CONTRACT SERVICES AGREEMENT NO. 24B249
BAGGAGE HANDLING SYSTEM PARTS FOR PALM SPRINGS
INTERNATIONAL AIRPORT
THIS AGREEMENT FOR CONTRACT SERVICES (“Agreement”) is made and entered into on November 25, 2024, by and between the City of Palm Springs, a California charter city and municipal corporation (“City”), and Robson Handling Technology USA Inc., a Texas corporation, (“Contractor”). City and Contractor are individually referred to as “Party” and are collectively referred to as the “Parties”.
RECITALS
A. City requires the services of a licensed and qualified firm to provide baggage handling system parts for Palm Springs International Airport, (“Project”).
B. Contractor has submitted to City a Bid to provide baggage handling system parts for Palm Springs International Airport, under the terms of this Agreement.
C. Based on its experience, education, training, and reputation, Contractor is qualified and desires to provide the necessary services to City for the Project.
D. City desires to retain the services of Contractor for the Project.
NOW, THEREFORE, in consideration of the promises and mutual obligations, covenants, and conditions contained herein, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
AGREEMENT
1. CONTRACTOR SERVICES
1.1 Scope of Services. In compliance with all terms and conditions of this Agreement, Contractor shall provide services to City as described in the Scope of Services/Work attached to this Agreement as Exhibit “A” and incorporated herein by reference (the “Services” or “Work”).
Exhibit "A" includes the agreed upon schedule of performance and the schedule of fees.
Contractor warrants that the Services shall be performed in a competent, professional, and satisfactory manner consistent with the level of care and skill ordinarily exercised by high quality, experienced, and well qualified members of the profession currently practicing under similar conditions. In the event of any inconsistency between the terms contained in the Scope of Services/Work and the terms set forth in this Agreement, the terms set forth in this Agreement shall govern.
1.2 Compliance with Law. Contractor shall comply with all applicable federal, state, and local laws, statutes and ordinances and all lawful orders, rules, and regulations when performing the Services. Contractor shall be liable for all violations of such laws and regulations in connection with the Services and this Agreement.
1.3 Licenses and Permits. Contractor shall obtain at its sole cost and expense such licenses, permits, and approvals as may be required by law for the performance of the Services required by this Agreement.
1.4 Familiarity with Work. By executing this Agreement, Contractor warrants that it has carefully considered how the Work should be performed and fully understands the facilities, difficulties, and restrictions attending performance of the Work under this Agreement.
2. TIME FOR COMPLETION
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The time for completion of the Services to be performed by Contractor is an essential condition of this Agreement. Contractor shall prosecute regularly and diligently the work of this Agreement according to the agreed upon schedule of performance set forth in Exhibit “A.” Neither Party shall be accountable for delays in performance caused by any condition beyond the reasonable control and without the fault or negligence of the non-performing Party. Delays shall not entitle Contractor to any additional compensation regardless of the Party responsible for the delay.
3. COMPENSATION OF CONTRACTOR
3.1 Compensation of Contractor. Contractor shall be compensated and reimbursed for the services rendered under this Agreement in accordance with the schedule of fees set forth in Exhibit “A”. The total amount of Compensation shall not exceed $345,084.67.
3.2 Method of Payment. In any month in which Contractor wishes to receive payment, Contractor shall submit to City an invoice for Services rendered prior to the date of the invoice, no later than the first working day of such month, in the form approved by City’s finance director.
Payments shall be based on the hourly rates set forth in Exhibit “A” for authorized services performed. City shall pay Contractor for all expenses stated in the invoice that are approved by City and consistent with this Agreement, within thirty (30) days of receipt of Contractor’s invoice.
3.3 Changes. In the event any change or changes in the Services is requested by City, Parties shall execute a written amendment to this Agreement, specifying all proposed amendments, including, but not limited to, any additional fees. An amendment may be entered into:
A. To provide for revisions or modifications to documents, work product, or Work, when required by the enactment or revision of any subsequent law; or B. To provide for additional services not included in this Agreement or not customarily furnished in accordance with generally accepted practice in Contractor’s profession.
3.4 Appropriations. This Agreement is subject to, and contingent upon, funds being appropriated by the City Council of City for each fiscal year. If such appropriations are not made, this Agreement shall automatically terminate without penalty to City.
4. PERFORMANCE SCHEDULE
4.1 Time of Essence. Time is of the essence in the performance of this Agreement.
4.2 Schedule of Performance. All Services rendered under this Agreement shall be performed under the agreed upon schedule of performance set forth in Exhibit “A.” Any time period extension must be approved in writing by the Contract Officer.
4.3 Force Majeure. The time for performance of Services to be rendered under this Agreement may be extended because of any delays due to a Force Majeure Event if Contractor notifies the Contract Officer within ten (10) days of the commencement of the Force Majeure Event. A Force Majeure Event shall mean an event that materially affects the Contractor’s performance and is one or more of the following: (1) Acts of God or other natural disasters occurring at the project site; (2) terrorism or other acts of a public enemy; (3) orders of governmental authorities (including, without limitation, unreasonable and unforeseeable delay in the issuance of permits or approvals by governmental authorities that are required for the Work); and (4) pandemics, epidemics or quarantine restrictions. For purposes of this section, “orders of governmental authorities,” includes ordinances, emergency proclamations and orders, rules to protect the public health, welfare and safety, and other actions of the City in its capacity as a municipal authority. After Contractor notification, the Contract Officer shall investigate the facts and the extent of any necessary delay, and extend the time for performing the Services for the Item 1Y - Page 6
period of the enforced delay when and if, in the Contract Officer’s judgment, such delay is justified.
The Contract Officer’s determination shall be final and conclusive upon the Parties to this Agreement. The Contractor will not receive an adjustment to the contract price or any other compensation. Notwithstanding the foregoing, the City may still terminate this Agreement in accordance with the termination provisions of this Agreement.
4.4 Term. Unless earlier terminated in accordance with Section 4.5 of this Agreement, this Agreement shall continue in full force and effect for a period of three years, commencing on November 25, 2024, and ending on November 24, 2027, unless extended by mutual written agreement of the Parties. In addition, the term may be extended at the sole discretion of the City upon written notice to the Contractor, for two additional one-year terms.
4.5 Termination Prior to Expiration of Term. City may terminate this Agreement at any time, with or without cause, upon thirty (30) days written notice to Contractor. Where termination is due to the fault of Contractor and constitutes an immediate danger to health, safety, and general welfare, the period of notice shall be such shorter time as may be determined by the City. Upon receipt of the notice of termination, Contractor shall immediately cease all Services except such as may be specifically approved by the Contract Officer. Contractor shall be entitled to compensation for all Services rendered prior to receipt of the notice of termination and for any Services authorized by the Contract Officer after such notice. City shall not be liable for any costs other than the charges or portions thereof which are specified herein. Contractor shall not be entitled to payment for unperformed Services and shall not be entitled to damages or compensation for termination of Work. If the termination is for cause, the City shall have the right to take whatever steps it deems necessary to correct Contractor's deficiencies and charge the cost thereof to Contractor, who shall be liable for the full cost of the City's corrective action.
Contractor may not terminate this Agreement except for cause, upon thirty (30) days written notice to City.
5. COORDINATION OF WORK
5.1 Representative of Contractor. The following principal of Contractor is designated as being the principal and representative of Contractor authorized to act and make all decisions in its behalf with respect to the specified Services: Robb VanderWaal, Parts & Service Manager.
It is expressly understood that the experience, knowledge, education, capability, and reputation of the foregoing principal is a substantial inducement for City to enter into this Agreement.
Therefore, the foregoing principal shall be responsible during the term of this Agreement for directing all activities of Contractor and devoting sufficient time to personally supervise the Services under this Agreement. The foregoing principal may not be changed by Contractor without prior written approval of the Contract Officer.
5.2 Contract Officer. The Contract Officer shall be the City Manager or his/her designee ("Contract Officer"). Contractor shall be responsible for keeping the Contract Officer fully informed of the progress of the performance of the Services. Contractor shall refer any decisions that must be made by City to the Contract Officer. Unless otherwise specified, any approval of City shall mean the approval of the Contract Officer.
5.3 Prohibition Against Subcontracting or Assignment. The experience, knowledge, education, capability, and reputation of Contractor, its principals, and employees, were a substantial inducement for City to enter into this Agreement. Contractor shall not contract with any other individual or entity to perform any Services required under this Agreement without the City's express written approval. In addition, neither this Agreement nor any interest may be assigned or transferred, voluntarily or by operation of law, without the prior written approval of City. Subcontracts, if any, shall contain a provisions making them subject to all provisions stipulated in this Agreement including without limitation the insurance and indemnification Item 1Y - Page 7
requirements. If Contractor is permitted to subcontract any part of this Agreement by City, Contractor shall be responsible to City for the acts and omissions of its subcontractor(s) in the same manner as it is for persons directly employed. Nothing contained in this Agreement shall create any contractual relationships between any subcontractor and City.
5.4 Independent Contractor. Neither City nor any of its employees shall have any control over the manner, mode, or means by which Contractor, its agents, or employees, perform the Services required, except as otherwise specified. Contractor shall perform all required Services as an independent contractor of City and shall not be an employee of City and shall remain at all times as to City a wholly independent contractor with only such obligations as are consistent with that role; however, City shall have the right to review Contractor’s work product, result, and advice. Contractor shall not at any time or in any manner represent that it or any of its agents or employees are agents or employees of City. Contractor shall pay all wages, salaries, and other amounts due personnel in connection with their performance under this Agreement and as required by law. Contractor shall be responsible for all reports and obligations respecting such personnel, including, but not limited to: social security taxes, income tax withholding, unemployment insurance, and workers’ compensation insurance. Contractor shall not have any authority to bind City in any manner.
5.5 Personnel. Contractor agrees to assign the following individuals to perform the services in this Agreement. Contractor shall not alter the assignment of the following personnel without the prior written approval of the Contract Officer. Acting through the City Manager, the City shall have the unrestricted right to order the removal of any personnel assigned by Contractor by providing written notice to Contractor.
Name: Title:
Robb VanderWaal Parts & Service Manager
5.6 California Labor Code Requirements.
A. Contractor is aware of the requirements of California Labor Code Sections 1720 et seq. and 1770 et seq., which require the payment of prevailing wage rates and the performance of other requirements on certain “public works” and “maintenance” projects (“Prevailing Wage Laws”). If the Services are being performed as part of an applicable “public works” or “maintenance” project, as defined by the Prevailing Wage Laws, and if the total compensation is $15,000 or more for maintenance or $25,000 or more for construction, alteration, demolition, installation, or repair, Contractor agrees to fully comply with such Prevailing Wage Laws. Contractor shall defend, indemnify, and hold the City, its officials, officers, employees, and agents free and harmless from any claims, liabilities, costs, penalties, or interest arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. It shall be mandatory upon the Contractor and all subcontractors to comply with all California Labor Code provisions, which include but are not limited to prevailing wages (Labor Code Sections 1771, 1774 and 1775), employment of apprentices (Labor Code Section 1777.5), certified payroll records (Labor Code Sections 1771.4 and 1776), hours of labor (Labor Code Sections 1813 and 1815) and debarment of contractors and subcontractors (Labor Code Section 1777.1).
B. If the Services are being performed as part of an applicable “public works” or “maintenance” project and if the total compensation is $15,000 or more for maintenance or $25,000 or more for construction, alteration, demolition, installation, or repair, then pursuant to Labor Code Sections 1725.5 and 1771.1, the Contractor and all subcontractors performing such Services must be registered with the Department of Industrial Relations. Contractor shall maintain registration for the duration of the Project and require the same of any subcontractors, as applicable. This Agreement may also be subject to compliance monitoring and enforcement by Item 1Y - Page 8
the Department of Industrial Relations. It shall be Contractor’s sole responsibility to comply with all applicable registration and labor compliance requirements.
6. INSURANCE
Contractor shall procure and maintain, at its sole cost and expense, policies of insurance as set forth in the attached Exhibit "B", incorporated herein by reference.
7. INDEMNIFICATION.
7.1 Indemnification. To the fullest extent permitted by law, Contractor shall defend (at Contractor’s sole cost and expense), indemnify, protect, and hold harmless City, its elected officials, officers, employees, agents, and volunteers (collectively the “Indemnified Parties”), from and against any and all liabilities, actions, suits, claims, demands, losses, costs, judgments, arbitration awards, settlements, damages, demands, orders, penalties, and expenses including legal costs and attorney fees (collectively “Claims”), including but not limited to Claims arising from injuries to or death of persons (Contractor’s employees included), for damage to property, including property owned by City, for any violation of any federal, state, or local law or ordinance or in any manner arising out of, pertaining to, or incident to any acts, errors or omissions, or willful misconduct committed by Contractor, its officers, employees, representatives, and agents, that arise out of or relate to Contractor’s performance of Services or this Agreement.
This indemnification clause excludes Claims arising from the sole negligence or willful misconduct of the Indemnified Parties. Under no circumstances shall the insurance requirements and limits set forth in this Agreement be construed to limit Contractor’s indemnification obligation or other liability under this Agreement. Contractor’s indemnification obligation shall survive the expiration or earlier termination of this Agreement until all actions against the Indemnified Parties for such matters indemnified are fully and finally barred by the applicable statute of limitations or, if an action is timely filed, until such action is final.
7.2 Design Professional Services Indemnification and Reimbursement. If Contractor’s obligation to defend, indemnify, and/or hold harmless arises out of Contractor’s performance as a “design professional” (as that term is defined under Civil Code section 2782.8), then, and only to the extent required by Civil Code section 2782.8, which is fully incorporated herein, Contractor’s indemnification obligation shall be limited to the extent which the Claims arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the Contractor in the performance of the Services or this Agreement, and, upon Contractor obtaining a final adjudication by a court of competent jurisdiction, Contractor’s liability for such claim, including the cost to defend, shall not exceed the Contractor’s proportionate percentage of fault.
8. RECORDS AND REPORTS
8.1 Reports. Contractor shall periodically prepare and submit to the Contract Officer reports concerning the performance of the Services required by this Agreement, or as the Contract Officer shall require.
8.2 Records. Contractor shall keep complete, accurate, and detailed accounts of all time, costs, expenses, and expenditures pertaining in any way to this Agreement. Contractor shall keep such books and records as shall be necessary to properly perform the Services required by this Agreement and enable the Contract Officer to evaluate the performance of such Services.
The Contract Officer shall have full and free access to such books and records at all reasonable times, including the right to inspect, copy, audit, and make records and transcripts from such records.
8.3 Ownership of Documents. All drawings, specifications, reports, records, documents, and other materials prepared by Contractor in the performance of this Agreement Item 1Y - Page 9
shall be the property of City. Contractor shall deliver all above-referenced documents to City upon request of the Contract Officer or upon the termination of this Agreement. Contractor shall have no claim for further employment or additional compensation as a result of the exercise by City of its full rights or ownership of the documents and materials. Contractor may retain copies of such documents for Contractor's own use. Contractor shall have an unrestricted right to use the concepts embodied in such documents.
8.4 Release of Documents. All drawings, specifications, reports, records, documents, and other materials prepared by Contractor in the performance of Services under this Agreement shall not be released publicly without the prior written approval of the Contract Officer.
8.5 Audit and Inspection of Records. After receipt of reasonable notice and during the regular business hours of City, Contractor shall provide City, or other agents of City, such access to Contractor’s books, records, payroll documents, and facilities as City deems necessary to examine, copy, audit, and inspect all accounting books, records, work data, documents, and activities directly related to Contractor’s performance under this Agreement. Contractor shall maintain such books, records, data, and documents in accordance with generally accepted accounting principles and shall clearly identify and make such items readily accessible to such parties during the term of this Agreement and for a period of three (3) years from the date of final payment by City hereunder.
9. ENFORCEMENT OF AGREEMENT
9.1 California Law. This Agreement shall be construed and interpreted both as to validity and to performance of the parties in accordance with the laws of the State of California.
Legal actions concerning any dispute, claim, or matter arising out of or in relation to this Agreement shall be instituted in the Superior Court of the County of Riverside, State of California, or any other appropriate court in such county, and Contractor covenants and agrees to submit to the personal jurisdiction of such court in the event of such action.
9.2 Interpretation. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the Parties. The terms of this Agreement are contractual and the result of negotiation between the Parties. Accordingly, any rule of construction of contracts (including, without limitation, California Civil Code Section 1654) that ambiguities are to be construed against the drafting party, shall not be employed in the interpretation of this Agreement. The caption headings of the various sections and paragraphs of this Agreement are for convenience and identification purposes only and shall not be deemed to limit, expand, or define the contents of the respective sections or paragraphs.
9.3 Waiver. No delay or omission in the exercise of any right or remedy of a nondefaulting Party on any default shall impair such right or remedy or be construed as a waiver. No consent or approval of City shall be deemed to waive or render unnecessary City’s consent to or approval of any subsequent act of Contractor. Any waiver by either Party of any default must be in writing. No such waiver shall be a waiver of any other default concerning the same or any other provision of this Agreement.
9.4 Rights and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the parties are cumulative. The exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party.
9.5 Legal Action. In addition to any other rights or remedies, either Party may take legal action, in law or in equity, to cure, correct, or remedy any default, to recover damages for Item 1Y - Page 10
any default, to compel specific performance of this Agreement, to obtain injunctive relief, a declaratory judgment, or any other remedy consistent with the purposes of this Agreement.
9.6 Attorney Fees. In the event any dispute between the Parties with respect to this Agreement results in litigation or any non-judicial proceeding, the prevailing Party shall be entitled, in addition to such other relief as may be granted, to recover from the non-prevailing Party all reasonable costs and expenses. These include but are not limited to reasonable attorney fees, expert contractor fees, court costs and all fees, costs, and expenses incurred in any appeal or in collection of any judgment entered in such proceeding.
10. CITY OFFICERS AND EMPLOYEES: NON-DISCRIMINATION
10.1 Non-Liability of City Officers and Employees. No officer or employee of City shall be personally liable to the Contractor, or any successor-in-interest, in the event of any default or breach by City or for any amount which may become due to the Contractor or its successor, or for breach of any obligation of the terms of this Agreement.
10.2 Conflict of Interest. Contractor acknowledges that no officer or employee of the City has or shall have any direct or indirect financial interest in this Agreement, nor shall Contractor enter into any agreement of any kind with any such officer or employee during the term of this Agreement and for one (1) year thereafter. Contractor warrants that Contractor has not paid or given, and will not pay or give, any third party any money or other consideration in exchange for obtaining this Agreement.
10.3 Covenant Against Discrimination. In connection with its performance under this Agreement, Contractor shall not discriminate against any employee or applicant for employment because of actual or perceived race, religion, color, sex, age, marital status, ancestry, national origin ( i.e., place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a “prohibited basis”). Contractor shall ensure that applicants are employed, and that employees are treated during their employment, without regard to any prohibited basis. As a condition precedent to City’s lawful capacity to enter this Agreement, and in executing this Agreement, Contractor certifies that its actions and omissions hereunder shall not incorporate any discrimination arising from or related to any prohibited basis in any Contractor activity, including but not limited to the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship; and further, that Contractor is in full compliance with the provisions of Palm Springs Municipal Code Section 7.09.040, including without limitation the provision of benefits, relating to non-discrimination in city contracting.
11. MISCELLANEOUS PROVISIONS
11.1 Notice. Any notice, demand, request, consent, approval, or communication that either Party desires, or is required to give to the other Party or any other person shall be in writing and either served personally or sent by pre-paid, first-class mail to the address set forth below.
Notice shall be deemed communicated seventy-two (72) hours from the time of mailing if mailed as provided in this Section. Either Party may change its address by notifying the other Party of the change of address in writing.
To City: City of Palm Springs
Attention: City Manager/ City Clerk
3200 E. Tahquitz Canyon Way
Palm Springs, California 92262
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To Contractor: Robson Handling Technology USA Inc.
Attention: Robb VanderWaal
129 S. Main St. Suite 260
Grapevine, TX 76051
11.2 Integrated Agreement. This Agreement constitutes the entire understanding between the Parties and supersedes and cancels all prior negotiations, arrangements, agreements, representations, and understandings, if any, made by or among the Parties with respect to the subject matter in this Agreement.
11.3 Amendment. No amendments or other modifications of this Agreement shall be binding unless through written agreement signed by all Parties.
11.4 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. In the event that any one or more of the phrases, sentences, clauses, paragraphs, or sections contained in this Agreement shall be declared invalid or unenforceable by valid judgment or decree of a court of competent jurisdiction, such invalidity or unenforceability shall not affect any of the remaining phrases, sentences, clauses, paragraphs, or sections of this Agreement, which shall be interpreted to carry out the intent of the Parties.
11.5 Successors in Interest. This Agreement shall be binding upon and inure to the benefit of the Parties’ successors and assignees.
11.6 Third Party Beneficiary. Except as may be expressly provided for in this Agreement, nothing contained in this Agreement is intended to confer, nor shall this Agreement be construed as conferring, any rights, including, without limitation, any rights as a third-party beneficiary or otherwise, upon any entity or person not a party to this Agreement.
11.7 Recitals. The above-referenced Recitals are hereby incorporated into the Agreement as though fully set forth in this Agreement and each Party acknowledges and agrees that such Party is bound, for purposes of this Agreement, by the same.
11.8 Authority. The persons executing this Agreement on behalf of the Parties warrant that they are duly authorized to execute this Agreement on behalf of Parties and that by so executing this Agreement the Parties are formally bound to the provisions of this Agreement.
11.9 Counterparts. This Agreement may be signed in counterparts, each of which shall constitute an original.
12. Compliance with Economic Sanctions in Response to Russia's Actions in Ukraine. When funding for the services is provided, in whole or in part, by an agency controlled of the State of California, Consultant shall fully and adequately comply with California Executive Order N-6-22 (“Russian Sanctions Program”). As part of this compliance process, Consultant shall also certify compliance with the Russian Sanctions Program by completing the form located in Exhibit “C” (Russian Sanctions Certification), attached hereto and incorporated herein by reference. Consultant shall also require any subconsultants to comply with the Russian Sanctions Program and certify compliance pursuant to this Section.
13. Federal Provisions
Since funding for the Services is provided, in whole or in part, by the Federal Aviation Administration, Supplier shall also fully and adequately comply with the provisions included in Exhibit “D” attached hereto and incorporated herein by reference (“Federal Provisions”). With respect to any conflict between such Federal Provisions and the terms of this Agreement and/or the provisions of state law, the more stringent requirement shall control.
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[SIGNATURES ON NEXT PAGE]
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SIGNATURE PAGE TO CONTRACT SERVICES AGREEMENT
BY AND BETWEEN THE CITY OF PALM SPRINGS AND ROBSON HANDLING TECHNOLOGY USA INC.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates stated below.
CONTRACTOR:
By: _____________________________ By: _____________________________ Signature Signature
(2nd signature required for Corporation)
Date: ___________________________ Date: ___________________________ CITY OF PALM SPRINGS:
APPROVED BY CITY COUNCIL:
Date: _________________ Item No. _________________
APPROVED AS TO FORM: ATTEST:
By: _____________________________ By: _____________________________ City Attorney City Clerk
APPROVED:
By: _____________________________ Date: ____________________________ City Manager – over $50,000
Deputy/Assistant City Manager – up to $50,000
Director – up to $25,000
Manager – up to $5,000
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EXHIBIT “A”
SCOPE OF SERVICES/WORK
Including,
Schedule of Fees
And
Schedule of Performance
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SECTION 4 – SCOPE OF WORK
1.1 Background:
Palm Springs International Airport has the need for a service contract allowing for the bulk purchase of materials required for the maintenance of our Baggage Handling System.
1.2 Scope:
A. The Contractor will provide guaranteed pricing on all parts associated with their bid.
B. The Contractor shall have the knowledge and expertise to determine if a part is obsolete or no longer manufactured what appropriate part can supersede it.
C. The contractor shall be able to supply the Airport with Baggage System parts compatible with PSP’s current baggage system such as:
1. Belt material
2. Bearings
3. Drive motors (NORD)
4. VFD’s (NORD)
5. PLC’s (Allen Bradley)
6. Ethernet cables
7. Horizontal diverter parts (Siemens)
D. The contractor will be required to respond to parts orders within 24 hours of the order being placed in the agreed upon fashion.
E. Bids shall be evaluated based upon quoted prices for the attached parts list and for the total catalog of applicable available parts.
F. Response Time:
1. Order Confirmation. Contractors shall provide the City with a verbal or email communication response regarding delivery time within 1 hour of initial contact from the City.
2. Routine Parts. Response time for routine parts and supplies deliveries shall be within 24-72 hours.
3. Non-Routine Parts. Expedited response for delivery of parts and supplies will be within 24-48 hours after the call from the City. Any additional increase in delivery, shipping or freight charges shall be communicated to and approved by the City prior to service and/or shipping of parts.
4. If the parts and supplies cannot be delivered within the timeline detailed above, the Contractor will inform the City representative immediately of the reasons the parts and supplies cannot be delivered.
G. Delivery: Deliveries will be accepted twenty-four hours, seven days per week.
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H. General Safety Requirements: The Contractor shall be responsible for all safety precautions required in connection with their work, including regulations of the Occupational Safety and Health Administration (OSHA) and other governing agencies.
The City reserves the right to oversee all service work from a safety standpoint and require the Vendor to take appropriate action to ensure safety and code compliance.
I. Parts List: A parts list is included in this bid specification. Each vendor shall furnish a price per category in relationship to the item described in the parts list. Only categories that vendors wish to furnish parts for are required. Any additional parts categories offered but not listed and/or program pricing and incentives shall be attached to the final bid submittal by the vendor.
1. All parts and supplies furnished by the vendor must be of a City pre-authorized parts and supplies manufacturer or an equal product. The vendors shall provide vendor invoices reflecting wholesale pricing.
J. Equivalency: Vendor shall state the brand they will furnish for each category.
K. Communication: Upon award of the contract, the contract award vendors will each assign a contact person from their company to set and schedule parts and supply deliveries. It is expected there will be a contact person available by telephone during normal business hours, or that an answering call will be returned to the City within thirty (30) minutes. The contract award vendors must have a communication device that will allow the City to contact them directly in the event of an emergency. The contract award vendors will provide the City with all phone numbers that will allow 24- hour emergency communication. Failure to return a call will result in a reassessment and/or possible cancellation of that vendor’s contract.
L. Safety: All parts and supplies furnished to the City shall meet all manufacturer safety code requirements set by all local, state and federal regulation agencies.
M. Contractor will use commercially reasonable efforts to cause the applicable manufacturer to ensure that all parts and supplies will meet all applicable safety code requirements set by all local, state and federal regulation agencies.
1.3 Parts Invoice:
A parts invoice shall be issued electronically for each order and submitted with the invoice covering the parts and supplies order. All of the following information must be provided in clear and concise language and in legible form. The parts invoice shall include the following information:
1. Unique parts and or supplies order/job number;
2. Name of parts and/or supply manufacture;
3. City of Palm Springs Airport contact person requesting parts and/or supply order;
4. Date parts and/or supplies were ordered;
5. Contractor/Vendor employee who filled the order;
6. Delivery charges, when applicable.
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1.4 Invoicing:
The Contractor shall submit the invoice to the Contract Administrator. Each invoice will be reviewed for accuracy. Any irregularities will be brought to the contractor’s attention immediately. This may include excessive and or unreasonable part prices, illegible information, inaccurate information, etc. In the case of parts pricing, the City may ask for copies of the original parts invoices in order to verify the pricing, quality, and allowed markup, if any. Approval for payment shall be authorized by the Contract Administrator.
1.5 Payment:
The resulting contract for these services is an as needed contract. No specific amount of orders and/or service is guaranteed. The contract value is an estimated value only. All work authorized under the contract will be compensated on a time and material basis as outlined in this scope.
1.6 Pricing:
1. The pricing included in this Contract shall be firm for the first year.
2. The unit prices may be adjusted (decreased or increased) once a year to correspond with the most recent annual change to the Consumer Price Index for All Urban Consumers as published by the U.S. Bureaus of Labor Statistics for the Riverside-San Bernardino-Ontario Areas. Contractor must submit this request in writing to be reviewed/approved by the Contract Administrator. The approval will be made by a formal amendment.
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ATT.ACHIMENT G
BIDFGRM
INVITATION IFOR BIDS ~IFB 24-16•
BAGGAGE HANDLING PAIRTS FOR PAIi.Mi SP~INGS INiliiERNATIONAL AIRPORT Responding to lhis IIFB or lbaggage !handling parts supply, he 1Jnders·gned bidder proposes and agrees to provi de ·1he services and work in accordance with the specifications. Bidder proposes anid ag~es to• furnish .rll labo:r, equipment, mate:riats, supervision, andl seivice niece!>Sary to co plete· said Work in accordance with lhe Specifications of U'le Oi y of Palm Springs and · II accept as fu11 payment ~herefore, the following u:nit oost amounts. The City of Pal' Springs will not a:c:oept any addttional charges. fees, etc. that are not alr,eadry included or incorporated in the below uni! costs. l1TEM
11 2
3 4
5 6
7 8
DESCRJPTION
SEE ATTACHED Fl'RICE SHEET
UNIT ~ST•IMATED UNIT PRi CE SUB'JOTAL QUANTITY ·
TOTAL ,(Enter this am.cunt; in PhmetBlds) f 3lf5,Cf-f· li'J, •NOTE: Tl'lis bid ·rorm Is to determine the lowest bidder and will oo used to establish lhe contract unit pri:Ces. Tile contract will be set a the- Cily budget amount.
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EXHIBIT “B”
INSURANCE PROVISIONS
Including
Verification of Coverage,
Sufficiency of Insurers,
Errors and Omissions Coverage,
Minimum Scope of Insurance,
Deductibles and Self-Insured Retentions, and
Severability of Interests (Separation of Insureds)
Item 1Y - Page 28
INSURANCE
1. Procurement and Maintenance of Insurance. Contractor shall procure and maintain public liability and property damage insurance against all claims for injuries against persons or damages to property resulting from Contractor’s performance under this Agreement.
Contractor shall procure and maintain all insurance at its sole cost and expense, in a form and content satisfactory to the City, and submit concurrently with its execution of this Agreement.
Contractor shall also carry workers’ compensation insurance in accordance with California workers’ compensation laws. Such insurance shall be kept in full force and effect during the term of this Agreement, including any extensions. Such insurance shall not be cancelable without thirty (30) days advance written notice to City of any proposed cancellation. Certificates of insurance evidencing the foregoing and designating the City, its elected officials, officers, employees, agents, and volunteers as additional named insureds by original endorsement shall be delivered to and approved by City prior to commencement of services. The procuring of such insurance and the delivery of policies, certificates, and endorsements evidencing the same shall not be construed as a limitation of Contractor’s obligation to indemnify City, its elected officials, officers, agents, employees, and volunteers.
2. Minimum Scope of Insurance. The minimum amount of insurance required under this Agreement shall be as follows:
1. Comprehensive general liability and personal injury with limits of at least one million dollars ($1,000,000.00) combined single limit coverage per occurrence and two million dollars ($2,000,000) general aggregate;
2. Automobile liability insurance with limits of at least one million dollars ($1,000,000.00) per occurrence;
3. Professional liability (errors and omissions) insurance with limits of at least one million dollars ($1,000,000.00) per occurrence and two million dollars ($2,000,000) annual aggregate is:
_________ required
___x_____ is not required;
4. Workers’ Compensation insurance in the statutory amount as required by the State of California and Employer’s Liability Insurance with limits of at least one million dollars $1 million per occurrence. If Contractor has no employees, Contractor shall complete the City’s Invitation for Waiver of Workers’ Compensation Insurance Requirement form.
3. Primary Insurance. For any claims related to this Agreement, Contractor’s insurance coverage shall be primary with respect to the City and its respective elected officials, officers, employees, agents, and volunteers. Any insurance or self-insurance maintained by City and its respective elected officials, officers, employees, agents, and volunteers shall be in excess of Contractor’s insurance and shall not contribute with it. For Workers’ Compensation and Employer’s Liability Insurance only, the insurer shall waive all rights of subrogation and contribution it may have against City, its elected officials, officers, employees, agents, and volunteers.
4. Errors and Omissions Coverage. If Errors & Omissions Insurance is required, and if Contractor provides claims made professional liability insurance, Contractor shall also agree in writing either (1) to purchase tail insurance in the amount required by this Agreement to cover claims made within three years of the completion of Contractor’s services under this Agreement, or (2) to maintain professional liability insurance coverage with the same carrier in Item 1Y - Page 29
the amount required by this Agreement for at least three years after completion of Contractor’s services under this Agreement. Contractor shall also be required to provide evidence to City of the purchase of the required tail insurance or continuation of the professional liability policy.
5. Sufficiency of Insurers. Insurance required in this Agreement shall be provided by authorized insurers in good standing with the State of California. Coverage shall be provided by insurers admitted in the State of California with an A.M. Best’s Key Rating of B++, Class VII, or better, unless otherwise acceptable to the City.
6. Verification of Coverage. Contractor shall furnish City with both certificates of insurance and endorsements, including additional insured endorsements, effecting all of the coverages required by this Agreement. The certificates and endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. All proof of insurance is to be received and approved by the City before work commences. City reserves the right to require Contractor’s insurers to provide complete, certified copies of all required insurance policies at any time. Additional insured endorsements are not required for Errors and Omissions and Workers’ Compensation policies.
Verification of Insurance coverage may be provided by: (1) an approved General and/or Auto Liability Endorsement Form for the City of Palm Springs or (2) an acceptable Certificate of Liability Insurance Coverage with an approved Additional Insured Endorsement with the following endorsements stated on the certificate:
A. "The City of Palm Springs, its officials, employees, and agents are named as an additional insured…” ("as respects City of Palm Springs Contract No.___" or "for any and all work performed with the City" may be included in this statement).
B. "This insurance is primary and non-contributory over any insurance or selfinsurance the City may have..." ("as respects City of Palm Springs Contract No.___" or "for any and all work performed with the City" may be included in this statement).
C. "Should any of the above described policies be canceled before the expiration date thereof, the issuing company will mail 30 days written notice to the Certificate Holder named." Language such as, “endeavor to” mail and "but failure to mail such notice shall impose no obligation or liability of any kind upon the company, its agents or representative" is not acceptable and must be crossed out.
D. Both the Workers’ Compensation and Employers' Liability policies shall contain the insurer's waiver of subrogation in favor of City, its elected officials, officers, employees, agents, and volunteers.
In addition to the endorsements listed above, the City of Palm Springs shall be named the certificate holder on the policies.
All certificates of insurance and endorsements are to be received and approved by the City before work commences. All certificates of insurance must be authorized by a person with authority to bind coverage, whether that is the authorized agent/broker or insurance underwriter. Failure to obtain the required documents prior to the commencement of work shall not waive the Contractor’s obligation to provide them.
7. Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by the City prior to commencing any work or services under this Agreement. At the option of the City, either (1) the insurer shall reduce or eliminate such deductibles or self-insured retentions with respect to the City, its elected officials, officers, employees, agents, and volunteers; or (2) Contractor shall procure a bond guaranteeing payment of losses and related investigations, claim administration, and defense expenses. Certificates of Item 1Y - Page 30
Insurance must include evidence of the amount of any deductible or self-insured retention under the policy. Contractor guarantees payment of all deductibles and self-insured retentions.
8. Severability of Interests (Separation of Insureds). This insurance applies separately to each insured against whom claim is made or suit is brought except with respect to the limits of the insurer’s liability.
Item 1Y - Page 31
EXHIBIT “C”
Item 1Y - Page 32
ATTACHMENT "P
EXECUil11ViE ORDER N-6·:22 CER11I1Fl,CA TION
INV,llATION FO'R BIDS (IFB 24-15)
BAGGAG'E HANDLIING PARTS 'FOR PALM SPIRJN,GS INTEiRNA.TIONAL AIRPORT 1Execuhve Order Nl--6-22 issued by Governor ·Gavin Newsom on March 4, 202:2, dfntels .tll agenc s and departments thal are subf,eci to, the, Governor's authority. to, {a,) terminate any contr.acts with a_ny i11dividuals or entitles lhat are determined to, be a target of ectmollllic sanctions against Russia and Russian enli:ties and individuals; and (b) efmln ftoin enlering into-aniy new conb"acts wi:th such individuals or enti~ies whi e lhe afor,em,et111ioned sancliions are in eff~ct.
I::xecutiv@ Order IN-6-22 also requires that any eon ..-actor that (1) cun,endy has a ooruract with lhe City of Palm Sp.rings fonded through ,gr. nt funds prov,lded by the State of Cal'ifomia; a.ml/or (2} submits - bid or 1proposall or olherwise proposes. to or enler into •or renew a oomraci wilh the City of Palm Spl'inga with State of Calitomla grai,t funid:s, ~ry t at t e pe1$0.n is not tfle targel: or any ,ecor1omlc salilc!f:orn$ again&! Russia and Russian enUtles and Ind vicluals.
The comraotor hereb-y oertifie-s, SUBJECT' TO PENAL TY FOR PERJURY, !hat a) the ooritractor iG not a 1:arget of any economic. sanc~lons ageirnst 'Russian and Russian entities andl individuals as discussed 1in Ex:eoutive Order N-6-22 .andl b,> U,e person signing below is duly avlhorized to legally birnd the Contractor_ This certification is made under ~he laws of thle Sate ,of California.
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Signature:4/J{<(r ee., ,,;
Printed Name: I~ o bb ~1 ~,.. W-~
Tille: pr., t'). ~ ) ct.,J '-(. YfJ., .)'~.,...
Fi - . ·N, i1 .. l ~, .., J J il~J L ~_, -7:l,,i;_,1./m £,.J 1rm' ame.: ,11 ... ., .,. n . ,) ,.. '1 - ,-1,~ ..,._ ~ Data: ___ i ____ L-~ ::1+.--------
Exhibit “D”
FEDERAL AVIATION ADMINISTRATION
FEDERAL PROVISIONS
Provision
Reference Provision Description
Page
No.
FAA - 01 Access to Records and Reports 2
FAA - 02 Affirmative Action Requirement * 3
FAA – 03 Breach of Contract Terms 5
FAA – 04 Buy American Preference * 6
FAA – 05 Civil Rights General 7
FAA – 06 Civil Rights – Title VI Assurances * 8
FAA – 07 Clean Air and Water Pollution Control 11
FAA – 08 Contract Work Hours and Safety Standards Act Requirements 12 FAA – 09 Copeland Anti-Kickback Act 14
FAA – 10 Davis Bacon Requirements 15
FAA – 11 Debarment and Suspension * 22
FAA – 12 Disadvantaged Business Enterprise * 23
FAA – 13 Distracted Driving 25
FAA – 14 Prohibition on Certain Telecommunications and Video Surveillance Services or Equipment
26 FAA – 15 Drug Free Workplace Requirements (not applicable to Contractors)
27 FAA – 16 Equal Employment Opportunity 28
FAA – 17 Federal Fair Labor Standards Act * 36
FAA – 18 Lobbying and Influencing Federal Employees 37
FAA – 19 Prohibition of Segregated Facilities 38
FAA – 20 Occupational Safety and Health Act of 1970 39
FAA – 21 Procurement of Recovered Materials * 40
FAA – 22 Right to Inventions 41
FAA – 23 Seismic Safety 42
FAA – 24 Tax Delinquency and Felony Convictions* 43
FAA – 25 Termination of Contract 44
FAA – 26 Trade Restriction Certification (Foreign) * 45 FAA – 27 Veteran’s Preference 47
FAA – 28 Domestic Preferences for Procurements * 48
*Solicitation Clause also
Updated 2.8.2023
Item 1Y - Page 33
FAA - 01 Access to Records and Reports
APPLICABILITY – pertains to all contracts.
The Contractor must maintain an acceptable cost accounting system. The Contractor agrees to provide the City, the Federal Aviation Administration and the Comptroller General of the United States or any of their duly authorized representatives access to any books, documents, papers and records of the Contractor which are directly pertinent to the specific contract for the purpose of making audit, examination, excerpts and transcriptions. The Contractor agrees to maintain all books, records and reports required under this contract for a period of not less than three years after final payment is made and all pending matters are closed.
Reference: 2 CFR § 200.334, 2 CFR § 200.337, FAA Order 5100.38 Item 1Y - Page 34
FAA - 02 Affirmative Action Requirement
NOTICE OF REQUIREMENT FOR AFFIRMATIVE ACTION TO
ENSURE EQUAL EMPLOYMENT OPPORTUNITY
APPLICABILITY – pertains to all contracts over $10,000 as follows:
Construction – AIP funded construction work contracts and subcontracts that exceed $10,000.
Construction work means construction, rehabilitation, alteration, conversion, extension, demolition or repair of buildings, highways or other changes or improvements to real property, including facilities providing utility services. The term also includes the supervision, inspection and other onsite functions incidental to the actual construction.
Equipment – any equipment project exceeding $10,000 that involves installation of equipment onsite (e.g., electrical vault equipment). This provision does not apply to equipment acquisition projects where the manufacture of the equipment takes place offsite at a manufacturer’s plant (e.g., firefighting and snow removal vehicles).
Professional Services – any professional service agreement if the professional services agreement includes tasks that meet the definition of construction work [as defined by the U.S.
Department of Labor (DOL)] and exceeds $10,000. Examples include installation of monitoring systems (e.g., noise, environmental, etc.).
Property/Land – any agreement associated with land acquisition if the agreement includes construction work (defined above) that exceeds $10,000. Examples include demolition of structures or installation of boundary fencing.
REQUIREMENTS -
1. The Contractor’s attention is called to the “Equal Opportunity Clause” and the “Standard Federal Equal Employment Opportunity Construction Contract Specifications” set forth herein.
2. The goals and timetables for minority and female participation, expressed in percentage terms for the Contractor’s aggregate workforce in each trade on all construction work in the covered area, are as follows:
Timetables
Goals for minority participation for each trade: [N/A]
Goals for female participation in each trade: [N/A]
These goals are applicable to all of the Contractor’s construction work (whether or not it is Federal or federally assisted) performed in the covered area. If the Contractor performs construction work in a geographical area located outside of the covered area, it shall apply the goals established for such geographical area where the work is actually performed. With regard to this second area, the Contractor also is subject to the goals for both its federally involved and nonfederally involved construction.
The Contractor’s compliance with the Executive Order and the regulations in 41 CFR Part 60-4 shall be based on its implementation of the Equal Opportunity Clause, specific affirmative action obligations required by the specifications set forth in 41 CFR 60-4.3(a) and its efforts to meet the goals. The hours of minority and female employment and training must be substantially Item 1Y - Page 35
uniform throughout the length of the contract, and in each trade, and the Contractor shall make a good faith effort to employ minorities and women evenly on each of its projects. The transfer of minority or female employees or trainees from Contractor to Contractor or from project to project for the sole purpose of meeting the Contractor’s goals shall be a violation of the contract, the Executive Order and the regulations in 41 CFR Part 60-4. Compliance with the goals will be measured against the total work hours performed.
3. The Contractor shall provide written notification to the Director of the Office of Federal Contract Compliance Programs (OFCCP) within 10 working days of award of any construction subcontract in excess of $10,000 at any tier for construction work under the contract resulting from this solicitation. The notification shall list the name, address, and telephone number of the subcontractor; employer identification number of the subcontractor; estimated dollar amount of the subcontract; estimated starting and completion dates of the subcontract; and the geographical area in which the subcontract is to be performed.
4. As used in this notice and in the contract resulting from this solicitation, the “covered area” is California, Riverside County, Palm Springs.
Reference: 41 CFR Part 60-4
Item 1Y - Page 36
FAA – 03 Breach of Contract
APPLICABILITY – required for all contracts that exceed the simplified acquisition threshold as stated in 2 CFR Part 200, Appendix II (A). This threshold is occasionally adjusted for inflation and is $250,000.
REQUIREMENT -
See Section 4.5 of the Agreement.
Reference: 2 CFR § 200 Appendix II(A)
Item 1Y - Page 37
FAA – 04 Buy American Preferences
APPLICABILITY – required for contracts defined as follows:
• Construction Projects involving the replacement, rehabilitation, reconstruction of airfield surfaces such as on runways, taxiways, taxilanes, aprons, roadways, parking lots, etc. – Insert the Certificate of compliance to FAA Buy American Preference based on Construction Projects.
• Equipment and Buildings Projects involving and including the acquisition of equipment such as snow removal equipment, navigational aids, wind cones, and the construction of buildings such as hangars, terminal development, lighting vaults, aircraft rescue & firefighting buildings, etc. - Insert the Certificate of Compliance with FAA Buy American Preference Based on Equipment/Building Projects.
REQUIREMENT -
The Contractor certifies that all constructions materials, defined to mean an article, material, or supply other than an item of primarily iron or steel; a manufactured product; cement and cementitious materials; aggregates such as stone, sand, or gravel; or aggregate binding agents or additives that are or consist primarily of: non-ferrous metals; plastic and polymer-based products (including polyvinylchloride, composite building materials, and polymers used in fiber optic cables); glass (including optic glass); lumber; or drywall used in the project are manufactured in the U.S.
Reference: Title 49 USC § 50101
Item 1Y - Page 38
FAA – 05 Civil Rights General
APPLICABILITY – required for all contracts regardless of funding source.
REQUIREMENT -
In all its activities within the scope of its airport program, the Contractor agrees to comply with pertinent statutes, Executive Orders, and such rules as identified in Title VI List of Pertinent Nondiscrimination Acts and Authorities to ensure that no person shall, on the grounds of race, color, national origin (including limited English proficiency), creed, sex (including sexual orientation and gender identity), age, or disability be excluded from participating in any activity conducted with or benefiting from Federal assistance. The above provision binds the Contractor and subcontractors from the bid solicitation period through the completion of the contract.
This provision is in addition to that required by Title VI of the Civil Rights Act of 1964.
Reference: 49 USC § 47123
Item 1Y - Page 39
FAA – 06 Civil Rights – Title VI Assurances
APPLICABILITY – required for all contracts.
REQUIREMENT -
Title VI List of Pertinent Nondiscrimination Acts and Authorities During the performance of this contract, the Contractor, for itself, its assignees, and successors in interest (hereinafter referred to as the “Contractor”) agrees to comply with the following nondiscrimination statutes and authorities; including but not limited to:
• Title VI of the Civil Rights Act of 1964 (42 USC § 2000d et seq., 78 stat. 252) (prohibits discrimination on the basis of race, color, national origin); • 49 CFR part 21 (Non-discrimination in Federally-Assisted programs of the Department of Transportation—Effectuation of Title VI of the Civil Rights Act of 1964); • The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, (42 USC § 4601) (prohibits unfair treatment of persons displaced or whose property has been acquired because of Federal or Federal-aid programs and projects); • Section 504 of the Rehabilitation Act of 1973 (29 USC § 794 et seq.), as amended (prohibits discrimination on the basis of disability); and 49 CFR part 27 (Nondiscrimination on the Basis of Disability in Programs or Activities Receiving Federal Financial Assistance); • The Age Discrimination Act of 1975, as amended (42 USC § 6101 et seq.) (prohibits discrimination on the basis of age);
• Airport and Airway Improvement Act of 1982 (49 USC § 47123), as amended (prohibits discrimination based on race, creed, color, national origin, or sex); • The Civil Rights Restoration Act of 1987 (PL 100-259) (broadened the scope, coverage and applicability of Title VI of the Civil Rights Act of 1964, the Age Discrimination Act of 1975 and Section 504 of the Rehabilitation Act of 1973, by expanding the definition of the terms “programs or activities” to include all of the programs or activities of the Federal-aid recipients, sub-recipients and contractors, whether such programs or activities are Federally funded or not); • Titles II and III of the Americans with Disabilities Act of 1990 (42 USC § 12101, et seq) (prohibit discrimination on the basis of disability in the operation of public entities, public and private transportation systems, places of public accommodation, and certain testing entities) as implemented by U.S. Department of Transportation regulations at 49 CFR parts 37 and 38; • The Federal Aviation Administration’s Nondiscrimination statute (49 USC § 47123) (prohibits discrimination on the basis of race, color, national origin, and sex); • Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (ensures nondiscrimination against minority populations by discouraging programs, policies, and activities with disproportionately high and adverse human health or environmental effects on minority and low-income populations); • Executive Order 13166, Improving Access to Services for Persons with Limited English Proficiency, and resulting agency guidance, national origin discrimination includes discrimination because of limited English proficiency (LEP). To ensure compliance with Title VI, you must take Item 1Y - Page 40
reasonable steps to ensure that LEP persons have meaningful access to your programs [70 Fed.
Reg. 74087 (2005)];
• Title IX of the Education Amendments of 1972, as amended, which prohibits you from discriminating because of sex in education programs or activities (20 USC § 1681, et seq).
Compliance with Nondiscrimination Requirements:
During the performance of this contract, the Contractor, for itself, its assignees, and successors in interest (hereinafter referred to as the “Contractor”), agrees as follows:
1. Compliance with Regulations: The Contractor (hereinafter includes consultants) will comply with the Title VI List of Pertinent Nondiscrimination Acts and Authorities, as they may be amended from time to time, which are herein incorporated by reference and made a part of this contract.
2. Nondiscrimination: The Contractor, with regard to the work performed by it during the contract, will not discriminate on the grounds of race, color, national origin (including limited English proficiency), creed, sex (including sexual orientation and gender identity), age, or disability in the selection and retention of subcontractors, including procurements of materials and leases of equipment. The Contractor will not participate directly or indirectly in the discrimination prohibited by the Nondiscrimination Acts and Authorities, including employment practices when the contract covers any activity, project, or program set forth in Appendix B of 49 CFR part 21.
3. Solicitations for Subcontracts, including Procurements of Materials and Equipment:
In all solicitations, either by competitive bidding or negotiation made by the Contractor for work to be performed under a subcontract, including procurements of materials, or leases of equipment, each potential subcontractor or supplier will be notified by the Contractor of the Contractor’s obligations under this contract and the Nondiscrimination Acts and Authorities on the grounds of race, color, or national origin.
4. Information and Reports: The Contractor will provide all information and reports required by the Acts, the Regulations, and directives issued pursuant thereto and will permit access to its books, records, accounts, other sources of information, and its facilities as may be determined by the City or the Federal Aviation Administration to be pertinent to ascertain compliance with such Nondiscrimination Acts and Authorities and instructions. Where any information required of a Contractor is in the exclusive possession of another who fails or refuses to furnish the information, the Contractor will so certify to the City or the Federal Aviation Administration, as appropriate, and will set forth what efforts it has made to obtain the information.
5. Sanctions for Noncompliance: In the event of a Contractor’s noncompliance with the nondiscrimination provisions of this contract, the City will impose such contract sanctions as it or the Federal Aviation Administration may determine to be appropriate, including, but not limited to:
a. Withholding payments to the Contractor under the contract until the Contractor complies; and/or
b. Cancelling, terminating, or suspending a contract, in whole or in part.
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6. Incorporation of Provisions: The Contractor will include the provisions of paragraphs one through six in every subcontract, including procurements of materials and leases of equipment, unless exempt by the Acts, the Regulations, and directives issued pursuant thereto. The Contractor will take action with respect to any subcontract or procurement as the City or the Federal Aviation Administration may direct as a means of enforcing such provisions including sanctions for noncompliance. Provided, that if the Contractor becomes involved in, or is threatened with litigation by a subcontractor, or supplier because of such direction, the Contractor may request the City to enter into any litigation to protect the interests of the City. In addition, the Contractor may request the United States to enter into the litigation to protect the interests of the United States.
Reference: 49 USC § 47123, FAA Order 1400.11
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FAA – 07 Clean Air/Water Pollution Control
APPLICABILITY – This provision is required for all contracts and lower tier contracts that exceed $150,000.
REQUIREMENT -
If the Agreement exceeds $150,000, Contractor agrees to comply with all applicable standards, orders, and regulations issued pursuant to the Clean Air Act (42 USC § 7401-7671q) and the Federal Water Pollution Control Act as amended (33 USC § 1251-1387). The Contractor agrees to report any violation to the City immediately upon discovery. The City assumes responsibility for notifying the Environmental Protection Agency (EPA) and the Federal Aviation Administration.
Contractor must include this requirement in all subcontracts that exceeds $150,000.
Reference: 2 CFR § 200, Appendix II(G); 42 USC § 7401; 33 USC § 1251 Item 1Y - Page 43
FAA – 08 Contract Work Hours and Safety Standards
APPLICABILITY – This provision is required for contracts as follows:
Contract Work Hours and Safety Standards Act Requirements (CWHSSA) (40 USC §§ 3702 & 3704) requires contractors and subcontractors on covered contracts to pay laborers and mechanics employed in the performance of the contracts not less than one and one-half times their basic rate of pay for all hours worked over 40 in a workweek. CWHSSA prohibits unsanitary, hazardous, or dangerous working conditions on federally-assisted projects. The Wage and Hour Division (WHD) within the U.S. Department of Labor (DOL) enforces the compensation requirements of this Act, while DOL’s Occupational Safety and Health Administration (OSHA) enforces the safety and health requirements.
Contract Types –
Construction – This provision applies to all contracts and lower tier contracts that exceed $100,000, and employ laborers, mechanics, watchmen, and guards.
Equipment – This provision applies to any equipment project exceeding $100,000 that involves installation of equipment onsite (e.g., electrical vault equipment). This provision does not apply to equipment acquisition projects where the manufacture of the equipment takes place offsite at the vendor plant (e.g., ARFF and SRE vehicles).
Professional Services – This provision applies to professional service agreements that exceed $100,000 and employs laborers, mechanics, watchmen, and guards. This includes members of survey crews and exploratory drilling operations.
Property – While most land transactions do not involve employment of laborers, mechanics, watchmen, and guards, under certain circumstances, a property acquisition project could require such employment. Examples include the installation of property fencing or testing for environmental contamination
CONTRACT WORKHOURS AND SAFETY STANDARDS ACT REQUIREMENTS
1. Overtime Requirements.
No contractor or subcontractor contracting for any part of the contract work which may require or involve the employment of laborers or mechanics shall require or permit any such laborer or mechanic, including watchmen and guards, in any workweek in which he or she is employed on such work to work in excess of forty hours in such workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times the basic rate of pay for all hours worked in excess of forty hours in such workweek.
2. Violation; Liability for Unpaid Wages; Liquidated Damages.
In the event of any violation of the clause set forth in paragraph (1) of this clause, the Contractor and any subcontractor responsible therefor shall be liable for the unpaid wages. In addition, such contractor and subcontractor shall be liable to the United States (in the case of work done under contract for the District of Columbia or a territory, to such District or to such territory), for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or mechanic, including watchmen and guards, employed in violation of the clause set forth in paragraph (1) of this clause, in the sum of $29 for each calendar day on which such individual was required or permitted to work in excess of the standard workweek of forty hours without payment of the overtime wages required by the clause set forth in paragraph (1) of this clause.
3. Withholding for Unpaid Wages and Liquidated Damages.
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The Federal Aviation Administration (FAA) or the City shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld, from any moneys payable on account of work performed by the Contractor or subcontractor under any such contract or any other Federal contract with the same prime Contractor, or any other federally-assisted contract subject to the Contract Work Hours and Safety Standards Act, which is held by the same prime Contractor, such sums as may be determined to be necessary to satisfy any liabilities of such Contractor or subcontractor for unpaid wages and liquidated damages as provided in the clause set forth in paragraph (2) of this clause.
4. Subcontractors.
The Contractor or subcontractor shall insert in any subcontracts the clauses set forth in paragraphs (1) through (4) and also a clause requiring the subcontractor to include these clauses in any lower tier subcontracts. The prime contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with the clauses set forth in paragraphs (1) through (4) of this clause.
Reference: 2 CFR Part 200, Appendix II(E); 2 CFR § 5.5(b); 40 USC § 3702; 40 USC § 3704
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FAA – 09 Copeland Anti-Kickback
APPLICABILITY -
The Copeland (Anti-Kickback) Act (18 USC § 874 and 40 USC § 3145) makes it unlawful to induce by force, intimidation, threat of dismissal from employment, or by any other manner, any person employed in the construction or repair of public buildings or public works, financed in whole or in part by the United States, to give up any part of the compensation to which that person is entitled under a contract of employment. The Copeland Act also requires each contractor and subcontractor to furnish weekly a statement of compliance with respect to the wages paid each employee during the preceding week.
Contract Types –
Construction – This provision applies to all construction contracts and subcontracts financed under the AIP that exceed $2,000.
Equipment – This provision applies to all equipment installation projects (e.g., electrical vault improvements) financed under the AIP that exceed $2,000. This provision does not apply to equipment acquisitions where the equipment is manufactured at the vendor’s plant (e.g., SRE and ARFF vehicles).
Professional Services –The emergence of different project delivery methods has created situations where Professional Service Agreements (PSAs) include tasks that meet the definition of construction, alteration, or repair as defined in 29 CFR Part 5. If such tasks result in work that qualifies as construction, alteration, or repair and it exceeds $2,000, the PSA must incorporate the Copeland Anti-kickback provision.
Property –Ordinarily, land acquisition projects would not involve employment of laborers or mechanics and thus the Copeland Anti-Kickback provision would not apply. However, land projects that involve installation of boundary fencing and demolition of structures would involve laborers and mechanics. The City must include this provision if the land acquisition project involves employment of laborers or mechanics for a contract exceeding $2,000.
REQUIREMENT -
Contractor must comply with the requirements of the Copeland “Anti-Kickback” Act (18 USC 874 and 40 USC 3145), as supplemented by Department of Labor regulation 29 CFR part
3. Contractor and subcontractors are prohibited from inducing, by any means, any person employed on the project to give up any part of the compensation to which the employee is entitled. The Contractor and each Subcontractor must submit to the City, a weekly statement on the wages paid to each employee performing on covered work during the prior week. City must report any violations of the Act to the Federal Aviation Administration.
Reference: 2 CFR Part 200, Appendix II(D); 29 CFR Parts 3 and 5 Item 1Y - Page 46
FAA – 10 Davis Bacon Requirements
APPLICABILITY -
The Davis-Bacon Act (40 USC §§ 3141-3144, 3146, and 3147) ensures that laborers and mechanics employed under the contract receive pay no less than the locally prevailing wages and fringe benefits as determined by the Department of Labor.
Contract Types –
Construction –all construction contracts and subcontracts that exceed $2,000 and include funding from the AIP.
Equipment – This provision applies to all equipment installation projects (e.g., electrical vault improvements) financed under the AIP that exceed $ 2,000. This provision does not apply to equipment acquisitions where the equipment is manufactured at the vendor’s plant (e.g., SRE and ARFF vehicles)
Professional Services – The emergence of different project delivery methods has created situations where Professional Service Agreements (PSAs) includes tasks that meet the definition of construction, alteration, or repair as defined in 29 CFR Part 5. If such tasks result in work that qualifies as construction, alteration, or repair and it exceeds $2,000, the PSA must incorporate this clause.
Property – Ordinarily, land acquisition projects would not involve employment of laborers or mechanics and thus the provision would not apply. However, land projects that involve installation of boundary fencing and demolition of structures would involve laborers and mechanics. The City must include this provision if the land acquisition project involves employment of laborers or mechanics for a contract exceeding $2,000.
Fencing Projects – Fencing projects that exceed $2,000 must include this provision.
DAVIS-BACON REQUIREMENTS
1. Minimum Wages.
(i) All laborers and mechanics employed or working upon the site of the work will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by the Secretary of Labor under the Copeland Act (29 CFR Part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalent thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the Contractor and such laborers and mechanics.
Contributions made or costs reasonably anticipated for bona fide fringe benefits under section 1(b)(2) of the Davis-Bacon Act on behalf of laborers or mechanics are considered wages paid to such laborers or mechanics, subject to the provisions of paragraph (1)(iv) of this section; also, regular contributions made or costs incurred for more than a weekly period (but not less often than quarterly) under plans, funds, or programs which cover the particular weekly period, are deemed to be constructively made or incurred during such weekly period. Such laborers and mechanics shall be paid the appropriate wage rate and fringe benefits on the wage determination Item 1Y - Page 47
for the classification of work actually performed, without regard to skill, except as provided in 29 CFR § 5.5(a)(4). Laborers or mechanics performing work in more than one classification may be compensated at the rate specified for each classification for the time actually worked therein:
Provided, that the employer’s payroll records accurately set forth the time spent in each classification in which work is performed. The wage determination (including any additional classification and wage rates conformed under (1)(ii) of this section) and the Davis-Bacon poster (WH-1321) shall be posted at all times by the Contractor and its subcontractors at the site of the work in a prominent and accessible place where it can easily be seen by the workers. (ii)(A) The contracting officer shall require that any class of laborers or mechanics, including helpers, which is not listed in the wage determination and which is to be employed under the contract shall be classified in conformance with the wage determination. The contracting officer shall approve an additional classification and wage rate and fringe benefits therefore only when the following criteria have been met:
(1) The work to be performed by the classification requested is not performed by a classification in the wage determination;
(2) The classification is utilized in the area by the construction industry; and (3) The proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination. (B) If the Contractor and the laborers and mechanics to be employed in the classification (if known), or their representatives, and the contracting officer agree on the classification and wage rate (including the amount designated for fringe benefits where appropriate), a report of the action taken shall be sent by the contracting officer to the Administrator of the Wage and Hour Division, U.S. Department of Labor, Washington, DC 20210. The Administrator, or an authorized representative, will approve, modify, or disapprove every additional classification action within 30 days of receipt and so advise the contracting officer or will notify the contracting officer within the 30-day period that additional time is necessary.
(C) In the event the Contractor, the laborers, or mechanics to be employed in the classification, or their representatives, and the contracting officer do not agree on the proposed classification and wage rate (including the amount designated for fringe benefits, where appropriate), the contracting officer shall refer the questions, including the views of all interested parties and the recommendation of the contracting officer, to the Administrator for determination. The Administrator, or an authorized representative, will issue a determination within 30 days of receipt and so advise the contracting officer or will notify the contracting officer within the 30-day period that additional time is necessary.
(D) The wage rate (including fringe benefits where appropriate) determined pursuant to subparagraphs (1)(ii) (B) or (C) of this paragraph, shall be paid to all workers performing work in the classification under this contract from the first day on which work is performed in the classification.
(iii) Whenever the minimum wage rate prescribed in the contract for a class of laborers or mechanics includes a fringe benefit which is not expressed as an hourly rate, the contractor shall either pay the benefit as stated in the wage determination or shall pay another bona fide fringe benefit or an hourly cash equivalent thereof.
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(iv) If the Contractor does not make payments to a trustee or other third person, the Contractor may consider as part of the wages of any laborer or mechanic the amount of any costs reasonably anticipated in providing bona fide fringe benefits under a plan or program, Provided, that the Secretary of Labor has found, upon the written request of the Contractor, that the applicable standards of the Davis-Bacon Act have been met. The Secretary of Labor may require the Contractor to set aside in a separate account assets for the meeting of obligations under the plan or program.
2. Withholding. The Federal Aviation Administration or the City shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld from the Contractor under this contract or any other Federal contract with the same prime contractor, or any other federally-assisted contract subject to Davis-Bacon prevailing wage requirements, which is held by the same prime contractor, so much of the accrued payments or advances as may be considered necessary to pay laborers and mechanics, including apprentices, trainees, and helpers, employed by the Contractor or any subcontractor the full amount of wages required by the contract. In the event of failure to pay any laborer or mechanic, including any apprentice, trainee, or helper, employed or working on the site of the work, all or part of the wages required by the contract, the Federal Aviation Administration may, after written notice to the Contractor, City, Applicant, or Owner, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds until such violations have ceased.
3. Payrolls and Basic Records.
(i) Payrolls and basic records relating thereto shall be maintained by the Contractor during the course of the work and preserved for a period of three years thereafter for all laborers and mechanics working at the site of the work. Such records shall contain the name, address, and social security number of each such worker; his or her correct classification; hourly rates of wages paid (including rates of contributions or costs anticipated for bona fide fringe benefits or cash equivalents thereof of the types described in 1(b)(2)(B) of the Davis-Bacon Act); daily and weekly number of hours worked; deductions made; and actual wages paid. Whenever the Secretary of Labor has found under 29 CFR 5.5(a)(1)(iv) that the wages of any laborer or mechanic include the amount of any costs reasonably anticipated in providing benefits under a plan or program described in section 1(b)(2)(B) of the Davis-Bacon Act, the Contractor shall maintain records that show that the commitment to provide such benefits is enforceable, that the plan or program is financially responsible, and that the plan or program has been communicated in writing to the laborers or mechanics affected, and records which show the costs anticipated or the actual costs incurred in providing such benefits. Contractors employing apprentices or trainees under approved programs shall maintain written evidence of the registration of apprenticeship programs and certification of trainee programs, the registration of the apprentices and trainees, and the ratios and wage rates prescribed in the applicable programs. (ii)(A) The Contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the Federal Aviation Administration if the agency is a party to the contract, but if the agency is not such a party, the Contractor will submit the payrolls to the applicant, the City, or Owner, as the case may be, for transmission to the Federal Aviation Administration. The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR § 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on weekly transmittals. Instead the payrolls shall only need to Item 1Y - Page 49
include an individually identifying number for each employee (e.g., the last four digits of the employee’s social security number). The required weekly payroll information may be submitted in any form desired. Optional Form WH–347 is available for this purpose from the Wage and Hour Division Web site at http://www.dol.gov/esa/whd/forms/wh347instr.htm or its successor site. The prime contractor is responsible for the submission of copies of payrolls by all subcontractors.
Contractors and subcontractors shall maintain the full social security number and current address of each covered worker and shall provide them upon request to the Federal Aviation Administration if the agency is a party to the contract, but if the agency is not such a party, the Contractor will submit them to the applicant, the City, or Owner, as the case may be, for transmission to the Federal Aviation Administration, the Contractor, or the Wage and Hour Division of the Department of Labor for purposes of an investigation or audit of compliance with prevailing wage requirements. It is not a violation of this section for a prime contractor to require a subcontractor to provide addresses and social security numbers to the prime contractor for its own records, without weekly submission to the sponsoring government agency (or the applicant, City, or Owner).
(B) Each payroll submitted shall be accompanied by a "Statement of Compliance," signed by the Contractor or subcontractor or his or her agent who pays or supervises the payment of the persons employed under the contract and shall certify the following:
(1) That the payroll for the payroll period contains the information required to be provided under 29 CFR § 5.5(a)(3)(ii), the appropriate information is being maintained under 29 CFR § 5.5 (a)(3)(i), and that such information is correct and complete; (2) That each laborer and mechanic (including each helper, apprentice, and trainee) employed on the contract during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly, and that no deductions have been made either directly or indirectly from the full wages earned, other than permissible deductions as set forth in Regulations, 29 CFR Part 3;
(3) That each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash equivalents for the classification of work performed, as specified in the applicable wage determination incorporated into the contract. (C) The weekly submission of a properly executed certification set forth on the reverse side of Optional Form WH-347 shall satisfy the requirement for submission of the “Statement of Compliance” required by paragraph (3)(ii)(B) of this section. (D) The falsification of any of the above certifications may subject the Contractor or subcontractor to civil or criminal prosecution under Section 1001 of Title 18 and Section 231 of Title 31 of the United States Code.
(iii) The Contractor or subcontractor shall make the records required under paragraph (3)(i) of this section available for inspection, copying, or transcription by authorized representatives of the City, the Federal Aviation Administration, or the Department of Labor and shall permit such representatives to interview employees during working hours on the job. If the Contractor or subcontractor fails to submit the required records or to make them available, the Federal agency may, after written notice to the Contractor, the City, applicant, or Owner, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds.
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Furthermore, failure to submit the required records upon request or to make such records available may be grounds for debarment action pursuant to 29 CFR § 5.12.
4. Apprentices and Trainees.
(i) Apprentices. Apprentices will be permitted to work at less than the predetermined rate for the work they performed when they are employed pursuant to and individually registered in a bona fide apprenticeship program registered with the U.S. Department of Labor, Employment and Training Administration, Office of Apprenticeship Training, Employer and Labor Services, or with a State Apprenticeship Agency recognized by the Office, or if a person is employed in his or her first 90 days of probationary employment as an apprentice in such an apprenticeship program, who is not individually registered in the program, but who has been certified by the Office of Apprenticeship Training, Employer and Labor Services or a State Apprenticeship Agency (where appropriate) to be eligible for probationary employment as an apprentice. The allowable ratio of apprentices to journeymen on the job site in any craft classification shall not be greater than the ratio permitted to the contractor as to the entire work force under the registered program. Any worker listed on a payroll at an apprentice wage rate, who is not registered or otherwise employed as stated above, shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any apprentice performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. Where a contractor is performing construction on a project in a locality other than that in which its program is registered, the ratios and wage rates (expressed in percentages of the journeyman’s hourly rate) specified in the Contractor’s or subcontractor’s registered program shall be observed. Every apprentice must be paid at not less than the rate specified in the registered program for the apprentice’s level of progress, expressed as a percentage of the journeymen hourly rate specified in the applicable wage determination. Apprentices shall be paid fringe benefits in accordance with the provisions of the apprenticeship program. If the apprenticeship program does not specify fringe benefits, apprentices must be paid the full amount of fringe benefits listed on the wage determination for the applicable classification. If the Administrator determines that a different practice prevails for the applicable apprentice classification, fringes shall be paid in accordance with that determination. In the event the Office of Apprenticeship Training, Employer and Labor Services, or a State Apprenticeship Agency recognized by the Office, withdraws approval of an apprenticeship program, the Contractor will no longer be permitted to utilize apprentices at less than the applicable predetermined rate for the work performed until an acceptable program is approved.
(ii) Trainees. Except as provided in 29 CFR § 5.16, trainees will not be permitted to work at less than the predetermined rate for the work performed unless they are employed pursuant to and individually registered in a program which has received prior approval, evidenced by formal certification by the U.S. Department of Labor, Employment and Training Administration. The ratio of trainees to journeymen on the job site shall not be greater than permitted under the plan approved by the Employment and Training Administration. Every trainee must be paid at not less than the rate specified in the approved program for the trainee’s level of progress, expressed as a percentage of the journeyman hourly rate specified in the applicable wage determination.
Trainees shall be paid fringe benefits in accordance with the provisions of the trainee program. If the trainee program does not mention fringe benefits, trainees shall be paid the full amount of fringe benefits listed on the wage determination unless the Administrator of the Wage and Hour Division determines that there is an apprenticeship program associated with the corresponding Item 1Y - Page 51
journeyman wage rate on the wage determination that provides for less than full fringe benefits for apprentices. Any employee listed on the payroll at a trainee rate that is not registered and participating in a training plan approved by the Employment and Training Administration shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any trainee performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. In the event the Employment and Training Administration withdraws approval of a training program, the Contractor will no longer be permitted to utilize trainees at less than the applicable predetermined rate for the work performed until an acceptable program is approved.
(iii) Equal Employment Opportunity. The utilization of apprentices, trainees, and journeymen under this part shall be in conformity with the equal employment opportunity requirements of Executive Order 11246, as amended, and 29 CFR Part 30.
5. Compliance with Copeland Act Requirements.
The Contractor shall comply with the requirements of 29 CFR Part 3, which are incorporated by reference in this contract.
6. Subcontracts.
The Contractor or subcontractor shall insert in any subcontracts the clauses contained in 29 CFR §§ 5.5(a)(1) through (10) and such other clauses as the Federal Aviation Administration may by appropriate instructions require, and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime contractor shall be responsible for the compliance by any subcontractor or lower tier subcontractor with all the contract clauses in 29 CFR § 5.5.
7. Contract Termination: Debarment.
A breach of the contract clauses in paragraph 1 through 10 of this section may be grounds for termination of the contract, and for debarment as a contractor and a subcontractor as provided in 29 CFR § 5.12.
8. Compliance with Davis-Bacon and Related Act Requirements.
All rulings and interpretations of the Davis-Bacon and Related Acts contained in 29 CFR Parts 1, 3, and 5 are herein incorporated by reference in this contract.
9. Disputes Concerning Labor Standards.
Disputes arising out of the labor standards provisions of this contract shall not be subject to the general disputes clause of this contract. Such disputes shall be resolved in accordance with the procedures of the Department of Labor set forth in 29 CFR Parts 5, 6, and 7. Disputes within the meaning of this clause include disputes between the Contractor (or any of its subcontractors) and the contracting agency, the U.S. Department of Labor, or the employees or their representatives.
10. Certification of Eligibility.
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(i) By entering into this contract, the Contractor certifies that neither it (nor he or she) nor any person or firm who has an interest in the Contractor’s firm is a person or firm ineligible to be awarded Government contracts by virtue of section 3(a) of the Davis-Bacon Act or 29 CFR §
5.12(a)(1).
(ii) No part of this contract shall be subcontracted to any person or firm ineligible for award of a Government contract by virtue of section 3(a) of the Davis-Bacon Act or 29 CFR § 5.12(a)(1). (iii) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 USC § 1001.
Reference: 2 CFR Part 200, Appendix II(D); 29 CFR Part 5; 49 USC § 47112(b); 40 USC §§ 3141- 3144, 3146, and 3147
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FAA – 11 Debarment and Suspension
APPLICABILITY - This requirement applies to covered transactions, which are defined in 2 CFR part 180 (Subpart B). AIP funded contracts are non-procurement transactions, as defined by 2 CFR § 180.970. Covered transactions include any AIP-funded contract, regardless of tier, that is awarded by a contractor, subcontractor, supplier, consultant, or its agent or representative in any transaction, if the amount of the contract is expected to equal or exceed $25,000. This includes contracts associated with land acquisition projects.
REQUIREMENT -
A11.3.1 Bidder or Offeror Certification
By submitting a bid/proposal under the solicitation for this contract, the Contractor must have certified that neither it nor its principals are presently debarred or suspended by any Federal department or agency from participation in this transaction.
A11.3.2 Lower Tier Contract Certification
CERTIFICATION OF LOWER TIER CONTRACTORS REGARDING DEBARMENT The Contractor, by administering each lower tier subcontract that exceeds $25,000 as a “covered transaction”, must verify each lower tier participant of a “covered transaction” under the project is not presently debarred or otherwise disqualified from participation in this federally assisted project. The Contractor will accomplish this by:
1. Checking the System for Award Management at website: http://www.sam.gov.
2. Collecting a certification statement similar to the Certification of Offerer /Bidder Regarding Debarment, above.
3. Inserting a clause or condition in the covered transaction with the lower tier contract.
If the Federal Aviation Administration later determines that a lower tier participant failed to disclose to a higher tier participant that it was excluded or disqualified at the time it entered the covered transaction, the FAA may pursue any available remedies, including suspension and debarment of the non-compliant participant.
Reference: 2 CFR part 180 (Subpart B), 2 CFR part 200 Appendix II(H), 2 CFR Part 1200, DOT Order 4200.5; Executive Orders 12549 and 12689
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FAA – 12 Disadvantaged Business Enterprise
APPLICABILITY – all contracts with Airports that have a DBE program on file with the FAA.
Contract Assurance (§ 26.13) –
The Contractor or subcontractor shall not discriminate on the basis of race, color, national origin, or sex in the performance of this contract. The Contractor shall carry out applicable requirements of 49 CFR part 26 in the award and administration of Department of Transportation-assisted contracts. Failure by the Contractor to carry out these requirements is a material breach of this contract, which may result in the termination of this contract or such other remedy as the City deems appropriate, which may include, but is not limited to:
1) Withholding monthly progress payments;
2) Assessing sanctions;
3) Liquidated damages; and/or
4) Disqualifying the Contractor from future bidding as non-responsible.
Prompt Payment (§26.29) – The prime contractor agrees to pay each subcontractor under this prime contract for satisfactory performance of its contract no later than [10 days] days from the receipt of each payment the prime contractor receives from [the City]. The prime contractor agrees further to return retainage payments to each subcontractor within [30 days] days after the subcontractor’s work is satisfactorily completed. Any delay or postponement of payment from the above referenced time frame may occur only for good cause following written approval of the [City]. This clause applies to both DBE and non-DBE subcontractors.
Termination of DBE Subcontracts (49 CFR § 26.53(f)) –
The prime Contractor must not terminate a DBE subcontractor listed in response to the solicitation (or an approved substitute DBE firm) without prior written consent of the City. This includes, but is not limited to, instances in which the prime contractor seeks to perform work originally designated for a DBE subcontractor with its own forces or those of an affiliate, a non-DBE firm, or with another DBE firm.
The prime Contractor shall utilize the specific DBEs listed to perform the work and supply the materials for which each is listed unless the Contractor obtains written consent of the City. Unless City consent is provided, the prime Contractor shall not be entitled to any payment for work or material unless it is performed or supplied by the listed DBE.
The City may provide such written consent only if the City agrees, for reasons stated in the concurrence document, that the prime Contractor has good cause to terminate the DBE firm. For purposes of this paragraph, good cause includes the circumstances listed in 49 CFR §26.53.
Before transmitting to the City its request to terminate and/or substitute a DBE subcontractor, the prime Contractor must give notice in writing to the DBE subcontractor, with a copy to the City, of its intent to request to terminate and/or substitute, and the reason for the request.
The prime contractor must give the DBE five days to respond to the prime contractor's notice and advise the City and the Contractor of the reasons, if any, why it objects to the proposed termination of its subcontract and why the City should not approve the prime Contractor's action. If required Item 1Y - Page 55
in a particular case as a matter of public necessity (e.g., safety), the City may provide a response period shorter than five days.
In addition to post-award terminations, the provisions of this section apply to preaward deletions of or substitutions for DBE firms put forward by offerors in negotiated procurements.
Reference: 49 CFR part 26
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FAA – 13 Distracted Driving
APPLICABILITY - contracts that exceed the micro-purchase threshold of 2 CFR § 200.320 (currently set at $10,000).
REQUIREMENT -
TEXTING WHEN DRIVING
In accordance with Executive Order 13513, “Federal Leadership on Reducing Text Messaging While Driving”, (10/1/2009) and DOT Order 3902.10, “Text Messaging While Driving”, (12/30/2009), the Federal Aviation Administration encourages recipients of Federal grant funds to adopt and enforce safety policies that decrease crashes by distracted drivers, including policies to ban text messaging while driving when performing work related to a grant or subgrant.
In support of this initiative, the City encourages the Contractor to promote policies and initiatives for its employees and other work personnel that decrease crashes by distracted drivers, including policies that ban text messaging while driving motor vehicles while performing work activities associated with the project. The Contractor must include the substance of this clause in all subtier contracts exceeding $10,000 that involve driving a motor vehicle in performance of work activities associated with the project.
Reference: Executive Order 13513, DOT Order 3902.10
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FAA – 14 Prohibition on Certain Telecommunications and Video Surveillance Services and Equipment
APPLICABILITY - all AIP funded contracts and lower-tier contracts.
REQUIREMENT -
Contractor and Subcontractor agree to comply with mandatory standards and policies relating to use and procurement of certain telecommunications and video surveillance services or equipment in compliance with the National Defense Authorization Act [Public Law 115-232 § 889(f)(1)].
Reference: 2 CFR § 200, Appendix II(K); 2 CFR § 200.216 Item 1Y - Page 58
FAA – 15 Drug Free Workplace Requirements
APPLICABILITY - This provision applies to all AIP funded projects, but not to the contracts between the City and a contractor, subcontractors, suppliers, or subgrantees.
The Drug-Free Workplace Act of 1988 requires some Federal contractors and all Federal grantees to agree that they will provide drug-free workplaces as a condition of receiving a contract or grant from a Federal agency. The Act does not apply to contractors, subcontractors, or subgrantees, although the Federal grantees workplace may be where the contractors, subcontractors, or subgrantees are working.
Reference: 49 CFR part 32, Drug-Free Workplace Act of 1988 (41 U.S.C. 701 et seq., as amended)
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FAA – 16 Equal Employment Opportunity
APPLICABILITY – The purpose of this provision is to provide equal opportunity for all persons, without regard to race, color, religion, sex, or national origin who are employed or seeking employment with contractors performing under a federally-assisted construction contract. There are two provisions ― a construction clause and a specification clause.
The equal opportunity contract clause applies to any contract or subcontract when the amount exceeds $10,000. Once the equal opportunity clause is determined to be applicable, the contract or subcontract must include the clause for the remainder of the year, regardless of the amount or the contract.
Contract Types –
Construction – all construction contracts and subcontracts as required above.
Equipment – all equipment contracts as required above that involves installation of equipment onsite (e.g., electrical vault equipment). This provision does not apply to equipment acquisition projects where the manufacture of the equipment takes place offsite at the vendor plant (e.g., ARFF and SRE vehicles).
Professional Services – all professional service agreements as required above.
Property – all land acquisition projects that include work that qualifies as construction work as defined by 41 CFR part 60 as required above. An example is installation of boundary fencing.
REQUIREMENT -
A16.3.1 EEO Contract Clause
During the performance of this contract, the Contractor agrees as follows:
(1) The Contractor will not discriminate against any employee or applicant for employment because of race, color, religion, sex, sexual orientation, gender identity, or national origin. The Contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, sexual orientation, gender identify, or national origin. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff, or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided setting forth the provisions of this nondiscrimination clause. (2) The Contractor will, in all solicitations or advertisements for employees placed by or on behalf of the Contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, or national origin.
(3) The contractor will not discharge or in any other manner discriminate against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant. This provision shall not apply to instances in which an employee who has access to the compensation information of other employees or applicants as a part of such Item 1Y - Page 60
employee's essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor's legal duty to furnish information. (4) The Contractor will send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice to be provided by the agency contracting officer, advising the labor union or workers’ representative of the Contractor’s commitments under this section 202 of Executive Order 11246 of September 24, 1965, and shall post copies of the notice in conspicuous places available to employees and applicants for employment.
(5) The Contractor will comply with all provisions of Executive Order 11246 of September 24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor. (6) The Contractor will furnish all information and reports required by Executive Order 11246 of September 24, 1965, and by the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the contracting agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders.
(7) In the event of the Contractor’s noncompliance with the nondiscrimination clauses of this contract or with any such rules, regulations, or orders, this contract may be canceled, terminated, or suspended in whole or in part and the Contractor may be declared ineligible for further Government contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law. (8) The Contractor will include the provisions of paragraphs (1) through (8) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The Contractor will take such action with respect to any subcontract or purchase order as may be directed by the Secretary of Labor as a means of enforcing such provisions, including sanctions for noncompliance:
Provided, however, that in the event the contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction, the Contractor may request the United States to enter into such litigation to protect the interests of the United States.
A16.3.2 EEO Specification
STANDARD FEDERAL EQUAL EMPLOYMENT OPPORTUNITY
CONSTRUCTION CONTRACT SPECIFICATIONS
a. “Covered area” means the geographical area described in the solicitation from which this contract resulted;
b. “Director” means Director, Office of Federal Contract Compliance Programs (OFCCP), U.S.
Department of Labor, or any person to whom the Director delegates authority; Item 1Y - Page 61
c. “Employer identification number” means the Federal social security number used on the Employer’s Quarterly Federal Tax Return, U.S. Treasury Department Form 941; d. “Minority” includes:
(1) Black (all persons having origins in any of the Black African racial groups not of Hispanic origin);
(2) Hispanic (all persons of Mexican, Puerto Rican, Cuban, Central or South American, or other Spanish culture or origin, regardless of race);
(3) Asian and Pacific Islander (all persons having origins in any of the original peoples of the Far East, Southeast Asia, the Indian Subcontinent, or the Pacific Islands); and (4) American Indian or Alaskan native (all persons having origins in any of the original peoples of North America and maintaining identifiable tribal affiliations through membership and participation or community identification).
2. Whenever the Contractor, or any subcontractor at any tier, subcontracts a portion of the work involving any construction trade, it shall physically include in each subcontract in excess of $10,000 the provisions of these specifications and the Notice which contains the applicable goals for minority and female participation and which is set forth in the solicitations from which this contract resulted.
3. If the Contractor is participating (pursuant to 41 CFR part 60-4.5) in a Hometown Plan approved by the U.S. Department of Labor in the covered area either individually or through an association, its affirmative action obligations on all work in the Plan area (including goals and timetables) shall be in accordance with that Plan for those trades which have unions participating in the Plan. Contractors must be able to demonstrate their participation in and compliance with the provisions of any such Hometown Plan. Each contractor or subcontractor participating in an approved plan is individually required to comply with its obligations under the EEO clause and to make a good faith effort to achieve each goal under the Plan in each trade in which it has employees. The overall good faith performance by other contractors or subcontractors toward a goal in an approved Plan does not excuse any covered contractor’s or subcontractor’s failure to take good faith efforts to achieve the Plan goals and timetables.
4. The Contractor shall implement the specific affirmative action standards provided in paragraphs 7a through 7p of these specifications. The goals set forth in the solicitation from which this contract resulted are expressed as percentages of the total hours of employment and training of minority and female utilization the Contractor should reasonably be able to achieve in each construction trade in which it has employees in the covered area. Covered construction contractors performing construction work in a geographical areas where they do not have a Federal or federally assisted construction contract shall apply the minority and female goals established for the geographical area where the work is being performed. Goals are published periodically in the Federal Register in notice form, and such notices may be obtained from any Office of Federal Contract Compliance Programs office or from Federal procurement contracting officers. The Contractor is expected to make substantially uniform progress in meeting its goals in each craft during the period specified.
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5. Neither the provisions of any collective bargaining agreement, nor the failure by a union with whom the Contractor has a collective bargaining agreement, to refer either minorities or women shall excuse the Contractor’s obligations under these specifications, Executive Order 11246, or the regulations promulgated pursuant thereto.
6. In order for the nonworking training hours of apprentices and trainees to be counted in meeting the goals, such apprentices and trainees must be employed by the Contractor during the training period, and the Contractor must have made a commitment to employ the apprentices and trainees at the completion of their training, subject to the availability of employment opportunities. Trainees must be trained pursuant to training programs approved by the U.S. Department of Labor.
7. The Contractor shall take specific affirmative actions to ensure equal employment opportunity. The evaluation of the Contractor’s compliance with these specifications shall be based upon its effort to achieve maximum results from its actions. The Contractor shall document these efforts fully, and shall implement affirmative action steps at least as extensive as the following:
a. Ensure and maintain a working environment free of harassment, intimidation, and coercion at all sites, and in all facilities at which the Contractor’s employees are assigned to work. The Contractor, where possible, will assign two or more women to each construction project. The Contractor shall specifically ensure that all foremen, superintendents, and other onsite supervisory personnel are aware of and carry out the Contractor’s obligation to maintain such a working environment, with specific attention to minority or female individuals working at such sites or in such facilities. b. Establish and maintain a current list of minority and female recruitment sources, provide written notification to minority and female recruitment sources and to community organizations when the Contractor or its unions have employment opportunities available, and maintain a record of the organizations’ responses. c. Maintain a current file of the names, addresses, and telephone numbers of each minority and female off-the-street applicant and minority or female referral from a union, a recruitment source, or community organization and of what action was taken with respect to each such individual. If such individual was sent to the union hiring hall for referral and was not referred back to the Contractor by the union or, if referred, not employed by the Contractor, this shall be documented in the file with the reason therefor, along with whatever additional actions the Contractor may have taken. d. Provide immediate written notification to the Director when the union or unions with which the Contractor has a collective bargaining agreement has not referred to the Contractor a minority person or woman sent by the Contractor, or when the Contractor has other information that the union referral process has impeded the Contractor’s efforts to meet its obligations.
e. Develop on-the-job training opportunities and/or participate in training programs for the area which expressly include minorities and women, including upgrading programs and apprenticeship and trainee programs relevant to the Contractor’s employment needs, especially those programs funded or approved by the Department of Labor. The Item 1Y - Page 63
Contractor shall provide notice of these programs to the sources compiled under 7b above.
f. Disseminate the Contractor’s EEO policy by providing notice of the policy to unions and training programs and requesting their cooperation in assisting the Contractor in meeting its EEO obligations; by including it in any policy manual and collective bargaining agreement; by publicizing it in the company newspaper, annual report, etc.; by specific review of the policy with all management personnel and with all minority and female employees at least once a year; and by posting the company EEO policy on bulletin boards accessible to all employees at each location where construction work is performed.
g. Review, at least annually, the company’s EEO policy and affirmative action obligations under these specifications with all employees having any responsibility for hiring, assignment, layoff, termination, or other employment decisions including specific review of these items with onsite supervisory personnel such superintendents, general foremen, etc., prior to the initiation of construction work at any job site. A written record shall be made and maintained identifying the time and place of these meetings, persons attending, subject matter discussed, and disposition of the subject matter. h. Disseminate the Contractor’s EEO policy externally by including it in any advertising in the news media, specifically including minority and female news media, and providing written notification to and discussing the Contractor’s EEO policy with other contractors and subcontractors with whom the Contractor does or anticipates doing business. i. Direct its recruitment efforts, both oral and written, to minority, female, and community organizations, to schools with minority and female students and to minority and female recruitment and training organizations serving the Contractor’s recruitment area and employment needs. Not later than one month prior to the date for the acceptance of applications for apprenticeship or other training by any recruitment source, the Contractor shall send written notification to organizations such as the above, describing the openings, screening procedures, and tests to be used in the selection process. j. Encourage present minority and female employees to recruit other minority persons and women and, where reasonable, provide after school, summer, and vacation employment to minority and female youth both on the site and in other areas of a contractor’s work force.
k. Validate all tests and other selection requirements where there is an obligation to do so under 41 CFR part 60-3.
l. Conduct, at least annually, an inventory and evaluation at least of all minority and female personnel, for promotional opportunities and encourage these employees to seek or to prepare for, through appropriate training, etc., such opportunities. m. Ensure that seniority practices, job classifications, work assignments, and other personnel practices do not have a discriminatory effect by continually monitoring all personnel and employment related activities to ensure that the EEO policy and the Contractor’s obligations under these specifications are being carried out.
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n. Ensure that all facilities and company activities are nonsegregated except that separate or single-user toilet and necessary changing facilities shall be provided to assure privacy between the sexes.
o. Document and maintain a record of all solicitations of offers for subcontracts from minority and female construction contractors and suppliers, including circulation of solicitations to minority and female contractor associations and other business associations.
p. Conduct a review, at least annually, of all supervisor’s adherence to and performance under the Contractor’s EEO policies and affirmative action obligations.
8. Contractors are encouraged to participate in voluntary associations, which assist in fulfilling one or more of their affirmative action obligations (7a through 7p). The efforts of a contractor association, joint contractor-union, contractor-community, or other similar group of which the Contractor is a member and participant may be asserted as fulfilling any one or more of its obligations under 7a through 7p of these specifications provided that the Contractor actively participates in the group, makes every effort to assure that the group has a positive impact on the employment of minorities and women in the industry, ensures that the concrete benefits of the program are reflected in the Contractor’s minority and female workforce participation, makes a good faith effort to meet its individual goals and timetables, and can provide access to documentation which demonstrates the effectiveness of actions taken on behalf of the Contractor. The obligation to comply, however, is the Contractor’s and failure of such a group to fulfill an obligation shall not be a defense for the Contractor’s noncompliance.
9. A single goal for minorities and a separate single goal for women have been established. The Contractor, however, is required to provide equal employment opportunity and to take affirmative action for all minority groups, both male and female, and all women, both minority and non-minority. Consequently, the Contractor may be in violation of the Executive Order if a particular group is employed in a substantially disparate manner (for example, even though the Contractor has achieved its goals for women generally, the Contractor may be in violation of the Executive Order if a specific minority group of women is underutilized).
10. The Contractor shall not use the goals and timetables or affirmative action standards to discriminate against any person because of race, color, religion, sex, sexual orientation, gender identity, or national origin.
11. The Contractor shall not enter into any subcontract with any person or firm debarred from Government contracts pursuant to Executive Order 11246.
12. The Contractor shall carry out such sanctions and penalties for violation of these specifications and of the Equal Opportunity Clause, including suspension, termination, and cancellation of existing subcontracts as may be imposed or ordered pursuant to Executive Order 11246, as amended, and its implementing regulations, by the Office of Federal Contract Compliance Programs. Any contractor who fails to carry out such sanctions and penalties shall be in violation of these specifications and Executive Order 11246, as amended.
13. The Contractor, in fulfilling its obligations under these specifications, shall implement specific affirmative action steps, at least as extensive as those standards prescribed in paragraph 7 of these specifications, so as to achieve maximum results from its efforts to ensure equal Item 1Y - Page 65
employment opportunity. If the Contractor fails to comply with the requirements of the Executive Order, the implementing regulations, or these specifications, the Director shall proceed in accordance with 41 CFR part 60-4.8.
14. The Contractor shall designate a responsible official to monitor all employment related activity to ensure that the company EEO policy is being carried out, to submit reports relating to the provisions hereof as may be required by the Government, and to keep records. Records shall at least include for each employee, the name, address, telephone numbers, construction trade, union affiliation if any, employee identification number when assigned, social security number, race, sex, status (e.g., mechanic, apprentice, trainee, helper, or laborer), dates of changes in status, hours worked per week in the indicated trade, rate of pay, and locations at which the work was performed. Records shall be maintained in an easily understandable and retrievable form; however, to the degree that existing records satisfy this requirement, contractors shall not be required to maintain separate records.
15. Nothing herein provided shall be construed as a limitation upon the application of other laws which establish different standards of compliance or upon the application of requirements for the hiring of local or other area residents (e.g. those under the Public Works Employment Act of 1977 and the Community Development Block Grant Program).
Reference: 2 CFR 200, Appendix II(C), 41 CFR § 60-1.4, 41 CFR § 60-4.3, Executive Order 11246
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FAA – 17 Federal Fair Labor Standards Act
APPLICABILITY – Contract Types – Per the Department of Labor, all employees of certain enterprises having workers engaged in interstate commerce; producing goods for interstate commerce; or handling, selling, or otherwise working on goods or materials that have been moved in or produced for such commerce by any person are covered by the FLSA.
All consultants, sub-consultants, contractors, and subcontractors employed under this federally assisted project must comply with the FLSA.
Professional Services – 29 CFR § 213 exempts employees in a bona fide executive, administrative or professional capacity. Because professional firms employ individuals that are not covered by this exemption, the agreement with a professional services firm must include the FLSA provision.
REQUIREMENT -
The provisions of 29 CFR part 201, the Federal Fair Labor Standards Act (FLSA), are incorporated by reference with the same force and effect as if given in full text. The FLSA sets minimum wage, overtime pay, recordkeeping, and child labor standards for full and part-time workers.
The Contractor has full responsibility to monitor compliance to the referenced statute or regulation. The Contractor must address any claims or disputes that arise from this requirement directly with the U.S. Department of Labor – Wage and Hour Division.
Reference: 29 USC § 201, et seq; 2 CFR § 200.430
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FAA – 18 Lobbying and Influencing Federal Employees
APPLICABILITY- all contracts exceeding $100,000.
REQUIREMENT -
Consultants and contractors that apply or bid for an award of $100,000 or more must have certified that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant, or another award covered by 31 USC §1352. Each tier must also disclose any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award.
For an award over $100,00, the bidder or offeror certifies by signing and submitting this bid or proposal, to the best of his or her knowledge and belief, that:
• No Federal appropriated funds have been paid or will be paid, by or on behalf of the bidder or offeror, to any person for influencing or attempting to influence an officer or employee of an agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement. • If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions.
• The undersigned shall require that the language of this certification be included in the award documents for all sub-awards at all tiers (including subcontracts, sub-grants, and contracts under grants, loans, and cooperative agreements) and that all sub-recipients shall certify and disclose accordingly.
This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
Reference: 31 USC § 1352 – Byrd Anti-Lobbying Amendment, 2 CFR part 200, Appendix II(I), 49 CFR part 20, Appendix A
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FAA – 19 Prohibition of Segregated Facilities
APPLICABILITY - The Contractor must comply with the requirements of the EEO clause by ensuring that facilities they provide for employees are free of segregation on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin. This clause must be included in all contracts that include the equal opportunity clause, regardless of the amount of the contract.
Contract Types – any contract containing the Equal Employment Opportunity clause of 41 CFR § 60-1.4. This obligation flows down to subcontract and sub-tier purchase orders containing the Equal Employment Opportunity clause.
Construction – Construction work means construction, rehabilitation, alteration, conversion, extension, demolition or repair of buildings, highways, or other changes or improvements to real property, including facilities providing utility services. The term also includes the supervision, inspection, and other onsite functions incidental to the actual construction.
Equipment – On site installation of equipment such as airfield lighting control equipment meets the definition of construction and thus this provision would apply. This provision does not apply to equipment projects involving manufacture of the item at a vendor’s manufacturing plant. An example would be the manufacture of a SRE or ARFF vehicle.
Professional Services – Professional services that include tasks that qualify as construction work as defined by 41 CFR part 60-1. Examples include the installation of noise monitoring equipment.
Property/Land – Land acquisition contracts that include tasks that qualify as construction work as defined by 41 CFR part 60-1. Examples include demolition of structures or installation of boundary fencing.
REQUIREMENT -
(a) The Contractor agrees that it does not and will not maintain or provide for its employees any segregated facilities at any of its establishments, and that it does not and will not permit its employees to perform their services at any location under its control where segregated facilities are maintained. The Contractor agrees that a breach of this clause is a violation of the Equal Employment Opportunity clause in this contract. (b) “Segregated facilities,” as used in this clause, means any waiting rooms, work areas, rest rooms and wash rooms, restaurants and other eating areas, time clocks, locker rooms and other storage or dressing areas, parking lots, drinking fountains, recreation or entertainment areas, transportation, and housing facilities provided for employees that are segregated by explicit directive or are in fact segregated on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin because of written or oral policies or employee custom. The term does not include separate or single-user rest rooms or necessary dressing or sleeping areas provided to assure privacy between the sexes. (c) The Contractor shall include this clause in every subcontract and purchase order that is subject to the Equal Employment Opportunity clause of this contract.
Reference: 2 CFR Part 200, Appendix II (C); 41 CFR Part 60-1 Item 1Y - Page 69
FAA – 20 Occupational Safety and Health Act
APPLICABILITY – Contract Types – All contracts and subcontracts must comply with the Occupational Safety and Health Act of 1970 (OSH). The U.S. Department of Labor Occupational Safety and Health Administration (OSHA) oversees the workplace health and safety standards wage provisions from OSH.
REQUIREMENT -
All contracts and subcontracts that result from this solicitation incorporate by reference the requirements of 29 CFR Part 1910 with the same force and effect as if given in full text. The employer must provide a work environment that is free from recognized hazards that may cause death or serious physical harm to the employee. The employer retains full responsibility to monitor its compliance and their subcontractor’s compliance with the applicable requirements of the Occupational Safety and Health Act of 1970 (29 CFR Part 1910). The employer must address any claims or disputes that pertain to a referenced requirement directly with the U.S. Department of Labor – Occupational Safety and Health Administration.
Reference: 29 CFR part 1910
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FAA – 21 Procurement of Recovered Materials
APPLICABILITY – Contract Types – This provision applies to any contracts that include procurement of products designated in subpart B of 40 CFR part 247 where the purchase price of the item exceeds $10,000 or the value of the quantity acquired by the preceding fiscal year exceeded $10,000.
Construction and Equipment – all construction and equipment projects.
Professional Services and Property – if the agreement includes procurement of a product that exceeds $10,000.
REQUIREMENT -
Contractor and subcontractor agree to comply with Section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, and the regulatory provisions of 40 CFR Part 247. In the performance of this contract and to the extent practicable, the Contractor and subcontractors are to use products containing the highest percentage of recovered materials for items designated by the Environmental Protection Agency (EPA) under 40 CFR Part 247 whenever:
1) The contract requires procurement of $10,000 or more of a designated item during the fiscal year; or
2) The contractor has procured $10,000 or more of a designated item using Federal funding during the previous fiscal year.
The list of EPA-designated items is available at www.epa.gov/smm/comprehensive-procurementguidelines-construction-products.
Section 6002(c) establishes exceptions to the preference for recovery of EPA-designated products if the contractor can demonstrate the item is:
a) Not reasonably available within a timeframe providing for compliance with the contract performance schedule;
b) Fails to meet reasonable contract performance requirements; or c) Is only available at an unreasonable price.
Reference: 2 CFR § 200.323, 2 CFR Part 200, Appendix II (J); 40 CFR part 247, 42 USC § 6901, et seq (Resource Conservation and Recovery Act)
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FAA – 22 Rights to Inventions
APPLICABILITY – Contract Types – This provision applies to all contracts and subcontracts with small business firms or nonprofit organizations that include performance of experimental, developmental, or research work. This clause is not applicable to construction, equipment, or professional service contracts unless the contract includes experimental, developmental, or research work.
REQUIREMENT -
Contracts or agreements that include the performance of experimental, developmental, or research work must provide for the rights of the Federal Government and the City in any resulting invention as established by 37 CFR part 401, Rights to Inventions Made by Non-profit Organizations and Small Business Firms under Government Grants, Contracts, and Cooperative Agreements. This contract incorporates by reference the patent and inventions rights as specified within 37 CFR §401.14. Contractor must include this requirement in all sub-tier contracts involving experimental, developmental, or research work.
Reference: 2 CFR § 200, Appendix II(F), 37 CFR 401
Item 1Y - Page 72
FAA - 23 Seismic Safety
APPLICABILITY – Contract Types – This provision applies to construction of new buildings and additions to existing buildings financed in whole or in part through the Airport Improvement Program.
Professional Services– any contract involved in the construction of new buildings or structural addition to existing buildings.
Construction – any contract involved in the construction of new buildings or structural addition to existing buildings.
Equipment – if the project involves construction or structural addition to a building such as an electrical vault project to accommodate or install equipment.
Land – This provision will not typically apply to a property/land project.
REQUIREMENT -
A23.3.1 Professional Service Agreements for Design
SEISMIC SAFETY
In the performance of design services, the Consultant agrees to furnish a building design and associated construction specification that conform to a building code standard that provides a level of seismic safety substantially equivalent to standards as established by the National Earthquake Hazards Reduction Program (NEHRP). Local building codes that model their building code after the current version of the International Building Code (IBC) meet the NEHRP equivalency level for seismic safety. At the conclusion of the design services, the Consultant agrees to furnish the Owner a “certification of compliance” that attests conformance of the building design and the construction specifications with the seismic standards of NEHRP or an equivalent building code.
A23.3.2 Construction Contracts
SEISMIC SAFETY
The Contractor agrees to ensure that all work performed under this contract, including work performed by subcontractors, conforms to a building code standard that provides a level of seismic safety substantially equivalent to standards established by the National Earthquake Hazards Reduction Program (NEHRP). Local building codes that model their code after the current version of the International Building Code (IBC) meet the NEHRP equivalency level for seismic safety.
Reference: 49 CFR Part 41
Item 1Y - Page 73
FAA – 24 Tax Delinquency and Felony Conviction
APPLICABILITY – This provision applies to all contracts funded in whole or part with AIP.
REQUIREMENT -
The Contractor must have certified under the procurement process that resulted in the award of this contract that:
• Contractor has not been convicted of a Federal felony within the last 24 months; or • Contractor does not have any outstanding tax liability for which all judicial and administrative remedies have lapsed or been exhausted.
Reference: Sections 8113 of the Consolidated Appropriations Act, 2022 (Public Law 117-103), and similar provisions in subsequent appropriations acts.
DOT Order 4200.6 – Appropriations Act Requirements for Procurement and Non-Procurement Regarding Tax Delinquency and Felony Convictions
Item 1Y - Page 74
FAA – 25 Termination of Contract
APPLICABILITY – All contracts and subcontracts in excess of $10,000.
REQUIREMENT -
See Section 4.5 of the Agreement.
Reference: 2 CFR § 200 Appendix II(B), FAA Advisory Circular 150/5370-10, Section 80-09 Item 1Y - Page 75
FAA – 26 Foreign Trade Restriction
APPLICABILITY – all AIP funded projects.
REQUIREMENT -
TRADE RESTRICTION CERTIFICATION
By accepting this contract the Contractor certifies the following statements are true – 1) is not owned or controlled by one or more citizens of a foreign country included in the list of countries that discriminate against U.S. firms as published by the Office of the United States Trade Representative (USTR);
2) has not knowingly entered into any contract or subcontract for this project with a person that is a citizen or national of a foreign country included on the list of countries that discriminate against U.S. firms as published by the USTR; and
3) has not entered into any subcontract for any product to be used on the Federal project that is produced in a foreign country included on the list of countries that discriminate against U.S. firms published by the USTR.
This certification concerns a matter within the jurisdiction of an agency of the United States of America and the making of a false, fictitious, or fraudulent certification may render the maker subject to prosecution under Title 18 USC Section 1001.
The Contractor must provide immediate written notice to the City if the Contractor learns that its certification or that of a subcontractor was erroneous when submitted or has become erroneous by reason of changed circumstances. The Contractor must require subcontractors provide immediate written notice to the Contractor if at any time it learns that its certification was erroneous by reason of changed circumstances.
Unless the restrictions of this clause are waived by the Secretary of Transportation in accordance with 49 CFR 30.17, no contract shall be awarded to an Offeror or subcontractor:
1) who is owned or controlled by one or more citizens or nationals of a foreign country included on the list of countries that discriminate against U.S. firms published by the USTR or 2) whose subcontractors are owned or controlled by one or more citizens or nationals of a foreign country on such USTR list or
3) who incorporates in the public works project any product of a foreign country on such USTR list.
Nothing contained in the foregoing shall be construed to require establishment of a system of records in order to render, in good faith, the certification required by this provision. The knowledge and information of a contractor is not required to exceed that which is normally possessed by a prudent person in the ordinary course of business dealings.
The Contractor agrees it will incorporate this provision for certification without modification in all lower tier subcontracts. The Contractor may rely on the certification of a prospective subcontractor that it is not a firm from a foreign country included on the list of countries that discriminate against U.S. firms as published by USTR, unless the Contractor has knowledge that the certification is erroneous.
Item 1Y - Page 76
This certification is a material representation of fact upon which reliance was placed when making an award. If it is later determined that the Contractor or subcontractor knowingly rendered an erroneous certification, the Federal Aviation Administration (FAA) may direct through the City cancellation of the contract or subcontract for default at no cost to the City or the FAA.
Reference: 49 USC § 50104, 49 CFR part 30
Item 1Y - Page 77
FAA – 27 Veteran’s Preference
APPLICABILITY – This provision applies to all AIP funded projects that involve labor to carry out the project. This preference, which excludes executive, administrative, and supervisory positions, applies to covered veterans [as defined under § 47112(c)] only when they are readily available and qualified to accomplish the work required by the project.
REQUIREMENT -
In the employment of labor (excluding executive, administrative, and supervisory positions), the Contractor and all sub-tier contractors must give preference to covered veterans as defined within Title 49 United States Code Section 47112. Covered veterans include Vietnam-era veterans, Persian Gulf veterans, Afghanistan-Iraq war veterans, disabled veterans, and small business concerns (as defined by 15 USC 632) owned and controlled by disabled veterans. This preference only applies when there are covered veterans readily available and qualified to perform the work to which the employment relates.
Reference: 49 USC § 47112(c)
Item 1Y - Page 78
FAA – 28 Domestic Preferences for Procurements
APPLICABILITY – all contracts and Purchase orders for work or products under the grant.
REQUIREMENT -
The Contractor certifies by signing and submitting its bid or proposal that, to the greatest extent practicable, the Contractor has provided a preference for the purchase, acquisition, or use of goods, products, or materials produced in the United States (including, but not limited to, iron, aluminum, steel, cement, and other manufactured products) in compliance with 2 CFR § 200.322.
Reference: 2 CFR § 200.322; 2 CFR Part 200, Appendix II(L) Item 1Y - Page 79
ATTACHMENT B
PUBLIC INTEGRITY BUSINESS DISCLOSURE
Item 1Y - Page 80
Item 1Y - Page 81
1. 2.
3. 4.
5. Name of Entity
PUBLIC INTEGRITY DISCLOSURE
APPLICANT DISCLOSURE FORM
Robson Handling Technology
Address of Entity (Principal Place of Business)
129 S. Main St. Suite #260, Grapevine, TX 76051
Local or California Address (if different than #2)
' State where Entity is Registered with Secretary of State Texas
If other than California, is the Entity also registered in California? D Yes D No Type of Entity
izr(orporation D Limited Liability Company D Partnership D Trust D Other (please specify)
6. Officers, Directors, Members, Managers, Trustees, Other Fiduciaries (please specify) Note: If any response is not a natural person, please identify all officers, directors, members, managers and other fiduciaries for the member, manager, trust, or other entity . I
- Matt Williams D Officer D Director D Member D
Manager
[name] D General Partner D Limited Partner
Ej()ther _President .
- Scott Hashimoto D Officer D Director D Member D Manager [name] D General Partner D Limited Partner
[50ther _Vice President
Peter Bjostad D Officer D Director D Member
D Manager
[name] D General Partner D Limited Partner
Item 1Y - Page 82
Other _Vice President. ____ _
7. Owners/Investors with a 5% beneficial interest in the Applicant Entity or a related entity
EXAMPLE
[name of owner/investor]
A.
[name of owner/investor]
B.
[name of owner/investor]
C.
[name of owner/investor]
D.
[name of owner/investor)
E.
[name of owner/investor)
[percentage of beneficial interest in entity and
name of entity]
[percentage of beneficial interest in entity and
name of entity]
[percentage of beneficial interest in entity and
name of entity]
[percentage of beneficial interest in entity and
name of entity)
[percentage of beneficial interest in entity and
name of entity)
[percentage of beneficial interest in entity
and name of entity)
I DECLARE UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE STATE OF CALIFORNIA THAT THE FOREGOING IS TRUE AND CORRECT.
,.,ature of Disclosing Party, Printed Name, Title
Xch~
Date
f a..-h J Sc-rvi"tc:.. }'h ,,_ ,.,,. _1 r .,-
CITY COUNCIL STAFF REPORT
DATE: NOVEMBER 21, 2024 CONSENT CALENDAR
SUBJECT: APPROVAL OF A COOPERATIVE AGREEMENT WITH RIVERSIDE
COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT
(RCFC) AND THE CITY OF PALM SPRINGS FOR THE CONSTRUCTION OF PALM SPRINGS MASTER DRAINAGE PLAN (MDP) LINE 6, STAGE 3 FROM: Scott C. Stiles, City Manager
BY: Engineering Services Department
SUMMARY:
The existing Storm Drain Line 6 comprises two stages that run along Vista Chino and end at the Farrell storm detention basin. The proposed funding/cooperative agreement between the City and Riverside County Flood Control and Water Conservation District (RCFC) will extend Line 6 with a new Stage 3, which will run from the intersection of Francis Drive and Avenida Caballeros southward to connect with Stage 2 at Vista Chino.
RECOMMENDATION:
1. Approve a Cooperative Funding Agreement with the Riverside County Flood Control and Water Conservation District and the City of Palm Springs associated with the construction, operation, and maintenance of flood control improvements identified as Palm Springs Master Drainage Plan (MDP) Line 6, Stage 3; and
2. Authorize the City Manager to execute all necessary documents.
BACKGROUND:
In collaboration with RCFC, the City will lead the design and construction of Line 6 Stage 3, part of the Master Drainage Plan for the Palm Springs area. This project consists of approximately 4,000 linear feet of reinforced concrete pipe, ranging from 30 inches to 60 inches in diameter, and various required appurtenances as described in the agreement, included as Attachment A.
This pipeline will collect flow from the intersection of E. Francis Drive and N. Avenida Caballeros and convey it southerly along N. Avenida Caballeros to E. Vista Chino and California State Route 111 as shown in Figure 1. At its downstream terminus, Line 6 Stage 3 will discharge into the existing Palm Springs Master Drainage Plan Lines 5 and Item 1Z - Page 1
City Council Staff Report
November 21, 2024 -- Page 2
RCFC Cooperative Funding Agreement
6 facilities. By implementing this project, the City aims to efficiently convey stormwater to existing drainage facilities. This not only helps mitigate potential flooding but also protects public and private property, enhances community resilience, and promotes safe living conditions.
RCFC has allocated a total contribution of $2,924,918 to complete the project, covering engineering design, environmental assessments, and construction.
Figure 1
Item 1Z - Page 2
City Council Staff Report
November 21, 2024 -- Page 3
RCFC Cooperative Funding Agreement
STAFF ANALYSIS:
A Cooperative Funding Agreement between RCFC and the City of Palm Springs has been prepared by RCFC and outlines the obligations of each agency. Under the terms of the agreement, the City will be taking the lead role for the project by providing the design, environmental analysis, bidding, construction management and regulatory permits. In exchange, RCFC will be providing the allocated total district contribution, not to exceed $2,924,918.
Upon completion of the project, RCFC and the City will jointly accept ownership and responsibility for the operation and maintenance of the infrastructure built with this project, as described in the agreement.
Upon execution of the agreement, RCFC will allocate funds to the City for the initiation of the Plans, Specifications, and Estimate (PS&E) and Environmental analysis. The City will utilize these funds to engage the services of an on-call engineering consultant to prepare the required documentation. Staff has reviewed the agreement and recommends approval.
ENVIRONMENTAL ASSESSMENT:
In accordance with the California Environmental Quality Act (“CEQA”) Guidelines the requested City Council action is not a “Project” pursuant to Section 15378(b)(5).
Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment are not considered a “Project.
FISCAL IMPACT:
Approval of the Cooperative Funding Agreement obligates the City to provide the administrative, technical, managerial and construction support services necessary to plan, design and construct the project. In return, RCFC will provide a financial contribution not to exceed $2,924,918 towards design, construction and environmental documents needed for the project. Any costs above that would be the obligation of the City of Palm Springs or an amendment to the current agreement would be required for additional funding from RCFC.
REVIEWED BY:
City Engineer: Joel Montalvo
Deputy City Manager: Flinn Fagg
City Manager: Scott Stiles
ATTACHMENTS:
A. RCFC Cooperative Funding Agreement
Item 1Z - Page 3
Attachment A
Item 1Z - Page 4
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FUNDING / COOPERATIVE AGREEMENT
Palm Springs MDP Line 6, Stage 3
Project No. 6-0-00300
Miscellaneous No. 219
This Funding/Cooperative Agreement ("Agreement"), dated as of , is entered into by the Riverside County Flood Control and Water Conservation District, a body corporate and politic ("DISTRICT") and the City of Palm Springs, a municipal corporation ("CITY"). DISTRICT and CITY are collectively referred to herein as "Parties" and individually as "Party". The Parties hereto agree as follows:
RECITALS
A. DISTRICT has budgeted for and CITY has plans to design and construct Palm Springs MDP Line 6, Stage 3 ("LINE 6 STAGE 3") to provide flood protection to the residential area along N. Avenida Caballeros and E. Francis Drive to E. Vista Chino and California State Route 111; and
B. LINE 6 STAGE 3, as shown on DISTRICT's Drawing No. 6-0430 and as shown in concept in blue on Exhibit "A", attached hereto and made a part hereof, consists of approximately 4,000 lineal feet of 30-inch to 60-inch reinforced concrete pipe to collect flows from the intersection of E. Francis Drive and N. Avenida Caballeros and convey them southerly within N. Avenida Caballeros to E. Vista Chino and California State Route 111. At its downstream terminus, LINE 6 STAGE 3 will outlet into DISTRICT's existing Palm Springs Master Drainage Plan Lines 5 and 6 facility, as shown on DISTRICT's Drawing No. 6-0307; and C. Associated with the construction of LINE 6 STAGE 3, are certain inlets, connector pipes and storm drains that are thirty-six inches (36") or less in diameter within CITYheld rights of way, hereinafter called "APPURTENANCES"; and D. LINE 6 STAGE 3 and APPURTENANCES are hereinafter called "PROJECT"; and
Item 1Z - Page 5
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E. CITY is willing to assume the lead role for PROJECT and, therefore, will provide the administrative, technical, managerial and support services necessary to plan, design and construct PROJECT; and
F. CITY desires that DISTRICT include certain unavoidable utility relocations as part of the DISTRICT's financial contribution to construct PROJECT. "UTILITY RELOCATIONS" is defined as the unavoidable relocation of utilities not owned by CITY that (a) conflict with the construction of PROJECT; and (b) cannot be relocated by others under CITY's franchise authority. These certain unavoidable UTILITY RELOCATIONS shall be included in the public works construction contract for PROJECT; and G. Due to the Parties' mutual interest in PROJECT, DISTRICT wishes to support CITY's efforts by providing a financial contribution to implement PROJECT; and H. DISTRICT is willing to provide a financial contribution towards PROJECT and shall be as follows, subject to the not to exceed amount provided in Recital I below:
i. One hundred percent (100%) of costs associated with engineering design, hydrology and hydraulics, geo-technical analysis and potholing required to complete the design of PROJECT; California Environmental Quality Act ("CEQA") determination; preparation, application, and acquisition of the environmental clearance, mitigation and permits if required for PROJECT; and other typical ancillary costs related to the preparation of improvement plans ("DESIGN CONTRIBUTION"). However, DESIGN
CONTRIBUTION shall not include the fees associated with the Western Riverside County Multiple Species Habitat Conservation Plan ("MSHCP"); and
Item 1Z - Page 6
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ii. In the event that CITY chooses to hire an engineering consulting firm to prepare the improvement plans (defined in Section I.4.), DISTRICT is also willing to contribute an additional ten percent (10%) of design proposal cost to offset CITY's administrative costs associated with design contract administration ("DESIGN ADMIN"); and
iii. One hundred percent (100%) of the lowest responsible bid contract price for construction of PROJECT and the costs associated with UTILITY RELOCATIONS ("CONSTRUCTION
CONTRIBUTION"); and
iv. Up to an additional ten percent (10%) of CONSTRUCTION CONTRIBUTION to offset CITY's administrative costs associated with construction, contract administration and other typical ancillary costs related to the delivery of PROJECT
("CONSTRUCTION ADMINISTRATION CONTRIBUTION");
and
v. Up to an additional ten percent (10%) of CONSTRUCTION CONTRIBUTION for construction contract change orders
("CONSTRUCTION CHANGE ORDERS CONTRIBUTION");
and
I. Altogether, DESIGN CONTRIBUTION, DESIGN ADMIN,
CONSTRUCTION CONTRIBUTION, CONSTRUCTION ADMINISTRATION
CONTRIBUTION, and CONSTRUCTION CHANGE ORDERS CONTRIBUTION are hereinafter called "TOTAL DISTRICT CONTRIBUTION". TOTAL DISTRICT Item 1Z - Page 7
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CONTRIBUTION for PROJECT shall not exceed a total of Two Million Nine Hundred TwentyFour Thousand Nine Hundred Eighteen Dollars ($2,924,918); and J. CITY agrees to fund and secure all remaining costs of PROJECT that exceeds TOTAL DISTRICT CONTRIBUTION, as set forth herein; and K. DISTRICT and CITY acknowledge it is in the best interest of the public to proceed with the construction of PROJECT at the earliest possible date; and L. The purpose of this Agreement is to memorialize the mutual understandings by and between CITY and DISTRICT with respect to the design, construction, ownership, operation and maintenance of PROJECT and the payment of TOTAL DISTRICT CONTRIBUTION.
NOW, THEREFORE, in consideration of the preceding recitals and the mutual covenants hereinafter contained, the parties hereto mutually agree that the above recitals are true and correct and incorporated into the terms of this Agreement and as follows:
SECTION I
CITY shall:
1. Pursuant to the California Environmental Quality Act ("CEQA"), act as Lead Agency and assume responsibility for preparation, circulation and adoption of all necessary and appropriate CEQA documents pertaining to the construction, operation and maintenance of PROJECT.
2. Upon execution of this Agreement, issue a first invoice to DISTRICT (Attn:
Special Projects Section) for fifty percent (50%) of DESIGN CONTRIBUTION, subject to and provided that TOTAL DISTRICT CONTRIBUTION shall not exceed the total amount of Two Million Nine Hundred Twenty-Four Thousand Nine Hundred Eighteen Dollars ($2,924,918) for PROJECT.
Item 1Z - Page 8
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3. Provide DISTRICT an opportunity to review and approve the PROJECT engineering design cost proposal and associated design schedule. As PROJECT design progresses, CITY shall update said design schedule as requested by DISTRICT.
4. Prepare or cause to be prepared the necessary plans, bid documents and specifications for PROJECT, hereinafter called "IMPROVEMENT PLANS", in accordance with the applicable DISTRICT and CITY standards, and submit to DISTRICT (Attn: Special Projects Section) for its review, comment and approval prior to advertising PROJECT for construction bids. CITY shall not permit any change to or modification of DISTRICT approved and CITY approved IMPROVEMENT PLANS without DISTRICT's prior written permission and consent.
5. Make reasonable efforts during the preparation of IMPROVEMENT PLANS to avoid utility conflicts associated with UTILITY RELOCATIONS.
6. Keep an accurate accounting of all PROJECT costs associated with the TOTAL DISTRICT CONTRIBUTION as set forth in Recital I and provide this accounting along with future invoices to DISTRICT. The final accounting of construction costs shall include a detailed breakdown of all costs, including, but not limited to, payment vouchers, approved change orders and other such construction contract documents as may be necessary to establish the actual costs associated with PROJECT and will be included when invoicing DISTRICT.
7. Prior to advertising PROJECT for public works construction contract, secure all necessary permits, approvals or agreements required by any federal, state and local resource or regulatory agencies pertaining to PROJECT. Such documents may include, but are not limited to, a Section 404 permit issued by the U.S. Army Corps of Engineers, a Section 401 Water Quality Certification issued by the California Regional Water Quality Control Board (CRWQCB), a Streambed Alteration Agreement issued by the California Department of Fish and Wildlife, and a National Pollutant Discharge Elimination System Permit issued by the State Water Resources Control Board or CRWQCB and Western Riverside County Regional Item 1Z - Page 9
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Conservation Authority ("REGULATORY PERMITS"). CITY shall also provide DISTRICT an opportunity to review, comment on and approve, as appropriate, all applications for REGULATORY PERMITS prior to submitting the application to the applicable regulatory agencies.
8. Following the signing of improvement plans by all Parties, issue a second invoice to DISTRICT (Attn: Special Projects Section) for (i) the remainder of DESIGN CONTRIBUTION and, if applicable, (ii) DESIGN ADMIN. The invoice shall include an accounting of all design costs associated with the preparation of plans and specifications for PROJECT, a copy of the signed improvement plans, including, and if applicable, the associated design contract administration cost. TOTAL DISTRICT CONTRIBUTION shall not exceed the total amount of Two Million Nine Hundred Twenty-Four Thousand Nine Hundred Eighteen Dollars ($2,924,918) for PROJECT.
9. Prior to awarding a public works construction contract for PROJECT, provide DISTRICT seven (7) calendar days following construction bid opening to review and approve or reject bids for construction of PROJECT.
10. Advertise, award and administer a public works construction contract for PROJECT of the bids pursuant to the applicable provisions of the California Public Contract Code. At the time of advertising for bids, provide DISTRICT with a copy of IMPROVEMENT PLANS and any subsequent addenda thereto.
11. Provide DISTRICT with written notice (Attention: Special Projects Section) that CITY has awarded a public works construction contract for PROJECT. The written notice shall include CITY contractor's actual bid amounts for PROJECT, setting forth the lowest responsible bid contract amount.
12. At the time of providing written notice of the award of a construction contract as set forth in Section I.11, issue a third invoice to DISTRICT (Attention: Special Item 1Z - Page 10
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Projects Section) for the payment of CONSTRUCTION CONTRIBUTION, subject to and provided that TOTAL DISTRICT CONTRIBUTION shall not exceed the total amount of Two Million Nine Hundred Twenty-Four Thousand Nine Hundred Eighteen Dollars ($2,924,918) for PROJECT.
13. Prior to commencing construction of PROJECT, procure or caused to be procured insurance coverages during the term of this Agreement. CITY shall require its PROJECT construction contractor(s) to furnish original certificate(s) of insurance and original certified copies of endorsements and, if requested, certified original policies of insurance, including all endorsements and any and all other attachments. Prior to CITY issuing a Notice to Proceed to its construction contractor(s) to begin construction of PROJECT, an original certificate of insurance evidencing the required insurance coverage shall be provided to DISTRICT. At minimum, the procured insurance coverages should adhere to DISTRICTꞌs required insurance provided in Exhibit "B", attached hereto and made a part hereof.
14. Prior to commencing construction of PROJECT, schedule and conduct a mandatory pre-construction meeting between CITY, CITY's construction manager, CITY's construction contractor(s), DISTRICT and other affected entities. CITY shall notify DISTRICT (Attention: Special Project Section) in writing at least twenty (20) days prior to conducting the pre-construction meeting.
15. Prior to commencing construction of PROJECT, furnish DISTRICT with final mylar of the IMPROVEMENT PLANS and assign ownership of the IMPROVEMENT PLANS to DISTRICT.
16. Furnish DISTRICT, at the time of providing written notice of intent to start construction as set forth in Section I.14, with a construction schedule which shall show the order and dates in which CITY or CITY's contractor proposes to carry on the various parts of work, including estimated start and completion dates.
Item 1Z - Page 11
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17. Not permit any change to, or modification of, the DISTRICT and CITY approved IMPROVEMENT PLANS that would result in a change of functionality or maintainability of PROJECT without DISTRICT's prior written permission and consent. Failure to do so shall be deemed a material breach of this Agreement and shall authorize and constitute authority for DISTRICT, at its sole discretion, to provide written notice to CITY that DISTRICT is unable to: a) perform its obligations hereunder, and b) to accept responsibility for ownership, operation and maintenance of LINE 6 STAGE 3 due, either in whole or in part, to said breach of this Agreement.
18. Construct or cause to be constructed PROJECT pursuant to a CITY administered public works contract in accordance with IMPROVEMENT PLANS approved by DISTRICT and CITY.
19. Require its construction contractor(s) to comply with all Cal/OSHA safety regulations including regulations concerning confined space and maintain a safe working environment for all CITY and DISTRICT employees on the site.
20. Relocate or cause to be relocated, at its sole cost and expense, all conflicting CITY owned utilities. CITY shall also order the relocation of all other utilities installed by permit or franchise within CITY rights of way which conflict with the construction of PROJECT.
21. Require its construction contractor(s) to furnish DISTRICT (Attention:
Contract Management Section) with a confined space procedure specific to PROJECT. The procedure shall comply with requirements contained in California Code of Regulations, Title 8, Section 5158, Other Confined Space Operations, Section 5157, Permit Required Confined Space and District confined Space Procedures, SOM-18. The procedure shall be provided to DISTRICT no less than twenty (20) days prior to requesting that DISTRICT perform a final inspection for acceptance of PROJECT. The procedure shall be reviewed and approved by DISTRICT prior to conducting the final inspection.
Item 1Z - Page 12
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22. Inspect PROJECT construction or cause PROJECTꞌs construction to be inspected by its construction manager, and pay all costs associated therewith, provided that such costs will be included within the CONSTRUCTION ADMINISTRATION CONTRIBUTION. In the event CITY wishes to utilize the DISTRICTꞌs construction inspection, materials testing and construction survey services, CITY shall provide DISTRICT with a written request (Attn: Special Projects) for such services. However, CITY will continue to serve as construction contract manager.
23. Perform all survey and construction staking work as needed for PROJECT as specified herein.
24. Furnish, or cause its construction manager to furnish, all construction survey and materials testing services necessary to ensure PROJECT construction is accomplished in accordance with the DISTRICT and CITY approved IMPROVEMENT PLANS.
25. Grant DISTRICT, by execution of this Agreement, the right to enter upon property owned or controlled by CITY where necessary and convenient for the purpose of gaining access to, and performing inspection service for, the construction of PROJECT.
26. Within two (2) weeks of completing PROJECT construction, provide DISTRICT with written notice (Attention: Construction Management Section) that PROJECT construction is substantially complete and requesting that DISTRICT conduct a final inspection of LINE 6 STAGE 3.
27. Upon completion of PROJECT construction, accept ownership and sole responsibility for the operation and maintenance of APPURTENANCES and LINE 6 STAGE 3 upon (i) CITY inspection of PROJECT in accordance with Section I.22, (ii) CITY acceptance of PROJECT construction as being complete, (iii) DISTRICT acceptance of LINE 6 STAGE 3 construction as being complete, and (iv) CITY receipt of stamped and signed record drawings of LINE 6 STAGE 3 plans as set forth in Section II.13.
Item 1Z - Page 13
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28. Following CITY's acceptance of LINE 6 STAGE 3 for ownership, operation and maintenance and prior to DISTRICT's acceptance of ownership and responsibility for the operation and maintenance of LINE 6 STAGE 3 pursuant to Section II.12., LINE 6 STAGE 3 shall be in a satisfactorily maintained condition as solely determined by DISTRICT. If, subsequent to the inspection and, in the sole discretion of DISTRICT, LINE 6 STAGE 3 is not in an acceptable condition, corrections shall be made at CITY's sole expense.
29. Upon completion of PROJECT construction, provide DISTRICT with a copy of CITY's Recorded Notice of Completion. The recorded Notice of Completion shall be accompanied by the final accounting of all PROJECT construction costs as set forth in Section I.6.
30. At the time of providing a Notice of Completion as set forth in Section I.29., and if applicable, issue a fourth invoice to DISTRICT (Attention: Special Projects Section) for CONSTRUCTION ADMINISTRATION CONTRIBUTION and CONSTRUCTION CHANGE ORDERS CONTRIBUTION, subject to and provided that TOTAL DISTRICT CONTRIBUTION shall not exceed Two Million Nine Hundred Twenty-Four Thousand Nine Hundred Eighteen Dollars ($2,924,918) for PROJECT.
31. Upon completion of PROJECT construction but prior to DISTRICT's acceptance of LINE 6 STAGE 3 for ownership, operation and maintenance, provide DISTRICT (Attention: Construction Management Section) with (i) soil compaction report(s) – stamped and wet signed by the geotechnical engineer, and ii) concrete testing report(s) – stamped and wet signed by a civil engineer registered in the State of California, necessary to establish that LINE 6 STAGE 3 was constructed in accordance with DISTRICT-approved and CITY-approved IMPROVEMENT PLANS.
32. Upon completion of PROJECT construction but prior to CITY's acceptance of LINE 6 STAGE 3 and APPURTENANCES for ownership, operation and maintenance Item 1Z - Page 14
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pursuant to Section I.27, provide or cause its civil engineer of record or construction civil engineer of record, duly registered in the State of California, to provide DISTRICT and CITY with redlined "record drawings" of IMPROVEMENT PLANS. After DISTRICT and CITY approval of the redlined "record drawings", CITY's engineer shall schedule with DISTRICT and CITY a time to transfer the redlined changes into DISTRICT's original mylars at DISTRICT's office, after which the engineer shall review, stamp and sign mylars "record drawings".
33. Refund to DISTRICT, at the time of providing a Notice of Completion as set forth in Section I.29., any unexpected portions of TOTAL DISTRICT CONTRIBUTION.
SECTION II
DISTRICT shall:
1. Act as a Responsible Agency under CEQA, taking all necessary and appropriate action to comply with CEQA for PROJECT.
2. Within thirty (30) business days of receiving CITY's first invoice to DISTRICT, pay CITY for fifty percent (50%) of DESIGN CONTRIBUTION as set forth in Section I.2, subject to and provided that TOTAL DISTRICT CONTRIBUTION shall not exceed the total amount of Two Million Nine Hundred Twenty-Four Thousand Nine Hundred Eighteen Dollars ($2,924,918) for PROJECT.
3. At its sole cost and expense, review, comment and make a determination on CITY's PROJECT engineering design cost proposal and associated design schedule as set forth in Section I.3.
4. Review the IMPROVEMENT PLANS in accordance with the applicable DISTRICT and CITY standards and approve IMPROVEMENT PLANS prior to advertising PROJECT for construction bids as set forth in Section I.4.
5. Within thirty (30) business days of receiving CITY's second invoice to DISTRICT, pay CITY for the remaining fifty percent (50%) of DESIGN CONTRIBUTION Item 1Z - Page 15
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following the signing of IMPROVEMENT PLANS as set forth in Section I.8, subject to and provided that TOTAL DISTRICT CONTRIBUTION shall not exceed the total amount of Two Million Nine Hundred Twenty-Four Thousand Nine Hundred Eighteen Dollars ($2,924,918) for PROJECT.
6. Within seven (7) calendar days following CITY's public works construction bid opening, review and approve or reject bids for construction of PROJECT. DISTRICT may only reject bids found by DISTRICT to be unreasonably high. DISTRICT shall not unreasonably withhold approval of contract.
7. Within thirty (30) business days of CITY awarding PROJECT construction contract, pay, at its sole cost and expense, the costs associated with the MSHCP, which is either the lesser of (i) three percent (3%) of the lowest responsible bid price, or (ii) three percent (3%) of lowest responsible bid price less the value of applicable project-specific mitigation.
8. Within thirty (30) business days of receiving CITY's third invoice to DISTRICT, pay CITY for CONSTRUCTION CONTRIBUTION as set forth in Section I.12, subject to and provided that TOTAL DISTRICT CONTRIBUTION shall not exceed the total amount of Two Million Nine Hundred Twenty-Four Thousand Nine Hundred Eighteen Dollars ($2,924,918) for PROJECT.
9. Conduct periodic inspections of LINE 6 STAGE 3 construction for quality control purposes at its sole cost and provide any comments to CITY's designated PROJECT construction inspector.
10. Upon receipt of CITY's Notice of Completion that PROJECT construction is substantially complete, conduct a final inspection of LINE 6 STAGE 3.
11. Pay CITY, withing thirty (30) business days after receipt of CITY's fourth invoice, for CONSTRUCTION ADMINISTRATION CONTRIBUTION and if applicable, CONSTRUCTION CHANGE ORDERS CONTRIBUTION, as set forth in Section I.31., subject Item 1Z - Page 16
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to and provided that TOTAL DISTRICT CONTRIBUTION does not exceed a total sum of Two Million Nine Hundred Twenty-Four Thousand Nine Hundred Eighteen Dollars ($2,924,918) for PROJECT.
12. Accept ownership and responsibility for the operation and maintenance of LINE 6 STAGE 3 from CITY once all of the following takes place: (i) DISTRICT's inspection of LINE 6 STAGE 3 in accordance with Section II.10., (ii) DISTRICT's acceptance of LINE 6 STAGE 3 construction as being complete, (iii) DISTRICT's receipt of CITY's recorded Notice of Completion as set forth in Section I.29., (iv) DISTRICT's receipt of appropriate engineering documentation as set forth in Section I.31., (v) DISTRICT receipt of stamped and signed "record drawings" of IMPROVEMENT PLANS, as set forth in Section I.33., (v) CITY acceptance of APPURTENANCES for ownership, operation, and maintenance, (vi) LINE 6 STAGE 3 is fully functioning as a flood control drainage system as solely determined by DISTRICT, and (vii) DISTRICT's sole determination that LINE 6 STAGE 3 is in a satisfactorily maintained condition.
13. Provide CITY with a reproducible duplicate copy of "record drawings" of IMPROVEMENT PLANS upon; (i) DISTRICT acceptance of PROJECT construction as being complete, and (ii) DISTRICT receipt of stamped and signed "record drawings" of IMPROVEMENT PLANS as set forth in Section I.33.
14. Prior to DISTRICT acceptance of ownership and responsibility for the operation and maintenance of LINE 6 STAGE 3, LINE 6 STAGE 3 shall be in a satisfactorily maintained condition as solely determined by DISTRICT. If, subsequent to the inspection and, in the sole discretion of DISTRICT, LINE 6 STAGE 3 is not in an acceptable condition, corrections shall be made at sole expense of CITY.
SECTION III
It is further mutually agreed:
Item 1Z - Page 17
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1. All Recitals set forth above are hereby incorporated herein by reference as if set forth fully in the body of this Agreement.
2. Notwithstanding any other provision herein this agreement TOTAL DISTRICT CONTRIBUTION shall not exceed a total sum of Two Million Nine Hundred Twenty-Four Thousand Nine Hundred Eighteen Dollars ($2,924,918) for PROJECT and shall be used by CITY solely for the purpose of the design and construction of said PROJECT as set forth herein. No additional funding whatsoever shall be provided by DISTRICT for any subsequent PROJECT modifications, extensions or repairs.
3. In the event the actual construction cost for PROJECT is less than CONSTRUCTION CONTRIBUTION, CITY shall refund the difference to DISTRICT within thirty (30) days of filing the Notice of Completion for PROJECT.
4. In the event CITY's construction contractor does not complete the construction of PROJECT in accordance with DISTRICT standards, CITY shall complete the PROJECT utilizing the bonds and insurances secured for PROJECT.
5. DISTRICT, the County of Riverside, the State of California or any of their duly authorized representatives shall have the right to review and to copy any records and supporting documentation pertaining to the performance of this Agreement. CITY agrees to maintain such records for possible audit for a minimum of three (3) years after final payment.
CITY agrees to allow the auditor(s) access to such records during normal business hours and to allow interviews of any employees who might reasonably have information related to such records.
6. CITY shall indemnify, defend and hold harmless, and require its construction contractor(s) to indemnify, defend and hold harmless, the Riverside County Flood Control and Water Conservation District, County of Riverside, its Agencies, Districts, Special Districts and Departments, their respective directors, officers, Board of Supervisors, elected Item 1Z - Page 18
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and appointed officials, employees, agents and representatives (individually and collectively hereinafter referred to as "Indemnitees") from any liability whatsoever, based or asserted upon any acts, omissions or services of CITY or CITY's construction contractor(s), its officers, employees, subcontractors, agents or representatives arising out of or in any way relating to this Agreement, including, but not limited to, property damage, bodily injury or death, or any other element of any kind or nature whatsoever arising from the performance of CITY or CITY's construction contractor(s), their officers, employees, subcontractors, agents or representatives ("Indemnitors") from this Agreement. CITY or CITY's construction contractor(s) shall defend, at its sole expense, all costs and fees, including, but not limited to, attorney fees, cost of investigation, defense, and settlements or awards, the Indemnitees in any claim or action based upon such alleged acts or omissions.
7. With respect to any action or claim subject to indemnification herein by CITY, CITY shall, at their sole cost, have the right to use counsel of their own choice and shall have the right to adjust, settle or compromise any such action or claim without the prior consent of DISTRICT and the County of Riverside; provided, however, that any such adjustment, settlement or compromise in no manner whatsoever limits or circumscribes CITY's indemnification to Indemnitees as set forth herein.
8. CITY's obligation hereunder shall be satisfied when CITY has provided to DISTRICT and the County of Riverside the appropriate form of dismissal relieving DISTRICT and the County of Riverside from any liability for the action or claim involved.
9. The specified insurance limits required in this Agreement shall in no way limit or circumscribe CITY's obligations to indemnify and hold harmless the Indemnitees herein from third party claims.
10. In the event there is conflict between this clause and California Civil Code Section 2782, this clause shall be interpreted to comply with Civil Code 2782. Such Item 1Z - Page 19
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interpretation shall not relieve CITY from indemnifying the Indemnitees to the fullest extent allowed by law.
11. If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions will nevertheless continue in full force without being impaired or invalidated in any way.
12. This Agreement is to be construed in accordance with the laws of the State of California.
13. Any action at law or in equity brought by any of the Parties hereto for the purpose of enforcing a right or rights provided for by the Agreement shall be tried in a court of competent jurisdiction in the County of Riverside, State of California, and the Parties hereto waive all provisions of law providing for a change of venue in such proceedings to any other county.
14. Neither CITY nor DISTRICT shall assign this Agreement without the written consent of the other Party. Any attempt to delegate or assign any interest herein shall be deemed void and of no effect.
15. This Agreement is made and entered into for the sole protection and benefit of the Parties hereto. No other person or entity shall have any right of action based upon the provisions of this Agreement.
16. Any and all notices sent or required to be sent to the Parties of this Agreement will be mailed by first class mail, postage prepaid, to the following addresses:
RIVERSIDE COUNTY FLOOD CONTROL CITY OF PALM SPRINGS
AND WATER CONSERVATION DISTRICT 3200 E. Tahquitz Canyon Way 1995 Market Street Palm Springs, CA 92262
Riverside, CA 92501 Attn: Joel Montalvo
Attn: Contracts Services Section
17. This Agreement is the result of negotiations between the Parties hereto and the advice and assistance of their respective counsel. The fact that this Agreement was prepared Item 1Z - Page 20
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as a matter of convenience by DISTRICT shall have no import or significance. Any uncertainty or ambiguity in this Agreement shall not be construed against DISTRICT because DISTRICT prepared this Agreement in its final form.
18. Any waiver by DISTRICT or CITY of any breach by any other Party of any provision of this Agreement shall not be construed to be a waiver of any subsequent or other breach of the same or any other provision hereof. Failure on the part of DISTRICT or CITY to require from any other Party exact, full and complete compliance with any of the provisions of this Agreement shall not be construed as in any manner changing the terms hereof or stopping DISTRICT or CITY from enforcing this Agreement.
19. The obligations of DISTRICT are limited by and contingent upon the availability of DISTRICT funds for DISTRICT's financial contribution toward PROJECT as set forth herein. In the event that such funds are not forth coming for any reason, DISTRICT shall immediately notify CITY in writing. Agreement shall be deemed terminated and have no further force and effect immediately upon receipt of DISTRICT's notification by CITY.
20. This Agreement is intended by the Parties hereto as a final expression of their understanding with respect to the subject matter hereof and as a complete and exclusive statement of the terms and conditions thereof and supersedes any and all prior and contemporaneous agreements and understandings, oral or written, in connection therewith. This Agreement may be changed or modified only upon the written consent of the Parties hereto.
21. No alternation or variation of the terms of this Agreement shall be valid unless made in writing and signed by both Parties, and no oral understanding or agreement not incorporated herein shall be binding on either Party hereto.
22. Nothing in the provisions of this Agreement is intended to create duties or obligations to or rights in third parties not parties to this.
Item 1Z - Page 21
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23. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Each Party of this Agreement agrees to the use of electronic signatures, such as digital signatures that meet the requirements of the California Uniform Electronic Transactions Act (("CUETA") Cal. Civ. Code §§ 1633.1 to 1633.17) for executing this Agreement. The Parties further agree that the electronic signatures of the Parties included in this Agreement are intended to authenticate this writing and to have the same force and effect as manual signatures.
Electronic signature means an electronic sound, symbol or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record pursuant to CUETA as amended from time to time. CUETA authorizes use of an electronic signature for transactions and contracts among Parties in California, including a government agency. Digital signature means an electronic identifier, created by computer, intended by the Party using it to have the same force and effect as the use of a manual signature, and shall be reasonably relied upon by the Parties. For purposes of this section, a digital signature is a type of "electronic signature" as defined in subdivision (i) of Section 1633.2 of the Civil Code.
//
//
Item 1Z - Page 22
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IN WITNESS WHEREOF, the Parties hereto have executed this Cooperative Agreement on .
(to be filled in by Clerk of the Board)
RECOMMENDED FOR APPROVAL:
RIVERSIDE COUNTY FLOOD CONTROL
AND WATER CONSERVATION DISTRICT
By
JASON E. UHLEY
General Manager-Chief Engineer
By
KAREN SPIEGEL, Chair
Riverside County Flood Control and Water
Conservation District Board of Supervisors
APPROVED AS TO FORM: ATTEST:
MINH H. TRAN
County Counsel
KIMBERLY RECTOR
Clerk of the Board
By
NAME
Deputy County Counsel
By
Deputy
(SEAL)
Funding/Cooperative Agreement with City of Palm Springs Palm Springs MDP Line 6, Stage 3
Project No. 6-0-00300
Miscellaneous No. 219
9/30/2024
AGR:blj
Item 1Z - Page 23
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RECOMMENDED FOR APPROVAL: CITY OF PALM SPRINGS
By
JEFFREY BERNSTEIN
Mayor
APPROVED AS TO FORM: ATTEST:
By
JEFFREY BALLINGER
City Attorney
By
BRENDA PREE
City Clerk
(SEAL)
Funding/Cooperative Agreement with City of Palm Springs Palm Springs MDP Line 6, Stage 3
Project No. 6-0-00300
Miscellaneous No. 219
9/30/2024
AGR:blj
Item 1Z - Page 24
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Source: Esri, Maxar, Earthstar Geographics, and the GIS User Community LEGEND
Palm Springs MDP Line 6, Stage 3
Existing Facilities Line
Item 1Z - Page 25
Exhibit B
Insurance Requirements ׀ Page 1 of 5
DISTRICT's Insurance Requirements is as follows:
CITY's contractor(s) shall not commence operations until DISTRICT has been furnished with original certificate(s) of insurance and original certified copies of endorsements and if requested, certified original policies of insurance including all endorsements and any and all other attachments as required in this Section.
Without limiting or diminishing CITY's contractor(s) obligation to indemnify or hold DISTRICT harmless, CITY contractor(s) shall procure and maintain or cause to be maintained, at its sole cost and expense, the following insurance coverage's during the term of this Agreement.
As respects to the insurance section only, the DISTRICT herein refers to the Riverside County Flood Control and Water Conservation District, the County of Riverside, its Agencies, Districts, Special Districts, and Departments, their respective directors, officers, Board of Supervisors, employees, elected or appointed officials, agents or representatives as Additional Insureds.
A. Workers' Compensation:
If CITY contractor(s) has employees as defined by the State of California, CITY contractor(s) shall maintain statutory Workers' Compensation Insurance (Coverage A) as prescribed by the laws of the State of California. Policy shall include Employers' Liability (Coverage B) including Occupational Disease with limits not less than $1,000,000 per person per accident. Policy shall be endorsed to waive subrogation in favor of DISTRICT.
B. Commercial General Liability:
Commercial General Liability insurance coverage, including but not limited to, premises liability, unmodified contractual liability, products and completed operations liability, personal and advertising injury, and cross liability coverage, covering claims which may arise from or out of CITY's contractor(s) performance of its obligations hereunder. Policy shall name the DISTRICT as Additional Insured. Policy's limit of liability shall not be less than $2,000,000 per occurrence combined single limit. If such insurance contains a general aggregate limit, it shall apply separately to this Agreement or be no less than two (2) times the occurrence limit.
C. Vehicle Liability:
If CITY's contractor(s) vehicles or mobile equipment are used in the performance of the obligations under this Agreement, then CITY contractor(s) shall maintain liability insurance for all owned, non-owned or hired vehicles so used in an amount not less than $1,000,000 per occurrence combined single limit. If such insurance contains a general aggregate limit, it shall apply separately to this Agreement or be no less than two (2) times the occurrence limit. Policy shall Item 1Z - Page 26
Exhibit B
Insurance Requirements ׀ Page 2 of 5
name the DISTRICT as Additional Insureds.
D. Pollution and Asbestos Liability:
CITYꞌs contractor(s) shall obtain, at its sole expense and keep in effect during the term of the contract, Pollution Legal Liability and/or Asbestos Legal Liability and/or Errors and Omissions (if project involves environmental hazards) covering CITYꞌs contractor(s) liability for a third-party bodily injury and property damage arising from pollution conditions caused by the CITYꞌs contractor(s) while performing their operations under the contract. The insurance coverage shall apply to sudden and accidental pollution events. Any coverage restriction as to time limit for discovery of a pollution incident and/or a time limit for notice to the insurer must be accepted by the DISTRICT. The insurance coverage shall also respond to cleanup cost. This coverage may be written in combination with the commercial general liability insurance or professional liability insurance.
CITYꞌs contractor(s) shall maintain Pollution Legal Liability and/or Asbestos Legal Liability and/or Errors and Omissions with limits no less than $1,000,000 per occurrence or claim, and $2,000,000 policy aggregate. The policy shall be endorsed to state that the general aggregate limit of liability shall apply separately to this contract. Any self-insured retention/deductible amount shall be submitted to the DISTRICT for review and approval. If CITYꞌs contractor(s) maintains broader coverage and/or higher limits than the minimums shown above, the DISTRICT requires and shall be entitled to the broader coverage and/or higher limits maintained by CITYꞌs contractor(s). Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the DISTRICT.
In the event, CITYꞌs contractor(s) encounters materials on the site that is believed to be asbestos or polychlorinated biphenyl (PCB) which has not been rendered harmless, CITYꞌs contractor(s) shall immediately stop work in the area affected and report the condition to the DISTRICT in writing. The work in the affected area shall not thereafter be resumed except by written agreement of the DISTRICT and CITY, if in fact the material is asbestos or polychlorinated biphenyl (PCB) and has not been rendered harmless. The work in the affected area shall be resumed in the absence of asbestos or polychlorinated biphenyl (PCB), or when it has been rendered harmless, by written agreement of the DISTRICT and CITY.
Item 1Z - Page 27
Exhibit B
Insurance Requirements ׀ Page 3 of 5
CITYꞌs construction contractor(s) shall not be required to perform without consent any work relating to asbestos or polychlorinated biphenyl (PCB).
E. Professional Liability:
CITY contractor(s) shall cause any architect or engineer retained by CITY contractor(s) in connection with the performance of CITY's contractor(s) obligations under this Agreement to maintain Professional Liability Insurance providing coverage for the performance of their work included within this Agreement, with a limit of liability of not less than $1,000,000 per occurrence and $2,000,000 annual aggregate. CITY contractor(s) shall require that, if such Professional Liability Insurance is written on a claims made basis rather than an occurrence basis, such insurance shall continue through the term of this Agreement and that such architect or engineer shall purchase at such architect or engineer's sole expense either 1) an Extended Reporting Endorsement (also known as Tail Coverage); or 2)Prior Dates Coverage from a new insurer with a retroactive date back to the date of, or prior to, the inception of this Agreement; or 3) demonstrate through Certificates of Insurance that such architect or engineer has maintained continuous coverage with the same or original insurer. Coverage provided under items: 1), 2) or 3) shall continue for the term specified in the insurance policy as long as the law allows.
F. General Insurance Provisions – All Lines:
a. Any insurance carrier providing insurance coverage hereunder shall be admitted to the State of California and have an A.M. BEST rating of not less than an A: VIII (A: 8) unless such requirements are waived, in writing, by the DISTRICT Risk Manager. If the DISTRICTꞌs Risk Manager waives a requirement for a particular insurer such waiver is only valid for that specific insurer and only for one policy term.
b. The CITY contractor(s) must declare its insurance self-insured retention for each coverage required herein. If any such self-insured retention exceeds $500,000 per occurrence each such retention shall have the prior written consent of the DISTRICT Risk Manager before the commencement of operations under this Agreement. Upon notification of self-insured retention deemed unacceptable to the DISTRICT, and at the election of the DISTRICTꞌs Risk Manager, CITY's contractor(s) carriers shall either: 1) reduce or eliminate such self-insured retention with respect to this Agreement with DISTRICT, or 2) procure a bond which guarantees payment of losses and related investigations, claims administration, and Item 1Z - Page 28
Exhibit B
Insurance Requirements ׀ Page 4 of 5
defense costs and expenses.
c. CITY contractor(s) shall cause their insurance carrier(s) to furnish DISTRICT with 1) a properly executed original certificate(s) of insurance and certified original copies of endorsements effecting coverage as required herein; and 2) if requested to do so orally or in writing by the DISTRICT Risk Manager, provide original certified copies of policies including all endorsements and all attachments thereto, showing such insurance is in full force and effect.
Further, said certificate(s) and policies of insurance shall contain the covenant of the insurance carrier(s) that a minimum of thirty (30) days written notice shall be given to the DISTRICT prior to any material modification, cancellation, expiration or reduction in coverage of such insurance. If CITY contractor(s) insurance carrier(s) policies does not meet the minimum notice requirement found herein, CITY contractor(s) shall cause CITY's contractor(s) insurance carrier(s) to furnish a 30-day Notice of Cancellation Endorsement.
d. In the event of a material modification, cancellation, expiration or reduction in coverage, this Agreement shall terminate forthwith, unless DISTRICT receives, prior to such effective date, another properly executed original certificate of insurance and original copies of endorsements or certified original policies, including all endorsements and attachments thereto, evidencing coverages set forth herein and the insurance required herein is in full force and effect. An individual authorized by the insurance carrier to do so on its behalf shall sign the original endorsements for each policy and the certificate of insurance.
e. It is understood and agreed by the parties hereto that CITY's contractor(s)insurance shall be construed as primary insurance, and DISTRICT's insurance and/or deductibles and/or self-insured retentions or self-insured programs shall not be construed as contributory. f. If, during the term of this Agreement or any extension thereof, there is a material change in the scope of services or there is a material change in the equipment to be used in the performance of the scope of work which will add additional exposures (such as the use of aircraft, watercraft, cranes, Item 1Z - Page 29
Exhibit B
Insurance Requirements ׀ Page 5 of 5
etc.); or the term of this Agreement, including any extensions thereof, exceeds five (5) years, DISTRICT reserves the right to adjust the types of insurance required under this Agreement and the monetary limits of liability for the insurance coverages currently required herein, if, in the DISTRICT Risk Manager's reasonable judgment, the amount or type of insurance carried by CITY contractor(s) has become inadequate.
g. CITY contractor(s)shall pass down the insurance obligations contained herein to all tiers of subcontractors working under this Agreement. h. The insurance requirements contained in this Agreement may be met with a program(s) of self-insurance acceptable to DISTRICT.
i. CITY contractor(s)agrees to notify DISTRICT of any claim by a third party or any incident or event that may give rise to a claim arising from the performance of this Agreement.
Item 1Z - Page 30
CITY COUNCIL STAFF REPORT
DATE: NOVEMBER 21, 2024 PUBLIC HEARING
SUBJECT: RESOLUTION OF NECESSITY OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS FOR THE ACQUISITION BY EMINENT DOMAIN OF A
PERMANENT NON-EXCLUSIVE EASEMENT INTEREST IN A PORTION
OF CERTAIN REAL PROPERTY LOCATED IN PALM SPRINGS,
COUNTY OF RIVERSIDE, CALIFORNIA AND MORE PARTICULARLY
DESCRIBED AS ASSESSOR PARCEL NO. 513-144-012 FOR THE
PLAZA THEATRE RESTORATION PROJECT
FROM: Scott C. Stiles, City Manager
BY: Jeffrey S. Ballinger, City Attorney
SUMMARY:
This public hearing item will allow the City Council to consider acquiring, by eminent domain, a permanent non-exclusive easement interest in a portion of certain real property identified by Assessor Parcel Number (APN) 513-144-012 (the “Property), owned by Grit Development, LLC, a California limited liability company, (“Grit Development”) for the Plaza Theatre Restoration Project (the “Project”).
RECOMMENDATION:
1. Conduct a public hearing to consider the adoption of a resolution of necessity, including providing all parties interested in the affected Property and their attorneys, or their representatives, an opportunity to be heard on the issues relevant to the Resolution of Necessity;
2. Make the following findings as hereinafter described in this report:
a) The public interest and necessity require the proposed Project; b) The Project is planned or located in a manner that will be most compatible with the greatest public good and the least private injury;
c) The real Property to be acquired is necessary for the Project; and d) The offer of just compensation has been made to the Property owner.
3. Adopt Resolution No. ____, “RESOLUTION OF NECESSITY OF THE CITY
COUNCIL OF THE CITY OF PALM SPRINGS FOR THE ACQUISITION BY
EMINENT DOMAIN OF A PERMANENT NON-EXCLUSIVE EASEMENT INTEREST Item 2A - Page 1
IN A PORTION OF CERTAIN REAL PROPERTY LOCATED IN PALM SPRINGS,
COUNTY OF RIVERSIDE, CALIFORNIA AND MORE PARTICULARLY DESCRIBED AS ASSESSOR PARCEL NO. 513-144-012 FOR THE PLAZA THEATRE RESTORATION PROJECT” (Attachment A)
BACKGROUND:
The City of Palm Springs acquired the historic Plaza Theatre from the City’s former Redevelopment Agency in 2015. At the time, the California Department of Finance (DOF), which has final authority over the disposition of former Redevelopment Agency properties, approved the conveyance of the Theatre to the City with the understanding that the Theatre has a historic designation and cannot be demolished. The DOF specifically required that the City secure a new operator with conditions that the property will be maintained as a historic structure and performing arts venue.
On January 27, 2022, the City Council approved a Memorandum of Understanding between the City of Palm Springs and the Palm Springs Plaza Theatre Foundation, which had been formed to raise funds for the restoration of the historic Plaza Theatre.
On June 29, 2023, with construction documents completed, City Council approved the Plaza Theatre Restoration, City Project 18-04 for advertising and soliciting bids for construction services. Staff advertised the theatre restoration project to Plans Room, the local paper, and through PlanetBidsTM.
A total of five bids were received at the time of bid closing. The first and second lowest bids were found non-responsive and contained significant errors in their accounting/costs.
The remaining three bids ranged from $26,322,000 to $26,999,757, indicating the true price to construct this Project. On December 14, 2023, City Council awarded a construction contract to Woodcliff Corporation for the project, in the amount of $26,322,000. The Project construction is expected to be completed in late Fall of 2025, with an opening to the public at the end of 2025.
STAFF ANALYSIS:
The City owns the real property located at 128 S. Palm Canyon Drive, Palm Springs, CA, APN 513-144-010, on which is located the City’s historic Plaza Theatre (“Plaza Theatre Property”).
Grit Development owns the real property located at 124 S. Palm Canyon Drive, Palm Springs, CA, APN 513-144-011, on which Grit Development’s tenant, Kalura Trattoria operates an Italian restaurant (“Kalura Property”).
Grit Development also owns the real property located at 134 S. Palm Canyon Drive, Palm Springs, CA, APN 513-144-13, on which Grit Development’s tenant, Brandini Toffee operates a toffee shop (“Brandini Property”).
Item 2A - Page 2
Grit Development is also the owner of the real property, identified as APN 513-144-012, located in between the Kalura Property and the Brandini Property on part of which Kalura maintains an outdoor dining patio.
The City currently possesses a ten foot (10’) wide ingress/egress easement over APN 513-144-012, for purposes of providing access to and from the Plaza Theatre Property.
However, the California Building Code, 24 Cal. Code Regs. § 1030.2, requires a twentyfoot (20’) ingress/egress easement. Consequently, the City needs to acquire an additional ten foot (10’) permanent non-exclusive easement interest from Grit Development, over APN 513-144-012 in order to make the Theatre capable of being occupied. A copy of the legal definition, legal description and depiction of the proposed acquisition is attached as Attachment B.
Eminent Domain Action
The public project relating to the proposed eminent domain action is identified as the Plaza Theatre Restoration Project (“Project”). The Project will widen the existing ingress/egress easement on APN 513-144-012 from Palm Canyon Drive to the historic Plaza Theatre from ten feet (10’) to twenty feet (20’) to meet current California building code safety standards.
The City obtained an appraisal of the affected property from Thompson & Thompson Real Estate Valuation and Consulting. An offer of just compensation was then made to the property owner for the acquisition pursuant to California Government Code section 7267.2.
A litigation guarantee was ordered to determine and confirm the identity of the record owner. Following a standard public records and due diligence search for ownership information, a notice of this public hearing was mailed to the affected property owner.
The power of eminent domain is used by the City only as a last resort to obtain interests necessary for projects after 1) negotiations have stalled; or 2) the owner has requested that the City proceed directly to eminent domain for tax or other advantages; or 3) the eminent domain process is necessary to clear title to the property. In this case, an offer of just compensation was made to the owner for the full Fair Market Value as determined by an independent appraisal. California’s definition of Fair Market Value is one of the most inclusive definitions in the United States and requires the appraiser to consider the highest and best use of the property and to consider the highest price a willing buyer and seller would agree to. The City’s appraisal must use this definition of Fair Market Value.
California eminent domain law provides that a public entity may not commence with eminent domain proceedings until its governing body has adopted a resolution of necessity, which may only be adopted after the City Council has given each party with an interest in the affected property, or their representatives, a reasonable opportunity to appear and be heard on the following matters:
Item 2A - Page 3
1) The public interest and necessity require the proposed Project; 2) The Project is planned or located in a manner that will be most compatible with the greatest public good and the least private injury; 3) The real property to be acquired is necessary for the Project; and 4) The offers of just compensation have been made to the property owner.
The City has been in active negotiations with the property owner (Grit), as well as the tenant (Kalura) regarding this necessary acquisition. And, the City remains hopeful that a negotiated resolution can still be reached.
However, since an agreement has not yet been reached with the property owner, it is necessary to proceed with the eminent domain process to meet critical project deadlines.
Pursuant to Section 1245.235 of the California Code of Civil Procedures, a notice of this hearing was sent by first class mail on November 5, 2024, to the record owner, and stated the City’s intent to consider the adoption of a resolution, the right of the property owner to appear and be heard, and notice that failure to file a written request to appear may result in a waiver of the right to appear and be heard.
Of course, even if the Resolution is adopted, City staff and the City Attorney will continue with efforts to negotiate a voluntary acquisition with the owner, and a mutually agreeable resolution with the tenant.
Description of Property to be Acquired
The affected property is located on the east side of South Palm Canyon Drive and south of W. Tahquitz Canyon Way in the City of Palm Springs and is described as Riverside County Assessor Parcel Number 513-144-012 (the “Property”).
Existing pedestrian ingress/egress to and from the historic Plaza Theatre is currently provided by a ten-foot-wide easement granted to the City and recorded on August 25, 2000 as Document No. 2000-335399, a copy of which is attached as Attachment C. The proposed permanent non-exclusive easement acquisition for ingress/egress contains 1,282 square feet, which overlaps the existing easement. The area of the existing easement is estimated to contain 621 square feet (10 feet x 62.12 feet).
The Property is currently owned by Grit Development, LLC, a California limited liability company.
Hearings and Required Findings
The recommended actions of the City Council pertain to the acquisition of a permanent non-exclusive easement interest in the Property. A true and correct copy of the legal definition, legal description and depiction of the Property sought to be acquired is attached to the Resolution of Necessity as Exhibit A.
Item 2A - Page 4
California eminent domain law provides that a public entity may not commence with eminent domain proceedings until its governing body has adopted a resolution of necessity, which may only be adopted after the governing body has given each party with an interest in the affected property, or their representatives, a reasonable opportunity to appear and be heard on the following matters:
The four required findings are addressed as follows:
1. The Public Interest and Necessity Require the Proposed Project Approval of the Eminent Domain action to acquire the property rights serves the public interest and is necessary for completion of the Project. Acquisition of the Property is necessary to allow safe access to and from the City-owned historic Plaza Theatre.
Restoring the City’s historic Plaza Theatre provides a new mid-scale venue with state-ofthe-art capabilities in the heart of downtown Palm Springs, which will benefit the residents of Palm Springs and the entire Coachella Valley. The historic Plaza Theatre will provide live performances, film premieres, community and educational events, and films appealing to diverse audiences, including children and all members of the community. In addition, the historic Plaza Theatre will attract local and out-of-town guests, generating additional revenue to local business and to the City through sales and transient occupancy taxes.
2. The Project is Planned or Located in a Manner That Will be Most Compatible With the Greatest Public Good and the Least Private Injury The City owns the real property located at 128 S. Palm Canyon Drive, Palm Springs, CA, APN 513-144-010, on which is located the City’s historic Plaza Theatre. On December 14, 2023, City Council awarded a construction contract to Woodcliff Corporation for the restoration of the historic Plaza Theatre. The City already owns a 10-foot easement interest in APN 513-144-012 from Palm Canyon Drive to the historic Plaza Theatre and needs to acquire an additional ten-foot (10’) easement interest in APN 513-144-012 to meet current California building and safety code standards for access to and from the historic Plaza Theatre.
3. The Real Property to be Acquired is Necessary for the Proposed Project Acquisition of the permanent non-exclusive easement interest is necessary for the City so that it can widen its current easement interest in APN 513-144-012 from 10 feet to 20 feet to comply with current California building and safety codes for access to and from the historic Plaza Theatre.
4. The Offer of Just Compensation Has Been Made
An appraisal was prepared by Thompson & Thompson Real Estate Valuation and Consulting to establish the fair market value of the real property the City is seeking to Item 2A - Page 5
acquire. As discussed above, an offer of just compensation was made to the property owner to purchase the permanent non-exclusive easement interest as established by the approved appraisal and as required by Section 7267.2 of the California Government Code. Although a negotiated settlement may still be possible for the property, it would be appropriate to commence the procedure to acquire the property through eminent domain, to ensure that the City has possession of the real property, which is necessary in order for the City to complete the project.
The assessor parcel number, the party to whom the offer was made and the date of the offer is provided in the following table:
APN Record Owner Date of Offer
512-144-012 Grit Development, LLC 10/14/2024
It should be noted that the purpose of this hearing is not to consider or decide the amount of compensation to be paid to the owner or damages paid to any tenants of the property.
That is a matter that is left exclusively to a court or jury, should the matter proceed that far.
ENVIRONMENTAL ASSESSMENT:
The Plaza Theatre Restoration Project was evaluated pursuant to the California Environmental Quality Act (“CEQA”) by the City’s Historic Site Preservation Board (“HSPB”) on March 7, 2023, via Case #3.1149 – HSPB #22A as required under the City’s Historic Preservation Ordinance, (Chapter 8.05 of the Palm Springs Municipal Code). At that time the HSPB evaluated the project and determined it to be Categorically Exempt from further analysis under CEQA as a Class 31 exemption because “the project proposed a restoration, rehabilitation, maintenance, and preservation of the building in a manner consistent with the Secretary of the Interior Standards for the Treatment of Historic Resources.” At that time, the HSPB made affirmative findings pursuant to PSMC Section 8.05.110 and granted a Certificate of Appropriateness for the project.
The subject ingress/egress easement is a necessary component of the Project and the easement is necessary to implement the project. It is therefore covered by the exemption determination made when the City approved the Project and no further environmental review is required. City staff is directed to file a Notice of Exemption within three (3) days following adoption of this Resolution.
ALIGNMENT WITH STRATEGIC PLANNING:
This action aligns with the Strategic Plan 2A – Improve City Facilities and prioritize deferred maintenance. The historic Plaza Theatre is a public building that has been out of commission for 10 years. Its restoration will allow it to be used by the public once again Item 2A - Page 6
as a movie theatre, performance and meeting space.
FISCAL IMPACT:
The Plaza Theatre Rehabilitation, City Project 18-04 is budgeted at $34,000,000. The Palm Springs Plaza Theatre Foundation (“Foundation”) has raised $14,000,000 with the balance of the funding coming from the City pursuant to a Funding and Repayment Agreement (“Agreement”) between the Foundation and the City. City funding is comprised of 1) $7.5 million from the Measure J Fund, 2) $12.5 million from the General Fund reserves. Pursuant to the Agreement, the Foundation will repay the City $10 million. The need for the subject easement was not included in the original budget for the Project. As such, the acquisition of the ingress/egress easement is expected to cost no less than $604,000. All legal settlements are paid out of the City’s Risk Assessment Fund. There is sufficient Fund Balance is this Fund to cover the acquisition at a cost of $604,000.
REVIEWED BY:
Assistant City Manager: Teresa Gallavan
City Attorney: Jeffrey Ballinger
City Manager: Scott Stiles
ATTACHMENTS:
A. Resolution of Necessity
B. Legal definition, legal description and depiction of APN 513-144-012 C. Grant of Easement recorded 8/25/2000, Document No. 2000-335399 Item 2A - Page 7
RESOLUTION NO. _______
RESOLUTION OF NECESSITY OF THE CITY COUNCIL
OF THE CITY OF PALM SPRINGS FOR THE
ACQUISITION BY EMINENT DOMAIN OF A PERMANENT
NON-EXCLUSIVE EASEMENT INTEREST IN A PORTION
OF CERTAIN REAL PROPERTY LOCATED IN PALM
SPRINGS, COUNTY OF RIVERSIDE, CALIFORNIA AND
MORE PARTICULARLY DESCRIBED AS ASSESSOR
PARCEL NO. 513-144-012, FOR THE PLAZA THEATRE
RESTORATION PROJECT
WHEREAS, the City of Palm Springs (“City”) proposes to acquire a permanent nonexclusive easement interest in a portion of certain real property identified as Assessor Parcel No. 513-144-012, for the Plaza Theatre Restoration Project (“Project”), pursuant to the authority granted to the City by Section 37350.5 of the California Government Code; and
WHEREAS, pursuant to Section 1245.235 of the California Code of Civil Procedure, the City scheduled a public hearing for November 21, 2024 at 5:30 p.m., in the City of Palm Springs City Council Chamber, located at 3200 East Tahquitz Canyon Way, in Palm Springs, California, and gave to each person whose property is to be acquired and whose name and address appears on the last equalized county assessment roll, notice and a reasonable opportunity to appear at said hearing and be heard on the matters referred to in Section 1240.030 of the California Code of Civil Procedure; and WHEREAS, said hearing has been held by the City and each person whose property is to be acquired by eminent domain was afforded the opportunity to be heard on said matters; and
WHEREAS, the City may now adopt a resolution of necessity pursuant to Section 1240.040 of the California Code of Civil Procedure.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. Compliance with California Code of Civil Procedure and California Environmental Quality Act. There has been compliance by the City with the requirements of Section 1245.235 of the California Code of Civil Procedure and the California Environmental Quality Act.
SECTION 2. Public Use. The public use for which the real property interest is to be acquired is for the Plaza Theatre Restoration Project, in the City of Palm Springs, Riverside County, California. Section 37350.5 of the California Government Code Item 2A - Page 8
authorizes the City to acquire by eminent domain real property necessary for such purposes.
SECTION 3. Description of Property. Attached and marked as Exhibit ”A” are the legal definition, legal description and depiction of the real property to be acquired by the City, which describes the general location and extent of the property to be acquired with sufficient detail for reasonable identification.
SECTION 4. Findings. The City hereby finds and determines each of the following:
(a) The public interest and necessity require the proposed Project; (b) The proposed Project is planned or located in the manner that will be most compatible with the greatest public good and least private injury;
(c) The easement interest described in Exhibit "A" is necessary for the proposed Project;
(d) The offer required by section 7267.2 of the California Government Code was made.
SECTION 5. Use Not Unreasonably Interfering with Existing Public Use. Some or all of the real property to be acquired may be subject to easements and rights-of-way appropriated to existing public uses. The legal descriptions of these easements and rights-of-way are on file with the City and describe the general location and extent of the easements and rights-of-way with sufficient detail for reasonable identification. In the event the herein described use or uses will not unreasonably interfere with or impair the continuance of the public use as it now exists or may reasonably be expected to exist in the future, counsel for the City is authorized to acquire the easement interest subject to such existing public uses pursuant to section 1240.510 of the California Code of Civil Procedure.
SECTION 6. More Necessary Public Use. Some or all of the real property to be acquired may be subject to easements and rights-of-way appropriated to existing public uses. To the extent that the herein described use or uses will unreasonably interfere with or impair the continuance of the public use as it now exists or may reasonably be expected to exist in the future, the City finds and determines that the herein described use or uses are more necessary than said existing public use. Counsel for the City is authorized to acquire the real property appropriated to such existing public uses pursuant to section 1240.610 of the California Code of Civil Procedure. Staff is further authorized to make such improvements to the real property being acquired that it determines is reasonably necessary to mitigate any adverse impact upon the existing public use.
SECTION 7. Further Activities. Counsel for the City is hereby authorized to file legal proceedings necessary to acquire the hereinabove described real property in the name of and on behalf of the City by eminent domain, and counsel is authorized to institute and prosecute such legal proceedings as may be required in connection therewith.
Item 2A - Page 9
Legal counsel is further authorized to take such steps as may be authorized and required by law, and to make such security deposits as may be required by order of court, to permit the City to take possession of and use said real property at the earliest possible time. Counsel is further authorized to correct any errors or to make or agree to non-material changes in the legal description of the real property that are deemed necessary for the conduct of the condemnation action or other proceedings or transaction required to acquire the subject real property.
SECTION 8. Effective Date. This Resolution shall take effect immediately upon adoption.
ADOPTED THIS 21st day of November, 2024.
SCOTT STILES, CITY MANAGER
ATTEST:
BRENDA PREE, MMC, CERA
CITY CLERK
Item 2A - Page 10
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, Brenda Pree, MMC, CERA City Clerk of the City of Palm Springs, hereby certify that Resolution No. ___________ is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on November 21, 2024 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Brenda Pree, MMC, CERA, City Clerk
City of Palm Springs, California
(SEAL)
Item 2A - Page 11
EXHIBIT “A”
[TO BE INSERTED ON FOLLOWING PAGE]
Item 2A - Page 12
RESOLUTION NO. _______
RESOLUTION OF NECESSITY OF THE CITY COUNCIL
OF THE CITY OF PALM SPRINGS FOR THE
ACQUISITION BY EMINENT DOMAIN OF A PERMANENT
NON-EXCLUSIVE EASEMENT INTEREST IN A PORTION
OF CERTAIN REAL PROPERTY LOCATED IN PALM
SPRINGS, COUNTY OF RIVERSIDE, CALIFORNIA AND
MORE PARTICULARLY DESCRIBED AS ASSESSOR
PARCEL NO. 513-144-012, FOR THE PLAZA THEATRE
RESTORATION PROJECT
WHEREAS, the City of Palm Springs (“City”) proposes to acquire a permanent nonexclusive easement interest in a portion of certain real property identified as Assessor Parcel No. 513-144-012, for the Plaza Theatre Restoration Project (“Project”), pursuant to the authority granted to the City by Section 37350.5 of the California Government Code; and
WHEREAS, pursuant to Section 1245.235 of the California Code of Civil Procedure, the City scheduled a public hearing for November 21, 2024 at 5:30 p.m., in the City of Palm Springs City Council Chamber, located at 3200 East Tahquitz Canyon Way, in Palm Springs, California, and gave to each person whose property is to be acquired and whose name and address appears on the last equalized county assessment roll, notice and a reasonable opportunity to appear at said hearing and be heard on the matters referred to in Section 1240.030 of the California Code of Civil Procedure; and WHEREAS, said hearing has been held by the City and each person whose property is to be acquired by eminent domain was afforded the opportunity to be heard on said matters; and
WHEREAS, the City may now adopt a resolution of necessity pursuant to Section 1240.040 of the California Code of Civil Procedure.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. Compliance with California Code of Civil Procedure and California Environmental Quality Act. There has been compliance by the City with the requirements of Section 1245.235 of the California Code of Civil Procedure and the California Environmental Quality Act.
SECTION 2. Public Use. The public use for which the real property interest is to be acquired is for the Plaza Theatre Restoration Project, in the City of Palm Springs, Riverside County, California. Section 37350.5 of the California Government Code Item 2A - Page 13
authorizes the City to acquire by eminent domain real property necessary for such purposes.
SECTION 3. Description of Property. Attached and marked as Exhibit ”A” are the legal definition, legal description and depiction of the real property to be acquired by the City, which describes the general location and extent of the property to be acquired with sufficient detail for reasonable identification.
SECTION 4. Findings. The City hereby finds and determines each of the following:
(a) The public interest and necessity require the proposed Project; (b) The proposed Project is planned or located in the manner that will be most compatible with the greatest public good and least private injury;
(c) The easement interest described in Exhibit "A" is necessary for the proposed Project;
(d) The offer required by section 7267.2 of the California Government Code was made.
SECTION 5. Use Not Unreasonably Interfering with Existing Public Use. Some or all of the real property to be acquired may be subject to easements and rights-of-way appropriated to existing public uses. The legal descriptions of these easements and rights-of-way are on file with the City and describe the general location and extent of the easements and rights-of-way with sufficient detail for reasonable identification. In the event the herein described use or uses will not unreasonably interfere with or impair the continuance of the public use as it now exists or may reasonably be expected to exist in the future, counsel for the City is authorized to acquire the easement interest subject to such existing public uses pursuant to section 1240.510 of the California Code of Civil Procedure.
SECTION 6. More Necessary Public Use. Some or all of the real property to be acquired may be subject to easements and rights-of-way appropriated to existing public uses. To the extent that the herein described use or uses will unreasonably interfere with or impair the continuance of the public use as it now exists or may reasonably be expected to exist in the future, the City finds and determines that the herein described use or uses are more necessary than said existing public use. Counsel for the City is authorized to acquire the real property appropriated to such existing public uses pursuant to section 1240.610 of the California Code of Civil Procedure. Staff is further authorized to make such improvements to the real property being acquired that it determines is reasonably necessary to mitigate any adverse impact upon the existing public use.
SECTION 7. Further Activities. Counsel for the City is hereby authorized to file legal proceedings necessary to acquire the hereinabove described real property in the name of and on behalf of the City by eminent domain, and counsel is authorized to institute and prosecute such legal proceedings as may be required in connection therewith.
Item 2A - Page 14
Legal counsel is further authorized to take such steps as may be authorized and required by law, and to make such security deposits as may be required by order of court, to permit the City to take possession of and use said real property at the earliest possible time. Counsel is further authorized to correct any errors or to make or agree to non-material changes in the legal description of the real property that are deemed necessary for the conduct of the condemnation action or other proceedings or transaction required to acquire the subject real property.
SECTION 8. Effective Date. This Resolution shall take effect immediately upon adoption.
ADOPTED THIS 21st day of November, 2024.
SCOTT STILES, CITY MANAGER
ATTEST:
BRENDA PREE, MMC, CERA
CITY CLERK
Item 2A - Page 15
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, Brenda Pree, MMC, CERA City Clerk of the City of Palm Springs, hereby certify that Resolution No. ___________ is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on November 21, 2024 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Brenda Pree, MMC, CERA, City Clerk
City of Palm Springs, California
(SEAL)
Item 2A - Page 16
EXHIBIT “A”
[TO BE INSERTED ON FOLLOWING PAGE]
Item 2A - Page 17
RESOLUTION NO. _______
RESOLUTION OF NECESSITY OF THE CITY COUNCIL
OF THE CITY OF PALM SPRINGS FOR THE
ACQUISITION BY EMINENT DOMAIN OF A PERMANENT
NON-EXCLUSIVE EASEMENT INTEREST IN A PORTION
OF CERTAIN REAL PROPERTY LOCATED IN PALM
SPRINGS, COUNTY OF RIVERSIDE, CALIFORNIA AND
MORE PARTICULARLY DESCRIBED AS ASSESSOR
PARCEL NO. 513-144-012, FOR THE PLAZA THEATRE
RESTORATION PROJECT
WHEREAS, the City of Palm Springs (“City”) proposes to acquire a permanent nonexclusive easement interest in a portion of certain real property identified as Assessor Parcel No. 513-144-012, for the Plaza Theatre Restoration Project (“Project”), pursuant to the authority granted to the City by Section 37350.5 of the California Government Code; and
WHEREAS, pursuant to Section 1245.235 of the California Code of Civil Procedure, the City scheduled a public hearing for November 21, 2024 at 5:30 p.m., in the City of Palm Springs City Council Chamber, located at 3200 East Tahquitz Canyon Way, in Palm Springs, California, and gave to each person whose property is to be acquired and whose name and address appears on the last equalized county assessment roll, notice and a reasonable opportunity to appear at said hearing and be heard on the matters referred to in Section 1240.030 of the California Code of Civil Procedure; and WHEREAS, said hearing has been held by the City and each person whose property is to be acquired by eminent domain was afforded the opportunity to be heard on said matters; and
WHEREAS, the City may now adopt a resolution of necessity pursuant to Section 1240.040 of the California Code of Civil Procedure.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS DOES HEREBY RESOLVE AS FOLLOWS:
USECTION 1U. UCompliance with California Code of Civil Procedure and California Environmental Quality ActU. There has been compliance by the City with the requirements of Section 1245.235 of the California Code of Civil Procedure and the California Environmental Quality Act.
USECTION 2.U UPublic UseU. The public use for which the real property interest is to be acquired is for the Plaza Theatre Restoration Project, in the City of Palm Springs, Riverside County, California. Section 37350.5 of the California Government Code Item 2A - Page 18
authorizes the City to acquire by eminent domain real property necessary for such purposes.
USECTION 3.U UDescription of PropertyU. Attached and marked as Exhibit ”A” are the legal definition, legal description and depiction of the real property to be acquired by the City, which describes the general location and extent of the property to be acquired with sufficient detail for reasonable identification.
USECTION 4.U UFindingsU. The City hereby finds and determines each of the following:
(a) The public interest and necessity require the proposed Project; (b) The proposed Project is planned or located in the manner that will be most compatible with the greatest public good and least private injury;
(c) The easement interest described in Exhibit "A" is necessary for the proposed Project;
(d) The offer required by section 7267.2 of the California Government Code was made.
USECTION 5.U UUse Not Unreasonably Interfering with Existing Public UseU. Some or all of the real property to be acquired may be subject to easements and rights-of-way appropriated to existing public uses. The legal descriptions of these easements and rights-of-way are on file with the City and describe the general location and extent of the easements and rights-of-way with sufficient detail for reasonable identification. In the event the herein described use or uses will not unreasonably interfere with or impair the continuance of the public use as it now exists or may reasonably be expected to exist in the future, counsel for the City is authorized to acquire the easement interest subject to such existing public uses pursuant to section 1240.510 of the California Code of Civil Procedure.
USECTION 6.U UMore Necessary Public UseU. Some or all of the real property to be acquired may be subject to easements and rights-of-way appropriated to existing public uses. To the extent that the herein described use or uses will unreasonably interfere with or impair the continuance of the public use as it now exists or may reasonably be expected to exist in the future, the City finds and determines that the herein described use or uses are more necessary than said existing public use. Counsel for the City is authorized to acquire the real property appropriated to such existing public uses pursuant to section 1240.610 of the California Code of Civil Procedure. Staff is further authorized to make such improvements to the real property being acquired that it determines is reasonably necessary to mitigate any adverse impact upon the existing public use.
USECTION 7.U UFurther ActivitiesU. Counsel for the City is hereby authorized to file legal proceedings necessary to acquire the hereinabove described real property in the name of and on behalf of the City by eminent domain, and counsel is authorized to institute and prosecute such legal proceedings as may be required in connection therewith.
Item 2A - Page 19
Legal counsel is further authorized to take such steps as may be authorized and required by law, and to make such security deposits as may be required by order of court, to permit the City to take possession of and use said real property at the earliest possible time. Counsel is further authorized to correct any errors or to make or agree to non-material changes in the legal description of the real property that are deemed necessary for the conduct of the condemnation action or other proceedings or transaction required to acquire the subject real property.
USECTION 8.U UEffective DateU. This Resolution shall take effect immediately upon adoption.
ADOPTED THIS 21st day of November, 2024.
SCOTT STILES, CITY MANAGER
ATTEST:
BRENDA PREE, MMC, CERA
CITY CLERK
Item 2A - Page 20
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, Brenda Pree, MMC, CERA City Clerk of the City of Palm Springs, hereby certify that Resolution No. ___________ is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on November 21, 2024 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Brenda Pree, MMC, CERA, City Clerk
City of Palm Springs, California
(SEAL)
Item 2A - Page 21
EXHIBIT “B”
[TO BE INSERTED ON FOLLOWING PAGE]
Item 2A - Page 22
CL
CL
APN: 513-144-006
APN: 513-144-002
APN: 513-144-012
APN: 513-144-011
APN: 513-144-013
PROPOSED EASEMENT DIMENSIONING
3/4" IP TAG
ILLEGIBLE DN. 0.25'
3/4" IP TAG
ILLEGIBLE DN. 0.6'
3/4" IP WITH
PLASTIC PLUG LS
4146 DN. 0.5'
EXISTING CURB
Item 2A - Page 23
L ____________________ _
w
>
NB9.45'02"£ 379.455' \ ! ~ ---~6
I - - ~l---~~~QUITZ ~AN~-°~-~AY I~
I ~ ~ NW COR. LEGEND u
I · ~ 40.00', i- BLOCK 27 ✓ =~= c;;:::/OFPSIT ~ 8 ~ O Z I ui . ,9;-~ -- PROPERTY LINE Z I O ~ ~~ I 0v ---- RIGHT OF WAY ~ >-- ~o ~ 1 Z ~o/ • FD MON AS NOTED
~I c5
~I
~I ~i I
I
2 _J
<(
Q_
o· 20' 40' 80'
---62.12·---
0 PROPOSED EASEMENT FOR INGRESS AND EGRESS PURPOSES, IN FAVOR OF THE CITY OF PALM
SPRINGS
CITY OF PALM SPRINGS
APN: 513-144-012
EXHIBIT
A PORTION OF BLOCK 27, MAPS OF PALM A
SPRINGS, RECORDED IN BOOK 9 AT PAGE 432,
RECORDS OF SAN DIEGO COUNlY, CALIFORNIA
SCALE: 1 "=40' DATE: 5 16 2024 OWN BY: JS
EXHIBIT “C”
[TO BE INSERTED ON FOLLOWING PAGE]
Item 2A - Page 24
Item 2A - Page 25
·--
R~cording
Requested hy and
After Recording
Return to:
City Clerk
City of Pi>Jm Springs
Box 2743
Palm Springs, CA 92263
File No. R • 00-014
DOC N 2000-33e388
N/2&/2Nt N :MA ~H:NC
Pa~ 1 of 15
Recorded !ft Off!o!al R~rH
Cow-lty of R!var•!de
Gary L. Ora,o ,-... _,., Co,,inly Clerk, Reoordar
IIIIIMllll~llll~III W: ; S ! U ftJGf I SClf 0,,. ~ NC.-co,I U,,S' IIJ$C -- - - ···- -• t---- ------- - -- · ---- - : / &
: ✓ ::::- . .. ----- - - . - ·- - A R l COP•
NO DOCUMENTARY STAMPS NEEDED
GRANT OF EASEMENT
For a valuable consideration, receipt of which is hereby acknowledged, John Wessman, a married man as his sole and separate property 1 "Grantor'', hereby grants to, the Community Redevelopment Agency of the City of Palm Springs, a public body, corporate and politic, a perpetual easement for ingress and egress, over and across the real property in the City of Palm Springs, County of Riverside, State of California, described as follows:
Being over the land described in Exhibit "A· and shown on Exhibit "B" attached hereto and made a part hereof. -----•-·m-zzs; __ ...__,_ETI;;;;aa;;;;:;;;;==== ....- :;,;,,,,;;,;,.:.; .• --;;a,-.-.
John Wessman, a married man as his sole
and separate property
. • • -- -~ .. ···- . . - - . ~ ->· 1
I
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t
•
;
, ..
i"
ii •
J--·
Item 2A - Page 26
--
. ,
ALL-PURPOSE ACKNOWLEDGMENT
State ofl_lJ,.U:_l.J_~~~~L---
County of l'(HJt:.,e6~tf e,
on Jijµ .3, :looo before me, Jh~lt.7- ~j'g1;--Jo , """"'J'" Date --r: / _ 1 Name, Title of Officer personally appe.,rccl ~_/u7 W(:~rn,:2a?
~rsonally known to me - OR -
NAME(S) OF SIGNER(S)
•:,roved to me on the basis of satisfactory
evidence to be the pen;oos(lii whose name()f isl4i-(
5Ubscribed to •.he within in5trumeot am!
acknowledged lo me that ht:l.lbdda¥~xecuted the
$4UT\C ill hi~ aulhoriz.e<I capacity~. and
,,_, ___ ,_ .. ..., .. ~._..._....,~ .. ,hi~r signaturec-:) on the instrument n~ or the entity upon behalf of which the
(') acted, executed the instrument.
CAPACITY CLAIMED BY SIGNER
I& INDlVIDUAL(S)
D CORPORATE _____ _
OFFlCER(S) ____ _
TITLE(S)
D P ARTNER(S)
0 ATTORNEY-IN-FACT
0 TRUSTEE(S)
0 SUBSCRIBING WITNESS
0 GUAROIAN/CONSERV ATOR
0 OTHER _ ______ _
SIGNER IS REPRESENTING:
A1TEN110N NOTARY: Although the information requuted below i, OmONAL, ii could prevent fraudulent attachment of this certificate to uDauthoriz.ed document.
THIS CERTIFICATE Title or Type of Document. _ _ _ _____ _ ______ ________ _
MUST BE ATTACHED
TO THE DOCUMEITT Number of P11ees _ _ _ ___ DATE of DOCUMENT _ _ _ _ _ _ ______ _ DESCRIBED AT RIGHT:
Si ner(s Other Than Named Ahov,:
ll• ~~•lllillll 2008-335339
08-'i?5r'200$ 6e 98A
2 of 8
Item 2A - Page 27
.. ,
.L : · ... ·
• I
,?
Under the provisions of Government Code 27361.7, I certify under the penalty of perjury that the notary seal on the document to which this statement is attached reads as follows:
Narne ofNotary: Marth~ J2 · Hl~i3r~s
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Place of Execution: ls\ Ve.vs\ &e (; OUY\:t:i
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LEGAL DESCRIP11ON:
COURT YARD EASEMENT;
ALL THAT PORTION OF BLOCK 27 AS SHOWN ON TI-IE MAP OF PALM SPRINGS TOWNSITE, RECORDED IN BOOK 09 AT PAGE 432, RECORDS OF SAN DIEGO CO UNIT CALIFORNIA, DESCRIBED AS FOLLOW;
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CITY OF PALM SPRINGS
PORTION OF BLOCK 27. PALM SPP.INGS TOWNSITE
MAP BOOK 9, PAGE 432, SAN DIEGO COUNTY CA.
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CERTIFICATE OF ACCEPTANCE
THIS IS TO CERTIFY that the interest in real propeny conveyed by GRANT OF EASEl\-lENT
dated: July 3, 2000
from: John Wessman, a married man as bis separate property, Grantor. to the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRlNGS. Grantee is hereby accepted by the Assistant Secretary of said Agency, on this 4th day of August, UXX>, pursuant to authority gramcd by said Agency, by its Resolution No. 1106 made on the 2nd day of August, 2000, and the Grantee coments to recordation thereof by the Assistant Secretary, its duly authorized officer.
Dared at Palm Springs, California, this 4th day of August. 2000. . . . • ~ C • !~ \ . ' : •; • . • • ,,' .•······•• ... ~-.. ;\ .. . ··, · \ ' · ... / '. - . , . .. .. .: ,. , .! •• . • .... . "' . , . .... . " • • • ' L • •. \, • • : • ~., \ '. > .. : - •• I t •
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PATRICIA A. SANDERS
Assistant Secretary
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CITY COUNCIL STAFF REPORT
DATE: NOVEMBER 21, 2024 BUSINESS & LEGISLATIVE
SUBJECT: APPROVE AN UNFUNDED ACCRUED LIABILITY MANAGEMENT
POLICY AND AN ACTION PLAN TO PAY DOWN THE UNFUNDED
ACCRUED LIABILITY WITH FUNDS THE CITY COUNCIL HAS
PREVIOUSLY SET ASIDE IN THE GENERAL FUND AND AIRPORT
RESERVES
FROM: Scott C. Stiles, City Manager
BY: Department of Finance and Treasury
SUMMARY:
The City has two CalPERS (California Public Employees’ Retirement System) Pension plans, one for Public Safety and one for all other employees titled the Miscellaneous Plan.
The City has large, growing liabilities for both plans, not uncommon to a lot of cities in California. Like other cities, Palm Springs is recommending to the Council an action plan to pay down the liability using funds that the Council has been setting aside for the past several years in the General Fund and in the Airport Fund. The total of both plans’ liability is expected to be $215 million at the end of FY24 and the City has $52.3 million set aside to help pay that down. Additionally, the City is requesting to put a policy in place that will help staff address the liability in the future.
RECOMMENDATION:
1. Approve an action plan to pay down the Unfunded Accrued Liability by sending CalPERS $28.9 million, paying off specific base year liabilities and placing $22.4 million in an irrevocable Section 115 Trust to use to pay down the liability at a point in the future.
2. Approve an Unfunded Accrued Liability Management Policy.
BACKGROUND:
In the Pension Funding Strategy Report (Attachment A), the City’s Financial Advisor, Suzanne Harrell from Harrell & Company Advisors, LLC, has prepared a detailed, educational document that explains many areas of CalPERS pension plan and how it is structured, the Action Plan, and the Unfunded Accrued Liability (UAL) Policy. This staff Item 3A - Page 1
City Council Staff Report
November 21, 2024 -- Page 2
Unfunded Accrued Liability Policy and Action Plan
report will be less detailed and will attempt to hit the key areas of what Staff is asking of the City Council.
TABLE 1
CalPERS uses an actuarial valuation to determine the City’s pension liability for both plans (Total Estimated Liability in Table 1). The City’s annual payments to CalPERS remain on deposit and are invested by CalPERS (Market Value of Assets in Table 1).
The Unfunded Liability in Table 1 is the Estimated Liability minus the Market Value of Assets. The Funded % in Table 1 is the Market Value of Assets divided by the Total Estimated Liability. This indicates that as of June 30, 2023 (the latest valuation) the City has on deposit, invested by CalPERS, $413.8 million toward the calculated liability of $639 million, the total for both plans.
The past several years, on an annual basis, the City Council has placed in reserve, dollars set aside, in both the General Fund and Airport Fund, to help pay down this liability at some point in the future. The cumulated total as of 6/30/2025 is below (Table 2):
TABLE 2
The City is planning to use all of the current reserve to assist in paydown of the liability.
The Actuarial Liability is adjusted each year through the Actuarial process. Many Assumptions are used to determine the City’s liability; assumptions such as a 6.8% investment return each year. This assumes the City’s assets held by CalPERS will earn an average rate of return annually of 6.8%. If the City earns less, the liability increases annually, and the opposite occurs if CalPERS earns greater than 6.8%. Another Amount Description
$46,250,000 General Fund
6,000,000 Airport Fund
$52,250,000 Total
Item 3A - Page 2
Description Miscellaneous Safety Total
6130/2023 Total Es,imated Liability
6130/2023 Market Value ,of Assets
6130/2023 Unfulilded I.Ji ability
Changes in FY24 & FY25
06!30!24• Unfunded I.Jiability (Est)
Funded % as of 06130/23
F11.mded % as of 06!30124
,
$275,213,507 $363,720,468 $638,933,975,
194,376,564 21'9i,407,606, 413,784,160
$80,836,'963 $144,312,862 $225, 14'9',815,
(5,042,~01) (4,876, 144) ('91
,'9118,345)
, $75,79'4,752 $139',436,718 $215,231 ,470
70.63%
71.'95,%
60.32%
6,1.14%
64.76%
65.78%
City Council Staff Report
November 21, 2024 -- Page 3
Unfunded Accrued Liability Policy and Action Plan
assumption is the Mortality Table that estimates expected remaining life of the City’s employees. If the Mortality Table gets updated, and longer expected lives are the result, the City will have an increase in the liability. At the end of each year, when the liability is adjusted, this is known as a UAL base for that year. Please see Appendix B, page B-2, in Attachment A, to view the cumulative UAL bases over the years for the Safety Plan. As noted in the Safety Plan schedule, the total of $144.3 million (Table 1) in the 06/30/2023 Unfunded Accrued Liability under the Safety Plan column. The “Reasons for Base” change in liability are discussed in the Background section of Attachment A, Page 1.
However, the main takeaway is to understand there are reasons each year why the liability will increase or decrease (main reasons are described above) and these are titled “UAL Base”. A City can choose a specific UAL base to pay, in any specific year, and when this is done it is called an “Additional Discretionary Payment”, or an ADP.
STAFF ANALYSIS:
The action plan, in the first recommendation above, is to pay CalPERS $28.9 million dollars in one lump sum which will immediately reduce the City’s liability by that amount.
It is most beneficial when selecting an UAL Base to make an Additional Discretionary Payment (ADP), to select higher dollar amounts with longer amortization periods left.
When an ADP is made, it not only reduces the City’s liability, but it reduces the annual payment to CalPERS because the liability has been reduced. It is also beneficial from a budgetary standpoint to select a UAL Base that may have a shorter amortization period but provides significant budgetary savings in early years. This is cost savings to the City and helpful to the City’s annual budget. In Table 3, the highlighted red numbers indicate a UAL base that is to be paid. The City has selected 3 UAL bases to pay (see the dates above the red numbers). Please refer to Appendix B, page B-2, in Attachment A, Safety Plan UAL bases. The highlighted yellow lines represent the UAL Base years the City has selected to pay. Please refer to the Balance at 06/30/2025 column to match the amounts.
Item 3A - Page 3
FYE Revised 06/30/2014 06/30/2016 06/30/2020 Total Net UAL June 30 UAL Pa ment UAL Base UAL Base UAL Base Reduction After Reduction City Council Staff Report
November 21, 2024 -- Page 4
Unfunded Accrued Liability Policy and Action Plan
TABLE 3
The City has chosen to make UAL Base payments to the Safety plan only due to the low funded percentage of 61.14% (Table 1) in an attempt to get the funded percentage above 70% to more coincide with the Miscellaneous plan. In addition to making UAL Base payments, the City will set aside the remaining $22.3 million in an irrevocable Section 115 Trust (page 6 of Attachment A). This will further reduce the liability by that amount.
Please see Table 4 for the total affect when the $52.25 million is contributed to reducing the City’s liability.
y
UAL at 06/30/25 $ 138,787,003 $ (10,785,115) $ (13,581,602) $ (5,511,113) $ (29,877,830) $ 108,909,173 2026 19,276,071 (1,440,855) (954,495) (439,244) (2,834,594) 16,441,477 2027 20,272,998 (1,481,199) (981,222) (549,055) (3,011,476) 17,261,523 2028 21,074,477 (1,522,673) (1,008,696) (549,055) (3,080,424) 17,994,053 2029 22,934,989 (1,565,308) (1,036,941) (549,055) (3,151,303) 19,783,685 2030 23,259,836 (1,609,136) (1,065,976) (549,055) (3,224,167) 20,035,669 2031 23,522,316 (1,654,192) (1,095,824) (549,055) (3,299,071) 20,223,245 2032 22,707,783 (1,700,510) (1,126,508) (549,055) (3,376,072) 19,331,711 2033 22,557,127 (1,397,819) (1,158,051) (549,055) (3,104,925) 19,452,202 2034 21,365,561 (1,076,321) (1,190,477) (549,055) (2,815,852) 18,549,708 2035 19,669,723 (737,280) (1,223,811) (549,055) (2,510,146) 17,159,577 2036 18,886,020 (378,224) (1,258,079) (549,055) (2,185,358) 16,700,662 2037 17,480,459 - (1,293,306) (549,055) (1,842,361) 15,638,098 2038 16,740,573 - (1,329,519) (549,055) (1,878,574) 14,861,999 2039 15,949,131 - (1,366,747) (549,055) (1,915,802) 14,033,329 2040 15,376,196 - (1,405,017) (549,055) (1,954,072) 13,422,124 2041 15,113,491 - (1,444,358) (549,055) (1,993,413) 13,120,078 2042 12,353,386 - (1,484,801) (549,055) (2,033,856) 10,319,530 2043 10,492,008 - (1,526,377) - (1,526,377) 8,965,631
2044 12,897,940 - (1,569,116) - (1,569,116) 11,328,824
2045 1,438,289 - (1,289,813) - (1,289,813) 148,476
2046 - - (993,156) - (993,156)(2) -
$ 353,368,372 $ (14,563,516) $ (25,802,288) $ (9,224,124) $ (49,589,928) $ 303,778,445
Item 3A - Page 4
City Council Staff Report
November 21, 2024 -- Page 5
Unfunded Accrued Liability Policy and Action Plan
TABLE 4
As Table 4 indicates, the total funding percentage raises from 65.78% (see Table 1) to
74.70%.
Unfunded Accrued Liability Management Policy
Staff is making a recommendation to City Council to also approve a UAL Management Policy (Attachment A, Appendix D). The Policy ensures the City maintains focus on the UAL each budget cycle in hopes of achieving 90% funded status by 2040-2041.
The Policy outlines a few options the City can take every year to address the liability, particularly, the Policy outlines what the City can do with the $6 million that the Council has been setting aside every year to paydown the UAL.
The City has been setting aside $6 million each year to address the CalPERS liability.
Including the City’s annual payment to CalPERS each July, the City has been budgeting approximately $22 million in CalPERS expense (Attachment A, Table 7). Instead of setting aside $6 million to be used in the future, the City may elect to pay any future year UAL base that ends up as a liability. Doing this will result in no increase in the UAL in the future. The UAL will continue to decrease, and the funding status percentage will grow as each year passes. If the UAL base in any future year is positive, the City may elect to transfer the $6 million into the City’s Section 115 Trust to be used for future ADP’s.
ALIGNMENT WITH STRATEGIC PLANNING:
This item aligns with City Council identified Major Theme/Principal of Forward-Thinking Governance.
Item 3A - Page 5
Description Miscellaneous Safety Total
6!3.ot2023 Total Est!i mated Uability
6!3.ot2023 Market Value of Assets
6/30/2023 Unfunded L!i ability
Changes in FY24 & FY25
06/30/24 Unfunded L!i ability {Est)
Total UAL Bases to Prepay
Sect!ion 115 Trust Deposit
06!3.ot25 Unfunded L!i ability {Est)
Funded % as of 06/30/25
$275,213,507 $363,720,468 $638,933,975
194,376,554 219,407,606 4 13,784,160
$80,836,953 $144,312,862 $225,149,815
(6,168,795) (5,525,859) (11 ,694,654)
$74,668,158 $138,787,003 $213,455,16 1
(29,877,830)
(22,372,170)
$16 1,205,16 1
74.70%
City Council Staff Report
November 21, 2024 -- Page 6
Unfunded Accrued Liability Policy and Action Plan
FISCAL IMPACT:
Since the City Council has been proactive in setting aside a portion of the General Fund for paying down the CalPERS liability, there isn’t any impact to the General Fund. The City will use the Fund Balance reserves which are Assigned for the CalPERS liability which is expected to total $52.25 million (includes the Airport Reserves) at 06/30/2025.
The impact will come as a reduction in cash for the $29.87 million that will be sent to CalPERS for immediate paydown of the liability. The remaining $22.4 million will still be held in the City’s investment portfolio in the form of an irrevocable Section 115 Trust that can only be used to send to CalPERS for paydown of the UAL.
REVIEWED BY:
Department Director: Kristopher J. Mooney
City Manager: Scott Stiles
ATTACHMENTS:
A. Pension Funding Strategy Report
Item 3A - Page 6
ATTACHMENT A
Item 3A - Page 7
CITY OF PALM SPRINGS
PENSION
FUNDING STRATEGY
November 21, 2024
Item 3A - Page 8
1 EXECUTIVE SUMMARY
The purpose of this report (Report) is to detail the City’s current pension liabilities, the status of funding, expected changes to funding and lay out strategies for increasing the funded status of the City’s existing CalPERS pension liability. Goals include:
• increase the Safety Plan funding to at least 70%;
• maintain annual unfunded pension liabilities funding at a maximum of $22 million per year; and
• formulate a policy for funding future increases in pension liabilities.
BACKGROUND
The City has one general retirement plan with CalPERS that covers all eligible non-safety employees (Miscellaneous Plan) and one retirement plan with CalPERS that covers all eligible safety employees (Safety Plan). The Plans’ benefits and employee contributions to the Plans vary depending on the Plan and whether the employee was employed prior to the effective date of the State of California Public Employees’ Pension Reform Act of 2013 (PEPRA). PEPRA limited the benefits that could be offered to employees and required a minimum contribution by employees to the Plans.
The City’s benefits and Plans’ participant data are shown in Appendix A.
CalPERS annually calculates the actuarial value of the pension liability of the Plans and compares that to the City’s share of Plan assets on deposit in the CalPERS asset pool.
The difference between the actuarial value of the pension liability and the market value of assets each June 30 is called the Unfunded Actuarial Liability (UAL). CalPERS amortizes the UAL created each year over different time periods depending on what created the particular UAL. A UAL can result from:
Type of Change CalPERS Category
Change in actuarial assumptions Assumption Change
Change in benefits Benefit Change
Investment return compared to required return Investment Gain/Loss Increases resulting from payroll changes (salaries or
increases in personnel)
Non-Investment Gain/Loss
Changes resulting from annual Entry Age Accrued
Liability Calculation
Non-Investment Gain/Loss
These individual additions or reductions for each specific year are called “UAL Bases.” Item 3A - Page 9
2 The most recent valuation was prepared as of June 30, 2023, and was provided to the City in August 2024. This is the typical lag between the valuation date and the availability of the valuation.
As of June 30, 2024, the discount rate used in the actuarial calculation of the pension liability was 6.8%. It is called the “discount rate” because that is the rate used to discount the stream of future benefit payments to participants back to today’s present value. The UAL is amortized by applying the same rate to the payments, effectively charging the City
6.8% on the unamortized UAL balance.
CALPERS RECENT HISTORY
For some historical perspective, CalPERS had a negative 24 % ROR in FY 2008-09 as a result of the global economic crisis. Ultimately, this changed the way CalPERS calculated the funding requirement (using market value instead of an actuarial value to calculate the funding requirement) and caused a major increase in every public agencies’ UAL over the last 10 years. In the years following the global recession, the CalPERS board made a number of other actuarial assumption changes and changes in how it amortized each new year’s UAL. Most impactful, the discount rate was reduced from 7.75% to 7% over several years and the UAL for actuarial assumption changes were amortized over 20 years instead of 30 years, while UAL for investment gains and losses continued to be amortized over 30 years. In 2019, the CalPERS board changed the amortization period for investment gains and losses to 20 years. More recently, as a consequence of a 21.3% ROR in FY 2020-21, the CalPERS board took the opportunity to reduce the discount rate from 7% to 6.8%, offsetting a portion of the reduction in UAL resulting from the significant ROR in that year.
The cumulative effect of the policy changes in the last 10 years, together with investment results and changes in the City’s employment base, created a UAL annual amortization schedule that increased by over 100% from FY 2017-18 to FY 2030-31, at which time it will start to decline.
The significant changes in the City’s UAL over the last 5 years resulted from:
• Investment return of 21.3% in FY 2020-21 reducing the UAL by $42.65 million • Decrease in the discount rate from 7.0% to 6.8% in FY 2020-21 offsetting a portion of the investment return and increasing the UAL by $13.5 million • Investment return of negative 6.1% in Fiscal Year 2021-22 increasing the UAL by $63.2 million
• Entry Age Accrued Liability Calculation in Fiscal Year 2022-23 increasing UAL by $14 million (80% in Safety Plan and 20% in Miscellaneous Plan) Item 3A - Page 10
3 This last change is likely a result of an increase in active members in the Safety Plan from 160 in 2021 to 178 by 2023, translating to an increase in payroll of $5 million annually and an increase in active members in the Miscellaneous Plan from 282 in 2021 to 336 by 2023, translating to an increase in payroll of $7 million annually.
The current list of UAL’s created by year and the remaining amortization is shown in Appendix B. A history of the annual actuarial value of assets (through 2011-12), market value of assets, entry age actuarial accrued liability, and funded ratio is shown in Appendix C. CalPERS updates its UAL Base amortization assumptions from time to time.
The current assumptions are included in Appendix E.
FUNDED STATUS
The most recent actuarial valuation for the Plans was prepared as of June 30, 2023. As of June 30, 2023, the Miscellaneous Plan was 70.6% funded and the Safety Plan was
60.3% funded.
Following a rate of return (ROR) of 5.8% in 2022-23 and a negative ROR of 6.1% in 2021- 22, CalPERS achieved a 9.3% ROR in Fiscal Year 2023-24. This ROR exceeds the required ROR for a break even -- that is, when the ROR equals the discount rate, the Plan “breaks even,” and there is no actuarial impact on the UAL for that year created by the pool investments. The excess between the 9.3% ROR and the discount rate will create extra funding as of June 30, 2024, and be used to reduce the UAL as of June 30, 2024. The impact of the Fiscal Year 2023-24 investment return has been estimated in Table No. 1 below. Similarly, the ROR in the prior two years was below the discount rate and created additional UAL in the previous two years. The impact of the Fiscal Years 2021-22 and 2022-23 investment returns has already been included in the UAL calculation.
With the FY 2023-24 ROR of 9.3% and the scheduled FY 2023-24 UAL Payment, the funding is expected to increase to approximately 72.4% as of June 30, 2024, for the Miscellaneous Plan and to approximately 61.7% for the Safety Plan, assuming no other actuarial changes. However, other actuarial changes can be expected due to the growth in the City’s employee base and payroll as noted above.
Item 3A - Page 11
4 TABLE NO. 1
PROJECTED JUNE 30, 2024 VALUATION AND FUNDED STATUS
Miscellaneous Safety Total
6/30/2023 Estimated Entry Age AL $275,213,507 $363,720,468 $638,933,975 6/30/2023 Market Value of Assets 194,376,554 219,407,606 413,784,160 6/30/2023 UAL $80,836,953 $144,312,862 $225,149,815
Scheduled Change in UAL Balance(1) (182,787) 609,046 426,259
2.5% Excess ROR (4,859,414) (5,485,190) (10,344,604)
6/30/2024 Estimated UAL(2) $75,794,752 $139,436,718 $215,231,470 % Funded June 30, 2023 70.6% 60.3% 64.7%
% Funded June 30, 2024(2) 72.4% 61.8% 66.3%
____________________
(1) Per the June 30, 2023, amortization schedule, net effect of changes in UAL Bases in FY 2023-
24. (2) Projected, actual changes to the UAL may vary when June 30, 2024, Valuation is final and may include other non-investment related actuarial changes.
The City has reserved $45.5 million (combined General Fund and Airport Fund PERS Reserves) towards the UAL and anticipates increasing this amount to $52.25 million by June 30, 2025.
UAL PAYMENTS
CalPERS June 30, 2023, Valuation and Estimated June 30, 2024, with Changes Chart No. 1, shows required UAL annual payments for the June 30, 2023, UAL and the June 30, 2024, projected UAL after taking into account the FY 2023-24 ROR. The current combined annual UAL payments peak at approximately $25 million in 2030-31 as of the June 30, 2023, valuation, and would decrease to a maximum $23.5 million once the FY 2023-24 ROR is reflected. Again, a caution that there could be (and will likely be) noninvestment related increases to the UAL reflected in the June 30, 2024, Valuation that will increase the annual payments as well as the total UAL. It is not possible to project those additional increases at this time.
The net reduction in the UAL for the FY 2023-24 UAL is projected to reduce the total UAL payments needed to amortize the June 30, 20234 UAL from $376 million to $354 million.
The total FY 2024-25 UAL payment is $16,561,647, and together with the $6,750,000 PERS reserve increase, means a total of $23.3 million of City resources are currently applied to unfunded pension costs.
Item 3A - Page 12
5 CHART NO. 1
CURRENT AND PROJECTED ANNUAL UAL PAYMENTS
JUNE 30, 2023 VALUATION REPORT
COMBINED SAFETY AND MISCELLANEOUS
$23,695,317
$24,789,213 $23,824,024
$22,632,458
$20,936,620
$18,007,470
$16,380,388
$11,758,905
$15,202,480
$19,276,071
$22,933,065
$23,520,343
$22,553,836
$19,664,060
$16,733,054
$15,111,257
$10,484,146
$12,894,603
$-
$4,000,000
$8,000,000
$12,000,000
$16,000,000
$20,000,000
$24,000,000
$28,000,000
2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 Total $375,941,306
Total $353,368,372
June 30, 2024 Projected Valuation
with FY 2023-24 ROR Impact
June 30, 2023 Valuation
Item 3A - Page 13
6 Net Pension Liability
Fund Balance Reserves
The City’s net pension liability (NPL) is comprised of the actuarial pension liability less any funds held in an irrevocable trust for the purpose of paying the pension liability. The funds currently held in the CalPERS pool comprise the funds held and applied toward the pension liability.
The General Fund reserves of $44.5 million as of June 30, 2024, and $52.25 million expected as of June 30, 2025, while available to make UAL or normal pension cost payments, are not legally restricted for this purpose and are not used directly to offset the liabilities.
The current General Fund reserves expected as of June 30, 2025, for the pension liabilities are as follows:
Amount Description
$46,250,000 General Fund
6,000,000 Airport Fund
$52,250,000 Total
Amounts in the General Fund reserves are included in the City’s general investment portfolio. That portfolio was earning 4.79% as of June 30, 2024. Investment earnings on these reserves are part of the General Fund and Airport Fund revenues.
Section 115 Trust Options
A trust established under IRS Code Section 115 (115 Trust) is irrevocable and can only be applied toward the liability for which it was established. Therefore, any amounts deposited in a 115 Trust will be used to reduce the NPL. Once deposited in the 115 Trust, the funds are no longer available for any other purpose. However, depositing funds in a 115 Trust doesn’t reduce the annual UAL payments unless the City draws the funds out for that purpose. Earnings on the 115 Trust remain in the trust until drawn and applied to either an annual UAL payment or normal pension costs.
Both CalPERS and PARS have multiple 115 Trust options available to the City. Each option has a different level of investment risk. Since each 115 Trust is an investment pool, the investments generally have a longer average life than the City’s stand-alone investment portfolio, and consequently have a higher ROR.
The upside to depositing the UAL reserves in a 115 Trust is the ability to improve the ROR on the funds segregated by the City Council for the purpose of having funds to offset major changes in the UAL. Another positive to a 115 Trust is that the investment grows at the 115 Trust ROR and is not impacted by the CalPERS ROR.
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7 The downside is that (1) the funds are irrevocably pledged to pension payments and cannot be used for other General Fund purposes and (2) there is no guarantee that the 115 Trust option chosen would achieve the expected rate of return anticipated.
Further, the income from investing the funds will stay in the 115 Trust, and while available to offset additional pension costs, will no longer be part of the General Fund investment income. For budgeting purposes, the City can preserve the integrity of the General Fund budget by using the annual income in the 115 Trust toward a portion of the UAL or normal cost in that year, reducing General Fund expenses in an amount equal to the reduced investment income realized by the General Fund.
Given the City’s reserve balances, usually the trust restriction is only a concern in the event of a financial calamity (such as a natural disaster with significant damage to both property and infrastructure in the City). However, in that event, the 115 Trust balance could be used to make normal cost payments under the Plans, freeing up the same amount of General Fund resources.
Transfers to CalPERS
The City can transfer all or part of the fund balance reserves to CalPERS for deposit to the Plans. CalPERS will add the funds to the market value of assets, which will decrease the NPL and have a small impact on the UAL payments upfront, or the City can apply the funds toward particular UAL balances, which will also decrease the NPL but will affect the UAL based on the remaining UAL payments for the base selected. In either situation, the funds deposited will be invested in the CalPERS pool and be subject to the CalPERS investment ROR. Once the funds are transferred, they become part of the CalPERS investment portfolio.
UAL FUNDING
The expected combined annual UAL amortization payments as of June 30, 2024, are shown in Chart No. 1. The UAL payments are shown separately for each Plan in Table Nos. 2 and 3 below.
There are several ways to impact the UAL payments and potentially reduce the total obligation. As described above, each year a UAL base is created based on the CalPERS investment ROR and/or other changes. Each base is paid off over a fixed period of time pursuant to a fixed method and the outstanding balance is subject to an implied interest rate equal to the discount rate. For example, a UAL base for an Investment Loss established in FY 2016-17 will not be fully amortized until FY 2048-49, but a UAL base for an Assumption Change established in FY 2016-17 will be fully amortized in FY 2038- 39, and an Assumption Change established in FY 2013-14 will be fully amortized in FY 2035-36.
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8 Paying off a liability that will accrue interest at 6.8% earlier than required by CalPERS will reduce the total interest expense associated with the existing UAL, while it may temporarily increase the total payment to CalPERS in the early years.
There are 3 general methods for reducing the UAL payments: the CalPERS “Fresh Start” program, Additional Discretionary Payments (ADP) and Pension Obligation Bonds (POB).
Fresh Start
Because of the unequal annual UAL payments scheduled under the CalPERS current amortization method, CalPERS offers a “Fresh Start” program under which they roll up all the UAL bases into one net number and amortize that amount over a fixed 10- or 15- year period in level annual payments using the current 6.8% discount rate. Once the City selects the Fresh Start option, there is no ability to return to the prior amortization schedule.
Because the City’s remaining UAL payments are significant, while there are long term cost savings by locking in a 10-year Fresh Start for either Plan, it is not realistic to plan for such a significant increase in annual payments in the earliest years. The 15-Year Fresh Start provides 7.5% long-term reduction in payments for the Safety Plan but requires higher payments during the 15 years of the 15-Year Fresh Start program (that is, all the savings are in years 2040-2045). The 15-Year Fresh Start doesn’t provide enough long-term savings for the Miscellaneous Plan either, with lower payments in years 2028-2034, higher payments in years 2035-2040 and savings again in years 2041-2044 after the 15 Year Fresh Start payments are finished.
Table Nos. 2 and 3 compare the payments under the 15-Year Fresh Start with the existing payments. The City’s FY 2023-24 and FY 2024-25 UAL payments are also shown for comparison.
The Fresh Start is only available for the entire UAL balance, but can be used for one Plan or the other – the City is not required to use the Fresh Start for both Plans if it wants to only use it for one of the Plans.
The Fresh Start for a Plan can also be used in conjunction with paying down a portion of the UAL first and then opting for the Fresh Start for the balance outstanding.
As shown in Table No. 2, there is not a significant long-term benefit to the 15-Year Fresh Start for the Miscellaneous Plan. This is because the outstanding balance of the UAL under the existing amortization is approximately equal to the balance of the UAL under the Fresh Start by 2029. There is a greater significant long-term benefit to the 15-Year Fresh Start for the Safety Plan because of the lower current funded percentage, but as shown in Table No. 3, the City would be required to make higher payments in the early years and would not realize any payment savings until after year 15.
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9 TABLE NO. 2
FRESH START COMPARISON
MISCELLANEOUS PLAN
Projected
Reduction in UAL
Payments for
FYE
June 30
6/30/23 Report 6/30/2024 Revised Fresh Start
UAL Payments Investment ROR(2) UAL Payment 15 Years(3) Difference 2024 $ 5,495,912 $ - $ 5,495,912
2025 6,397,152 - 6,397,152
2026 7,210,166 - 7,210,166 $7,800,000 $ 589,834
2027 7,746,445 (119,056) 7,627,389 7,800,000 172,611
2028 8,189,503 (238,111) 7,951,392 7,800,000 (151,392)
2029 9,159,687 (357,167) 8,802,520 7,800,000 (1,002,520) 2030 9,402,281 (476,104) 8,926,177 7,800,000 (1,126,177) 2031 9,615,902 (595,129) 9,020,773 7,800,000 (1,220,773) 2032 9,130,611 (595,129) 8,535,482 7,800,000 (735,482)
2033 9,028,108 (595,129) 8,432,979 7,800,000 (632,979)
2034 8,423,842 (595,129) 7,828,713 7,800,000 (28,713)
2035 6,946,438 (595,129) 6,351,309 7,800,000 1,448,691
2036 6,563,028 (595,129) 5,967,899 7,800,000 1,832,101
2037 5,889,899 (595,129) 5,294,770 7,800,000 2,505,230
2038 5,529,521 (595,129) 4,934,392 7,800,000 2,865,608
2039 5,145,735 (595,129) 4,550,606 7,800,000 3,249,394
2040 4,857,578 (595,129) 4,262,449 7,800,000 3,537,551
2041 4,648,916 (595,129) 4,053,787 - (4,053,787)
2042 3,807,170 (595,129) 3,212,041 - (3,212,041)
2043 2,982,585 (595,129) 2,387,456 - (2,387,456)
2044 4,196,620(1) (595,129) 2,563,848 - (2,563,848)
2045 - (595,129) (1) - - -
2046 - (595,129) (1) - - -
$128,474,035 $(10,712,508) $117,914,143 $117,000,000 $(914,143) (1) Negative UAL payments will be used to offset final positive UAL balance or be used to offset future UAL Base payments.
(2) Annual credit based on projected $4.8 million Investment Gain UAL Base in FY 2023-24. (3) Based on an approximate $74.34 million UAL as of June 30, 2025 (net of 2023-24 ROR and 2023-24 and 2024-25 UAL payments).
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10 TABLE NO. 3
FRESH START COMPARISON
SAFETY PLAN
Projected
Reduction in UAL
Payments for
FYE
June 30
6/30/23 Report 6/30/2024 Revised Fresh Start
UAL Payments Investment ROR(2) UAL Payment 15 Years(2) Difference 2024 $ 8,906,390 $ - $ 8,906,390
2025 10,164,495 - 10,164,495
2026 12,065,905 - 12,065,905 $14,525,000 $2,459,095
2027 12,779,996 (134,387) 12,645,609 14,525,000 1,879,391 2028 13,391,860 (268,774) 13,123,086 14,525,000 1,401,914 2029 14,535,630 (403,161) 14,132,469 14,525,000 392,531 2030 14,871,073 (537,414) 14,333,659 14,525,000 191,341 2031 15,173,311 (671,768) 14,501,543 14,525,000 23,457
2032 14,844,069 (671,768) 14,172,301 14,525,000 352,699 2033 14,795,916 (671,768) 14,124,148 14,525,000 400,852 2034 14,208,616 (671,768) 13,536,848 14,525,000 988,152 2035 13,990,182 (671,768) 13,318,414 14,525,000 1,206,586 2036 13,589,889 (671,768) 12,918,121 14,525,000 1,606,879 2037 12,857,457 (671,768) 12,185,689 14,525,000 2,339,311 2038 12,477,949 (671,768) 11,806,181 14,525,000 2,718,819 2039 12,070,293 (671,768) 11,398,525 14,525,000 3,126,475 2040 11,785,515 (671,768) 11,113,747 14,525,000 3,411,253 2041 11,731,472 (671,768) 11,059,704 - (11,059,704)
2042 9,813,113 (671,768) 9,141,345 - (9,141,345)
2043 8,776,320 (671,768) 8,104,552 - (8,104,552)
2044 11,005,860 (671,768) 10,334,092 - (10,334,092)
2045 2,518,057 (671,768) 1,438,289(1) - (1,438,289)
2046 184,793(1) (671,768) (1) - - -
$247,467,276 $(12,092,022) $235,454,229 $217,875,000 $(17,579,229) (1) Negative UAL payments will be used to offset final positive UAL balance or be used to offset future UAL Base payments.
(2) Annual credit based on projected $5.5 million Investment Gain UAL Base in FY 2023-24 (3) Based on an approximate $138.41 million UAL as of June 30, 2025 (net of 2023-24 ROR and 2023-24 and 2024-25 UAL payments).
Item 3A - Page 18
11 Additional Discretionary Payments
The City can accomplish the same result as the Fresh Start by making Additional Discretionary Payments (ADP) in an amount that would mimic the Fresh Start payment.
The benefit to the making ADP in this manner instead of committing the Fresh Start schedule is that if the need arose to make a smaller or no ADP, the City has the ability to make any adjustment to the ADP it desires. The amount of the ADP would be equal to the figure in the “Difference” in Table Nos. 2 and 3 above. If the amount is negative, and there would be no additional ADP, however, the City would be required to make the original UAL Payment.
The City can also make ADP in any amount. For example, the City could make ADPs equal to the $6.75 million annual deposit to the UAL Reserve in each year. The City may also choose to make a different contribution each year, for example, $3 million in ADP in lieu of a deposit to the PERS Reserve and $3.75 million deposit to a 115 Trust.
Further, whether or not the City does establish a 115 Trust using its $52.25 million PERS reserve, it can withdraw funds from either the 115 Trust or the PERS reserve to make the ADP difference between the existing payment and the Fresh Start payment. On a cumulative basis, this would use approximately $38.7 million of the $52.25 million set aside, and not increase the City’s currently scheduled payments.
The City could also adopt a policy of using any reduction in the UAL payment resulting from an ROR in excess of the discount rate to make ongoing ADPs. For example, the City could make ADPs equal to the reduction in UAL payments expected as a result of the 9.3% investment return in 2023-24 (starts at $250,000 and increases to $1.25 million by year 5 combined for both Plans). In addition, in FY 2036-37, the City’s pension obligation bonds will be paid in full, and the City’s policy could include making ongoing ADPs equal to the payment no longer required for the pension obligation bonds.
Under the ADP scenarios, any outstanding UAL balance continues to accrue interest at
6.8%.
Prepay UAL Bases
When making ADPs, the City can choose to prepay particular UAL bases. This can be more impactful on a budgetary basis than just creating a payment schedule to mimic the Fresh Start Payment. For example, the Safety Plan UAL Base created in 2014 has only 11 years left to amortize and a balance of $10,785,115 as of June 30, 2025. By using some of the PERS Reserve to make an ADP to pay off this particular UAL Base, it will reduce the annual payment to CalPERS by $1.5 million in the next several years. The City’s UAL Policy could include a provision that such annual savings can be used to make additional ADP or add to a 115 Trust.
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12 Table No. 4 shows the impact of using the entire expected June 30, 2025, PERS Reserve to make ADPs to pay off $52.14 million in UAL Bases. Generally, bases with the shortest remaining payments are selected because it effectively flattens out the annual UAL payments compared to the existing increases through 2030 before the payments start to decline. However, a few bases with longer remaining payments are selected to provide long-term benefit.
Note that funds used for the prepayment of UAL bases will be subject to investment risk as described under the Pension Obligation Bonds heading, the prepayment does stop the existing UAL base from accruing at 6.8%.
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13 TABLE NO. 4
ADP TO PAY OFF $52.14M UAL BASES(1)
COMBINED PLANS
FYE
June 30
Revised 6/30/2014 6/30/2016 6/30/2017 6/30/2018 6/30/2022 Net After UAL Payment UAL Base(A) UAL Base(B) UAL Base(C) UAL Base(D) UAL Base(E) Reductions UAL $213,455,161 $(20,301,993) $(13,581,602) $(5,809,059) $(10,034,237) $(2,413,043) $161,315,227 2026 $ 19,276,071 $(2,712,278) $ (954,495) $ (613,362) $ (995,087) $ (222,537) $ 13,778,312 2027 20,272,998 (2,788,223) (981,222) (630,538) (1,022,949) (222,537) 14,627,530 2028 21,074,477 (2,866,294) (1,008,696) (648,194) (1,051,592) (222,537) 15,277,164 2029 22,934,989 (2,946,551) (1,036,941) (666,345) (1,081,037) (222,537) 16,981,578 2030 23,259,836 (3,029,056) (1,065,976) (685,004) (1,111,306) (222,537) 17,145,958 2031 23,522,316 (3,113,870) (1,095,824) (704,186) (1,142,422) (222,537) 17,243,477 2032 22,707,783 (3,201,060) (1,126,508) (723,905) (1,174,410) (222,537) 16,259,364 2033 22,557,127 (2,631,271) (1,158,051) (744,176) (1,207,293) (222,537) 16,593,799 2034 21,365,561 (2,026,079) (1,190,477) (765,015) (1,241,098) (222,537) 15,920,356 2035 19,669,723 (1,387,864) (1,223,811) (786,437) (1,275,848) (222,537) 14,773,225 2036 18,886,020 (711,974) (1,258,079) (646,451) (1,311,572) (222,537) 14,735,406 2037 17,480,459 - (1,293,306) (497,768) (1,078,112) (222,537) 14,388,736 2038 16,740,573 - (1,329,519) (340,971) (830,147) (222,537) 14,017,399 2039 15,949,131 - (1,366,747) (174,918) (568,650) (222,537) 13,616,279 2040 15,376,196 - (1,405,017) - (291,718) (222,537) 13,456,925 2041 15,113,491 - (1,444,358) - - (222,537) 13,446,596
2042 12,353,386 - (1,484,801) - - (222,537) 10,646,048
2043 10,492,008 - (1,526,377) - - (222,537) 8,743,094
2044 12,897,940 - (1,569,116) - - (222,537) 11,106,287
2045 1,438,289(2) - (1,289,813) - - 148,476
2046 - - (993,156)(2) - - - -
$353,368,372 $(27,414,518) $(25,802,288) $(8,627,271) $(15,383,241) $(4,228,203) $272,906,007 (1) The June 30, 2025 anticipated UAL is $213.46 million taking into account the FY 2023-24 ROR and 2023-24 and 2024-25 UAL payments. (2) Negative UAL payments will be used to offset final positive UAL balance or be used to offset future UAL Base payments.
Bases: (A) Miscellaneous Plan / Safety Plan 6/30/2014 Assumption Change; (B) Safety Plan 6/30/2016 (Gain)/Loss; (C) Safety Plan 6/30/2017 Assumption Change; (D) Safety Plan 6/30/2018 Assumption Change; (E) Miscellaneous Plan 6/30/2022 Non-Investment (Gain)/Loss Item 3A - Page 21
14 Pension Obligation Bonds
Pension Obligation Bonds generate potential budget savings by taking advantage of the borrowing rate differential between the interest rate the City can achieve on its own external financing of the UAL compared to the implicit 6.8% interest charged by CalPERS on the outstanding UAL balance.
POBs are issued as taxable municipal bonds instead of traditional tax-exempt bonds. The City’s borrowing rate will be based on a taxable interest rate, which is typically about 1% higher than a tax-exempt rate under current market conditions. Based on the term of the financing and the City’s anticipated credit rating, the City’s effective taxable bonds borrowing rate is 5.5% today.
Using POBs, the City borrows to prepay all or a portion of the UAL. For example, some cities choose to issue POBs to bring their overall funding level to 85%, 90% or 100%. If a city funds less than 100% of the UAL, the city’s annual pension cost becomes the combined remaining UAL payment plus the debt service on the POBs. The City funded 50% of its UAL using POBs in 2007. The POBs will be paid in full in FY 2035-36. Then debt service in the final year is approximately $2.6 million.
POBs can be structured in several ways. The most common are to generate a level debt service and then have the debt service decline to match the decline in the current UAL schedule, or to generate a level debt service payment over the same time as a Fresh Start. The process for issuing POBs is streamlined for the City. The City filed its validation action in connection with the 2007 Bonds and any POB issued today can be issued under the existing 2007 Bonds indenture.
POBs carry some investment rate risk. Under the existing UAL payment schedule, the City will make principal and interest payments each year on the outstanding UAL balance according to the CalPERS formula. As an example, let’s say that the principal component of the UAL is $100,000 annually for 10 years, for a total UAL of $1,000,000. Each year $100,000 will be added to the investment pool and be subject to the fluctuating ROR inherent in the CalPERS pool – that is, it will need to earn 6.8% to break even, and if it doesn’t, an UAL base will be created. If the City issued POB to pay the entire $1,000,000 upfront, the entire $1,000,000 would be subject to the fluctuating ROR instead of $100,000 in year 1, $200,000 cumulative in year 2, $300,000 cumulative in year 3, and so on. Any increase in UAL because of the upfront deposit could potentially add to the City’s long-term cost to amortize any new UAL.
A simple example to demonstrate the risk to increased UAL is shown in Table No. 5.
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15 TABLE NO. 5
POB UAL IMPACT
Existing POB
Year
UAL
Principal ROR New UAL
UAL
Principal ROR New UAL
1 $ 100,000 5.00% $1,800 $1,000,000 5.00% $18,000
2 200,000 6.00% 1,600 1,000,000 6.00% 8,000
3 300,000 6.80% - 1,000,000 6.80% -
4 400,000 6.80% - 1,000,000 6.80% -
5 500,000 6.80% - 1,000,000 6.80% -
6 600,000 6.80% - 1,000,000 6.80% -
7 700,000 6.80% - 1,000,000 6.80% -
8 800,000 6.80% - 1,000,000 6.80% -
9 900,000 6.80% - 1,000,000 6.80% -
10 1,000,000 6.80% - 1,000,000 6.80% -
$3,400 $26,000
On the other hand, the savings achieved from the POB payments compared to the UAL payments will offset some, if not all, of any potential new UAL resulting from ROR below the required rate. If the City wanted to explore POB options, a more in-depth analysis can be provided. The GFOA has advised against issuing POBs for a number of reasons, outlined in Appendix F. For the most part, the concerns expressed relate to POBs issued before 2015 – most modern POBs have addressed the concerns. Only the investment risk described above is worth exploring in detail.
CONCLUSION
The projections of funding options above show the impact of each type of funding (115 Trust, Fresh Start, ADP) on a stand-alone basis. The funding option that appears to work best for the City’s needs will be a combination of 115 Trust deposits and ADPs to prepay some Safety Plan UAL Bases up front, with additional 115 Trust deposits and ADPs on an ongoing basis to keep the projected unfunded pension funding below an annual cost of $22 million.
Any funding plan should be considered in tandem with a formal UAL funding policy, which is included as Appendix D.
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16 The Funding Plan options recommended are:
• Use $29.88 million of General Fund PERS reserves to make ADPs for the Safety Plan (2014 Assumption Change Base, 2016 Loss Base and 2020 Investment Loss Base) to bring the funding percentage of CalPERS plan assets to 70%. See Table No. 7 below for the revised combined Plans UAL payments under this scenario. • Use remaining $22.37 million General Fund/Airport Fund reserves to establish a 115 Trust to reduce the NPL and increase combined funded amount to approximately 74.8% as shown in Table No. 6 below.
• Set a goal of achieving 90% funding by FY 2040-41 (i.e, increase funding status by 5% every 5 years).
• Annually calculate the difference between $22 million and the UAL Payments after ADPs above (Table No. 7 Column titled “$22 Million less new UAL Payment”) and use the excess to first pay off the new UAL bases created based on the most current CalPERS valuation. If there are funds remaining, use the balance to make annual deposits to the 115 Trust.
• Beginning in FY 2035-36, use savings from maturity of existing pension obligation bonds to pay off any new UAL bases not funded as described in the paragraph above, and then use the balance to make annual deposits to the 115 Trust. • Adopt a policy on how to use the 115 Trust funds in the future to manage pension costs:
Apply annual earnings on 115 Trust fund toward UAL payments to maintain integrity of the General Fund budget (alternatively, reduce the amount deposited below).
Deposit all or a portion of the difference between $22 million and UAL Payments after ADPs (based on the calculation described above) to increase the 115 Trust.
Choose a CalPERS or PARS 115 Trust plan depending on the risk profile of each portfolio.
Item 3A - Page 24
17 TABLE NO. 6
PROJECTED JUNE 30, 2025 FUNDED STATUS
Miscellaneous Safety Total
6/30/2023 Estimated Entry Age AL $275,213,507 $363,720,468 $638,933,975 6/30/2023 Market Value of Assets 194,376,554 219,407,606 413,784,160 6/30/2023 UAL $80,836,953 $144,312,862 $225,149,815
Scheduled FY 2023-24 Change in
UAL Balance(1) (182,787) 609,046 426,259
Scheduled FY 2024-25 Change in
UAL Balance(1) (1,126,594) (649,715) (1,776,309)
6/30/2025 UAL Per CalPERS $79,527,572 $144,272,193 $223,799,765
2.5% Excess ROR (4,859,414) (5,485,190) (10,344,604)
Prepay Safety UAL Bases:
6/30/2014 Assumption Change - (10,785,115) (10,785,115) 6/30/2016 (Gain)/Loss - (13,581,602) (13,581,602)
6/30/2020 Investment (Gain)/Loss - (5,511,113) (5,511,113) Total UAL Bases to Prepay - (29,877,830) (29,877,830)
6/30/2025 Estimated UAL(2) $74,668,158 $108,909,173 $183,577,331 % Funded June 30, 2025 -CalPERS(2) 72.9% 70.1% 71.3%
Deposit to 115 Trust (22,372,170)
Net Pension Liability $161,205,161
% Funded June 30, 2025 - Total(2) 74.8%
____________________
(1) Per the June 30, 2023, amortization schedule, net effect of changes in UAL Bases in FY 2023-24 and FY 2024-25.
(2) Projected, actual changes to the UAL may vary when June 30, 2024, Valuation is final and may include other non-investment related actuarial changes.
Item 3A - Page 25
18 TABLE NO. 7
PREPAY $29.88M SAFETY UAL BASES
FYE
June 30
Revised 6/30/2014 6/30/2016 6/30/2020 Total Net UAL $22M less UAL Payment UAL Base(A) UAL Base(B) UAL Base(C) Reduction After Reduction(3) New UAL Payment UAL $138,787,003(1) $(10,785,115) $(13,581,602) $(5,511,113) $(29,877,830) $108,909,173 2026 $ 19,276,071 (1,440,855) (954,495) (439,244) $ (2,834,594) $ 16,441,477 $ 5,558,523 2027 20,272,998 (1,481,199) (981,222) (549,055) (3,011,476) 17,261,523 4,738,477 2028 21,074,477 (1,522,673) (1,008,696) (549,055) (3,080,424) 17,994,053 4,005,947 2029 22,934,989 (1,565,308) (1,036,941) (549,055) (3,151,303) 19,783,685 2,216,315 2030 23,259,836 (1,609,136) (1,065,976) (549,055) (3,224,167) 20,035,669 1,964,331 2031 23,522,316 (1,654,192) (1,095,824) (549,055) (3,299,071) 20,223,245 1,776,755 2032 22,707,783 (1,700,510) (1,126,508) (549,055) (3,376,072) 19,331,711 2,668,289 2033 22,557,127 (1,397,819) (1,158,051) (549,055) (3,104,925) 19,452,202 2,547,798 2034 21,365,561 (1,076,321) (1,190,477) (549,055) (2,815,852) 18,549,708 3,450,292 2035 19,669,723 (737,280) (1,223,811) (549,055) (2,510,146) 17,159,577 4,840,423 2036 18,886,020 (378,224) (1,258,079) (549,055) (2,185,358) 16,700,662 5,299,338 2037 17,480,459 - (1,293,306) (549,055) (1,842,361) 15,638,098 6,361,902 2038 16,740,573 - (1,329,519) (549,055) (1,878,574) 14,861,999 7,138,001 2039 15,949,131 - (1,366,747) (549,055) (1,915,802) 14,033,329 7,966,671 2040 15,376,196 - (1,405,017) (549,055) (1,954,072) 13,422,124 8,577,876 2041 15,113,491 - (1,444,358) (549,055) (1,993,413) 13,120,078 8,879,922 2042 12,353,386 - (1,484,801) (549,055) (2,033,856) 10,319,530 11,680,470 2043 10,492,008 - (1,526,377) - (1,526,377) 8,965,631 13,034,369 2044 12,897,940 - (1,569,116) - (1,569,116) 11,328,824 10,671,176 2045 1,438,289(2) - (1,289,813) - (1,289,813) 148,476 21,851,524 2046 - - (993,156) - (993,156)(2) - 22,000,000
$353,368,372 (14,563,516) (25,802,288) (9,224,124) $(49,589,928) $303,778,445 (1) The June 30, 2025 anticipated UAL is $138.8 million taking into account the FY 2023-24 ROR and 2023-24 and 2024-25 UAL payments. (2) Negative UAL payments will be used to offset final positive UAL balance or be used to offset future UAL Base payments. (3) For comparison, after prepaying these UAL Bases, a 15- Year Fresh Start program annual payment would be $19,100,000, for a total $286,500,000.
Bases: (A) Safety Plan 6/30/2014 Assumption Change; (B) Safety Plan 6/30/2016 (Gain)/Loss; (C) Safety Plan 6/30/2020 Investment (Gain)/Loss Item 3A - Page 26
19 DISCLAIMER: The information included in this Report is for discussion purposes only. The information provided is based on information, market conditions, laws, opinions, and forecasts, all of which are subject to change. Harrell & Company Advisors is not obligated to update material to reflect subsequent changes. In preparing this Report, information contained herein has been obtained from sources considered reliable, but Harrell & Company Advisors has not verified this information and does not represent that this material is accurate, current, or complete and it should not be relied upon as such.
To the extent that Harrell & Company Advisors provides any alternatives, options, calculations or examples, such information is not intended to express any view that the City could achieve particular results in any municipal securities transaction, and those alternatives, options, calculations or examples do not constitute a recommendation that any municipal issuer or obligated person should effect any municipal securities transaction. This material is not research and does not constitute tax or legal advice. Questions concerning tax or legal implications of materials should be discussed with your tax advisors and/or legal counsel.
Item 3A - Page 27
A-1
APPENDIX A
PLAN BENEFITS AND PARTICIPANT DATA
Plan Description. The City provides retirement benefits, disability benefits, and death benefits to all qualified employees (and their beneficiaries as applicable) that are eligible to participate in the City’s separate Safety (police and fire) and Miscellaneous (all other) retirement plans (collectively, the “Plans”), through agent multiple employer defined benefit pension plans administered by CalPERS, which acts as a common investment and administrative agent for its participating member employers. Benefit provisions are established by State statute and by City contracts with employee bargaining groups.
California Public Employees’ Pension Reform Act of 2013. On September 12, 2012, the Governor signed into law the California Public Employees’ Pension Reform Act of 2013 (“PEPRA”), which made changes to CalPERS Plans, most substantially affecting new employees hired after January 1, 2013 (the “Implementation Date”). For non-safety CalPERS participants hired after the Implementation Date, PEPRA changed the normal retirement age by increasing the eligibility for the 2% age factor from age 55 to 62 and increased the eligibility requirement for the maximum age factor of 2.5% to age 67.
PEPRA also: (i) requires all new participants enrolled in CalPERS after the Implementation Date to contribute at least 50% of the total annual normal cost of their pension benefit each year as determined by an actuary to a maximum of 8% of salary, (ii) requires CalPERS to determine the final compensation amount for employees based upon the highest annual compensation earnable averaged over a consecutive 36-month period as the basis for calculating retirement benefits for new participants enrolled after the Implementation Date, and (iii) caps “pensionable compensation” for new participants enrolled after the Implementation Date at 100% of the federal Social Security contribution and benefit base for members participating in Social Security or 120% for members not participating in Social Security, while excluding previously allowed forms of compensation under the formula such as payments for unused vacation, annual leave, personal leave, sick leave, or compensatory time off.
Benefit Tiers. In 2011 the City established two tiers of benefits for employees in each employee plan, based on date of hire (“Tier 1” and “Tier 2”). Benefits were reduced for Tier 2 employees hired on or after January 1, 2011.
Due to PEPRA, the City added a benefit tier in each employee group for employees subject to PEPRA (“PEPRA Tier”). Ultimately, PEPRA is expected to reduce the City’s long-term pension obligation as existing employees retire and new employees are hired to replace them.
Item 3A - Page 28
A-2
The Plans’ provisions and benefits at June 30, 2023 are summarized as follows:
Miscellaneous
Classic Tier 2 PEPRA
Hire date
Prior to
January 1, 2013
Prior to
January 1, 2013
On or after
January 1, 2013
Benefit formula 2.7% @ 55 2% @ 60 2% @ 62
Benefit vesting schedule 5 years of service 5 years of
i
5 years of service
Benefit payments Monthly for life Monthly for life Monthly for life Retirement age 50 50 52
Monthly benefits, as a% of eligible
ti
2.0% to 2.7% 2.0% to 2.7% 1.0% to 2.5%
Required employee contribution rates FY 2024-
25 8.00% 7.00% 8.75%
Required contribution during FY 2024-25 11.62% 11.62% 11.62% Safety
Classic Tier 2 PEPRA
Hire date
Prior to
January 1, 2013
On or after
January 1, 2013
On or after
January 1, 2013
Benefit formula 3% @ 50 3% @ 55 2.7% @ 57
Benefit vesting schedule 5 years of service 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life Monthly for life Retirement age 50 50 52
Monthly benefits, as a% of eligible
compensation
3%, 50+ yrs 2.4%-3%, 50 yrs –
55+ yrs,
respectively
2%-2.7%, 50 yrs
–
57+ yrs,
Required employee contribution rates FY 2024-
25 9.00% 9.00% 13.50%
Required contribution during FY 2024-25 22.40% 22.40% 22.40% Employees Covered. At June 30, 2022 and June 30, 2023, the following employees were covered by the benefit terms for each plan:
2022 2023
Miscellaneous Safety Miscellaneous Safety
Active employees 306 167 336 178
Transferred employees 118 40 124 38
Separated employees 201 36 222 41
Retired employees and 563 289 561 292
Annual Covered Payroll - Active $ 22,940,361 $ 20,040,307 $ 26,802,118 $ 23,036,853 PV of Future Payroll - Active 208,789,646 215,030,519 246,464,226 244,192,909 Annual Benefits - Retired 15,249,621 17,228,050 15,793,323 17,883,353 Item 3A - Page 29
B-1
APPENDIX B
UAL BASES – MISCELLANEOUS PLAN
Reason for Base
Date
Est.
Ramp
Level
2025-26
Ramp
Shape
Escalation
Rate
Amort.
Period
Balance
6/30/23
Expected
Payment
2023-24
Balance
6/30/24
Expected
Payment
2024-25
Balance
6/30/25
Minimum
Required
Payment
2025-26
Fresh Start 6/30/05 No Ramp 2.80% 9 8,061,575 910,006 7,669,325 935,486 7,224,070 961,679 Assumption Change 6/30/09 No Ramp 2.80% 6 3,842,587 565,175 3,519,808 581,000 3,158,726 597,268 Special (Gain)/Loss 6/30/09 No Ramp 2.80% 16 2,887,229 224,867 2,851,174 231,163 2,806,161 237,635 Special (Gain)/Loss 6/30/10 No Ramp 2.80% 17 1,539,586 115,528 1,524,886 118,763 1,505,844 122,088 Assumption Change 6/30/11 No Ramp 2.80% 8 3,049,442 371,964 2,872,401 382,378 2,672,559 393,085 Special (Gain)/Loss 6/30/11 No Ramp 2.80% 18 187,476 13,590 186,180 13,971 184,402 14,362 (Gain)/Loss 6/30/12 No Ramp 2.80% 19 6,967,678 489,098 6,936,026 502,792 6,888,070 516,871 Payment (Gain)/Loss 6/30/12 No Ramp 2.80% 19 310,254 21,778 308,845 22,388 306,710 23,015 (Gain)/Loss 6/30/13 100% Up/Dn 2.80% 20 24,135,494 1,751,810 23,966,316 1,800,861 23,734,942 1,851,285 (Gain)/Loss 6/30/14 100% Up/Dn 2.80% 21 (17,120,544) (1,203,207) (17,041,298) (1,236,897) (16,921,846) (1,271,530) Assumption Change 6/30/14 100% Up/Dn 2.80% 11 10,628,317 1,203,105 10,107,705 1,236,792 9,516,878 1,271,423 (Gain)/Loss 6/30/15 100% Up/Dn 2.80% 22 8,422,322 574,361 8,401,472 590,443 8,362,584 606,976 (Gain)/Loss 6/30/16 100% Up/Dn 2.80% 23 10,672,575 707,625 10,667,022 727,439 10,640,614 747,807 Assumption Change 6/30/16 100% Up/Dn 2.80% 13 3,891,571 385,924 3,757,368 396,730 3,602,872 407,838 (Gain)/Loss 6/30/17 100% Up/Dn 2.80% 24 (9,648,806) (623,106) (9,660,982) (640,553) (9,655,955) (658,489) Assumption Change 6/30/17 100% Up/Dn 2.80% 14 3,279,993 307,295 3,185,461 315,900 3,075,608 324,745 (Gain)/Loss 6/30/18 100% Up/Dn 2.80% 25 (4,293,981) (219,092) (4,359,553) (281,534) (4,365,054) (289,417) Assumption Change 6/30/18 100% Up/Dn 2.80% 15 7,959,692 576,367 7,905,310 740,631 7,677,473 761,369 Method Change 6/30/18 100% Up/Dn 2.80% 15 2,231,834 161,609 2,216,585 207,667 2,152,701 213,482 Non-Investment(Gain)/Loss 6/30/19 No Ramp 0.00% 16 (1,276,568) (121,034) (1,238,293) (121,034) (1,197,415) (121,033) Investment (Gain)/Loss 6/30/19 100% Up Only 0.00% 16 974,838 58,614 980,553 78,151 966,466 97,689 Investment (Gain)/Loss 6/30/20 80% Up Only 0.00% 17 4,796,229 197,160 4,918,619 295,740 4,947,455 394,319 Non-Investment(Gain)/Loss 6/30/20 No Ramp 0.00% 17 79,511 7,333 77,340 7,333 75,021 7,333 Assumption Change 6/30/21 No Ramp 0.00% 18 596,328 53,624 581,461 53,624 565,583 53,624 Net Investment (Gain) 6/30/21 60% Up Only 0.00% 18 (24,267,275) (521,618) (25,378,388) (1,043,235) (26,025,997) (1,564,853) Non-Investment(Gain)/Loss 6/30/21 No Ramp 0.00% 18 (5,676,362) (510,439) (5,534,846) (510,439) (5,383,707) (510,439) Risk Mitigation 6/30/21 No Ramp 0.00% 0 6,747,279 6,972,914 0 0 0 0 Risk Mitigation Offset 6/30/21 No Ramp 0.00% 0 (6,747,279) (6,972,914) 0 0 0 0 Benefit Change 6/30/22 No Ramp 0.00% 19 370,495 (2,425) 398,195 35,807 388,268 35,807 Investment (Gain)/Loss 6/30/22 40% Up Only 0.00% 19 31,941,002 0 34,112,990 733,248 35,674,905 1,466,497 Non-Investment(Gain)/Loss 6/30/22 No Ramp 0.00% 19 2,317,172 0 2,474,740 222,537 2,413,043 222,537 Investment (Gain)/Loss 6/30/23 20% Up Only 0.00% 20 1,418,977 0 1,515,467 0 1,618,519 34,790 Non-Investment(Gain)/Loss 6/30/23 No Ramp 0.00% 20 2,558,312 0 2,732,277 0 2,918,072 262,403 Total 80,836,953 5,495,912 80,654,166 6,397,152 79,527,572 7,210,166 Item 3A - Page 30
B-2
UAL BASES – SAFETY PLAN
Reason for Base
Date
Est.
Ramp
Level
2025-26
Ramp
Shape
Escalation
Rate
Amort.
Period
Balance
6/30/23
Expected
Payment
2023-24
Balance
6/30/24
Expected
Payment
2024-25
Balance
6/30/25
Minimum
Required
Payment
2025-26
Fresh Start 6/30/08 No Ramp 2.80% 15 (519,276) (42,101) (511,078) (43,280) (501,104) (44,492) Assumption Change 6/30/09 No Ramp 2.80% 6 3,488,513 513,097 3,195,476 527,464 2,867,666 542,233 Special (Gain)/Loss 6/30/09 No Ramp 2.80% 16 8,751,258 681,576 8,641,975 700,660 8,505,539 720,279 Special (Gain)/Loss 6/30/10 No Ramp 2.80% 17 1,345,491 100,964 1,332,644 103,791 1,316,002 106,697 Assumption Change 6/30/11 No Ramp 2.80% 8 3,284,291 400,610 3,093,616 411,827 2,878,383 423,358 Special (Gain)/Loss 6/30/11 No Ramp 2.80% 18 (359,545) (26,063) (357,059) (26,793) (353,650) (27,543) (Gain)/Loss 6/30/12 No Ramp 2.80% 19 37,610,977 2,640,110 37,440,126 2,714,033 37,181,262 2,790,026 Payment (Gain)/Loss 6/30/12 No Ramp 2.80% 19 (12,723,199) (893,108) (12,665,402) (918,115) (12,577,832) (943,822) (Gain)/Loss 6/30/13 100% Up/Dn 2.80% 20 31,159,468 2,261,626 30,941,055 2,324,952 30,642,346 2,390,051 (Gain)/Loss 6/30/14 100% Up/Dn 2.80% 21 (18,529,892) (1,302,254) (18,444,122) (1,338,717) (18,314,837) (1,376,201) Assumption Change 6/30/14 100% Up/Dn 2.80% 11 12,044,668 1,363,433 11,454,678 1,401,610 10,785,115 1,440,855 (Gain)/Loss 6/30/15 100% Up/Dn 2.80% 22 16,029,373 1,093,125 15,989,690 1,123,732 15,915,678 1,155,197 (Gain)/Loss 6/30/16 100% Up/Dn 2.80% 23 13,622,398 903,208 13,615,309 928,498 13,581,602 954,495 Assumption Change 6/30/16 100% Up/Dn 2.80% 13 4,935,724 489,472 4,765,513 503,177 4,569,564 517,266 (Gain)/Loss 6/30/17 100% Up/Dn 2.80% 24 (9,610,561) (620,637) (9,622,688) (638,014) (9,617,681) (655,879) Assumption Change 6/30/17 100% Up/Dn 2.80% 14 6,195,090 580,404 6,016,543 596,656 5,809,059 613,362 (Gain)/Loss 6/30/18 100% Up/Dn 2.80% 25 (812,825) (41,473) (825,237) (53,293) (826,278) (54,785) Assumption Change 6/30/18 100% Up/Dn 2.80% 15 10,403,090 753,295 10,332,014 967,984 10,034,237 995,087 Method Change 6/30/18 100% Up/Dn 2.80% 15 1,245,527 90,189 1,237,018 115,894 1,201,366 119,139 Non-Investment(Gain)/Loss 6/30/19 No Ramp 0.00% 16 1,665,809 157,938 1,615,864 157,938 1,562,523 157,938 Investment (Gain)/Loss 6/30/19 100% Up Only 0.00% 16 1,104,914 66,435 1,111,392 88,580 1,095,424 110,724 Investment (Gain)/Loss 6/30/20 80% Up Only 0.00% 17 5,342,657 219,622 5,478,991 329,433 5,511,113 439,244 Non-Investment(Gain)/Loss 6/30/20 No Ramp 0.00% 17 1,745,723 160,995 1,698,053 160,995 1,647,142 160,995 Assumption Change 6/30/21 No Ramp 0.00% 18 2,418,528 217,483 2,358,232 217,483 2,293,836 217,483 Net Investment (Gain) 6/30/21 60% Up Only 0.00% 18 (24,383,436) (524,115) (25,499,868) (1,048,229) (26,150,576) (1,572,343) Non-Investment(Gain)/Loss 6/30/21 No Ramp 0.00% 18 (3,728,978) (335,323) (3,636,012) (335,323) (3,536,724) (335,323) Risk Mitigation 6/30/21 No Ramp 0.00% 0 9,668,246 9,991,560 0 0 0 0 Risk Mitigation Offset 6/30/21 No Ramp 0.00% 0 (9,668,246) (9,991,560) 0 0 0 0 Benefit Change 6/30/22 No Ramp 0.00% 19 171,887 (2,118) 185,764 16,705 181,132 16,704 Investment (Gain)/Loss 6/30/22 40% Up Only 0.00% 19 35,560,045 0 37,978,128 816,328 39,717,014 1,632,657 Non-Investment(Gain)/Loss 6/30/22 No Ramp 0.00% 19 3,733,082 0 3,986,932 358,519 3,887,535 358,519 Investment (Gain)/Loss 6/30/23 20% Up Only 0.00% 20 1,690,315 0 1,805,256 0 1,928,013 41,442 Non-Investment(Gain)/Loss 6/30/23 No Ramp 0.00% 20 11,431,746 0 12,209,105 0 13,039,324 1,172,542 Total 144,312,862 8,906,390 144,921,908 10,164,495 144,272,193 12,065,905 Item 3A - Page 31
I
I
I
C-1
APPENDIX C
HISTORICAL COMBINED PLANS VALUATION DATA
(in Thousands)
Actuarial
Valuatio
n Date
Actuarial
Valuation
of Assets
(AVA)
Market
Value of
Assets
(MVA)
Entry
Age
Actuarial
Accrued
Liability
Unfunde
d
Actuarial
Accrued
Liability
Funded
Ratio
(AVA Basis)
Funded
Ratio
(MVA Basis)
2002 $177,380 $161,255 $196,755 $ 19,375 90.2% 82.0%
2003 176,603 160,548 215,315 38,713 82.0% 74.6%
2004 185,822 183,061 226,759 40,936 81.9% 80.7%
2005 199,868 206,430 240,780 40,912 83.0% 85.7%
2006 214,958 228,936 256,006 41,048 84.0% 89.4%
2007 251,415 289,888 275,143 23,729 91.4% 105.4%
2008 266,824 270,956 295,627 28,803 90.3% 91.7%
2009 277,407 201,224 325,445 48,038 85.2% 61.8%
2010 287,186 223,107 340,124 64,078 84.4% 65.6%
2011 297,775 262,301 359,319 35,474 82.9% 73.0%
2012 303,139 252,694 372,378 50,445 81.4% 67.9%
2013 N/A 276,082 388,672 112,590 N/A 71.0%
2014 314,149 424,091 109,942 74.1%
2015 310,725 443,181 132,456 70.1%
2016 301,587 463,510 161,923 65.1%
2017 324,779 483,708 158,930 67.1%
2018 341,746 517,341 175,595 66.1%
2019 354,467 535,306 180,839 66.2%
2020 362,736 555,176 192,440 65.3%
2021 436,809 579,894 143,086 75.3%
2022 395,949 604,757 208,808 65.5%
2023 413,784 638,934 225,150 64.8%
Item 3A - Page 32
D-1
APPENDIX D
UNFUNDED ACCRUED LIABILITY MANAGEMENT POLICY
Section 1. Purpose
The purpose of this Unfunded Accrued Liability Management Policy (the “Policy”) is to strategically address the existing and any future unfunded accrued liability (the “UAL”) associated with the City of Palm Springs’ (the “City”) California Public Employees’ Retirement System (CalPERS) pension plans (the “Pension Plans”). This Policy also addresses some of the principal elements and core parameters central to the policy objectives discussed in this Policy. In the development of this Policy, the City strives to reduce its UAL and the associated financing costs in the most cost-efficient and fiscally responsible manner possible.
The City is committed to fiscal sustainability by employing long-term financial planning efforts, maintaining appropriate reserve levels, and employing prudent practices in governance, management, budget administration, and financial reporting. This Policy is intended to make all relevant information readily available to decision-makers and the public to improve the quality of decisions, identify policy goals, and to demonstrate a commitment to long-term financial planning. Adherence to this Policy signals to rating agencies and capital markets that the City is well managed and able to meet its obligations in a timely manner.
The Policy is intended to reflect a reasonable and conservative approach to managing the UAL costs associated with the Pension Plans. This Policy recognizes that the Pension Plans are subject to market volatility and that actual economic and demographic experience of the plans will differ from the actuarial assumptions. Accordingly, it is intended to allow for adaptive responses to changing circumstances, providing flexibility to address such volatility in a financially sound manner. As such, the City is required to continually monitor its Pension Plans and the corresponding UAL.
Section 2. Policy Goals and Objectives
The overarching goals and objectives of this Policy are as follows:
• Establish, attain, and maintain targeted pension plan funding levels • Provide sufficient assets to permit the payment of all benefits under the Pension Plans
• Seek to manage and control future contribution volatility to the extent reasonably possible
• Strive to make Annual Discretionary Payments to accelerate UAL pay-down, reduce interest costs, and stabilize future payments
• Maintain the City’s sound financial position and creditworthiness • Provide guidance in making annual budget decisions
• Create sustainable and fiscally sound future budgets
• Demonstrate prudent financial management practices
• Ensure that pension funding decisions protect both current and future stakeholders Item 3A - Page 33
D-2
• Create transparency as to how and why the Pensions Plans are funded Section 3. Background and Discussion
In General. Each Pension Plan is a multiple employer defined benefit pension plan administered by the California Public Employee Retirement System (“CalPERS”). All fulltime and certain part-time City employees are eligible to participate in the CalPERS retirement and disability benefits, annual cost of living adjustments and death benefits offered to plan members and their beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute.
The financial objective of a defined benefit pension plan is to fund the long-term cost of benefits provided to the plan participants. In order to assure its financial soundness and sustainability, the plan should accumulate adequate resources in a systematic and disciplined manner to ensure sufficient resources are available to meet employee benefit requirements. This Policy outlines the practices the City will utilize to address its actuarially determined contributions to fund the long-term cost of benefits to the Pension Plan participants and annuitants.
Pension Costs and Liabilities. In order to fund its employees’ pension benefits, the City is required to make contributions (a portion of which may come from the employees) to CalPERS. CalPERS then invests these contributions to generate returns to help fund the pension benefits. The regular required contributions, known as the “normal cost,” are calculated as a percent of salaries and represent the annual cost of service accrual for the upcoming fiscal year for active employees. If, for any reason, the actual Pension Plan experience and investment performance fall short of the actuarial assumptions, the Pension Plan can become underfunded (i.e., the Pension Plan’s Normal Accrued Liability exceeds the Plan’s market value of assets). This shortfall is known as the Unfunded Accrued Liability (the “UAL”) and usually has to be covered by the City through a series of UAL Payments, which are above and beyond the “normal cost” contributions. The UAL Payments are calculated in total dollar amounts, not as a percent of salaries.
The UAL can be caused by multiple factors, including but not limited to, changes to CalPERS’ actuarial amortization policy, retroactive pension benefit enhancements, investment underperformance, actuarial assumption changes, demographic factors, and discount rate reductions.
UAL is Debt. The UAL balance at any given point in time is a debt of the City owed to CalPERS which is amortized over a set period of time with interest accruing at the then current CalPERS discount rate (the “Discount Rate”). However, this debt can be prepaid at any time without penalties. Recognizing the UAL as debt helps the City identify proper steps to address it and minimize the associated financing costs.
Item 3A - Page 34
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Ongoing CalPERS Practices. Every year CalPERS prepares updated actuarial valuation reports for each of the City’s Pension Plans wherein it calculates the City’s total pension liability as of the end of the prior fiscal year (each a “Valuation Report”). If the investment performance during that fiscal year was different from the Discount Rate, or if CalPERS made any changes to its actuarial assumptions, or if the actual demographic or compensation experience within the Pension Plans was different from the actuarial assumptions, new line items, or UAL amortization “bases,” may be added to the plan and result in a change to the UAL balance. Such UAL amortization bases may be positive (indicating funding shortfall for the Pension Plans) or negative (indicating funding surplus for the Pension Plans). Since CalPERS can add new UAL amortization bases every year, the Pension Plans must be monitored annually and managed continually – there is no one-time solution.
CalPERS has adopted the UAL amortization methods that were meant to help public agencies “ease into” paying for the UAL increases. New UAL amortization bases are implemented incrementally, with a five-year ramp-up period, and at times include additional small increases in each of the subsequent years. The ramp-up period, while reducing the impact in the near term, increases the overall UAL repayment costs for the City. Since the UAL balances accrue interest at the rate that is equal to the then current Discount Rate, the delayed payments prior to the commencement of the amortization and the reduced payments during the ramp-up period that do not fully cover the interest costs result in negative amortization, causing further increases to the UAL balance. To help reduce the overall costs of the UAL repayment, this Policy encourages level annual payments (i.e., no ramp-up) whenever possible.
Section 4. Policy
Funding Level Objective. It is the City’s policy to strive to achieve and maintain a Pension “Funded Ratio” (being the ratio by which the Market Value of Assets—as set forth in the most recently published Valuation Report--exceeds the Entry Age Normal Accrued Liability or “AL”—as set forth in the most recently published Valuation Report) for each Pension Plan of at least 90% by Fiscal Year 2040-41 as shown in the table below, and once achieved, never dropping below 85% (the “Funding Level Objective”). Achieving and maintaining the 90% Funding Level Objective ensures that the ongoing contributions of the City and its employees, and therefore the taxpayer funds, are properly and adequately funding the retirement benefits of retirees and today’s workers. This concept is commonly referred to as the intergenerational equity. The reason for a Funding Level Objective of 90% rather than 100% is to allow some cushion for the possibility that good investment returns in a given year might push the Funded Ratio of a Pension Plan above 100% (commonly referred to as “super funded status”), which means that the City and its employees had contributed into the Pension Plan more than was necessary. Thus, while the City remains committed to maintaining a 100% funded level, it shall manage the 90% differential through its own investment process by creating the “Pension Rate Stabilization Fund” discussed herein.
Item 3A - Page 35
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Guidance: To achieve the Funding Level Objective, this Policy provides the following guidance:
Pre-Pay the Entire Annual UAL Payment by July 31st of each year. On or before July 1st of each year, the City receives its annual CalPERS UAL invoice. The City has two payments options. The invoice can be paid in equal monthly increments or be paid in a lump sum at the beginning of the fiscal year by July 31st. By paying the lump sum amount due by July 31st, CalPERS provides an approximately 3.4% reduction in the amount to be paid compared to making the monthly payments. Each year during the budget cycle, the Finance Director will assess whether or not the CalPERS credit exceeds the anticipated earnings over time on the amounts to be prepaid. If there is a significant savings in UAL payment, the Finance Director may recommend making the lump sum payment in July, after factoring in the City’s other cashflow needs.
Pre-Pay UAL from Reserves, One-Time Revenues and Fund Surpluses. Reserves regularly do not earn returns that can offset the interest rate that CalPERS charges on the outstanding UAL balance. Supplemental contributions into the Pension Plans from available reserves, one-time revenues and fund surpluses can generate substantial long- term net savings.
Each supplemental contribution, referred to by CalPERS as an Additional Discretionary Payment (ADP), reduces the UAL balance, the Annual Required Contributions (ARC) for future years, and the total interest costs associated with the UAL.
Therefore, during each budget cycle, the City staff shall review all available reserves, onetime revenues and fund surpluses to determine whether any such funds could be used to make an ADP to pay down the UAL, keeping in mind budgetary constraints and the prudence of maintaining adequate reserves, but balancing the fiscal soundness of eliminating the high-interest UAL debt. ADPs should not adversely affect the general operations and fiscal soundness of the City.
Sequestered Surplus. Each Fiscal Year during the City’s normal budget adoption process, beginning with the 2025-26 Fiscal year budget, the City will calculate the difference between the UAL Payments provided in the CalPERS June 30, 2023, Valuation for the current year and $22 million. This amount is referred to as Sequestered Surplus. The Sequestered Surplus shall first be used to make ADP to reduce any new UAL base added in the most current CalPERS Valuation. Any surplus above the amount of any new UAL base is referred to as Surplus Available for 115 Trust.
Item 3A - Page 36
Funding Level Ob~ectirve
FYE
6/3012025
6/3012030
6/3012035
613012040
% Funded
74.8%
80.0%
85.0%
90.0%
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Utilize Savings Achieved from Refunding Outstanding Debt to Pre-Pay UAL. During each budget cycle, staff should review all outstanding long-term debt of the City to determine whether a refunding of such debt might result in net present value savings of greater than 3%, and if so, consider a structure and strategy that frontloads the savings, which can then be used to pay down the UAL (“Refunding Savings”). This strategy should only be used if the interest rates on the currently outstanding debt is sufficiently below the then-current Discount Rate to ensure that overall savings are achieved by the City.
Pension Obligation Financing. The City may consider issuing taxable municipal debt obligations (generically hereafter referred to as “Pension Obligations”) to refinance the UAL, in part or in whole, if such bond obligations are expected to produce minimum cash flow savings of at least 15%, taking into account all debt service and costs of issuance associated with such bond obligations, in comparison to CalPERS’ respective UAL amortization schedule and the then-current Discount Rate. Pension Obligations shall not utilize swaps or derivatives of any kind and should be structured with reasonable and flexible call provisions (with a maximum of 10-year call provision). Pension Obligations shall be used only to prepay the UAL liabilities and shall not be used to finance normal cost payments. The issuance of Pension Obligations must be voted upon and approved by the City Council.
Utilize Budget Savings After Maturity of 2007 Pension Obligations. The Pension Obligations issued in 2007 will mature on June 1, 2035. Beginning with the Fiscal Year 2035-36 budget, the City will consider using the budget savings resulting from the maturity of the Pension Obligations to reduce any new UAL bases created after 2025 that were not able to be funded from Sequestered Surplus.
Annual Review of the CalPERS Actuarial Valuation Reports and Associated Tasks. The City staff shall review or cause to be reviewed the annual CalPERS actuarial valuation reports within 30 days of their release by CalPERS, which usually takes place during the month of August. The review should focus on identifying the annual changes to each of the Pension Plans UAL and quantifying the associated cost implications and the corresponding impact on the Funded Ratio. Staff should annually reach out to the City’s CalPERS actuary to request a calculation of flat payments (rather than ramp-up payments) for all outstanding and new UAL amortization bases. In making ADPs, the City staff shall determine or cause to be determined the optimal application of the ADPs to the outstanding UAL amortization bases to achieve Funding Level Objective as well as desired budgetary outcomes.
ADPs Shared Between All Benefiting City Funds. Whenever is ADP is made, the City will endeavor to ensure that all benefitting funds contribute their fair share in accordance with the City’s allocation method of charging off its pension costs for each City fund.
Establishment and Operation of a Pension Rate Stabilization Fund.
Establishment of a Pension Rate Stabilization Fund. The City shall establish a Pension Rate Stabilization Fund, a Section 115 trust fund managed by a third-party investment manager (the “Investment Manager”). The Pension Rate Stabilization Fund will receive Sequestered Savings (defined below) and Sequestered Surplus (defined below) as well as any other Item 3A - Page 37
D-6
funds deposited into it at the discretion of the City Council, based on recommendations made by the City staff during the annual budget process. Funds in the Pension Rate Stabilization Fund should only be used to manage the City’s pension benefits costs to maintain each of the Pension Plans at Funding Level Objective in accordance with the goals and objectives set forth in this Policy.
Funding the Pension Rate Stabilization Fund.
Surplus Available for 115 Trust. Any Sequestered Surplus not needed to make an ADP as described above (Surplus Available for 115 Trust), shall be set aside, transferred, and deposited into the Pension Rate Stabilization Fund.
Budget Savings from Maturity of 2007 Pension Obligations. An amount equal to the remaining budgetary savings, after making any ADPs for new UAL bases as described above, shall be set aside, transferred, and deposited into the Pension Rate Stabilization Fund.
Operation of the Pension Rate Stabilization Fund. Surplus Available for 115 Trust and Refunding Savings (and any other amounts contributed by the City) shall be deposited in the Pension Rate Stabilization Fund and used solely for the purpose of making ADP’s (and Normal Cost payments to the extent the amount therein exceeds the Pension Rate Stabilization Fund Maximum, as described below) to CalPERS for the purpose of achieving and maintaining Funding Level Objective.
POB Savings. Upon the issuance of a series of Pension Obligations, and for each of the 4 succeeding years following such issuance, a fixed dollar amount deemed appropriate by the City Council at the time of the “Average Annual Savings” (calculated by subtracting the total debt service payments on any such issuance of Pension Obligations from the corresponding total UAL payments that are being paid off by such issuance of Pension Obligations and that would have otherwise been payable to CalPERS had such Pension Obligations not been issued and dividing by the number of years to maturity of such financing) achieved by issuing Pension Obligations (the “POB Savings”), shall be transferred from the General Fund (and/or such other appropriate funds of the City) and deposited into the Pension Rate Stabilization Fund.
With the goal of achieving and maintaining the Funding Level Objective, each year during the budget cycle, City staff shall calculate, or cause to be calculated, the upcoming Fiscal Year’s estimated Funded Ratio by taking into account the most recent Valuation Report’s statement of Funded Ratio and adjusting for the estimated Base that will be either added or subtracted due to the prior Fiscal Year’s investment result of either exceeding or falling short of the then current Discount Rate for that Fiscal Year (the “Estimated Funded Ratio”). If the Estimated Funded Ratio is estimated to be less than the Funding Level Objective, to the extent funds are available in the Pension Rate Stabilization Fund, the appropriate member of staff shall either make, or shall direct the Investment Manger to make, an ADP to CalPERS in the amount necessary to bring the Funded Ratio back up to the Funding Level Objective. Additionally, if sufficient funds are available in the Pension Rate Stabilization Item 3A - Page 38
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Fund, staff shall assess whether to fully amortize any new bases in order to reduce the longterm interest costs associated with “ramping”.
Moneys in the Pension Rate Stabilization Fund shall be allowed to accumulate until such time as the amount therein, when combined with the Market Value of Assets (as set forth in the most recently published Valuation Report) exceeds the Entry Age Normal Accrued Liability (as set forth in the most recently published Valuation Report) by 110% (the “Pension Rate Stabilization Fund Maximum”). To the extent monies in the Pension Rate Stabilization Fund on June 30th exceed the Pension Rate Stabilization Fund Maximum (after consideration has been given to the amounts therein required to be paid to CalPERS for the ensuing Fiscal Year to maintain the Estimated Funded Ratio at or above the Funding Level Objective), the surplus should be used to offset the City’s Normal Cost payment made to CalPERS in such Fiscal Year.
Transparency and Reporting. Funding of the Pension Plans should be transparent to all stakeholders, including plan participants, annuitants, the City Council, and City residents.
To achieve this Policy objective, copies of the annual actuarial valuation reports for each Pension Plan shall be made available to the City Council and shall be posted on the City’s website. The City’s audited financial statements shall also be posted on the City’s because they include, among other things, information on the City’s current and future annual Pension Plan contributions as well as the funded status of each Pension Plan.
Annual Budget to Contain Policy Directed Information. The City’s annual operating budget shall consider the items specified in this Policy for inclusion in each such annual budget.
Review of Policy. Funding a defined benefit pension plan requires a long-term horizon planning approach. This Policy is intended to provide general objectives and guidelines, which will require periodic review and constant update to consider changes in the City’s financial position and Pension Plan funded status over time. As such, City staff will review the policy for implementation of new best practices and will provide to Council for adoption on an as needed basis, not to exceed 5 years. This will provide an opportunity to assess the progress each five years toward the Funding Level Objective.
Item 3A - Page 39
E-1
APPENDIX E
CALPERS ACTUARIAL AMORTIZATION POLICY
Amortization payments are determined according to the CalPERS Actuarial Amortization Policy.
The CalPERS board adopted a new policy effective for the June 30, 2019, actuarial valuation.
The new policy applies prospectively only; amortization bases (sources of UAL) established prior to the June 30, 2019, valuation continue to be amortized according to the prior policy.
Prior Policy (Bases Established prior to June 30, 2019) Amortization payments are determined as a level percentage of payroll whereby the payment increases each year at an escalation rate. Gains or losses are amortized over a fixed 30 -year period with a 5-year ramp up at the beginning and a 5-year ramp down at the end of the amortization period. All changes in liability due to plan amendments (other than golden handshakes) are amortized over a 20-year period with no ramp. Changes in actuarial assumptions or changes in actuarial methodology are amortized over a 20-year period with a 5- year ramp up at the beginning and a 5-year ramp down at the end of the amortization period.
Changes in unfunded accrued liability due to a Golden Handshake will be amortized over a period of five years. Bases established prior to June 30, 2013, may be amortized differently. A summary is provided in the following table:
The 5-year ramp up means that the payments in the first four years of the amortization period are 20%, 40%, 60% and 80% of the “full” payment which begins in year five. The 5-year ramp down means that the reverse is true in the final four years of the amortization period.
Current Policy (Bases Established on or after June 30, 2019) Amortization payments are determined as a level dollar amount. Investment gains or losses are amortized over a fixed 20 -year period with a 5-year ramp up at the beginning of the amortization period. Non-investment gains or losses are amortized over a fixed 20-year period with no ramps.
All changes in liability due to plan amendments (other than golden handshakes) are amortized over a 20-year period with no ramps. Changes in actuarial assumptions or changes in actuarial methodology are amortized over a 20-year period with no ramps. Changes in unfunded accrued liability due to a Golden Handshake are amortized over a period of five years. A summary is provided in the table on the following page:
Driver Investment
NonInvestmentAssumption/
Method Change
Benefit
Change
Golden
Handshake
Amortization Period 30 Years 30 Years 20 Years 20 Years 5 Years Escalation Rate
- Active Plans 2.80% 2.80% 2.80% 2.80% 2.80%
- Inactive Plans 0% 0% 0% 0% 0%
Ramp Up 5 5 5 0 0
Ramp Down 5 5 5 0 0
Source
Item 3A - Page 40
E-2
Exceptions for Inconsistencies
An exception to the amortization rules above is used whenever their application results in inconsistencies. In these cases, a “fresh start” approach is used. This means that the current unfunded actuarial liability is projected and amortized over a set number of years. For example, a fresh start is needed in the following situations:
• When a negative payment would be required on a positive unfunded actuarial liability; or
• When the payment would completely amortize the total unfunded liability in a very short time period, and results in a large change in the employer contribution requirement.
It should be noted that the actuary may determine that a fresh start is necessary under other circumstances. In all cases of a fresh start, the period is set by the actuary at what is deemed appropriate; however, the period will not be greater than 20 years.
Exceptions for Plans in Surplus
If a surplus exists (i.e., the Market Value of Assets exceeds the plan’s accrued liability) any prior amortization layers shall be considered fully amortized, and the surplus shall not be amortized.
In the event of any subsequent unfunded liability, a Fresh Start shall be used with an amortization period of 20 years or less.
Exceptions for Small Amounts
Where small unfunded liabilities are identified in annual valuations which result in small payment amounts, the actuary may shorten the remaining period for these bases. • When the balance of a single amortization base has an absolute value less than $250, the amortization period is reduced to one year.
• When the entire unfunded liability is a small amount, the actuary may perform a Fresh Start and use an appropriate amortization period.
Driver Investment
NonInvestmentAssumption/
Method Change
Benefit
Change
Golden
Handshake
Amortization Period 20 Years 20 Years 20 Years 20 Years 5 Years Escalation Rate 0% 0% 0% 0% 0%
Ramp Up 5 0 0 0 0
Ramp Down 0 0 0 0 0
Source
Item 3A - Page 41
E-3
Exceptions for Inactive Plans
The following exceptions apply to plans classified as Inactive. These plans have no active members and no expectation to have active members in the future. • Amortization of the unfunded liability is on a “level dollar” basis rather than a “level percent of pay” basis. For amortization layers, which utilize a ramp up and ramp down, the “ultimate” payment is constant.
• Actuarial judgment will be used to shorten amortization periods for Inactive plans with existing periods that are deemed too long given the duration of the liability. The specific demographics of the plan will be used to determine if shorter periods maybe more appropriate.
Exceptions for Inactive Agencies
For a public agency with no active members in any CalPERS rate plan, the unfunded liability shall be amortized over a closed amortization period of no more than 15 years.
Item 3A - Page 42
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APPENDIX F
GFOA ADVISORY
In February 2021, the Government Finance Officers’ Association (GFOA) affirmed that their original guidance - that state and local governments should not issue POBs - remains current regardless of economic cycles. It is important to note that there are several issues that the GFOA points to which all agencies should adhere to when issuing POBs.
However, because of pension reforms and policy changes in recent years, including trends against complex debt structures as well as adaptation in the POB market, these concerns are being addressed. The Advisory notes five key issues or concerns that are addressed below.
GFOA View Response
POBs are complex structures that may
utilize Guaranteed Investment Contracts,
Capital Appreciation Bonds and
swaps/derivatives.
POBs should only be issued as plain, vanilla
fixed-rate bonds.
POBs increase debt burden and
potentially use up debt capacity.
The UAL is considered “debt” under GASB
68 and by rating agencies and already uses
up debt capacity from a debt affordability
perspective – POBs refinance UAL at a
lower cost.
POBs are frequently structured in a
manner that defers or extends repayment. POBs will NOT be used to finance normal costs or extend payments.
Rating agencies may not view POBs as
credit positive, particularly if not part of a
comprehensive plan.
Rating agencies generally view POBs as
credit neutral if they are issued as part of a
long-term comprehensive plan and not to
compensate for financial distress.
Invested POB proceeds might fail to earn
more than the interest rate on the bonds,
leading to an increased UAL.
The City’s issuance of POBs is not as an
investment vehicle, it is primarily a debt
management tool. But as noted, the effect
of the CalPERS investment return should be
taken into account.
Item 3A - Page 43
F-2
There has been an evolution of the POB market in the last decade, which has resulted in a “modern” version of POBs. Previously, most POBs were sold as non-callable bonds, following the traditional corporate bond structure, US Treasury bonds and other taxable investments. Since 2017, however, only one POB in California has been publicly sold with a non-callable structure. The investors in POBs are now comfortable with the standard 10-year par call option utilized in the tax-exempt municipal bond market.
The GFOA Advisory specifically addresses complex POB structures that utilize derivatives (swaps), Guaranteed Investment Contracts and non-callable structures.
Clearly this warning has been noted. The City has never used derivatives. Any POB structure proposed for the City, which would use only plain, vanilla fixed-rate current interest bonds with 10-year par call options, as are being utilized in the modern POB market.
Other notable reports. In 2018, the League of California Cities published a report (League of California Cities® Retirement System Sustainability Study and Findings, January 2018) on their pension study including their findings. Their results recognize that government agencies have limited options to reduce pension and UAL debt service costs. But the report highlighted the six options that are the most common. Included in those options was the issuance of POB, while carefully noting the concerns highlighted by GFOA.
Implicit in every CalPERS annual actuarial report is their discussion of the benefit of making additional discretionary payments. Specifically, they remind agencies that "CalPERS allows employers to make additional discretionary payments (ADPs) at any time and in any amount" and that ADPs can "serve to reduce the UAL and future required contributions and can result in significant long-term savings.” The impact on the City’s budget from ADPs is generally over the long-term, not the short-term.
Standard & Poor’s generally views POBs as a neutral rating factor when they are considered as part of the City’s overall financing plan for addressing its UAL.
Item 3A - Page 44
CITY COUNCIL STAFF REPORT
DATE: NOVEMBER 21, 2024 BUSINESS & LEGISLATIVE
SUBJECT: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM
SPRINGS, CALIFORNIA, AMENDING PALM SPRINGS MUNICIPAL
CODE ARTICLE V OF CHAPTER 8.04 OF TITLE 8 REGARDING
UNDERGROUNDING OF UTILITIES AND THE FORMATION OF
UNDERGROUND UTILITY DISTRICTS
FROM: Scott C. Stiles, City Manager
BY: Engineering Services Department
SUMMARY:
This action will amend Municipal Code Article V of Chapter 8.04 of Title 8, codifying a procedure for the formation of new underground utility districts. This action will also include a resolution of the City Council to adopt “Underground Utility District Formation Guidelines for Rule 20B and Rule 20C Projects”, a policy and procedural document guiding residents in undergrounding utilities in their neighborhoods.
RECOMMENDATION:
1. Conduct first reading and introduce Ordinance No. _____, “AN ORDINANCE OF
THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING PALM SPRINGS MUNICIPAL CODE ARTICLE V OF CHAPTER 8.04 OF TITLE 8 REGARDING UNDERGROUNDING OF UTILITIES AND THE FORMATION OF UNDERGROUND UTILITY DISTRICTS.”
2. Approve Resolution No. _____, “A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF PALM SPRINGS, CALIFORNIA ADOPTING A POLICY AND
PROCEDURAL DOCUMENT, ENTITLED UNDERGROUND UTILITY DISTRICT FORMATION GUIDELINES FOR RULE 20B AND RULE 20C PROJECTS TO
GUIDE RESIDENTS IN UNDERGROUNDING OVERHEAD ELECTRICAL AND COMMUNICATION UTILITIES IN THEIR NEIGHBORHOODS.”
3. Authorize the City Manager to execute all necessary documents.
Item 3B - Page 1
City Council Staff Report
November 21, 2024 -- Page 2
Underground Utility Districts Ordinance
BACKGROUND:
The City supports undergrounding overhead utility wires and poles. Undergrounding improves public safety by reducing the threat of fire, impacts from earthquakes and high wind events, and reduces utility company maintenance costs. It also improves the aesthetics of the community through the elimination of overhead wires.
The Rule 20 Program was created in the 1970s by the California Public Utilities Commission (CPUC) to assist residents and municipalities with financing the cost of undergrounding their utilities. Rule 20B programs empower private property owners to support the cost of undergrounding projects in their neighborhoods through creation of assessment districts. While not guaranteed, under Rule 20B, a small portion of the project (typically between 20% and 40% of total costs) may be eligible for reimbursement by the utility service provider, with the reimbursement spread across ratepayers.
Staff have been contacted by various residents that are interested in forming propertyowner funded Utility Undergrounding Assessment Districts (UUDs) to convert overhead utilities to underground and to finance these projects through City revenue bonds secured by a special assessment on their property taxes.
The City of Palm Springs has successfully created UUDs in the past, but only by conditioning undergrounding of utilities in the conditions of approval for new developments while all parcels were still owned by a single entity. The developer could then recover those costs by including them in the price of the individual/subdivided lots.
In established and built-out neighborhoods, the process is more complicated since there are multiple property owners that need to be in support of the undergrounding project and be willing to contribute towards their share of the project costs through special property tax assessments.
The formation of UUDs is a multi-phase endeavor involving an exploratory phase, a petition phase, and a formal voting phase before the design and construction phase can begin.
The current City of Palm Springs Municipal Code is silent on the issue of the formation of assessment districts. The purpose of this ordinance, Attachment A, is to amend the municipal code allowing for the formation of new underground utility districts.
In addition, Resolution No. _____, Attachment B, is to adopt a policy and procedural document, Attachment C, to guide residents in undergrounding utilities in their neighborhoods, entitled “Underground Utility District Formation Guidelines for Rule 20B and Rule 20C Projects” (Guidelines). The Guidelines outline the basic considerations and steps involved in forming an assessment district to finance costs associated with undergrounding utilities. The Guidelines are referenced as a policy and procedural document in the ordinance, but they are not described in detail, allowing the City Council to adopt and to periodically update policies and procedures by resolution.
Item 3B - Page 2
City Council Staff Report
November 21, 2024 -- Page 3
Underground Utility Districts Ordinance
STAFF ANALYSIS:
The five phases involved in forming a UUD and implementing an undergrounding project are:
1. Exploratory Phase
2. Petition Phase
3. Assessment District Formation and Formal Voting Phase
4. Calculation and Payment of Assessment Phase
5. Construction Phase
The exploratory phase begins with the formation of a local committee of interested residents (Neighborhood Committee) and outreach to utility companies to obtain rough cost estimates for undergrounding their services, including a conservative contingency amount to address potential unforeseen costs that may arise. The Neighborhood Committee then submits a “letter of interest” to the City expressing their interest in forming a UUD stating the preliminary cost estimate with contingency and showing the proposed boundaries of the undergrounding, signed by at least 60% of the properties within the proposed district.
The petition phase starts with the retention of “Consultants” (Financial Advisor, Bond Counsel and Assessment Engineer) to prepare a formal petition to all affected owners within the proposed district boundaries. The City will collect a deposit of funds and enter into an Underground Assessment District Deposit and Release Agreement with the Neighborhood Committee to hire and pay for Consultants services. If the UUD is ultimately approved by the property owners, these initial costs can be paid back as part of the assessment. The petition will state the approximate assessment on each property should the UUD be approved as developed by Consultants. The petition is then circulated to all affected property owners within the proposed district boundaries and for the process to continue, a minimum of 60% must sign expressing interest and, of this 60%, they must represent more than 50% of the proposed district weighted by the amount of the assessment.
Once the petition receives the required expression of interest, the next phase is the formation of the Assessment District and Formal Voting process. At this stage, Staff will prepare a staff report for the City Council to approve of a resolution to initiate the formation of the UUD. Upon City Council approval of the resolution, the Assessment Engineer will be directed to prepare the Engineer’s Report, in compliance with Proposition 218, identifying the special benefits the undergrounding project confers to the properties and determining the precise assessment amount on each property based upon the specific special benefit conferred to each parcel relative to the overall project budget. The precise assessment amount on each property is determined as a lump sum and/or bond-financed installment amount to provide property owners with payment options. Ballots are mailed to all property owners along with a Notice of Public Hearing. Property owners then have 45 days to return the ballots, at which time the ballots are opened and tabulated at the Public Hearing. If a majority (50% +1 of the returned assessment ballots are in favor of Item 3B - Page 3
City Council Staff Report
November 21, 2024 -- Page 4
Underground Utility Districts Ordinance
the project, as weighted by each assessment amount, the UUD will be formed via City Council resolution. If a majority in-favor vote is not received, the Assessment District is not formed. At that stage, any unspent funds remaining in the deposit made by the Neighborhood Committee will be refunded to them.
Following successful formation of the UUD, property owners will have two options for payment:
1. Payment in full or a portion of the assessment amount within 30 days of the close of the public hearing. This saves the property owner the cost of selling bonds for the portion paid with cash. Bonds will be sold for any unpaid portion of the assessment and a lien will be placed on the property until the bond is paid in full.
2. If property owner elects not to pay within the 30-day period noted above, bonds will be sold, and the assessment will be placed on the property tax bill to be paid over a 20- to 25-year period. During that time, a lien is placed on the property until the bond amount is paid in full. Bonds will incur a finance charge.
The final phase is the Construction Phase.
Upon approval of the UUD, detailed design will be undertaken by the utility companies and/or by a consultant. The cost for detailed design is calculated as a percentage of the Rough Order of Magnitude (ROM) estimated by the utility companies for the undergrounding project. Once the project is fully designed, the project will be bid for construction. Revenue bonds to finance the undergrounding project would not be issued until the project is bid for construction; therefore, the cost for detailed design, including plans, specifications and estimates would require that funds be advanced, either by the City or the Neighborhood Committee, and reimbursed once the revenue bonds are sold.
The City would invite construction bids for the utility undergrounding project and award the project to the lowest responsive bidder. When construction of the main line underground infrastructure has been completed, and utility company(ies) complete all wiring, power and cabling work, property owners will be notified that it is time to perform their private conversions connecting to the newly undergrounded utilities. The assessment amount only covers work performed in the public right-of-way. Therefore, private conversions require property owners to hire a licensed electrician to connect the property’s existing overhead connection to the underground infrastructure. It will be the property owner’s responsibility to perform the conversion within the designated time frame.
ENVIRONMENTAL ASSESSMENT:
The proposed ordinance will not have an impact on the environment. As such, pursuant to the California, Environmental Quality Act, Cal. Pub. Res. Code 21000 et seq. (“CEQA”), City Staff will file a Notice of Exemption within five (5) days following adoption of this ordinance.
Item 3B - Page 4
City Council Staff Report
November 21, 2024 -- Page 5
Underground Utility Districts Ordinance
ALIGNMENT WITH STRATEGIC PLANNING:
This item aligns with the City Council Priority “Community Infrastructure”.
FISCAL IMPACT:
Adoption of this Ordinance and Underground Utility District Formation Guidelines for Rule 20B and 20C Projects will not have an immediate fiscal impact. An initial deposit for district formation costs will be collected from the Neighborhood Committee and held by the City to pay expenses incurred during the exploratory and petition phases of the district formation. Upon formation of the UUD, the design and construction of the project will be financed through City revenue bonds secured by property tax assessments and the Neighborhood Committee will be reimbursed for the initial deposit.
REVIEWED BY:
City Engineer: Joel Montalvo
Director of Finance: Kristopher Mooney
City Attorney: Jeffrey S. Ballinger
Deputy City Manager: Flinn Fagg
City Manager: Scott Stiles
ATTACHMENTS:
A. Ordinance No. _____
B. Resolution No. _____ Adopting Underground Utility District Formation Guidelines C. Underground Utility District Formation Guidelines (Attachment to the Resolution) Item 3B - Page 5
ATTACHMENT A
Item 3B - Page 6
ORDINANCE NO. __________
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, AMENDING PALM
SPRINGS MUNICIPAL CODE ARTICLE V OF CHAPTER
8.04 OF TITLE 8 REGARDING UNDERGROUNDING OF
UTILITIES AND THE FORMATION OF UNDERGROUND
UTILITY DISTRICTS
City Attorney’s Summary
This ordinance amends the City of Palm Springs Municipal Code to codify the procedure for the formation of new
underground utility districts.
WHEREAS, the City’s municipal code sets the requirements for installing service wires and lines, including but not limited to certain overhead electrical lines, underground (“undergrounding”) for new and existing developments and places the responsibility for compliance on the developer and owner; and
WHEREAS, the City supports undergrounding overhead utility wires and poles; and
WHEREAS, undergrounding improves public safety by reducing the threat of fire, impacts from earthquakes and high wind events, and also reduces utility company maintenance costs; and
WHEREAS, undergrounding improves the aesthetics of the City; and WHEREAS, City residents have expressed interest in voluntarily undergrounding service wires, lines, and poles in their residential communities; and WHEREAS, the cost of undergrounding can range in the tens of thousands of dollars per household, or higher; and
WHEREAS, the California Public Utilities Commission (“CPUC”) created the Rule 20 program in the 1970s to assist residents and municipalities with financing the cost of undergrounding; and
WHEREAS, per CPUC Decision 23-06-008, the Rule 20A program, which promoted municipal undergrounding projects, has been effectively terminated; and WHEREAS, the CPUC left its Rule 20B and Rule 20C programs largely intact; and WHEREAS, Rule 20B programs empower private property owners to support the cost of undergrounding projects in their neighborhoods via the implementation of an assessment district on properties benefitted by the undergrounding project in order to fiscally support the undergrounding effort, with the cost of undergrounding paid over time and assessed on the property owners’ tax rolls; and
Item 3B - Page 7
Ordinance No.