Agenda packet — Orange City Council, August 25, 2026 (part 2 of 2)

302

CHANGE ORDER REQUEST (COR)
Project Name:

Project Number:

Requested By:

COR Number:

Date of Request:

Change Name: Villa Vista and Santiago Boulevard Improvements Description of Change (Required):

Perform the required additional work at Villa Vista and Santiago Boulevard in accordance with the previously submitted proposal. The negotiated lump sum includes all labor, materials, equipment, and traffic control necessary to complete the work.

Reason for Change (Required):

The City requested additional pipeline renewal work at Villa Vista and Santiago Boulevard beyond the original Contract scope.

Location of Change (Required): List all locations if various locations are included in this Request Villa Vista and Santiago Boulevard, City of Orange.

Additional Days Requested Due to Change (If Applicable):

N/A
Cost Breakdown: Total Net Change in Cost:

Negotiated lump sum per revised proposal. $135,000.00
Note: Attach all supporting documents for cost justification.

Requestor:

Signature:

Title: Date:

ANNUAL PIPELINE RENEWAL PROJECT
W725
All Cities Engineering, Inc.
3 7/27/26
V.P.
303
ALL CITIES ENGINEERING, INC.

PO BOX 3619
Riverside, CA 92519
License No. 1009171
(951) 255-3964
REVISED PROPOSAL – VILLA VISTA AND SANTIAGO BLVD
Per our discussions, we have agreed to perform the required work for a negotiated lump sum price of $135,000.00.

This lump sum amount includes all labor, materials, equipment, and traffic control necessary to complete the work described in the original proposal.

TOTAL LUMP SUM PRICE: $135,000.00
Accepted By: ________________________________
Date: ______________________________________
304
ALL CITIES ENGINEERING, INC.

PO Box 3619, Riverside, CA 92519
License No. 1009171 | (951) 255-3964

INVOICE

BILL TO
City of Orange
Public Works Department - Water Division
Invoice No. W725-CO1
Invoice Date 7/27/2026
Project No. W725
Change Order COR 1
Terms Per Contract

ANNUAL PIPELINE RENEWAL PROJECT
Install 1-1/2-Inch Water Meter
# Description Qty. Rate Amount
1 Furnish and install one 1-1/2-inch water meter, complete in place 1 LS $8,200 $8,200.00 TOTAL DUE $8,200.00

PAYMENT INFORMATION
Payment is due in accordance with the Contract terms.

Please reference Invoice W725-CO1 and Project W725 with payment.

Thank you.

ALL CITIES ENGINEERING, INC. Page 1 of 1 305

CHANGE ORDER REQUEST (COR)
Project Name:

Project Number:

Requested By:

COR Number:

Date of Request:

Change Name: Install 1-1/2-Inch Water Meter
Description of Change (Required):

Furnish and install one 1-1/2-inch water meter, complete in place, as requested by the City.

Reason for Change (Required):

The additional water meter installation was requested beyond the original Contract scope.

Location of Change (Required): List all locations if various locations are included in this Request City-designated location within the Annual Pipeline Renewal Project limits.

Additional Days Requested Due to Change (If Applicable):

N/A
Cost Breakdown: Total Net Change in Cost:

Proposal dated 3/10/2026 - lump sum. $8,200.00
Note: Attach all supporting documents for cost justification.

Requestor:

Signature:

Title: Date:

ANNUAL PIPELINE RENEWAL PROJECT
W725
All Cities Engineering, Inc.
1 7/27/26
V.P.
306
PO BOX 3619 RIVERSIDE CA, 92519
License No. 1009171
(951) 255-3964

PROPOSAL
Project: Orange – 2" water meter
ITEM NO. DESCRIPTION UNIT EST. QTY ITEM PRICE TOTAL
1 Install 1 1/2" water meter LS 1 $8,200 $8,200
2 3
4 5
6 7
8 9
10 11
12 TOTAL $8,200.00
Date: 03/10/2026
To accept this quotation, sign here and return: ___________________________________________ Thank you for your business!
Quotation prepared by: JAVIER CASTRO
13 307

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

City of Orange
300 East Chapman Avenue
Orange, California 92866
Attention: City Clerk
[Space above this line for Recorder’s use only.]

THIS DOCUMENT IS RECORDED AT THE

REQUEST AND FOR THE BENEFIT OF THE CITY

OF ORANGE AND IS EXEMPT FROM THE

PAYMENT OF A RECORDING FEE PURSUANT
TO GOVERNMENT CODE SECTIONS 6103 AND
27383.

NOTICE OF COMPLETION AND ACCEPTANCE
NOTICE IS HEREBY GIVEN that work on that certain public work and improvements known as “Annual Pipeline Renewal Project, Bid No. 25-26.04; W-725” (herein referred to as the “Project”), for the owner, the City of Orange, a municipal corporation (herein referred to as the “City”), whose address is 300 E. Chapman Avenue, Orange, CA 92866, was completed and accepted by the City Council of the City of Orange on August 25, 2026 at a regular meeting of its members, at which a quorum was present and acting throughout. The Contractor who performed (or caused to be performed) said public work and improvements was All Cities Engineering, Inc., a California corporation, with its principal office at 5881 Snowgrass Trail, in the City of Riverside, State of California.

The name of the surety on the Labor and Material Bond for the Project is U.S. Specialty Insurance Company (Bond# S063604) in the amount of $1,190,075.01.

DATED as of the 25th day of August 2026. CITY OF ORANGE, a municipal corporation By:

Daniel R. Slater
Mayor of the City of Orange

STATE OF CALIFORNIA

COUNTY OF ORANGE
I, Daniel R. Slater, Mayor of the City of Orange, state that I have read the foregoing document, know the contents thereof, and that the facts therein stated are true of my own knowledge. I hereby declare under penalty of perjury that the foregoing is true and correct.

DATED as of the 25th day of August 2026 at Orange, California.

Daniel R. Slater, Mayor of the City of Orange
I, Pamela Coleman, City Clerk for the City of Orange, hereby attest that Daniel R. Slater is known to me to be the Mayor of the City of Orange and known to me to be the person who executed the within instrument on behalf of said municipal corporation, and acknowledged to me that the City of Orange executed the same.

Pamela Coleman, City Clerk of the City of Orange
308
Agenda Item
Orange City Council
Item #: 3.12. 8/25/2026 File #: 26-0470
TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Christopher Cash, Public Works Director

1. SUBJECT
First Amendment to Contract with CJ Concrete Construction, Inc. for Annual Concrete Replacement at Various Locations Fiscal Year 2025-2026

2. SUMMARY
The City of Orange has entered into a contract with CJ Concrete Construction, Inc. for the Annual Concrete Replacement at Various Locations Fiscal Year 2025-2026. Additional locations have been added to the agreed bid unit prices in the amount of $105,100.

3. RECOMMENDED ACTION

1. Approve the amendment to the contract with CJ Concrete Construction, Inc. in the amount of $105,100 for Annual Concrete Replacement at Various Locations Fiscal Year 2025-2026; and authorize the Mayor and the City Clerk to execute on behalf of the City.

2. Authorize the continuing appropriation of $161,604.93 from the Fiscal Year 2026 CIP budget account into the Fiscal Year 2027 budget:
500-5101-87102-255702- Pavement Management Program

4. FISCAL IMPACT
The expense for this amendment is $105,100 and will be funded through Capital Projects (500):
500-5101-87102-255702-20 Pavement Management Program

5. STRATEGIC PLAN GOALS
Goal 5: Improve Infrastructure, Mobility, and Technology

6. DISCUSSION AND BACKGROUND
The City Council Awarded the Annual Concrete Replacement at Various Locations Fiscal Year 2025- 2026 on June 23, 2026, to CJ Concrete Construction, Inc. The project addresses concrete repairs identified by the Public Works Department, replacing sidewalk displacements and lifted curbs and gutters.

The unit bid prices from CJ Concrete Construction, Inc., were very favorable to the City to increase the scope of work. As such, staff recommends adding approximately 4,650 square feet of sidewalk, City of Orange Printed on 8/20/2026Page 1 of 2
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Item #: 3.12. 8/25/2026 File #: 26-0470
600 linear feet of curb and gutter and 150 square feet of driveway approaches.

The awarded contract amount for CJ Concrete Construction, Inc. was $597,816.00 including the 15% contingency. First Amendment to the contract represents 17.5% increase from the original awarded contract amount bringing the total contract amount of total awarded contract amount to $702,916.

7. ATTACHMENTS
· First Amendment to Contract
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Agenda Item
Orange City Council
Item #: 3.12. 8/25/2026 File #: 26-0470
TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Christopher Cash, Public Works Director

1. SUBJECT
First Amendment to Contract with CJ Concrete Construction, Inc. for Annual Concrete Replacement at Various Locations Fiscal Year 2025-2026

3. RECOMMENDED ACTION

2. Authorize the continuing appropriation of $161,604.93 from the Fiscal Year 2026 CIP budget account into the Fiscal Year 2027 budget:
500-5101-87102-255702- Pavement Management Program

4. FISCAL IMPACT
The expense for this amendment is $105,100 and will be funded through Capital Projects (500):
500-5101-87102-255702-20 Pavement Management Program

5. STRATEGIC PLAN GOALS
Goal 5: Improve Infrastructure, Mobility, and Technology

The unit bid prices from CJ Concrete Construction, Inc., were very favorable to the City to increase the scope of work. As such, staff recommends adding approximately 4,650 square feet of sidewalk, City of Orange Printed on 8/20/2026Page 1 of 2
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Item #: 3.12. 8/25/2026 File #: 26-0470
600 linear feet of curb and gutter and 150 square feet of driveway approaches.

7. ATTACHMENTS
· First Amendment to Contract
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FIRST AMENDMENT
TO

CONTRACT
[Annual Concrete Replacement at Various Locations
FY 2025-2026, (Bid No. 25-26.15)]

THIS FIRSTAMENDMENT TO CONTRACT (the “ First Amendment to Contract”) is made and entered into as of _________________, 2026 (“Effective Date”) by and between the CITY OF ORANGE, a municipal corporation (“City”), and CJ CONCRETE CONSTRUCTION, INC., a California corporation (“Contractor”), with reference to the following.

A. City and Contractor entered into a Contract (Agreement No. AGR-7813.A) dated as of June 23, 2026, which is incorporated herein by this reference (the “Original Contract”); and

B. City and Contractor desire to modify, amend and supplement certain portions of the Original Contract by increasing the compensation.

NOW, THEREFORE, the parties hereby agree as follows:

Section 1. Defined Terms. Except as otherwise defined herein, all capitalized terms used herein shall have the meanings set forth for such terms in the Original Contract.

Section 2. Cross-References. City and Contractor agree that all references in this First Amendment are deemed and construed to refer to the Original Contract, as implemented by this First Amendment.

Section 3. Compensation. Article 3 of the Original Contract is hereby amended to increase the total not -to-exceed compensation for the services to be rendered by ONE HUNDRED FIVE THOUSAND ONE HUNDRED DOLLARS and 00/100 ($105,100.00) and Sections 3.a and 3.c are hereby amended in their entirety to read as follows:

“a. Contractor agrees to receive and accept an amount not to exceed SIX

HUNDRED TWENTY -FOUR THOUSAND NINE HUNDRED FORTY
DOLLARS and 00/100 ($624,940.00) as compensation for furnishing all materials and doing all the Work contemplated and embraced in this Contract. Said compensation covers (1) all loss or damage arising out of the nature of the Work, from the acts of the elements; (2) any unforeseen difficulties or obstructions which may arise or be encountered in the prosecution of the Work until its acceptance by City, other than as provided below; (3) all risks of every description connected with the Work; (4) all expenses incurred by or in consequence of the suspension or discontinuance of the Work; and (5) well and faithfully completing the Work, and for the whole thereof, in the manner and according to the Plans and Specifications, and requirements of the Authorized City Representative under them. Retention amounts shall be withheld from progress payments as required by law unless Contractor provides securities in lieu of retention.”

313
314
2 “c. The total amount of compensation under this Contract, including contingencies, shall not exceed SEVEN HUNDRED TWO THOUSAND NINE HUNDRED SIXTEEN DOLLARS and 00/100 ($702,916.00).”

Section 4. Integration. This First Amendment amends, as set forth herein, the Original Contract and, except as specifically amended hereby, the Original Contract shall remain in full force and effect. To the extent that there is any conflict or inconsistency between the terms and provisions of this First Amendment and the terms and provisions of the Original Contract, the terms and provisions of this First Amendment shall control and govern the rights and obligations of the parties.

IN WITNESS of this First Amendment, the parties enter into this First Amendment on the year and day first above written.

“CONTRACTOR” “CITY”

CJ CONCRETE CONSTRUCTION, INC., CITY OF ORANGE, a municipal corporation a California corporation

*By: By:

Printed Name: Daniel R. Slater, Mayor
Title:

*By: ATTEST:

Printed Name:

Title:

Pamela Coleman, City Clerk

APPROVED AS TO FORM:

Connor Hyland
Senior Assistant City Attorney

*NOTE: If CONTRACTOR is a corporation, the City requires the following signature(s):
-- (1) the Chairman of the Board, the President or a Vice -President, AND (2) the Secretary, the Chief Financial Officer, the Treasurer, an Assistant Secretary or an Assistant Treasurer. If only one corporate officer exists or one corporate officer holds more than one corporate office, please so indicate. OR -- The corporate officer named in a corporate resolution as authorized to enter into this Agreement. A copy of the corporate resolution, certified by the Secretary close in time to the execution of the Agreement, must be provided to the City. √
X
315
Agenda Item
Orange City Council
Item #: 3.13. 8/25/2026 File #: 26-0463
TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Nathalie Adourian, City Attorney

1. SUBJECT
Response to the 2025-2026 Orange County Grand Jury Report, “PFAS and Public Awareness: A Closer Look at Orange County Drinking Water”

2. SUMMARY
The 2025-2026 Orange County Grand Jury issued its report entitled “PFASand Public Awareness: A Closer Look at Orange County Drinking Water.”The City of Orange is required to respond to certain findings and recommendations contained in the report. The City’sproposed response is presented to the City Council for consideration and approval.

3. RECOMMENDED ACTION
Approve the City of Orange response to the 2025-2026 Orange County Grand Jury Report, “PFAS and Public Awareness: A Closer Look at Orange County Drinking Water,”and authorize the Mayor to execute the response on behalf of the City Council.

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
Goal 5: Improve Infrastructure, Mobility, and Technology.

6. DISCUSSION AND BACKGROUND
The 2025-2026 Orange County Grand Jury issued the report “PFASand Public Awareness: A Closer Look at Orange County Drinking Water,” which includes findings and recommendations directed to water agencies throughout Orange County. The City of Orange is required to respond to Findings F2, F4, F6, and F8 and Recommendations R2, R4, and R5.

Pursuant to California Penal Code Sections 933 and 933.05, the City Council is required to respond to the findings and recommendations pertaining to matters under its control. The proposed City response is attached for the City Council’s consideration and approval.

Upon approval, the response will be submitted to the Presiding Judge of the Orange County Superior Court as required by law.

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7. ENVIRONMENTAL REVIEW
The proposed action is not subject to the California Environmental Quality Act (CEQA) because it does not constitute a “project”within the meaning of CEQA Guidelines Section 15378, as it will not result in a direct or reasonably foreseeable indirect physical change in the environment.

7. ATTACHMENTS
· Proposed City of Orange Response to the 2025-2026 Orange County Grand Jury Report, “PFAS and Public Awareness: A Closer Look at Orange County Drinking Water” · 2025-2026 Orange County Grand Jury Report, “PFASand Public Awareness: A Closer Look at Orange County Drinking Water”
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Agenda Item
Orange City Council
Item #: 3.13. 8/25/2026 File #: 26-0463
TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Nathalie Adourian, City Attorney

1. SUBJECT
Response to the 2025-2026 Orange County Grand Jury Report, “PFAS and Public Awareness: A Closer Look at Orange County Drinking Water”

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
Goal 5: Improve Infrastructure, Mobility, and Technology.

Upon approval, the response will be submitted to the Presiding Judge of the Orange County Superior Court as required by law.

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Item #: 3.13. 8/25/2026 File #: 26-0463

Office of Mayor PHONE: (714) 744-2211 • FAX: (714) 744-5523 www.cityoforange.org

August 12, 2026

The Honorable Sheila F. Hanson
Presiding Judge of the Superior Court
700 Civic Center Drive West
Santa Ana, CA 92701
Re: Response to the 2025-2026 Orange County Grand Jury Report “PFAS and Public Awareness – A Closer Look at Orange County Drinking Water” Dear Honorable Judge Hanson:

The following is the City of Orange’s response to the findings and recommendations contained in the Orange County Grand Jury Report, “ PFAS and Public Awareness – A Closer Look at Orange County Drinking Water.” The City of Orange is required to respond to Findings F -2, F-4, F-6, and F-8, and Recommendations R-2, R-4, and R-5.

FINDINGS:

F-2. PFAS is widespread, and contamination has been detected in Orange County groundwater sources. Community water systems are required to report PFAS monitoring results in their annual Consumer Confidence Reports.

City's Response: The City agrees with this finding.

PFAS are human-made chemicals that have been used in consumer products such as carpets, clothing, fabrics for furniture, paper packaging for food, fire -fighting foams, and other materials designed to be waterproof, stain -resistant, or nonstick. PFAS has been detected in water throughout the United States and has been detected in Orange County groundwater sources. Orange County has led the nation in PFAS testing and treatment to remove PFAS from its groundwater.

Beginning in 2027, community water systems must include applicable PFAS monitoring and compliance information in their Consumer Confidence Reports (CCR). The City of Orange currently includes its PFAS test results in its CCR.

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F-4. OCWD has taken a proactive leadership role in addressing PFAS in the Orange County Groundwater Basin, though PFAS treatment implementation varies across local cities and water districts.

City's Response: The City agrees with the finding.

The City of Orange agrees that the Orange County Water District (OCWD) has taken a proactive leadership role in addressing PFAS in Orange County and has done so in a collaborative manner with water retailers, regulatory agencies, and industry experts. OCWD has been committed to ensuring that the Orange County community is knowledgeable about PFAS and that the local water agencies have the resources to address PFAS contamination.

OCWD implemented a PFAS treatment policy that enables construc ting treatment facilities for impacted water agencies, including the City of Orange, by funding 100% of design and construction costs, with operation and maintenance costs shared 50/50 with the retail water agency. The resulting treatment program has been systematic, coordinated, and consistent between water retailers and OCWD for the benefit of Orange County communities.

F-6. Orange County drinking water meets or exceeds state and federal standards and is safe for consumption without additional home filtration.

City's Response: The City agrees with the finding.

The City of Orange agrees that the drinking water provided by the City to its customers meets applicable state and federal drinking water standards and is safe for consumption. The City continuously monitors its water supplies and conducts thousands of water quality tests each year throughout the service area to ensure the water we serve to our community is of high quality and safe without additional home filtration.

F-8. There are limited online PFAS education and outreach programs among Orange County water retailers. Most retailers rely on OCWD for PFAS education and outreach. PFAS advisories were included in approximately 55% of the Orange County water retailers’ annual water quality reports in 2025.

City's Response: The City partially disagrees with this finding.

Specifically, the City disagrees with the characterization that there are limited PFAS education and outreach efforts among water retailers, as applied to the City of Orange. Like many water agencies, the City collaborates with other water utilities and OCWD to synthesize a uniform, concise message about PFAS contamination and potential health effects for the public. The City regularly responds to questions from our customers related to PFAS and other contaminants in drinking water.

Regarding the inclusion of PFAS advisories in the annual water quality report in 2025, the City’s 2025 CCR contains test results, sampling dates, notification levels, ranges of detections, and the public health goals for various PFAS compounds. The City’s CCR is posted online, 321
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and customers are informed about the report on their utility bills. Additionally, the City advertises the availability of the water quality report in the local newspaper to reach a wider audience.

RECOMMENDATIONS:

R-2. By July 1, 2029, OCWD and its member agencies should monitor PFAS in groundwater and surface water sources and promptly implement PFAS treatment when response levels are exceeded.

City's Response: The recommendation is being implemented and will be complete by July1, 2029.

The City is currently monitoring all its groundwater sources for PFAS as required by the State Water Resources Control Board and the U .S. Environmental Protection Agency. PFAS treatment systems have been installed at 8 groundwater wells. These systems are in operation and the selected ion exchange technology has been effective in removing PFAS. An additional four wells at three different locations are in design with construction scheduled to begin in early 2027. When response levels are exceeded, Orange has removed the well from operation immediately and implemented treatment for PFAS before the well can be brought back into service.

R-4. By July 1, 2029, all Orange County water retailers should consistently include a PFAS advisory, treatment facilities status, and compliance information in consumer confidence reports and on agency websites, using clear and understandable language for the public.

City's Response: The recommendation is being implemented and will be complete by July 1, 2029.

By July 1, 2029, the City will include the appropriate PFAS advisory, when such advisory is required, and compliance information in its CCR and on its website, using clear and understandable language for the public. Orange will include an advisory in its CCR if it has a detection for PFAS, as defined by federal and state regulations. Regarding the treatment facilities status, our wells will have PFAS treatment systems operational when they are in service.

R-5. By September 30, 2026, OCWD and all Orange County water retailers should enhance coordinated public education efforts to reassure their customers about drinking water safety.

City's Response: The recommendation is being implemented.

The City has made consistent efforts to promote drinking water safety through public outreach and education. Orange plans to continue engaging the public through social media, tours, community events, and student engagement to enhance awareness and educate customers about drinking water safety.
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Thank you for your service and efforts on behalf of the City of Orange. We hope this response will be helpful.

Sincerely,

Dan Slater
Mayor, City of Orange
cc: The Orange County Grand Jury
700 Civic Center Drive West
Santa Ana, CA 92701
BCC:

Jarad L. Hildenbrand, City Manager
Nathalie Adourian, City Attorney
323

Fcalifornia stateting,4

PFAS and Public Awareness
A Closer Look at Orange County
Drinking Water
Orange County Grand Jury 2025-2026
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PFAS and Public Awareness
Orange County Grand Jury 2025-2026 Page 3 of 62

TABLE OF CONTENTS
SUMMARY ...................................................................................................................... 5 BACKGROUND .............................................................................................................. 5 REASON FOR STUDY ................................................................................................... 8 METHOD OF STUDY ...................................................................................................... 8 INVESTIGATION AND ANALYSIS .................................................................................. 9 FINDINGS ..................................................................................................................... 35 RECOMMENDATIONS ................................................................................................. 36 COMMENDATIONS ...................................................................................................... 37 REQUIRED RESPONSES ............................................................................................ 39 Acronyms ...................................................................................................................... 46 Glossary ........................................................................................................................ 50 Bibliography .................................................................................................................. 51 Appendix A .................................................................................................................... 55 Appendix B .................................................................................................................... 62

FIGURES
Figure 1 - Potential Major Exposure Pathways of PFAS to Humans ............................... 6 Figure 2 - Orange County Groundwater Public Supply Wells ........................................ 11 Figure 3 - Orange County Water District (OCWD) Service Area ................................... 12 Figure 4 - Municipal Water District of Orange County (MWDOC) Service Area ............ 13 Figure 5 - The PFAS Cycle ............................................................................................ 15 Figure 6 - Wastewater Treatment Discharges to the Santa Ana River .......................... 16 Figure 7 - CDC Multi-site Study Site Orange County, CA .............................................. 17 Figure 8 - Average PFAS Levels in Blood, CDC Multi-site Study Virtual Open House, July 2025 ....................................................................................................... 18 Figure 9 - How are people exposed to PFAS? .............................................................. 20 Figure 10 - Are PFAS Safe? .......................................................................................... 22 Figure 11 - Highest PFAS Detections Among All OCWD Sources During UCMR 3 and UCMR 5 Monitoring Cycles ......................................................................... 24 327
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Figure 12 - Highest PFAS Detections Among All OCWD Sources Listed on Each SWRCB Monitoring Order Exhibit A ............................................................ 25 Figure 13 - PFAS Rule Enforceable Maximum Contaminant Levels and Maximum Contaminant Level Goals ............................................................................ 27 Figure 14 - Timeline of OCWD Response to PFAS in the Santa Ana River Basin ......... 29 Figure 15 - Map of Current and Future PFAS Treatment Locations .............................. 30 Figure 16 - Approximate PFAS Capital Funding Sources .............................................. 31 Figure 17 - Summary of PFAS Treatment Facilities ...................................................... 32 Figure 18 - OCWD Share of PFAS Treatment Facility Annual O&M Cost ..................... 33 Figure 19 - PFAS Monthly Cost to OCWD Service Area Residents .............................. 34 Figure 20 - UCMR 3 Contaminants List, PFAS Contaminants ...................................... 55 Figure 21 - UCMR 5 Contaminants List, PFAS Contaminants ...................................... 56 Figure 22 - SWRCB PFAS General Monitoring Orders Issued 2020 through 2025 ....... 57 Figure 23 - SWRCB General Monitoring Order 2020-0003-DDW, PFAS Constituents . 58 Figure 24 - SWRCB General Monitoring Order 2021-0001-DDW, PFAS Constituents . 59 Figure 25 - SWRCB General Monitoring Order 2022-0001-DDW, PFAS Constituents . 60 Figure 26 - SWRCB General Monitoring Order 2025-0002-DDW, PFAS Constituents . 61 Figure 27 - EPA Eight Content Requirements of a Consumer Confidence Report ........ 62

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PFAS and Public Awareness
Orange County Grand Jury 2025-2026 Page 5 of 62

SUMMARY
Per- and Polyfluoroalkyl Substances (PFAS) form a broad class of thousands of synthetic chemicals characterized by strong carbon–fluorine bonds and are among the most durable compounds in organic chemistry. This bond strength makes PFAS highly resistant to breaking down, allowing them to persist in the environment for decades or longer. Because of this persistence, PFAS are often called “forever chemicals.” Various industries have used PFAS in consumer and commercial applications since the 1940s because their chemical properties provide water, oil, and stain resistance, as well as heat stability. These properties support applications across numerous sectors, including aerospace, automotive, textiles, firefighting foams, food packaging, electronics, and medical devices. As a result of their widespread use and persistence, PFAS now appear globally in water, air, soil, wildlife, and human blood.

Scientific studies continue to show associations between PFAS exposure and harmful health effects in humans and animals, although the degree of risk varies by compound.

In response, federal and state agencies, including the United States Environmental Protection Agency (EPA) and the United States Food and Drug Administration (FDA), began accelerating regulatory actions in the 2010s to reduce PFAS exposure, enhance monitoring, and develop treatment and disposal methods.

This report identifies and describes PFAS levels detected by Orange County drinking water agencies. It evaluates how these agencies have responded to recent PFAS regulatory requirements. It also examines the progress of PFAS treatment facility planning and installation, along with implementation of public education programs related to PFAS in drinking water. This report’s findings and recommendations aim to strengthen PFAS reporting in annual Water Quality Reports (Consumer Confidence Reports) and expand public outreach by Orange County drinking water agencies.

BACKGROUND
PFAS are a large group of man-made "forever chemicals" produced since the 1940s, known for extreme persistence, environmental mobility, and bioaccumulation due to strong carbon-fluorine bonds.1 Used in water/stain-resistant coatings, firefighting foams, industrial processes, PFAS have contaminated soil, water, and air globally.

1 Elsie M. Sunderland, et al., “A review of the pathways of human exposure to poly- and perfluoroalkyl substances (PFASs) and present understanding of health effects,” Journal of Exposure Science & Environmental Epidemiology, November 23, 2018, accessed March 16, 2026, https://sunderlandlab.org/assets/sunderland_jeseerev_2018wsi.pdf. 329
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Contaminated drinking water has led to high levels of exposure to PFOA, PFOS, and other PFAS2 for some populations residing near manufacturing facilities. Workers in facilities that make or use PFAS can be exposed to higher amounts of these chemicals and have higher levels in their blood.3 Infants may be exposed to PFAS through breastfeeding.4

Figure 1 - Potential Major Exposure Pathways of PFAS to Humans5 PFAS, especially PFOA and PFOS, have been detected in air, water, and soil in and around manufacturing facilities. However, these releases have been declining since companies began phasing out the production and use of several PFAS in the early 2000s.6 Due to their chemical structure, PFAS are very stable in the environment and are resistant to breaking down. Some PFAS are volatile and can be carried long distances through the air, which may lead to contamination of soils and groundwater far from the source of the PFAS emission.7
The four major sources of PFAS are: fire training/fire response sites, industrial sites, landfills, and wastewater treatment plants/biosolids. PFAS can get into drinking water when products containing them are used or spilled onto the ground or into lakes and rivers. Once in groundwater, PFAS are easily transported long distances and can

2 Kyle Steenland, Tony Fletcher, and David A. Savitz, “Epidemiologic Evidence on the Health Effects of Perfluorooctanoic Acid (PFOA),” National Library of Medicine, accessed May 12, 2026, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2920088/.
3 Sunderland, “A review of the pathways of human exposure.” 4 Ibid.
5 Ibid.
6 Ibid.
7 “Frequently Asked Questions (FAQs) PFAS General," California State Water Resources Control Board, March 4, 2019, https://www.waterboards.ca.gov/pfas/docs/pfas_general_faq.pdf. 330
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contaminate drinking wells. PFAS in the air can also end up in rivers and lakes used for drinking water.8
PFAS have been used extensively in surface coating and protectant formulations due to their unique ability to repel oil, grease, and water. Major applications have included protectants for paper and cardboard packaging products, carpets, leather products, and textiles that enhance water, grease, and soil repellency, and in firefighting foams. PFAS have also been used as processing aids in the manufacture of nonstick coatings on cookware. Common consumer products containing PFAS include Teflon, Gore-Tex and Scotchgard.9
Background Summary of PFAS and Its Effects
Source and Exposure: Primary sources include industrial sites, firefighting training, landfills, and wastewater treatment plants. They enter drinking water, food, and indoor dust, resulting in widespread human exposure.

Health and Environmental Impact: PFAS are associated with adverse effects, including cancer (i.e. testicular, kidney), developmental delays, liver damage, and high cholesterol. They do not break down easily, leading to "background" contamination even in remote areas.10
Regulation and Action: While major US manufacturing of certain PFAS ended around 2015, they remain in products and in the environment. The EPA has established Maximum Contaminant Levels (MCLs) for drinking water.11 "Forever Chemicals" Definition: Their chemical structure, featuring one of the strongest bonds in organic chemistry, makes them resistant to heat, water, and oil, thus earning them the nickname "forever chemicals.”12
In Orange County, PFAS have been detected in the Orange County Groundwater Basin, which provides 77% to 85% of the drinking water for north and central parts of the county. Local agencies have taken a proactive stance, shutting down dozens of impacted wells and building some of the nation's largest treatment facilities to ensure tap water meets safety standards.13

8 “PFAS background,” California State Water Resources Control Board, January 14, 2025, https://www.waterboards.ca.gov/pfas/background.html
9 Ibid.
10 “PFAS Explained,” EPA, accessed March 11, 2026, https://www.epa.gov/pfas/pfas-explained. 11 “Per- and Polyfluoroalkyl Substances (PFAS), Final PFAS National Primary Drinking Water Regulation,” Accessed May 12, 2026, https://www.epa.gov/sdwa/and-polyfluoroalkyl-substances-pfas. 12 Ibid.
13 University of California, Irvine, “UCI PFAS Health Study, Frequently Asked Questions,” accessed May 12, 2026, https://sites.uci.edu/pfas/frequently-asked-questions/. 331
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REASON FOR STUDY
Recent regulatory actions related to PFAS have created significant operational, financial, and communication challenges for drinking water agencies across California.

Orange County agencies face an intensifying timeline due to the region’s reliance on groundwater supplies, the presence of PFAS in local aquifers, and the need to comply with evolving state and federal standards. As regulatory and monitoring requirements expand, agencies must rapidly adapt their treatment strategies, capital planning, and public outreach efforts.

This study is necessary to provide a clear, up-to-date understanding of how Orange County drinking water agencies are responding to these new requirements. Evaluating the status of PFAS treatment planning and installation helps illustrate the extent of infrastructure readiness, the pace of implementation, and the challenges agencies encounter as they work to bring new systems online. At the same time, assessing the development and delivery of PFAS-related education programs offers insight into how effectively agencies are communicating risks, regulatory changes, and water quality information to the public.

By documenting current conditions and identifying gaps or emerging needs, the study supports informed decision-making among water providers, policymakers, and ratepayers. This work helps ensure that Orange County communities receive safe drinking water and that agencies are equipped to meet regulatory expectations while maintaining public trust.

METHOD OF STUDY
The Orange County Grand Jury investigated the PFAS in Orange County drinking water to provide a clear and accurate assessment. The Grand Jury based its study on a comprehensive review of multiple sources, including interviews, public records, field investigations, and relevant news articles. Multiple independent sources corroborated and validated all facts, findings, and recommendations presented in the report.  Interviewed several Orange County governmental leaders and senior staff directly involved in managing drinking water quality
 Reviewed and analyzed key documents related to the investigation, including:
o Published Water Quality reports from all Orange County water retailers o Records from all Orange County water agencies
 Examined news articles and publications relevant to the topic.  Conducted extensive internet research.
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 Performed field investigations in which Grand Jury members visited several water management agencies to directly observe and assess drinking water processes.

INVESTIGATION AND ANALYSIS
The 2025-2026 Orange County Grand Jury investigated the presence of PFAS in Orange County drinking water and the response of Orange County community water systems. Community water systems (CWS) are city, county, regulated utilities, regional water systems and even small water companies and districts where people live. Non- community water systems14 provide drinking water to the public at locations where people do not reside permanently. The investigation included evaluation of Orange County CWS compliance with federal and state PFAS monitoring and reporting requirements and the extent of the voluntary response to PFAS contamination. The Grand Jury also evaluated annual Consumer Confidence Reports, also called Annual Water Quality Reports, which are issued annually by CWS and distributed to their customers.

Orange County Drinking Water Systems
The Grand Jury investigation was limited to community water systems (CWS) operated by cities or special districts that are regulated under the Safe Drinking Water Act .15 CWS are defined as public water systems that serve at least 15 service connections used by yearlong residents, or regularly serve at least 25 yearlong residents of the area served by the system.16 In Orange County, there are 31 such CWS that are operated by cities or special districts and that sell drinking water directly to customers on a retail basis. In this report, these Orange County CWS may be referred to as retail water districts or water retailers.

Drinking Water Sources
North and Central Orange County
Orange County is divided into two distinct areas when it comes to drinking water sources. There are 2.5 million residents of north and central Orange County, who receive about 85% of their drinking water supplies from the Orange County Groundwater Basin, and the remaining 15% of their water supplies are imported from

14 “California Code, Health and Safety Code - HSC § 116275,” FindLaw, accessed May 21,2026, https://codes.findlaw.com/ca/health-and-safety-code/hsc-sect-116275/. 15 “Summary of the Safe Drinking Water Act,” EPA, describing statutory authority at 42 U.S.C. § 300f et seq., accessed My 21, 2026, https://www.epa.gov/laws-regulations/summary-safe-drinking-water-act. 16 “California Code, Health and Safety Code - HSC § 116275,” FindLaw. 333
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the State Water Project and Colorado River delivered by Municipal Water District of Orange County (MWDOC).17
South Orange County
Approximately 600,000 residents of south Orange County rely primarily on imported water supplies delivered by MWDOC, and a few south County communities also have groundwater supplies from the San Juan Basin and surface water supplies from Irvine Lake (also referred to as the Santiago Reservoir).18
Public Supply Wells
According to the California Department of Water Resources (DWR) as of November 2024,19 there were a total of 217 public supply wells for drinking water in Orange County. Of the 217 total wells, 211 were CWS wells and six were non-community water system wells. See Figure 2 for a Department of Water Resources map of Orange County groundwater public supply wells. This map illustrates the reliance of north and central Orange County on groundwater sources, and the reliance of south Orange County on imported water supplies.

17 “How water works in Orange County,” OCWD, accessed May 21, 2026, https://www.ocwd.com/learning- center/how-water-works-in-oc/.
18 Ibid.
19 “California’s Groundwater Live: Well Infrastructure,” California Department of Water Resources, accessed April 13, 2026, https://storymaps.arcgis.com/stories/f2b252d15a0d4e49887ba94ac17cc4bb. 334
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Source: State of California, Department of Water Resources Figure 2 - Orange County Groundwater Public Supply Wells Orange County Water District
Orange County Water District (OCWD) manages the Orange County Groundwater Basin to ensure sustainable use through replenishment of groundwater and delivery of water supplies to its 19 member agencies. Some OCWD member agencies are also members of MWDOC.
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Figure 3 - Orange County Water District (OCWD) Service Area Municipal Water District of Orange County
MWDOC is the wholesale water provider and resource planning agency that partners with the Metropolitan Water District of Southern California (MWD) to deliver imported water to its 27 member agencies.20 Some MWDOC member agencies are also members of OCWD.

20 “How water works in Orange County,” OCWD.
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Source: MWDOC
Figure 4 - Municipal Water District of Orange County (MWDOC) Service Area PFAS and the Health Effects of Exposure
What are PFAS?
PFAS are a large group of many thousands of manufactured chemicals that are resistant to heat, oil, and water. Among the many thousands of different PFAS, some have been more widely used and studied than others.21 PFAS have been used extensively in surface coating and protectant formulations due to their unique ability to reduce the surface tension of liquids, and their ability to repel oil, grease, water, and staining. Major applications have included use as processing aids in the manufacture of nonstick coatings on cookware, surface protectants for paper and cardboard such as disposable food packaging, microwave popcorn bags, pizza boxes, and candy wrappers. Other surface protectants include those used on furniture and carpets,

21 “PFAS Explained,” EPA.
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leather products, outdoor gear, and textiles.22 PFAS are also one of the main components of aqueous film forming foams (AFFF) used frequently at airports and military bases for firefighting and emergency response training activities.23 It is important to note that PFAS-containing firefighting foams and other emergency response materials containing PFAS are no longer in use at Orange County airports and harbors.24
PFOA and PFOS are two types of PFAS of particular concern that are no longer manufactured or imported into the US. Trace amounts of PFOA and PFOS may still be contained in some imported goods and in other PFAS goods and materials that are still produced and used in the US.25 Under the PFOA Stewardship Program with the EPA, eight major PFAS producers have phased out PFOA and other PFAS substances from their emissions and products; however, manufacturers are replacing substances in the PFAS family with others such as GenX and ADONA.26
Understanding the PFAS Cycle: How PFAS Moves Through the Environment PFAS move through the environment in a repeating cycle through air, water, soil, products, animals, and humans. This is known as the PFAS cycle. This cycle can be described in four stages and is illustrated at Figure 5.27 Manufacturing and use. The PFAS cycle begins during manufacturing or everyday use of PFAS-containing consumer and industrial products. During manufacture and use, PFAS are released into the air, water, and soil. As more PFAS are manufactured and used, the more they accumulate because they are persistent and resistant to degradation.

Environmental spread. After PFAS are released to the environment, they move through wind, snowfall, rain, and runoff to soil and surface water, and infiltration to groundwater. Industrial sites and wastewater treatment plants are key entry points

22 “Our Current Understanding of the Human Health and Environmental Risks of PFAS,” EPA, Accessed May 21, 2026, https://www.epa.gov/pfas/our-current-understanding-human-health-and-environmental- risks-pfas.
23 Sunderland. “A review of the pathways of human exposure.” 24 “SB-1044 Compliance: Phasing Out PFAS in Class B Firefighting Foam,” CAL FIRE, accessed April 17, 2026, https://osfm.fire.ca.gov/what-we-do/pipeline-safety-and-cupa/fire-fighting-equipment-and-foam- pfas.
25 “PFAS – Frequently Asked Questions,” California State Water Resources Control Board Division of Water Quality (SWRCB), 5, [3] 3M Company, “Fluorochemical use, distribution and release overview.,” AR226-0550, 1999, updated March 19, 2020, accessed March 25, 2026, https://www.waterboards.ca.gov/pfas/docs/master_pfas_faq_mar.pdf. 26 “Risk Management for Per- and Polyfluoroalkyl Substances (PFAS) under TSCA,” EPA, accessed May 21, 2026, https://www.epa.gov/assessing-and-managing-chemicals-under-tsca/risk-management-and- polyfluoroalkyl-substances-pfas.
27 “Understanding the PFAS Cycle,” EcoPulse, accessed April 13, 2026, https://www.ecopulsenow.com/insights/understanding-the-pfas-cycle. 338
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into the environment. PFAS are absorbed from the environment by plants and animals, and then move up the food chain.

Human exposure. Most people are exposed to PFAS through using PFAS- contaminated products, drinking contaminated water, and eating contaminated food such as fish caught from water contaminated by PFAS, and dairy products from livestock exposed to PFAS.28 The US Centers for Disease Control (CDC) National Health and Nutrition Examination Survey (NHANES) estimated that in NHANES 2017–2018 data 98% of the US population had combined PFAS serum levels greater thanௗ2ௗnanograms per milliliter.29
Re-entry. Even after disposal of PFAS products, PFAS can re-enter the environment through landfill leachate or runoff to soils, agricultural spreading of biosolids, and municipal wastewater treatment effluent discharges to surface water, resulting in PFAS cycling back into soil, animal feed crops, and water.

Source: Minnesota Pollution Control Agency
Figure 5 - The PFAS Cycle
What is the Source of PFAS in Orange County Groundwater? Wastewater treatment plants located along the Santa Ana River that discharge effluent to the Santa Ana River upstream of managed aquifer recharge operations are sources

28 “Risk Management for Per- and Polyfluoroalkyl Substances (PFAS) under TSCA,” EPA. 29 “National Health and Nutrition Examination Survey. NHANES 2017-18 Overview,” Centers for Disease Control and Prevention (CDC), accessed April 16, 2026,
https://wwwn.cdc.gov/nchs/nhanes/continuousnhanes/default.aspx?BeginYear=2017. 339
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of PFAS contamination for public water systems downstream of these wastewater treatment plants.30 The OCWD Groundwater Replenishment System (GWRS) actively manages and recharges the Orange County groundwater basin with surface water from the Santa Ana River, imported surface water, and purified recycled water from the GWRS. For much of the year, flow in the Santa Ana River consists predominantly of effluent from municipal wastewater treatment plants upstream from the Orange County groundwater basin.31 Figure 6 illustrates these upstream wastewater discharges to the Santa Ana River.32 PFAS has recently been measured in the Santa Ana River at concentrations consistent with wells surrounding the recharge facilities, suggesting that historic concentrations of PFAS in the Santa Ana River may be a primary input of PFAS in the Orange County groundwater basin.33

Figure 6 - Wastewater Treatment Discharges to the Santa Ana River How Much PFAS is Found in the General Population?
Because of their widespread use and their persistence in the environment, many PFAS are found in the blood of people and animals all over the world.34 CDC scientists have measured PFAS in the blood serum (the clear portion of blood) of 98% of participants

30 “Per- and Polyfluoroalkyl Substances (PFAS), What are PFAS?” SWRCB, accessed May 21, 2026, https://www.waterboards.ca.gov/santaana/water_issues/programs/pfas/. 31 “UCI PFAS Health Study,” University of California, Irvine, accessed May 12, 2026, https://sites.uci.edu/pfas/.
32 National Water Research Institute, Report of the Scientific Advisory Panel: Orange County Water District’s Santa Ana River Water Quality and Health Study, Fountain Valley, CA, 2004, accessed April 14, 2026, https://www.ocwd.com/wp-content/uploads/sarwqh-final-nwri-panel-report-2004.pdf. 33 Russ Detwiler, Reconstructing historical PFAS concentrations in groundwater using a reduced-order modeling framework. Alburquerque NM, InterPore2025, May 20, 2025, accessed April 16, 2026, https://events.interpore.org/event/56/contributions/7590/. 34 “PFAS Explained,” EPA.
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aged 12 years and older since 1999, indicating widespread exposure to PFAS in the US population.35
Researchers at the University of California, Irvine (UCI) are participating in the CDC Multi-site Study (MSS).36 The MSS provides information to communities about the health effects of exposure to PFAS. The UCI MSS site is the area in Orange County, shown at Figure 7.

At the July 2025 MSS update, the
UCI researchers shared results
showing average levels of certain
PFAS chemicals in the blood of
adults who participated at the
Orange County study site. They
compared Orange County results
with other study locations and with
national averages. For adults at the
Orange County site, the average
blood levels were estimated to be

2.4 for PFOS, 1.2 for PFOA, 1.3 for
PFHxS, and 0.27 for PFNA
(measured in nanograms per
milliliter, ng/L) These levels were
lower than the averages seen
across all study sites. In addition, all
of these levels, except PFHxS, were
lower than the average levels found
in the general U.S. population. See
Figure 8 for the UCI MSS chart of
Average PFAS Levels in Blood.37
On the chart, the Orange County
study site is labeled “CA.” Orange
County is the only California
location included in the study.

35 “PFAS Frequently Asked Questions,” SWRCB, 5, [8] CDC, “National Report on Human Exposure to Environmental Chemicals,” 2019, accessed April 23, 2026, https://www.waterboards.ca.gov/pfas/docs/master_pfas_faq_mar.pdf. 36 “Multi-site Study,” CDC, Agency for Toxic Substances and Disease Registry (ATSDR), Per- and Polyfluoralkyl Substances (PFAS) and Your Health, accessed April 16, 2026, https://www.atsdr.cdc.gov/pfas/health-studies/multi-site-study.html. 37 “PFAS Multi-site Study (MSS), Virtual Open House,” CDC, ATSDR, July 28, 2025, accessed April 16, 2026, https://www.atsdr.cdc.gov/media/pdfs/2025/08/Open-House-Slides-508.pdf.

Source: CDC
Figure 7 - CDC Multi-site Study Site Orange
County, CA
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Source: CDC
Figure 8 - Average PFAS Levels in Blood, CDC Multi-site Study Virtual Open House, July 2025
Because of the phasing out of certain PFAS compounds, serum levels of PFOA and PFOS in the general population of the US have decreased dramatically in recent years.

According to the CDC, blood levels of both PFOS and PFOA have steadily decreased in US residents since 1999-2000.38
The half-life of PFAS in the human body is defined as the time required for the PFAS concentrations in serum or plasma to fall by half from the starting concentration.39 Thirteen studies conducted mainly in Europe and the US involving both general populations and exposed workers resulted in half-life estimates for PFOA of 2.73 years (range: 1.48 to 5.1 years), 4.70 years for PFOS (range: 1.69 to 5.7 years), and 5.31 years for PFHxS (range: 2.84 to 8.5 years).40 Based on that information, with no additional exposure, it could be anticipated that PFAS may be cleared from the body after an average of five years. However, PFAS exposures continue in general

38 “Per- and Polyfluoralkyl Substances (PFAS) and Your Health, Fast Facts: PFAS in the U.S. Population,” CDC, ATSDR, https://www.atsdr.cdc.gov/pfas/data-research/facts-stats/index.html. 39 Isabella Rosato, et al. “Estimation of per- and polyfluoroalkyl substances (PFAS) half-lives in human studies: a systematic review and meta-analysis,” Environmental Research, Volume 242, February 1, 2024, 117743, accessed April 13, 2026,
https://www.sciencedirect.com/science/article/pii/S0013935123025471. 40 Isabella Rosato, et al. “Estimation of per- and polyfluoroalkyl substances (PFAS) half-lives.” 342
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populations primarily through food and water despite production phase outs and regulatory interventions.

How Are People Exposed to PFAS?
There is general agreement that dietary intake is the largest source of PFAS exposure rather than inhalation or dermal contact.41 Direct exposures due to use in products can be quickly phased out by production phaseouts but exposures driven by PFAS accumulation in the environment, food chains, and contamination of groundwater and drinking water persist because of the continuing PFAS cycle. Human exposures to PFOS and PFOA, the two PFAS that are of greatest regulatory concern, have been declining due to regulatory interventions while understanding of their adverse effects on human health has been rapidly advancing. At the same time, a proliferation of new PFASs has rapidly replaced PFOS and PFOA with shorter chain length PFASs and new chemicals that are difficult to detect using standard methods.42 Emerging evidence from animal experiments suggests some of these alternative PFASs can be equally hazardous.43

41 Sunderland, “A review of the pathways of human exposure,” 136. 42 Sunderland, “A review of the pathways of human exposure,” 132. 43 Ibid.
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Source: EPA
Figure 9 - How are people exposed to PFAS?44
PFAS Exposure and Excretion
Exposure happens when a person breathes, eats, drinks, or touches a chemical and it enters their body. Excretion is the process whereby substances, like PFAS, leave the body. All PFAS can leave the body over time through urine, through menstrual blood or blood donation, or through breast milk. All of these factors could affect PFAS levels measured in blood.45 While PFAS blood test results can tell you the amount of certain PFAS in your blood, the test results will not provide information to pinpoint a health problem and will not predict future health outcomes. You can talk with your healthcare provider about the benefits and limitations of PFAS blood testing.46

44 “PFAS Explained,” EPA, 2, March 11, 2026, https://www.epa.gov/system/files/documents/2023-10/final- virtual-pfas-explainer-508.pdf.
45 “Per- and Polyfluoralkyl Substances (PFAS) and Your Health, Preventing PFAS Exposure,” CDC, ATSDR, accessed April 16, 2026, https://www.atsdr.cdc.gov/pfas/prevent-exposure/your-body.html. 46 “Per- and Polyfluoralkyl Substances (PFAS) and Your Health, Testing for PFAS,” CDC, ATSDR, accessed April 17, 2026, https://www.atsdr.cdc.gov/pfas/blood-testing/index.html. 344
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What are the Health Effects of Exposure?
Exposure to unsafe levels of PFOA/PFOS may result in adverse health effects including developmental effects to fetuses during pregnancy, cancer, liver effects, immune effects, thyroid effects, and other effects such as cholesterol changes.47 Laboratory studies in animals who were exposed to PFAS found links between the chemicals and increased cholesterol, changes in the body’s hormones, alterations of the immunologic system, decreased fertility, increased risk of cancer (especially kidney and testicular), low birth weight, delayed puberty onset, and birth defects. Since humans and animals react differently to PFAS, not all effects observed in animals may occur in humans. Although many epidemiology studies have examined the potential of PFAS to result in adverse health effects, most of the studies are cross-sectional in design and do not establish causality. Based on several factors outlined in the report of PFAS by the CDC including the consistency of findings across studies, the available epidemiology studies suggest associations between PFAS exposure and several health outcomes in humans.48

47 “PFAS Frequently Asked Questions, ” SWRCB, 5, [6] A. M. Calafat, L.-Y. Wong, Z. Kuklenyik, J. A. Reidy, and L. L. Needham, “Polyfluoroalkyl Chemicals in the US Population: Data from the National Health and Nutrition Examination Survey (NHANES) 2003–2004 and Comparisons with NHANES 1999–2000,” Environ. Health Perspect., vol. 115, no. 11, pp. 1596 - 1602, Nov. 2007, https://www.waterboards.ca.gov/pfas/docs/master_pfas_faq_mar.pdf. 48 “PFAS Frequently Asked Questions,” SWRCB, 8, [1] ATSDR, “Toxicological Profile for Perfluoroalkyls, Draft for Public Comment,” 2018, https://www.waterboards.ca.gov/pfas/docs/master_pfas_faq_mar.pdf. 345
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Source: EPA

Figure 10 - Are PFAS Safe?49
PFAS Regulatory Requirements
Public drinking water systems are required to follow certain regulations to ensure that the water they serve to their customers is safe to drink.50 In recent years, specific regulations have been issued to address PFAS contamination that require monitoring and taking actions when PFAS is detected in drinking water sources. The following sections present PFAS regulations in the order they were issued by the EPA and California State Water Resources Control Board (SWRCB).

PFAS Monitoring Requirements
Monitoring refers to the collection and evaluation of data for contaminants that are suspected of being present in water. Samples are collected and analyzed according to EPA-approved laboratory methods. Monitoring results are reported to either the EPA or SWRCB. This data serves as a primary source of occurrence and exposure information used to develop regulatory decisions.

OCWD conducts all sampling and analyses and reporting of monitoring results to regulatory agencies on behalf of its member agencies. OCWD owns and operates its

49 “PFAS Explained,” EPA, 1, accessed March 11, 2026,
https://www.epa.gov/system/files/documents/2023-10/final-virtual-pfas-explainer-508.pdf. 50 “Drinking Water Standards and Regulations: An Overview,” CDC, accessed May 21, 2026, https://www.cdc.gov/drinking-water/about/drinking-water-standards-and-regulations-an-overview.html. 346
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own EPA-certified laboratory where it can use analytical methods approved by the EPA.

MWDOC member agencies conduct monitoring activities using either their own staff or contractors to collect samples, which are delivered to EPA-certified laboratories for analyses. Laboratories report the results of their analyses to each MWDOC water retailer, who then reports the results to either the EPA or SWRCB.

EPA Unregulated Contaminant Monitoring Rule
EPA uses the Unregulated Contaminant Monitoring Rule (UCMR) to collect data every five years for no more than 30 priority contaminants that are suspected to be present in drinking water and do not have health-based standards set under the Safe Drinking Water Act (SDWA).51 The UCMR applies to all large public water systems (PWSs) serving greater than 10,000 people, all small PWSs serving between 3,300 and 10,000 people, and a representative sample of small PWSs serving fewer than 3,300 people.

EPA establishes the list of contaminants for each five-year UCMR cycle, considering an initial list of contaminants that are not regulated by the National Primary Drinking Water Regulations, are known or anticipated to occur at PWSs, and may warrant regulation under the SDWA.52
The SDWA Public Notification Rule ensures that consumers will receive notice if there is a risk to public health from their drinking water. The Public Notification Rule requires that all PWSs notify their customers of the availability of UCMR results no later than 12- months after results are known. CWS are required to report UCMR results in their Consumer Confidence Report (CCR) when unregulated contaminants are detected. The annual drinking water quality report must include notice of availability of unregulated contaminant monitoring results, the average of the year’s results and the range of detections.53
The Grand Jury obtained UCMR monitoring data for all sampling and analyses conducted to fulfill UCMR requirements for its member agencies. The highest PFAS detections for all OCWD sources during the UCMR 3 and UCMR 5 monitoring cycles are shown at Figure 11.

51 “Summary of the Safe Drinking Water Act,” EPA.
52 “Learn About the Unregulated Contaminant Monitoring Rule,” EPA, accessed April 7, 2026, https://www.epa.gov/dwucmr/learn-about-unregulated-contaminant-monitoring-rule. 53 “Public Notification Rule,” EPA, accessed April 7, 2026, https://www.epa.gov/dwreginfo/public- notification-rule#rule-summary.
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Source: Compiled from OCWD data
Figure 11 - Highest PFAS Detections Among All OCWD Sources During UCMR 3 and UCMR 5 Monitoring Cycles
California State Water Resources Control Board PFAS General Monitoring Orders Beginning in 2020, the SWRCB Division of Drinking Water, based on review of monitoring results from its 2019 PFAS monitoring orders, determined that it was necessary to expand monitoring to groundwater sources located within the vicinity of the PFAS detections. Several PFAS general monitoring orders were issued to PWSs 2020, 2021, 2022, and 2025 that included Orange County groundwater well locations.54 Each of the SWRCB PFAS monitoring orders included requirements for sample collection and laboratory analysis by specific dates, to be followed by monitoring conducted every calendar quarter thereafter.55 These PFAS monitoring orders established Consumer Confidence Report Detection Levels (CCRDL), and Notification and Response Levels for each PFAS chemical to be monitored. A list of the SWRCB PFAS monitoring orders and exhibits identifying groundwater sources required to be monitored are shown at Appendix A, as well as copies of the CCRDL for each monitoring order.

The Grand Jury obtained monitoring data for all sampling and analyses conducted to fulfill SWRCB monitoring order requirements for sources listed in the monitoring orders that are owned by their member agencies. The highest PFAS detections for all these OCWD sources are shown at Figure 12.

54 “PFAS DDW General Orders,” SWRCB, accessed May 21, 2026, https://www.waterboards.ca.gov/drinking_water/certlic/drinkingwater/pfas_ddw_general_order/. 55 Ibid.

EPA UCMRNumber of PFAS on UCMR Contaminants ListMaximum PFAS Detection Among all OCWD Sources2012-2016 UCMR 36 PFASFigure 20, Appendix A70 ng/L2022-2026 UCMR 529 PFASFigure 21, Appendix A29 ng/L 348
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1OCWD monitoring data as of March 19, 2026
2Outlier result. Next maximum PFAS result 88 ng/L
3Outlier result. Next maximum PFAS result 73.7 ng/L
Source: Compiled from OCWD data
Figure 12 - Highest PFAS Detections Among All OCWD Sources Listed on Each SWRCB Monitoring Order Exhibit A
2025 SWRCB General Order DW 2025-0002-DDW
The 2025 SWRCB General Order, issued on December 12, 2025, adopted the initial monitoring requirements in the federal PFAS Rule for each California CWS and non- transient, non-community water system. The 2025 SWRCB Order allows previously acquired data to count toward initial monitoring if collected on or after January 1, 2019, and reported concentrations no greater than the respective MCL.56 The 2025 SWRCB General Order also included a list of Orange County groundwater sources showing that 151 of the 198 listed sources had completed initial monitoring as required by the federal PFAS Rule.57
PFAS Notification and Response Requirements
Notification and response levels are health-based advisory levels established by the SWRCB Division of Drinking Water (DDW) for chemicals in drinking water that do not have established MCLs.

When chemicals are found in drinking water at concentrations greater than their notification levels, PWSs are required by law to make specific notifications. When

56 “ORDER DW 2025-0002-DDW,” SWRCB, accessed May 21, 2026, https://www.waterboards.ca.gov/drinking_water/certlic/drinkingwater/pfas_ddw_general_order/docs/order- dw-2025-0002-ddw-pfas-initial-monitoring.pdf.
57 “Exhibit A – List of Sources and Required Monitoring Frequency,” SWRCB, accessed May 21, 2026, https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.waterboards.ca.gov%2Fdrinkin g_water%2Fcertlic%2Fdrinkingwater%2Fpfas_ddw_general_order%2Fdocs%2Forder-dw-2025-0002- ddw-exhibit-a.xlsx&wdOrigin=BROWSELINK.

SWRCB OrderNumber of PFAS on Order CCRDLSelected Monitoring Date RangeMaximum PFAS Detection Among All OCWD Sources Listed on Order Exihibit A2020-0003-DDW18 PFAS Figure 23, Appendix A8/27/20 - 2/15/21 67.5 ng/L2021-0003-DDW18 PFAS Figure 24, Appendix A2/16/21 - 10/30/22470 ng/L22022-0001-DDW25 PFAS Figure 25, Appendix A10/31/22 - 4/24/24169 ng/L32025-0002-DDW25 PFAS Figure 26, Appendix A4/25/24 - 3/19/26173.7 ng/L 349
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chemicals are found in drinking water at concentrations greater than their response levels, DDW recommends removal of a drinking water source from service.58 PFAS notification and response levels specified in CCRDLs attached to SWRCB general monitoring orders remain in effect until MCLs are established and become effective. For example, MCLs for specific PFAS will become effective in 2029, and at that time will supersede notification and response levels specified the 2022 CCRDL.

PFAS National Primary Drinking Water Regulation
In April 2024 EPA announced the final National Primary Drinking Water Regulation for six PFAS (the federal PFAS Rule).59 The PFAS Rule applies to all CWS. The EPA expects that over many years this rule will prevent PFAS exposure in drinking for approximately 100 million people, prevent thousands of deaths, and reduce tens of thousands of serious PFAs-attributable illnesses.60
The PFAS Rule establishes initial monitoring and compliance monitoring requirements, and enforceable maximum contaminant levels (MCL) for six PFAS in drinking water.

Initial monitoring for six listed PFAS must be implemented beginning April 2024 and must be completed no later than April 26, 2027. Compliance monitoring requirements beginning April 26, 2027, will be either triennial, annual, or quarterly as determined by the SWRCB based on results of the initial monitoring.

Maximum Contaminant Level (MCL) is the highest level of a contaminant allowed in drinking water. EPA has established legally enforceable MCLs of 4.0 parts per trillion (ppt) for PFOA and PFOS, and 10.0 ppt for PFHxS, PFNA, and HFPO-DA (GenX chemicals). Figure 13 shows the MCLs and MCLG effective April 26, 2029.

Ensuring compliance with drinking water MCLs for the PFAS of most concern is the reason over $600 million (see Figure 17) is being spent to construct PFAS treatment facilities in Orange County.

58 “Drinking Water Notification Levels,” SWRCB, accessed May 21, 2026, https://www.waterboards.ca.gov/drinking_water/certlic/drinkingwater/NotificationLevels.html. 59 “Per- and Polyfluoroalkyl Substances (PFAS), Final PFAS National Primary Drinking Water Regulation,” EPA, accessed May 21, 2026, https://www.epa.gov/sdwa/and-polyfluoroalkyl-substances-pfas. 60 Ibid.
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Source: EPA
Figure 13 - PFAS Rule Enforceable Maximum Contaminant Levels and Maximum Contaminant Level Goals61
In addition to ongoing compliance monitoring and MCLs, the PFAS Rule also includes additional requirements with future effective dates. Between April 2027 and April 2029, if monitoring shows that drinking water levels exceed MCLs, CWS must implement solutions that reduce these PFAS; results of initial monitoring must be included in the CCR; results of compliance monitoring must be included in the CCR; and public notification is required for monitoring and testing violations. Starting April 2029, CWS that have MCL violations must take action to reduce levels of these PFAS in their drinking water, and public notification is required for MCL violations.

Compliance with Regulatory Requirements
Consumer Confidence Reports
The Grand Jury reviewed the 2025 Consumer Confidence Reports (Water Quality Reports) issued by 31 water retailers serving Orange County. The CCR is to be delivered to all billing customers by July 1 of each year and must include specified information. All 31 water retailers complied with the eight content requirements specified by the EPA, shown in Appendix B.62 Seven of the 11 water retailers operating PFAS

61 “PFAS National Primary Drinking Water Regulation, April 2024,” EPA, accessed May 12, 2026, https://www.epa.gov/system/files/documents/2024-04/pfas-npdwr_fact-sheet_general_4.9.24v1.pdf. 62 “Consumer Confidence Report Rule: A Quick Reference Guide,” EPA, accessed April 18, 2026, https://www.epa.gov/sites/default/files/2014-05/documents/guide_qrg_ccr_2011.pdf. 351
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treatment facilities in Orange County included a PFAS advisory section in their CCRs, while only 55 percent of the 31 water retailers included any PFAS advisory statement.

The Grand Jury found that the 31 Orange County water retailers reported either “not detected” results or concentrations below notification thresholds for the six PFAS listed in the EPA PFAS Rule on their 2025 CCRs. After PFAS treatment facilities became operational, OCWD member retailers operating these facilities consistently reported “not detected” results for the same six PFAS. The Grand Jury found that PFAS results from individual wells do not necessarily reflect the quality of water delivered to customers, as some tested wells were later placed into inactive status or destroyed. CCRs documented PFAS constituents exceeding notification levels as required and did not report “not detected” results for those constituents. Monitoring results and CCRs are available in the Safe Drinking Water Information System (SDWIS), California’s official database for tracking public water systems, drinking water quality monitoring, regulatory compliance, and enforcement.63
Notification and Response
As of 2020, drinking water retailers with PFAS detections above notification and response levels at wells without PFAS treatment facilities began to rely on imported water, or groundwater blended with imported water to deliver drinking water with PFAS concentrations below notification and response levels. As of 2021, multiple water retailers in Orange County shut down groundwater wells after PFAS concentrations at those wells exceeded established response levels.64
PFAS Rule Initial Monitoring
When the 2025 SWRCB General Order adopting the PFAS National Primary Drinking Water Regulation was issued in December 2025, 76% of listed Orange County groundwater sources had already completed initial monitoring required to be completed by April 2027. Most of the remaining Orange County sources received credit for previously acquired data, leaving only 6% with all requirements to be completed by April 2027.

63 “Drinking Water Watch,” SWRCB, Division of Drinking Water, Safe Drinking Water Information System (SDWIS), accessed April 26, 2026, https://sdwis.waterboards.ca.gov/PDWW/. 64 “Orange County launches first water plant to remove PFAS toxins,” Solano Public Health, accessed April 29, 2026,
https://publichealth.networkofcare.org/solano/CommunityResources/News/Article?articleId=124536. 352
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Proactive Response to PFAS Impacts
PFAS Impacts and OCWD Response
OCWD coordinated a regional response to PFAS contamination in partnership with its member agencies. These efforts focus on restoring the groundwater basin, which supplies up to 85 percent of the water used by approximately 2.5 million residents in north and central Orange County. A timeline of OCWD response to PFAS in the Orange County Groundwater Basin is shown in Figure 14. As PFAS-impacted groundwater wells began to be shut down in early 2020, public education became a critical component of community water systems’ response. OCWD dedicated resources to public outreach, including the development of informational web pages to inform the public about PFAS impacts and the measures being implemented to address them.65

Source: Compiled from multiple OCWD sources
Figure 14 - Timeline of OCWD Response to PFAS in the Santa Ana River Basin PFAS contamination has impacted more than 100 groundwater wells across 15 water retailers. As of this report, 53 wells have returned to service following construction of treatment facilities. Figure 15 shows a map of current and future PFAS treatment locations in Orange County.

65 “PFAS education center,” Orange County Water District, accessed April 8, 2026, https://www.ocwd.com/what-we-do/water-quality/pfas/.
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Figure 15 - Map of Current and Future PFAS Treatment Locations PFAS Treatment Facilities and Capital Costs
Construction of PFAS treatment facilities began in 2020. OCWD executed the PFAS Treatment Facilities and Program Agreement, under which OCWD funds capital costs and shares operating and maintenance (O&M) costs with participating water retailers.

Figure 16 summarizes projected PFAS capital funding sources as of January 2026, including OCWD pay-as-you-go (PAYGO) revenue, state and federal grants, an EPA Water Infrastructure Finance and Innovation Act (WIFIA) loan, and litigation settlement proceeds. The Grand Jury commends OCWD for securing diversified funding sources to advance timely treatment facility construction.
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Source: OCWD data
Figure 16 - Approximate PFAS Capital Funding Sources
Figure 17 summarizes PFAS treatment facilities by water retailer, opening date, treatment technology, capacity, location, connections, number of wells, and capital costs. Facilities began entering service in mid-2021, starting with a treatment plant in Fullerton, with additional facilities becoming operational over time. Most facilities use ion exchange technology. Capital costs vary based on the number of affected wells, conveyance pipeline requirements, and treatment facility configuration.

OCWD is funding the reasonable costs of designing and constructing PFAS treatment facilities for its member water retailers. Each retailer could either have OCWD design and build the treatment facility or receive reimbursement for designing and constructing the treatment system independently. As of this report, 38 wells with PFAS treatment were built by OCWD and fifteen wells with PFAS treatment were designed and built by the water retailers.

Eighteen wells with PFAS treatment construction projects by OCWD have been completed on schedule. Ten wells with PFAS treatment projects, which were built by OCWD, were completed on schedule; however, OCWD experienced cost overruns due to specialized design requirements or owner-requested improvements. An additional 10 wells with PFAS treatment projects that were done by OCWD were completed late and over budget, primarily due to pandemic-related material delays, design complexity, owner-requested improvements, and utility coordination challenges. 355
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Source: Multiple OCWD and water retailer data
Figure 17 - Summary of PFAS Treatment Facilities
Community Water SystemOpening DateType Capacity Location Connections WellsTotal Cost ($M)Actual-to Date ($M)Remaining Budget ($M)Sep-2024 Ion Exchange 51,000 gal/min Nine (9) PFAS treatment facilities at Linda Vista, Katella Ave., Santa Cruz, Energy Field, Brookhurst, Willow Park, Downtown, Boysen Park, and La Palma14 $117.1 $117.1 $0.0Dec-2028 Ion Exchange8,000 gal/minWells 48 & 532$16.0$0.8$15.3Dec-2028 Ion Exchange 8,000 gal/min Wells 39 & 47 2 $16.0 $0.9 $15.1Dec-2029 Ion Exchange TBD Well 51 1 $7.0 $0.0 $7.0City of Buena Park Jun-2026 Packer 2,200 gal/minLinden Well - Install Packer to reduce flow from PFAS zone(s) in the well - not treatment.1 $0.6 $0.1 $0.6Jun-2021 Ion Exchange 2,400 gal/min Kimberly Well 1A 1 $5.3 $4.1 $1.3Dec-2023Granular Activated Carbon (GAC)5,000 gal/min Main Plant 3A 1 $13.7 $13.7 $0.0Dec-2026Granular Activated Carbon (GAC)4,000 gal/min Main Plant Wells 5,6,7,8 4 $12.5 $2.6 $9.9Jun-2027 Ion Exchange 4,400 gal/min Kimberly Well 2 1 $10.9 $4.3 $6.6Dec-2029 Ion Exchange 1,600 gal/minSunclipse Well 10 - Pipeline for Treatment at Kimberly 2 Plant Well 15 - New Well Site Needed2 $15.3 $0.0 $15.3Jun-2023 Ion Exchange 17,600 gal/minWells 21, 23, 28, 29, 30, 31 6$24.3$24.3$0.0Dec-2026 Ion Exchange 2,000 gal/min Well 19 1 $6.5 $1.9 $4.7Dec-2028 Ion Exchange 13,590 gal/min Wells 22, 26, and 27 3 $31.7 $1.6 $30.2Dec-2030 Ion Exchange 2,000 gal/min Well 25 1 $7.0 $0.0 $7.0Dec-2029 Ion Exchange 3,000 gal/min Well 3A 1 $8.0 $0.0 $8.0Dec-2030 Ion Exchange 3,000 gal/min Well 6 1 $8.0 $0.0 $8.0Sep-2022 Ion Exchange 8,420 gal/min Wells 9, 19, 23, 24 4 $10.0 $9.9 $0.1Apr-2026 Ion Exchange 7,940 gal/minWells 20, 21, 223$14.7$14.7$0.0Apr-2026 Ion Exchange 3,200 gal/minWell 281$5.0$4.0$1.0Dec-2028 Ion Exchange 5,500 gal/min Wells 25, 27 2 $13.0 $0.4 $12.7Dec-2029 Ion Exchange 3,200 gal/min Well 26 1 $7.0 $0.1 $6.9Dec-2029 Ion Exchange TBDWell 29 - New Well Currently Being Drilled by City1 $6.0 $1.0 $5.0May-2023 Ion Exchange 2,500 gal/min Well 40 1 $5.8 $5.8 $0.0Sep-2026 Ion Exchange 2,500 gal/minWell 381$7.4$7.4$0.0Dec-2026 Ion Exchange 2,000 gal/minWell 311$8.5$6.8$1.7Apr-2027 Ion Exchange 3,600 gal/min Well 27&28 2 $17.0 $8.7 $8.3May-2027 Ion Exchange 9,200 gal/minWells 27, 28, 31, 38, 40 at John Garthe Reservoir5 $31.4 $0.0 $31.4Dec-2029 Ion Exchange 12,400 gal/minWells 16, 29, 33, 41, 43(fut) at Walnut Reservoir5 $25.0 $0.1 $24.9May-2025 Ion Exchange 6,400 gal/minMain Street and Prospect Avenue to remove PFAS from four (4) wells in Tustin4 $32.7 $32.7 $0.0Dec-2029 Ion Exchange 2,000 gal/minEdinger Well1$7.0$0.0$7.0Dec-2030 Ion Exchange 2,300 gal/min 17th St Wells (2 wells treated) 2 $7.0 $0.0 $7.0Dec-2030 Ion Exchange 2,500 gal/min WM-3 (New Well) 1 $8.0 $0.0 $8.0Dec-2030 Ion Exchange 2,500 gal/min WM-SC4 (New Well) 1 $8.0 $0.0 $8.0East Orange County Water DistrictJun-2024 Ion Exchange 3,200 gal/minTreatment for East and VanderWerff Wells19,000 2 $8.9 $8.9 $0.0Nov-2023 Ion Exchange 3,200 gal/minBradford and Fairhaven Plants3$4.4$4.4$0.0Jul-2027 Ion Exchange 940 gal/min Sherrill Plant 1 $3.1 $0.8 $2.4Dec-2028 Ion Exchange 7,620 gal/min La Jolla, Fern Plants 3 $8.3 $0.5 $7.8Dec-2028 Ion Exchange 7,620 gal/minClair, Beach, and Dale Plants4$12.8$0.9$11.9Dec-2030 Ion Exchange 2,500 gal/minLowden1$8.0$0.0$8.0Dec-2030 Ion Exchange 2,500 gal/min Orangewood 1 $8.0 $0.0 $8.0Irvine Ranch Water District Oct-2024 Ion Exchange 3,200 gal/min Orange Park Acres Well No. 1 125,000 1 $7.2 $7.2 $0.0Serrano Water District Feb-2022 Ion Exchange 3,200 gal/min Wells 3 and 5 5,659 2 $6.0 $6.0 $0.0Yorba Linda Water District Dec-2021 Ion Exchange 13,200 gal/min All ten (10) Yorba Linda wells 11,786 10 $27.7 $27.7 $0.0Note: $M = Dollars in Millions 106 $607.8 $318.9 $288.9 City of Anaheim
City of Tustin 14,500
64,000City of Fullerton 32,000
Golden State Water Company
City of Garden Grove 34,300City of Orange46,30036,00045,576City of Santa AnaCity of WestminsterCity of Huntington Beach 356
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Operations and Maintenance Costs
Under the PFAS Treatment Facilities and Program Agreement, OCWD reimburses 50 percent of eligible operations and maintenance (O&M) costs incurred by participating water agencies. Eligible O&M costs include treatment media replacement, power and chemical costs, routine maintenance, repairs, staffing, compliance monitoring, regulatory compliance activities, additional pumping, waste disposal, sewer costs, and other necessary system maintenance expenses.

Actual PFAS treatment expenses (see Figure 18), which can be found in Annual Comprehensive Financial Reports (ACFRs),66 varied primarily due to construction timing and the performance of ion exchange resin media. Specialized resins are a key element in PFAS treatment and help remove PFAS from water using electrostatics. Construction delays meant some treatment facilities were not operational as expected, resulting in lower O&M costs. In FY22 and FY23, initial resin media lasted longer than anticipated and reduced O&M costs. In contrast, FY25 experienced more resin changeouts than anticipated and higher O&M costs. Resin media life varies by treatment system and operating conditions, such as run time, cycling frequency, and production flow rates.

OCWD is updating resin performance assumptions and changeout frequency estimates to improve future O&M forecasts.

Source: OCWD
Figure 18 – OCWD’s Share of PFAS Treatment Facility Annual O&M Cost Program Status and Future Plans
The overall OCWD PFAS Treatment Systems Project currently includes 11 water retailers, with construction planned or underway for four additional retailers, expanding the program to 15. Fifty-three treatment systems are operational. Construction

66 “Sound financial management,” Orange County Water District, accessed April 8, 2026, https://www.ocwd.com/what-we-do/sound-financial-management/. $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000FY22 FY23 FY24 FY25 357
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continues on 20 additional systems, with design work underway for 24 more. Here is a list of PFAS projects in design or under construction as of May 2026:
 Golden State Water Company Wells SLON and SORG are still in planning. Well SSYC is in design and is anticipated to start construction in Fiscal Year 26/27.  Tustin 17th Street Well is nearing the start of design.  Huntington Beach Well 3A, Anaheim Wells 39 and 47, Tustin Edinger Well are all in the design phase and are anticipated to start construction in Fiscal Year 26/27.  Buena Park Linden Well is currently in construction.

Figure 19 indicates the estimated average monthly cost of PFAS treatment to OCWD service area residents is $1.42 per person. OCWD anticipates continued design and construction activity over several years.

Source: OCWD
Figure 19 - PFAS Monthly Cost to OCWD Service Area Residents

Total Capital Costs $570,000,000State & Fed Grants $152,000,000Litigation Proceeds $121,000,000Net Capital Costs $297,000,000Amortized Debt Costs4.50%Interest Rate25Years$297,000,000 AmountAnnual Debt Payment $20,029,391 Estimated Annual O&M Cost $22,000,000 Total Annual Cost $42,029,391 Total Monthly Cost $3,502,449 OCWD Population from 19 Member Agencies 2,469,000 personsMonthly cost per person $1.42 Average PFAS Impact to OCWD Service Area ResidentsOver a 25 year period 358
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FINDINGS
In accordance with California Penal Code Sections 933 and 933.05, the 2025-2026 Orange County Grand Jury requires (or, as noted, requests) responses from each agency affected by the findings presented in this section. The responses are to be submitted to the Presiding Judge of the Superior Court.

Based on its investigation described herein, the 2025-2026 Orange County Grand Jury has arrived at the following six principal findings:

F1 Commercial and industrial chemical manufacturers are a major source of PFAS contamination. Settlement litigation funds are available for community water systems to make claims.

F2 PFAS is widespread, and contamination has been detected in Orange County groundwater sources. Community water systems are required to report PFAS monitoring results in their annual Consumer Confidence Reports.

F3 PFAS exposure is associated with potential adverse human health effects.

F4 OCWD has taken a proactive leadership role in addressing PFAS in the Orange County Groundwater Basin, though PFAS treatment implementation varies across local cities and water districts.

F5 Groundwater supplies must either be treated to remove PFAS or must be replaced with imported water supplies that are significantly more expensive than groundwater. Over $500 million is being spent on construction, operations, and maintenance of PFAS treatment facilities in Orange County.

F6 Orange County drinking water meets or exceeds state and federal standards and is safe for consumption without additional home filtration.

F7 Research on newer PFAS compounds and long-term exposure effects is ongoing.

F8 There are limited online PFAS education and outreach programs among Orange County water retailers. Most retailers rely on OCWD for PFAS education and outreach. PFAS advisories were included in approximately 55% of the Orange County water retailers’ annual water quality reports in 2025. 359
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RECOMMENDATIONS
In accordance with California Penal Code Sections 933 and 933.05, the 2025-2026 Orange County Grand Jury requires (or, as noted, requests) responses from each agency affected by the recommendations presented in this section. The responses are to be submitted to the Presiding Judge of the Superior Court.

Based on its investigation described herein, the 2025-2026 Orange County Grand Jury makes the following recommendations:

R1 By September 30, 2026, Orange County Water District (OCWD), in coordination with state and federal agencies, should pursue cost recovery efforts against PFAS manufacturers to offset treatment, monitoring, and long-term remediation costs incurred by local water agencies and ratepayers. [F1, F5] R2 By July 1, 2029, OCWD and its member agencies should monitor PFAS in groundwater and surface water sources and promptly implement PFAS treatment when response levels are exceeded. [F2, F4]
R3 By September 30, 2026, OCWD, in collaboration with the Orange County Health Care Agency, should update public education and guidance continually as scientific understanding and regulatory standards evolve. [F3] R4 By July 1, 2029, all Orange County water retailers should consistently include a PFAS advisory, treatment facilities status, and compliance information in consumer confidence reports and on agency websites, using clear and understandable language for the public. [F2, F8]
R5 By September 30, 2026, OCWD and all Orange County water retailers should enhance coordinated public education efforts to reassure their customers about drinking water safety. [F6, F8]
R6 By September 30, 2026, OCWD should continuously monitor national and international PFAS research developments and incorporate new findings into future groundwater management, treatment planning, and regulatory compliance strategies. [F7]
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COMMENDATIONS
Many Orange County water agencies have demonstrated exceptional leadership in addressing PFAS through large-scale treatment investments, rigorous monitoring, and public communication. Together, these agencies serve more than two million residents and have implemented some of the most advanced PFAS treatment systems in the nation. The following commendations recognize high-impact programs and measurable achievements across the region.

Orange County Water District (OCWD)
OCWD has implemented the largest PFAS treatment program in the United States, designing and constructing treatment systems for over 100 impacted wells across 15 cities and retail water districts, improving water quality for approximately 1.5 million people. OCWD secured a $94M EPA Water Infrastructure Finance and Innovation Act (WIFIA) loan, $152M in state and federal grant funding, and $131M in PFAS manufacturers litigation settlement funds to support this effort, which includes the build-out of more than 30 PFAS treatment facilities.

The Grand Jury offers additional commendations to OCWD and its member agencies for their collaborative cost-sharing agreement. Under this arrangement, OCWD fully funds all PFAS facility design and construction capital expenditures. Ongoing operations and maintenance costs are then shared equally, with OCWD covering 50% and each participating water retailer contributing the remaining 50% for the PFAS treatment facilities they operate. This approach reflects progressive public-sector planning, demonstrating how agencies can work together to address complex and costly challenges. It also serves as a strong model for future government/private-sector cost-sharing agreements, illustrating how thoughtful collaboration can enhance efficiency and long-term public benefit.

Anaheim Water Utility
Anaheim has launched one of the largest municipal PFAS treatment programs in the country, a multi-phase, $150M effort to construct treatment systems at nine groundwater sites. The utility serves 64,000 metered customers, historically relying on groundwater for 80% of its supply. PFAS treatment systems for Wells 39 and 47 are among the first in a series of facilities designed to restore local production while meeting stringent state and federal standards.

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Yorba Linda Water District (YLWD)
YLWD operates the J. Wayne Miller, Ph.D. Water Treatment Plant, recognized as the nation’s largest PFAS ion-exchange treatment facility. The plant serves approximately 80,000 customers and has delivered PFAS-free water for nearly three consecutive years. This facility allows YLWD to optimize its groundwater resources while proactively meeting evolving PFAS regulatory standards.

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RESPONSES
The following excerpts from the California Penal Code provide the requirements for public agencies to respond to the Findings and Recommendations of this Grand Jury report:
§933
(c) No later than 90 days after the grand jury submits a final report on the operations of any public agency subject to its reviewing authority, the governing body of the public agency shall comment to the presiding judge of the superior court on the findings and recommendations pertaining to matters under the control of the governing body, and every elected county officer or agency head for which the grand jury has responsibility pursuant to Section 914.1 shall comment within 60 days to the presiding judge of the superior court, with an information copy sent to the board of supervisors, on the findings and recommendations pertaining to matters under the control of that county officer or agency head and any agency or agencies which that officer or agency head supervises or controls. In any city and county, the mayor shall also comment on the findings and recommendations. All of these comments and reports shall forthwith be submitted to the presiding judge of the superior court who impaneled the grand jury. A copy of all responses to grand jury reports shall be placed on file with the clerk of the public agency and the office of the county clerk, or the mayor when applicable, and shall remain on file in those offices. One copy shall be placed on file with the applicable grand jury final report by, and in the control of the currently impaneled grand jury, where it shall be maintained for a minimum of five years.
§933.05.
(a) For purposes of subdivision (b) of Section 933, as to each grand jury finding, the responding person or entity shall indicate one of the following:
(1) The respondent agrees with the finding.
(2) The respondent disagrees wholly or partially with the finding, in which case the response shall specify the portion of the finding that is disputed and shall include an explanation of the reasons, therefore.
(b) For purposes of subdivision (b) of Section 933, as to each grand jury recommendation, the responding person or entity shall report one of the following actions:
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(1) The recommendation has been implemented, with a summary regarding the implemented action.
(2) The recommendation has not yet been implemented, but will be implemented in the future, with a timeframe for implementation.
(3) The recommendation requires further analysis, with an explanation and the scope and parameters of an analysis or study, and a timeframe for the matter to be prepared for discussion by the officer or head of the agency or department being investigated or reviewed, including the governing body of the public agency when applicable. This timeframe shall not exceed six months from the date of publication of the grand jury report.
(4) The recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation, therefore.
(c) However, if a finding or recommendation of the grand jury addresses budgetary or personnel matters of a county agency or department headed by an elected officer, both the agency or department head and the board of supervisors shall respond if requested by the grand jury, but the response of the board of supervisors shall address only those budgetary or personnel matters over which it has some decision-making authority. The response of the elected agency or department head shall address all aspects of the findings or recommendations affecting his or her agency or department. (d) A grand jury may request a subject person or entity to come before the grand jury for the purpose of reading and discussing the findings of the grand jury report that relates to that person or entity in order to verify the accuracy of the findings prior to their release.
(e) During an investigation, the grand jury shall meet with the subject of that investigation regarding the investigation, unless the court, either on its own determination or upon request of the foreperson of the grand jury, determines that such a meeting would be detrimental.
(f) A grand jury shall provide to the affected agency a copy of the portion of the grand jury report relating to that person or entity two working days prior to its public release and after the approval of the presiding judge. No officer, agency, department, or governing body of a public agency shall disclose any contents of the report prior to the public release of the final report.
(Amended by Stats. 1997, Ch. 443, Sec. 5. Effective January 1, 1998.) Comments to the Presiding Judge of the Superior Court in compliance with Penal Code §933.05 are required from:
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Orange County Board of Supervisors 90 Day Response Required Findings: F3
Recommendations: R3

Orange County Water District Board of Directors 90 Day Response Required Findings: F1, F2, F3, F4, F5, F6, F7, F8
Recommendations: R1, R2, R3, R5, R6

Orange County Health Care Agency 90 Day Response Requested Findings: F3
Recommendations: R3

City of Anaheim 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

City of Brea 90 Day Response Required
Findings: F2, F6, F8
Recommendations: R4, R5

City of Buena Park 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

City of Fountain Valley 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

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City of Fullerton 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

City of Garden Grove 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

City of Huntington Beach 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

City of La Habra 90 Day Response Required
Findings: F2, F6, F8
Recommendations: R4, R5

City of La Palma 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

City of Newport Beach 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

City of Orange 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

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City of San Clemente 90 Day Response Required
Findings: F2, F6, F8
Recommendations: R4, R5

City of Santa Ana 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

City of Seal Beach 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

City of Tustin 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

City of Westminster 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

East Orange County Water District 90 Day Response Required Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

El Toro Water District 90 Day Response Required
Findings: F2, F6, F8
Recommendations: R4, R5

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Emerald Bay Service District 90 Day Response Required Findings: F2, F6, F8
Recommendations: R4, R5

Golden State Water Company 90 Day Response Required Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

Irvine Ranch Water District 90 Day Response Required Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

Laguna Beach County Water District 90 Day Response Required Findings: F2, F6, F8
Recommendations: R4, R5

Mesa Water District 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

Moulton Niguel Water District 90 Day Response Required Findings: F2, F6, F8
Recommendations: R4, R5

Santa Margarita Water District 90 Day Response Required Findings: F2, F6, F8
Recommendations: R4, R5

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Orange County Grand Jury 2025-2026 Page 45 of 62
Serrano Water District 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

South Coast Water District 90 Day Response Required
Findings: F2, F6, F8
Recommendations: R4, R5

Trabuco Canyon Water District 90 Day Response Required Findings: F2, F6, F8
Recommendations: R4, R5

Yorba Linda Water District 90 Day Response Required
Findings: F2, F4, F6, F8
Recommendations: R2, R4, R5

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Acronyms
ACFRS Annual comprehensive financial reports
ADONA Ammonium 4 8-dioxa-3h-perfluorononanoate
AFFF Aqueous film forming foams used frequently at airports and military bases for firefighting and emergency response training activities AL Regulatory Action Level The concentration of a contaminant which, if exceeded, triggers treatment or other requirements that a water system must follow
ATSDR Agency for Toxic Substances and Disease Registry
CCR Consumer Confidence Report
CCRDL Consumer Confidence Report Detection Levels
CDC United States Centers for Disease Control and Prevention CWS Community Water System
DDW Division of Drinking Water
DWR Department of Water Resources
Effluent Liquid waste from industrial facilities
EPA US Environmental Protection Agency
FDA Food and Drug Administration
GenX Is a Chemours trademark name for a synthetic, short chain organofluorine chemical compound, the ammonium
salt of hexafluoropropylene oxide dimer acid (HFPO-DA). It can also be used more informally to refer to the group of related fluorochemicals that are used to produce GenX.

GWRS Ground water replacement system
HALF LIFE Time required for a quantity to reduce to half of its original value HFPO-DA Hexafluoropropylene oxide dimer acid
MSS Multi site study
MCL Glossary of Terms Maximum Contaminant Level. The highest level of a contaminant that is allowed in drinking water. Primary MCLs are set as 370
PFAS and Public Awareness
Orange County Grand Jury 2025-2026 Page 47 of 62
close to the public health goals and maximum contaminant level goals as is economically and technologically feasible. Secondary MCLs are set to protect the odor, taste, and appearance of drinking water.

MCLG Maximum Contaminant Level Goal. The level of a contaminant in drinking water below which there is no known or expected risk to health. The United States Environmental Protection Agency (USEPA) sets maximum contaminant level goals.

MRDL Maximum Residual Disinfectant Level. The highest level of a disinfectant allowed in drinking water. There is convincing evidence that the addition of a disinfectant is necessary for control of microbial contaminants.

MRDLG Maximum Residual Disinfectant Level Goal The level of a drinking water disinfectant below which there is no known or expected risk to health.

MRDLGs do not reflect the benefits of the use of disinfectants to control microbial contaminants.

MWD Metropolitan Water District
MWDOC Municipal Water District of Orange County
N/A Not applicable
ND Not detected
NHANES National Health and Nutrition Examination Survey NL California Notification Level Non-regulatory, health-based advisory levels established by the State Board for contaminants in drinking water for which an MCL has not been established
NR Not required to be tested; < = average is less than the detection limit for reporting purposes
NTU Nephelometric turbidity units
OCWD Orange County Water District
O & M Operations and Management
PAYGO “Pay as you go”
PDWS Primary Drinking Water Standard MCLs, MRDLs and treatment techniques (TTs) for contaminants that affect health, along with their monitoring and reporting requirements
pCi/L picoCuries per liter
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PFAS RULE Establishes enforceable drinking water standards for six PFAS chemicals PFAS Per- and polyfluoroalkyl substances
PFBA Perfluoro Butanoic Acid
PFBS Perfluoro Butane Sulfonic Acid
PFHpA Perfluoro Heptanoic Acid
PFHxA Perfluoro Hexanoic Acid
PFHxS Perfluoro Hexane Sulfonic Acid
PFNA Perfluorononanoic acid
PFOA Perfluoro Octanoic Acid
PFOS Perfluoro Octane Sulfonic Acid
PFPeA Perfluoro Pentanoic Acid
PHG Public Health Goal The level of a contaminant in drinking water below which there is no known or expected risk to health. The California Environmental Protection Agency (CalEPA) sets public health goals.

PPB Parts per billion
PPM Parts per million
PPT Parts per trillion
PQL Practical Quantitation Level
PWS Public water supply
RAA Highest Running Annual Average
SAR Santa Ana River
SDWA Safe Drinking Water Act
SDWIS Safe Drinking Water Information System
SWRCB State Water Resources Control Board
WIFIA Water Infrastructure Finance and Innovation Act
TT Treatment Technique. A required process intended to reduce the level of a contaminant in drinking water
UCI University of California, Irvine
372
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UCMR Unregulated Contaminant Monitoring Rule
US United States
µmho/cm Micromho per centimeter (equivalent to 1 microsiemens/cm)

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Glossary
Cross Sectional Study Examines prevalence of a condition or characteristic at a single point in time across a population to identify patterns, associations, and risk factors
Ion Exchange Technology Process that removes/replaces dissolved ions in a solution using solid materials.

Non-Community Water Systems Public water systems at locations where people do not reside
Non-Transient Water Systems Public water systems that service at least 25 of the same people over six months of the year, but do not
live there

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Orange County Grand Jury (2025 – 2026). [Cover page, bottom row image of Yorba Linda Water District PFAS Treatment Facility]. Photograph. August 27, 2025.

Unpublished internal documentation.

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Orange County Water District. “PFAS education center.” Accessed April 8, 2026. https://www.ocwd.com/what-we-do/water-quality/pfas/.

Orange County Water District. “Sound financial management.” Accessed April 8, 2026. https://www.ocwd.com/what-we-do/sound-financial-management/.

Pitcher Pouring [Cover page, top row, left image] - Pouring Water into a Glass - Refreshment and Hydration Concept on Wooden Table. 76812373 Stock Photo at Vecteezy, 2026
Rosato, Isabelle, et al. “Estimation of per- and polyfluoroalkyl substances (PFAS) half- lives in human studies: a systematic review and meta-analysis.” Environmental Research. Volume 242. 1 February 2024, 117743. Accessed April 13, 2026. https://www.sciencedirect.com/science/article/pii/S0013935123025471?via%3Dihub.

Solano Public Health. “Orange County launches first water plant to remove PFAS toxins.” Accessed April 29, 2026. Orange County launches first water plant to remove PFAS toxins.

Steenland, Kyle, Fletcher, Tony, and Savitz, David A. “Epidemiologic Evidence on the Health Effects of Perfluorooctanoic Acid (PFOA).” National Library of Medicine.

Accessed May 12, 2026. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2920088/.

Stricklin Tommy, Magnifying Glass [Cover page middle row, left image of magnifying glass] – What Is TDS in Drinking Water? Levels, Testing & Solutions | SpringWell, 2026 376
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Sunderland, Elsie M, et al. “A review of the pathways of human exposure to poly- and perfluoroalkyl substances (PFASs) and present understanding of health effects.” Journal of Exposure Science & Environmental Epidemiology. 3 November 2018. Accessed March 16, 2026. https://sunderlandlab.org/assets/sunderland_jeseerev_2018wsi.pdf.

SWRCB. “Drinking Water Notification Levels.” Accessed May 21, 2026. https://www.waterboards.ca.gov/drinking_water/certlic/drinkingwater/NotificationLevels.h tml.

SWRCB. “Exhibit A – List of Sources and Required Monitoring Frequency.” Accessed May 21, 2026.
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SWRCB. “ORDER DW 2025-0002-DDW.” Accessed May 21, 2026. https://www.waterboards.ca.gov/drinking_water/certlic/drinkingwater/pfas_ddw_general _order/docs/order-dw-2025-0002-ddw-pfas-initial-monitoring.pdf.

SWRCB. “PFAS - Frequently Asked Questions,” 5. [3] 3M Company, “Fluorochemical use, distribution and release overview.,” AR226-0550, 1999. updated March 19, 2020.

Accessed March 25, 2026.
https://www.waterboards.ca.gov/pfas/docs/master_pfas_faq_mar.pdf.

SWRCB. “PFAS - Frequently Asked Questions.” 5. [6] A. M. Calafat, L.-Y. Wong, Z.

Kuklenyik, J. A. Reidy, and L. L. Needham, “Polyfluoroalkyl Chemicals in the US Population: Data from the National Health and Nutriti Examination Survey (NHANES) 2003–2004 and Comparisons with NHANES 1999–2000,” Environ. Health Perspect., vol. 115, no. 11, pp. 1596– 1602, Nov. 2007.
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SWRCB. “PFAS - Frequently Asked Questions,” 5. [8] CDC, “National Report on Human Exposure to Environmental Chemicals,” 2019. Accessed April 23, 2026. https://www.waterboards.ca.gov/pfas/docs/master_pfas_faq_mar.pdf.

SWRCB, “PFAS - Frequently Asked Questions.” 8. [1] Agency for Toxic Substances and Disease Registry (ATSDR), “Toxicological Profile for Perfluoroalkyls, Draft for Public Comment,” 2018. https://www.waterboards.ca.gov/pfas/docs/master_pfas_faq_mar.pdf.

SWRCB. “PFAS DDW General Orders.” Accessed May 21, 2026. https://www.waterboards.ca.gov/drinking_water/certlic/drinkingwater/pfas_ddw_general _order/.

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Zimmerman Janet, Santa Ana River [Cover page top row, center image], Water agencies pledge cooperation to help the Santa Ana River – Orange County Register, published September 20, 2014

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Appendix A
Unregulated Contaminated Monitoring Rule (UCMR)
Contaminants Lists, PFAS Contaminants

Figure 20 - UCMR 3 Contaminants List, PFAS Contaminants

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Figure 21 - UCMR 5 Contaminants List, PFAS Contaminants 380
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State Water Resources Control Board PFAS General
Monitoring Orders, 2020-2025
SWRCB Order
Exhibit Title Internet URL Web Address
2020 SWRCB General Order
DW 2020-0003-DDW
https://www.waterboards.ca.gov/board_decisions/adopte
d_orders/drinking_water/2020/pfas_go_2020_0003_ddw/
pfas_go_2020_0003_ddw.pdf
Exhibit A – List of Sources Subject to
General Order No. DW 2020-0003-DDW
(for DDW Section 5),
https://wqts.com/wp-
content/uploads/2020/09/go_exhibit_a_section5.pdf
2021 SWRCB General Order
DW-2021-0001-DDW
https://www.waterboards.ca.gov/board_decisions/adopte
d_orders/drinking_water/2021/pfas_go_2021_0001_ddw/
a5.pdf
Exhibit A – List of Sources Subject to
General Order No. DW 2021-0001-DDW
(For DDW Section 5)
https://www.waterboards.ca.gov/board_decisions/adopte
d_orders/drinking_water/2021/pfas_go_2021_0001_ddw/
a5.pdf
2022 Amended General Order DW 2022-
0001-DDW
https://www.waterboards.ca.gov/drinking_water/certlic/dri nkingwater/pfas_ddw_general_order/docs/amended-
pfas-general-order-2022-final.pdf
Exhibit A – List of Sources Subject to
General Order No. DW 2022-0001-DDW
(Amended)
https://www.waterboards.ca.gov/drinking_water/certlic/dri nkingwater/pfas_ddw_general_order/docs/pfas_go_2022
-0001-DDW_ExhibitA.pdf
2025 SWRCB General Order
DW 2025-0002-DDW
https://www.waterboards.ca.gov/drinking_water/certlic/dri nkingwater/pfas_ddw_general_order/docs/order-dw-
2025-0002-ddw-pfas-initial-monitoring.pdf
Exhibit A – List of Sources Subject to
General Order DW 2025-0002-DDW
https://view.officeapps.live.com/op/view.aspx?src=https% 3A%2F%2Fwww.waterboards.ca.gov%2Fdrinking_water
%2Fcertlic%2Fdrinkingwater%2Fpfas_ddw_general_ord
er%2Fdocs%2Forder-dw-2025-0002-ddw-exhibit-
a.xlsx&wdOrigin=BROWSELINK
Figure 22 - SWRCB PFAS General Monitoring Orders Issued 2020 through 2025

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State Water Resources Control Board General
Monitoring Orders PFAS Constituents Lists

Figure 23 - SWRCB General Monitoring Order 2020-0003-DDW, PFAS Constituents

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Figure 24 - SWRCB General Monitoring Order 2021-0001-DDW, PFAS Constituents 383
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Figure 25 - SWRCB General Monitoring Order 2022-0001-DDW, PFAS Constituents

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Figure 26 - SWRCB General Monitoring Order 2025-0002-DDW, PFAS Constituents

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Appendix B

Source: EPA
Figure 27 - EPA Eight Content Requirements of a Consumer Confidence Report 386
Agenda Item
Orange City Council
Item #: 3.14. 8/25/2026 File #: 26-0450
TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Pamela Coleman, City Clerk/Director of City Clerk Services

1. SUBJECT
Adoption of amendments to the City’s Conflict of Interest Code following the 2026 biennial review

2. SUMMARY
Adoption of Resolution No. 11714 fulfills the State-mandated biennial review and update to the City’s Conflict of Interest Code and amends the previous Code adopted by Resolution No. 11558.

3. RECOMMENDED ACTION
Adopt Resolution No. 11714. A Resolution of the City Council of the City of Orange adopting an amended Conflict of Interest Code pursuant to the Political Reform Act of 1974.

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
This action does not correlate to any of the adopted strategic plan goals. However, Section 87306 of the California Government Code requires biennial review of the City’s Conflict of Interest Code.

6. DISCUSSION AND BACKGROUND
Pursuant to the Political Reform Act, the City conducted a thorough review of its Conflict of Interest Code and determined that amendments are necessary. At its April 28, 2026, meeting, the City Council directed staff to file the Local Agency Biennial Review Notice and, if necessary, prepare a resolution amending the Code for City Council approval. Since the last update, new positions have been created, and some existing positions have either been eliminated or have been renamed. The attached legislative (redlined) version highlights the proposed amendments to the Code.

7. ATTACHMENTS
· Resolution No. 11714 with Exhibit A
· Legislative version of Exhibit A
· Notice of Intention to amend the City’s Conflict of Interest Code City of Orange Printed on 8/20/2026Page 1 of 1
powered by Legistar™
387
Agenda Item
Orange City Council
Item #: 3.14. 8/25/2026 File #: 26-0450
TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Pamela Coleman, City Clerk/Director of City Clerk Services

1. SUBJECT
Adoption of amendments to the City’s Conflict of Interest Code following the 2026 biennial review

3. RECOMMENDED ACTION
Adopt Resolution No. 11714. A Resolution of the City Council of the City of Orange adopting an amended Conflict of Interest Code pursuant to the Political Reform Act of 1974.

4. FISCAL IMPACT
None.

A RESOLUTION OF THE CITY COUNCIL OF

THE CITY OF ORANGE ADOPTING AN

AMENDED CONFLICT OF INTEREST CODE

PURSUANT TO THE POLITICAL REFORM
ACT OF 1974

WHEREAS, the Political Reform Act (Government Code Section 81000 et seq.) requires the City to adopt and promulgate a conflict of interest code; and WHEREAS, the City Council adopted a Conflict of Interest Code, which was amended by Resolution No. 11558 on June 25, 2024; and
WHEREAS, the Political Reform Act, in Government Code Section 87306, requires the City to review its Conflict of Interest Code biennially to determine whether amendments are required; and
WHEREAS, on April 28, 2026, the City Council directed staff to review the City’s Conflict of Interest Code; and
WHEREAS, the City has determined that due to changes in City employee positions and titles, the City's Conflict of Interest Code requires revision; and WHEREAS, on April 28, 2026, the City Council received and filed the 2026 Local Agency Biennial Notice and directed staff to promulgate the necessary amendments to the City’s Conflict of Interest Code.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Orange as follows:

SECTION 1. The City Council adopts by reference the model conflict of interest code promulgated by the Fair Political Practices Commission as set forth in Section 18730 of the Title 2 of the California Code of Regulations, which, together with the City’s List of D esignated Positions and Disclosure Categories, collectively constitute the City of Orange Conflict of Interest Code. A copy of said Code is attached hereto as Exhibit A and shall be on file with the City Clerk and available to the public for inspection and copying during regular business hours.

SECTION 2. The amended Conflict of Interest Code shall become effective at the time of the adoption and approval of this Resolution.

SECTION 3. Any prior Resolution adopting a Conflict of Interest Code for the City of Orange, including Resolution No. 11558, is hereby rescinded upon the effective date of this Resolution.
389
ADOPTED this ______ day of _______________________ 2026.

Daniel R. Slater, Mayor, City of Orange

ATTEST:

____________________________________
Pamela Coleman, City Clerk, City of Orange

APPROVED AS TO FORM:

Nathalie Adourian, City Attorney

Attachment: Exhibit A

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.

CITY OF ORANGE )

I, PAMELA COLEMAN, City Clerk of the City of Orange, California, do hereby certify that the foregoing Resolution was duly and regularly adopted by the City Council of the City of Orange at a regular meeting thereof held on the ___ day of 2026, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

Pamela Coleman, City Clerk, City of Orange
390

CONFLICT OF INTEREST CODE OF THE

CITY OF ORANGE

The Political Reform Act (Government Code Section 81000, et seq.) requires state and local government agencies to adopt and promulgate conflict of interest codes. The Fair Political Practices Commission has adopted a regulation (2 California Code of Regulations Section 18730) that contains the terms of a standard conflict of interest code, which can be incorporated by reference in an agency’s code. After public notice and hearing, the standard code may be amended by the Fair Political Practices Commission to conform to amendments in the Political Reform Act. Therefore, the terms of 2 California Code of Regulations Section 18730 and any amendments to it duly adopted by the Fair Political Practices Commission are hereby incorporated by reference. This regulation and the attached Appendix, designating positions and establishing disclosure categories, shall constitute the conflict of interest code of the City of Orange (“City”).

All officials and designated positions required to submit a statement of economic interests shall file their statements with the City Clerk as the City’s Filing Officer. The City Clerk shall make and retain a copy of all statements filed by officials listed in Government Code Section 87200, and forward the originals of such statements to the Fair Political Practices Commission. The City Clerk shall retain the originals of the statements filed by all other officials and designated positions and will make all retained statements available for public inspection and reproduction during regular business hours (Gov. Code § 81008).

391

APPENDIX

DESIGNATION OF POSITIONS AND

ESTABLISHMENT OF DISCLOSURE CATEGORIES

PART A

DESIGNATED POSITIONS

The Mayor, Members of the City Council and Planning Commission, the City Manager, the City Attorney, the City Treasurer, and all other City Officials who manage public investments as defined by 2 California Code of Regulations § 18700.3(b), are NOT subject to the City’s Code, but must file disclosure statements under Government Code Section 87200 et seq. [Regs. § 18730(b)(3)]

OFFICIALS WHO MANAGE PUBLIC INVESTMENTS

It has been determined that the positions listed below are other City Officials who manage public investments.1 These positions are listed here for informational purposes only.

Administrative Services Director
Assistant City Manager
Assistant Finance Director
Finance Director

1 Individuals holding one of the above listed positions may contact the Fair Political Practices Commission for assistance or written advice regarding their filing obligations if they believe that their position has been categorized incorrectly. The Fair Pol itical Practices Commission makes the final determination whether a position is covered by §87200.

392

DESIGNATED POSITIONS DISCLOSURE

CATEGORIES

CITY ATTORNEY
Assistant City Attorney I 1, 2, 3, 4
Assistant City Attorney II 1, 2, 3, 4
Risk Manager 1, 2, 3, 4
Senior Assistant City Attorney 1, 2, 3, 4

CITY CLERK
Assistant City Clerk Services Director 1, 2, 3, 4
City Clerk Services Director 1, 2, 3, 4
Deputy City Clerk 1, 2, 3, 4

CITY MANAGER
Assistant to City Manager 1, 2, 3, 4
Assistant to the City Manager 1, 2, 3, 4
Deputy City Manager 1, 2, 3, 4
Senior Assistant to the City Manager 1, 2, 3, 4
Public Affairs & Information Manager 1, 2, 3, 4

COMMUNITY DEVELOPMENT
Administrative Analyst I & II 1, 2, 3, 4
Assistant Community Development Director 1, 2, 3, 4
Building Inspection Supervisor 1, 2, 3, 4
Building and Safety Manager 1, 2, 3, 4
Chief Building Official 1, 2, 3, 4
Code Compliance Manager 1, 2, 3, 4
Code Compliance Officer 1, 2, 3, 4
Combination Building Inspector 1, 2, 3, 4
Community Development Director 1, 2, 3, 4
Economic Development Manager 1, 2, 3, 4
Economic Development Project Manager 1, 2, 3, 4
Housing Manager 1, 2, 3, 4
IT Project Manager 1, 2, 3, 4
Planning Manager 1, 2, 3, 4
Principal Planner 1, 2, 3, 4
Senior Administrative Analyst 1, 2, 3, 4
Senior Code Compliance Officer 1, 2, 3, 4
Senior Combination Building Inspector 1, 2, 3, 4
Senior Plan Check Engineer 1, 2, 3, 4
Senior Planner 1, 2, 3, 4
393

DESIGNATED POSITIONS DISCLOSURE

CATEGORIES
COMMUNITY and LIBRARY SERVICES
Administrative Analyst I & II 1, 2, 3, 4
Administrative Manager 1, 2, 3, 4
Assistant Community Services Director 1, 2, 3, 4
Assistant Library Services Director 1, 2, 3, 4
Community and Library Services Director 1, 2, 3, 4
Library Manager I & II 1, 2, 3, 4
Library Tech/Support Services Manager 1, 2, 3, 4
Parks and Facilities Manager 1, 2, 3, 4
Recreation Services Manager 1, 2, 3, 4
Senior Library Manager 1, 2, 3, 4

FINANCE
Accounting Manager 1, 2, 3, 4
Assistant Finance Director 1, 2, 3, 4
Controller 1, 2, 3, 4
Finance Director 1, 2, 3, 4
Finance Manager 1, 2, 3, 4
Senior Administrative Analyst 1, 2, 3, 4
Senior Buyer 1, 2, 3, 4

FIRE
Battalion Chief 1, 2, 3, 4
Deputy Chief 1, 2, 3, 4
Emergency Manager 1, 2, 3, 4
EMS Manager 1, 2, 3, 4
Fire Chief 1, 2, 3, 4
Senior Administrative Analyst 1, 2, 3, 4
Senior EMS Manager 1, 2, 3, 4
Staff Captain 1, 2, 3, 4

INFORMATION TECHNOLOGY
IT Manager 1, 2, 3, 4
IT Project Manager 1, 2, 3, 4

HUMAN RESOURCES
Assistant Human Resources Director 1, 2, 3, 4
Human Resources Director 1, 2, 3, 4
Human Resources Manager 1, 2, 3, 4
Senior Human Resources Analyst 1, 2, 3, 4
394

DESIGNATED POSITIONS DISCLOSURE

CATEGORIES
POLICE
Administrative Analyst I & II 1, 2, 3, 4
Police Captain 1, 2, 3, 4
Police Chief
Police Lieutenant 1, 2, 3, 4
Senior Administrative Analyst 1, 2, 3, 4

PUBLIC WORKS
Administrative Manager 1, 2, 3, 4
Assistant Field Services Manager 1, 2, 3, 4
Assistant Public Works Director 1, 2, 3, 4
Assistant Water Manager 1, 2, 3, 4
City Traffic Engineer 1, 2, 3, 4
Construction Inspection Supervisor 1, 2, 3, 4
Construction Inspector I & II 1, 2, 3, 4
Contract Administrator 1, 2, 3, 4
Deputy Public Works Director 1, 2, 3, 4
Environmental Program Manager 1, 2, 3, 4
Environmental Scientist 1, 2, 3, 4
Equipment Maintenance Superintendent
Field Services Manager
Manager of Transportation/City Traffic Engineer 1, 2, 3, 4 Principal Civil Engineer 1, 2, 3, 4
Public Work Director 1, 2, 3, 4
Senior Administrative Analyst 1, 2, 3, 4
Senior Civil Engineer 1, 2, 3, 4
Water Manager 1, 2, 3, 4

ORANGE CITY PUBLIC FACILITIES FINANCING AUTHORITY
Member 1, 2, 3, 4
1, 2, 3, 4
MEMBERS of BOARDS, COMMISSIONS, and COMMITTEES
Audit Advisory Committee 1, 2, 3, 4
Community Development Block Grant Program Committee 1, 2, 3, 4 Design Review Committee 1, 2, 3, 4
Investment Advisory Committee 1, 2, 3, 4
Orange Public Library Board of Trustees 1, 2, 3, 4
Park Planning & Community Events Commission 1, 2, 3, 4
Santiago Creek Commission 1, 2, 3, 4
395
Traffic Commission 1, 2, 3, 4
1All interests in real property as set forth in Category 1, but only investments, sources of income and business positions which may provide services or materials of the type utilized by the library.

CONSULTANTS and NEW POSITIONS
2Consultants shall be included in the list of designated employees and shall disclose pursuant to the broadest disclosure category in the Code subject to the following limitation: The City Manager may determine in writing that a particular consultant, although a "designated position," is hired to perform a range of duties that is limited in scope and thus is not required to fully comply with the disclosure requirements described in this section. Such written determination shall include a description of the consultant's duties and, based upon that description, a statement of the extent of disclosure requirements.

The City Manager's determination is a public record and shall be retained for public inspection in the same manner and location as this Conflict of Interest Code. The disclosure requirements for new positions shall be categorized by the City Manager based on the duties of the position.
1, 2, 3, 4

396

PART B

DISCLOSURE CATEGORIES

Disclosure categories pertain to investments, real property, business positions and sources of income, including loans, gifts, and travel payments from sources located in or doing business within the jurisdiction of the City of Orange (City).

Category 1
Interests in real property within the boundaries of the City or within two miles of the boundaries of the City in which the designated employee, spouse and dependent children have an aggregate interest of $1,000 or more in value. It includes interests in real property held by a business entity or trust in which the employee, spouse and dependent children have an aggregate interest of 10% or more.

Category 2
Investments held by the designated employee, spouse and dependent children, with an aggregate value of more than $1,000, in business entities having real property in the City or doing business, planning to do business, or having done business in the City within the past two years. It includes investments held by a business entity or trust in which the filer, spouse and dependent children have an aggregate interest of 10% or greater.

Category 3
Income (including loans) aggregating $250 or more if the source is located within or doing business within the City. It includes gifts aggregating $50 or more whether or not the source (donor) is in the City . It includes sources of income to the designated employee, to the designated employee's community property interest in the income of a spouse, and to the employee's pro rata share of any income of a trust in which the employee, spouse or dependent childre n have individually or collectively an aggregate interest of 10% or greater.

Category 4
Employment and management positions in business entities.

397

CONFLICT OF INTEREST CODE OF THE

CITY OF ORANGE
The Political Reform Act (Government Code Section 81000, et seq.) requires state and local government agencies to adopt and promulgate conflict of interest codes. The Fair Political Practices Commission has adopted a regulation (2 California Code of Regulations Section 18730) that contains the terms of a standard conflict of interest code, which can be incorporated by reference in an agency’s code. After public notice and hearing, the standard code may be amended by the Fair Political Practices Commission to conform to amendments in the Political Reform Act. Therefore, the terms of 2 California Code of Regulations Section 18730 and any amendments to it duly adopted by the Fair Political Practices Commission are hereby incorporated by reference. This regulation and the attached Appendix, designating positions and establishing disclosure categories, shall constitute the conflict of interest code of the City of Orange (“City”).

APPENDIX

DESIGNATION OF POSITIONS AND

ESTABLISHMENT OF DISCLOSURE CATEGORIES
PART A

DESIGNATED POSITIONS
The Mayor, Members of the City Council and Planning Commission, the City Manager, the City Attorney, the City Treasurer, and all other City Officials who manage public investments as defined by 2 California Code of Regulations § 18700.3(b), are NOT subject to the City’s Code, but must file disclosure statements under Government Code Section 87200 et seq. [Regs. § 18730(b)(3)]

OFFICIALS WHO MANAGE PUBLIC INVESTMENTS
It has been determined that the positions listed below are other City Officials who manage public investments.1 These positions are listed here for informational purposes only.

Administrative Services Director
Assistant City Manager
Assistant Finance Director
Finance Director
1 Individuals holding one of the above listed positions may contact the Fair Political Practices Commission for assistance or written advice regarding their filing obligations if they believe that their position has been categorized incorrectly. The Fair Political Practices Commission makes the final determination whether a position is covered by §87200.
399

DESIGNATED POSITIONS DISCLOSURE

CATEGORIES
City Attorney
Assistant City Attorney I 1, 2, 3, 4
Assistant City Attorney II 1, 2, 3, 4
Risk Manager 1, 2, 3, 4
Senior Assistant City Attorney 1, 2, 3, 4
City Clerk
ADD: Assistant Director of City Clerk Services 1, 2, 3, 4 1, 2, 3, 4
Director of City Clerk Services 1, 2, 3, 4
Deputy City Clerk 1, 2, 3, 4
City Manager
Assistant City Manager 1, 2, 3, 4
Assistant to the City Manager 1, 2, 3, 4
Deputy City Manager 1, 2, 3, 4
Economic Development Manager 1, 2, 3, 4
Emergency Manager 1, 2, 3, 4
Senior Economic Development Project Manager 1, 2, 3, 4
Senior Administrative Analyst 1, 2, 3, 4
Senior Assistant to the City Manager 1, 2, 3, 4
Public Information Officer 1, 2, 3, 4
Community Development
Administrative Analyst I & II 1, 2, 3, 4
Assistant Community Development Director 1, 2, 3, 4
Building Inspection Supervisor 1, 2, 3, 4
Building and Safety Manager 1, 2, 3, 4
ADD: Chief Building Official 1, 2, 3, 4
ADD: Code Compliance Manager 1, 2, 3, 4
Code Compliance Officer 1, 2, 3, 4
Code Compliance Supervisor 1, 2, 3, 4
Combination Building Inspector 1, 2, 3, 4
Community Development Director 1, 2, 3, 4
ADD: Economic Development Manager 1, 2, 3, 4
ADD: Economic Development Project Manager 1, 2, 3, 4
Environmental Compliance Specialist 2, 3, 4
ADD: Housing Manager 1, 2, 3, 4
IT Project Manager 2, 3, 4
Planning Manager 1, 2, 3, 4
Principal Planner 1, 2, 3, 4
Senior Administrative Analyst 1, 2, 3, 4
Senior Code Compliance Officer 1, 2, 3, 4
Senior Combination Building Inspector 1, 2, 3, 4
Senior Housing Manager 1, 2, 3, 4
Senior Plan Check Engineer 1, 2, 3, 4
Senior Planner 1, 2, 3, 4
Community and Library Services
Administrative Analyst II 1, 2, 3, 4
Administrative Manager 1, 2, 3, 4
ADD: Assistant Community Services Director 1, 2, 3, 4
ADD: Assistant Library Services Director 1, 2, 3, 4
Assistant Director 1, 2, 3, 4
ADD: Community and Library Services Director 1, 2, 3, 4 Community Services Director 1, 2, 3, 4
ADD: Library Manager I & II 1, 2, 3, 4 400
ADD: Library Tech/Support Services Manager 1, 2, 3, 4
Parks and Facilities Manager 1, 2, 3, 4
Recreation Services Manager 1, 2, 3, 4
ADD: Senior Library Manager 1, 2, 3, 4
Senior Administrative Analyst 1, 2, 3, 4

DESIGNATED POSITIONS DISCLOSURE

CATEGORIES
Finance
Accounting Manager 1, 2, 3, 4
Assistant Finance Director 1, 2, 3, 4
Budget Manager 1, 2, 3, 4
Add: Controller 1, 2, 3, 4
Finance Director 1, 2, 3, 4
Finance Manager 1, 2, 3, 4
Purchasing Officer 1, 2, 3, 4
ADD: Senior Administrative Analyst 1, 2, 3, 4
Senior Buyer 1, 2, 3, 4
Fire
Battalion Chief 1, 2, 3, 4
Deputy Chief 1, 2, 3, 4
ADD: Emergency Manager 1, 2, 3, 4
EMS Manager 1, 2, 3, 4
Fire Chief 1, 2, 3, 4
ADD: Senior Administrative Analyst 1, 2, 3, 4
ADD: Senior EMS Manager 1, 2, 3, 4
Staff Captain 1, 2, 3, 4
Information Technology
Manager 1, 2, 3, 4
IT Project Manager 1, 2, 3, 4
Library [Combine w/ Community Services]
Assistant Library Services Director [move] 1, 2, 3, 4
Library Manager I & II [move] 1, 2, 3, 4
Library Services Director 1, 2, 3, 4
Library Tech/Support Services Manager [move] 1, 2, 3, 4 Senior Library Manager [move] 1, 2, 3, 4
Human Resources
Assistant Human Resources Director 1, 2, 3, 4
Human Resources Director 1, 2, 3, 4
Human Resources Manager 1, 2, 3, 4
Senior Human Resources Analyst 1, 2, 3, 4
Police
Administrative Analyst I & II 1, 2, 3, 4
Captain 1, 2, 3, 4
Lieutenant 1, 2, 3, 4
Police Chief 1, 2, 3, 4
Senior Administrative Analyst 1, 2, 3, 4
Public Works
Administrative Manager 1, 2, 3, 4
Assistant Field Services Manager 1, 2, 3, 4
Assistant Public Works Director 1, 2, 3, 4
Assistant Water Manager 1, 2, 3, 4
City Traffic Engineer 1, 2, 3, 4
Construction Inspection Supervisor 3, 4
Construction Inspector I & II 3, 4
Contract Administrator 1, 2, 3, 4
Deputy Public Works Director 1, 2, 3, 4
Environmental Program Manager 1, 2, 3, 4 401
Environmental Scientist 2, 3, 4
Equipment Maintenance Superintendent 2, 3, 4

DESIGNATED POSITIONS DISCLOSURE

CATEGORIES
Field Services Manager 1, 2, 3, 4
ADD: Manager of Transportation/City Traffic Engineer 1, 2, 3, 4 Principal Civil Engineer 3, 4
Public Works Director 1, 2, 3, 4
Public Works Administrator 1, 2, 3, 4
ADD: Senior Administrative Analyst 1, 2, 3, 4
Senior Civil Engineer 3, 4
Traffic Operations Superintendent 1, 2, 3, 4
Water Manager 1, 2, 3, 4
Orange City Public Facilities Financing Authority
Member 1, 2, 3, 4
Members of Boards, Commissions, and Committees
Audit Advisory Committee 1, 2, 3, 4
Community Development Block Grant Program Committee 1, 2, 3, 4 Design Review Committee 1, 2, 3, 4
Investment Advisory Committee 1, 2, 3, 4
Orange Public Library Board of Trustees1 1, 2, 3, 4
Park Planning & Community Events Commission 1, 2, 3, 4
Santiago Creek Commission 1, 2, 3, 4
Traffic Commission 1, 2, 3, 41All interests in real property as set forth in Category 1, but only investments, sources of income and business positions which may provide services or materials of the type utilized by the library.

Consultants and New Positions2
2Consultants shall be included in the list of designated employees and shall disclose pursuant to the broadest disclosure category in the Code subject to
the following limitation: The City Manager may determine in writing that a particular consultant, although a "designated position," is hired to perform a range of duties that is limited in scope and thus is not required to fully comply with the disclosure requirements described in this section. Such written determination shall include a description of the consultant's duties and, based upon that description, a statement of the extent of disclosure requirements. The City Manager's determination is a public record and shall be retained for public inspection in the same manner and location as this Conflict of Interest Code. The disclosure requirements for new positions shall be categorized by the City Manager based on the duties of the position.
1, 2, 3, 4
402
PART B

DISCLOSURE CATEGORIES
Disclosure categories pertain to investments, real property, business positions and sources of income, including loans, gifts, and travel payments from sources located in or doing business within the jurisdiction of the City of Orange (City).

Category 1
Interests in real property within the boundaries of the City or within two miles of the boundaries of the Cityin which the designated employee, spouse and dependent children have an aggregate interest of $1,000 or more in value. It includes interests in real property held by a business entity or trust in which the employee, spouse and dependent children have an aggregate interest of 10% or more.

Category 3
Income (including loans) aggregating $250 or more if the source is located within or doing business within the City. It includes gifts aggregating $50 or more whether or not the source (donor) is in the City. It includes sources of income to the designated employee, to the designated employee's community property interest in the income of a spouse, and to the employee's pro rata share of any income of a trust in which the employee, spouse or dependent children have individually or collectively an aggregate interest of 10% or greater.

Category 4
Employment and management positions in business entities. 403

NOTICE OF INTENTION

TO AMEND THE

CONFLICT OF INTEREST CODE

OF THE CITY OF ORANGE

NOTICE IS HEREBY GIVEN that the City of Orange intends to amend its Conflict of Interest Code (the “Code”) pursuant to Government Code Section 87306.

The Code designates those positions which are subject to the disclosure and disqualification r equirements of the City’s Code. The City’s proposed amendment identifies City officials who manage public investments that must file disclosure statements under Government Code Section 87200, adds new positions which must be designated, changes titles of some existing positions, and eliminates positions that have been abolished.

The proposed amended Code will be considered by the City Council on August 25, 2026, at 6:00 p.m. in the Council Chamber, 300 E. Chapman Avenue, Orange.

Any interested person may be present and comment at the public meeting or may submit written comments concerning the proposed amendment. Any comments or inquiries should be directed to the attention of Pamela Coleman, City Clerk , City of Orange, 300 E. Chapman Avenue, Orange , California 92866, (714) 744 -5500. Written comments must be submitted no later than August 25, 2026, at 3:00 p.m. Please see the August 25, 2026, City Council agenda for further details.

The proposed amended Code may be reviewed at, and copies obtained from, the office of the City Clerk.
404
Agenda Item
Orange City Council
Item #: 3.15. 8/25/2026 File #: 26-0475
TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Monica Espinoza, Human Resources Director

1. SUBJECT
Winter Holiday Closure for 2026, 2027, and 2028

2. SUMMARY
Adoption of Resolution No. 11717 would allow for certain City facilities to be closed during the week between the Christmas and New Year’s holiday for only calendar years 2026, 2027, and 2028.

3. RECOMMENDED ACTION
Adopt Resolution No. 11717. A Resolution of the City Council of the City of Orange regarding the 2026, 2027, and 2028 Winter Holiday Closure.

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
Goal 4: Improve Employee Retention and Recruitment

6. DISCUSSION AND BACKGROUND
Traditionally, the annual winter holiday closure is approved by the City Council in the Fall prior to the December closure. For better operational planning purposes, the City Council is being asked to approve the winter holiday closure for calendar years 2026, 2027, and 2028.

In accordance with most labor contracts between the City and its employee organizations, City employees receive one nine-hour (9) day of paid holiday leave on Christmas Eve (December 24) if it falls on a Monday through Thursday, one nine-hour (9) day of paid holiday for Christmas Day (December 25), and one nine-hour (9) day of paid holiday for New Year’s Day (January 1). If approved by the City Council, this action will allow the City to close most of its services for the following holiday periods:

City Hall:

Notwithstanding public safety and other emergency call-out services, City facilities will be closing at 5:00 p.m. on:
· Wednesday, December 23, 2026, through Sunday, January 3, 2027. The City will return City of Orange Printed on 8/20/2026Page 1 of 2
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to full service on Monday, January 4, 2027; and
· Thursday, December 23, 2027 through Sunday, January 2, 2028. The City will return to full service on Monday, January 3, 2028; and
· Friday, December 22, 2028 through Monday, January 1, 2029. The City will return to full service on Tuesday, January 2, 2029; and
Libraries:

The Orange Public Library & History Center (Main Library) and the Taft and El Modena branch libraries will close on:
· Thursday, December 24, 2026 and will re-open on Monday, January 4, 2027; and · Friday, December 24, 2027 and will re-open on Monday, January 3, 2028; and · Sunday, December 24, 2028 and will re-open on Tuesday, January 2, 2029.

Notwithstanding the above, the City will continue to provide public safety and other emergency call- out services. Employees will be required to utilize their own accrued paid leave hours (i.e., vacation, compensatory time, holiday compensatory time, administrative leave, trip reduction program leave, and/or floating holiday) to cover the holiday closures. The number of hours deducted will depend on the employee’sregular work schedule. Alternatively, employees may elect to take an unpaid leave of absence for hours associated with the holiday closures.

7. ATTACHMENTS
· Resolution No. 11717
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Agenda Item
Orange City Council
Item #: 3.15. 8/25/2026 File #: 26-0475
TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Monica Espinoza, Human Resources Director

1. SUBJECT
Winter Holiday Closure for 2026, 2027, and 2028

3. RECOMMENDED ACTION
Adopt Resolution No. 11717. A Resolution of the City Council of the City of Orange regarding the 2026, 2027, and 2028 Winter Holiday Closure.

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
Goal 4: Improve Employee Retention and Recruitment

City Hall:

Notwithstanding public safety and other emergency call-out services, City facilities will be closing at 5:00 p.m. on:
· Wednesday, December 23, 2026, through Sunday, January 3, 2027. The City will return City of Orange Printed on 8/20/2026Page 1 of 2
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to full service on Monday, January 4, 2027; and
· Thursday, December 23, 2027 through Sunday, January 2, 2028. The City will return to full service on Monday, January 3, 2028; and
· Friday, December 22, 2028 through Monday, January 1, 2029. The City will return to full service on Tuesday, January 2, 2029; and
Libraries:

7. ATTACHMENTS
· Resolution No. 11717
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RESOLUTION NO. 11717

A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF ORANGE REGARDING THE 2026,
2027, AND 2028 WINTER HOLIDAY CLOSURE

WHEREAS, most benefited, full-time City employees are provided with one nine-hour day of paid holiday leave on Christmas Eve if it falls on a Monday through Thursday (December 24, 2026), one nine-hour day of paid holiday leave on Christmas Day (December 25, 2026, 2027, and 2028), and one nine-hour day of paid holiday leave on New Year’s Day (January 1, 2027, 2028, and 2029) per their respective Memoranda of Understanding; and

WHEREAS, the City Council wishes to express its sincere appreciation to City employees for their dedicated service to the City and its citizens throughout the year; and

WHEREAS, the City Council recognizes the value of time spent with families during the holiday season; and

WHEREAS, the City will experience a slight reduction in its unfunded paid leave accrued liability by having employees use their own accrued paid leave balances to cover the proposed days off; and

WHEREAS, the City has met and conferred with all affected bargaining groups and satisfied its obligations under the Meyers -Milias-Brown Act with respect to the impacts of the winter holiday closure schedule on affected represented employees; and

WHEREAS, the City Council wishes to effectively accommodate time -off requests by City employees during the holidays.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Orange does hereby establishes the following winter holiday closure schedule:

Notwithstanding public safety and other emergency call-out services, City facilities will be closing at 5:00 p.m. on:

➢ Wednesday, December 23, 2026 through Sunday, January 3, 2027. The City will return to full service on Monday, January 4, 2027; and

➢ Thursday, December 23, 2027 through Sunday, January 2, 2028. The City will return to full service on Monday, January 3, 2028; and

➢ Friday, December 22, 2028 through Monday, January 1, 2029. The City will return to full service on Tuesday, January 2, 2029; and

The Orange Public Library & History Center (Main Library) and the Taft and El Modena branch libraries will close on:

409
2 ➢ Thursday, December 24, 2026 and will re-open on Monday, January 4, 2027; and

➢ Friday, December 24, 2027 and will re-open on Monday, January 3, 2028; and

➢ Sunday, December 24, 2028 and will re-open on Tuesday, January 2, 2029.

Subject to applicable Memoranda of Understanding, employees will utilize their own accrued paid leave hours (i.e., vacation, compensatory time, holiday compensatory time, administrative leave, trip reduction program leave , and/or floating holiday) to cover the holiday closures , except for hours otherwise covered by City -paid holiday leave. The number of hours deducted will depend on the employee’s regular work schedule. Alternatively, employees may elect to take an unpaid leave of absence for hours associated with the holiday closures.

ADOPTED this ____ day of ____________________, 2026

Daniel R. Slater, Mayor, City of Orange

ATTEST:

Pamela Coleman, City Clerk, City of Orange

APPROVED AS TO FORM:

Nathalie Adourian, City Attorney, City of Orange

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.

CITY OF ORANGE )

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

Pamela Coleman, City Clerk, City of Orange
410
Agenda Item
Orange City Council
Item #: 7.1. 8/25/2026 File #: 26-0491

1. SUBJECT
Appointment to the Community Development Block Grant Program Committee

2. SUMMARY
Due to the resignation of Connie Benson, an unscheduled vacancy exists on the Community Development Block Grant (CDBG) Program Committee. In accordance with Government Code Section 54974, a Notice of Vacancy was posted on July 16, 2026.

Mayor Slater has recommended the appointment of James Kushon, who currently serves on the Park Planning & Community Events Commission, to fill the vacancy on the CDBG Program Committee.

Mr. Kushon’sappointment to the CDBG Program Committee would result in a vacancy on the Park Planning & Community Events Commission.

3. RECOMMENDED ACTION
Confirm Mayor Slater’srecommendation to appoint James Kushon to the CDBG Program Committee to fill an unexpired term ending on June 30, 2027.

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Agenda Item
Orange City Council
Item #: 7.1. 8/25/2026 File #: 26-0491

1. SUBJECT
Appointment to the Community Development Block Grant Program Committee

Mayor Slater has recommended the appointment of James Kushon, who currently serves on the Park Planning & Community Events Commission, to fill the vacancy on the CDBG Program Committee.

Mr. Kushon’sappointment to the CDBG Program Committee would result in a vacancy on the Park Planning & Community Events Commission.

3. RECOMMENDED ACTION
Confirm Mayor Slater’srecommendation to appoint James Kushon to the CDBG Program Committee to fill an unexpired term ending on June 30, 2027.

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Agenda Item
Orange City Council
Item #: 9.1. 8/25/2026 File #: 26-0482
TO: Honorable Mayor and Members of the City Council
FROM: Jarad Hildenbrand, City Manager

1. SUBJECT
Agreements related to the restoration and future conveyance to the City of the approximately 67.7- acre former Sully-Miller property at 6145 E. Santiago Canyon Road for permanent public open space, and finding of California Environmental Quality Act exemption

2. SUMMARY
The former Sully-Miller property has been the subject of development proposals, environmental and regulatory proceedings, and significant community interest for decades. At the same time, preservation of Santiago Creek, open space, trails, natural resources, and the rural character of Orange Park Acres has been a long-standing community planning objective.

The agreements before the City Council present an opportunity to bring these histories together by establishing a contractual pathway through which Landify ECT Construction Corporation (Landify) would seek to acquire the approximately 67.7-acre property from Milan REI X, LLC (Milan), undertake an Inert Debris Engineered Fill Operation (IDEFO) and associated grading and site preparation necessary to establish the final landform, and, following completion and satisfaction of specified environmental, regulatory, engineering, title, insurance, and other closing conditions, convey the property to the City for permanent public open-space purposes. Landify is not responsible for final habitat restoration, trails, equestrian facilities, or other finished public amenities; those improvements would be the City's responsibility following conveyance and would be considered through future planning, environmental review, budgeting, grant funding, and City Council action.

Approval does not constitute the City's present acceptance of the property or approval of a final grading plan. Landify would own the property during its operations. Environmental testing and regulatory review remains underway, including review by the Orange County Health Care Agency acting as the Local Enforcement Agency (LEA). The LEA's forthcoming determination regarding the existing Stipulated Notice and Order (SNO), together with other applicable regulatory requirements, will inform the ultimate grading and site preparation plans.

If Landify performs its obligations and the City's closing conditions are satisfied, the City will be contractually obligated to accept the property. The conveyance will also include an appropriate recorded restriction limiting the property to permanent public open space and compatible public uses.

The transaction builds upon recent open-space preservation efforts along Santiago Creek. In 2024, approximately 14 acres associated with the Chandler/Hurwitz property were preserved for public open-space purposes. In January 2026, the City accepted from Milan approximately 30.75 acres of the northern portion of the Sully-Miller site. If the Sully-Miller transaction is successfully completed, these three efforts would collectively represent approximately 112 acres of public open-space City of Orange Printed on 8/20/2026Page 1 of 8
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preservation along Santiago Creek.

The agreements are an important step, but not the final step. Regulatory review, Landify's IDEFO and grading work, future community planning, funding, and long-term stewardship will continue to develop over the coming years.

3. RECOMMENDED ACTION

1. Approve the Real Property Transfer Agreement between the City of Orange and Landify ECT Construction Corporation for the future conveyance of the approximately 67.7-acre former Sully- Miller property to the City, subject to the terms and conditions contained therein.

2. Approve the Multiparty Indemnification and Release Agreement among the City of Orange, Landify ECT Construction Corporation, and Milan REI X, LLC concerning environmental liabilities associated with the property.

3. Authorize the Mayor to execute the agreements on behalf of the City.

4. Authorize the City Manager to execute related documents once finalized and made available, including agreement exhibits, and authorize the City Manager take actions necessary to incorporate those exhibits as a part of the agreements and implement said agreements, including executing non-substantive modifications, amendments, or extensions consistent with the purpose and intent of the agreements and approved as to form by the City Attorney, provided that such modifications, amendments, or extensions do not materially increase the City's financial obligations or environmental liability or materially alter the conditions to the City's acquisition of the property.

5. Find that approval of the agreements is not a project subject to the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21065 and CEQA Guidelines Section 15060(c), and is further exempt from CEQA pursuant to CEQA Guidelines Section 15061 (b)(3) because it can be seen with certainty that the approvals will not have a significant effect on the environment; and direct staff to file a Notice of Exemption.

4. FISCAL IMPACT
The agreements do not require the City to fund Landify's acquisition of the property or the design or operation of Landify's IDEFO and grading activities, and the Real Property Transfer Agreement does not provide for payment of a purchase price by the City.

Prior to conveyance, the City will be responsible for its internal administrative costs and certain third- party out-of-pocket costs incurred in carrying out its obligations under the Agreement, including applicable City oversight, monitoring, inspection, due diligence, title, escrow, and legal costs.

Regulatory monitoring or inspection required in connection with Landify's IDEFO operations prior to closing will be Landify's responsibility. At closing, the City will be responsible for the premium for the owner's title insurance policy, one-half of escrow fees and costs, and its own legal fees and costs.

Landify will be responsible for applicable City and County transfer taxes and recording costs associated with the Grant Deed. Any additional costs associated with optional extended title coverage requested by the City will also be the City's responsibility. Milan is responsible, at its sole cost and expense, for obtaining the pollution legal liability insurance required by the Multiparty Indemnification and Release Agreement.

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stewardship, and any future public improvements. The agreements do not establish the cost or scope of future master planning, habitat restoration, trails, recreational amenities, equestrian facilities, or ongoing maintenance. Any such expenditures will be subject to future City Council consideration and appropriation through the City's budget and capital improvement processes. Staff is evaluating grants, technical assistance, partnerships, philanthropic contributions, and other outside funding opportunities, including assistance through CCLR and the Orange County Brownfields Revitalization Program, subject to applicable eligibility requirements.

5. STRATEGIC PLAN GOALS
Goal 2: Enhance Economic Development and Achieve Fiscal Stability Objective 2.3: Work with appropriate stakeholders and identify a beneficial use and final resolution for the Sully Miller Site
Segment 1: East Orange to Villa Park Road
Project 1.8: Santiago Creek Trail Gap Closure

6. DISCUSSION AND BACKGROUND
The Sully-Miller Property: More Than a Century of History The approximately 67.7-acre property commonly known as Sully-Miller is located at 6145 E. Santiago Canyon Road along Santiago Creek within Orange Park Acres. The property is part of a larger area with a history of resource extraction dating back more than a century. Sand and aggregate mining occurred on the larger Sully-Miller site from approximately 1919 to 1995, followed by other industrial and related uses.

The question of what should happen to the property after the conclusion of mining has been discussed for decades. Beginning in the 1970s, the Santiago Creek Greenbelt Plan, Orange Park Acres Specific Plan, and East Orange planning efforts established a long-term vision emphasizing open space, the Santiago Creek corridor, trails, natural resources, and the rural character of the surrounding area.

In 1993, the City Council approved a General Plan Amendment, zone change, and tentative tract map allowing 25 residential lots on approximately 12.6 acres north of Santiago Creek adjacent to Mabury Ranch. The tentative tract map expired in 2000. A new tract map for 22 homes on this property was ultimately approved by the City Council in 2020.

Beginning in 1999, Fieldstone Communities pursued a substantially larger proposal involving 189 homes on the larger Sully-Miller site, including 18 homes north of Santiago Creek. The City Council approved the project in 2003. Opponents subsequently gathered sufficient signatures to qualify a referendum challenging the approval, and the City Council ultimately rescinded the project approvals rather than proceed to an election.

In 2009, the property returned with an application for the Rio Santiago proposal. Initially contemplated at more than 450 residential units, the proposal was ultimately reduced to 395 units and also included private recreational facilities and publicly accessible trails and open space.

Following several years of review and substantial community opposition, the City Council denied the project in 2014.

The next major proposal was Trails at Santiago Creek. Milan proposed a residential project in 2018 that ultimately resulted in City Council approval in October 2019 of land-use changes allowing 128 single-family homes on the larger site, with substantial open space and Santiago Creek Greenway City of Orange Printed on 8/20/2026Page 3 of 8
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single-family homes on the larger site, with substantial open space and Santiago Creek Greenway improvements. The approval again resulted in a referendum effort. More than 13,000 signatures were submitted, the referendum qualified for the ballot, and Orange voters rejected the residential approvals at the November 2020 election, with approximately 63 percent voting against the measure.

The project's Environmental Impact Report was also challenged, and in July 2021 the City Council rescinded the resolution certifying the EIR.

More recently, Milan submitted two Builder's Remedy applications affecting its properties in the area.

The City and Milan subsequently negotiated a broader resolution reflected in a 2025 Memorandum of Understanding involving three principal matters: the previously entitled Mabury 22-home tract north of Santiago Creek, a proposed 30-unit residential project at the existing arena site, and a pathway for the approximately 67.7-acre Sully-Miller property to be prepared by Landify and ultimately conveyed to the City for public open space.

The negotiated framework has continued to evolve as the individual projects have advanced. In May 2026, the City Council approved a First Amendment extending applicable processing deadlines and Builder's Remedy Tolling Agreements. In July 2026, the City Council approved a Second Amendment addressing the possibility of litigation challenging the Arena Residential Project or the Sully-Miller Open Space Project. The Second Amendment permits Milan, at its option, to extend the applicable Builder's Remedy Tolling Agreement during the pendency of such litigation, including appeals. The amendment was intended to preserve the negotiated framework while litigation is resolved and did not itself approve either project or grant development entitlements. The agreements now before the Council are the next significant step in implementing the Sully-Miller component of that broader negotiated framework.

East Orange Santiago Creek Greenbelt Corridor - A Long-Standing Open-Space Vision Preservation of Santiago Creek and the rural and open-space character of Orange Park Acres is not a new planning concept. The Orange Park Acres Specific Plan includes objectives to maintain the area's rural character, preserve drainage courses and natural resources, provide interconnected trails, and protect Santiago Creek as an ecological and riparian resource while allowing compatible recreational uses. The Specific Plan also promotes the phasing out of gravel pit operations along Santiago Creek and restoration of natural amenities within the area.

The historic Santiago Creek Greenbelt concept similarly envisioned an interconnected corridor of open space, trails, recreation, natural resources, agricultural areas, and parkland extending along Santiago Creek.

Recent actions have begun translating that long-standing vision into public ownership. In 2024, approximately 14 acres associated with the Chandler/Hurwitz property were preserved for public open-space purposes. In January 2026, the City accepted from Milan approximately 30.75 acres of the northern portion of the Sully-Miller site. The dedicated property surrounds the previously entitled Mabury 22-home tract north of Santiago Creek and includes conservation lands associated with that development and conservation easements involving Rivers & Lands Conservancy and the California Department of Fish and Wildlife.

If the approximately 67.7-acre Sully-Miller property is ultimately conveyed to the City, these three preservation efforts would collectively represent approximately 112 acres along Santiago Creek. The properties are not necessarily one contiguous site, but together they create opportunities for coordinated habitat protection, trails, passive recreation, watershed stewardship, and long-term open City of Orange Printed on 8/20/2026Page 4 of 8
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-space planning.

The Landify Agreements and Regulatory Process
Under the proposed framework, Landify would acquire the property from Milan and undertake an IDEFO and associated grading and site preparation. An IDEFO involves the acceptance, processing, and placement of clean soil and inert debris in accordance with applicable regulatory requirements to establish an approved final landform.

Landify is responsible for the IDEFO, grading, and site preparation contemplated by the Agreement.

Landify is not responsible for constructing the City's final restoration, future trails, equestrian facilities, recreational amenities, or other finished public improvements.

The Real Property Transfer Agreement establishes the conditions under which the property will ultimately be conveyed to the City. Landify will own and operate the property during the IDEFO and grading process. A separate Multiparty Indemnification and Release Agreement requires Milan, at its sole cost and expense, to procure pollution legal liability insurance as the primary source of recovery for covered environmental claims and allocates specified environmental responsibilities among Milan, Landify, and the City. The policy is required to provide limits of not less than $3 million per claim and $3 million in the aggregate, with a self-insured retention not exceeding $50,000 per claim, and, subject to its terms and limitations, to cover both pre-existing and new pollution conditions during Landify's ownership and for at least five years following the City's acquisition, but no longer than ten years from issuance.

Environmental testing and regulatory review remains underway. The LEA and other applicable agencies continue to review environmental testing results and technical information concerning the property. The LEA's determination regarding the work necessary to satisfy the SNO is forthcoming.

Those determinations will help establish the requirements for Landify's IDEFO, grading, and site preparation.

The agreements therefore do not approve a predetermined final grading plan, IDEFO operating plan, reclamation plan, permit, or other regulatory approval, and do not conclude the regulatory or environmental review process for any future discretionary approval. Future IDEFO, grading, corrective work, and permits remain subject to applicable regulatory requirements, approvals, legal standards, procedures, and findings, and the City’scommunity planning and proposed improvements remain subject to applicable environmental review.

Conditions and Commitment to City Acquisition
The transaction is structured so that the City does not take ownership at the beginning of Landify's work. Before conveyance, specified closing conditions must be satisfied, including environmental and geotechnical testing and applicable regulatory requirements required before Landify's acquisition, approval of applicable IDEFO permits and the LEA operating plan, completion and certification of required grading, satisfaction of representations and warranties, acceptable title, required closing documents, execution of the environmental liability agreement, and required environmental insurance.

The City has conducted preliminary due diligence sufficient to enter into the Agreement and retains the right, as provided in the Agreement, to review information arising from Landify's use and operation of the property through closing, including grading activities, regulatory review, site monitoring, and new environmental information.

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These conditions protect the City from prematurely accepting the property. They also define the commitment the Council is being asked to make now: if Landify performs its obligations and the City's closing conditions are satisfied, the City will be contractually obligated to complete the transaction and accept ownership. The Agreement does not contemplate a second City Council approval at the time of conveyance.

The conveyance will also include a recorded restriction limiting the property to permanent public open space and compatible public uses.

Project Feasibility and Risk
The proposed transaction offers a significant opportunity, but successful completion is not guaranteed.

Landify's multi-year IDEFO operation depends upon regulatory conditions, availability and volume of suitable soil, tipping fees, market conditions, and other economic factors. If the project becomes commercially infeasible, the Agreement establishes a process for the parties to evaluate potential modifications, mutual termination, or other alternatives. The City is not required to provide additional funding or accept an incomplete property.

Because Landify will own the property during its operations, a default, insolvency, or cessation of operations would not itself transfer ownership to the City. The Agreement includes protections intended to address incomplete performance, including security equal to 100 percent of the estimated cost to complete required reclamation work for each grading phase before that phase begins. If Landify exercises its contractual termination right because the IDEFO is approved but becomes commercially infeasible, Landify is required to perform specified reclamation work on any grading phase that has commenced but has not been completed. The City would not be required to acquire the property.

Environmental testing and regulatory review also remain underway, and the LEA has not yet made its final determination regarding the work necessary to satisfy the SNO. Those determinations could affect the scope, timing, and economic feasibility of Landify's work.

Landify has advised the City that its continued participation is time-sensitive and that it is prepared to continue pursuing the transaction through the end of 2026, but has not committed to remain beyond that timeframe. This does not alter the City's obligation to complete all required public review and regulatory processes, but significant delay could affect the continued availability of the proposed transaction.

Upon conveyance, the City will assume responsibility for long-term ownership, maintenance, stewardship, and future public improvements. Those costs are not presently known and will be addressed through future planning and budget processes.

If the agreements are not approved, the proposed Landify transaction and contractual pathway for the approximately 67.7-acre property to be prepared for open space and ultimately conveyed to the City will not proceed as currently structured, and there is no assurance the same opportunity would remain available later.

Planning for Future Public Use and Funding
The agreements do not determine the property's final public amenities. Those decisions will be developed through future community planning, environmental review, budgeting, and City Council City of Orange Printed on 8/20/2026Page 6 of 8
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action, consistent with the final regulatory requirements and approved landform.

The anticipated multi-year IDEFO and grading process provides time for the City to engage residents and stakeholders and evaluate trails, equestrian facilities and uses, habitat restoration, environmental education, passive recreation, scenic and natural resources, access, and other compatible open- space improvements. This process can also establish priorities and preliminary cost estimates before the City assumes ownership.

Staff has also begun evaluating outside funding and technical-assistance opportunities that may support environmental assessment, reuse planning, restoration, future improvements, and stewardship. These efforts include coordination with the Center for Creative Land Recycling (CCLR) and evaluation of potential assistance through the Orange County Brownfields Revitalization Program, subject to applicable program and EPA eligibility requirements.

Looking Ahead
For decades, the future of Sully-Miller has been defined by competing development proposals, regulatory proceedings, community debate, referenda, litigation, and uncertainty. The agreements before the Council offer a fundamentally different path.

That path is neither immediate nor guaranteed. Regulatory review must be completed, the LEA must determine the requirements necessary to address the SNO, Landify must acquire the property, obtain the required approvals and successfully complete its IDEFO and grading obligations, and the City's closing conditions must be satisfied.

If those steps are successfully completed, approximately 67.7 acres along Santiago Creek will be conveyed to the City for permanent public open-space purposes. Combined with the approximately

30.75 acres of the Sully-Miller property previously dedicated by Milan and the approximately 14 acres associated with Chandler/Hurwitz, these three efforts would collectively preserve approximately 112 acres of public open space along the Santiago Creek corridor.

After decades in which much of the conversation surrounding Sully-Miller has focused on what might be developed there, the proposed framework creates an opportunity to change that conversation to restoration, preservation, public ownership, and a shared vision for the future.

Staff recommends approval of the proposed agreements.

Environmental Review
Approval of the Real Property Transfer Agreement and the Multiparty Indemnification and Release Agreement is not a “project”subject to the California Environmental Quality Act (CEQA) because approval of the agreements will not itself result in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. Pub. Res. Code, § 21065; CEQA Guidelines, § 15060(c).

The agreements establish contractual terms governing the future conveyance of the property to the City and allocate environmental liability among the parties. The agreements do not themselves approve or authorize the IDEFO, a final grading plan, reclamation plan, operating plan, grading permit, or other regulatory authorization necessary to conduct physical activities on the property.

Landify must separately obtain the permits, regulatory approvals, and environmental review, if required under applicable law before conducting such activities.

Nothing in the agreements limits, waives, or predetermines the City's exercise of its governmental, regulatory, permitting, environmental review, police power, or land-use authority. Any future City of Orange Printed on 8/20/2026Page 7 of 8
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regulatory, permitting, environmental review, police power, or land-use authority. Any future discretionary governmental approval required for physical activities on the property remains subject to the applicable legal standards, procedures, findings, and environmental review required at the time that approval is considered. Accordingly, approval of the agreements does not constitute approval of those future physical activities or predetermine the City's consideration of any subsequent discretionary approval.

Approval of the agreements is also exempt from CEQA pursuant to the “commonsense exemption” because it can be seen with certainty that approval of the agreements will not itself result in a significant effect on the environment. CEQA Guidelines, § 15061(b)(3).

7. ATTACHMENTS
· Attachment 1 - Real Property Transfer Agreement between the City of Orange and Landify ECT Construction Corporation
· Attachment 2 - Multiparty Indemnification and Release Agreement among Milan REI X, LLC, Landify ECT Construction Corporation, and the City of Orange · Attachment 3 - Property Location Map
· Attachment 4 - Orange Park Acres Specific Plan - Relevant Goals, Objectives, and Policies.
· Attachment 5 - Historic Santiago Creek Greenbelt Map
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Agenda Item
Orange City Council
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TO: Honorable Mayor and Members of the City Council
FROM: Jarad Hildenbrand, City Manager

The transaction builds upon recent open-space preservation efforts along Santiago Creek. In 2024, approximately 14 acres associated with the Chandler/Hurwitz property were preserved for public open-space purposes. In January 2026, the City accepted from Milan approximately 30.75 acres of the northern portion of the Sully-Miller site. If the Sully-Miller transaction is successfully completed, these three efforts would collectively represent approximately 112 acres of public open-space City of Orange Printed on 8/20/2026Page 1 of 8
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preservation along Santiago Creek.

3. RECOMMENDED ACTION

3. Authorize the Mayor to execute the agreements on behalf of the City.

Following conveyance, the City will assume responsibility for ownership, operation, maintenance, City of Orange Printed on 8/20/2026Page 2 of 8
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stewardship, and any future public improvements. The agreements do not establish the cost or scope of future master planning, habitat restoration, trails, recreational amenities, equestrian facilities, or ongoing maintenance. Any such expenditures will be subject to future City Council consideration and appropriation through the City's budget and capital improvement processes. Staff is evaluating grants, technical assistance, partnerships, philanthropic contributions, and other outside funding opportunities, including assistance through CCLR and the Orange County Brownfields Revitalization Program, subject to applicable eligibility requirements.

Following several years of review and substantial community opposition, the City Council denied the project in 2014.

The next major proposal was Trails at Santiago Creek. Milan proposed a residential project in 2018 that ultimately resulted in City Council approval in October 2019 of land-use changes allowing 128 single-family homes on the larger site, with substantial open space and Santiago Creek Greenway City of Orange Printed on 8/20/2026Page 3 of 8
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single-family homes on the larger site, with substantial open space and Santiago Creek Greenway improvements. The approval again resulted in a referendum effort. More than 13,000 signatures were submitted, the referendum qualified for the ballot, and Orange voters rejected the residential approvals at the November 2020 election, with approximately 63 percent voting against the measure.

The project's Environmental Impact Report was also challenged, and in July 2021 the City Council rescinded the resolution certifying the EIR.

More recently, Milan submitted two Builder's Remedy applications affecting its properties in the area.

If the approximately 67.7-acre Sully-Miller property is ultimately conveyed to the City, these three preservation efforts would collectively represent approximately 112 acres along Santiago Creek. The properties are not necessarily one contiguous site, but together they create opportunities for coordinated habitat protection, trails, passive recreation, watershed stewardship, and long-term open City of Orange Printed on 8/20/2026Page 4 of 8
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-space planning.

Landify is responsible for the IDEFO, grading, and site preparation contemplated by the Agreement.

Landify is not responsible for constructing the City's final restoration, future trails, equestrian facilities, recreational amenities, or other finished public improvements.

Those determinations will help establish the requirements for Landify's IDEFO, grading, and site preparation.

These conditions protect the City from prematurely accepting the property. They also define the City of Orange Printed on 8/20/2026Page 5 of 8
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These conditions protect the City from prematurely accepting the property. They also define the commitment the Council is being asked to make now: if Landify performs its obligations and the City's closing conditions are satisfied, the City will be contractually obligated to complete the transaction and accept ownership. The Agreement does not contemplate a second City Council approval at the time of conveyance.

The conveyance will also include a recorded restriction limiting the property to permanent public open space and compatible public uses.

Project Feasibility and Risk
The proposed transaction offers a significant opportunity, but successful completion is not guaranteed.

Planning for Future Public Use and Funding
The agreements do not determine the property's final public amenities. Those decisions will be developed through future community planning, environmental review, budgeting, and City Council City of Orange Printed on 8/20/2026Page 6 of 8
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action, consistent with the final regulatory requirements and approved landform.

If those steps are successfully completed, approximately 67.7 acres along Santiago Creek will be conveyed to the City for permanent public open-space purposes. Combined with the approximately

Staff recommends approval of the proposed agreements.

Landify must separately obtain the permits, regulatory approvals, and environmental review, if required under applicable law before conducting such activities.

Nothing in the agreements limits, waives, or predetermines the City's exercise of its governmental, regulatory, permitting, environmental review, police power, or land-use authority. Any future City of Orange Printed on 8/20/2026Page 7 of 8
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regulatory, permitting, environmental review, police power, or land-use authority. Any future discretionary governmental approval required for physical activities on the property remains subject to the applicable legal standards, procedures, findings, and environmental review required at the time that approval is considered. Accordingly, approval of the agreements does not constitute approval of those future physical activities or predetermine the City's consideration of any subsequent discretionary approval.

THIS REAL PROPERTY TRANSFER AGREEMENT (the “Agreement”) is entered into as of _______________, 202 6 (“Agreement Date ”), by and between LANDIFY ECT CONSTRUCTION CORPORATION , a Delaware corporation ( “Landify”), and CITY OF ORANGE, a California municipal corporation (“City”), with reference to the following facts.

R E C I T A L S

A. Milan REI X, LLC, a California limited liability company ( “Milan”), owns the real property commonly known as the Sully-Miller Pit, located at 6145 E. Santiago Canyon Road in City of Orange (“City”), County of Orange (“County”), California, comprising approximately

67.743 acres, as more particularly described on Exhibit A attached hereto (the “Sully Miller Property”). The Sully Miller Property has long been a part of City of Orange community, with many residents expressing interest in preserving it as an open space reserve project.

B. On or about June 16, 2022, Milan and the Orange County Health Care Agency, Environmental Health, acting as the Solid Was te Local Enforcement Agency for the County of Orange (the “LEA”), entered into that certain Stipulated Notice and Order dated June 16, 2022, which concerns certain portions of the Property defined as the “Site,” and was recorded with the Orange County Clerk-Recorder’s Office on July 12, 2022, as Instrument No. 2022000244314 (as amended, the “SNO”).

C. Pursuant to that certain Letter of Intent dated April 22, 2025, between City and Milan, Milan has indicated a willingness to work with City to make the Sully Miller Property available for an open space reserve project.

D. Landify is a developer of Inert Debris Engineered Fill Operation ( “IDEFO”) projects, which involve the acceptance, processing, and placement of clean soil and inert debris in accordance with applicable regulatory requirements for the purposes of creating a final landform suitable for future development of open space reserve projects.

E. Concurrently with the execution of this Agreement, Landify and Milan have entered into a separate agreement (the “Milan Transfer Agreement ”), pursuant to which Landify will undertake the required due diligence to evaluate the feasibility of acquiring and developing the Sully Miller Property as an IDEFO project.

F. Provided that Landify completes the acquisition of the Sully Miller Property pursuant to the Milan Transfer Agreement, Landify and City have agreed that Landify will develop the Sully Miller Property as an open s pace reserve for passive recreation, habitat restoration, and other non -intensive open -space purposes (the “Open Space Project ”) as generally depicted on the site plan attached hereto as Exhibit G, and upon completion, transfer the Open Space Project to City in accordance with the terms of this Agreement.

ATTACHMENT 1
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2 NOW, THEREFORE, in consideration of the promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Transfer of the Property . Provided that Landify completes the acquisition of t he Property pursuant to the Milan Transfer Agreement, Landify shall transfer to City and City shall acquire from Landify the Sully Miller Property, together with all improvements, rights and privileges appertaining to the Sully Miller Property (collectively, the “Property”), on the terms and conditions contained herein. The City shall, subject to the satisfaction of all of the City’s Closing Conditions (as defined below), acquire the Property from Landify, in accordance with the express terms and condition s set forth in this Agreement . The City represents that, prior to execution of this Agreement, the City Council has approved the execution of this Agreement and has authorized the City Manager to take all actions necessary on behalf of the City to complete this transaction, including executing any modifications, amendments, or extensions to this Agreement, without the need for any further City Council action.

2. Escrow. Upon execution of this Agreement, the parties hereto shall deposit a copy of an executed counterpart of this Agreement in an escrow (the “Escrow”) with _________________ (“Escrow Holder” or “Title Company”) and this Agre ement shall serve as the instructions to Escrow Holder for the transfer contemplated hereby. Landify and City agree to execute such additional and supplementary escrow instructions as appropriate to enable the Escrow Holder to comply with the terms of this Agreement; provided, however, that in the event of any conflict between this Agreement and any supplementary escrow instru ctions, this Agreement shall control.

3. Due Diligence . As of the Agreement Date , City confirms it has conducted preliminary due diligence sufficient to enter into this Agreement, including review and approval of the Title Report, the Property Documents and the physical condition of the Property as of Agreement Date. However, City expressly reserves the right to conduct additional investigations, testing, and evaluation relating to the use and operation of the Property by Landify through the Closing Date, in cluding review of information arising from grading activities, regulatory review, and site monitoring as necessary to confirm satisfaction of the City’s Closing Conditions.

3.1 Title.

3.1.1 Permitted Title Exceptions. Title to the Property shall be conveyed to City by the Grant Deed (as defined below) subject only to the following condition s of title (“Permitted Title Exceptions”): (a) a lien to secure payment of general and special real property taxes and assessments, not delinquent; (b) the lien of supplemental taxes assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code; (c) any covenants, conditions or encumbrances required by the Agencies to achieve SNO Compliance as such terms are defined and further described in Section 4.1.2 below; (d) matters affecting the condition of title created by or with the written consent of City; (e) all exceptions which are disclosed in the title commitment attached hereto as Exhibit B (the “ Title Report ”); (f) all applicable laws, ordinances, rules and governmental regulations (including, but not limited to, those relative to building, zoning and land use) affecting the development, use, occupancy or 430
3 enjoyment of the Property; and (g) any matter which would be disclosed by an accurate survey or physical inspection of the Property.

3.1.2 Supplemental Title Report . In the event that after the Agreement Date a supplemental title report is issued setting forth new title conditions not set forth in the Title Report (“ New Title Exceptions ”), s uch New Title Exceptions shall be subject to the approval of City, which approval shall not be unreasonably withheld, conditioned or delayed.

City shall have twenty (20) days following the date of delivery to City of written notice from Landify, together with a copy of such supplemental Title Report and copies of any such New Title Exception, to approve or disapprove such New Title Exception by providing written notice to Landify. Notwithstanding the foregoing to the contrary, (a) City shall not have the right to disapprove any New Title Exception unless such exception would materially and adversely affect the development, use, operation or ownership of the Property, (b) if such New Title Exception constitutes a Permitted Title Exception as provided in Section 3.1.1 above, and (c) in no event shall City have the right to disapprove a New Title Exception created or caused to be created by or on behalf of City. In the event that City fails to timely approve or disapprove a New Title Exception, then such fail ure shall be deemed City’s disapproval thereof, and no New Title Exception shall be a permitted Title Exception without City’s express written approval. If any New Title Exception is disapproved by City, then, unless Landify advises City within five (5) business days after Landify’s receipt of City’s notice that Landify will cause such New Title Exception to be removed from title prior to the Closing Date, or City waives its disapproval within such period of time, this Agreement shall terminate and neithe r party shall have any further rights, duties or obligations under this Agreement or with respect to the Property, except as otherwise specifically set forth herein. City hereby acknowledges and agrees that in the event this Agreement is terminated pursuant to this Section 3.1.2 , City hereby releases any and all interest in the Property and shall have no further rights thereto, and Landify or any successor shall have the right to develop the Property in accordance with applicable law , provided, however, that nothing herein shall limit, impair, waive, or otherwise affect City's governmental, regulatory, environmental review, permitting, police power, or land use authority with respect to the Property.

3.1.3 Title Policy. Title shall be evidenced by the willingness of Title Company to issue its Standard Coverage ALTA Owner ’s Form Policy of Title Insurance ( “Title Policy”) in the amount of $___________ (the “ Premium Amount ”) showing title to the Property vested in City, subject only to only to the Permitted Title Exceptions. City may, at its option, request an Extended Coverage ALTA Owner ’s Form Policy of Title Insurance ( “ALTA Policy”) provided that the issuance of said Extended Coverage ALTA Policy does not delay the Closing, and any additional costs, including, but not limited to, title and endorsement fees and survey fees incurred in connection with the issuance of such ALTA Policy shall be City’s sole responsibility.

3.2 Property Documents. City acknowledges that it has had the opportunity to receive, review, and approve the due diligence documents set forth on Exhibit C (the “Property Documents”). Without limiting the provisions of this Section 3.2 or Section 8 below, City acknowledges and agrees that Landify makes no representation or warranty, express or implied, regarding the accuracy or completeness of any Property Documents, including, without limitation, any environmental audit or report (if any). City further acknowledges that Landify, 431
4 its affiliates, and agents have no responsibility for the content or accuracy of such Property Documents or related disclosures, and that Landify ’s obligations in connection with the transfer of the Property shall be governed solely by this Agreement, irrespective of the content, timing, or delivery of any such Property Documents or related disclosures. At City’s request, Landify shall provide such additional information as City may reasonably request, provided that such information is neither confidential nor proprietary nor subject to attorney -client privilege or the attorney work product doctrine.

3.3 Physical Investigations. City acknowledges that it has had the opportunity to review and inspect the Property prior to the Agreement Date. Should City wish to conduct any further evaluations, tests, inspections, or investigations of the physical condition of the Property prior to Landify taking title, City will coordinate such access directly with Milan and will provide Landify with a reasonable opportunity to participate in any further inspections.

Following Land ify’s ac quisition of the Property, City shall have the right to monitor grading operations and any new environmental issues as set forth in Section 6.1 below.

3.4 Natural Hazard Disclosure. City and Landify acknowledge that Landify is required to disclose if any of the Property lies within the following natural hazard areas or zones:
(i) a special flood hazard area designated by the Federal Emergency Management Agency; (ii) an area of potential flooding; (iii) a very high fire hazard severity zone; (iv) a wild land area that may contain substantial forest fire risks and hazards; (v) an earthquake fault or special studies zone; or (vi) a seismic hazard zone. City and Landify acknowledge that they have employed the services of the Title Company or its affiliate (“Natural Hazard Expert ”) to examine the maps and other information specifically made available to the public by government agencies for the purposes of enabling Landify to fulfill its disclosure obligations with respect to the natural hazards referred to in Ca lifornia Civil Code Section 1103 et seq and to report the results of its examination to City and Landify in writing. City hereby acknowledges and agrees that the written report prepared by the Natural Hazard Expert regarding the results of its examination fully and completely discharges Landify from its disclosure obligations referred to herein, and, for the purposes of this Agreement, the provisions of Civil Code Section 1102.4 regarding the non-liability of Landify for errors and/or omissions not within its personal knowledge shall be deemed to apply and the Natural Hazard Expert shall be deemed to be an expert, dealing with matters within the scope of its expertise with respect to the examination and written report regarding the natural hazards referred to above. Notwithstanding anything to the contrary contained in this Agreement, in no event shall Landify have any responsibility for matters not actually known to City.

4. Closing Conditions.

4.1 City’s Closing Conditions . City ’s obligation to consummate the transfer of the Property shall be subject to the satisfaction of the following conditions (collectively, the “City’s Closing Conditions”) at or prior to Closing, which are for City ’s benefit only, and may be waived in part or in whole by City (and then only in writing):

4.1.1 Representations And Warranties. All of Landify ’s representations and warranties contained in or made pursuant to this Agreement shall have been true and correct when made and, as of the Closing Date, such representations and warranties sha ll be true and 432
5 correct and no fact or condition shall exist which is materially and adversely inconsistent with such representations and warranties.

4.1.2 SNO Compliance. Milan shall have completed the analytical and geotechnical testing required under Sections 3, 4 and 5 of that certain Stipulated Notice and Order, dated June 16, 2022, which concerns certain portions of the Property defined as the “Site,” and recorded with the Orange County Clerk -Recorder’s Office on July 12, 2022, as Instrument No. 20220002443 14 (as amended, the “ SNO”) (the “ SNO Compliance ”). SNO Compliance includes completion of all testing of stockpiles, subsurface testing and vapor intrusion testing (as required), necessary to allow Landify to commence operation of an IDEFO and for the Open Space Project on the Property. SNO Compliance shall be evidenced by the written certification of all agencies with jurisdiction (e.g., Santa Ana Regional Water Quality Control Board, Department of Toxic Substances Control, CalRecycle, Local Enforcement Agency) (the “Agencies”) that no further remediation, corrective action, response action, closure activity, monitoring, post -closure obligations, engineering controls, institutional controls, land use restrictions, deed restrictions, environmental covenants, operation and maintenance obligations, or other environmental mitigation measures are required for the intended open space use of the Property, unless expressly approved in writing by City and Landify for operation of an IDEFO and an Open Space Reserve project on the Property , in a form acceptable to City and Landify in their reasonable discretion. Any covenants, conditions and encumbrances required by the Agencies to achieve SNO Compliance shall have been approved by Landify and the City in their sole but reasonable discretion and shall not materially interfere with Landify’s IDEFO operations or City's intended long -term ownership, operation, maintenance, or use of the Property as open space. Furthermore, Landify shall have obtained the LEA’s written approval of the operating plan required under Section 6.4 of the SNO.

4.1.3 Grading. All Phases of the Grading Work shall have been Completed as evidenced by issuance of the Grading Certificate by the City Engineer (as such terms are defined below).

4.1.4 Delivery of Closing Documents . Landify has delivered to Escrow Holder or City, as applicable, all documents required for the Closing hereunder, including without limitation, the documents and instruments specified in below.

4.1.5 Delivery of Title Policy . At the Closing the Title Company shall be irrevocably committed to issue to City the Title Policy.

4.1.6 No Material Default . Landify shall not be in Material Default (as defined below) of its obligations hereunder.

4.1.7 Environmental Liabi lity Agreement . Milan, Landify, and City shall have executed and delivered the Environmental Liability Agreement (as defined below) and Milan shall have obtained the environmental insurance required thereunder.

4.2 Landify’s Closing Conditions . Landify ’s obligation to consummate the transfer of t he Property shall be subject to the satisfaction of the following conditions 433
6 (collectively, “Landify’s Closing Conditions ”) at or prior to Closing, which are for Landify ’s benefit only, and may be waived in part or in whole by Landify (and then only in writing)

4.2.1 Representations and Warranties. All of City ’s representations and warranties contained in or made pursuant to this Agreement shall have been true and correct when made and, as of the Closing Date, such representations and warranties shall be true an d correct and no fact or condition shall exist which is materially and adversely inconsistent with such representations and warranties.

4.2.2 SNO Compliance. Milan shall have completed the analytical and geotechnical testing required under Sections 3, 4 and 5 of that certain Stipulated Notice and Order, dated June 16, 2022, which concerns certain portions of the Property defined as the “Site,” and recorded with the Orange County Clerk -Recorder’s Office on July 12, 2022, as Instrument No. 2022000244314 (as amend ed, the “ SNO”) (the “ SNO Compliance ”). SNO Compliance includes completion of all testing of stockpiles, subsurface testing and vapor intrusion testing (as required), necessary to allow Landify to commence operation of an IDEFO and for the Open Space Project on the Property. SNO Compliance shall be evidenced by the written certification of all agencies with jurisdiction (e.g., Santa Ana Regional Water Quality Control Board, Department of Toxic Substances Control, CalRecycle, Local Enforcement Agency) (the “Agencies”) that that no further remediation, corrective action, response action, closure activity, monitoring, post-closure obligations, engineering controls, institutional controls, land use restrictions, deed restrictions, environmental covenants, operation and maintenance obligations, or other environmental mitigation measures are required for the intended open space use of the Property, unless expressly approved in writing by City and Landify for operation of an IDEFO and an Open Space Reserve project on the Property , in a form acceptable to City and Landify in their reasonable discretion. Any covenants, conditions and encumbrances required by the Agencies to achieve SNO Compliance shall have been approved by Landify and the City in their sole but reasonable discretion and shall not materially interfere with Landify’s IDEFO operations or City's intended long -term ownership, operation, maintenance, or use of the Property as open space. Furthermore, Landify shall have obtained the LEA’s written approval of the operating plan required under Section 6.4 of the SNO.

4.2.3 IDEFO. Landify shall have obtained final approval from all applicable Agencies of all permits and approvals required for the operation of an IDEFO and the Open Space Project on the Property.

4.2.4 Milan Transfer Agreement . Landify shall have acquired the Property pursuant to the Milan Transfer Agreement.

4.2.5 Grading. All Phases of the Grading Work shall have been Completed as evidenced by issuance of the Grading Certificate by the City Engineer (as such terms are defined below).

4.2.6 Delivery of Closing Documents . City delivered to Escrow Holder or Landify, as applicable, all documents required for the Closing hereunder, including without limitation, the documents and instruments specified in below, to the extent said documents or instruments are required to be signed and delivered by City hereunder. 434
7 4.2.7 No Material Default . City shall not be in Material D efault of its obligations hereunder.

4.2.8 Environmental Liability Agreement . Milan, Landify, and City shall have executed and delivered the Environmental Liability Agreement (as defined below) and Milan shall have obtained the environmental insurance required thereunder.

4.3 Failure of Conditions.

4.3.1 City’s Closing Conditions Failure Notice. If any of City’s Closing Conditions are not approved or waived, in writing, by City by the Closing Date, City shall notify Landify in writing of those Closing Conditions which have not been satisfied or otherwise waived by City (the “City’s Closing Conditions Failure Notice ”). Landify shall have ten (10) business days after City has delivered to Landify City’s Closing Conditions Failure Notice (and the Closing Date shall be extended if necessary to give Landify such ten (10) business day period) to notify City in writing of Landify ’s election either to (a ) take such actions as may be necessary to cure such matters to City ’s satisfaction prior to the Closing ( as same may be extended), or (b ) advise City that Landify will not cure such matters ( “Landify’s Conditions Notice”). If Landify elects to cure such matters as set forth in City’s Closing Conditions Failure Notice, Landify shall promptly take any and all actions as may be necessary to cure same and the Closing Date shall be extended for a period of time acceptable to both Landify and City to enable Landify to accomplish same. If Landify elects not to cure such matters, then within five (5) business days after City’s receipt of the Landify’s Conditions Notice (and the Closing Date shall be extended if necessary to give City s uch five (5) business day period), City, at its sole and exclusive remedy, may either terminate this Agreement by delivering written notice thereof to Landify; provided, however, that i f the failure of a City’s Closing Condition to be satisfied is solely due to a Material Default by Landify, then the terms and provisions of Section 9 below shall apply. In the event that City fails to timely exercise its right to terminate the Agreement pursuant to this Section 4.3.1, then City shall not be deemed to have w aived the conditions set forth in the City’s Closing Conditions Failure Notice unless expressly waived in writing by the City Manager.

4.3.2 Landify’s Closing Conditions Failure Notice . If any of Landify’ s Closing Conditions are not approved or waived, in writing, by Landify by the Closing Date, Landify shall notify City in writing of those Closing Conditions which have not been satisfied or otherwise waived by Landify (the “Landify’s Closing Conditions Failure Notice ”). City shall have ten (10) business days after Landify has delivered to City Landify’s Closing Conditions Failure Notice (and the Closing Date shall be extended if necessary to give City such ten (10) business day period) to notify Landify in writing of City’s election either to (i) take such actions as may be necessary to cure such matters to Landify’s satisfaction prior to the Closing (as same may be extended), or (ii) advise Landify that City will not cure such matters (“City’s Conditions Notice”). If City elects to cure such matters as set f orth in the Landify’s Closing Conditions Failure Notice, City shall promptly take any and all actions as may be necessary to cure same and the Closing Date shall be extended for a period of time acceptable to both Landify and City to enable City to accomplish same. If City elects not to cure such matters, then within five (5) business days after Landify’s receipt of City’s Conditions Notice (and the Closing Date shall be extended if necessary to give Landify such five (5) business day period), Landify, at its sole and 435
8 exclusive remedy, may either terminate this Agreement by delivering written notice thereof to City; provided, however, that i f the failure of a Landify’s Closing Condition to be satisfied is solely due to a Material Default by City, then the terms and provisions of Section 9 below shall apply. In the event that Landify fails to timely exercise its right to terminate the Agreement pursuant to this Section 4.3.2, then Landify shall be deemed to have waived the conditions set forth in Landify’s Closing Conditions Failure Notice.

4.3.3 No Further Obligations . If this Agreement is terminated pursuant to Section 4.3.1 or Section 4.3.2 above, neither party s hall have any further liability or obligations hereunder except for those that expressly survive termination of this Agreement.

Furthermore, City hereby acknowledges and agrees that in the event this Agreement is terminated pursuant to Section 4.3.1 or Section 4.3.2 above, City hereby releases any and all interest in the Property arising solely under this Agreement and shall have no further rights thereto, and Landify or any successor shall have the right to develop the Property in accordance with applicable law provided, however, that nothing herein shall limit, impair, waive, or otherwise affect City's governmental, regulatory, environmental review, permitting, police power, or land use authority with respect to the Property.

4.3.4 “Closing Conditions ” Defined. For purposes of this Agreement, City’s Closing Conditions and Landify’s Closing Conditions shal l be collectively referred to herein as the “Closing Conditions”.

4.3.5 City’s Approval of City’s Closing Conditions . The satisfaction of the City’s Closing Conditions must be independently verified and approved by the City Manager prior to Closing. Notwithstanding the foregoing to the contrary, t he City acknowledges that it will be a condition to Landify’s obligation to acquire the Property pursuant to the Milan Transfer Agreement, that the City confirm in writing that the conditions set forth in Section 4.1. 2 and Section 4.1. 7 have been satisfied and independently verified and approved by the City (“ City Confirmation”). In the event that the City does not provide City Confirmation prior to the closing under the Milan Transfer Agreement, Landify shall have no obligation to acquire the Property.

5. Closing.

5.1 Date of Closing. Provided all Closing Conditions have been satisfied or waived, and unless otherwise agreed to in writing by the parties, the E scrow shall close within ten (10) business days of the date that all Phases of the Grading Work are Complete or deemed Complete pursuant to Section 6.1.5 below but in no event later than six (6) months after the issuance of the Grading Certificate for the final Phase (the “Closing Date”). The Closing Date may not be extended without the prior written approval of both Landify and City, except as otherwise expressly provided in this Agreement. Notwithstanding the foregoing, either party may postpone the Closing Date for not more than three (3) business days if either pa rty needs additional time to deliver into escrow or to the other party any required closing documents. In the event the Closing does not occur by the Closing Date (as same may be extended), the Escrow Holder shall, unless it is notified by both parties to the contrary, return to the depositor thereof items which may have been deposited hereunder. Any such return shall not relieve either party of any liability for its wrongful failure to close.
436
9 5.2 Conveyance. At Closing, Landify sha ll convey title to the Pr operty, by means of a duly executed and acknowledged grant deed in the form of Exhibit D attached hereto (the “Grant Deed”). For purposes of this Agreement, t he “Closing” shall mean the date that the Grant Deed is recorded in the Official Records of Orange County California (the “ Official Records”) and possession of the Property is delivered to City.

5.3 Closing Documents . On or before the Closing Date, Landify and City shall deliver to Escrow Holder all of the following documents:

5.3.1 The Grant Deed together wit h a separate tax affidavit, duly executed and acknowledged by Landify;

5.3.2 A duly executed affidavit in form reasonably acceptable to City certifying that Landify is not a “foreign person” within the meaning of Section 1445(e)(3) of the Internal Revenue Code of 1986, as amended, and a duly executed California 593-W form;

5.3.3 Landify and City shall each deposit such other funds and instruments as are reasonably required by the Escrow Holder, the Title Company or otherwise required to close the escrow and consummate the transfer of the Property in accordance with the terms hereof.

6. Development of Open Space Project.

6.1 Grading.

6.1.1 Scope of Landify’s Work . In creating the Open Space Project , Landify’s sole responsibility will be to perform the grading necessary to prepare the Property with pads and landforms suitable for the Open Space Project . Landify’s work will not include making any final improvements, such as installation of landscaping, trails, equestrian facilities, or other finished amenities —those final improveme nts will be the sole responsibility of City.

Landify’s grading will focus on “upcycling,” reusing clean soil and inert debris from ur ban construction sites through an IDEFO on the Property . The process for soil testing and acceptance of such soil is described in Exhibit E attached hereto ( the “Soils Management Plan”).

6.1.2 Grading Permit and Plans . Landify will grade the Property in substantial accordance with the conceptual grading plan attached hereto as Exhibit F (the “Conceptual Plan”). As a condition to the close of escrow under the Milan Transfer Agreement (the “Milan Closing”), Landify must obtain both (a) a Grading Permit from City, and (b) City approval of a detailed grading plan (the “ Grading Plan”). The Grading Plan must be designed and signed by a licensed civil engineer designated by Landify (“Landify’s Engineer”), and shall be consistent in all material respects with the Conceptual Plan. Landify may propose changes to the Grading Plan as it determines necessary, provided all such changes rema in consistent in all material respects with the Conceptual Plan and are approved in writing by City. Any modification of the approved Grading Plan or any material deviation from the Conceptual Plan shall require prior written approval of City. Any material deviation from the Conceptual Plan will require the prior written consent of City, which shall not be unreasonably withheld, conditioned, or delayed. City shall reasonably cooperate with Landify in processing and issuing 437
10 the Grading Permit and approvin g the Grading Plan; provided, however, that nothing in this Section shall require City to grant any permits or approvals except in accordance with applicable governmental procedures and any rights expressly reserved in this Agreement.

6.1.3 Best Management Practice/WQMP . The Grading Plan must include a Water Quality Management Plan (“ WQMP”) that identifies and provides for Best Management Practice implementation (“BMP”). For purposes of this Agreement:
a. The WQMP shall be prepared in accordance with
applicable l ocal agency requirements and shall describe the BMPs to be implemented during grading operations to minimize the discharge of pollutants in stormwater runoff. b. “BMPs” shall mean those erosion control, sediment
control, runoff control, and good housekeeping measures that are consistent with generally accepted industry standards , including without limitation those described in the most current version of the California Stormwater Quality Association (CASQA) Construction BMP Handbook, and as required under the State Water Resources Control Board Construction General Permit (Order 2009 -0009-DWQ, as amended) and any applicable municipal stormwater permit requirements.
c. Landify’s obligation shall be to implement and maintain BMPs in material compliance with applicable laws and permits , and consistent with standard construction practices, taking into account site conditions and operational feasibility. d. BMPs shall be subject to periodic inspection as required by applicable permits; however, temporary exceedances or adj ustments in BMP performance due to weather, site conditions, or construction activities shall not constitute a default, provided Landify acts in a commercially reasonable manner to address such conditions. e. BMPs must be maintained throughout the grading period, with periodic inspection by City staff and other regulatory agencies, as required by the WQMP.

WQMP implementation must be verified at the end of the final grading prior to acceptance.

6.1.4 Grading Work and Monitoring Rights . Following the Milan Closing, Landify shall complete the grading of the Property in one or more phases (each a “Phase,” collectively, the “Phases”), in substantial conformance with the approved Grading Plan for each applicable Phase, as outlined in Exhibit H (the “Grading Work”). City shall have the right to monitor the Grading Work. The parties shall mutually agree on a schedule for City inspections, which may be updated as reasonably necessary to accommodate the progress of the Grading Work. Landify shall promptly notify City of any material changes to the work in the field that could affect compliance with the approved Grading Plan or the Soils Management Plan. If any practical issues arise that impact City’s monitoring or access, the parties will cooperate in good faith to address and resolve such issues in a reasonable and timely manner. If City identifies any issue that is outside the scope of the approved Grading Plan or is not in compliance with the Soils Management Plan, City shall provide written notice to Landify describing the issue in reasonable detail. Within five (5) business days of such notice, representatives of Landify and City shall meet (in person or virtually) to discuss and attempt to 438
11 reach a mutually acceptable plan to address and resolve the issue. Such plan shall include clear timelines and steps for remediation or correction and shall remain in effect until the issue is fully resolved to the reasonable satisfaction of both parties. If Landify and City are unable to resolve the issue within ten (10) busi ness days following their initial meeting, the matter shall be submitted to the Neutral Professional for final resolution in accordance with Section 6.1.5 below.

6.1.5 Completion. At such time as Landify believes that the Grading Work for a Phase has been completed in conformance with the Grading Plan s, Landify shall provide written notice thereof (the “Completion Notice ”) to City accompanied by a written certification from Landify ’s Engineer made to City confirming that the Grading Work for such Phase is in conformance with the Grading Plans (the “Completion Certification”). By no later than ten (10) business days after Landify provides the Completion Notice and Completion Certification to City for a Phase, City shall review and approve the Completion Certification for the applicable Phase, or identify any incomplete items pertaining to such Grading Work. In the event City fails to timely approve the Completion Certification or to identify any incomplete items, the parties shall promptly meet and confer to dete rmine whether additional inspection or review is required prior to acceptance of the Grading Work for the applicable Phase. If Landify and City fail to agree on any matters to be agreed to pursuant to this Section (a “ Completion Dispute”), then such dispute may be referred to a “ Completion Arbitration ” upon which a mutually agreed-upon qualified professional selected by the parties at the time of the Completion Dispute (“Neutral Professional ”) shall resolve such Completion Dispute in a commercially reasonable manner and in accordance with this Agreement, including providing a written finding as to what corrections must be completed in order to resolve such Completion Dispute. Landify shall address such matters promptly to the extent directed by the Neutral Professional . The Grading Work for each Phase shall be deemed “ Complete” upon (a) the City’s approval of the Completion Certification for such Phase, or (b) if a Completion Arbitration is initiated with respect to such Phase, upon the Neutral Professiona l’s finding that the Grading Work that is the subject of the Completion Dispute has been completed in conformance wi th the Grading Plans.

Once the Grading Work for all Phase s is Complete or deemed Complete, Landify shall obtain and deliver to City a final topographical survey of the Property in conformance with the Grading Plan. Pending the determination that the Grading Work for any Phase is Complete, Landify shall have the right to proceed with the Grading Work on future Phases.

6.1.6 Grading Certificate . Upon completion of the grading work, Landify’s Engineer shall submit a written certification that the Property has been graded in substantial conformance with the approved Grading Plan. Following review and approval by the City Engineer, the City Engineer shall issue the final grading certificate confirming the same (the "Grading Certificate").

6.2 Regulatory Compliance . If the project is operated as an Inert Debris Engineered Fill Operation (IDEFO) under Title 27 of the California Code of Regulations, Landify will ensure that all necessary permits and approvals from the Local Enforcement Agency (LEA), CalRecycle, and any other applicable regulatory agencies are obtained and maintained. Landify shall be solely responsible for compliance with all regulatory requirements associated with IDEFO operations conducted by Landify during Landify’s ownership of the Property (“ Landify’s IDEFO Operations ”), including closure requirements, monitoring obligations, reporting obligations, and any required remediation or corr ective action. Landify 439
12 shall remain the responsible operator for all Landify’s IDEFO Operations, and City shall not be deemed the operator, owner -operator, or responsible party for IDEFO regulatory purposes with respect to Landify’s IDEFO Operations. Prior to Closing, Landify shall provide documentation reasonably acceptable to City demonstrating that all Landify’s IDEFO Operations requirements and related closure requirements applicable to the Property have been satisfied or transferred in a manner approve d by the applicable regulatory agencies (collectively, “ Landify Pre -Closing IDEFO Requirements”). Landify shall remain responsible for all Landify Pre -Closing IDEFO Requirements, including any Landify Pre -Closing IDEFO Requirements identified as not fully satisfied after Closing. While City does not have oversight over IDEFO activities, regulation and enforcement fall under the LEA and other state agencies, Landify is committed to maintaining an open and cooperative relationship with City. To support trans parency, Landify will voluntarily share relevant permitting and compliance documentation with City and keep City informed of any significant regulatory developments related to Landify’s IDEFO Operations . In the event of an enforcement action or notice of noncompliance from the LEA, CalRecycle, or other regulatory agency, related to Landify’s IDEFO Operations, Landify will promptly notify City and work constructively to address any concerns and maintain regulatory compliance, recognizing City’s interest in the responsible operation of the site.

6.3 Bonding. Prior to Landify commencing each Phase of the Grading Work, Landify shall furnish to City with either a cash deposit, a corporate surety bond issued by a company duly and legally licensed to conduct a general surety business in the State of California, or an instrument of credit equivalent to one hundred percent (100%) of the estimated cost (“Estimated Cost to Complete ”) to complete the Reclamation Work for the entirety of such Phase (as defined below). Upon Completion of the Grading Work for a particular Phase and the issuance of the Grading Certificate for such Phase, the faithful performance bond for such Phase shall be released to Landify.

6.4 Insurance. Prior to commencement of the initial Phase of the Grading Work, Landify shall obtain or cause to be obtained and filed with City, all insurance required under this Section. Landify shall not allow any contractor or subcontractor to commence the Grading Work until all insurance described herein shall have be en so obtained. Said insurance shall be maintained in full force and effect until the completion of the Grading Work. All requirements herein provided shall appear either in the body of the insurance policies or as endorsements and shall specifically bind the insurance carrier.

6.4.1 Minimum Limits.
(a) Commercial General Liability: $2,000,000 per occurrence, $4,000,000 general aggregate for personal injury, bodily injury and property damage arising out of the Grading Work;
(b) Pollution Legal Liability : $2,000,00 0 per occurrence for bodily injury, property damage and remediation expense, and shall include coverage for emergency response, transportation coverage and non-owned disposal sites; (c) Automobile Liability : $ 1,000,000 combined single limit providing coverage for all owned, non-owned and hired vehicles; 440
13 (d) Workers’ Compensation: Worker’s compensation limits as required by the Labor Code of the State of California;
(e) Umbrella/Excess Liability: $2,000,000 per occurrence and in the general aggregate, which limit m ay be satisfied by any combination of primary or excess/umbrella per occurrence policies providing coverage at least as broad as the underlying commercial general liability, employer’s liability and automobile liability insurance policies; and (f) Professional Liability : $2,000,000 per claim insuring against professional negligent errors and omissions arising from services rendered.

6.4.2 Other Insurance Provisions. Each insurance policy required by this Section shall be endorsed to state that coverage shall not be suspended, voided, cancelled by either party, reduced in coverage or in limits except after thirty (30) days ’ prior written notice by certified mail, return receipt requested, has been given to City. (a) Acceptability of Insurers . Insurance is to be placed with insurers with an A.M. Bests’ rating of no less than A:VII. (b) Verification of Coverage . Landify shall furnish City with certificates of insurance and with original endorsements effecting coverage required by this clause. The certificates and endorsements for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. The certificates and endorsements are to be received and approved by City before work commences. City reserves the right to require complete, certified copies of all required insurance policies, at any time. (c) Subcontractors. Landify and/or Landify ’s general
contractor shall include all subcontractors as insureds under its policies or shall obtain separate certificates and endorsements for each subcontractor. All coverages for subcontractors shall be subject to all of the requirements stated herein.

6.5 Cost of Work . The construction of the Open Space Project shall be performed at Landify’s sole cost and expense, and no payment of any kind shall be made therefore by City except as otherwise provided in this Agreement. Except as expressly provided in this Agreement. Landify shall be responsible for all costs associated with grading operations, environmental compliance, and Landify’s IDEFO Ope rations. Any monitoring, testing, or inspection required by Agencies in connection with Landify’s IDEFO Operations prior to Closing shall be performed at Landify’s sole cost and expense. For the avoidance of doubt, City shall not be required to provide any monetary assistance to the design or construction of the Open Space Project or Landify's IDEFO Operations; provided, however, that City shall be solely responsible for any and all internal administrative costs and any third party out -of-pocket costs incurred by City in connection with overseeing, monitoring and inspecting the grading, design and construction of the Open Space Project and Landify’s IDEFO Operations for the purpose of carrying out its obligations under this Agreement and the Grading Plan, but not in connection with any breach of this Agreement or violation of applicable law by Landify.

441
14 6.6 Right of Termination . If, in Landify’s reasonable discretion, changes in regulatory conditions, soil availability, or the economics of soil volumes and tipp ing fees render the Open Space Project no longer commercially viable or feasible to complete under the approved plans and specifications, Landify may notify the City, and the parties will work together in good faith to either: (a) modify the approved plans and specifications to make the Open Space Project economically feasible for Landify in a manner mutually acceptable to City and Landify in their reasonable discretion, (b) the Parties mutually agree to terminate this Agreement in writing, (c) City, at its sole discretion, may proceed to acquire the Property notwithstanding the fact that the Open Space Project has not been completed, or (d) City, at its sole discretion, may proceed with the original, approved plans and specifications provided City shall compensate Landify to extent necessary to make the Open Space Project economically feasible for Landify. In the event that City and Landify are not able to come to an agreement within ten (10) days after City’s receipt of a written request from Landify, then Landify shall have the right to terminate this Agreement by delivering written notice to City upon which this Agreement shall terminate and be of no further force or effect and neither party shall have any further obligation or liability hereunder except for those obligations and liabilities that expressly survive the termination of this Agreement. In the event the parties elect to proceed pursuant to Section 6.6(b) or Section 6.6(c) above, or this Agreement is otherwise terminated by Landify pursuant to this Section 6.6, Landify shall have no further obligation to complete the Grading Work; provided, however, that as to any Phase of the Grading Work that has commenced but has not been Completed, Landify shall perform the following work (the “ Reclamation Work”): (i) rough grade the applicable Phase in accordance with customary development practices as determined by Landify’s Engineer, (ii) add topsoil using only material already present on site (i.e. Landify will not be required to import any additional ine rt debris or other material for this purpose), and (iii) reseed the affected Phase. City hereby acknowledges and agrees that in the event this Agreement is terminated pursuant to this Section 6.6, City hereby releases any and all interest in the Property arising solely under this Agreement and shall have no further rights thereto, and Landify or any successor shall have the right to develop the Property in accordance with applicable law, provided, however, that nothing herein shall limit, impair, waive, o r otherwise affect City's governmental, regulatory, environmental review, permitting, police power, or land use authority with respect to the Property.

6.7 Environmental Matters. Concurrently with the closing of the transfer of the Property to Landify under the Milan Transfer Agreement, Milan, City, and Landify will enter into an Environmental Liability Agreement, in the form attached as Exhibit I (the “Environmental Liability Agreement ”). Under this Agreement, the parties will obtain environmental insurance for any hazardous materials or pollution -related liabilities associated with the Property . The environmental insurance will remain in effect during Landify’s ownership and for a period after City acquires the Property, with the duration to be finalized, but currently anticipated to extend for 10 years from the date Milan transfers the Property to Landify.

If a third -party claim arises that is not covered by the insurance, the Environmental Liability Agreement provides that liability for such a claim will be allocated based on when the event or condition giving rise to the claim first occurred. All parties will enter into a customary mutual release as part of the Environmental Liability Agreement. The full terms and provisions of the Environmental Liability Agreement are set forth in the attached exhibit. 442
15 7. As-Is; Release and Indemnifications.

7.1 As-Is. CITY EXPRESSLY ACKNOWLEDGES AND AGREES THAT,

EXCEPT FOR THE EXCEPTED MATTERS (AS DEFINED BELOW), CITY IS ACQUIRING THE PROPERTY “AS IS ”, AND “WITH ALL FAULTS ”, AFTER SUCH

INSPECTION, ANALYSIS, EXAMINATION AND INVESTIGATION AS CITY DEEMS

DESIRABLE OR NECESSARY, AND WITHOUT WARRANTY OR REPRESENTATION AS

TO PHYSICAL CONDITION, ENTITLEMENTS, UTILITIES, TITLE, LEASES, RENTS,

REVENUES, INCOME, EXPENSES, OPERATION, ZONING OR OTHER REGULATION,

COMPLIANCE WITH LAW, SUITABILITY OR FITNESS FOR PARTICULAR PURPOSES OR ANY OTHER MATTER WHATSOEVER. CITY EXPRESSLY ACKNOWLEDGES

THAT IT HAS BEEN AFFORDED AMPLE OPPORTUNITY TO INSPECT, ANALYZE AND

INVESTIGATE ALL ASPECTS OF THE PR OPERTY AND CONDITIONS RELEVANT THERETO, AND CITY SHALL RELY ON CITY ’S OWN INVESTIGATION AND INSPECTION, AND ALL MATTERS RELATING THERETO.

7.2 Release. F rom and after the Closing, except for the Excepted Matters , Landify shall not be liable to City for any loss or damage to persons or property, injury to City ’s business or any loss of income therefrom, to the extent arising from City’s use or operation of the Property after Closing . Effective upon the Closing, except for the Excepted Matters, City unconditionally and absolutely hereby waives, releases, acquits, and forever discharges Landify, its affiliates, subsidiaries, directors, officers and employees (collectively, the “Released Parties”), of and from any and all claims, liens, demands, losses, damages, liabilities, fines, penalties, charges, administrative and judicial proceedings and orders, judgments, all costs and expenses incurred in connection therewith (including, without limitation, reasonable attorneys ’ fees, reasonable costs of defense, and reas onable costs and expenses of all experts and consultants), or compensation whatsoever, direct or indirect, known or unknown, foreseen or unforeseen, accrued or not accrued, liquidated or unliquidated, fixed or contingent, which City ever had, now has or may have, or which may arise in the future, in each such case in this paragraph above, to the extent arising from (i) any hazardous materials on, in, under, from or affecting the Property and not caused by Landify or its employees, agents or representatives, (ii) to the extent arising or resulting from this Agreement or the use, ownership, operation, entitlement or development of the Property by City, (iii) any defects in title (for which the City is relying on the Title Policy), and/or (i v) otherwise arising out of or connected to the physical condition of the Property. To the extent there is any conflict between the terms and provisions of Section 7 of this Agreement and the Environmental Liability Agreement, the terms of the Environmental Liability Agreement shall control.

THE ABOVE RELEASE IS INTENDED TO BE A FULL
RELEASE OF ALL CLAIMS KNOWN AND UNKNOWN.

CITY HEREBY ACKNOWLEDGES THAT CITY HAS READ

AND IS FAMILIAR WITH THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 1542 ( “SECTION
1542”), WHICH IS SET FORTH BELOW:
443
16 “A GENERAL RELEASE DOES NOT EXTEND

TO CLAIMS THAT THE CREDITOR OR

RELEASING PARTY DOES NOT KNOW OR

SUSPECT TO EXIST IN HIS OR HER FAVOR

AT THE TIME OF EXECUTING THE RELEASE

AND THAT, IF KNOWN BY HIM OR HER,

WOULD HAVE MATERIALLY AFFECTED HIS

OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.”

CITY HEREBY WAIVES THE PROVISIONS OF SECTION
1542 IN CONNECTION WITH THE MATTERS WHICH ARE

THE SUBJECT OF THE FOREGOING WAIVERS AND
RELEASES; PROVIDED, HOWEVER, THAT THIS RELEASE

AND WAIVER SHALL NOT APPLY TO CLAIMS ARISING

FROM THE FOLLOWING (COLLECTIVELY, THE
“EXCEPTED MATTERS”): (i) LANDIFY’S GRADING
ACTIVITIES, (ii) SOIL IMPORTATION OR MATERIAL
PLACEMENT ASSOCIATED WITH LANDIFY’S IDEFO
OPERATIONS, (iii) LANDIFY’S FAILURE TO PERFORM THE

GRADING WORK IN ACCORDANCE WITH THE CITY -
APPROVED GRADING PLAN OR THIS AGREEMENT, (iv)
LANDIFY’S FRAUD OR WILLFUL MISCONDUCT, (v) A
BREACH OF LANDIFY ’S REPRESENTATIONS,

WARRANTIES AND COVENANTS SET FORTH IN THIS

AGREEMENT OR ANY OBLIGATIONS OF LANDIFY THAT
EXPRESSLY SURVIVE THE CLOSING, OR (vi) ANY

CLAIMS PERMITTED TO BE BROUGHT UNDER THE
ENVIRONMENTAL LIABILITY AGREEMENT.
________________
City’s Initials

7.3 Indemnification. Landify shall defend, indemnify, and hold harmless City, its officers, officials, employees, and ag ents from and against all claims, liabilities, damages, demands, losses, penalties, fines, remediation costs, monitoring costs, closure costs, regulatory actions, judgments, attorneys’ fees, consultant fees, expert fees, and expenses or costs (collectively, “ Liabilities”) to the extent caused by Landify’s IDEFO Operations, including grading activities, soil importation occurring prior to the transfer of the Property to the City, regulatory violations, or failure to perform the Grading Work in accordance wit h the approved Grading Plan. City shall defend, indemnify, and hold harmless Landify from and against all Liabilities first arising from and after the Closing related to the use, ownership and operation of the Property, except to the extent caused by Landify’s IDEFO Operations.

7.4 Conflict. To the extent there is any conflict between the terms and conditions of this Article 7 and the Environmental Liability Agreement, the terms and conditions 444
17 of the Environmental Liability Agreement shall control. In no e vent shall any provision of this Article 7 (including the as-is, the general release or indemnification provisions of this Article 7) be interpreted to expand, override, or negate or otherwise affect the limited release, indemnification or other provisions set forth in the Environmental Liability Agreement. The Environmental Liability Agreement is binding, and all matters it addresses are exclusively governed by its terms.

8. Default. In the event that the Closing does not occur in a timely manner prior to the Closing Date due to the Material Default of a Party hereunder (the “ Defaulting Party”), and such Material Default is not remedied within thirty (30) days after the Defaulting Party receives written notice from the other Party (the “ Non-Defaulting Party ”), the Non -Defaulting Party may pursue only one of the following remedies: (a) terminate this Agreement, in which case the Non-Defaulting Party shall have no further obligations hereunder except for any obligations that expressly survive the Closing; or ( b) compel the Defaulting Party’s performance of its obligations hereunder through an action for specific performance; provided, however, that the Non-Defaulting Party shall not bring any action for consequential or punitive damages, including lost profits; however nothing in this Section shall limit the effectiveness of either party’s indemnification obligations pursuant to this Agreement. Furthermore, City hereby acknowledges and agrees that in the event this Agreement is terminated for any reason, City h ereby releases any and all interest in the Property and shall have no further rights thereto, and Landify or any successor shall have the right to develop the Property in accordance with applicable law, provided, however, that nothing herein shall limit, impair, waive, or otherwise affect City's governmental, regulatory, environmental review, permitting, police power, or land use authority with respect to the Property. For purposes of this Agreement, a “ Material Default” by either Party means the failure to perform any duty, obligation, or covenant set forth in this Agreement that is substantial and essential to the transaction con templated by this Agreement. A Material Default does not include minor, technical, or trivial failures that do not significantly impact the other party’s rights or the overall value or purpose of this Agreement.

9. Prorations. Current real property taxes and assessments, water, sewer and utility charges (calculated on the basis of the period covered), and other recurring expenses n ormal to the operation and maintenance of the Property shall be prorated as of midnight on the day before the Closing Date on the basis of a three hundred sixty (360) day year (i.e., thirty (30) day months). If the amount of any installment of real property taxes is not known as of the Closing Date, then a proration shall be made by the Parties based on a reasonable estimate of the real property taxes applicable to the Property and the Parties shall adjust the proration when the actual amount becomes known upon the written request of either Party made to the other. All bonds or special assessments against the Property due and payable before the Closing Date shall be paid by Landify and all bonds or special assessments due and payable after the Closing Date shall be the responsibility of City. If, within twelve (12) months following the Closing Date, either Party discovers that the estimated prorations at the Closing Date were not accurate for any reason, it shall notify the other Party of such inaccuracy a nd the Parties shall promptly make any adjustment required. Neither Party shall be obligated to adjust any prorations after such twelve (12) month period. Landify shall be solely responsible for the payment of all supplemental taxes levied, assessed or otherwise accrued by the Closing Date. Notwithstanding any other provision of this Agreement to the contrary, if City shall become liable after the Closing for payment of any property taxes or assessments, supplemental or otherwise, assessed against the Pr operty for 445
18 any period of time prior to the Closing Date, Landify shall immediately pay to City on demand an amount equal to such taxes or assessments. The provisions of this Section 10 (shall survive the Closing.

10. Closing Costs . All costs associated with the Closing shall be paid as between Landify and City in accordance with the custom in the County, except as otherwise expressly set forth herein. Landify shall pay any city transfer taxes, documentary county transfer taxes, recording costs with respect to the Grant Deed. City shall pay the premium charged for the Title Policy. Landify and City shall split all escrow fees and costs. Each party shall pay its own legal fees and costs.

11. Brokers and Brokerage Commission. Landify and City respectively represent that there are no brokers or other intermediaries entitled to receive brokerage commissions or fees or other compensation out of or with respect to the sale of the Property ( “Landify’s Broker ”).

Landify and City each agree to indemnify, defend and h old the other harmless from and against all claims, suits, losses, liabilities, damages and costs incurred or resulting from the claim of any person, that a commission, fee or remuneration is due in connection with this transaction pursuant to a written agreement made with said claimant. The provisions of this Section shall survive the Closing or any termination of this Agreement.

12. Landify’s Representations and Warranties; Limited Liability.

12.1 Landify’s Representations and Warranties . Landify, on behalf o f itself and its partners, members, directors, officers, employees, representatives and authorized agents, hereby represents and warrants to City that, as of the Agreement Date, the following are true and correct and shall be deemed remade as of the Closing Date:

12.1.1 This Agreement and all documents executed by Landify that are to be delivered to Landify at Closing (i) are, or at the time of Closing will be, duly authorized, executed and delivered by Landify, (ii) do not, and at the time of Closing will not, vi olate any provision of any judicial order to which Landify is a party or to which Landify is subject, and (iii) constitute (or in the case of closing documents will constitute) a valid and legally binding obligation of Landify.

12.1.2 Landify has full and complete power and authority to enter into this Agreement and, subject to obtaining any consents or waivers required to be obtained prior to Closing, to perform its obligations hereunder.

12.1.3 Landify is not presently the subject of a bankruptcy, insolvency or probate proceeding and Landify does not anticipate nor intend to file or cause to be filed any bankruptcy or insolvency proceeding involving Landify or Landify’s assets during the pendency of this Agreement.

13. City’s Representations and Warranties . City hereby represents and warrants to Landify that, as of the Agreement Date, the following are true and correct and shall be deemed remade as of the Closing Date:
446
19 13.1 This Agreement and all documents executed by City that are to be delivered to Landify at Closing (i) are, or at the time of Closing will be, duly authorized, executed and delivered by City, (ii) do not, and at the time of Closing will not, violate any provision of any judicial order to which City is a party or to which City is subject, and (iii) constitute (or in the case of closing documents will constitute) a valid and legally binding obligation of City.

13.2 City has full and complete power and authority to enter into this Agreement and, subject to obtaining any consents or waivers required to be obtained prior t o Closing, to perform its obligations hereunder.

13.3 City is not presently the subject of a bankruptcy, insolvency or probate proceeding and City does not anticipate nor intend to file or cause to be filed any bankruptcy or insolvency proceeding involving City or City’s assets during the pendency of this Agreement.

14. Miscellaneous.

14.1 Notices. Any notice required or permitted to be given under this Agreement shall be in writing. Furthermore, any notice of default shall also clearly describe the nature of the def ault, the applicable cure period applicable to such default, the date on which such cure period expires and the requested action to cure such default. Any notice sent by personal service shall be deemed received on the actual delivery thereof. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, then notice shall not be deemed given. Notices delivered by the United States Expres s Mail or overnight courier that provides next business day delivery shall be deemed given on the next business day after delivery of the same to the United States Postal Service or such courier with a signed acknowledgement of receipt. If any notice is transmitted by electronic transmission (email), the same shall be deemed served or delivered upon transmission thereof (as evidenced by the recipient’s reply to such notice or other competent evidence of actual receipt).

If to City: City of Orange
300 E. Chapman Ave
Orange, CA 92866
Attention: Public Works Director, Christopher Cash
Telephone: 714-744-5546
Email: [email protected]

If to Landify: Landify ECT Construction Corporation
580 California Street, 12th and 16th Floors
San Francisco, California 94104
Attention: Jonathan Bryden
Telephone: (415) 635-3555
Email: [email protected]
447
20 with a copy to: Jackson Tidus
2030 Main Street, Suite 1500
Irvine, California 92614
Attention: Sonia Lister, Esq. and Sarah Kleinberg, Esq.

Telephone: (949) 851-7408; (949) 851-7623
Email: [email protected];
[email protected]

14.2 Successors and Assigns . Neither party may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement without the other party’s consent, in its sole and absolute discretion. Notwithstanding th e foregoing to the contrary, Landify may assign its rights under this Agreement without the prior written consent of City to an entity which controls, is controlled by, or is under common control with Landify so long as such assignee (i) assumes in writing the obligations of Landify under this Agreement, and (ii) acknowledges and agrees to be bound by all of the terms and provisions of this Agreement as if such assignee had originally signed this Agreement.

14.3 Amendments. Except as otherwise provided herein, this Agreement may be amended or modified only by a written instrument executed by Landify and City.

14.4 Continuation and Survival of Representations and Warranties . All representations and warranties by Landify or City contained herein or made in writing pursuant to this Agreement are intended to and shall remain true and correct as of the Closing Date, shall be deemed material, and shall survive the execution and delivery of this Agreement. All statements contained in any certificate or other instrument del ivered at any time by or on behalf of Landify or City in connection with the transaction contemplated hereby shall constitute representations and warranties hereunder.

14.5 Entire Agreement; Construction. This Agreement (including any exhibits attached hereto, which are hereby incorporated herein) constitutes the entire understanding of the parties and all prior agreements, representations, and understandings between the parties, whether oral or written, are deemed null and void, all of the foregoing having bee n merged into this Agreement. The parties acknowledge that each party and/or its counsel have reviewed and revised this Agreement and that no rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall be employed in the interpretation of this Agreement or any amendments or exhibits to this Agreement or any document executed and delivered by either party in connection with this Agreement.

14.6 Enforceability. If for any reason, any provision of this Agreement shall be held to be unenforceable, it shall not affect the validity or enforceability of any other provision of this Agreement and to the extent any provision of this Agreement is not determined to be unenforceable, such provision, or portion thereof, shall be, and remain, in full force and effect.

14.7 Counterparts. This Agreement may be executed in counterparts. All executed counterparts shall constitute one agreement, and each counterpart shall be deemed an original. The parties hereby acknowledge and agree t hat facsimile signatures or signatures transmitted by electronic mail in so-called “pdf” format shall be legal and binding and shall have 448
21 the same full force and effect as if an original of this Agreement had been delivered. City and Landify intend (i) to be bound by the signatures on any document sent by facsimile or electronic mail, (ii) are aware that the other party will rely on such signatures, and (iii) hereby waive any defenses to the enforcement of the terms of this Agreement based on the foregoing forms of signature.

14.8 Dispute Costs. In the event any dispute between the parties with respect to this Agreement results in litigation or other proceedings, the prevailing party shall be reimbursed for all its reasonable costs and expenses by the party not prevailing, including, without limitation, reasonable attorneys ’ and experts ’ fees and costs incurred in connection with such litigation or other proceeding and/or any appeal thereof. Such costs, expenses and fees shall be included in and made a part of the judgment recovered by the prevailing party. The provisions of this Section shall survive any termination of this Agreement and the Closing.

14.9 Governing Law . This Agreement shall be enforced, governed by, and construed in accordance with California law.

14.10 Time of the Essence and Business Days . Time is of the essence of this Agreement. Unless the context otherwise requires, all periods terminating on a given day or date shall terminate at 5:00 p.m. (Pacific Time) on such day or date, and references to “days” shall refer to calendar days unless such references are to “business days ” which shall refer to days other than Saturday, Sunday or legal holiday. Notwithstanding the foregoing, if any period terminates on a Saturday, Sunday or legal holiday, the termination of such period shall be on the next succeeding business day. The time in which any act provided under this Agreement is to be done shall be computed by excluding the first day and including the last day, unless the last day is a Saturday, Sunday or legal holiday, and then it is also excluded.

14.11 Limitation of Remedies . Except for fraud or the willful misconduct of a defaulting party, in no event shall any party be liable for any speculative, consequential or punitive damages, or lost profits.

14.12 Headings. Any headings or captions used herein are inserted only as a matter of convenience and for reference only and in no way define, limit or describe the scope of this Agreement nor the intent of any of the provisions hereof.

14.13 No Third Party Beneficiaries . Except as otherwise expressly set forth herein, Landify and City do not intend, and this Agreement shall not be construed, to create a third-party beneficiary status or interest in, nor give any third -party beneficiary rights or remedies to, any other person or entity not a party to this Agreement.

14.14 Further Assurances. After the Closing, Landify and City shall cooperate with one another at reasonable times and on reasonable conditions and shall execute and deliver such instruments and documents as may be ne cessary in order fully to carry out the intent and purposes of the transactions contemplated hereby. Except for such instruments and documents as the parties are obligated to deliver by the terms of this Agreement, such cooperation shall be without additional cost or liability. The provisions of this Section shall survive the Closing. 449
22 IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of the Agreement Date.

CITY:

CITY OF ORANGE,
a California municipal corporation
By: _____________________________________
Name: Daniel R. Slater
Title: Mayor

LANDIFY:

LANDIFY ECT CONSTRUCTION CORPORATION,
a Delaware corporation
By:

Name:

Title:

ATTEST:

Pamela Coleman, City Clerk

APPROVED AS TO FORM:

Nathalie Adourian, City Attorney

450
Exhibit A – Legal Description E

XHIBIT A

LEGAL DESCRIPTION OF THE REAL PROPERTY
All that certain real property situated in the City of Orange, County of Orange, State of California, as described as follows:
(Legal Description of The Real Property to be provided at a later date)

451
Exhibit B – Title Report

EXHIBIT B

TITLE REPORT

Preliminary Title Report dated March 25, 2026 issued by Fidelity National Title Insurance Company Order No. FBDO-2603557, as amended.
(Preliminary Title Report to be provided at a later date) 452
Exhibit C – List of Property Documents

EXHIBIT C

LIST OF PROPERTY DOCUMENTS

(List of Property Documents to be provided at a later date)

453
Exhibit D – Grant Deed

EXHIBIT D

GRANT DEED

RECORDING REQUESTED BY AND WHEN
RECORDED MAIL TO:

CITY OF ORANGE

C/O CITY CLERK
300 EAST CHAPMAN AVENUE
ORANGE, CALIFORNIA 92866

(Space above this line for Recorder’s use)
MAIL TAX STATEMENTS TO: SAME AS ABOVE

DOCUMENTARY TRANSFER TAX EXEMPTREVENUE AND TAXATION CODE SECTION 11922

LOCATION:
6145 E. Santiago Canyon Road
Orange, California

APN: __________________

Exempt – Recording Requested Under Government Code Sections 6103 & 27383

GRANT DEED
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, LANDIFY ECT CONSTRUCTION CORPORATION, a Delaware corporation (“Grantor”), hereby grants to the City of Orange, a California municipal corporation (“ Grantee”), all that certain real property situated in the City of Orange, County of Orange, State of California, more particularly described in exhibit “A” attached hereto and incorporated herein (the “property”).

THE PROPERTY IS CONVEYED TO GRANTEE SUBJECT TO THE FOLLOWING RESTRICTION:
the Property shall be held, maintained, and retained by Grantee as permanent public open space and used only for passive recreation, habitat restoration, trails, and other non -intensive open - space purposes consistent therewith.

This restriction is permanent, shall run with the land, and shall be binding upon Grantee and its successors and assigns. Nothing herein creates or grants to Grantor any right of reentry, reversion, repurchase, or other right to reacquire the Property. 454
Exhibit D – Grant Deed
IN WITNESS WHEREOF, the undersigned has executed this Grant Deed as of the day and year indicated.
[Signature appears on the following page]
455
Exhibit D – Grant Deed
Dated: ______________.

GRANTOR:

LANDIFY ECT CONSTRUCTION CORPORATION,
a Delaware corporation

By:

Name:

Title:

ACKNOWLEDGMENTS
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA

COUNTY OF
On , 20___, before me,
(here insert name and title of the
officer)
personally appeared
,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature

(Seal)

456
Exhibit D – Grant Deed

EXHIBIT A TO GRANT DEED LEGAL

DESCRIPTION
(Grant deed legal description to be provided at a later date) 457
Exhibit E – Soils Management Plan

EXHIBIT E

SOILS MANAGEMENT PLAN

(Approved IDEFO Operations Plan to be provided at a later date) 458
Exhibit F – Conceptual Plan

EXHIBIT F

CONCEPTUAL PLAN

(Conceptual plan from Grading Plan to be provided at a later date) 459
Exhibit G – Site Plan

EXHIBIT G

SITE PLAN

(Site Plan from Grading Plan to be provided at a later date) 460
Exhibit H – Phasing Plan

EXHIBIT H

PHASING PLAN

(Phasing plan from Grading Plan to be provided at a later date) 461
Exhibit I – Environmental Liability Agreement

EXHIBIT I

ENVIRONMENTAL LIABILITY AGREEMENT

462
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MULTIPARTY INDEMNIFICATION AND RELEASE AGREEMENT
(Environmental Liabilities – Sully-Miller Property, Orange, California)

This MULTIPARTY INDEMNIFICATION AND RELEASE AGREEMENT ( this “Agreement”) is made and effective as of [_________________, 2026], by and among: MILAN REI X, LLC, a California limited liability company (“ Milan”), LANDIFY ECT CONSTRUCTION CORPORATION, a Delaware corporation (“Landify”), and the CITY OF ORANGE, a California municipal corporation (“ City”) (each, a “ Party,” and collective ly, the “Parties”).

RECITALS:

A. Milan owns the real property commonly known as the Sully -Miller Pit, located at 6145 E. Santiago Canyon Road, Orange, California, comprising approximately 67.743 acres, as more particularly described on Exhibit A attached hereto (the “ Sully Miller Property ” or the “Property”). The Sully Miller Property has long been a part of the City of Orange community, with significant public interest in its preservation as an open space reserve project.

B. On or about June 16, 2022, Milan and the Orange County Health Care Agency, Environmental Health, acting as the Solid Waste Local Enforcement Agency for the County of Orange (“LEA”), entered into a Stipulated Notice and Order relating to the Property, recorded July 12, 2022 as Instrument No. 2022000244314 (as amended, the “SNO”).

C. Milan and Landify have entered into that certain Agreement of Purchase and Sale and Joint Escrow Instructions dated [_________________ ___, 2026] (as such may be amended in writing by the parties thereto, the “Milan Transfer Agreement”) pursuant to which Landify will acquire the Property from Milan and develop it as an Inert Debris Engineered Fill Operation (“IDEFO”) project, suitable for future open space reserve use.

D. Landify and the City have also entered into that certain Real Property Transfer Agreement dated [_________________ ___, 2026] (as such may be amended in writing by the parties thereto, the “City Transfer Agreement”) that governs the future transfer of the Property from Landify to the City after completion of Landify’s IDEFO for the future development of the Property as an open space reserve for passive recreation, habitat restoration, and other non - intensive open-space purposes (the “Open Space Project”).

E. This Agreement is being executed concurrently with the closing of the transfer of the Property from Milan to Landify under the Milan Transfer Agreement , and is intended to allocate and limit certain environmental liabilities among Milan, Landify, and the City in relation to the Property, and to confirm Milan’s agreement to purchase environmental insurance as the primary source of funding and remedy for covered claims. 463
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NOW, THEREFORE, in consideration of the mutual covenants in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:

1. Definitions.
(a) “Environmental Claim ” means any and all claims, demands, actions, suits, proceedings, judgments, orders, obligations, liabilities, losses (including diminution in value), da mages, fees (including attorneys’ and consultants’ fees), costs, fines, penalties, or expenses, whether known or unknown, arising out of or relating to:
(i) the presence, release, migration, or remediation of Hazardous Materials in, on, under, or from the Property at any time; (ii) investigation, remediation, or other response actions required by governmental authority;
(iii) alleged violations of Environmental Laws;
(iv) personal injury, property damage, or natural resource damage arising from or related to any of the foregoing;
(v) any other matter relating to pollution, contamination, or environmental site conditions at or relating to the Property; or (vi) with respect to Milan only, any failure to comply with or otherwise satisfy any terms, conditions or obligations under the SNO. (b) “Environmental Laws ” means any federal, state, or local statute, regulation, ordinance, or requirement relating to the environment, human health, or Hazardous Materials, including without limitation CERCLA, RCRA, the Clean Water Act, the Clean Air Act, the Solid Waste Disposal Act, any of their California counterparts , and the California Surface Mining and Reclamation Act.
(c) “Hazardous Materials ” means any pollutant, contaminant, toxic or hazardous substance, waste, or material regulated under any Environmental Law, including petroleum products, asbestos, PCBs, lead, radioactive materials, mold, PFAS, and any substance, waste or material that requires investigation , remediation or other response action under Environmental Laws.
(d) “Losses” means any and a ll damages, settlement amounts, judgments, fees, costs, expenses and losses, including without limitation (i) governmental fines and penalties imposed on any Indemnified Party (as defined below); (ii) all settlement amounts, judgment, fees and costs incurred by any Indemnified Party or required to be paid to a third party with regard to any claim, demand or lawsuit (including in a cost recovery or contribution action , tort action, or governmental claim or enforcement action) ; (iii) damages awarded for i njury to persons , property or natural resources; and (iv) all reasonable consulting and expert fees and costs, court 464
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costs, and attorneys’ fees and expenses incurred by any Indemnified Party in connection with any matters covered by this indemnity.
(e) “Third Party Claim” means any claim, demand, suit, action, cause of action, proceeding, or order (whether civil, criminal, administrative, or regulatory) made or brought by any person or entity who is not a party (or affiliated with any party) to this Agreement, incl uding but not limited to governmental authorities, alleging liability, responsibility, or obligation for injury, loss, damage, costs, or expenses arising from or relating to any Environmental Claims.

2. Pollution Legal Liability Insurance . Concurrently with the execution of this Agreement, and a s a condition to closings pursuant to the Milan Transfer Agreement and the City Transfer Agreement , Milan shall, at its sole cost and expense, procure and maintain a Pollution Legal Liability Insurance policy (“Policy”) issued by a carrier acceptable to the Parties.

The Policy must, at a minimum: (i) name Milan as first named insured, and Landify, the City, and their respective affiliates as additional named insureds; (ii) p rovide primary and non - contributory coverage, without any material exclusi ons for pre -existing conditions ; (iii) a fford coverage for bodily injury, death, property damage (including loss of use or diminution in value), clean-up costs (including costs of site investigation, remediation and other respon se actions) , business interruption, and expenses incurred in the investigation, defense, and settlement of claims or suits, in connection with any loss or occurrence arising out of or relating to the Property or the Open Space Project; (iv) cover both pre -existing and new pollution conditions (subject only to standard policy limitations for clean -up expenses incurred for known and identified soil contaminants located on -site); (v) provide a per -claim and aggregate limit of not less than $3,000,000, with a s elf-insured retention not exceeding $50,000 per claim; (vi) shall contain a waiver of subrogation against the Parties; and (vii) r emain in effect during Landify’s ownership of the Property and for a period of not less than five (5) years after the City’s acquisition of the Property , but in no event longer than ten (10) years from issuance. The Policy shall be a primary source of recovery for any Environmental Claim relating to the Property arising during any Party’s period of ownership, except as expressly provided in Section 4 (Indemnification for Third Party Claims), the City Transfer Agreement, or applicable law.

3. Mutual Limited Release. Each Party, on behalf of itself and its successors and assigns, hereby releases and discharges the other Parties and their respective officers, directors, employees, agents, and affiliates, from any and all Environmental Claims and Losses (as these terms are defined above) concerning the Property.

THE ABOVE RELEASE IS INTENDED TO BE A FULL RELEASE OF ALL CLAIMS KNOWN AND UN KNOWN. EACH PARTY HEREBY

ACKNOWLEDGES THAT IT HAS READ AND IS FAMILIAR WITH THE
PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 (“SECTION 1542”), WHICH IS SET FORTH BELOW:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE

CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO

EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE

RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE
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MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR OR RELEASED PARTY.”
Notwithstanding anything herein to the con trary, nothing in this Agreement shall release, waive, or limit liability arising from (i) any obligations of the parties pursuant to this Agreement (including Section 4 below), the Milan Transfer Agreement or the City Transfer Agreement, or (ii) fraud, intentional misrepresentation, concealment of material facts, or willful misconduct.

4. Indemnification for Third Party Claims. To the extent any Third Party Claims (and related Losses) are not covered under the Policy, e ach Party agrees to indemnify, defend, and hold harmless the other Parties and their respective officers, directors, employees, agents , and affiliates (collectively, the “Indemnified Parties”) from and against any and all Third Party Claims as follows: (i) Milan shall indemnify, defend, and hold harmless the other Indemnified Parties from and against any and all Third Party Claims (and related Losses) to the extent caused by or arising out of Milan’s acts or omissions occurring during Milan’s period of ownership of the Property; (ii) Landify sha ll indemnify, defend, and hold harmless the other Indemnified Parties from and against any and all Third Party Claims (and related Losses) to the extent caused by or arising out of Landify’s acts or omissions occurring during Landify’s period of ownership of the Property; and (iii) the City shall indemnify, defend, and hold harmless the other Indemnified Parties from and against any and all Third Party Claims (and related Losses) to the extent caused by or arising out of the City’s acts or omissions occurri ng after the City’s acquisition of the Property . No Party shall be entitled to indemnification to the extent the Third Party C laim arose from its own acts or omissions. In no event shall the indemnification obligations under this Agreement include consequential, incidental, special, or punitive damages, including but not limited to any damages associated with delay, and each Party expressly waives the right to recover same. An Indemnified Party may bring an action to enforce indemnification under this Agre ement against the Indemnifying Party without first proceeding against any other person or pursuing any other remedy. The indemnification obligations set forth in this Agreement shall survive Closing, transfer of title, expiration or termination of the Policy, and termination of the Real Property Transfer Agreement.

5. Procedures for Indemnity Claims . If any Party (the “ Indemnitee”) intends to seek indemnification in connection with a Third Party Claim, the Indemnitee shall promptly notify the Party or Partie s responsible for indemnification under this Agreement (the “Indemnitor”) in writing (the “ Claims Notice”). The Claims Notice shall describe the claim in reasonable detail and state the amount, or estimated amount, of any Losses to the extent known.

Failure to provide prompt notice will not relieve the Indemnitor of its obligations except to the extent the Indemnitor is actually prejudiced by such failure. If the Indemnitor assumes the defense of the Third Party Claim: (i) the Indemnitee may retain separat e counsel at its own expense, except that, if a conflict of interest arises or defenses are available to the Indemnitee that are unavailable to the Indemnitor, the Indemnitor shall pay the reasonable fees and expenses of one such counsel for the Indemnitee in each relevant jurisdiction; (ii) the Indemnitor shall control the defense, investigation, and settlement of the claim, but must act in good faith and keep the Indemnitee reasonably informed; (iii) the Indemnitor shall not settle or consent to judgment on any claim without the Indemnitee’s prior written consent, unless the settlement provides solely for monetary relief, includes a full release of the Indemnitee, and involves no admission of liability or fault by the Indemnitee; and (iv) the Indemnitee shall not settle or 466
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consent to judgment on any claim without the Indemnitor’s prior written consent, which shall not be unreasonably withheld, conditioned, or delayed. If the Indemnitor does not elect to assume the defense within thirty (30) days, notifies the Indemnitee in writing that it will not defend the claim, or fails to diligently prosecute the defense, then the Indemnitee may assume the defense and the Indemnitor shall remain responsible for all reasonable and documented costs and expenses incurred in connection with such defense. The Indemnitor may, at its own expense, participate in the defense. The Parties shall act in good faith, cooperate fully, and provide each other reasonable access to all relevant information and personnel in connection wit h any Third Party Claim.

6. Procedures for Insurance Claims. If any Party becomes aware of circumstances that may give rise to a claim under the Pollution Legal Liability Insurance Policy, that Party (the “Notifying Party”) shall promptly notify the insurer, in accordance with the terms of the Policy, and provide written notice to the other Parties within five (5) business days of making such notification. No Party shall voluntarily incur expenses, pay, or settle any insurance claim without providing prior written notice to the other Parties and allowing them a reasonable opportunity to review and comment. All Parties shall reasonably cooperate in the preparation and prosecution of any claim under the Policy. The deductible or self -insured retention applicable to a covered claim shall be borne by the Party responsible for the underlying event, condition, or action, as determined by the allocation of liability in Section 4 . No settlement of any claim under the Policy shall be made without the prior written conse nt of all Parties whose interests may be affected, such consent not to be unreasonably withheld or delayed.

7. Miscellaneous.
(a) Notices. Any notice required or permitted to be given under this Agreement shall be in writing. Furthermore, any notice of default shall also clearly describe the nature of the default, the applicable cure period applicable to such default, the date on which such cure period expires and the requested action to cure such default. Any notice sent by personal service shall be deemed r eceived on the actual delivery thereof. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, then notice shall not be deemed given. Notices delivered by the United States Express Mail or overnight courier that provides next business day delivery shall be deemed given on the next business day after delivery of the same to the United States Postal Service or such courier with a sig ned acknowledgement of receipt. If any notice is transmitted by electronic transmission (email), the same shall be deemed served or delivered upon transmission thereof (as evidenced by the recipient’s reply to such notice or other competent evidence of actual receipt). Notices given by counsel to the Buyer shall be deemed given by Buyer and notices given by counsel to the Seller shall be deemed given by Seller.
467
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If to City: City of Orange
300 E. Chapman Ave
Orange, CA 92866
Attention: City Manager, Jarad Hildenbrand
Email: [email protected]
with a copy to: City of Orange
300 E. Chapman Ave
Orange, CA 92866
Attention: City Attorney, Nathalie Adourian
Email: [email protected]

If to Milan: c/o Tivoli Capital, Inc.
701 S. Parker Street, Suite 5300
Orange, CA 92868
Attention: Claus Dieckell
Telephone No.: 714-687-0000
E-Mail: [email protected]

with copies sent concurrently to

c/o Tivoli Capital, Inc.
701 S. Parker Street, Suite 5300
Orange, CA 92868
Attention: M. Saeed Dheda
Telephone No.: 714-687-0000 ext. 105
E-Mail: [email protected]

and:

c/o Milan Capital Management, Inc.
701 S. Parker Street, Suite 5200
Orange, CA 92868
Attention: Christopher Nichelson
Telephone No.: 714-687-0000 ext. 101
E-Mail: [email protected]

and:

Kennerly, Lamishaw & Rossi LLP
707 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90017
Attention: William J. Birney, Esq.

Telephone No.: (213) 312-1250
E-Mail: [email protected]

468
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If to Landify: Landify ECT Construction Corporation
580 California Street, 12th and 16th Floors
San Francisco, California 94104
Attention: Jonathan Bryden
Telephone: (415) 635-3555
Email: [email protected]
with a copy to: Jackson Tidus
2030 Main Street, Suite 1500
Irvine, California 92614
Attention: Sonia Lister, Esq. and Sarah Kleinberg, Esq.

Telephone: (949) 851-7408; (949) 851-7623
Email: [email protected];
[email protected]
(b) Successors and Assigns . Neither party may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement without the other party’s consent, in its sole and absolute discretion. Notwithstanding the foregoing to the contrary , Landify may assign its rights under this Agreement without the prior written consent of Milan or City to an entity which controls, is controlled by, or is under common control with Landify so long as such assignee (i) assumes in writing the obligations of Landify under this Agreement, and (ii) acknowledges and agrees to be bound by all of the terms and provisions of this Agreement as if such assignee had originally signed this Agreement. (c) Amendments. Except as otherwise provided herein, this Agreement may be amended or modified only by a written instrument executed by all the Parties hereto. (d) Continuation and Survival of Representations and Warranties . All representations and warranties by the Parties contained herein or made in writing pursuant to this Agreement are intended to and shall remain true and correct as of the Closing Date, shall be deemed material, and shall survive the execution and delivery of this Agreement. All statements contained in any certificate or other instrument delivered at any time by or on behalf of a Party in connection with the transaction contemplated hereby shall constitute representations and warranties hereunder.
(e) Entire Agreement; Construction. This Agreement (including any exhibits attached hereto, which are hereby incorporated herein) constitutes the entire understanding of the parties and all prior agreements, representations, and understandings between the parties, whether oral or written, are deemed null and void, all of the foregoing having been merged into this Agreement. The parties acknowledge that each party and/or its counsel have reviewed and revised this Agreement and that no rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall be employed in the interpretation of this Agreement or any amendments or exhibits to this Agreement or any document executed and delivered by either party in connection with this Agreement.
(f) Enforceability. If for any reason, any provision of this Agreement shall be held to be unenforceable, it shall not affect the validity or enforceability of any other provision of 469
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this Agreement and to the extent any provision of this Agreement is not determined to be unenforceable, such provision, or portion thereof, shall be, and remain, in full force and effect. (g) Counterparts. This Agreement may be executed in counterparts. All executed counterparts shall constitute one agreement, and each counterpart shall be deemed an original. The parties hereby acknowledge and agree that signatures transmitt ed by electronic mail in so-called “pdf” format shall be legal and binding and shall have the same full force and effect as if an original of this Agreement had been delivered. The Parties intend (i) to be bound by the signatures on any document sent by electronic mail, (ii) are aware that the other party will rely on such signatures, and (iii) hereby waive any defenses to the enforcement of the terms of this Agreement based on the foregoing forms of signature. (h) Dispute Costs. In the event any dispute between the parties with respect to this Agreement results in litigation or other proceedings, the prevailing party shall be reimbursed for all its reasonable costs and expenses by the party not prevailing, including, without limitation, reasonable attorneys’ and experts’ fees and costs incurred in connection with such litigation or other proceeding and/or any appeal thereof. Such costs, expenses and fees shall be included in and made a part of the judgment recovered by the prevailing party. The provisions of this Section shall survive any termination of this Agreement and the Closing. (i) Governing Law . This Agreement shall be enforced, governed by, and construed in accordance with California law.
(j) Time of the Essence and Business Days . Time is of the essence of this Agreement. Unless the context otherwise requires, all periods terminating on a given day or date shall terminate at 5:00 p.m. (Pacific Time) on such day or date, and references to “ days” shall refer to calendar days unless such references are to “ business days” which shall refer to days other than Saturday, Sunday or legal holiday. Notwithstanding the foregoing, if any period terminates on a Saturday, Sunday or legal holiday, the termination of such period shall be on the next succeeding business day. The time in which any act provided under this Agreement is to be done shall be computed by excluding the first day and including the last day, unless the last day is a Saturday, Sunday or legal holiday, and then it is also excluded. (k) Limitation of Remed ies. Except for fraud or the willful misconduct of a defaulting party, in no event shall any party be liable for any speculative, consequential or punitive damages, or lost profits.
(l) Headings. Any headings or captions used herein are inserted only as a matter of convenience and for reference only and in no way define, limit or describe the scope of this Agreement nor the intent of any of the provisions hereof. (m) No Third Party Beneficiaries . Except as otherwise expressly set forth herein, no Party intends , and this Agreement shall not be construed, to create a third -party beneficiary status or interest in, nor give any third -party beneficiary rights or remedies to, any other person or entity not a party to this Agreement.
(n) Further Assurances . After the Closing, each Party shall cooperate with one another at reasonable times and on reasonable conditions and shall execute and deliver such 470
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instruments and documents as may be necessary in order fully to carry out the intent and purposes of the transactions contem plated hereby. Except for such instruments and documents as the parties are obligated to deliver by the terms of this Agreement, such cooperation shall be without additional cost or liability. The provisions of this Section shall survive the Closing. [SIGNATURES ON FOLLOWING PAGE]
471
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IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of the Agreement Date.

CITY:

CITY OF ORANGE,
a California municipal corporation
By: _____________________________________
Name: Daniel R. Slater
Title: Mayor

LANDIFY:

LANDIFY ECT CONSTRUCTION CORPORATION,
a Delaware corporation
By:

Name:

Title:

MILAN:

MILAN REI X, LLC,
a California limited liability company

By: Tivoli Capital, Inc.
a California corporation
Its Managing Member

By:

Name:

Title:

ATTEST:

Pamela Coleman, City Clerk

APPROVED AS TO FORM:

Nathalie Adourian, City Attorney √
472
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MULTIPARTY INDEMNIFICATION AND RELEASE AGREEMENT
(Environmental Liabilities – Sully-Miller Property, Orange, California)

RECITALS:

ATTACHMENT 2
473
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THE ABOVE RELEASE IS INTENDED TO BE A FULL RELEASE OF ALL CLAIMS KNOWN AND UN KNOWN. EACH PARTY HEREBY

CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO

EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE

RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE
475
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If to Milan: c/o Tivoli Capital, Inc.
701 S. Parker Street, Suite 5300
Orange, CA 92868
Attention: Claus Dieckell
Telephone No.: 714-687-0000
E-Mail: [email protected]

with copies sent concurrently to

c/o Tivoli Capital, Inc.
701 S. Parker Street, Suite 5300
Orange, CA 92868
Attention: M. Saeed Dheda
Telephone No.: 714-687-0000 ext. 105
E-Mail: [email protected]

and:

c/o Milan Capital Management, Inc.
701 S. Parker Street, Suite 5200
Orange, CA 92868
Attention: Christopher Nichelson
Telephone No.: 714-687-0000 ext. 101
E-Mail: [email protected]

and:

Kennerly, Lamishaw & Rossi LLP
707 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90017
Attention: William J. Birney, Esq.

Telephone No.: (213) 312-1250
E-Mail: [email protected]

478
7 10671-129441\1734108.9
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If to Landify: Landify ECT Construction Corporation
580 California Street, 12th and 16th Floors
San Francisco, California 94104
Attention: Jonathan Bryden
Telephone: (415) 635-3555
Email: [email protected]
with a copy to: Jackson Tidus
2030 Main Street, Suite 1500
Irvine, California 92614
Attention: Sonia Lister, Esq. and Sarah Kleinberg, Esq.

IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of the Agreement Date.

CITY:

CITY OF ORANGE,
a California municipal corporation
By: _____________________________________
Name: Daniel R. Slater
Title: Mayor

LANDIFY:

LANDIFY ECT CONSTRUCTION CORPORATION,
a Delaware corporation
By:

Name:

Title:

MILAN:

MILAN REI X, LLC,
a California limited liability company

By: Tivoli Capital, Inc.
a California corporation
Its Managing Member

By:

Name:

Title:

ATTEST:

Pamela Coleman, City Clerk

APPROVED AS TO FORM:

Nathalie Adourian, City Attorney √
482

VILLA PARK

UNINCORPORATED

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NOTE: Recent data updates may not be reflected on this
map at the time of printing, use at your discretion.

No part of this map shall be reproduced for
commercial purposes.

J:\GisProjects\_Projects\Sully-Miller_Property\GIS\APRX\Sully-Miller_Property\Sully-Miller_Property.aprx\Sully_Miller Property - 11x 17 8/19/2026
Source: City of Orange (2026); Eagle Aerial 2025)

CITY OF ORANGE
Real Property Transfer Agreement - 67.7 Acre former Sully-Miller Property 0 400200
Feet
.

Legend
City Boundary
Sully-Miller Property
Parcels
Note: This map generally depicts the approximate 67.7 acre location, and is subject to minor corrections.

ATTACHMENT 3 483
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Santa Ana River - Santiago Creek Greenbelt Plan (1971)
ATTACHMENT 5
686
Agenda Item
Orange City Council
Item #: 9.2. 8/25/2026 File #: 26-0478
TO: Honorable Mayor and Members of the City Council
FROM: Jarad Hildenbrand, City Manager

1. SUBJECT
County of Orange Unincorporated Island Annexation Study and Policy Direction (Continued from August 11, 2026)

2. SUMMARY
During the February 5, 2026 Strategic Planning Session, the City Council expressed interest in evaluating whether the remaining unincorporated County islands within the City's Sphere of Influence should be annexed into the City of Orange. Annexation has the potential to create a more unified community, improve service consistency, and eliminate jurisdictional boundaries that currently divide neighborhoods surrounded by the City. At the same time, annexation would transfer ongoing service responsibilities, infrastructure obligations, and Regional Housing Needs Assessment (RHNA) allocations to the City. This report provides an overview of the annexation process, summarizes the potential fiscal and policy considerations, and seeks City Council direction regarding whether staff should pursue annexation of some or all of the remaining County islands.

3. RECOMMENDED ACTION

1. Receive and file the presentation regarding the potential annexation of the remaining County islands within the City of Orange's Sphere of Influence.

2. Provide policy direction regarding whether staff should pursue annexation of all, some, or none of the remaining County islands, and identify any additional analysis desired before initiating formal proceedings.

4. FISCAL IMPACT
There is no immediate fiscal impact associated with this report. Should the City Council direct staff to initiate annexation proceedings, additional staff time and consultant resources may be required to prepare fiscal analyses, service plans, environmental documentation, and annexation applications.

Preliminary estimates indicate that annexation of one or more County islands could result in ongoing net costs to the City unless additional revenue-sharing agreements are negotiated with the County of Orange.

5. STRATEGIC PLAN GOALS
Goal 3: Enhance Quality of Life Through City Services.

Objective 3.2: County Island Annexation

6. DISCUSSION AND BACKGROUND
History of County Island Annexation
The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Act) was enacted to streamline local government organization and encourage logical municipal boundaries that promote City of Orange Printed on 8/20/2026Page 1 of 6
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Item #: 9.2. 8/25/2026 File #: 26-0478
streamline local government organization and encourage logical municipal boundaries that promote efficient and effective service delivery. One of the Act's primary objectives is to facilitate the annexation of unincorporated "County islands" that are substantially surrounded by incorporated cities.

Following adoption of the Act, the City of Orange partnered with the County of Orange and the Orange County Local Agency Formation Commission (OC LAFCO) to evaluate the City's remaining unincorporated islands. As a result of that effort, the City successfully annexed 11 County islands in 2003, eliminating numerous jurisdictional boundaries and expanding municipal services to those neighborhoods.

At that time, six additional County islands were also evaluated for annexation; however, annexation did not proceed due to a combination of fiscal, procedural, and community considerations. Those six remaining County islands continue to exist today and collectively encompass approximately 850 acres and are home to nearly 5,000 residents.

The remaining County islands are summarized below.

County Island
Name
Location Acreage
El Modena North of Chapman Avenue and south of east Silverleaf Avenue.
101.67
North El Modena South of East Bond Avenue and north of East Walnut Avenue, encompassing Hewes Street

31.59 Lincoln/Glassell North of West Lincoln Avenue and Adjacent to the Santa Ana River.
103.03
Olive Heights North and south of East Buena Vista Avenue, north of Lincoln Avenue and south of East Bixby Avenue.

32.47 Orange Park
Acres
South of East Santiago Canyon Road and north of East
Chapman Avenue, encompassing Orange Park
Boulevard.
394.02
Santiago Creek
(Bond Pits)
North and south of Villa Park Road and west of Hewes
Street.
187.25
Potential Benefits of Annexation
Annexation of the remaining County islands has the potential to provide several long-term community and operational benefits. Because these neighborhoods are already surrounded by or closely connected to the City of Orange, annexation would create more logical municipal boundaries while allowing the City to provide consistent municipal services throughout the community.

Potential benefits include:
· Elimination of fragmented City and County jurisdictional boundaries. · More consistent police, fire, code enforcement, planning, and public works services. · Improved coordination of infrastructure maintenance and capital improvements.

City of Orange Printed on 8/20/2026Page 2 of 6
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· Greater consistency in land use planning and development standards. · Enhanced emergency response coordination.
· Increased local representation through the Orange City Council. · Creation of a more unified community by incorporating neighborhoods that already identify closely with the City of Orange.

Annexation Process
California law establishes two different annexation procedures depending upon the size of the territory proposed for annexation. County islands that are 150 acres or smaller qualify for a streamlined annexation process, while larger territories require additional procedural steps, including protest proceedings and, under certain circumstances, an election.

I. Annexation Process for County Islands with 150 Acres or Less When a County island is 150 acres or less (all but Orange Park Acres and the Bond Pits), California Government Code Section 56375.3 authorizes a streamlined approach that is further described below:

Step 1 - Preliminary Discussions: City staff meet with OC LAFCO, the County Executive Office, service providers/special districts, and residents/property owners to express the City’sinterest and intent of annexing the County island(s).

Step 2 - Negotiate Revenue Shares: As further described below, the City and County will negotiate one-time and ongoing revenue exchanges. As a part of this process, the City and County will finalize the property tax share. In Orange County, this has already been established through a 1980 City/County Master Property Tax Exchange Agreement. The property tax revenue split is 51% to the City and 49% to the County.

Step 3 - City Council Resolution and OC LAFCO Application Submission: The City Council adopts a resolution confirming findings pursuant to California Government Code Section 56375.3, and submits all the required materials (e.g., boundary map(s), vicinity maps, plan for service, property tax exchange resolution) to OC LAFCO.

Step 4 - County Board of Supervisors: The County Board of Supervisors considers adopting an annexation agreement and a property tax exchange resolution.

Step 5 - OC LAFCO Review and Public Hearing: OC LAFCO ensures the proposal is complete, prepares the report, and schedules a public hearing. In accordance with the Act, OC LAFCO notifies parties of the proposal and waiver of protest proceedings, and the OC LAFCO Commission shall approve the proposed annexation.

The approximate timeline for annexations that are 150 Acres or less is generally 6-12 months.

II. Annexation Process for County Islands with 150 Acres or More Step 1 - Preliminary Feasibility Analysis: In collaboration with OC LAFCO and the County of Orange, City staff evaluates the fiscal impacts, service costs, and existing infrastructure.

Step 2 - Outreach to Residents: Although not legally required at initiation, staff recommends conducting community meetings, mailers, or informational workshops to better understand the City of Orange Printed on 8/20/2026Page 3 of 6
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community’s perspective on potentially being annexed into the City of Orange.

Step 3 - Negotiate Revenue Shares: As further described below, the City and County will negotiate one-time and ongoing revenue shares to support City services. As a part of this process, the City and County will finalize the property tax share. In Orange County, this has already been established through a 1980 City/County Master Property Tax Exchange Agreement. The property tax revenue split is 51% to the City and 49% to the County.

Step 4 - City Council Resolution: The City Council adopts a resolution initiating annexation proceedings.

Step 5 - County Board of Supervisors: The County Board of Supervisors considers adopting an annexation agreement and a property tax exchange resolution.

Step 6 - Submit Application to OC LAFCO: Application materials include plan for services, fiscal analyses, CEQA compliance, maps, and legal descriptions.

Step 7 - OC LAFCO Hearing: OC LAFCO holds a public hearing and determines whether to approve the annexation. Approval does not complete the annexation. Instead, it authorizes commencement of protest proceedings.

Step 8 - Protest Proceedings: OC LAFCO schedules a protest hearing and accepts written protests for a period generally ranging from 21 to 60 days. The outcome depends on whether the territory is inhabited. Provided below are the processes for inhabited vs. uninhabited territories.

Inhabited Territory (12 or More Registered Voters)
Protest Level Result
Less than 25% protest Annexation Ordered
25% to less than 50% protest submitted by
registered voters within the territory; or
protest submitted by 25% of the owners of
the land who also own at least 25% of the
assessed value of land within the territory
Election required
50% or more protest Proceedings terminated
Uninhabited Territory (Fewer than 12 Registered Voters) Protest LevelResult
Less than 50% of assessed value
protesting
Annexation Ordered
50% or more of assessed value protesting Proceedings terminated If protests fall within the election range, OC LAFCO calls an election among voters residing within the annexation territory. A majority vote is required for annexation to proceed.

Step 9 - Completion: If there is no majority protest or the election succeeds, then OC LAFCO issues a Certificate of Completion, the annexation becomes effective, and the County service City of Orange Printed on 8/20/2026Page 4 of 6
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responsibilities transfer to the City.

This process may last 12-18 months, or longer if an election is required.

Financial Considerations
In early 2025, City staff requested preliminary fiscal information from the County of Orange and OC LAFCO to better understand the financial implications associated with annexing the remaining County islands. Based on the County's estimates, annexation of all remaining County islands would likely result in an ongoing net fiscal impact to the City under the existing revenue allocation structure.

Should the City Council direct staff to proceed, staff would negotiate with the County regarding one- time and ongoing revenue-sharing agreements intended to offset municipal service costs associated with annexation. Generally, the following revenue categories would be addressed in those discussions:
· City Share of Property Taxes (51% to the City / 49% to the County) · City Share of Orange County Street Light Assessment District Dissolution Fund · City Share of the Orange County Structural Fire Fund
· City Share of the Orange County Public Library Fund
Prior to initiating annexation proceedings, staff recommends conducting additional due diligence regarding the condition of public infrastructure within each County island, including streets, sidewalks, storm drains, street lighting, parks, and other public improvements. Understanding existing infrastructure conditions will help the City better estimate future maintenance obligations and long-term capital replacement needs.

Regional Housing Needs Assessment (RHNA)
Annexation of County islands would also transfer responsibility for the County's remaining Regional Housing Needs Assessment (RHNA) allocations within those territories to the City. In total, the remaining County islands currently contain an allocation of 1,383 RHNA units. Although annexation would not require immediate residential development, the City would assume responsibility for planning for those housing units in accordance with State housing law.

Island RHNA Units
El Modena 328
Lincoln Glassell 624
North El Modena 0
Olive Heights 431
Orange Park Acres 0
Santiago Creek (Bond Pits) 0
Total 1,383
In determining whether to pursue annexation, the City Council may wish to consider several policy factors, including the long-term fiscal impacts to the City, opportunities to negotiate additional revenue sharing with the County, the transfer of RHNA obligations, the condition of existing public City of Orange Printed on 8/20/2026Page 5 of 6
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revenue sharing with the County, the transfer of RHNA obligations, the condition of existing public infrastructure, community support, and the benefits of creating more unified municipal boundaries and service delivery.

Summary Comparison of Remaining County Islands
County Island Acres Estimated
Population
RHNA Units Annexation Process
El Modena 101.67 2,797 328 Streamlined
North El Modena 31.59 520 0 Streamlined
Olive Heights 32.47 500 431 Streamlined
Lincoln/Glassell 103.03 0 624 Streamlined
Orange Park Acres 394.02 1,074 0 Standard
Santiago Creek 187.25 0 0 Standard
Conclusion
Annexation of the remaining County islands presents an opportunity to eliminate jurisdictional inconsistencies and provide more unified municipal services to neighborhoods that are closely connected to the City of Orange. However, annexation would also transfer ongoing service responsibilities, infrastructure maintenance obligations, and applicable RHNA allocations to the City.

Because the financial impacts vary by island and additional negotiations with the County would be necessary regarding revenue sharing, staff is seeking policy direction from the City Council regarding whether to proceed with annexation of all, some, or none of the remaining County islands and the level of additional analysis desired before initiating formal proceedings.

7. ATTACHMENTS
· County Island Profiles (OC LAFCO)
· 1980 Property Tax Agreement
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Agenda Item
Orange City Council
Item #: 9.2. 8/25/2026 File #: 26-0478
TO: Honorable Mayor and Members of the City Council
FROM: Jarad Hildenbrand, City Manager

1. SUBJECT
County of Orange Unincorporated Island Annexation Study and Policy Direction (Continued from August 11, 2026)

3. RECOMMENDED ACTION

1. Receive and file the presentation regarding the potential annexation of the remaining County islands within the City of Orange's Sphere of Influence.

5. STRATEGIC PLAN GOALS
Goal 3: Enhance Quality of Life Through City Services.

Objective 3.2: County Island Annexation

6. DISCUSSION AND BACKGROUND
History of County Island Annexation
The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Act) was enacted to streamline local government organization and encourage logical municipal boundaries that promote City of Orange Printed on 8/20/2026Page 1 of 6
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streamline local government organization and encourage logical municipal boundaries that promote efficient and effective service delivery. One of the Act's primary objectives is to facilitate the annexation of unincorporated "County islands" that are substantially surrounded by incorporated cities.

The remaining County islands are summarized below.

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· Greater consistency in land use planning and development standards. · Enhanced emergency response coordination.
· Increased local representation through the Orange City Council. · Creation of a more unified community by incorporating neighborhoods that already identify closely with the City of Orange.

Step 4 - County Board of Supervisors: The County Board of Supervisors considers adopting an annexation agreement and a property tax exchange resolution.

The approximate timeline for annexations that are 150 Acres or less is generally 6-12 months.

Step 2 - Outreach to Residents: Although not legally required at initiation, staff recommends conducting community meetings, mailers, or informational workshops to better understand the City of Orange Printed on 8/20/2026Page 3 of 6
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community’s perspective on potentially being annexed into the City of Orange.

Step 4 - City Council Resolution: The City Council adopts a resolution initiating annexation proceedings.

Step 5 - County Board of Supervisors: The County Board of Supervisors considers adopting an annexation agreement and a property tax exchange resolution.

Step 6 - Submit Application to OC LAFCO: Application materials include plan for services, fiscal analyses, CEQA compliance, maps, and legal descriptions.

Step 9 - Completion: If there is no majority protest or the election succeeds, then OC LAFCO issues a Certificate of Completion, the annexation becomes effective, and the County service City of Orange Printed on 8/20/2026Page 4 of 6
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responsibilities transfer to the City.

This process may last 12-18 months, or longer if an election is required.

Island RHNA Units
El Modena 328
Lincoln Glassell 624
North El Modena 0
Olive Heights 431
Orange Park Acres 0
Santiago Creek (Bond Pits) 0
Total 1,383
In determining whether to pursue annexation, the City Council may wish to consider several policy factors, including the long-term fiscal impacts to the City, opportunities to negotiate additional revenue sharing with the County, the transfer of RHNA obligations, the condition of existing public City of Orange Printed on 8/20/2026Page 5 of 6
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revenue sharing with the County, the transfer of RHNA obligations, the condition of existing public infrastructure, community support, and the benefits of creating more unified municipal boundaries and service delivery.

7. ATTACHMENTS
· County Island Profiles (OC LAFCO)
· 1980 Property Tax Agreement
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OC LAFCO Unincorporated Areas Program
Orange Islands (ID#17-19, #21-23)
Sphere of Influence – City of Orange

Strategic Opportunities for County Unincorporated Areas Since 2000, OC LAFCO has successfully annexed several unincorporated county areas to adjacent cities.

Today the collaboration with the County and cities adjacent to these areas continues with t he remaining unincorporated areas involving a combination of challenges (e.g., historical resident and agency opposition, lack of infrastructure financing, differences in city/county development standards) that requires a strategic partnership facilitated by OC LAFCO. Current demographic and fiscal data are critical to this effort and a better understanding of issues related to municipal service delivery to unincorporated communities.

The information below provides an overview of current service related costs and revenues as well as potential opportunities for islands.

Overview of the Orange Islands (ID#17 – 19, #21-23)
The Orange Islands include six separate islands consisting of a total of approximately 850 acres of unincorporated territory surrounded by the City of Orange. The islands are generally located in the western part of the sphere of influence of the City of Orange and include 1,362 single-family detached units and 447 other dwelling units, a population of 4,891 residents, and 2,375 registered voters. The chart below depicts the acreage for each island.

Island Name Island ID # Location Acreage
El Modena ID#17 North of Chapman Avenue and south of East Silverleaf Avenue. 101.67
Lincoln/Glassell ID#18 North of West Lincoln Avenue and adjacent to Santa Ana River. 103.03
North El Modena ID#19 North and south of the intersection of Hewes St. and East Bond Avenue. 31.59
Olive Heights ID#21 North and south of East Buena Vista Avenue, south of East Bixby Avenue 32.47
Orange Parks Acres ID#22
South of East Santiago Canyon Road and north
of East Chapman Avenue, encompassing
Orange Park Boulevard.
394.02
Santiago Creek ID#23 South of Villa Park Road and west of Hewes Street. 187.25

699
The chart below highlights current municipal service provisions to the area.

Service Category Current Service Provider
Sewer City of Orange
Fire Protection & Prevention Orange County Fire Authority Law Enforcement Orange County Sheriff
Solid Waste Collection Ware Disposal/CR&R
Inc./Waste Management
Street Sweeping County of Orange
Library County of Orange
Animal Control County of Orange
Planning County of Orange
Code Enforcement County of Orange
Parks & Recreation OC Parks (Regional)
Education Orange Unified School District (K-12)

County Costs/Revenues
The County has worked with various departments to develop an annual accounting of County General Fund municipal service revenues and expenditures for each of the unincorporated areas. This profile includes a snapshot of the costs to the County to provide municipal services and the revenue generated for the Orange Islands for fiscal year 2023-24. Currently, the Orange Islands result in a yearly negative impact to the County General Fund of approximately $2,099,692 (excluding capital project expenditures). Primary service expenses for the island s include animal control, law enforcement, and infrastructure maintenance.

Property tax revenue allocated to the County general fund is the major revenue source gener ated within the islands, consisting of approximately $360,535 each fiscal year.

Annexation Opportunity
Approval of the a nnexation of the island s to the City by OC LAFCO could result in several benefits to the residents and the commercial area related to City service levels and the proximity of City service providers and emergency responders. The Orange Islands consist of built‐out residential neighborhoods , small commercial area s, and recreational areas with opportunities for additional revenues. Unincorporated islands that are less than 150 acres may be processed by OC LAFCO under the streamlined “small island” provisions of State law which require OC LAFCO to approve the annexation and waive protest proceedings2.

Currently, OC LAFCO is waiving the application fee for cities and providing resources that bridge information gaps and align the efforts of local stakeholders. In part to this, OC LAFCO staff is available to facilitate discussions among stakeholders and participate in community workshops, when requested, to ensure that the residents and landowners are informed on the annexation process. Additionally, the State Board of Equalization currently supports the streamlining of small island annexations (less than 150 acres) through its waiver of the requirement for a map and legal description of the annexation territory.

2Cortese‐Knox‐Hertzberg Local Government Reorganization Act of 2000, Section 56375.3 (a) 700

Orange County Revenue & Expenditure Data
Orange Unincorporated Islands (ID#17-19, #21-23)

0BCounty Revenue (FY 2023-24)

1BIsland 2BIsland ID# 3BSales Tax 4BProperty Tax 5BTotal Taxes 6BEl Modena 7BID# 17 8B$31,109 9B$19,081 10B$50,190
11BLincoln/Glassell 12BID# 18 13Bn/a 14B$23,331 $23,331 16BNorth El Modena 17BID# 19 18Bn/a 19B$ 3,017 20B$3,017 21BOlive Heights 22BID# 21 23B$525,160 24B$5,014 25B$530,174 26BOrange Park Acres 27BID# 22 28B$5,755 29B$309,318 30B$315,073 31BSantiago Creek 32BID# 23 33Bn/a 34B$774 35B$774
36BTotal Revenue:
37B$562,024 38B$360,535 39B$922,559

Potential Property Tax Revenue upon annexation (based on the City/County Master Property Tax Exchange Agreement adopted on October 28, 1980):
40BIsland 41BIsland ID# 42BCity Tax % 43BCounty Tax %
44BCity
Revenue
45BCounty
Revenue
46BEl Modena 47BID# 17 48B51% 49B49% 50B$9,731 51B$9,350 52BLincoln/Glassell 53BID# 18 54B51% 55B49% 56B$11,899 57B$11,432 58BNorth El Modena 59BID# 19 60B51% 61B49% 62B$1,539 63B$1,478 64BOlive Heights 65BID# 21 66B51% 67B49% 68B$2,557 69B$2,456 70BOrange Park
Acres
71BID# 22 72B51% 73B49% 74B$157,752 75B$151,565
76BSantiago Creek 77BID# 23 78B51% 79B49% 80B$395 81B$317

701

82BCounty Expenditures (FY 2023-24)

Operations and Maintenance

OC
Waste &
Recycling
Animal
Care
Services
Sheriff OCPW
Road
Maint.

OCPW
Infra.

Maint.

Code Enf.

El Modena $4,373 $8,784 $844,007
$109,2861 $189,4972 $73,3333
Lincoln/
Glassell $1,782 $0 $0
North El Modena $415 $715 $156,912
Olive Heights $403 $117 $150,877
Santiago Creek $0 $0 $0
Orange Parks Acres $18,440 $10,927 $324,084 $70,428 $90,529 $44,783 Total Expenditures $25,413 $20,543 $1,475,880 $179,714 $280,026 $118,116 Total Operation and Maintenance Expenditures: $2,099,692

1 Includes the total cost of OCPWD Road Maintenance for the following islands: El Modena, Lincoln Glassel, North El Modena, Olive Heights and Santiago Creek.
2 Includes the total cost of OCPWD Infrastructure Maintenance for the following islands: El Modena, Lincoln Glassel, North El Modena, Olive Heights and Santiago Creek.
3 Includes the total cost of Code Enforcement for the following islands: El Modena, Lincoln Glassel, North El Modena, Olive Heights and Santiago Creek. 702

El Modena Island (ID #17)

General Information
Sphere of Influence City of Orange
Supervisorial District 2nd
Acreage 101.67
Within City of Orange’s General Plan? Yes
City of Orange’s Pre-zoning Designation Low and Low Medium Density Residential Fire Stations (within 1-mile radius) Orange Fire Station #2 and #4 Parks (within ½ mile radius) El Modena (Orange), La Veta (Orange) Flood Control Channels (miles) .82
Demographics
Population 2,797
Housing Units 684

703

704

Lincoln/Glassell Island (ID #18)

General Information
Sphere of Influence City of Orange
Supervisorial District 2nd and 4th
Acreage 103.03
Within City of Orange’s General Plan? Yes
City of Orange’s Pre-zoning Designation Resource area / Open Space Fire Stations (within 1-mile radius) Anaheim Fire Station #5 Parks (within ½ mile radius) Olive, Steve Ambriz Memorial (Orange), Rio Vista (Anaheim)
Flood Control Channels (miles) 1.01
Demographics
Population 0
Housing Units 0

705

706

North El Modena Island (ID #19)

General Information
Sphere of Influence City of Orange
Supervisorial District 2nd
Acreage 31.59
Within City of Orange’s General Plan? Yes
City of Orange’s Pre-zoning Designation Low Density Residential Fire Stations (within 1-mile radius) OCFA Fire Station #23 and Orange Fire Stations #2 and #4
Parks (within ½ mile radius) None
Flood Control Channels (miles) .243
Demographics
Population 520
Housing Units 126

707

708

Olive Heights Island (ID #21)

General Information
Sphere of Influence City of Orange
Supervisorial District 2nd
Acreage 32.47
Within City of Orange’s General Plan? Yes
City of Orange’s Pre-zoning Designation Low Medium Residential Fire Stations (within 1-mile radius) None
Parks (within ½ mile radius) Eisenhower (Orange), Oliver (Orange) Flood Control Channels (miles) .371
Demographics
Population 500
Housing Units 166

709

710

5 Orange Park Acres Island (ID #22)

General Information
Sphere of Influence City of Orange
Supervisorial District 3rd
Acreage 394.02
Within City of Orange’s General Plan? Yes
City of Orange’s Pre-zoning Designation Estate Low-Density Residential Fire Stations (within 1-mile radius) OCFA Fire Station #23 Parks (within ½ mile radius) None
Flood Control Channels (miles) 1.784
Demographics
Population 1,074
Housing Units 386

711

6 712

Santiago Creek Island (ID #23)

General Information
Sphere of Influence City of Orange
Supervisorial District 3rd
Acreage 187.25
Within City of Orange’s General Plan? Yes
City of Orange’s Pre-zoning Designation Resource Area/Open Space Fire Stations (within 1-mile radius) OCFA Fire Station #23 and Orange Fire Stations #2 and #4
Parks (within ½ mile radius) Grijalva Community
Flood Control Channels (miles) 1.328
Demographics
Population 0
Housing Units 0

713

714
715
716
717
718
719
720
721
722
Agenda Item
Orange City Council
Item #: 9.3. 8/25/2026 File #: 26-0483
TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Trang Nguyen, Finance Director

1. SUBJECT
Result of the Independent Accountants’ Report on the Agreed Upon Procedures for Payroll

2. SUMMARY
LSL Certified Public Accountants completed the Payroll Agreed-Upon Procedures engagement approved by the City Council on February 24, 2026. The engagement concluded that the City's payroll calculations, employee compensation, leave administration, overtime calculations, and related payroll processes were accurate, with no exceptions identified. The report also included recommendations to strengthen internal controls, clarify provisions within the City's Memoranda of Understanding, and further reduce operational risk.

3. RECOMMENDED ACTION
Receive and file the results of the Agreed Upon Procedures for Payroll.

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
Goal 2: Enhance Economic Development and Achieve Fiscal Stability.

6. DISCUSSION AND BACKGROUND

BACKGROUND
Staff is currently implementing the Human Capital Management module as part of the City's new Enterprise Resource Planning (ERP) system. Given the significance of payroll as the City's largest operating expenditure and the opportunity to validate existing processes before implementation of the new system, staff recommended engaging an independent firm to perform an Agreed-Upon Procedures (AUP) engagement. The purpose of the AUP was to independently assess payroll calculations, evaluate internal controls, and identify opportunities to strengthen payroll governance.

On February 24, 2026, the City Council approved the agreement with LSL Certified Public Accountants (LSL) to perform the City's annual financial audit services and the Payroll AUP.

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DISCUSSION
LSL began fieldwork for the Payroll Agreed-Upon Procedures (AUP) engagement in May 2026. The engagement included interviews with Human Resources and Payroll staff and testing of 47 payroll transactions covering employee compensation, leave and time-off, payroll internal controls, and overtime pay.

While the AUP did not identify errors in payroll calculations or employee compensation, LSL identified several opportunities to further strengthen internal controls and improve policy clarity.

The AUP identified two significant internal control findings:
· Strengthening segregation of duties between Human Resources and Payroll by assigning responsibility for employee data management to Human Resources and Payroll is responsible for payroll processing.
· An independent review of changes to the employee data such as pay rate, deductions, and accrual.

And the AUP has two operational improvement recommendations:
· Clarifying Memoranda of Understanding (MOUs) by specifying the pay rates used for vacation, sick leave, and overtime calculations.
· Clarifying MOU provisions regarding the treatment of accumulated sick leave upon separation. · Establishing a best practice review process whereby proposed MOU provisions are reviewed by executive management and the City Attorney prior to labor negotiations and provided to CalPERS for review before implementation.

Many of these recommendations are procedural in nature and are intended to improve the clarity of the City's MOUs and strengthen internal controls. Importantly, the AUP did not identify errors in employee compensation or payroll calculations. Rather, the recommendations are intended to reduce future risk, improve consistency, and align the City's payroll administration with industry best practices.

Message from Audit Committee
The Audit Committee had a special meeting on July 30th to review the AUP results. Overall, the Committee congratulated staff on a successful audit as the audit did not note any material miscalculations or errors with the payroll process. The Committee acknowledged LSL’s recommendations and expressed concerns with three findings. The Committee strongly recommend the City Council direct staff to:
· Establish clear segregation of duties between Human Resources and Payroll; · Establish an independent review of changes to the employee data; and · Clarify the MOU languages in the upcoming negotiations.

The Committee emphasized that implementing these recommendations would significantly strengthen the City's internal control environment by improving segregation of duties, enhancing independent oversight of employee data changes, and reducing the risk of errors or unauthorized City of Orange Printed on 8/20/2026Page 2 of 3
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changes to payroll records.

CONCLUSION
Overall, the AUP provides independent assurance that the City's payroll calculations and payments are accurate while identifying opportunities to further strengthen governance and internal controls.

Staff concurs with the recommendations, which are consistent with the City's ongoing efforts in recent years to strengthen governance, clarify business process ownership, enhance internal controls, and promote accountability and transparency across the organization.

7. ATTACHMENTS
· City of Orange Payroll AUP
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Agenda Item
Orange City Council
Item #: 9.3. 8/25/2026 File #: 26-0483
TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Trang Nguyen, Finance Director

1. SUBJECT
Result of the Independent Accountants’ Report on the Agreed Upon Procedures for Payroll

3. RECOMMENDED ACTION
Receive and file the results of the Agreed Upon Procedures for Payroll.

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
Goal 2: Enhance Economic Development and Achieve Fiscal Stability.

6. DISCUSSION AND BACKGROUND

On February 24, 2026, the City Council approved the agreement with LSL Certified Public Accountants (LSL) to perform the City's annual financial audit services and the Payroll AUP.

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While the AUP did not identify errors in payroll calculations or employee compensation, LSL identified several opportunities to further strengthen internal controls and improve policy clarity.

The Committee emphasized that implementing these recommendations would significantly strengthen the City's internal control environment by improving segregation of duties, enhancing independent oversight of employee data changes, and reducing the risk of errors or unauthorized City of Orange Printed on 8/20/2026Page 2 of 3
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changes to payroll records.

7. ATTACHMENTS
· City of Orange Payroll AUP
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LSLCPAS.COM
INDEPENDENT ACCOUNTANTS’ REPORT

ON AGREED-UPON PROCEDURES
To the Honorable Mayor and Members of the City Council
City of Orange, California
We have performed the procedures enumerated below to assist the City of Orange, California (hereafter, the City) in verifying the City’s compliance with its payroll policies for the period of July 1, 2025 – April 18, 2026. The City’s management is responsible for ensuring compliance with its payroll policies.

The City has agreed to and acknowledged that the proced ures performed are appropriate to meet the intended purpose of verifying compliance with the City’s payro ll policies. This report may not be suitable for any other purpose. The procedures performed may not address all the item s of interest to a user of this report and may not meet the needs of all users of this report and, as su ch, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures performed and our findings were as follows:

EMPLOYEE COMPENSATION REVIEW

1. We obtained and reviewed the various City policies, applicable Memorandum of Understanding (MOU), and any other documentation prepared by the City to gain an understanding of pay rates, pay dates, and types of pay offered to employees
Finding: No exceptions were noted as a result of our procedures.

2. We selected a statistical sample of employees for various pay dates during the fiscal year throughout the City and recalculated their pay per the payroll registers to the employees’ personnel action forms, timesheets, and MOU for their bargaining unit. The statistical sample considered no less than 7 employees from each MOU with different positions/job titles (positions/job titles including levels 1, 2, 3 should be considered the same position/job title).

Finding: No exceptions were noted as a result of our procedures.

3. We recalculated and verified all regular, overtime, le ave, and special assignment pay identified in the sample to ensure there were no discrepancies.

Finding: No exceptions were noted as a result of our procedures.

4. We verified that all pay rates in the sample were approved by the appropriate level of authority and that all payment was supported by appropriate documentation, including time sheets or workflows.

Finding: No exceptions were noted as a result of our procedures.

Attachment A
729

To the Honorable Mayor and Members of the City Council
City of Orange, California

LEAVE AND TIME-OFF PROCEDURES

1. We obtained and reviewed the City’s policies regardi ng special leave programs, including military leave pay and short-term disability programs against applicable laws and MOUs.

Finding: No exceptions were noted as a result of our procedures.

2. We obtained an understanding of the City’s prac tices regarding all Leave Benefits and payouts.

Finding: With the exception of the Police Association and Police Management Association, the MOUs do not specify which pay rate is used to calculate the vacati on and sick leave payouts. Our testing revealed that the payouts were calculated using a rate that consisted of the base pay and other specialty types of pay.

Recommendation: The City should update the vacation and sick leave payout policies in its MOUs, other than the Police Association and Police Management Associ ation, to specify the pay rate to be used for vacation and sick leave payouts upon termination.

Finding: With the exception of the Police Associati on, Police Management Association, and Executive Management, the MOUs do not include the treatment of accumulated sick leave upon termination.

Recommendation: The City should update its MOUs, other than the Police Association, Police Management Association, and Executive Management MOUs, to incl ude the treatment of accumulated sick leave upon termination.

3. We reviewed the City’s calculations of empl oyee Leave Benefits banks and ensured the employee accruals are calculated in accordance with the City policies and MOUs.

Finding: No exceptions were noted as a result of our procedures.

4. We verified through statistical sampling (specified a bove) of employee leave usage that compensatory time off (CTO) is removed from employee leave banks as used, and that amounts are paid to employees using appropriate pay rates. We verified through statistical sampling (specified above) of employee leave usage and payouts to ensure they are removed from the empl oyee leave banks and the amounts paid out to the employee are calculated in accordance with the MOUs.

Finding: No exceptions were noted as a result of our procedures.

5. We reviewed and recalculated any shift differential/fa tigue/on-call/standby pay calculations and verified that the City complied with the Fair Labor Standards Act (FLSA), City policies and MOUs.

Finding: No exceptions were noted as a result of our procedures.

PAYROLL COMPLIANCE AND INTERNAL CONTROLS

1. We gained an understanding of the City’s internal cont rols and procedures through inspection of City policies and written procedures, interviews with City staff, and a test of controls utilizing statistical sampling methods to ensure that controls are effectively designed and implemented.

Finding: Payroll staff are solely responsible for entering and updating pay rates in the payroll software based on personnel action forms (PAF) received from human resources (HR). In addition, HR does not verify whether pay rates are entered or modified correctly in ac cordance with the related PAF. This is a significant deficiency in internal controls with respect to lack of segregation of duties, and should be considered a top priority for remediation, due to the higher potential for fraud or error in this particular transaction cycle.

Recommendation: For segregation of duties, independent review, and industry best practice, we recommend restricting access to and ability to edit pay rate information within payroll software exclusively to HR personnel. HR supervisors should ensure that the pay rates documented in employees’ PAFs agree to the rates in the payroll software. HR should also review a pay rate modification report after each bi-weekly pay cycle to verify all changes in pay rates for proper au thorization. The personnel responsible for processing payroll disbursements should not have access to enter or modify pay rates. 730

To the Honorable Mayor and Members of the City Council
City of Orange, California

2. We examined and tested any payroll related informat ion technology (IT) or computer controls, including password, access rights, and data management practices to ensure that controls are effectively designed and implemented.

Finding: No exceptions were noted as a result of our procedures.

3. We provided feedback to the City regarding the industry’ s best practices for any key controls identified to be substandard or improperly designed or implemented.

Finding: MOUs are currently prepared by the HR Department and provided to the various bargaining units and the City Attorney for review and approval. This is a departure from the normal process found in other local governments and represents a potential weakness in internal control with respect to the approval and authorization of employee benefits, and consistency and accuracy of information provided to CalPERS.

Recommendation: As a best practice, we recommend that the HR Department present the terms and conditions of proposed MOUs to the City Council, City Manager, and City Attorney to ensure alignment with the governing body’s and executive management’s goals with respect to personnel prior to presentation of the MOU to the bargaining unit for approval. This also allows the appropriate parties to exercise sufficient oversight over the benefits provided to employees. Furthermore, as an additional safeguard, draft MOUs should also be provided to CalPERS for a review to ensure that the pension administrator is aware of changes to the covered members’ payroll and benefit terms.

OVERTIME PAY REVIEW

1. We obtained an understanding of the City’s overtime (O T) practices outlined in the MOUs and City Policies.

Finding: Our review of the overtime policies in the MOUs revealed that only the Police Association and Police Management Association MOUs specifically define the pa y rate used to calculate overtime pay. During our testing, we noted that overtime pay included various type s of specialty pay in addition to the base salary or wage.

Recommendation: We recommend an update to the overtime policy in each MOU, other than Police Association and Police Management Association, to define the pay rate used to calculate overtime pay.

2. We reviewed the City’s OT policies and practices and MOU against the requirements of FLSA.

Finding: No exceptions were noted as a result of our procedures.

3. We verified overtime calculations through a statistical sampling (specified above) to ensure compliance with both FLSA and MOUs guidelines.

Finding: No exceptions were noted as a result of our procedures.

We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards estab lished by the American Instit ute of Certified Public Accountants (AICPA). We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the City’s compliance with its payroll policies. Accordingly, we do not expr ess such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. 731

To the Honorable Mayor and Members of the City Council
City of Orange, California

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information of the City Council and management of the City of Orange and is not intended to be, and should not be, used by anyone other than these specified parties.

Irvine, California
July 7, 2026
732

Orange City CouncilAugust 25, 2026

Orange City Council
August 25, 2026