 66% 748,061 240 EMPLOYEE ASSISTANCE 79 20,946 4,367 - 4,367 21% 10,036 246 COUNTYWIDE SOLID WASTE PROGRAM 115,660 2,078,493 1,469,417 671,825 2,141,242 103% 1,282,326 255 HOUSING SUCCESSOR AGENCY 105,078 1,172,110 1,112,841 0 1,112,841 95% 1,088,413 TOTAL SPECIAL REVENUE FUNDS 1,042,288 14,674,624 10,835,814 1,030,663 11,866,477 81% 10,334,631

CAPITAL PROJECT FUNDS
301 PARK DEVELOPMENT 13,194 2,475,298 529,284 612,132 1,141,416 46% 800,274 302 PARK MAINTENANCE 54,242 660,850 596,029 - 596,029 90% 601,772 303 LOCAL DRAINAGE 3,173 7,119,361 3,024,077 1,273,061 4,297,138 60% 877,113 304 LOCAL DRAIN. NON-AB1600 6,255 410,006 178,965 3,818 182,782 45% 127,399 306 AGRICULTURE & OPEN SPACE PRESERVATIO 8,133 247,600 89,467 - 89,467 36% 115,366 308 STREET CIP 14,479 5,499,004 4,730,431 367,785 5,098,216 93% 6,944,720 309 TRAFFIC IMPACT 40,032 6,133,049 1,127,537 3,076,549 4,204,086 69% 5,786,493 315 PUBLIC SAFETY FACILITIES IMPACT 457,997 11,717,604 3,966,914 7,564,986 11,531,900 98% 795,081 346 PUBLIC FAC.NON AB1600 47,771 3,408,156 1,083,580 917,417 2,000,997 59% 26,273 347 PUBLIC FACILITIES IMPACT 2,440 279,278 129,438 12,400 141,838 51% 26,724 348 LIBRARY IMPACT 18,529 222,349 203,820 - 203,820 92% 204,340 350 UNDERGROUNDING 98 1,194,738 139,340 138,263 277,603 23% 1,046 355 SCHOOL PEDESTRIAN & TRAFFIC SAFETY 1,711 916,562 29,714 3,428 33,142 4% 48,177 360 COMM/REC CENTER IMPACT 1,331 2,794,248 237,843 557,016 794,859 28% 762,008 375 QUIMBY FEE 87,117 1,403,605 357,529 319,244 676,772 48% 542,182 TOTAL CAPITAL PROJECTS FUNDS 756,501 44,481,708 16,423,968 14,846,098 31,270,066 70% 17,658,968

DEBT SERVICE FUNDS
420 CIVIC CENTER DEBT 47,683 290,852 287,751 - 287,751 99% 291,904 441 POLICE FACILITY BOND DEBT 64,688 387,792 390,265 - 390,265 101% 387,161 TOTAL DEBT SERVICE FUNDS 112,371 678,644 678,016 678,016 - 100% 679,065

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City of Morgan Hill
Year to Date Expenses - Fiscal Year 2023-24
For the Month Ended May 31, 2024
92% of Year Complete

CURRENT

FUND MONTH PERCENT OF
NO. FUND/ACTIVITY ACTUAL AMENDED YTD OUTSTANDING TOTAL TOTAL TO PRIOR

EXPENSES BUDGET EXPENSES ENCUMBRANCE ALLOCATED BUDGET YTD

ENTERPRISE FUNDS
SEWER
640 WASTEWATER OPERATIONS 549,976 15,555,361 12,423,669 71,449 12,495,118 80% 14,153,978 641 WASTEWATER CAPITAL EXPANSION 1,427,686 26,223,607 10,377,554 566,779 10,944,333 42% 8,041,788 642 WASTEWATER RATE STABILIZATION 156 1,872 1,716 - 1,716 92% 1,666 643 WASTEWATER CAPITAL PROJECTS 194,738 17,522,286 3,589,315 2,022,256 5,611,571 32% 11,512,549 TOTAL SEWER FUND(S) 2,172,556 59,303,126 26,392,255 2,660,483 29,052,737 49% 33,709,981 WATER
Water Operations 1,455,866 18,480,381 15,835,339 529,551 16,364,890 89% 12,565,730 Utility Billing 114,269 1,192,638 1,106,803 56,347 1,163,149 98% 917,811 Water Conservation 644,730 39,096 328,869 49,180 378,049 59% 244,995 650 WATER OPERATIONS 1,609,230 20,317,749 17,271,011 635,078 17,906,089 88% 13,728,536 651 WATER CAPITAL EXPANSION 63,509 2,479,364 734,580 62,239 796,820 32% 652,274 652 WATER RATE STABILIZATION 117 1,403 1,286 - 1,286 92% 1,248 653 WATER-CAPITAL PROJECTS 16,010,730 1,384,544 3,053,241 571,024 3,624,265 23% 1,681,733 TOTAL WATER FUND(S) 3,057,400 38,809,246 21,060,119 1,268,341 22,328,460 58% 16,063,791 TOTAL ENTERPRISE FUNDS 5,229,957 98,112,372 47,452,374 3,928,824 51,381,198 52% 49,773,772

INTERNAL SERVICE FUNDS
730 INFORMATION SYSTEMS 195,525 2,683,931 2,319,451 31,332 2,350,783 88% 2,032,915 740 BUILDING MAINTENANCE 142,784 1,781,790 1,384,912 89,734 1,474,645 83% 1,306,318 741 BUILDING REPLACEMENT 25,825 1,501,100 220,783 137,196 357,979 24% 145,326 745 CIP ADMINISTRATION 228,846 2,061,046 1,787,608 1,787,777 169 87% 1,659,794 760 UNEMPLOYMENT 14,818 15,000 26,644 - 26,644 178% 14,081 770 WORKERS COMPENSATION 15,654 1,048,265 812,252 - 812,252 77% 680,901 790 EQUIPMENT REPLACEMENT 58,718 1,245,240 717,596 495,813 1,213,409 97% 593,426 791 EMPLOYEE BENEFITS FUND 49,368 750,000 644,309 - 644,309 86% 725,078 795 GEN. LIABILITY INSURANCE 105,360 2,551,193 2,625,290 2,625,290 - 103% 1,842,561 TOTAL INTERNAL SERVICE FUNDS 836,898 13,637,565 10,538,844 754,244 11,293,088 83% 9,000,400 REPORT TOTAL $ 13,093,318 $ 231,314,891 $ 136,345,143 $ 23,594,248 $ 159,939,391 69% 134,659,764 $

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City of Morgan Hill
Fund Activity Summary - Fiscal Year 2023-24
For the Month Ended May 31, 2024
92% of Year Complete
Beginning Year to-Date
Fund Fund Balance YTD % of YTD % of Deficit or
No. Fund Description 07-01-23 Actual Budget Actual Budget Carryover Reserved1 Unreserved 010 GENERAL FUND 33,224,036 $ 43,070,454 $ 81% 50,416,128 $ 84% (7,345,673) $ 3,034,419 $ 22,843,944 $ TOTAL GENERAL FUND $ 33,224,036 $ 43,070,454 81% $ 50,416,128 84% $ (7,345,673) $ 3,034,419 $ 22,843,944 202 STREET MAINTENANCE 68,927 $ 687,580 72% 687,580 $ 87% $ (0) $ - $ 68,927 205 PUBLIC SAFETY/SUPPL. LAW 319,867 195,795 192% 101,182 80% 94,613 414,480 - 206 DEVELOPMENT SERVICES (426,677) 4,737,241 75% 5,285,324 83% (548,083) 145,930 (1,120,689) 207 LONG RANGE PLANNING 1,276,770 824,677 81% 765,375 48% 59,302 18,178 1,317,894 215 / 216 CDBG 30,767 519% 1,685 92% 76 1,609 - 32,376
225 ASSET SEIZURE 102,496 199% 2,580 92% 717 1,863 104,359 - 229 LIGHTING AND LANDSCAPE 191,949 116,003 58% 141,366 60% (25,363) 3,818 162,768 230 COMMUNITY FACILITIES DISTRICT 150,651 30,469 80% 40,096 97% (9,627) 141,024 - 232 ENVIRONMENTAL PROGRAMS 328,270 552,860 94% 391,509 70% 161,351 2,040 487,581 234 MOBILE HOME PK RENT STAB. 76,297 939% 5,483 92% 831 4,651 - 80,948 235 SENIOR HOUSING 239,361 n/a - n/a - - 239,361 -
236 HOUSING MITIGATION 5,698,654 3,218,878 72% 835,133 54% 2,383,745 188,873 7,893,526 240 EMPLOYEE ASSISTANCE 61,893 7,654 37% 4,367 21% 3,287 - 65,180 246 COUNTYWIDE SOLID WASTE 239,294 2,111,570 261% 1,469,417 71% 642,153 671,825 209,623 247 ENVIRONMENT REMEDIATION 140,690 261% 3,546 n/a - 3,546 144,236 - 255 HOUSING SUCCESSOR AGENCY 4,001,427 513,638 215% 1,112,841 95% (599,203) 3,402,224 0 TOTAL SPECIAL REVENUE FUNDS $ 12,500,636 $ 13,009,659 82% $ 10,835,814 74% $ 2,173,845 $ 1,030,663 $ 13,643,818 301 PARK DEV. IMPACT FUND $ 1,426,990 $ 851,324 42% 529,284 $ 21% 322,040 $ $ 612,132 $ 1,136,899 302 PARK MAINTENANCE 2,489,205 87,258 24% 596,029 90% (508,771) 1,980,434 - 303 LOCAL DRAINAGE 11,817,863 511,466 114% 3,024,077 42% (2,512,611) 1,273,061 8,032,191 304 LOCAL DRAINAGE/NON-AB1600 1,343,736 33,301 108% 178,965 44% (145,663) 3,818 1,194,255 306 AG. AND OPEN SPACE PRESERVATION 541,496 194,030 4807% 89,467 36% 104,564 646,060 - 308 STREET CIP 4,078,203 3,788,750 84% 4,730,431 86% (941,681) 367,785 2,768,736 309 TRAFFIC IMPACT FUND 3,727,580 1,252,700 98% 1,127,537 18% 125,163 3,076,549 776,194 315 PUBLIC SAFETY FACILITIES IMPACT 3,050,728 774,687 97% 3,966,914 34% (3,192,227) 7,564,986 (7,706,485) 346 PUBLIC FACILITIES NON-AB1600 2,943,797 208,965 22% 1,083,580 32% (874,615) 917,417 1,151,765 347 PUBLIC FACILITIES IMPACT FUND 1,099,809 293,666 166% 129,438 46% 164,228 12,400 1,251,637 348 LIBRARY IMPACT FUND 1,408,238 886,308 135% 203,820 92% 682,488 2,090,726 - 350 UNDERGROUNDING 1,626,301 260,769 1158% 139,340 12% 121,428 138,263 1,609,466 355 SCHOOL PEDESTRIAN/TRAFFIC SFTY 92,077 32,121 7% 29,714 3% 2,407 3,428 91,056 360 COMM/REC CTR IMPACT FUND 992,228 1,253,462 110% 237,843 9% 1,015,619 557,016 1,450,831 375 QUIMBY FEE 1,621,885 2,903,060 475% 357,529 25% 2,545,531 319,244 3,848,172 TOTAL CAPITAL PROJECT FUNDS $ 38,260,136 $ 13,331,866 99% $ 16,423,968 37% $ (3,092,102) $ 14,846,098 $ 20,321,936 420 CIVIC CENTER DEBT $ 175,864 $ 270,651 93% 287,751 $ 99% (17,100) $ $ 129 $ 158,635 441 POLICE FACILITY BOND DEBT 166,725 355,838 92% 390,265 101% (34,427) 165 132,134 TOTAL DEBT SERVICE FUNDS $ 342,589 $ 626,489 92% $ 678,016 100% $ (51,526) $ 293 $ 290,769 640 WASTEWATER OPERATIONS $ 4,670,817 $ 12,647,446 81% 12,423,669 $ 80% 223,777 $ 71,449 4,823,145 641 WASTEWATER IMPACT FUND* 21,350,081 7,494,170 169% 10,377,554 40% (2,883,384) 566,779 17,899,918 642 WASTEWATER RATE STABILIZATION 2,799,081 252,558 132% 1,716 92% 250,842 3,049,923 - 643 WASTEWATER CAPITAL PROJECTS 15,601,623 5,104,792 98% 3,589,315 20% 1,515,477 2,022,256 15,094,844 650 WATER OPERATIONS 4,444,824 15,276,421 77% 17,271,011 85% (1,994,590) 635,078 1,815,156 651 WATER IMPACT FUND* 2,969,960 1,361,721 78% 734,580 30% 627,141 62,239 3,534,861 652 WATER RATE STABILIZATION 3,183,868 84,781 n/a 1,286 92% 83,495 3,267,363 - 653 WATER -CAPITAL PROJECT 15,548,298 6,752,240 97% 3,053,241 19% 3,698,999 571,024 18,676,273 TOTAL ENTERPRISE FUNDS $ 70,568,552 $ 48,974,128 91% $ 47,452,374 48% $ 1,521,755 $ 3,928,824 $ 68,161,483 730 INFORMATION SERVICES $ 793,101 $ 2,289,172 92% 2,319,451 $ 86% (30,279) $ $ 31,332 $ 731,490 740 BUILDING MAINTENANCE 7,256 1,537,734 92% 1,384,912 78% 152,823 89,734 70,345 741 BUILDING REPLACEMENT 4,309,501 878,031 102% 220,783 15% 657,249 137,196 4,829,553 745 CIP ENGINEERING 9,209 1,152,211 56% 1,787,608 87% (635,397) 169 (626,357) 760 UNEMPLOYMENT 303,137 245% 7,204 26,644 178% (19,439) 283,698 - 770 WORKERS COMPENSATION 2,152,498 906,261 91% 812,252 77% 94,009 30,000 2,216,507 790 EQUIPMENT REPLACEMENT 7,665,968 1,269,528 74% 717,596 58% 551,932 495,813 7,722,087 791 EMPLOYEE BENEFITS FUNDS (124,893) 783,850 92% 644,309 86% 139,541 - 14,648 795 GEN. LIABILITY INSURANCE 932,477 1,934,310 92% 2,625,290 103% (690,980) 241,497 - TOTAL INTERNAL SERVICE FUNDS $ 16,048,254 $ 10,758,302 84% $ 10,538,844 77% $ 219,458 $ 784,244 $ 15,483,468 Revenues Expenses Preliminary Ending Fund Balance

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SUMMARY BY FUND TYPE
GENERAL FUND GROUP 33,224,036 $ 43,070,454 $ 81% 50,416,128 $ 84% (7,345,673) $ 3,034,419 $ 22,843,944 $ SPECIAL REVENUE GROUP 12,500,636 13,009,659 82% 10,835,814 74% 2,173,845 1,030,663 13,643,818 DEBT SERVICE GROUP 342,589 626,489 92% 678,016 100% (51,526) 293 290,769 CAPITAL PROJECTS GROUP 38,260,136 13,331,866 99% 16,423,968 37% (3,092,102) 14,846,098 20,321,936 ENTERPRISE GROUP 70,568,552 48,974,128 91% 47,452,374 48% 1,521,755 3,928,824 68,161,483 INTERNAL SERVICE GROUP 16,048,254 10,758,302 84% 10,538,844 77% 219,458 784,244 15,483,468 TOTAL ALL GROUPS 170,944,203 $ 129,770,900 $ 86% 136,345,143 $ 59% (6,574,243) $ 23,624,542 $ 140,745,418 $ For Enterprise Funds: Unrestricted fund balance = Fund balance net of fixed assets and long-term liabilities. *Unreserved fund balance includes bond proceeds reserved for projects listed in bond documents. 1 Amount restricted for encumbrances, fixed asset replacement, long-term receivables, and bond reserves.

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From: Christina Turner
To: Kim Mancera
Cc: Michelle Bigelow
Subject: FW: [EXTERNAL] June 26th , 2024 City Council Agenda Item #9 Date: Monday, June 24, 2024 10:24:47 AM
Attachments: GF Open Encumbrance $25K and over.xlsx
Please supplement.

From: Dat Nguyen <[email protected]>
Sent: Monday, June 24, 2024 10:22 AM
To: Joe Baranowski <[email protected]>
Cc: Christina Turner <[email protected]>; Yvonne Martinez Beltran <[email protected]>; Rene Spring <[email protected]>; Marilyn Librers <[email protected]>; Mark Turner <[email protected]>; Michelle Bigelow <[email protected]>; CC Public Comment <[email protected]>
Subject: RE: [EXTERNAL] June 26th , 2024 City Council Agenda Item #9 Please see attached:

Thanks,
Dat
From: Joe Baranowski <[email protected]>
Sent: Saturday, June 22, 2024 7:36 AM
To: Dat Nguyen <[email protected]>
Cc: Christina Turner <[email protected]>; Yvonne Martinez Beltran <[email protected]>; Rene Spring <[email protected]>; Marilyn Librers <[email protected]>; Mark Turner <[email protected]>; Michelle Bigelow <[email protected]>; CC Public Comment <[email protected]>
Subject: [EXTERNAL] June 26th , 2024 City Council Agenda Item #9 Re. Monthly Budget Update and Financial Report
Hi Dat,
The staff report for the budget update notes there are outstanding encumbrances totaling approximately $3M.

That’s about the amount a quarter-cent sales tax would raise, representing a significant future budget commitment (expenditures).

Can you please provide an itemized list of encumbrances greater than $25K ?

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Thank you,
Joe Baranowski
WARNING: This message is from an external user. Confidential information such as social security numbers, credit card numbers, bank routing numbers, gift card numbers, wire transfer information and other personally identifiable information should not be transmitted to this user. For question, please contact the Morgan Hill IT Department by opening a new helpdesk request online or call 408-909-0055.

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Purchase Order Fiscal Year Total Ordered Total Liquidated Total Balance Create Date Vendor 20240103 2024 778,400.00 0.00 778,400.00 08/17/2023 100887 20250001 2024 668,384.71 158,073.09 510,311.62 08/03/2023 100228 20240330 2024 407,187.42 0.00 407,187.42 05/03/2024 101813 20240113 2024 1,236,028.00 927,021.00 309,007.00 08/21/2023 100183 20240150 2024 768,550.00 567,785.96 200,764.04 08/25/2023 101421 20240329 2024 80,979.06 0.00 80,979.06 05/02/2024 101797 20240134 2024 100,000.00 30,962.31 69,037.69 08/24/2023 100998 20240207 2024 55,740.50 0.00 55,740.50 10/04/2023 100438 20240268 2024 182,094.89 134,206.10 47,888.79 01/03/2024 100402 20240120 2024 46,419.84 11,186.18 35,233.66 08/23/2023 101631 20240035 2024 60,000.00 29,209.50 30,790.50 08/14/2023 101424 20240022 2024 34,000.00 4,524.00 29,476.00 08/14/2023 101620 20240277 2024 47,415.00 18,460.00 28,955.00 01/24/2024 100645 20240294 2024 74,000.00 45,410.60 28,589.40 02/14/2024 100683 20240206 2024 28,500.00 0.00 28,500.00 10/04/2023 100768 20240278 2024 30,000.00 1,619.50 28,380.50 01/24/2024 101728 20240013 2024 26,000.00 0.00 26,000.00 08/10/2023 100803 20240220 2024 39,000.00 13,000.00 26,000.00 10/24/2023 100794

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Alpha Sort DBA

AXON ENTERPRISE INC

TYLER TECHNOLOGIES,

LENCO ARMORED VEHICL LENCO ARMORED VEHICLES

YMCA OF SILICON VALL YMCA OF SILICON VALLEY
RIDECO US INC.

HYUNDAI OF SAN BRUNO HYUNDAI OF SAN BRUNO

A & B MECHANICAL, IN

JARVIS FAY
FIRATO SERVICE CO.,
RADIOMOBILE, INC.

SOUTH BAY YOUTH SPOR SOUTH BAY YOUTH SPORTS

AASKA PATEL ISLAND KIDS LLC

BURR PLUMBING & PUMP

TRIPEPI, SMITH & ASS

LANCE E BAYER

BOUCHER LAW, PC

NANOGAN SCIENCE & SE MAD SCIENCE OF THE BAY AREA

STANFORD HEALTH CARE

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Name

AXON ENTERPRISE INC

TYLER TECHNOLOGIES, INC

LENCO INDUSTRIES INC

YOUNG MEN'S CHRISTIAN ASSN OF SILICON VALLEY
RIDECO US INC.

BAY AREA AG INC

A & B MECHANICAL, INC

JARVIS FAY LLP
FIRATO SERVICE CO., INC.

RADIOMOBILE, INC.

KYLE CAMPBELL

AASKA PATEL

BURR PLUMBING & PUMPING, INC

TRIPEPI, SMITH & ASSOCIATES, INC

LANCE E BAYER

BOUCHER LAW, PC

NANOGAN SCIENCE & SERVICES, LLC

STANFORD HEALTH CARE

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10 CITY COUNCIL STAFF REPORT
MEETING DATE: June 26, 2024
PREPARED BY:

Chris Ghione, Public Services Director
APPROVED BY: City Manager

AWARD THE ENERGY SERVICES CONTRACT TO SYSERCO ENERGY
SOLUTIONS, INC. FOR DESIGN AND CONSTRUCTION OF SOLAR

SYSTEMS AT MULTIPLE CITY FACILITIES IN THE AMOUNT OF
$7,583,500

RECOMMENDATION(S)

1. Open and close the Public Hearing;

2. Authorize the City Manager to execute and administer an energy service contract with Syserco Energy Services for $7,583,500;

3. Authorize contingency funds of $379,175; and

4. Adopt a resolution making findings in compliance with California Government Code Section 4217.12 on Energy Conservation Contracts.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Protecting the Environment and Preserving Open Space and Agricultural Land Maintaining and Enhancing Infrastructure
2024-2025 Strategic Priorities
Fiscal Sustainability
Healthy Community
Guiding Documents
Climate Action Plan
REPORT NARRATIVE:

The City has a history of reviewing options for solar panel installation at City facilities, with City-owned panels at the Centennial Recreation Center and the Civic Center, as well as third-party-owned solar at the Aquatics Center and Police Department. City staff have continued to monitor opportunities for solar photovoltaic generation at its facilities.

In 2023, the City staff identified an opportunity for significant benefit from solar opportunities:

Federal Inflation Reduction Act Funding—The Inflation Reduction Act (IRA), enacted

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10 in 2022, provides a 30% tax credit for solar installations. Since government agencies do not pay federal taxes, under the IRA, they are eligible to receive a direct payment from the federal government equal to the value of a 30% tax credit. This direct payment is intended to provide the same financial incentive for government entities to invest in solar energy as the tax credit does for taxpayers.

The NEM2 Rate Structure Concludes - The NEM2 rate structure was highly beneficial as it allowed solar customers to receive credits for excess energy exported to the grid at the full retail rate. This means that for every kilowatt-hour (kWh) of electricity a solar system sends to the grid, the customer receives a credit for one kWh on their bill at the same price they would pay for electricity from the utility. This makes solar installations financially attractive, as excess energy production could offset a significant portion of a customer's energy bill. The NEM2 rate structure concluded in mid-2023. However, City staff submitted applications for solar at seven locations to PG&E prior to the conclusion of the rate structure, allowing the City time to potentially design and install solar at these City facilities.

PG&E Rates Continue to Increase — The City has seen significant rate increases from PG&E over the last few years and is forecasting additional years of rate increases. These rate increases significantly impact the City's budget.

Based on these factors and the very fast timing needed to identify feasibility options and design the solar equipment, the City Manager entered into a Letter of Intent (Attachment 1) with Syserco Energy Solutions, Inc. for the preliminary design and analysis to install solar at seven locations in the City. Syerco Energy Solutions has provided numerous energy services to the City over the years and presented this option to the City. Syserco Energy Solutions has also worked with numerous municipalities and school districts to develop and construct large-scale solar systems. The seven locations include the Aquatics Center, Police Department, Corporation Yard, City Hall, Community and Cultural Center, the water well at Nordstrom Park, and the water well at the Outdoor Sports Center. The letter of intent provides the opportunity for the City Council to move forward with an Energy Services Contract with Syserco Energy Solutions, Inc. to design and construct the solar improvements at these facilities.

Overall, the City will significantly benefit financially. It is anticipated that over the 30-year life of the systems, the City will have an estimated net savings of over $18.6 million and see a return on investment in eight years. The Inflation Reduction Act Rebate, estimated at $2.3 million, is a large part of this quick return on investment. While staff believe this funding source will be available by project completion in the first half of 2026, if it were to become unavailable, the overall number of years to see the return on investment would move out to year 11. The overall cost saving over 30 years would be reduced to $16.3 million.

Additionally, since funding the project would utilize various capital funds, the City would begin seeing significant operational cost savings as soon as the systems come online.

By the second year of service, the system would provide over $0.5 million in estimated savings, of which approximately 66% would be in the General Fund. The estimated savings would increase each year with increases in the cost of electricity. Furthermore,

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10 the City has additional grant funding applications in process that could further reduce costs and increase savings. A detailed cost and savings analysis is included in Attachment 2.

California Government Code sections 4217.10 to 4217.18 establish a framework that allows public agencies, including cities, to implement energy efficiency, cogeneration, and alternative energy projects through performance contracts or other financial mechanisms. This code enables cities to enter into agreements with energy service companies to finance, design, construct, and/or maintain energy-saving improvements to public facilities. The key feature of the e-contracts is that the costs must be determined to be offset through energy savings achieved by the project, ensuring that the improvements deliver the expected financial and environmental benefits to the City.

A resolution making the required findings is included as Attachment 3. The energy service contract prepared by the City (Attachment 4) provides the City with all the necessary protection that the City's standard public works project provides.

The project will require the removal of a significant number of trees. While more expensive, City staff recommend relocating most of the trees that require removal. This will ensure as many mature trees as possible are retained. New trees will replace any trees that cannot be relocated. The tree relocation and removal summary is included in Attachment 5.

COMMUNITY ENGAGEMENT:

Inform/Involve
This project aligns with the City's Climate Action Plan, which was developed through extensive collaboration with the Community. It is also aligned with the City Council's Goal of Fiscal Sustainability and is being brought forward to the Council by staff for this financial opportunity.

ALTERNATIVE ACTIONS:

The City Council could choose not to move forward with the project at this time and provide staff with alternate direction or direct staff to issue a Request For Proposal (RFP). This would result in the City being unable to receive the NEM2 rate structure unless a Council meeting could be held by mid-July to bring back an alternative contract.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

The City Council previously approved the City's Capital Improvement Program on June 19, 2024, that included funding for this project.

FISCAL AND RESOURCE IMPACT:

Funding for this project was approved within the Capital Improvement Program Budget for Fiscal Year 2024/25. The breakdown of project costs of $7,741,500 allocated by fund/ project is outlined below.
• Recreation Center Expansion and Renovation - $3,267,158 - Quimby Fund 375

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10 • Police Facility Expansion - $976,990 - Public Safety Facilities Fund 315 • Civic Center Expansion - $1,365,352 - Public Facilities Fund 347 • Utility System Solar - $2,132,000 - Water Capital Fund 653 and Sewer Capital Fund 643
Tree removal and relocation costs, approximately $158,000, are anticipated for this project. However, they are not included in this contract with Syserco Energy Solutions but have been included in the cost and savings analysis.

CEQA (California Environmental Quality Act):

Categorical Exemption / Statutory Exemption
This first portion of the project will complete the final design for the solar panels; therefore, exact sizing is not yet available. However, this project will be exempt from CEQA under the following exemptions:
• The proposed installation of solar panels on a new carport structure is exempt from the California Environmental Quality Act (CEQA) under Categorical Exemption Class 3 (Small Structures). The project consists of constructing a new carport structure that is less than 10,000 square feet and does not require significant grading or excavation. The solar panel installation is considered part of the carport structure and will not result in significant environmental impacts beyond those already considered under Class 33.
• The proposed installation of solar panels on a new carport structure, even if exceeding 10,000 square feet, at the locations identified is exempt under California Public Resources Code Section 21080.35 as the project will be designed to meet specific requirements, including the size of the facility, location in an existing developed area, and will not have a significant impact on the environment.

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DocuSign Envelope ID: 0229020D- F773- 4FD0- 8C11- D515848009AA 1 V d' R- a3- 03q 0cf&Xf iolta00-3
Chris Ghione
Public Services Director
City of Morgan Hill
17575 Peak Ave.

Morgan Hill, CA 95037
Mr. Gabe Johnson
Syserco Energy Solutions, Inc.
215 Fourier Ave., Suite 140
Fremont, CA 94539
Subject: Letter of Intent ( LOI) to Contract and Approval to Proceed with Detailed Engineering and Final Project Development for NEM2 Solar PV and Options for City' s Existing Solar Power Purchase Agreement
Dear Mr. Johnson,
The City of Morgan Hill (" City') has reviewed the Preliminary Solar Designs presented by Syserco Energy Solutions, Inc. (" SES"), that details an opportunity for the City to reduce Utility Costs by installing solar PV under NEM 2. 0 status.

City staff worked closely with SES to identify all viable locations where the City had an opportunity to install solar PV and submit Interconnection Applications through PG& E to secure NEM 2. 0 status. Ten 10) locations were identified and all ten ) Interconnection Applications were successfully submitted and accepted by PG& E.

The City requests that SES proceed with Project Development and Detailed Engineering of the City' s NEM 2. 0 Solar PV portfolio, consisting of the following systems and seven ( 7) site locations:

1. Aquatic Center (- 231 kW)

2. City Hall (- 162 kW)

3. Community and Culture Center (- 207kW)

4. CRC Park and Corp Yard (- 93 kW)

5. Nordstrom Well (- 93kW)

6. Police HQ (- 119kW)

7. Sports Well (- 124kW)
In order to maintain NEM 2. 0 status and realize the maximum financial value of these systems, each system must be designed, built and receive Point of Connection (POC) approval by PG& E by April 15, 2026. If these systems are unable to be built and preserve NEM 2. 0 status ahead of the deadline, the financial gains of the generated electricity for the City will be significantly devalued.

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DocuSign Envelope ID: 0229020D- F773- 4FD0- 8C11- D515848009AA In consideration of current market and supply chain conditions, City staff recognizes extremely long lead times for various components that are required for successful completion of the projects, and recommends finalizing Project Development and Project Implementation as quickly as possible so as to not jeopardize the financial gains that will be realized by the City by implementing these solar PV systems. Additionally, as part of this Scope of Work, SES will analyze the City' s existing solar Power Purchase Agreement ( PPA) for solar at the Police Department and Aquatics Center and provide a summary of options, relating to refinancing, buying -out, terminating, or renegotiating existing Agreement.

The purpose of this Detailed Engineering and Final Project Development is to determine the feasibility of entering into a negotiated Energy Services Agreement ( Agreement) utilizing CA GC 4217 for the Design - Build Implementation of these projects.

The City intends to enter into either an Energy Services Agreement (" Agreement") with SES, if the following Project Criteria is met:

1. Budget Impact: Project must not impact existing City capital budget.

Capital Outlay by the City shall not be required unless desired by the City.

2. Annual Savings: Must exceed annual Project and Operational Costs, at minimum.

3. Energy Savings: 100% of energy savings goes directly to the City.

Savings shall not be shared with SES or others.

4. Financing: The City shall have the opportunity to qualify for project Financing, if applicable, at the discretion of the City.

5. Financing Term: Shall not exceed the useful life of the proposed systems.

6. Rebate/ Grant Application: Program shall include administrative support for all grants and rebates, if available, including Inflation Reduction Act.

7. Design - Build Construction: All systems shall be designed and built by Syserco Energy Solutions.

8. Procurement Method: Procurement shall meet provisions of California Government Code 4217.

The City agrees to work exclusively with SES through the duration of the Project Development and Detailed Engineering effort.

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DocuSign Envelope ID: 0229020D- F773- 4FD0- 8C11- D515848009AA The City intends to enter into either an Energy Services Agreement with SES, or a PPA with 3`d party provider, within 90 days following the delivery of a final Energy Services Proposal ( ESP) that will result from the Final Engineering and Project Development that SES will perform.

All costs associated with Final Engineering and Project Development performed by SES shall be incorporated into the final Lump Sum Fixed Price of the Agreement.

In the event SES cannot meet this Project Criteria, there will be no charge to the City for engineering, pre -construction activities, project development or estimating costs incurred by SES for the development of the projects.

In the event SES meets the Project Criteria above and City does not enter into the Agreement with SES within ninety ( 90) days of submittal of the ESP, then the City shall pay SES a Break -Fee, in the amount of:

Sixty Thousand Dollars
60, 000. 00)
SES shall provide the City with all work products related to the planning and design conducted by SES prior to receiving the Break - Fee.

ACTIONS TO BE PERFORMED:

In order for SES to complete the Work, City shall provide SES with the following (if not already provided):
2- year history of utility bills and a signed form authorizing SES to act as an Agent for City and receive the data directly from the Utility Provider( s).

Records of existing solar PV Agreements, including access to existing solar PV production data, where applicable.

Reasonable access to facilities and design drawings
The Work is a very collaborative effort. The Work is intended to form the basis of a Final Proposal and contracting documents. Therefore, City shall also:

Assign a main Point of Contact for the Work: Chris Ghione, Public Services Director Provide reasonable access to Key Stakeholders:
o Christina Turner, City Manager
TIMELINE AND MILESTONES: SES will initiate this Work immediately upon acceptance of this Letter. Formal progress review meetings will be conducted regularly throughout the process of the Work. During these review meetings, SES will make recommendations based on preliminary analysis, while City will provide final direction regarding acceptance of the recommended Scope( s) of Work of the Project. The goal of these review meetings is to focus engineering / project development efforts, budgeting, and savings assessment of the measures that possess a high probability for implementation.

The following are proposed key milestone dates:

October, 2023 - Authorization to Proceed based on signature of LOI

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DocuSign Envelope ID: 0229020D- F773- 4FD0- 8C11- D515848009AA October, 2023 - Project Development Kickoff Meeting
October, 2023 - 30% Design Review Meeting
November, 2023 - 60% Design Review Meeting
December, 2023 - 90% Pre -Final Workshop Meeting
January, 2024 - Project Development Completion
March, 2024 - Agreements Approved by City Council
March, 2024 - Project Implementation begins
March, 2024 —January, 2026 : Estimated Project Implementation Timeline, based on current lead times and market conditions for material availability Please signify acceptance of this Letter of Intent by signing below.

Letter of Intent Authorized by:

Christina Turner
City Manager
City of Morgan Hill
DocuSfgned by:

Si fffflMF549944D...

Date: 10/ 19/ 2023
Scott Meinzen
VP and General Manager
Syserco Energy Solutions, Inc.

DocuSlgned by:

S1 DF45249C...

Date: 10/ 18/ 2023

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Year
Projected
Energy
Savings
Incentives
Projected
O&M
Savings
Total
Program
Savings
Project
Payments
PV O&M
and M&V
Cost
Total
Program
Costs
Project Cost $7,741,500 1 Year 1 $530,770 $2,275,050 $0 $2,805,820 $7,741,500 $24,184 $7,765,684 -$4,959,863 -$4,959,863Inflation Reduction Act (Solar)* $2,275,050 2 Year 2 $554,726 $0 $0 $554,726 $0 $24,909 $24,909 $529,817 -$4,430,047Other Incentives $0 3 Year 3 $579,769 $0 $0 $579,769 $0 $25,656 $25,656 $554,113 -$3,875,933 *IRA Solar Incentive is an Estimate - SES is not a Financial Advisor 4 Year 4 $605,950 $0 $0 $605,950 $0 $26,426 $26,426 $579,524 -$3,296,409 Total Grants and Incentives $ 2,275,050 5 Year 5 $633,318 $0 $0 $633,318 $0 $27,219 $27,219 $606,100 -$2,690,310PV Construction Duration (Years) 0 6 Year 6 $661,928 $0 $0 $661,928 $0 $28,035 $28,035 $633,893 -$2,056,417ECM Construction Duration (Years) 0 7 Year 7 $691,835 $0 $0 $691,835 $0 $28,876 $28,876 $662,958 -$1,393,458Annual Escalation of Electricity Cost 5.00% 8 Year 8 $723,097 $0 $0 $723,097 $0 $29,743 $29,743 $693,354 -$700,105Annual Escalation of O&M Cost/Savings 3.00% 9 Year 9 $755,774 $0 $0 $755,774 $0 $30,635 $30,635 $725,139 $25,035Change Settings on TELP Page 10 Year 10 $789,931 $0 $0 $789,931 $0 $112,354 $112,354 $677,577 $702,612 0 11 Year 11 $825,634 $0 $0 $825,634 $0 $32,501 $32,501 $793,133 $1,495,7451 12 Year 12 $862,951 $0 $0 $862,951 $0 $33,476 $33,476 $829,476 $2,325,2212 13 Year 13 $901,955 $0 $0 $901,955 $0 $34,480 $34,480 $867,476 $3,192,6963 14 Year 14 $942,722 $0 $0 $942,722 $0 $35,514 $35,514 $907,208 $4,099,9044 15 Year 15 $985,330 $0 $0 $985,330 $0 $36,580 $36,580 $948,750 $5,048,6545 16 Year 16 $1,029,861 $0 $0 $1,029,861 $0 $37,677 $37,677 $992,184 $6,040,8386 17 Year 17 $1,076,401 $0 $0 $1,076,401 $0 $38,807 $38,807 $1,037,593 $7,078,4317 18 Year 18 $1,125,039 $0 $0 $1,125,039 $0 $39,972 $39,972 $1,085,068 $8,163,4998 19 Year 19 $1,175,870 $0 $0 $1,175,870 $0 $41,171 $41,171 $1,134,699 $9,298,1989 20 Year 20 $1,228,991 $0 $0 $1,228,991 $0 $123,206 $123,206 $1,105,785 $10,403,983 10 21 Year 21 $710,516 $0 $0 $710,516 $0 $43,678 $43,678 $666,837 $11,070,82011 22 Year 22 $742,447 $0 $0 $742,447 $0 $44,988 $44,988 $697,458 $11,768,27912 23 Year 23 $775,814 $0 $0 $775,814 $0 $46,338 $46,338 $729,476 $12,497,75513 24 Year 24 $810,682 $0 $0 $810,682 $0 $47,728 $47,728 $762,954 $13,260,70914 25 Year 25 $847,116 $0 $0 $847,116 $0 $49,160 $49,160 $797,956 $14,058,66415 26 Year 26 $885,186 $0 $0 $885,186 $0 $50,635 $50,635 $834,551 $14,893,21516 27 Year 27 $924,964 $0 $0 $924,964 $0 $52,154 $52,154 $872,810 $15,766,02517 28 Year 28 $966,527 $0 $0 $966,527 $0 $53,719 $53,719 $912,808 $16,678,83418 29 Year 29 $1,009,953 $0 $0 $1,009,953 $0 $55,330 $55,330 $954,622 $17,633,45619 30 Year 30 $1,055,324 $0 $0 $1,055,324 $0 $56,990 $56,990 $998,334 $18,631,79020 31 Year 31 $0 $0 $0 $0 $0 $0 $0 $0 $18,631,79021 32 Year 32 $0 $0 $0 $0 $0 $0 $0 $0 $18,631,79022 33 Year 33 $0 $0 $0 $0 $0 $0 $0 $0 $18,631,79023 Totals $25,410,380 $2,275,050 $0 $27,685,430 $7,741,500 $1,312,140 $9,053,640 $18,631,79024 Cash
Position
Customer Project Savings Project Costs
Project
Preliminary Cash Flow Analysis Savings
-$10,000,000
-$5,000,000
$0
$5,000,000
$10,000,000$15,000,000$20,000,000
1 6 11 16 21 26 31
Project Revenues (Cash Purchase)
Cumulative Cash Flow Annual Cash Flow

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CITY MULTI FACILITY SOLAR PROJECT CONTRACT

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Version: June 2024

CONTRACT
This energy services contract (“Contract”) is entered into and becomes effective on ________ (Effective Date) by and between the City of Morgan Hill (“City”), a municipal corporation, and Syserco Energy Solutions, Inc. a California Corporation (“Contractor”) hereinafter referred to collectively as “Parties”, for work on the City Multi Facility Solar Project (“Project”) as described below.

In consideration of the promises and the mutual covenants contained in this Contract, the Parties agree as follows:

1. Location and Description. The Project is for the design and installation of Solar Photovoltaic arrays and all associated infrastructure and connections at seven City-owned facilities located at the following locations in Morgan Hill:
• Aquatics Center
• Morgan Hill Police Department
• Morgan Hill Community and Cultural Center
• Morgan Hill Corporation Yard
• Morgan Hill Civic Center
• Nordstrom Park (Nordstrom Well)
• Outdoor Sports Center (San Pedro Well)

2. Award of Contract. In accordance with Government Code Section 4217.12, Contractor has submitted a Proposal to perform the Work to construct the Project. On June 26, 2024, via a Public Hearing, City made findings that the Project complies with Government Code Section 4217 et seq. and authorized award of this Contract to Contractor for the amount set forth in Section 6, below.

3. Contract Documents. The Contract Documents incorporated into this Contract include and are comprised of all of the documents listed below. The definitions provided in Article 1 of the General Conditions apply to all of the Contract Documents, including this Contract.

3.1 Contract;

3.2 Subcontractor List

3.3 Payment and Performance Bonds

3.4 General Conditions;

3.5 Special Conditions;

3.6 Energy Services Proposal (ESP) Scope;

3.7 Notice of Award

3.8 Notice to Proceed

4. Contractor’s Obligations. Contractor will perform all of the Work required for the Project, as specified in the Contract Documents. Contractor must provide, furnish, and supply all things necessary and incidental for the timely performance

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and completion of the Work, including all necessary labor, materials, supplies, tools, equipment, transportation, onsite facilities, and utilities, unless otherwise specified in the Contract Documents. Contractor must use its best efforts to diligently prosecute and complete the Work in a professional and expeditious manner and to meet or exceed the performance standards required by the Contract Documents.

5. Payment. As full and complete compensation for Contractor’s timely performance and completion of the Work in strict accordance with the terms and conditions of the Contract Documents, City will pay Contractor Seven Million Five Hundred and Eighty Three Thousand Five Hundred Dollars ($7,583,500) (the “Contract Price”), for all of Contractor’s direct and indirect costs to perform the Work, including all labor, materials, supplies, equipment, federal, state, and local taxes, insurance, bonds and all overhead costs, in accordance with the payment provisions in the General Conditions.

6. Time for Completion. Contractor will fully complete the Work for the Project, meeting all requirements for Final Completion, within 638 calendar days from the commencement date given in the Notice to Proceed (“Contract Time”). By signing below, Contractor expressly waives any claim for delayed early completion.

7. Liquidated Damages. As further specified in Section 5.4 of the General Conditions, if Contractor fails to complete the Work within the Contract Time, City will assess liquidated damages in the amount of Two Thousand Dollars ($2,000) per day for each day of unexcused delay in achieving Final Completion, and such liquidated damages may be deducted from City’s payments due or to become due to Contractor under this Contract.

8. Labor Code Compliance.

8.1 General. This Contract is subject to all applicable requirements of Chapter 1 of Part 7 of Division 2 of the Labor Code, including requirements pertaining to wages, working hours and workers’ compensation insurance, as further specified in Article 9 of the General Conditions.

8.2 Prevailing Wages. This Project is subject to the prevailing wage requirements applicable to the locality in which the Work is to be performed for each craft, classification or type of worker needed to perform the Work, including employer payments for health and welfare, pension, vacation, apprenticeship, and similar purposes. Copies of these prevailing rates are available online at http://www.dir.ca.gov/DLSR. Each Contractor and Subcontractor must pay no less than the specified rates to all workers employed to work on the Project. The schedule of per

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diem wages is based upon a working day of eight hours. The rate for holiday and overtime work must be at least time and one-half.

8.3 Compliance. The Contract will be subject to compliance monitoring and enforcement by the California Department of Industrial Relations, pursuant to Labor Code Section 1771.4.

8.4 DIR Registration. The Contractor, along with its Subcontractors, is registered with the California Department of Industrial Relations (“DIR”) to perform public work pursuant to Labor Code Section 1725.5, subject to limited legal exceptions.

9. License Requirements. This Project requires a valid California contractor’s license for the following classification(s): Class B.

10. Subcontractor List. The subcontractors used will be added to the Subcontractor List and mutually agreed upon by the City and the Contractor prior to the approval of the design documents and/or shop drawings. Each Subcontractor must be registered with the California DIR to perform work on public projects. Contractor must submit a completed Subcontractor List form, including the name, location of the place of business, California contractor license number and DIR registration number and percentage of the Work to be performed (based on the Contract price) for each Subcontractor who will perform Work or service or fabricate or install Work for the prime contractor in excess of one-half (1/2) of one percent (1%) of the contract price, using the Subcontractor List form included with the Contract Documents.

11. Workers’ Compensation Certification. Pursuant to Labor Code Section 1861, by signing this Contract, Contractor certifies as follows: “I am aware of the provisions of Labor Code Section 3700 which require every employer to be insured against liability for workers’ compensation or to undertake selfinsurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the Work on this Contract.”

12. Conflicts of Interest. Contractor, its employees, Subcontractors, and agents, may not have, maintain, or acquire a conflict of interest in relation to this Contract in violation of any City ordinance or requirement, or in violation of any California law, including Government Code Section 1090 et seq., or the Political Reform Act, as set forth in Government Code Section 81000 et seq. and its accompanying regulations. Any violation of this Section constitutes a material breach of the Contract.

13. Independent Contractor. Contractor is an independent contractor under this Contract and will have control of the Work and the means and methods by

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which it is performed. Contractor and its Subcontractors are not employees of City and are not entitled to participate in any health, retirement, or any other employee benefits from City.

14. Notice. Any notice required by the Contract Documents must be made in writing, signed, dated, and sent to the other party by personal delivery, U.S.

Mail, a reliable overnight delivery service, or by email as a PDF (or comparable) file. Notice is deemed effective upon delivery unless otherwise specified. Notice for each party must be given as follows:

Address of City:

City of Morgan Hill
Attn: City Clerk
17575 Peak Avenue
Morgan Hill, CA 95037
Phone: (409) 779-7259
Email: [email protected]
Copy to: Public Services Director

Address of Contractor:

Name: Syserco Energy Solutions, Inc.

Attn: Scott Meinzen
Address: 215 Fourier Ave, Suite 140
City/State/Zip: Fremont, CA 94539
Phone: (510) 498-1171
Email: [email protected]
Copy to: [email protected]

15. Performance and Payment Bonds. Contractor will be required to provide performance and payment bonds each for one hundred percent of the Contract Price as further described in the Contract Documents.

16. General Provisions.

16.1 Assignment and Successors. Contractor may not assign its rights or obligations under this Contract, in part or in whole, without City’s written consent. This Contract is binding on Contractor’s and City’s lawful heirs, successors and permitted assigns.

16.2 Third Party Beneficiaries. There are no intended third-party beneficiaries to this Contract.

16.3 Governing Law and Venue. This Contract will be governed by California law and venue will be in the Superior Court of Santa Clara County, and no other place. Contractor waives any right it may have

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pursuant to Code of Civil Procedure Section 394, to file a motion to transfer any action arising from or relating to this Contract to a venue outside of Santa Clara County, California.

16.4 Amendment. No amendment or modification of this Contract will be binding unless it is in a writing duly authorized and signed by the parties to this Contract.

16.5 Integration. This Contract and the Contract Documents incorporated herein, including authorized amendments or Change Orders thereto, constitute the final, complete, and exclusive terms of the agreement between City and Contractor.

16.6 Severability. If any provision of the Contract Documents is determined to be illegal, invalid, or unenforceable, in whole or in part, the remaining provisions of the Contract Documents will remain in full force and effect.

16.7 Iran Contracting Act. Contractor certifies, by signing below, that it is not identified on a list created under the Iran Contracting Act, Public Contract Code Section 2200 et seq. (the “Act”), as a person engaging in investment activities in Iran, as defined in the Act, or is otherwise expressly exempt under the Act.

16.8 Authorization. Each individual signing below warrants that he or she is authorized to do so by the party that he or she represents, and that this Contract is legally binding on that party. If Contractor is a corporation, signatures from two officers of the corporation are required pursuant to California Corporations Code Section 313. If Contractor is a partnership, signature by a general partner with authority to bind the partnership is required. If Contractor is a limited liability company (LLC), a signature by a member or manager with authority to bind the LLC is required.

16.9 Electronic Signatures. Unless otherwise prohibited by law or City policy, the Parties agree that an electronic copy of a signed contract, or an electronically signed contract, has the same force and legal effect as a contract executed with an original ink signature. The term “electronic copy of a signed contract” refers to a transmission by facsimile, electronic mail, or other electronic means of a copy of an original signed contract in a portable document format. The term “electronically signed contract” means a contract that is executed by applying an electronic signature using technology approved by the City.
[Signatures are on the following page]

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CITY MULTI FACILITY SOLAR PROJECT CONTRACT

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AS SET FORTH IN CA. CORP. CODE § 313, TWO SIGNATURES ARE REQUIRED FOR CALIFORNIA CORPORATIONS:
(1) CHAIRPERSON OF THE BOARD, PRESIDENT, OR VICE PRESIDENT; AND 2) SECRETARY, ASSISTANT SECRETARY, CHIEF FINANCIAL OFFICER, OR ASSISTANT TREASURER.

The Parties agree to this Contract as witnessed by the signatures below:

CITY OF MORGAN HILL:
_______________________________
Christina J. Turner
City Manager
Date: _________________________
Attest:
______________________________
Michelle Bigelow
City Clerk
Date: _______________________
Approved as to Form:
________________________________
Donald A. Larkin
City Attorney
Date: _________________________

SYSERCO ENERGY SOLUTIONS,
INC.
_________________________
Signature
Majd Khlief, Chief Executive Officer
Date: ____________________
Corporate entities must provide a
second signature:
_________________________
Signature
Derek Eggers, President
Date: ______________________
991301_______________________
Contractor’s License Number(s)
03/31/2026
Expiration Date(s)
Seal:
1000545743
Contractor’s DIR Registration
Number(s)
6/30/2024____________________
Expiration Date

END OF CONTRACT

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CITY MULTI FACILITY SOLAR PROJECT CONTRACT | SUBCONTRACTOR LIST

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SUBCONTRACTOR LIST
The subcontractors that will perform Work on the Project will be listed and mutually agreed upon by the City and the Contractor prior to the approval of the design documents and/or shop drawings.

For each Subcontractor who will perform a portion of the Work in an amount in excess of one-half of 1% of the Contract amount, the Contractor must list a description of the Work, the name of the Subcontractor, its California contractor license number, the location of its place of business, its DIR registration number, and the portion of the Work that the Subcontractor is performing based on a percentage of the Contract amount.

DESCRIPTION

OF WORK

SUBCONTRACTOR
NAME

CALIFORNIA

CONTRACTOR

LICENSE
NUMBER
DIR REG. NO. LOCATION OF

BUSINESS
LOCAL
VENDOR2
YES/NO

PERCENT

OF WORK

END OF SUBCONTRACTOR LIST

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CITY MULTI FACILITY SOLAR PROJECT GENERAL CONDITIONS

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GENERAL CONDITIONS
Article 1 - Definitions
Definitions. The following definitions apply to all of the Contract Documents unless otherwise indicated, e.g., additional definitions that apply solely to the Specifications or other technical documents. Defined terms and titles of documents are capitalized in the Contract Documents, with the exception of the following (in any tense or form): “day,” “furnish,” “including,” “install,” “work day,” or “working day.” Allowance means a specific amount that must be included in the Bid Proposal for Work that may or may not be included in the Project, depending on conditions that will not become known until after bids are opened. If the Contract Price includes an Allowance and the cost of performing the Work covered by that Allowance is greater or less than the Allowance, the Contract Price will be increased or decreased accordingly.

Article, as used in these General Conditions, means a numbered Article of the General Conditions, unless otherwise indicated by the context.

Bid shall refer to the proposal submitted by Contractor.

Change Order means a written document duly approved and executed by City, which changes the scope of Work, the Contract Price, or the Contract Time.

City means the City of Morgan Hill, acting through its City Council, officers, employees, and authorized representatives.

City Engineer means the City Engineer for City and his or her authorized delegee(s) designated to oversee and manage the Project on City’s behalf.

Claim means a separate demand by Contractor for a change in the Contract Time or Contract Price, that has previously been submitted to City in accordance with the requirements of the Contract Documents, and which has been rejected by City, in whole or in part; or a written demand by Contractor objecting to the amount of Final Payment.

Contract means the signed agreement between City and Contractor for performing the Work required for the Project, and all documents expressly incorporated therein.

Contract Documents means, collectively, all of the documents listed as such in Section 2 of the Contract, including the Notice Inviting Bids; the Instructions to Bidders; addenda, if any; the Bid Proposal, and attachments thereto; the Contract; the Notice of Award and Notice to Proceed; the payment and performance bonds; the General Conditions; the Special Conditions; the Project Plans and Specifications; any Change Orders; and any other documents expressly made part of the Contract Documents. The Contract Documents do not include documents provided “For Reference Only,” or documents that are intended solely to provide information regarding existing conditions.

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Contract Price means the total compensation to be paid to Contractor for performance of the Work, as set forth in the Contract and as may be amended by Change Order or adjusted for an Allowance. The Contract Price is not subject to adjustment due to inflation or due to the increased cost of labor, material, supplies, or equipment following submission of the Bid Proposal. The Contract Price is deemed to include all applicable federal, state, and local taxes.

Contract Time means the number of days specified for complete performance of the Work, as set forth in the Contract and as may be amended by Change Order.

Contractor means the individual, partnership, corporation, or joint-venture that has signed the Contract with City to perform the Work.

Day means a calendar day unless otherwise specified.

Design Professional means the Contractor who is providing both design and construction.

DIR means the California Department of Industrial Relations.

Drawings has the same meaning as Plans.

Engineer means the City Engineer for the City of Morgan Hill and his or her authorized delegee(s).

Excusable Delay is defined in Section 5.3(B), Excusable Delay.

Extra Work means new or unforeseen work added to the Project, as determined by the Engineer in his or her sole discretion, including Work that was not part of or incidental to the scope of the Work when the Contractor’s bid was submitted; Work that is substantially different from the Work as described in the Contract Documents at bid time; or Work that results from a substantially differing and unforeseeable condition.

Final Completion means Contractor has fully completed all of the Work required by the Contract Documents to the City’s satisfaction, including all punch list items, and any required commissioning or training, and has provided the City with all required submittals, including the instructions and manuals, product warranties, and as-built drawings.

Final Payment means payment to Contractor of the unpaid Contract Price, including release of undisputed retention, less amounts withheld or deducted pursuant to the Contract Documents.

Furnish means to purchase and deliver for the Project.

Government Code Claim means a claim submitted pursuant to California Government Code § 900 et seq.

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Hazardous Materials means any substance or material identified now or in the future as hazardous under any Laws, or any other substance or material that may be considered hazardous or otherwise subject to Laws governing handling, disposal, or cleanup.

Including, whether or not capitalized, means “including, but not limited to,” unless the context requires otherwise.

Inspector means the individual(s) or firm(s) retained or employed by City to inspect the workmanship, materials, and manner of construction of the Project and its components to ensure compliance with the Contract Documents and all Laws.

Install means to fix in place for materials, and to fix in place and connect for equipment.

Laws means all applicable local, state, and federal laws, regulations, rules, codes, ordinances, permits, orders, and the like enacted or imposed by or under the auspices of any governmental entity with jurisdiction over any of the Work or any performance of the Work, including health and safety requirements.

Non-Excusable Delay is defined in Section 5.3(D), Non-Excusable Delay.

Plans means the City-provided plans, drawings, details, or graphical depictions of the Project requirements, but does not include Shop Drawings.

Project means the public works project referenced in the Contract.

Project Manager means the individual designated by City to oversee and manage the Project on City’s behalf and may include his or her authorized delegee(s) when the Project Manager is unavailable. If no Project Manager has been designated for this Project, any reference to Project Manager is deemed to refer to the Engineer.

Recoverable Costs is defined in Section 5.3(F), Recoverable Costs.

Request for Information or RFI means a Contractor’s written request for information about the Contract Documents, the Work, or the Project, submitted to City in the manner and format specified by City.

Section, when capitalized in these General Conditions, means a numbered section or subsection of the General Conditions, unless the context clearly indicates otherwise.

Shop Drawings means design documents, drawings, plan details or other graphical depictions prepared by or on behalf of Contractor, and subject to City acceptance, which are intended to provide details for fabrication, installation, and the like, of items required by or shown in the Plans or Specifications.

Specialty Work means Work that must be performed by a specialized Subcontractor with the specified license or other special certification, and that the Contractor is not qualified to self-perform.

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Specifications means the technical, text specifications describing the Project requirements, which are prepared for and incorporated into the Contract by or on behalf of City, and does not include the Contract, General Conditions or Special Conditions.

Subcontractor means an individual, partnership, corporation, or joint-venture retained by Contractor directly or indirectly through a subcontract to perform a specific portion of the Work. The term Subcontractor applies to subcontractors, suppliers, fabricators, and equipment lessors of all tiers, unless otherwise indicated by the context. A third party such as a utility performing related work on the Project is not a Subcontractor, even if Contractor must coordinate its Work with the third party.

Technical Specifications has the same meaning as Specifications.

Work means all of the construction and services necessary for or incidental to completing the Project in conformance with the requirements of the Contract Documents.

Work Day or Working Day, whether or not capitalized, means a weekday when the City is open for business, and does not include holidays observed by City.

Worksite means the place or places where the Work is performed, which includes, but may extend beyond the Project site, including separate locations for staging, storage, or fabrication.

Article 2 - Roles and Responsibilities

2.1 City.
(A) City Council. The City Council has final authority in all matters affecting the Project, except to the extent it has delegated authority to the Engineer. (B) Engineer. The Engineer, acting within the authority conferred by the City Council, is responsible for administration of the Project on behalf of City, including authority to provide directions to the Design Professional and to Contractor to ensure proper and timely completion of the Project. The Engineer’s decisions are final and conclusive within the scope of his or her authority, including interpretation of the Contract Documents.
(C) Project Manager. The Project Manager assigned to the Project will be the primary point of contact for the Contractor and will serve as City’s representative for daily administration of the Project on behalf of City. Unless otherwise specified, all of Contractor’s communications to City (in any form) will go to or through the Project Manager. City reserves the right to reassign the Project Manager role at any time or to delegate duties to additional City representatives, without prior notice to or consent of Contractor.

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2.2 Contractor.
(A) General. Contractor must provide all labor, materials, supplies, equipment, services, and incidentals necessary to perform and timely complete the Work in strict accordance with the Contract Documents, and in an economical and efficient manner in the best interests of City, and with minimal inconvenience to the public. (B) Responsibility for the Work and Risk of Loss. Contractor is responsible for supervising and directing all aspects of the Work to facilitate the efficient and timely completion of the Work. Contractor is solely responsible for, and required to exercise full control over the Work, including the construction means, methods, techniques, sequences, procedures, safety precautions and programs, and coordination of all portions of the Work with that of all other contractors and Subcontractors, except to the extent that the Contract Documents provide other specific instructions. Contractor’s responsibilities extend to any plan, method or sequence suggested, but not required by City or specified in the Contract Documents. From the date of commencement of the Work until either the date on which City formally accepts the Project or the effective date of termination of the Contract, whichever is later, Contractor bears all risks of injury or damage to the Work and the materials and equipment delivered to any Worksite, by any cause including fire, earthquake, wind, weather, vandalism, or theft. (C) Project Administration. Contractor must provide sufficient and competent administration, staff, and skilled workforce necessary to perform and timely complete the Work in accordance with the Contract Documents. Before starting the Work, Contractor must designate in writing and provide complete contact information, including telephone numbers and email address, for the officer or employee in Contractor’s organization who is to serve as Contractor’s primary representative for the Project, and who has authority to act on Contractor’s behalf.

A Subcontractor may not serve as Contractor’s primary representative. (D) On-Site Superintendent. Contractor must, at all times during performance of physical, on-site Work, provide a qualified and competent full-time superintendent acceptable to City, and assistants, as necessary, who must be physically present or available as necessary at the Project site while any aspect of the Work is being performed. The superintendent must have full authority to act and communicate on behalf of Contractor, and Contractor will be bound by the superintendent’s communications to City. City’s approval of the superintendent is required before the Work commences. If City is not satisfied with the superintendent’s performance, City may request a qualified replacement of the superintendent. Failure to comply may result in temporary suspension of the Work, at Contractor’s sole expense and with no extension of Contract Time, until an approved superintendent is physically present to supervise the Work. Contractor must provide written notice to City, as soon as practicable, before replacing the superintendent.

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(E) Standards. Contractor must, at all times, ensure that the Work is performed in an efficient, skillful manner following best practices and in full compliance with the Contract Documents, Laws, and applicable manufacturer’s recommendations.

Contractor has a material and ongoing obligation to provide true and complete information, to the best of its knowledge, with respect to all records, documents, or communications pertaining to the Project, including oral or written reports, statements, certifications, Change Order requests, or Claims. (F) Meetings. Contractor, its project manager, superintendent, and any primary Subcontractors requested by City, must attend a pre-construction conference, if requested by City, as well as weekly Project progress meetings scheduled with City. If applicable, Contractor may also be required to participate in coordination meetings with other parties relating to other work being performed on or near the Project site or in relation to the Project, including work or activities performed by City, other contractors, or other utility owners.
(G) Construction Records. Contractor will maintain up-to-date, thorough, legible, and dated daily job reports, which document all significant activity on the Project for each day that Work is performed on the Project. The daily report for each day must include the number of workers at the Project site; primary Work activities; major deliveries; problems encountered, including injuries, if any; weather and site conditions; and delays, if any. Contractor will take date and timestamped photographs to document general progress of the Project, including site conditions prior to construction activities, before and after photographs at offset trench laterals, existing improvements, and utilities, damage, and restoration.

Contractor will maintain copies of all subcontracts, Project-related correspondence with Subcontractors, and records of meetings with Subcontractors. Upon request by the City, Contractor will permit review of and/or provide copies of any of these construction records.
(H) Responsible Party. Contractor is solely responsible to City for the acts or omissions of any Subcontractors, or any other party or parties performing portions of the Work or providing equipment, materials, or services for or on behalf of Contractor or the Subcontractors. Upon City’s written request, Contractor must promptly and permanently remove from the Project, at no cost to City, any employee, Subcontractor, or employee of a Subcontractor who the Engineer has determined to be incompetent, intemperate, or disorderly, or who has failed or refused to perform the Work as required under the Contract Documents. (I) Correction of Defects. Contractor must promptly correct, at Contractor’s sole expense, any Work that is determined by City to be deficient or defective in any way, including workmanship, materials, parts, or equipment. Workmanship, materials, parts, or equipment that do not conform to the requirements under the Plans, Specifications, and every other Contract Document, as determined by City, will be considered defective and subject to rejection. Contractor must also promptly

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correct, at Contractor’s sole expense, any Work performed beyond the lines and grades shown on the Plans or established by City, and any Extra Work performed without City’s prior written approval. If Contractor fails to correct or to take reasonable steps toward correcting defective Work within five days following notice from City, or within the time specified in City’s notice to correct, City may elect to have the defective Work corrected by its own forces or by a third party, in which case the cost of correction will be deducted from the Contract Price. If City elects to correct defective Work due to Contractor’s failure or refusal to do so, City or its agents will have the right to take possession of and use any equipment, supplies, or materials available at the Project site or any Worksite on City property, in order to effectuate the correction, at no extra cost to City. Contractor’s warranty obligations under Section 11.2, Warranty, will not be waived nor limited by City’s actions to correct defective Work under these circumstances. Alternatively, City may elect to retain defective Work, and deduct the difference in value, as determined by the Engineer, from payments otherwise due to Contractor. This paragraph applies to any defective Work performed by Contractor during the oneyear warranty period under Section 11.2. (J) Contractor’s Records. Contractor must maintain all of its records relating to the Project in any form, including paper documents, photos, videos, electronic records, approved samples, and the construction records required pursuant to paragraph (G), above. Project records subject to this provision include, but are not limited to, complete Project cost records and records relating to preparation of Contractor’s bid, including estimates, take-offs, and price quotes or bids. (1) Contractor’s cost records must include all supporting documentation, including original receipts, invoices, and payroll records, evidencing its direct costs to perform the Work, including, but not limited to, costs for labor, materials, and equipment. Each cost record should include, at a minimum, a description of the expenditure with references to the applicable requirements of the Contract Documents, the amount actually paid, the date of payment, and whether the expenditure is part of the original Contract Price, related to an executed Change Order, or otherwise categorized by Contractor as Extra Work. Contractor’s failure to comply with this provision as to any claimed cost operates as a waiver of any rights to recover the claimed cost.
(2) Contractor must continue to maintain its Project-related records in an organized manner for a period of five years after City’s acceptance of the Project or following Contract termination, whichever occurs first. Subject to prior notice to Contractor, City is entitled to inspect or audit any of Contractor’s records relating to the Project or to investigate Contractor’s plant or equipment during Contractor’s normal business hours. Contractor’s records may also be subject to examination and audit by the California State Auditor, pursuant to Government Code § 8546.7.The record-keeping

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requirements set forth in this subsection 2.2(J) will survive expiration or termination of the Contract.
(K) Copies of Project Documents. Contractor and its Subcontractors must keep copies, at the Project site, of all Work-related documents, including the Contract, permit(s), Plans, Specifications, Addenda, Contract amendments, Change Orders, RFIs and RFI responses, Shop Drawings, as-built drawings, schedules, daily records, testing and inspection reports or results, and any related written interpretations. These documents must be available to City for reference at all times during construction of the Project.

2.3 Subcontractors.
(A) General. All Work which is not performed by Contractor with its own forces must be performed by Subcontractors, City reserves the right to approve or reject any and all Subcontractors proposed to perform the Work, for reasons including the Subcontractor’s poor reputation, lack of relevant experience, financial instability, and lack of technical ability or adequately trained workforce. Each Subcontractor must obtain a City business license before performing any Work. (B) Contractual Obligations. Contractor must require each Subcontractor to comply with the provisions of the Contract Documents as they apply to the Subcontractor’s portion(s) of the Work, including the generally applicable terms of the Contract Documents, and to likewise bind their subcontractors. Contractor will provide that the rights that each Subcontractor may have against any manufacturer or supplier for breach of warranty or guarantee relating to items provided by the Subcontractor for the Project, will be assigned to City. Nothing in these Contract Documents creates a contractual relationship between a Subcontractor and City, but City is deemed to be a third-party beneficiary of the contract between Contractor and each Subcontractor. Copies of subcontracts must be available to the Engineer upon request. Before a Subcontractor commences Work on the Project, Contractor must provide the Engineer a written statement with the name of the Subcontractor, a description of each portion of the Work performed by the Subcontractor, and the percentage of the overall Work to be performed by the Subcontractor.
(C) Termination. If the Contract is terminated, each Subcontractor’s agreement must be assigned by Contractor to City, subject to the prior rights of any surety, but only if and to the extent that City accepts, in writing, the assignment by written notification, and assumes all rights and obligations of Contractor pursuant to each such subcontract agreement.
(D) Substitution of Subcontractor. If Contractor requests substitution of a listed Subcontractor under Public Contract Code Section 4107, Contractor is solely responsible for all costs City incurs in responding to the request, including legal fees and costs to conduct a hearing, and any increased subcontract cost to

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perform the Work that was to be performed by the listed Subcontractor. If City determines that a Subcontractor is unacceptable to City based on the Subcontractor’s failure to satisfactorily perform its Work, or for any of the grounds for substitution listed in Public Contract Code Section 4107(a), City may request removal of the Subcontractor from the Project. Upon receipt of a written request from City to remove a Subcontractor pursuant to this paragraph, Contractor will immediately remove the Subcontractor from the Project and, at no further cost to City, will either (1) self-perform the remaining Work to the extent that Contractor is duly licensed and qualified to do so, or (2) substitute a Subcontractor that is acceptable to City, in compliance with Public Contract Code Section 4107, as applicable.

2.4 Coordination of Work.
(A) Concurrent Work. City reserves the right to perform have performed or permit performance of other work on or adjacent to the Project site while the Work is being performed for the Project. Contractor is responsible for coordinating its Work with other work being performed on or adjacent to the Project site, including by any utility companies or agencies, and must avoid hindering, delaying, or interfering with the work of other contractors, individuals, or entities, and must ensure safe and reasonable site access and use as required or authorized by City.

To the full extent permitted by law, Contractor must hold harmless and indemnify City against any and all claims arising from or related to Contractor’s avoidable, negligent, or willful hindrance of, delay to, or interference with the work of any utility company or agency or another contractor or subcontractor. (B) Coordination. If Contractor’s Work will connect or interface with work performed by others, Contractor is responsible for independently measuring and visually inspecting such work to ensure a correct connection and interface.

Contractor is responsible for any failure by Contractor or its Subcontractors to confirm measurements before proceeding with connecting Work. Before proceeding with any portion of the Work affected by the construction or operations of others, Contractor must give the Project Manager prompt written notification of any defects Contractor discovers which will prevent the proper execution of the Work. Failure to give notice of any known or reasonably discoverable defects will be deemed acknowledgement by Contractor that the work of others is not defective and will not prevent the proper execution of the Work. Contractor must also promptly notify City if work performed by others, including work or activities performed by City’s own forces, is operating to hinder, delay, or interfere with Contractor’s timely performance of the Work. City reserves the right to back charge Contractor for any additional costs incurred due to Contractor’s failure to comply with the requirements in this Section 2.4.

2.5 Submittals. Unless otherwise specified, Contractor must submit to Engineer for review and acceptance, all schedules, Design Documents, Shop Drawings, samples, product data and similar submittals required by the Contract Documents,

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or upon request by Engineer. Unless otherwise specified, all submittals, including Requests for Information (RFIs) are subject to the provisions of this Section, as well as specific submittal requirements that may be included elsewhere in the Contract Documents, including the Special Conditions or Specifications. The Engineer may require submission of a submittal schedule at or before a preconstruction conference, as may be specified in the Notice to Proceed. (A) General. Contractor is responsible for ensuring that its submittals are accurate and conform to the Contract Documents.
(B) Time and Manner of Submission. Contractor must ensure that its submittals are prepared and delivered in a manner consistent with the current Cityaccepted schedule for the Work and within the applicable time specified elsewhere in the Contract Documents, or if no time is specified, in such time and sequence so as not to delay the performance of the Work or completion of the Project. (C) Required Contents. Each submittal must include the Project name and contract number, Contractor’s name and address, the name and address of any Subcontractor or supplier involved with the submittal, the date, and references to applicable Specification section(s) and/or drawing and detail number(s). (D) Required Corrections. If corrections are required, Contractor must promptly make and submit any required corrections as specified in full conformance with the requirements of this Section, or other requirements that apply to that submittal.
(E) Effect of Review and Acceptance. Review and acceptance of a submittal by City will not relieve Contractor from complying with the requirements of the Contract Documents. Contractor is responsible for any errors in any submittal, and review or acceptance of a submittal by City is not an assumption of risk or liability by City.
(F) Enforcement. Any Work performed or any material furnished, installed, fabricated, or used without City’s prior acceptance of a required submittal is performed or provided at Contractor’s risk, and Contractor may be required to bear the costs incident thereto, including the cost of removing and replacing such Work or material, repairs to other affected portions of the Work, and the cost of additional time or services required of City, including costs for the Design Professional, Project Manager, or Inspector.
(G) Excessive RFIs. An RFI will be considered excessive or unnecessary if the City determines that the explanation or response to the RFI is clearly and unambiguously discernable from the Contract Documents. City’s costs to review and respond to excessive or unnecessary RFIs may be deducted from payments otherwise due to Contractor.

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2.6 Design Documents & Shop Drawings. When Design Documents and Shop Drawings are required by the Specifications or requested by the Engineer, they must be prepared according to best practices at Contractor’s expense. The Design Documents and Shop Drawings must be of a size and scale to clearly show all necessary details.

Unless otherwise specified by City, Design Documents and Shop Drawings must be provided to the Engineer for review and acceptance at least 30 days before the Work will be performed. If City requires changes, the corrected Design Documents and Shop Drawings must be resubmitted to the Engineer for review within the time specified by the Engineer. For all Project components requiring Design Documents and/or Shop Drawings, Contractor will not furnish materials or perform any Work until the Design Documents and/or Shop Drawings for those components are accepted by City.

Contractor is responsible for any errors or omissions in the Design Documents and/or Shop Drawings, shop fits and field corrections; any deviations from the Contract Documents; and for the results obtained by the use of the Design Documents and/or Shop Drawings. Acceptance of Design Documents and/or Shop Drawings by City does not relieve Contractor of Contractor’s responsibility.

2.7 Access to Work. Contractor must afford prompt and safe access to any Worksite by City and its employees, agents, or consultants authorized by City; and upon request by City, Contractor must promptly arrange for City representatives to visit or inspect manufacturing sites or fabrication facilities for items to be incorporated into the Work.

2.8 Personnel. Contractor and its Subcontractors must employ only competent and skillful personnel to perform the Work. Contractor and its Subcontractor’s supervisors, security or safety personnel, and employees who have unescorted access to the Project site must possess proficiency in English sufficient to read, understand, receive, and implement oral or written communications or instructions relating to their respective job functions, including safety and security requirements. Upon written notification from the Engineer, Contractor and its Subcontractors must immediately discharge any personnel who are incompetent, disorderly, disruptive, threatening, abusive, or profane, or otherwise refuse or fail to comply with the requirements of the Contract Documents or Laws, including Laws pertaining to health and safety. Any such discharged personnel may not be re-employed or permitted on the Project in any capacity without City’s prior written consent.

Article 3 - Contract Documents

3.1 Interpretation of Contract Documents.
(A) Plans and Specifications. The Plans and Specifications included in the Contract Documents are complementary. If Work is shown on one but not on the other, Contractor must perform the Work as though fully described on both, consistent with the Contract Documents and reasonably inferable from them as being necessary to produce the indicated results. The Plans and Specifications are deemed to include and require everything necessary and reasonably incidental

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to completion of the Work, whether or not particularly mentioned or shown.

Contractor must perform all Work and services and supply all things reasonably related to and inferable from the Contract Documents. In the event of a conflict between the Plans and Specifications, the Specifications will control, unless the Plan(s) at issue are dated later than the Specification(s) at issue. Detailed drawings take precedence over general drawings, and large-scale drawings take precedence over smaller scale drawings. Any arrangement or division of the Plans and Specifications into sections is for convenience and is not intended to limit the Work required by separate trades. A conclusion presented in the Plans or Specifications is only a recommendation. Actual locations and depths must be determined by Contractor’s field investigation. Contractor may request access to underlying or background information in City’s possession that is necessary for Contractor to form its own conclusions.
(B) Duty to Notify and Seek Direction. If Contractor becomes aware of a changed condition in the Project, or of any ambiguity, conflict, inconsistency, discrepancy, omission, or error in the Contract Documents, including the Plans or Specifications, Contractor must promptly submit a Request for Information to the Engineer and wait for a response from City before proceeding further with the related Work. The RFI must notify the City of the issue and request clarification, interpretation, or direction. The Engineer’s clarification, interpretation, or direction will be final and binding on Contractor. If Contractor proceeds with the related Work before obtaining City’s response, Contractor will be responsible for any resulting costs, including the cost of correcting any incorrect or defective Work that results.

Timely submission of a clear and complete RFI is essential to avoiding delay.

Delay resulting from Contractor’s failure to submit a timely and complete RFI to the Engineer is Non-Excusable Delay. If Contractor believes that City’s response to an RFI justifies a change to the Contract Price or Contract Time, Contractor must perform the Work as directed, but may submit a timely Change Order request in accordance with the Contract Documents. (See Articles 5 and 6.) (C) Figures and Dimensions. Figures control over scaled dimensions. (D) Technical or Trade Terms. Any terms that have well-known technical or trade meanings will be interpreted in accordance with those meanings, unless otherwise specifically defined in the Contract Documents. (E) Measurements. Contractor must verify all relevant measurements in the Contract Documents and at the Project site before ordering any material or performing any Work, and will be responsible for the correctness of those measurements or for costs that could have been avoided by independently verifying measurements.
(F) Compliance with Laws. The Contract Documents are intended to comply with Laws and will be interpreted to comply with Laws.

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3.2 Order of Precedence. Information included in one Contract Document but not in another will not be considered a conflict or inconsistency. Unless otherwise specified in the Special Conditions, in case of any conflict or inconsistency among the Contract Documents, the following order of precedence will apply, beginning from highest to lowest, with the most recent version taking precedent over an earlier version:
(A) Change Orders;
(B) Addenda;
(C) Contract;
(D) Notice to Proceed;
(E) Appendix B- Federal Contract Requirements (only if used); (F) Special Conditions;
(G) General Conditions;
(H) Payment and Performance Bonds;
(I) Energy Services Proposal/Scope
(J) Appendix A – Federal Bidding Requirements (only if used); (K) The City’s standard specifications, as applicable; and (L) Any generic documents prepared by and on behalf of a third party, that were not prepared specifically for this Project, such as Caltrans Standard Specifications or Caltrans Special Provisions.

3.3 Caltrans Standard Specifications. Any reference to or incorporation of the Standard Specifications of the State of California, Department of Transportation (“Caltrans”), including “Standard Specifications,” “Caltrans Specifications,” “State Specifications,” or “CSS,” means the most current edition of Caltrans’ Standard Specifications, unless otherwise specified (“Caltrans Standard Specifications”), including the most current amendments as of the date that Contractor’s bid was submitted for this Project. The following provisions apply to use of or reference to the Caltrans Standard Specifications or Special Provisions:
(A) Limitations. None of the “General Provisions” of the Caltrans Standard Specifications, i.e., Sections 1 through 9, applies to these Contract Documents with the exception of any specific provisions, if any, which are expressly stated to apply to these Contract Documents.
(B) Conflicts or Inconsistencies. If there is a conflict or inconsistency between any provision in the Caltrans Standard Specifications or Special Provisions and a provision of these Contract Documents, as determined by City, the provision in the Contract Documents will govern.
(C) Meanings. Terms used in the Caltrans Standard Specifications or Special Provisions are to be interpreted as follows:
(1) Any reference to the “Engineer” is deemed to mean the City Engineer.

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(2) Any reference to the “Special Provisions” is deemed to mean the Special Conditions, unless the Caltrans Special Provisions are expressly included in the Contract Documents listed in Section 2 of the Contract. (3) Any reference to the “Department” or “State” is deemed to mean City.

3.4 For Reference Only. Contractor is responsible for the careful review of any document, study, or report provided by the City or appended to the Contract Documents solely for informational purposes and identified as “For Reference Only.” Nothing in any document, study, or report so appended and identified is intended to supplement, alter, or void any provision of the Contract Documents. Contractor is advised that City or its representatives may be guided by information or recommendations included in such reference documents, particularly when making determinations as to the acceptability of proposed materials, methods, or changes in the Work. Any record drawings or similar final or accepted drawings or maps that are not part of the Contract Documents are deemed to be For Reference Only. The provisions of the Contract Documents are not modified by any perceived or actual conflict with provisions in any document that is provided For Reference Only.

3.5 Current Versions. Unless otherwise specified by City, any reference to standard specifications, technical specifications, or any City or state codes or regulations means the latest specification, code, or regulation in effect at the time the Contract is signed.

3.6 Conformed Copies. If City prepares a conformed set of the Contract Documents following award of the Contract, it will provide Contractor with two hard copy (paper) sets and one copy of the electronic file in PDF format. It is Contractor’s responsibility to ensure that all Subcontractors, including fabricators, are provided with the conformed set of the Contract Documents at Contractor’s sole expense.

3.7 Ownership. No portion of the Contract Documents may be used for any purpose other than construction of the Project, without prior written consent from City. Contractor is deemed to have conveyed the copyright in any designs, drawings, specifications, Shop Drawings, or other documents (in paper or electronic form) developed by Contractor for the Project, and City will retain all rights to such works, including the right to possession.

Article 4 - Bonds, Indemnity, and Insurance

4.1 Payment and Performance Bonds. Within ten days following issuance of the Notice of Award, Contractor is required to provide a payment bond and a performance bond, each in the penal sum of not less than 100 percent of the Contract Price, and each executed by Contractor and its surety using the bond forms included with the Contract Documents.
(A) Surety. Each bond must be issued and executed by a surety admitted in California. If an issuing surety cancels the bond or becomes insolvent, within

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seven days following written notice from City, Contractor must substitute a surety acceptable to City. If Contractor fails to substitute an acceptable surety within the specified time, City may, at its sole discretion, withhold payment from Contractor until the surety is replaced to City’s satisfaction, or terminate the Contract for default.
(B) Supplemental Bonds for Increase in Contract Price. If the Contract Price increases during construction by five percent or more over the original Contract Price, Contractor must provide supplemental or replacement bonds within ten days of written notice from City pursuant to this Section, covering 100% of the increased Contract Price and using the bond forms included with the Contract Documents.

4.2 Indemnity. To the fullest extent permitted by law, Contractor must indemnify, defend, and hold harmless City, its Council, officers, officials, employees, agents, volunteers, and consultants, (individually, an “Indemnitee,” and collectively the “Indemnitees”) from and against any and all liability, loss, damage, claims, causes of action, demands, charges, fines, costs, and expenses (including, without limitation, attorney fees, expert witness fees, paralegal fees, and fees and costs of litigation or arbitration) (collectively, “Liability”) of every nature arising out of or in connection with the acts or omissions of Contractor, its employees, Subcontractors, representatives, or agents, in bidding or performing the Work or in failing to comply with any obligation of Contractor under the Contract, except such Liability caused by the active negligence, sole negligence, or willful misconduct of an Indemnitee. This indemnity requirement applies to any Liability arising from alleged defects in the content or manner of submission of Contractor’s bid for the Contract. Contractor’s failure or refusal to timely accept a tender of defense pursuant to this Contract will be deemed a material breach of this Contract.

City will timely notify Contractor upon receipt of any third-party claim relating to the Contract, as required by Public Contract Code Section 9201. Contractor waives any right to express or implied indemnity against any Indemnitee. Contractor’s indemnity obligations under this Contract will survive the expiration or any early termination of the Contract.

4.3 Insurance. No later than ten days following issuance of the Notice of Award, Contractor must procure and provide proof of the insurance coverage required by this Section in the form of certificates and endorsements acceptable to City. The required insurance must cover the activities of Contractor and its Subcontractors relating to or arising from the performance of the Work, and must remain in full force and effect at all times during the period covered by the Contract through the date of City’s acceptance of the Project. The coverages may be arranged under a single policy for the full limits required or by a combination of underlying policies with the balance provided by excess or “umbrella” policies, provided each such policy complies with the requirements set forth herein. If Contractor fails to provide any of the required coverage in full compliance with the requirements of the Contract Documents, City may, at its sole discretion, purchase such coverage at Contractor’s expense and deduct the cost from payments due to Contractor, or terminate the Contract for default. Contractor further understands that City

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reserves the right to modify the insurance requirements set forth herein, with thirty (30) days’ notice provided to Contractor, at any time as deemed necessary to protect the interests of City. The procurement of the required insurance will not be construed to limit Contractor's liability under this Contract or to fulfill Contractor's indemnification obligations under this Contract.
(A) Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by City. If the City’s Risk Manager determines that the deductibles and/or self-insured retentions are unacceptably high, at City’s option, Contractor must either reduce or eliminate the deductibles and/or self-insured retentions as they apply to City and all required Additional Insured; or must provide a financial guarantee, to City’s satisfaction, guaranteeing payment of losses and related investigation, claim administration, and legal expenses.
(B) Policies and Limits. The following insurance policies and limits are required for this Contract unless otherwise specified in the Special Conditions:
(1) Commercial General Liability Insurance (“CGL”). Contractor shall maintain CGL and must include coverage for liability arising from Contractor’s or its Subcontractor’s acts or omissions in the performance of the Work against claims and liabilities for personal injury, death, or property damage providing protection in the minimum amount of: (i) two million dollars ($2,000,000.00) combined single limit each occurrence and either a general aggregate limit of four million dollars ($4,000,000.00) or a general aggregate limit of two million dollars ($2,000,000.00) as applied on a “per project” or “per location” basis, or (ii) the maximum amount of such insurance available to Contractor under Contractor’s combined insurance policies (including any excess or “umbrella” policies), whichever is greater.
a. CGL policy may not exclude explosion, collapse, underground excavation hazard, or removal of lateral support.
b. CGL policy must include contractor’s protected coverage, blanket contractual, and completed operations.
(2) Builder’s Risk Insurance: The Builder’s Risk Insurance policy must be issued on occurrence basis, for all-risk coverage (including Flood and Earthquake) on a one hundred percent (100%) completed value basis on the insurable portion of the Project for the benefit of City. (3) Workers’ Compensation Insurance and Employer’s Liability:

Contractor shall maintain Workers Compensation coverage, as required by law. The policy must comply with the requirements of the California Workers’ Compensation Insurance and Safety Act and provide

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protection in the minimum amount of: (i) One Million Dollars ($1,000,000.00) for any one accident or occurrence, or (ii) the maximum amount of such insurance available to Contractor under Contractor’s combined insurance policies (including any excess or “umbrella” policies), whichever is greater. If Contractor is self-insured, Contractor must provide its Certificate of Permission to Self-Insure, duly authorized by the Department of Industrial Relations.
(4) Automobile Liability: Contractor shall maintain Automobile Liability covering all owned, non-owned and hired automobiles (if Contractor does not own automobiles, then Contractor shall maintain Hired/Nonowned Automobile Liability) against claims and liabilities for personal injury, death, or property damage providing protection in the minimum amount of: (i) One Million Dollars ($1,000,000.00) combined single limit, or (ii) the maximum amount of such insurance available to Contractor under Contractor’s combined insurance policies (including any excess or “umbrella” policies), whichever is greater. (5) Pollution (Environmental) Liability: If the performance of Contractor’s work or service under this Contract involves hazardous materials, contaminated soil disposal, and/or a risk of accidental release of fuel oil, chemicals or other toxic gases or hazardous materials, Contractor shall procure and maintain Pollution Liability covering Contractor's liability for bodily injury, property damage and environmental damage resulting from pollution and related cleanup costs arising out of the work or services to be performed under this Contract. Coverage shall be provided for both work performed on site, as well as during the transport of hazardous materials. Such coverage shall be in the minimum amount of: (i) One Million Dollars ($1,000,000.00) for any one accident or occurrence, or (ii) the maximum amount of such insurance available to Contractor under Contractor’s combined insurance policies (including any excess or “umbrella” policies), whichever is greater. (6) Professional Liability:
a. If the performance of Contractor’s work or service under this Contract involves professional and/or technical services (examples include, but are not limited to, architects, engineers, land surveyors, legal services, and appraisers), Contractor shall procure and maintain either a claims made or occurrence Errors and Omission liability insurance in the minimum amount of: (i) One Million Dollars ($1,000,000.00) each claim, or (ii) the maximum amount of such insurance available to Contractor under Contractor’s combined insurance policies (including any excess or “umbrella” policies), whichever is greater. Further, if Contractor maintains a claims-made policy, Contractor shall provide written evidence of such insurance

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to City for at least five (5) years after the completion of work performed under this Contract.
b. If the performance of Contractor’s work or service under this Contract relates to Information Technology or related services (examples include, but are not limited to computer programmers, hardware engineers, or other systems consultants), Contractor shall procure and maintain a claims made Errors and Omission liability insurance, including Cyber Liability and Data Breach, in the minimum amount of: (i) One Million Dollars ($1,000,000.00) each claim, or (ii) the maximum amount of such insurance available to Contractor under Contractor’s combined insurance policies (including any excess or “umbrella” policies), whichever is greater.
(C) Required Endorsements. Contractor must provide proof of the following endorsements, listed for each policy for which endorsements are required, as outlined below:
(1) For all Policies except Builder’s Risk and Professional Liability:
a. “Waiver of Subrogation” endorsements providing that the carrier agrees to waive any right of subrogation it may have against the City of Morgan Hill and the City’s elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers.
(2) General Liability, Automobile, and Pollution Liability:
a. “Additionally Insured” - The City of Morgan Hill, its elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers are named as additional insureds on a form at least as broad as ISO Form CG 20 10 for ongoing operations and at least as broad as ISO Form CG 20 37 for completed operations.

b. “Primary and Non-Contributing” - Insurance shall be endorsed to be primary and non-contributory and will not seek contribution from the City’s insurance or self-insurance and shall be at least as broad as ISO Form CG 20 01.
(3) General Liability:
a. “Separation of Insureds” endorsements stating that the inclusion of more than one insured will not operate to impair the rights of one insured against another, and the coverages afforded will apply as though separate policies have been issued to each insured.

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(D) Subcontractors. Contractor must ensure that each Subcontractor is required to maintain the same insurance coverage required under this Section 4.3, with respect to its performance of Work on the Project, including those requirements related to the additional insureds and waiver of subrogation.

Contractor must confirm that each Subcontractor has complied with requirements as outlined herein. The insurance requirements for Subcontractors do not replace or limit the Contractor’s insurance obligations.
(E) Qualification of Insurers. All insurance required pursuant to this Contract must be issued by a company licensed and admitted, or otherwise legally authorized to carry out insurance business in the State of California, and each insurer must have a current A.M. Best's financial strength rating of “A” or better and a financial size rating of “VIII” or better.
(F) Certificates. Contractor must furnish City with copies of all certificates as outlined herein, whether new or modified, promptly upon receipt. In the event of a claim or legal action, CONSULTANT shall promptly furnish CITY of Morgan Hill with copies of all policies outlined herein. No policy subject to Contractor’s Contract with City shall be reduced, canceled, allowed to expire, or materially changed except after thirty (30) days' notice by the insurer to City, unless due to nonpayment of premiums, in which case ten (10) days written notice must be made to City. Certificates, including renewal certificates, may be mailed electronically to [email protected] or delivered to the Certificate Holder address as follows:

City of Morgan Hill
Attn: Risk Management
17575 Peak Avenue
Morgan Hill, CA 95037
(G) Contractor’s Responsibilities. This Section 4.3 establishes the minimum requirements for Contractor’s insurance coverage in relation to this Project, but is not intended to limit Contractor’s ability to procure additional or greater coverage.

Contractor is responsible for its own risk assessment and needs and is encouraged to consult its insurance provider to determine what coverage it may wish to carry beyond the minimum requirements of this Section. Contractor is solely responsible for the cost of its insurance coverage, including premium payments, deductibles, or self-insured retentions, and no Additional Insured will be responsible or liable for any of the cost of Contractor’s insurance coverage.

Article 5 - Contract Time

5.1 Time is of the Essence. Time is of the essence in Contractor’s performance and completion of the Work, and Contractor must diligently prosecute the Work and complete it within the Contract Time.

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(A) General. Contractor must commence the Work on the date indicated in the Notice to Proceed and must fully complete the Work in strict compliance with all requirements of the Contract Documents and within the Contract Time. Contractor may not begin performing the Work before the date specified in the Notice to Proceed.
(B) Authorization. Contractor is not entitled to compensation or credit for any Work performed before the date specified in the Notice to Proceed, with the exception of any schedules, submittals, or other requirements, if any, that must be provided or performed before issuance of the Notice to Proceed (C) Rate of Progress. Contractor and its Subcontractors must, at all times, provide workers, materials, and equipment sufficient to maintain the rate of progress necessary to ensure full completion of the Work within the Contract Time.

If City determines that Contractor is failing to prosecute the Work at a sufficient rate of progress, City may, in its sole discretion, direct Contractor to provide additional workers, materials, or equipment, or to work additional hours or days without additional cost to City, in order to achieve a rate of progress satisfactory to City. If Contractor fails to comply with City’s directive in this regard, City may, at Contractor’s expense, separately contract for additional workers, materials, or equipment or use City’s own forces to achieve the necessary rate of progress.

Alternatively, City may terminate the Contract based on Contractor’s default.

5.2 Schedule Requirements. Contractor must prepare all schedules using standard, commercial scheduling software acceptable to Engineer, and must provide the schedules in electronic and paper form as requested by the Engineer. In addition to the general scheduling requirements set forth below, Contractor must also comply with any scheduling requirements included in the Special Conditions or in the Technical Specifications.
(A) Baseline (As-Planned) Schedule. Within ten calendar days following City’s issuance of the Notice to Proceed (or as otherwise specified in the Notice to Proceed), Contractor must submit to City for review and acceptance a baseline asplanned schedule using critical path methodology showing in detail how Contractor plans to perform and fully complete the Work within the Contract Time including labor, equipment, materials, and fabricated items. The baseline schedule must show the order of the major items of Work and the dates of start and completion of each item, including when the materials and equipment will be procured. The schedule must also include the work of all trades reflecting anticipated labor or crew hours and equipment loading for the construction activities, and must be sufficiently comprehensive and detailed to enable progress to be monitored on a day-by-day basis. For each activity, the baseline schedule must be dated, provided in the format specified in the Contract Documents or as required by City, and must include, at a minimum, a description of the activity, the start and completion dates of the activity, and the duration of the activity.

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(1) Specialized Materials Ordering. Within five calendar days following issuance of the Notice to Proceed, Contractor must order any specialized material or equipment for the Work that is not readily available from material suppliers. Contractor must also retain documentation of the purchase order date(s).
(B) City’s Review of Schedules. City will review and may note exceptions to the baseline schedule, and to the progress schedules submitted as required below, to assure completion of the Work within the Contract Time. Contractor is solely responsible for resolving any exceptions noted in a schedule and, within seven days, must correct the schedule to address the exceptions. City’s review or acceptance of Contractor’s schedules will not operate to waive or limit Contractor’s duty to complete the Project within the Contract Time, nor to waive or limit City’s right to assess liquidated damages for Contractor’s unexcused failure to do so. (C) Progress Schedules. After City accepts the final baseline schedule with no exceptions, Contractor must submit an updated progress schedule and three week look-ahead schedule, in the format specified by City, for review and acceptance with each application for a progress payment or when otherwise specified by City, until completion of the Work. The updated progress schedule must show: how the actual progress of the Work as constructed to date compares to the baseline schedule; reflect any proposed changes in the construction schedule or method of operations, including to achieve Project milestones within the Contract Time; and identify any actual or potential impacts to the critical path.

Contractor must also submit periodic reports to City of any changes in the projected material or equipment delivery dates for the Project. (1) Float. The progress schedule must show early and late completion dates for each task. The number of days between those dates will be designated as the “float.” Any float belongs to the Project and may be allocated by the Engineer to best serve timely completion of the Project. (2) Failure to Submit Schedule. Reliable, up-to-date schedules are essential to efficient and cost-effective administration of the Project and timely completion. If Contractor fails to submit a schedule within the time periods specified in this Section, or submits a schedule to which City has noted exceptions that are not corrected, City may withhold up to five percent from payment(s) otherwise due to Contractor until the exceptions are resolved, the schedule is corrected and resubmitted, and City has accepted the schedule. In addition, Contractor’s failure to comply with the schedule requirements in this Section 5.2 will be deemed a material default and a waiver of any claims for Excusable Delay or loss of productivity arising during any period when Contractor is out of compliance, subject only to the limits of Public Contract Code Section 7102.

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(D) Recovery Schedule. If City determines that the Work is more than one week behind schedule, within seven days following written notice of such determination, Contractor must submit a recovery schedule, showing how Contractor intends to perform and complete the Work within the Contract Time, based on actual progress to date.
(E) Effect of Acceptance. Contractor and its Subcontractors must perform the Work in accordance with the most current City-accepted schedule unless otherwise directed by City. City’s acceptance of a schedule does not operate to extend the time for completion of the Work or any component of the Work, and will not affect City’s right to assess liquidated damages for Contractor’s unexcused delay in completing the Work within the Contract Time.
(F) Posting. Contractor must at all times prominently post a copy of the most current City-accepted progress or recovery schedule in its on-site office. (G) Reservation of Rights. City reserves the right to direct the sequence in which the Work must be performed or to make changes in the sequence of the Work in order to facilitate the performance of work by City or others, or to facilitate City’s use of its property. The Contract Time or Contract Price may be adjusted to the extent such changes in sequence actually increase or decrease Contractor’s time or cost to perform the Work.
(H) Authorized Working Days and Times. Contractor is limited to working Monday through Friday, excluding City of Morgan Hill-observed holidays, during City’s normal business hours, except as expressly provided in the Special Conditions, or as authorized in writing by City. City reserves the right to charge Contractor for additional costs incurred by City due to Work performed on days or during hours not expressly authorized in the Contract Documents, including reimbursement of costs incurred for inspection, testing, and construction management services.

5.3 Delay and Extensions of Contract Time.
(A) Notice of Delay. If Contractor becomes aware of any actual or potential delay affecting the critical path, Contractor must promptly notify the Engineer in writing, regardless of the nature or cause of the delay, so that City has a reasonable opportunity to mitigate or avoid the delay.
(B) Excusable Delay. The Contract Time may be extended if Contractor encounters “Excusable Delay,” which is an unavoidable delay in completing the Work within the Contract Time due to causes completely beyond Contractor’s control, and which Contractor could not have avoided or mitigated through reasonable care, planning, foresight, and diligence, provided that Contractor is otherwise fully performing its obligations under the Contract Documents. Grounds for Excusable Delay may include fire, natural disasters, including earthquake or

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unusually severe weather, acts of terror or vandalism, epidemic, unforeseeable adverse government actions, unforeseeable actions of third parties, supply chain material delays, permit approval delays, delays caused by utility companies (Pacific Gas & Electric (“PG&E”), encountering unforeseeable hazardous materials, unforeseeable site conditions, or suspension for convenience under Article 13. The Contract Time will not be extended based on circumstances which will not unavoidably delay completing the Work within the Contract Time based on critical path analysis.
(C) Weather Delays. A “Weather Delay Day” is a Working Day during which Contractor and its forces, including Subcontractors, are unable to perform more than 40% of the critical path Work scheduled for that day due to adverse weather conditions which impair the ability to safely or effectively perform the scheduled critical path Work that day. Adverse weather conditions may include rain, saturated soil, and Project site clean-up required due to adverse weather. Determination of what constitutes critical path Work scheduled for that day will be based on the most current, City-approved schedule. Contractor will be entitled to a non-compensable extension of the Contract Time for each Weather Delay Day in excess of the normal Weather Delay Days within a given month as determined by reliable records, including monthly rainfall averages, for the preceding ten years (or as otherwise specified in the Special Conditions or Specifications). (1) Contractor must fully comply with the applicable procedures in Articles 5 and 6 of the General Conditions regarding requests to modify the Contract Time.
(2) Contractor will not be entitled to an extension of time for a Weather Delay Day to the extent Contractor is responsible for concurrent delay on that day.
(3) Contractor must take reasonable steps to mitigate the consequences of Weather Delay Days, including prudent workforce management and protecting the Work, Project Site, materials, and equipment. (D) Non-Excusable Delay. Delay which Contractor could have avoided or mitigated through reasonable care, planning, foresight, and diligence is “NonExcusable Delay.” Contractor is not entitled to an extension of Contract Time or any compensation for Non-Excusable Delay, or for Excusable Delay that is concurrent with Non-Excusable Delay. Non-Excusable Delay includes delay caused by:
(1) weather conditions which are normal for the location of the Project, as determined by reliable records, including monthly rainfall averages, for the preceding ten years;

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(2) Contractor’s failure to order equipment and materials sufficiently in advance of the time needed for completion of the Work within the Contract Time;
(3) Contractor’s failure to provide adequate notification to utility companies or agencies for connections or services necessary for completion of the Work within the Contract Time;
(4) foreseeable conditions which Contractor could have ascertained from reasonably diligent inspection of the Project site or review of the Contract Documents or other information provided or available to the Contractor;
(5) Contractor’s failure, refusal, or financial inability to perform the Work within the Contract Time, including insufficient funds to pay its Subcontractors or suppliers.
(6) performance or non-performance by Contractor’s Subcontractors or suppliers;
(7) the time required to respond to excessive RFIs (see Section 2.5(G)); (8) delayed submission of required submittals, or the time required for correction and resubmission of defective submittals;
(9) time required for repair of, re-testing, or re-inspection of defective Work; (10) enforcement of Laws by City, or outside agencies with jurisdiction over the Work; or
(11) City’s exercise or enforcement of any of its rights or Contractor’s duties pursuant to the Contract Documents, including correction of defective Work, extra inspections or testing due to non-compliance with Contract requirements, safety compliance, environmental compliance, or rejection and return of defective or deficient submittals.
(E) Compensable Delay. Pursuant to Public Contract Code Section 7102, in addition to entitlement to an extension of Contract Time, Contractor is entitled to compensation for costs incurred due to delay caused solely by City, when that delay is unreasonable under the circumstances involved and not within the contemplation of the parties (“Compensable Delay”). Contractor is not entitled to an extension of Contract Time or recovery of costs for Compensable Delay that is concurrent with Non-Excusable Delay. Delay due to causes that are beyond the control of either City or Contractor, including Weather Delay Days, discovery of Historic or Archeological Items pursuant to Section 7.18, or the actions or inactions of third parties or other agencies, is not Compensable Delay, and will only entitle

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Contractor to an extension of time commensurate with the time lost due to such delay.
(F) Recoverable Costs. Contractor is not entitled to compensation for Excusable Delay unless it is Compensable Delay, as defined above. Contractor is entitled to recover only the actual, direct, reasonable, and substantiated costs (“Recoverable Costs”) for each working day that the Compensable Delay prevents Contractor from proceeding with more than 50% of the critical path Work scheduled for that day, based on the most recent progress schedule accepted by City. Recoverable Costs will not include home office overhead or lost profit. (G) Request for Extension of Contract Time or Recoverable Costs. A request for an extension of Contract Time or any associated Recoverable Costs must be submitted in writing to City within ten calendar days of the date the delay is first encountered, even if the duration of the delay is not yet known at that time, or any entitlement to the Contract Time extension or to the Recoverable Costs will be deemed waived. In addition to complying with the requirements of this Article 5, the request must be submitted in compliance with the Change Order request procedures in Article 6, below. Strict compliance with these requirements is necessary to ensure that any delay or consequences of delay may be mitigated as soon as possible, and to facilitate cost-efficient administration of the Project and timely performance of the Work. Any request for an extension of Contract Time or Recoverable Costs that does not strictly comply with all of the requirements of Article 5 and Article 6 will be deemed waived.
(1) Required Contents. The request must include a detailed description of the cause(s) of the delay, and must also describe the measures that Contractor has taken to mitigate the delay and/or its effects, including efforts to mitigate the cost impact of the delay, such as by workforce management, or by a change in sequencing. If the delay is still ongoing at the time the request is submitted, the request should also include Contractor’s plan for continued mitigation of the delay or its effects.
(2) Delay Days and Costs. The request must specify the number of days of Excusable Delay claimed, or provide a realistic estimate if the duration of the delay is not yet known. If the Contractor believes it is entitled to Recoverable Costs for Compensable Delay, the request must specify the amount of and basis for the Recoverable Costs that are claimed or provide a realistic estimate if the amount is not yet known. Any estimate of delay duration or cost must be updated in writing and submitted with all required supporting documentation as soon as the actual time and cost is known.

The maximum extension of Contract Time will be the number of days, if any, by which an Excusable Delay or a Compensable Delay exceeds any concurrent Non-Excusable Delay. Contractor is entitled to an extension of Contract Time, or compensation for Recoverable Costs, only if, and only to the extent that, such delay will unavoidably delay Final Completion.

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(3) Supporting Documentation. The request must also include any and all supporting documentation necessary to evidence the delay and its actual impacts, including scheduling and cost impacts, with a time impact analysis using critical path methodology, and demonstrating the unavoidable delay to Final Completion. The time impact analysis must be submitted in a form or format acceptable to City.
(4) Burden of Proof. Contractor has the burden of proving that the delay was an Excusable or Compensable Delay, as defined above; Contractor has fully complied with its scheduling obligations in Section 5.2, Schedule Requirements; Contractor has made reasonable efforts to mitigate the delay and its schedule and cost impacts; the delay will unavoidably result in delaying Final Completion, and any Recoverable Costs claimed by Contractor were actually incurred and were reasonable under the circumstances.
(5) Legal Compliance. Nothing in this Section 5.3 is intended to require the waiver, alteration, or limitation of the applicability of Public Contract Code Section 7102.
(6) No Waiver. Any grant of an extension of Contract Time or compensation for Recoverable Costs due to Compensable Delay will not operate as a waiver of City’s right to assess liquidated damages for Non-Excusable Delay.
(7) Dispute Resolution. In the event of a dispute over entitlement to an extension of Contract Time or compensation for Recoverable Costs, Contractor may not stop Work pending resolution of the dispute, but must continue to comply with its duty to diligently prosecute the performance and timely completion of the Work. Contractor’s sole recourse for an unresolved dispute based on City’s rejection of a Change Order request for an extension of Contract Time or compensation for Recoverable Costs is to comply with the dispute resolution provisions set forth in Article 12, below.

5.4 Liquidated Damages. It is expressly understood that if Final Completion is not achieved within the Contract Time, City will suffer damages from the delay that are difficult to determine and accurately specify. Pursuant to Public Contract Code section 7203, if Contractor fails to achieve Final Completion within the Contract Time, City will charge Contractor in the amount specified in the Contract for each calendar day that Final Completion is delayed beyond the Contract Time, as liquidated damages and not as a penalty. Any waiver of accrued liquidated damages, in whole or in part, is subject to approval of the City Council or its authorized delegee.

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(A) Liquidated Damages. Liquidated damages will not be assessed for any Excusable or Compensable Delay, as set forth above.
(B) Milestones. Liquidated damages may also be separately assessed for failure to meet milestones specified elsewhere in the Contract Documents. (C) Setoff. City is entitled to deduct the amount of liquidated damages assessed against any payments otherwise due to Contractor, including progress payments, Final Payment, or unreleased retention. If there are insufficient Contract funds remaining to cover the full amount of liquidated damages assessed, City is entitled to recover the balance from Contractor or its performance bond surety. (D) Occupancy or Use. Occupancy or use of the Project in whole or in part prior to Final Completion does not constitute City’s acceptance of the Project and will not operate as a waiver of City’s right to assess liquidated damages for Contractor’s Non-Excusable Delay in achieving Final Completion. (E) Other Remedies. City’s right to liquidated damages under this Section applies only to damages arising from Contractor’s Non-Excusable Delay or failure to complete the Work within the Contract Time. City retains its right to pursue all other remedies under the Contract for other types of damage, including damage to property or persons, costs, or diminution in value from defective materials or workmanship, costs to repair or complete the Work, or other liability caused by Contractor.

Article 6 - Contract Modification

6.1 Contract Modification. Subject to the limited exception set forth in subsection (D) below, any change in the Work or the Contract Documents, including the Contract Price or Contract Time, will not be a valid and binding change to the Contract unless it is formalized in a Change Order, including a “no-cost” Change Order or a unilateral Change Order. Changes in Work will not operate to release, limit, or abridge Contractor’s warranty obligations pursuant to Article 11 or any obligations of Contractor’s bond sureties.
(A) City-Directed Changes. City may direct changes in the scope or sequence of Work or the requirements of the Contract Documents, without invalidating the Contract. Such changes may include Extra Work as set forth in subsection (C) below, or deletion or modification of portions of the Work. Contractor must promptly comply with City-directed changes in the Work in accordance with the intent of the original Contract Documents, even if Contractor and City have not yet reached agreement as to adjustments to the Contract Price or Contract Time for the change in the Work or for the Extra Work. Contractor is not entitled to extra compensation for cost savings resulting from “value engineering” pursuant to Public Contract Code Section 7101, except to the extent authorized in advance by City in writing,

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Morgan Hill City CouncilJune 26, 2024

Morgan Hill City Council
June 26, 2024