The appraisal services have supported the City’s housing and econo mic development initiatives by providing analyses related to property acquisitions, dispositions, and rehabilitation cost estimates. On December 17, 2024, the City exercised its first one-year option to extend the agreement through January 20, 2026 , in order to ensure continuity of services for ongoing work with projects.
DISCUSSION
Frazier Capital Valuation, Inc. has continued to provide appraisal services that support the goals and objectives of the City’s General Plan and related land use documents. The firm has demonstrated a strong understanding of Federal, State, and local regulations governing grant funding and reporting requirements. Through recent collaboration, it was determined that additional services, such as brokers’ opinions of value and transactional representation, would enhance efficiency and support ongoing projects. To facilitate these services, the City proposes to further amend the existi ng agreement to establish a fee schedule for the remainder of the contract term, ensuring timely and consistent service delivery.
FISCAL IMPACT
$100,000; Funds are budgeted and available in the Economic and Community Development Department Measure AV Funds and the Housing Department for FY 2025-
26. STRATEGIC PLAN
Goal III: Invest in infrastructure to improve community livability.
E. Transform housing inventory to meet the changing lifestyle and market demands.
Prepared by: Megan Taggart, Director of Economic and
Community Development
Certified as to availability of Funds: Janelle Samson, Director of Operations Approved by: Salvador Mendez, Interim City Manager
Approved as to form: Alexandra Severino, City Attorney
ATTACHMENTS
Agrmt No. A-7570 Second Amendment with Frazier Capital Valuation, Inc.
Agrmt No. A-7570 First Amendment with Frazier Capital Valuation, Inc.
Agrmt No. A-7570 with Frazier Capital Valuation, Inc.
Reso. No. CC 2025-090
2nd AMENDMENT TO AGREEMENT A- 7570
BETWEEN THE CITY OF PALMDALE AND FRAZIER CAPITAL VALUATION, INC.
This Second Amendment to Agreement No. A-7570 (“Agreement”) is made and entered into by and between the City of Palmdale (hereinafter called “CITY”) and FRAZIER CAPITAL VALUATION, INC. (hereinafter called "CONSULTANT"). This Contract shall become effective on the date of the last signatory.
WHEREAS, on July 27, 2021 ("Original Agreement") the CITY and CONSULTANT entered into an agreement to provide:
Appraisal services for vacant land, single family residencies, mobilehomes, mobilehome park, 1-4 unit multi-family residences, 5 or more unit multi-family residences, or commercial properties.
WHEREAS, the parties desire to amend the Original Agreement to:
A) Update Article 1. Description of Work to allow for additional services to be provided to the City and update the total compensation for the contract.
B) Update Article 4. Fee Schedule to provide clarity on the costs for the additional services.
C) Update Article 5. Contract Term and Delivery to exercise the final one-year option to extend through January 20, 2027.
NOW THEREFORE, the parties agree as follows:
Article 1. Description of Work
Amend to provide additional services to the City of Palmdale. The added services are expanded to include brokerage services and brokers' opinions on vacant land and parcel values, and to increase the total compensation by One Hundred Thousand Dollars ($100,000.00), not to exceed One Hundred and Forty Thousand Dollars ($140,000.00).
Original Contract: $40,000.00
Amendment 1: No change
Amendment 2: $100,000.00
Article 4. Fee Schedule
The Fee Schedule is amended to include the following services:
Original Contract:
Appraisals
Vacant Land - $1,000-$4,000
Single Family Residence - $900-$1,200
Multi-Family 2 - 4 Units - $1,500-$1,900
Multi-Family 5 or more units - $2,100-$5,000
Commercial Property - $2,500-$4,000
Amendment 1: No change
Amendment 2:
1-3Concord - Document ID: generated after first signature Broker Opinion of Value
If less than two hours of time - Free
If more than two hours of time - $500-$900 per parcel
Brokerage Commission
10% buyer representation, if representing the City on a targeted acquisition, and there is no buyer broker.
5% buyer representation if the property is listed by another broker.
Article 5. Contract Term and Delivery
Original Contract: Executed January 20, 2022, for a term of three (3) years, expiring on January 20, 2025, with an option to extend the term for two additional terms of one year each.
Amendment 1: Exercise the first one-year option to extend through January 20, 2026.
Amendment 2: Exercise the final one-year option to extend through January 20, 2027.
All other terms and conditions of the Original Agreement not amended herein, remain in full force and effect.
REST OF PAGE INTENTIONALLY LEFT BLANK
2-3Concord - Document ID: generated after first signature
In Witness Whereof, the parties hereto have caused this Contract to be executed and attested by their respective officers thereunto duly authorized.
CITY OF PALMDALE:
FRAZIER CAPITAL VALUATION, INC.:
Salvador Mendez
Interim City Manager
Stephen K. Bethel
President
ADDRESS FOR NOTICE:
CITY OF PALMDALE
38300 Sierra Highway
Palmdale, CA 93550
ADDRESS FOR NOTICE:
FRAZIER CAPITAL VALUATION, INC.
633 West Fifth Street, Ste 5870
Los Angeles, CA 90071
APPROVE AS TO FORM:
Alexandra Severino
City Attorney
ATTEST:
Roxanne Faber
City Clerk
---------------------------------------- INTERNAL USE ONLY ----------------------------------------
■Certificate(s) and Endorsement(s) attached
■Confirmed business name on contract with certificate(s) ■Original contract and previous amendment(s) (if any) are attached ■Attached Agreement Checklist and met all requirements
3-3Concord - Document ID: generated after first signature 1st AMENDMENT TO AGREEMENT A- 7570
BETWEEN THE CITY OF PALMDALE AND FRAZIER CAPITAL VALUATION, INC.
This 1st Amendment to Agreement No. A-7570 (“Agreement”) is made and entered into by and between the City of Palmdale (hereinafter called “CITY”) and FRAZIER CAPITAL VALUATION, INC. (hereinafter called "CONSULTANT"). This Contract shall become effective on the date of the last signatory.
WHEREAS, on July 27, 2021 ("Original Agreement") the CITY and CONSULTANT entered into an agreement to provide:
Appraisal Services for City Projects
WHEREAS, the parties desire to amend the Original Agreement to:
Exercise option to extend agreement for additional one year term, leaving the second option for one additional year available.
NOW THEREFORE, the parties agree as follows:
Section 5.1 Contract Term - Consultant and City agree to exercise the option in Section 5 to extend the agreement for an additional one year term through January 20, 2026, leaving one additional option available.
All other terms and conditions of the Original Agreement not amended herein, remain in full force and effect.
REST OF PAGE INTENTIONALLY LEFT BLANK
1-2Concord - Document ID: 02yUq2LRm7D1j1XgsbyTAz
In Witness Whereof, the parties hereto have caused this Contract to be executed and attested by their respective officers thereunto duly authorized.
CITY OF PALMDALE:
FRAZIER CAPITAL VALUATION, INC.:
Ronda Perez
City Manager
Stephen K. Bethel
President
ADDRESS FOR NOTICE:
CITY OF PALMDALE
38300 Sierra Highway
Palmdale, CA 93550
ADDRESS FOR NOTICE:
FRAZIER CAPITAL VALUATION, INC.
633 West Fifth Street, Ste 5870
Los Angeles, CA 90071
APPROVE AS TO FORM:
William P. Curley, III
City Attorney
ATTEST:
Roxanne Faber
City Clerk
---------------------------------------- INTERNAL USE ONLY ----------------------------------------
■Certificate(s) and Endorsement(s) attached
■Confirmed business name on contract with certificate(s) ■Original contract and previous amendment(s) (if any) are attached ■Attached Agreement Checklist and met all requirements
2-2Concord - Document ID: 02yUq2LRm7D1j1XgsbyTAz
Record of Signing
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CITY COUNCIL
CITY OF PALMDALE, CALIFORNIA
RESOLUTION NO. CC 2025-090
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALMDALE
AUTHORIZING THE INTERIM CITY MANAGER TO EXECUTE THE
SECOND AMENDMENT TO AGREEMENT WITH FRAZIER CAPITAL
VALUATION, INC. AND GRANT ING AUTHORIZATION TO PAY ALL FEES
WHEREAS, on January 20, 2022, the City of Palmdale entered into an Agreement (A-7570) with Frazier Capital Valuation, Inc. , to provide professional appraisal services for vacant land, single -family residences, mobile ho me parks, to multi-family residences, or commercial properties for a total not to exceed (NTE) amount of $40,000 for three years with two options to extend for one year each; and
WHEREAS, on December 17, 2024, the City of Palmdale executed the First Amendment to Agreement A -7570, exerci sing its first one -year option to extend the services of the agreement through January 20, 2026; and
WHEREAS, on November 4, 2025, the City Council of the City of Palmdale approved the Second Amendment to Agreement A -7570 with Frazier Capital Valuation, Inc. to increase the value of the contract by $100,000 for a total not to exceed amount of $140,000, exercise the final one-year option to extend the services of the agreement through January 20, 2027, and ensure the agreement includes a fee schedule.
NOW THEREFORE, BE IT RESOLVED, THE CITY COUNCIL OF THE CITY OF
PALMDALE DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS:
SECTION 1. The foregoing recitals are true and correct and are a substantive part of this Resolution.
SECTION 2. The Interim City Manager is hereby authorized to execute the Second Amendment to Agreement A-7570 with Frazier Capital Valuation, In c (“Second Amendment”).
SECTION 3. The Interim City Manager is hereby authorized to execute any instruments, purchase orders, and agreements arising from the services provided by Frazier Capital Valuation, Inc. pur suant to the Second Amendment, including but not limited to administrative fees and costs , authorizations to proceed, land appraisals, brokers’ opinion’s, purchase and sale agreements, and escrow documents.
Resolution No. CC 2025-090
SECTION 4. The City Council hereby authorizes and directs the Interim City Manager or designee to pay all necessary costs, fees, and charges incurred as a result of services performed on behalf of the City of Palmdale.
SECTION 5. This Resolution shall take effect upon the date of its adoption.
SECTION 6. The City Clerk shall certify to the adoption of this resolution.
PASSED, APPROVED and ADOPTED this ______ day of ____________, ________.
_________________________________
Laura Bettencourt, Mayor Pro Tem
APPROVED AS TO FORM: ATTEST:
___________________________ _________________________________ Alexandra Severino Rochelle Scott, City Clerk
City Attorney
I, Rochelle Scott, City Clerk of the City of Palmdale, California, do hereby certify that the foregoing resolution was duly passed, appr oved, and adopted by the City Council of the City of Palmdale at a regular meeting of said Council held on the 4th day of November, 2025, by the following roll call vote:
AYES:
NOES:___________________________________________________________
ABSTAIN:______________________ABSENT:___________________________
Date:
Rochelle Scott, City Clerk
City Council Staff Report
DATE: NOVEMBER 4, 2025
TO: HONORABLE MAYOR PRO TEM AND CITY COUNCIL
FROM: PUBLIC WORKS DEPARTMENT
ENGINEERING DIVISION
DISTRICT: ALL
SUBJECT: APPROVE AGREEMENT WITH DUDEK TO UPDATE THE CITY’S
SEWER SYSTEM MASTER PLAN FOR A TOTAL NOT TO EXCEED
AMOUNT OF $840,598 OVER A TWO (2) YEAR TERM
RECOMMENDATION
Staff recommend that the City Council:
1. Approve Agreement No. A-9451 with Dudek to update the City’s Sewer System Master Plan for a total not to exceed amount of $840,598, which includes a contract amount of $764,180 plus a 10% contingency amount of $76,418 for a two (2) year term; and,
2. Authorize the Interim City Manager or his designee to execute Agreement No. A- 9451 with Dudek, including minimal and/or non-substantial changes.
BACKGROUND
The City successfully withdrew from the Los Angeles County Sewer Maintenance District on July 1, 2009. Prior to withdrawing, City staff worked with a consultant group to prepare the documentation required by the State for the operator of a public sewer system. One of these documents was the Sewer System Master Plan (Master Plan). The Master Plan is a comprehensive, long-range strategy document that outlines the sewer system status, maintenance requirements, capacity, and resource allocations.
Because much of the City’s sewer system was originally designed to serve single -family residential development, the increased land use densities adopted in the Palmdale 2045 General Plan may result in future capacity limitations. In response, the City issued a solicitation for proposals to update the Sewer System Master Plan to ensure adequate system capacity and long-term infrastructure planning.
Report to Mayor Pro Tem and City Council
Re: Approve Agrmt No. A-9451 with Dudek
November 4, 2025
DISCUSSION
The City issued Request for Proposal No. 25 -002-3100 on March 5, 2025. By the April 22, 2025, deadline, the City received four (4) proposals from the following consultants:
Vendor Location
Dudek Encinitas, CA
FEI Associates Chino, CA
Pacific Advanced Civil Engineering Fountain Valley, CA
Willdan Engineering Anaheim, CA
Each technical proposal was evaluated based on qualifications, training, staffing, methodology, and references. While most of the consultants met the requirements, Dudek submitted the most comprehensive and responsi ve proposal, earning the highest evaluation score. As is the case with proposals for consultant/professional services, the cost proposals were delivered separately from the technical proposal s and were not considered as part of the technical proposal evaluation.
The Master Plan will advise the City ’s long-term strategy for providing public sewer services to include, but not limited to, conditional assessment of both sewer pipelines and two pump stations, and the development of a prioritized short (current), intermediate (5 - year), and long -term (10 -year) capital improvement program. Dudek is strategically situated within the marketplace to provide these services, having done so for the last 30+ years for multiple municipal agencies, special districts, and utilities throughout California and the western United States. They will use their understanding of State requirements and advanced mapping systems to check the current sewer system’s performance, identify any issues, and recommend improvements.
Based on qualifications , experience, and references, staff recommend that the City Council approve the agreement with Dudek in the amount of $7 64,180 with a 10% contingency.
FISCAL IMPACT
$840,598; Sufficient f unds for consultant services are budgeted in the Sewer Maintenance accounts.
STRATEGIC PLAN
Goal III: Invest in infrastructure to improve community livability.
A. Seek innovative, cost effective, customer focused methods of service delivery.
Report to Mayor Pro Tem and City Council
Re: Approve Agrmt No. A-9451 with Dudek
November 4, 2025
Prepared by: Leonardo Torres, P.E.,
Director of Public Works
Certified as to availability of Funds: Janelle Samson, Director of Operations Approved by: Salvador Mendez, Interim City Manager
Approved as to form: Alexandra Severino, City Attorney
ATTACHMENTS
Agrmt No. A-9451 with Dudek
Dudek Technical Proposal
Dudek Cost Proposal
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AGREEMENT NO. A-9451
CONTRACT FOR CONSULTANT SERVICES
BETWEEN THE CITY OF PALMDALE AND DUDEK
THIS CONTRACT FOR CONSULTANT SERVICES (“Contract” herein) is made and entered into by and between the City of Palmdale a public body corporate and politic, (hereinafter called “CITY”) and DUDEK (hereinafter called “CONSULTANT”). This Contract shall become effective on the date of the last signatory.
RECITALS
WHEREAS, City desires to engage CONSULTANT to provide certain consultant services; and
WHEREAS, CONSULTANT represents that CONSULTANT has the expertise and is qualified to perform the services described in this Contract. And, if required, is duly registered under the laws of the State of California; and WHEREAS, CONSULTANT desires to accept such engagement.
NOW, THEREFORE, the parties agree as follows:
1 DESCRIPTION OF WORK
1.1 The City hereby engages CONSULTANT, and CONSULTANT accepts such engagement, to provide the following services:
Provide a Sanitary Master Plan Update for the City of Palmdale. Project tasks shall include but are not limited to the items listed below.
1. Review Existing Documents and Information/ Data
2. Develop and Calibrate GIS-based Sewer Hydraulic Modeling System
3. Develop Flow Monitoring Plan; Conduct Field Verification and Data Collection
4. Develop Population and Development/ Build-out Projections
5. Examine Land Use Criteria and Establish Sewer System Flow Criteria
6. Capacity Analysis and Pipeline Condition Assessment
7. Assess Pump Stations and Develop Capital Rehabilitation Program
8. Develop Comprehensive Capital Improvement Program (CIP)
9. Prepare and Submit Draft and Final Master Plan Reports
10. Prepare and Develop Project Management Plan
11. Additional CCTV Inspection
CONSULTANT's Technical Proposal detailing scope of work attached as Atch "A"
CONSULTANT shall perform and complete all such work and services in a manner satisfactory to CITY.
2-13
1.2 Project deliverables shall be reviewed and approved by CITY to determine acceptable completion. CITY shall have the right to review and inspect the work during the course of its performance at such times as may be specified by CITY.
1.3 CONSULTANT shall not accept any change of scope, or change in contract provisions, unless issued in writing, as a contract change order or amendment and signed by CITY. Any extensions of time must be mutually agreed upon in writing and executed by both parties.
1.4 CITY shall provide to CONSULTANT, without charge, all data, program information, including reports, records, maps, and other information, now in CITY’s possession, which may facilitate the timely performance of the work. 2 CITY PROJECT MANAGER
To provide the services required by this Contract, CONSULTANT shall act under the authority and approval of a Project Manager appointed by CITY. The City Project Manager will oversee the work under this Contract, assist CONSULTANT with any necessary information, audit billings, and approve payments. CONSULTANT shall channel reports, deliverables, and special requests through the City Project Manager. 3 CONSULTANT’S KEY PERSONNEL
CONSULTANT’s Team and Key Personnel are as follows:
Principal Engineer - Elizabeth Caliva, PE
Principal in Charge - Russ Bergholz, PE, PMP
Principal Electric Engineer - Joe Schneider, PE
Water Infrastructure Engineer - Jenny Li, PE
Hydraulic Modeling and GIS - Shannon Brown, PE, QSD
Sewer Pump Station Lead - Brandon Lacap, PE
Senior Region Engineer - Paul Mitchell, PE
This Consultant Services Contract has been awarded to CONSULTANT based on its representation that those personnel and subcontractors listed above will perform the portions of the work listed herein. CONSULTANT shall not deviate nor substitute any of these team members without prior written approval by CITY. 4 CONTRACT TERM
The term of this contract is TWO (2) YEARS, commencing on the effective date, with CITY reserving the option to extend the agreement for 1 additional term of one year each.
5 TAXES
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5.1 CONSULTANT shall pay all sales, consumer, use, and other similar taxes required to be paid by CONSULTANT in accordance with state and local laws.
5.2 CONSULTANT is an independent contractor and shall have no power or authority to incur any debt, obligation, or liability on behalf of CITY. No person employed by CONSULTANT or acting on its behalf, in connection with this Contract shall be considered the Agent or employee of CITY.
5.3 CONSULTANT shall be required to obtain a current City of Palmdale business license, as required by the Palmdale Municipal Code, before an Authorization to Proceed is issued.
6 PATENT FEES AND ROYALTIES
CONSULTANT shall pay all license fees and royalties and assume all costs incident to the use, in the performance of the work or the incorporation in the work of any invention, design, process, product or device which is the subject of patent rights or copyrights held by others. If a particular invention, design, process, product or device is specified by CITY for use in the performance of the work and if, to the actual knowledge of CITY, its use is subject to patent rights or copyrights calling for the payment of any license fee or royalty to others, the existence of such rights shall be disclosed by CITY in the contract documents. CONSULTANT shall indemnify and hold harmless CITY and anyone directly or indirectly employed by CITY from and against all claims, damages, losses and expenses (including attorneys' fees) arising out of any infringement of patent rights or copyrights incident to the use in the performance of the work, or resulting from the incorporation in the work of any invention, design, process, product or device not specified by CITY, and shall defend all such claims in connection with any alleged infringement of such rights. 7 STANDARDS OF PERFORMANCE
CONSULTANT shall be responsible for the completeness and accuracy of its services and work and documents resulting there from, and CITY shall not be responsible for discovering deficiencies therein. CONSULTANT shall correct any such deficiencies or errors without additional compensation and without cost to CITY, except to the extent any such deficiency is directly attributable to deficiencies in CITY -furnished information.
8 CONSULTANT’S PERSONNEL
8.1 All services required under this Contract shall be performed by CONSULTANT, or under CONSULTANT’S direct supervision, and all personnel shall possess the qualifications, permits and licenses required by State and local law to perform such services.
8.2 CONSULTANT shall be solely responsible for the satisfactory work performance of all personnel engaged in performing services required by this 4-13
Contract, and compliance with all reasonable performance standards established by CITY.
8.3 CONSULTANT shall be responsible for payment of all CONSULTANT’s employees’ and subcontractor’s wages and benefits and shall comply with all requirements pertaining to the employer’s liability, workers’ compensation, unemployment insurance, and Social Security.
8.4 CONSULTANT shall indemnify and hold harmless CITY, and its respective officers, agents and employees from and against all claims, demands, damages or costs arising from CONSULTANT’s acts or omissions with respect to any liability, damages, claims, costs and expenses of any nature arising from alleged violations of personnel practices.
9 COMPENSATION
9.1 For all of work and services including the various phases of tasks as described in Section 1, CITY shall pay to CONSULTANT an amount not to exceed the sum of SEVEN HUNDRED SIXTY FOUR THOUSAND ONE HUNDRED AND EIGHTY dollars ($764180), payable as follows:
The Contract Price is CONSULTANT’S estimate of its charges for all of the services, including all labor, equipment, material, subcontractor and reimbursable costs, to be provided under this Agreement. Progress payments shall be made on a time and material basis. Final payment shall be made upon completion of all services and City acceptance of all deliverables, not-to-exceed the Contract Price.
CONSULTANT's Cost Proposal of labor hours and rates is attached as Atch 'B'.
9.2 CONSULTANT shall perform no work in excess of the total contract price without prior written approval of CITY. Total contract price includes expenses related to travel to and from CITY to meet with City and to appear, if so required, before City Council or any other board or commission of CITY.
9.3 CONSULTANT shall maintain adequate records and shall permit inspection and audit by CITY of CONSULTANT’s charges under this Contract. CONSULTANT shall make such records available to CITY during normal business hours upon reasonable notice. Nothing herein shall convert such records into public records, and they will be available only to CITY and any specified public agencies. Such records shall be maintained by CONSULTANT for one (1) year following completion of the work under this Contract unless a longer period of time is required by state or federal law, in which event CONSULTANT shall retain its records for the time required by such laws.
9.4 No payment made hereunder by CITY to CONSULTANT, shall be construed as an acceptance by CITY of any work or materials, nor as evidence of satisfactory performance by CONSULTANT of its obligations under this Contract. 5-13
10 INDEMNIFICATION
To the fullest extent permitted by law, CONSULTANT and any contractors or subcontractors working on its behalf agree to indemnify CITY, its officers, employees, agents and elected and appointed boards (hereinafter “Indemnified Parties”) for any loss, claim, demand, cause of action, cost, expense, damage, obligation or liability which arises out of or is in any way connected with the performance of any work under this agreement, including any acts or omissions, willful misconduct or negligent conduct, whether active or passive, on the part of CONSULTANT, its contractors or subcontractors, and regardless of any acts, omissions or negligence (whether active or passive) of any person or entity indemnified hereunder. At their own expense, CONSULTANT and, as applicable, any contractors or subcontractors working on its behalf, shall defend any suit, claim or action against the Indemnified Parties founded upon such loss, claim, demand, cause of action, cost, expense, damage, obligation or liability. CONSULTANT shall ensure that the contract of any contractor or subcontractor working under this agreement contain an indemnity agreement, requiring the contractor or subcontractor to indemnify and defend the Indemnified Parties pursuant the terms set forth above. CONSULTANT shall indemnify the Indemnified Parties, and save it harmless from any and all loss, damage, costs, expenses and attorney's fees suffered or incurred on account of any breach of the aforesaid obligations and covenants, and any other provision or covenant of this agreement.
11 INSURANCE
11.1 CONSULTANT, at its expense, shall maintain in effect at all times during the performance of work under this Contract not less than the following coverage and limits of insurance, which shall be maintained with insurers listed “A” or better in the Best’s Insurance Guide and authorized to do business in the State of California. Proof of Insurance, as identified in Section 11.8, must be reviewed and accepted by the City Attorney.
11.1.1 Workers’ Compensation and Employer’s Liability
− Workers’ Compensation—coverage as required by the State of California − Employer’s Liability:
$1,000,000.00 each accident
$1,000,000.00 policy limit bodily injury
$1,000,000.00 each employee bodily injury by disease
11.1.2 Professional Liability (Errors & Omissions) Insurance* − $1,000,000 limit on a per occurrence basis
11.1.3 Commercial General Liability
− $1,000,000.00 limit on a per occurrence basis
− $2,000,000.00 general aggregate limit
6-13
11.1.4 Commercial Automobile Liability
− $1,000,000.00 combined single limit including owned, non-owned and hired automobile coverage
11.2 All of CONSULTANT’s policies shall contain an endorsement providing that written notice shall be given to CITY at least thirty- (30) calendar days prior to termination, cancellation or reduction of coverage in the policy.
11.3 Policies providing for bodily injury and property damage coverage shall contain the following:
A. An endorsement extending coverage to the City as an additional insured, in the same manner as the named insured, as respects liability arising out of the performance of any work under the Contract. Such insurance shall be primary insurance, as respects the interest of the City, and any other insurance maintained by the City shall be considered excess coverage and not contributing insurance with the insurance required hereunder. The certificate and endorsements shall state: “The City of Palmdale, the Successor Agency of the Community Redevelopment Agency of the City of Palmdale, Palmdale Civic Authority, Industrial Development Authority of the City of Palmdale, Palmdale Airport Authority, their officers, agents, employees and volunteers are named as additional insured’s.”
B. “Severability of Interest” clause.
11.4 Promptly on execution of this Contract, and prior to commencement of any work, CONSULTANT shall deliver to CITY certificates of insurance and endorsements to all required policies demonstrating that CONSULTANT has the required coverage and showing the required named insureds. Within five (5) days of written request from CITY, CONSULTANT shall deliver to CITY full and complete copies of all insurance policies required by this Contract.
11.5 The requirements as to the types and limits of insurance to be maintained by CONSULTANT are not intended to and shall not in any manner limit or qualify CONSULTANT’s liabilities and obligations under this Contract.
11.6 Any policy or policies of insurance that CONSULTANT elects to carry as insurance against loss or damage to its equipment and tools or other personal property used in the performance of this Contract shall include a provision waiving the insurer’s right of subrogation against CITY.
11.7 All insurance coverage must be maintained throughout the duration of this Contract.
11.8 Acceptable Proof of Insurance:
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11.8.1 ACORD Certificate of Insurance listing all coverages, limits, deductibles and insureds; and endorsements for all applicable coverages if agent has authority to issue it; Additional insured Form CG20101185 or CG20100707 and CG20370704 or equivalent must be provided for general liability coverage.
Additional insured form CA0001 must be provided for automobile liability coverage.
11.8.2 Agents must confirm that policy endorsements have been ordered from the respective insurance companies. Upon issuance, policy endorsements listing all insurers must be submitted to the City Attorney.
11.8.3 *When professional (E&O) liability coverage is provided on a “claims made basis”, CONSULTANT will continue to renew the insurance for a period of five (5) years after this Agreement expires or is terminated. Such insurance will have the same coverage and limits as the policy that was in effect during the term of this Agreement, and will cover CONSULTANT, or its officers, employees, or agents during the time this Agreement was in effect.
11.9 Notwithstanding any other provision of this Contract, CITY may immediately terminate this Contract if, at any time CONSULTANT fails to maintain the required insurance for any period of time or fails to comply with any of the insurance requirements listed above.
11.10 CONSULTANT shall require any and all subcontractor's working on its behalf to provide insurance coverages and limits that are based on the scope of work and nature of risk being performed by the subcontractor. Any and all subcontractors working on behalf of CONSULTANT shall be subject to all other insurance requirements that are stated herein.
Any deviation in this requirement will be CONSULTANT's sole risk. CONSULTANT's insurance requirements in Section 11 will not be impacted and/or limited by such deviation.
12 TERMINATION WITHOUT CAUSE
CITY reserves the right to terminate this Contract or any part thereof for its sole convenience with fifteen (15) days written notice. In the event of such termination, CONSULTANT shall immediately stop all work hereunder, and shall immediately cause any of its suppliers and sub-consultants to cease such work. CONSULTANT shall also surrender to CITY all finished or unfinished documents or programs and other materials, which shall be City’s property. As compensation in full for services performed to the date of such termination, the CONSULTANT shall receive an amount equal to the value of the work completed as of the termination date in accordance with the fee schedule or as negotiated between the parties. In no event shall the amount payable upon termination exceed the total maximum compensation provided for in this Contract.
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13 TERMINATION FOR CAUSE
13.1 If the City determines that the CONSULTANT has failed to supply an adequate working force, or to provide services of proper quality, or has failed in any other respect to satisfactorily perform the services specified in this Contract, the City shall give written notice to the CONSULTANT specifying all defaults to be remedied within thirty (30) days. Such notice shall set forth the basis for the City’s dissatisfaction and suggest corrective measures. If, after thirty days, the CONSULTANT has failed to implement the corrective measures, the City may elect to terminate this Contract, in whole or in part.
13.2 In the event the City terminates this Contract in whole or in part as provided herein above, the City may procure, upon such terms and in such manner, as it may deem appropriate, services similar to those terminated.
13.3 If this Contract is terminated as provided above, the City may require the CONSULTANT to provide all finished or unfinished documents, data, studies, software, drawings, maps, photographs, reports, etc., prepared by the CONSULTANT. Upon such termination, the CONSULTANT shall be paid an amount equal to the value of the services provided and work performed as of the date of termination. Such payment by the City may take into consideration the costs associated with hiring another CONSULTANT to complete the services. In the event no new CONSULTANT is employed, the CONSULTANT shall be paid an amount equal to the value of the work performed. In ascertaining the value of the work performed up to the date of termination, consideration shall be given to both completed work and work in progress, to complete and incomplete documents when such are delivered to CITY, and to authorized reimbursement expenses.
The above is in addition to any other remedies available by law or equity to the City.
13.4 If, after notice of termination of the Contract under the provisions of this Section 13, it is determined, for any reason, that CONSULTANT was not in default, or that the default was excusable, then the rights and obligations of the parties shall be the same as if the notice of termination had been issued pursuant to Section 12. 14 DISPUTE RESOLUTION
All claims, disputes, and other matters in question between CITY and CONSULTANT arising out of, or relating to this Contract, or the breach thereof shall, to the extent reasonably feasible, be resolved through good faith negotiations between the parties. 15 OWNERSHIP OF DOCUMENTS
All documents, including, but not limited to, research, field notes, investigations, analysis, and studies which are prepared in the performance of this Contract are to be, and remain the property of CITY. CONSULTANT shall furnish CITY, upon its 9-13
request, originals or reproducible or electronic copies of reports, studies and of all other documents listed above.
16 SUBCONTRACTING, DELEGATION AND ASSIGNMENT
16.1 CONSULTANT shall not delegate, subcontract or assign its duties or rights hereunder, either in whole or in part, without the prior written consent of CITY; provided, however, that claims for money due or to become due to CONSULTANT from CITY under this Contract may be assigned to a bank, trust company or other financial institution without such approval. Any proposed delegation, assignment or subcontract shall provide a description of the services covered, identification of the proposed assignee, delegates or subcontractor, and an explanation of why and how the same was selected, including the degree of competition involved. Any proposed agreement with an assignee, delegates or subcontractor shall include the following:
A. The amount involved, together with CONSULTANT’s analysis of such cost or price; and
B. A provision requiring that any subsequent modification or amendment shall be subject to the prior written consent of CITY.
C. The requirement to hire only those persons authorized by federal law to work in the United States.
16.2 Any assignment, delegation or subcontract shall be made in the name of CONSULTANT and shall not bind or purport to bind CITY and shall not release CONSULTANT from any obligations under this Contract including, but not limited to, the duty to properly supervise and coordinate the work of employees, assignees, delegates and subcontractors. No such assignment, delegation or subcontract shall result in any increase in the amount of total compensation payable to CONSULTANT under this Contract.
17 NON-DISCRIMINATION AND EQUAL EMPLOYMENT OPPORTUNITY
17.1 In performance of this Contract, CONSULTANT shall not discriminate against any employee, subcontractor, or applicant for employment because of sex, color, race, religion, ancestry, national origin, disability, medical condition, marital status, sexual orientation, or age. CONSULTANT will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their sex, color, race, religion, ancestry, national origin, disability, medical condition, marital status, sexual orientation or age. Affirmative action relating to employment shall include, but not be limited to the following: employment, upgrading, demotion or transfer; recruitment; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship.
17.2 The provisions of subsection 17.1 above shall be included in all solicitations or advertisements placed by or on behalf of CONSULTANT for personnel to perform any 10-13
services under this Contract. CITY shall have access to all documents, data and records of CONSULTANT and its subcontractors for purposes of determining compliance with the equal employment opportunity and non-discrimination provisions of this Section, and all applicable provisions of Executive Order No. 11246 which is incorporated herein by this reference. A copy of Executive Order No. 11246 is available for inspection at, and on file with, the Palmdale City Clerk’s Office. 18 FINANCIAL INTEREST CERTIFICATION
18.1 CONSULTANT warrants that no person has been employed or retained to solicit or secure this Contract upon an agreement or understanding for a commission, percentage, brokerage or contingent fee; and that no officer or employee of the CITY has any interest, financially or otherwise, in CONSULTANT’s firm.
18.2 For breach or violation of this warranty, CITY shall have the right to annul this Contract without liability, or at its discretion to deduct from the Contract Price or consideration, the full amount of such commission, percentage, brokerage or contingent fee.
19 CONFLICT OF INTEREST
19.1 CONSULTANT stipulates that its officers and employees do not now have a conflict of interest and it further agrees for itself, its officers and its employees that it will not contract for or accept employment for the performance of any work or services with any individual business, corporation or government unit that would create a conflict of interest in the performance of its obligations pursuant to this Contract or which would cause CONSULTANT to be “financial interested” (as provided in California Government Code Section 1090 et seq. or 87100 et seq.) in any contract or decision made by CITY on any matter.
19.2 CONSULTANT shall not employ any City official or employee to perform any work required pursuant to this Contract.
19.3 If CONSULTANT is a registered professional engineer or licensed land surveyor and the scope of work requires CONSULTANT’S recommendation of the actual formula to spread the costs of an assessment district’s improvements, then CONSULTANT shall not participate in making that recommendation if the additional elements set forth in Government Code section 87100.1(c) apply. Those additional elements are: (1) CONSULTANT has received income of $250 or more for professional services in connection with any parcel included in the benefit assessment district within 12 months prior to the creation of the district; and (2) the district includes other parcels in addition to those parcels for which CONSULTANT received the income. In the event a conflict of interest does arise in that context, City shall select a different CONSULTANT to recommend the actual formula to spread the costs of the assessment district’s improvements and the costs of such services shall be deducted from the compensation to be paid to CONSULTANT. 11-13
19.4 To the extent required by the City Manager/designee, CONSULTANT shall complete and file with the City Clerk a Form 700 Statement of Economic Interests disclosing any reportable property interests, income, gifts, investments, or business positions.
20 COMPLIANCE WITH LAW
20.1 CONSULTANT shall comply with all state and federal laws, including but not limited to, the requirement to hire only those persons authorized by federal law to work in the United States. If CONSULTANT uses any subcontractors to complete this Contract, this same requirement shall be included in all subcontracts and strictly enforced by CONSULTANT.
20.2 The law of the state of California shall govern this Contract. The venue of any legal action, either formal or informal, shall be the County of Los Angeles. 21 NOTICES
Any notice required under this Contract shall be in writing, addressed to the appropriate party at its address on the signature page and given personally or by registered or certified mail postage prepaid, or by a commercial courier service. All notices shall be effective upon the date of receipt.
22 ENTIRE CONTRACT AND AMENDMENTS
22.1 This Contract is the complete agreement between the parties and supersedes all prior proposals, agreements, and understandings between the parties and may not be modified or terminated orally.
22.2 No attempted waiver of any of the provisions hereof, nor any modification in the nature, extent or duration of the work to be performed by CONSULTANT hereunder, shall be binding unless in writing and signed by the party against whom the same is sought to be enforced.
22.3 The failure of any party to enforce against another party any provision of this Contract shall not constitute a waiver of that party’s right to enforce such a provision at a later time, and shall not serve to vary the terms of this Contract. 12-13
23 ATTORNEY’S FEES
If any action at law or in equity is brought to enforce or interpret any provisions of this Contract, the prevailing party in such action shall be entitled to reasonable attorney’s fees, costs and necessary disbursements, in addition to such other relief as may be sought and awarded.
In Witness Whereof, the parties hereto have caused this Contract to be executed and attested by their respective officers thereunto duly authorized.
CITY OF PALMDALE: DUDEK:
Salvador Mendez
Interim City Manager
Pro Tem
Joe Monaco
Chief Executive Officer
ADDRESS FOR NOTICE:
CITY OF PALMDALE
38250 Sierra Highway
Palmdale, CA 93550
ADDRESS FOR NOTICE:
DUDEK
605 Third Street
Encinitas, CA 92024
APPROVE AS TO FORM:
Alexandra Severino
City Attorney
ATTEST:
Roxanne Faber
City Clerk
---------------------------------------- INTERNAL USE ONLY ----------------------------------------
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□ Certificate(s) and Endorsement(s) attached
□ Confirmed business name on contract with certificate(s) □ Attached Agreement Checklist and met all requirements
E. Technical Proposal
Approach
With a current population of approximately 161,000, the City of Palmdale’s (City) 2020 Urban Water Management Plan
projects the City will increase its population by approximately 25,000 by 2045, a growth of 15% from current population estimates. This continued growth potential puts the City in a unique position among more built-out cities in the region, as it needs to focus on both condition assessment of aging sewer system assets and capacity analysis to accommodate future growth. This approach is also consistent with the reissued 2020 WDR, which now requires condition assessment as part of the System Evaluation and Capacity Assurance Plan
component of the Sewer System Management Plan (SSMP),
for which an agency’s sewer master plan is typically used.
The City’s sewer collection system consists of over 396 miles of gravity pipeline ranging from 8- to 21-inches in diameter and two small sewer pump stations (pump stations). The City’s pipelines are relatively new, with the oldest installed in the 1950s, and most pipelines (86%) built after 1980. The City discharges its sewer into 48 miles of regional trunk lines owned and operated by the Los Angeles County Sanitation District, which performs wastewater treatment for the City.
The City’s previous 2009 master plan concluded that the City’s system had significant capacity, only recommended two capacity-related improvement projects, at a cost of approximately $3.9M (2009 $). The 2009 master plan also recommended $54M in new sewer line extensions to serve outlying developments. After performing structural condition assessment of 62 miles of City sewers, the 2009 master plan recommended an annual renewal/replacement program at an average of approximately $1M per year. These projects are assumed to have been ongoing over the past 16 years.
A significant focus of this updated master planning effort includes (1) development and calibration of a new, GIS- based sewer model, including flow monitoring, (2) an updated capacity analysis, (3) condition assessment of sewer pipelines and the existing pump stations and (4) preparation of a prioritized short (current), intermediate (5- year) and long-term (10-year) capital improvement program (CIP) to guide the City moving forward.
For the sewer model, Dudek proposes using Aquanuity’s AquaTwin Sewer (https://aquanuity.com/). AquaTwin Sewer is the latest sewer software hydraulic modeling program developed by Paul Boulos, the founder of Innovyze (recently bought by AutoDesk) and the developer of industry standard hydraulic modeling software packages, including InfoWorks ICM (which was used in the City’s 2009 master plan) and InfoSWMM. AquaTwin Sewer is built natively in ArcGIS Pro and has significantly improved capabilities and processing speeds compared to Mr. Boulos’ earlier software offerings.
A key element of our proposed project prioritization approach is developing a risk model to develop overall Risk of Failure (ROF) scores to each pipeline in the City’s system. Risk-based scoring considers the consequences of poor condition, capacity issues, increased likelihood of failure, and safety. Our approach combines the typical likelihood of failure (LOF) and consequence of failure (COF) method to assess risk to determine if rehabilitation or complete Figure 3. Priority vs. Build-Out
Palmdale
85%
Atch A
City of Palmdale
A-9451
replacement is required based on the scoring of individual assets and to prioritize which projects are needed first.
Using a risk-based approach to project prioritization reduces the City’s risk exposure to failing assets and sewer spills.
Our approach to the condition assessment of the City’s pump stations and force mains identifies specific mechanical, structural, site/civil, electrical and control improvements that extend the useful life and increase each pump station’s operational reliability. Additionally, evaluation of safety risks, emergency features of the pump stations, access to the pump stations, and their impact on the surrounding environment suggest improvements that will reduce the risk of injury and sewer spills and prevent adverse effects on the surrounding community. Additionally, in concurrence with the reissued 2022 WDR, Dudek will identify assets vulnerable to climate change’s direct and indirect impacts (e.g., flooding or power disruptions) and make recommendations.
Example Implementation Work Plan
The Implementation Work Plan provides a roadmap for how significant elements of the scope of work relate to each other and lead to the preparation of project deliverables. Figure 4 illustrates how we propose to progress the City’s project.
Figure 4. Example Implementation Work Plan
Scope of Work
The following section further details the approach and framework used to complete each work element. This approach is the basis for estimating the level of effort for each step of the project.
Task 1. Data Collection and Review
The following details Dudek’s approach to ensuring all relevant documents, data, and staff knowledge are incorporated into the project.
Task 1.1 Documents and Data Review
The extent of data sources associated with the project will be extensive and will benefit from an organized tracking system. This task consists of collecting and reviewing relevant data provided by the City or obtained elsewhere for this project. Data to be provided will include, but not be limited to the 2009 master plan, relevant planning documents, the City’s General Plan, 2020 UWMP, latest Sanitary Sewer Management Plan (SSMP), land use maps, as-built drawings (as requested), sewer facilities (GIS), Facility Plans, Developer Engineering Plans, CCTV inspection database, any past flow metering data, other information listed in RFP and any other pertinent data.
Dudek will compile a data request list for information not provided during the proposal process and present it at the Kickoff Meeting. In addition, Dudek will prepare and maintain a list of items identified by the City or requested by Dudek, indicating the item(s) requested, a person responsible for collecting the information, when it is needed, and when it was provided to Dudek. Data will develop a gap analysis to determine what is missing, particularly related to the CCTV inspection data, and present it to the City.
Task 1.2 Meetings with City Staff
The Dudek team will meet with the City’s O&M and Engineering staff to discuss areas of immediate concern and current known operational problems in the system. Dudek anticipates this conversation commencing at the Kickoff Meeting, with additional meetings coordinated as needed. Dudek will hold a separate meeting with the Planning Department staff to understand anticipated growth in the region, key components of the City’s general plan, specific plans, and other key documents, as well as growth assumptions for the master plan.
Assumptions:
▪ Relevant documents are readily available.
▪ All interviews are held virtually via Zoom or similar.
Task 2. Sewer Hydraulic Model Development and Calibration Dudek will use the City’s GIS to develop a new, GIS-based sewer model in AquaTwin Sewer by Aquanuity. An accurate build of the model assumes the City’s GIS is complete, up to date, and accurate with complete diameters, pipeline inverts, and connectivity, at a minimum. Once the model is built, Dudek will troubleshoot for connectivity and functionality. Dudek will utilize City water billing data as well as the flow metering data from Task 3 to load the model. The model will be calibrated to within 10% of field conditions for dry and wet weather conditions, assuming a significant wet weather event is captured in the flow monitoring period. A technical memorandum will be developed to document the model development and calibration process, which will be included as an appendix to the Sewer Master Plan report.
Assumptions:
▪ GIS is up-to-date and accurate, including connectivity, diameters, material, invert/rim elevations, and facility IDs matching the City naming convention
▪ Dudek will assume water billing data is not available; Dudek will use flow metering and land use data for allocating sewer loads in their respective basins. ▪ If significant amounts of recent system improvements are not included in the City’s GIS, additional costs may be required to update the model to current system conditions. ▪ It is assumed that only City facilities and potentially key LACSD pipelines, where necessary, will be included in the hydraulic model. Outfall locations will be included where connections to the LACSD system exist.
Deliverables
▪ Technical memorandum documenting the process for building, updating and calibrating the hydraulic model.
Task 3. Flow Metering Plan, Field Verification and Data Collection The 2009 master plan reported significant wet weather response in the collection system, pointing to storm flows entering the collection system, which increases the risk for sewer spills. Per the City’s responses to questions for this RFP, minor improvements to the collection system have resulted in an improvement to weather response in the system, which is promising. However, given the extent of those impacts is unknown, as no subsequent flow metering has been conducted on the system since the 2009 master plan, Dudek recommends that the City conduct a 6-week flow metering program in the Winter of 2026 with the goal of capturing a significant wet weather event. According to historical precipitation data for the City, the highest rainfall occurs in February. This prolonged flow metering program would support the quantification of response in the City’s system and provide higher quality capacity evaluations and recommendations for the City.
Dudek will develop a flow metering plan that includes strategic locations to monitor flows, likely including duplicating several locations from the 2009 master plan to assess the changes in flows over time. The flow metering plan will be provided to the City for approval. ADS Environmental will perform the flow metering and site visits to verify accessibility and coordination concerns at proposed locations. Dudek and ADS will coordinate with the City if support is needed to successfully install and retrieve flow meters.
Assumptions
▪ Flow metering program assumed to occur between January and March 2026 to increase the probability of capturing a significant wet weather event. ▪ Fee assumes 6 weeks of flow monitoring using 30 flow meters installed in City pipelines only, conducted by ADS Environmental.
▪ Due to the uncertainty of the locations of the flow meters, $20,000 was assumed in the fee estimate for traffic control.
▪ The cost to extend the flow metering program is $415 per flow meter per week.
Deliverables
▪ Flow metering plan in PDF format
▪ Flow metering results report and raw data.
▪ Sewer basins in graphical format for inclusion in the report.
Task 4. Population and Development Buildout Projections Using City provided data (e.g. General Plan, UWMP, land use maps, specific plans, known planned development data) and potentially other relevant sources (census data, SCAG RHNA allocations, etc.), Dudek will update the existing and future population projections for the City, calculate persons per household for existing and future conditions, and determine phasing for new development in the Near-Term and Long-Term/Buildout categories. In updating the population, Dudek will consider new State ADU laws, the impact on densification, and laws related to higher efficiency water fixtures. Dudek will also consider service to currently unserved areas. This data will be tracked in GIS with documented assumptions. Recommendations will be presented to City staff for concurrence and use in the subsequent tasks of this master plan without further revision.
Deliverables
▪ Population Projections
▪ Phased development data
Task 5. Land Use and Sewer System Flow Criteria
The performance standards for evaluating the sewer system’s capacity adequacy are key to hydraulic analysis.
Dudek will review the criteria from the 2009 SMP and update them, as needed, to meet any changes in municipal code or operational changes. Values to be reviewed and updated include unit flow factors (existing and ultimate), peaking factors, I&I factors, sewer design criteria, pump station design criteria, service life criteria for pipelines and pump station equipment, and criteria for redundancy and reliability. Design peaking factors will be based on flow metering data. Data will be compiled in tabular format. Dudek will also evaluate existing regulations, areas and developments currently allowed to use private sewage disposal systems and determine the cost/benefit of providing public sewer to these areas, including, but not limited to, the cost of sewer line extensions versus revenues from connection fees.
Deliverables
▪ Unit flow factors, peaking factors, I&I factors, design and evaluation criteria, service life criteria in tabular format.
▪ Summary discussion on cost/benefit analysis of providing public sewer to currently unserved areas included in the master plan report.
Task 6. Capacity Analysis and Pipeline Condition Assessment The following details Dudek’s approach to capacity analysis and pipeline condition assessment.
Task 6.1 Capacity Analysis
The calibrated model from Task 2 will be updated to include the phased development per the analysis completed in Task 4. The collection system capacity will be evaluated under existing (2025), near-term (2035), and future (2045) conditions and the planning criteria from Task 5. Extended-period simulations will be used to evaluate the full range of flow conditions. This results in peak dry weather and wet weather flows. If a storm event is captured during the flow monitoring period, maximum d/D values and velocities will be compared against city criteria.
Modeling results will be used to identify pipelines not meeting planning criteria, those with capacity constraints under dry and wet weather conditions, and areas of potentially high I&I. Results will be presented tabularly and graphically. Subsequent model runs will be used to recommend system improvements in the form of pipeline upsizing. The model will include user-defined fields documenting deficiencies and recommended upsizing.
For the near-term and future projects, Dudek will determine the trunk-level sewerline extensions required to serve currently unserved areas that are anticipated to be served within the 2045 timeframe. Dudek will also use topography data to roughly define sewer basins in the currently unserved areas and anticipated land use data will be used to estimate sewer loads from those basins. These data will be brought into the model and used to size the future trunk system pipelines.
Task 6.2 Pipeline Condition Assessment
For sewer pipelines and manholes, which have CCTV inspection data in database format, Dudek performs condition assessment for 300 pipeline segments and associated manholes. Dudek is highly experienced in evaluating defects and looks to balance the recommended rehabilitation options, considering benefit, cost, public impact, and overall risk. While often applicable to most defects, full-length in-situ pipeline rehabilitation may not necessarily be recommended in all cases. For example, where the pipeline’s structural integrity has been compromised due to collapse or other failure, point repairs of single pipe segments or connections at manholes may be the only rehabilitation means necessary. Depending on the nature, quantity, and severity of defects observed during the condition assessment review, methods of trenchless rehabilitation or repair to be considered include specialty and heavy cleaning; in-situ point repairs, such as Weko Seal, Link-Pipe mechanical seal, or LMK Performance short liner; open trench point repairs, such as short- or long-segment pipe replacement, in-situ lining with Cured-In-Place Pipe (CIPP) liner cured with hot water or steam; complete open cut removal and replacement; and total replacement using either trenched or trenchless methods. Note that rehabilitation recommendations will consider replacing or rehabilitating adjacent manholes when the sewer main is recommended for rehabilitation or repair, based on available manhole inspection data. Typical manhole rehabilitation methods Dudek recommends include geopolymer coatings/liners and cured-in-place manhole (CIPM) liners, depending on the level of degradation.
Task 6.3 System Reliability
Dudek will evaluate the reliability of the sewer system based on the results of the capacity analysis and condition assessment, identifying any quality issues, legal/institutional/contractual constraints, per available data, system issues and cost considerations. Dudek will provide a list of maintenance recommendations to improve system performance and reliability.
Assumptions:
▪ CCTV inspection data is available in database and PDF formats. ▪ City provides information on legal, institutional, contractual constraints and maintenance issues faced during management of the sewer collection system. ▪ Fee estimate assumes review of 300 pipeline segments and associated manholes with video inspection data.
Deliverables
▪ Pipe flow rate estimates for peak dry and wet weather flow, resulting in d/D ratios, velocities, and available capacity based on City-specified d/D ratios provide in GIS format ▪ Sewer system capacity deficiencies under both existing and future conditions. ▪ Maps and tables showing the sewer pipelines not meeting the system design criteria. ▪ Note that CCTV deliverable from Houston and Harris from Task 11 is in database format, includes Mainline ID, u/s, d/s MH Ids, etc. Confirm with Brad Houston Task 7. Sewer Pump Stations and Capital Rehabilitation Program The primary objective of this task is to evaluate the life expectancy of the City’s existing sewer pump stations and to prioritize the rehabilitation and replacement (R&R) plan. The remaining useful life of assets will be assessed based on the projected useful life and recent condition assessment information.
Task 7.1 Pre-Inspection Workshop
Prior to the facility site inspections, Dudek will collect and review relevant as-builts/maintenance records/pump curves/run logs. Following review of this record data, Dudek will conduct a Pre-Inspection Workshop with City engineering and operations staff. This workshop will allow Dudek’s staff to discuss any discrepancies we found in the reviewed record data and further familiarize ourselves with the nuances of each pump station before performing the site inspections. This will also allow the operations staff to explain any known issues, pump station improvement history, and operator preferences, as included in Task 7.1.
Assumptions:
▪ Pre-Inspection Workshop will have a duration of no more than 1.5 hours.
Deliverables:
▪ Meeting Agenda and Minutes in electronic PDF format
Task 7.2 Pump Stations Field Inspections
The City’s two existing pump stations will be inspected on-site and in person by Dudek’s experienced pump station lead and electrical engineer. The site inspections will include non-destructive, sensory observations (visual, audible) of each station’s existing assets. Prior to the facility visits, Dudek will prepare inspection checklists based on the existing assets documented in the record drawings and the information reviewed during the data collection and review phase.
Assumptions:
▪ Dudek will coordinate and conduct the following site inspections for condition assessment of the two existing pump stations (Avenue S Sewer Pump Station; Pelona Vista Sewer Pump Station):
o One (1) day of Pump Station Site Inspections: Assuming inspection of the City’s two pump stations can be completed within a single day (Up to 1.5 hours of inspection duration per pump station site; fee table includes hours associated with travel time). ▪ Dudek will receive City support for access to pump station facilities, including electrical/telemetry panels, valve vaults, wet wells, and pump station buildings and enclosures. ▪ Dudek may request that City operations staff manually pump down the level in the wet well in order to observe the condition of the wet well interior below the high water level. ▪ No shutdown of any equipment will be included during the site inspections. ▪ No confined space entry will be required or performed during the site inspections. ▪ No on-site flow monitoring or wet well fill/draw testing at the pump stations will be included in the assessment.
▪ Potholing to determine the location of existing buried utilities, including force mains, is not included.
▪ Ring out or megger testing of conductors is not included. ▪ Wiring will not be traced to confirm the accuracy of as-built wiring drawings. ▪ Gravity sewer manholes upstream of the pump station wet well will not be considered part of the pump station inspection and assessment.
Deliverables:
▪ Field notes and photos to be included in Pump Station Condition Assessment Technical Memorandum (See Task 7.7)
Task 7.3 Pump Station Condition Assessment
Dudek will perform a comprehensive condition assessment and evaluation of each of the City’s existing pump stations based on our review of the existing record information obtained as well as the information observed and documented from the site inspections. Dudek’s evaluation of all pump station assets includes reviewing and assessing all mechanical, structural, site/civil, electrical, instrumentation, and controls features. Dudek’s comprehensive assessment will score each pump station’s individual assets based on a condition, criticality, and risk-based scoring system. This scoring system considers remaining useful life based on physical condition, as well as operational performance, consequences of asset failure, and operational and safety risks associated with asset failure. Additionally, emergency features of the pump stations, access to the pump stations, and their impact on the surrounding environment will be evaluated.
Dudek will also evaluate if a gravity option is available, in lieu of upgrading the lift stations. The Dudek lift station team will work with the hydraulic modeling team to determine if a gravity option is available, and the extent of improvements required to implement the option. It is understood the City previously evaluated a gravity option for one lift station (Spanish Broom/Casa Verde) and a preliminary design was evaluated. The City will provide the previous improvement plans and cost estimates to Dudek to evaluate as part of this Master Plan. A comparison of the costs will be presented in the lift station technical memorandum.
Assumptions:
▪ Asset scoring will be used as a tool to assist in the prioritization of recommended improvements. ▪ City to provide previous design plans and cost estimate for replacement of Spanish Broom lift station with a gravity pipeline for Dudek to use as one option in the evaluation.
Deliverables:
▪ Pump station asset scoring tables will be included in the Pump Station Condition Assessment Technical Memorandum (See Task 7.7)
Task 7.4 Force Main Desktop Analysis
Based on the information on the obtained force main record, Dudek will perform a desktop analysis of each pump station’s corresponding force main. Force mains will be evaluated based on documented age, material, maintenance records, known issues, and a desktop hydraulic capacity analysis.
Recommendations resulting from this task may include a physical inspection of the forcemain to confirm condition and/or recommendation for construction of a parallel forcemain if the lift station is recommended to stay in service. Any force main improvements Dudek recommends will be incorporated into the overall prioritized capital improvement projects for each pump station.Assumptions:
▪ Force main assessment will only be based on desktop analysis due to limitations on physical force main inspection techniques.
▪ Dewatering existing force mains, piping, tanks, or wet structures is not included. ▪ CCTV inspection or physical scanning of force mains is not included. ▪ Potholing to determine the location of existing buried utilities, including force mains, is not included.
▪ Force main discharge manholes will not be considered part of the force main analysis.
Deliverables:
▪ Force main analyses will be included in the Pump Station Condition Assessment Technical Memorandum (See Task 7.7)
Task 7.5 Comprehensive List of Deficits and Recommendations Based on Dudek’s pump stations data review, desktop analysis, site inspections, and asset scoring analysis, Dudek will prepare a comprehensive list of deficits and associated recommendations. Dudek’s recommended improvements are developed towards reducing the risk of injury, reducing the risk of sewer spills, mitigating impacts to the surrounding environment, preventing adverse effects on the surrounding community, extending the pump station's useful life, and increasing operational reliability. The overall pump station and force main recommended improvements will include a feasibility level (AACE International Class 4) project cost estimate for each project. The Pump Station Condition Assessment Technical Memorandum will prioritize and describe these improvement projects. These recommended improvements will then be incorporated into the overall SSMP Update Document.
Assumptions:
▪ The recommended pump station and force main improvements will be coordinated with associated recommended improvements developed for the upstream/downstream gravity sewer facilities (as necessary) to ensure that recommended upgrades to pump stations and/or forcemains will be included in the hydraulic model and their impact considered in the capacity evaluation. For example, increases in pumping capacity that may impact downstream capacity results or decommissioning a lift station and replacemeing with a gravity option that may alter overall movement of sewer flows through the system.
▪ The developed feasibility-level project cost estimates will not be included in the submitted Comprehensive List of Deficits and Recommendations. The Pump Station Condition Assessment Technical Memorandum will include the project cost estimates.
Deliverables:
▪ Comprehensive List of Deficits and Recommendations in electronic PDF format Task 7.6 Post-Inspection Workshop (Virtual)
Following the pump station site inspections, Dudek will conduct a post-inspection workshop between Dudek and City staff to review any critical observations or code violations obtained during the site inspections. Dudek will present any reference photos of immediate safety or operational concerns or code violations per the National Electric Code (NEC) and the National Fire Protection Association (NFPA) 820 to City staff.
Assumptions:
▪ Post-Inspection Workshop will have a duration of no more than 1.5 hours Deliverables:
▪ Meeting Agenda and Minutes in electronic PDF format
Task 7.7 Pump Station Condition Assessment Technical Memorandum Dudek’s team will prepare a comprehensive Pump Station Condition Assessment Technical Memorandum (TM) that will be included as an appendix to the final SSMP Update document. Dudek will submit a Draft Pump Station Condition Assessment TM to the City for review. Following City review, Dudek will incorporate or address all of the City’s comments and prepare a Final Pump Station Condition Assessment TM. The recommended pump station improvement projects and associated feasibility-level project cost estimates will be summarized in the final Pump Station Condition Assessment Technical Memorandum and incorporated into the Sewer Master Plan and CIP Report.
Assumptions:
▪ None
Deliverables:
▪ Draft and Final Pump Station Condition Assessment TM in electronic PDF format Task 8. Comprehensive Capital Improvement Program
Using the results of Task 6, Capacity Analysis and Condition Assessment, and Task 7, Pump Station Evaluations and Capital Rehab Program, Dudek will develop short (existing), intermediate (5-year), and long-term (10-year) recommended capital improvement program (CIP) projects to address the deficiencies identified. The development of the CIP will be based on the capacity analysis results, the available condition assessment information, and the useful life and value of the existing sewer collection system assets. We will establish asset values and recommend maintenance and aging infrastructure’s year-to-year replacement/rehabilitation costs.
Findings and recommendations from the 2009 SMP will be evaluated and incorporated into the recommendations for this project if they are still viable. Dudek will develop a risk model evaluating the likelihood and consequences of failure for the sewer pipeline assets of the City’s system and utilize the resulting risk scores to prioritize and phase the recommended CIP projects.
Task 8.1 Prioritize and Rank Phased CIP Projects
Dudek will propose a methodology to develop a likelihood of failure (LOF), consequence of failure (COF) and overall risk of failure (ROF) score for each pipeline in the system and present this proposal to the City. The LOF score will include information such as pipe condition, capacity, flood zones, pipe age, and pipe material. The COF score will include information such as proximity to water bodies, storm drain inlets, schools/hospitals/fire stations, roadways and railroads, and other relevant factors that may increase the consequence of asset failure or sewer spill. The methodology, including weighting factors, will be finalized in coordination with City staff. The approved methodology will be constructed inside the Aquanuity AquaTwin Asset software program to assign the values to each pipeline in the system. Dudek will include in the software output high level estimated project costs for each recommended pipeline rehabilitation based on a set of cost factors agreed upon with the City.
The risk assessment results will be used to rank pipelines based on the highest overall risk score, which would then be used to prioritize the pipeline improvements identified in the Master Plan. CIP project recommendations will be included for gravity sewer pipelines, manholes, pump stations, and force mains and phased into short, intermediate and long-term planning. The CIP list will be categorized into condition-related facility repairs, capacity-related improvements, development-driving recommendations and CIP projects to service previously unserved areas.
Assumptions:
▪ Relevant GIS layers are available from the City to construct the risk model.
Deliverables
▪ Overall risk scores are assigned to the gravity sewer pipelines in tabular format and GIS. GIS database will include estimated project costs for each recommended pipeline rehabilitation project.
Task 8.2 Develop Cost Estimate and Description Sheets
Dudek will develop planning-level cost estimates for each CIP project recommendation, including design, construction, CM, admin/legal, and other contingencies based on recent project bids, manufacturer quotes, and other data. Project Description sheets will be developed for each project recommendation in text, graphical, and tabular formats, including project descriptions, locations, phase/timing, and estimated project costs. The master plan report will include a discussion based on the cost estimates. Dudek will obtain recent project costs from the City’s Finance Department as available.
Assumptions:
▪ Costs will be planning-level. One virtual workshop will be held with City staff to review group cost estimates. The City will provide any relevant, recent project bids.
Deliverables
▪ Individual project cost estimates and description sheets are included in the Sewer Master Plan documents.
Task 9. Preparation of Sewer Master Plan Update Documents Dudek will prepare a Final SMP report that summarizes the results of all previously described tasks as described below.
Task 9.1 Draft SMP Update Report
Dudek always aims to develop a master plan report that is highly useful to multiple departments in an agency, including engineering, planning, operations, and finance. To succeed, the resulting deliverables must be clear, easy to read, and enable quick information retrieval. In addition to being functional, the reports must accomplish the following:
▪ Provide a thorough system inventory of the collection system pipelines and facilities. ▪ Explain design and evaluation criteria based on industry standards and the region’s unique characteristics.
▪ Provide sufficient detail on the master planning process to give the reader an understanding and ability to replicate and/or update the process when the time arises. ▪ Identify areas within the service areas with substandard condition, performance, or capacity and present those tabularly and graphically.
▪ Identify projects that improve performance and/or increase efficiency to improve system reliability and meet regulatory requirements.
▪ Succinctly summarize the findings, results, and recommendations of the master plan for easy implementation.
The Dudek team writes the SMP report alongside doing the work, as we have found it results in a more efficient process and ensures critical steps and/or details are not missed. Dudek will draft a Table of Contents (TOC) for the City’s review and comment. The TOC will include both headings and subheadings for each section. If applicable to the City, upon completing each section, Dudek can provide a draft section report to the City for review and comment. Dudek will meet with various divisions to present findings, methods, and procedures and address any questions or concerns as needed. Once a full draft report is completed, Dudek will provide an electronic copy of the report (Word and PDF) to the City for review. A Draft Report Review workshop will be held to discuss City comments.
Assumptions:
▪ City will provide a consolidated set of comments for the Draft SMP submittal. The draft Report Review workshop will be held virtually.
Deliverables
▪ Dudek will deliver the Draft SMP Update as follows: Electronic PDF and Word versions Task 9.2 Draft Final SMP Update Report
Dudek will prepare the Draft Final SMP documents addressing the City’s comments on the Draft SMP report.
Assumptions:
▪ City will provide a consolidated set of comments for the Draft Final SMP submittal.
Deliverables
▪ Dudek will deliver the Draft Final SMP Update as follows: Electronic PDF and Word versions Task 9.3 Final SMP Update Report
Dudek will prepare the Final SMP documents addressing the City’s comments on the Draft Final SMP report. The report will be organized according to the agreed-upon table of contents from Task 9.1. The Final report will be signed and stamped by a licensed Civil Engineer.
Deliverables
▪ Dudek will deliver the Final SMP Update: Electronic PDF and Word versions and three (3) bound, hard copies.
▪ All modeling files.
Task 10. Project Management
Effective project management is key to the successful completion of any project. Dudek has a proven record of delivering projects on time and within budget. The project manager, Elizabeth Caliva, will be the single point of contact for overall communication and program coordination with the City and subconsultants. The following subsections provide more detail on the management of this project.
Task 10.1 Prepare Project Management and QA/QC Work Plan Dudek will begin the project by developing a project management and QA/QC work plan to guide the project objectives and scope, schedule, budget management, communication and collaboration, the quality assurance and quality control procedures, and documentation and reporting for the project.
Task 10.2 Kickoff Meeting, Monthly Status Meetings and Workshops Dudek assumed an in-person Kickoff Meeting and virtual monthly status meetings for the fee estimate. Special workshops are noted in the relevant tasks above.
Task 10.3 Project Schedule and Status Reports
The project schedule will be updated throughout the project; any significant changes will be discussed with City staff. Monthly progress reports will be included with each invoice, summarizing the project’s progress and status, including an updated schedule, if changed.
Assumptions:
▪ The kickoff meeting will be held in person; the fee assumes all other meetings and workshops will be held virtually.
Deliverables
▪ Project Management and QA/QC Workplan (PDF)
▪ Meeting Agendas & Minutes (electronic)
▪ Monthly Status Reports and Updated Project Schedules (electronic) ▪ Monthly Invoices
Task 11. Additional CCTV Inspection
Dudek will review the CCTV inspection database in Task 6 and, if needed, will work with Houston and Harris to conduct additional CCTV inspection. Dudek will prepare a CCTV inspection plan for Houston and Harris to follow.
Dudek will then utilize the resulting CCTV inspection to perform additional condition assessment, with the results included in the CIP developed as part of Task 8.
Assumptions:
▪ Five (5) miles of CCTV inspection of 8- to 18-inch included in the fee estimate. (Costs may increase if inspection of larger diameter pipelines is needed.) Additional length can be added. ▪ Additional fees may be required for traffic control and cleaning. The fee estimate includes $10,000 for traffic control and no additional cost for cleaning. ▪ The fee estimate assumes a condition assessment of 50 pipeline segments from this new CCTV inspection data.
▪ Cost assumes no-fee permits.
Deliverables
▪ CCTV inspection results in PACP format delivered in a NASSCO database format. Houston and Harris will utilized City-provided sewer GIS information, such as pipeline, upstream and downstream manhole identification numbers.
▪ Condition assessment results are presented in a graphical and tabular format. Results will be incorporated into the City’s CIP in Task 8.
Dudek’s proposed project schedule follows this page.
Updated Project Schedule
City of Palmdale
Sanitary Sewer Master Plan Update
DUDEK FEE ESTIMATE - NEGOTIATED
October 7, 2025
Project Team Role: PIC - QA/QC
Project
Manager
Senior
Modelers
Lift Station
Lead
Electrical
Engineer Senior Engineers
Project
Engineers Admin
Flow Metering CCTV Inspection
Team Member: R. Bergholz E. Caliva S. Brown; J. Li B. Lacap J. Schneider K. Muntz, T. Eckermann
K. Jowid,
J. Arvizu
M. Kinney TOTAL
DUDEK DUDEK LABOR ADS Environmental Houston and Harris OTHER DIRECT Billable Rate : $325 $295 $270 $285 $295 $255 $235 $165 HOURS COSTS Fee Fee COSTS TOTAL FEE Task 1 Data Collection and Review
1.1 Data Collection and Review 4 8 4 4 8 16 44 11,460$ 11,460$
1.2 Meetings with City Staff (O&M, Engineering, Planning) 2 6 2 4 14 3,720$ 3,720$
1.3 Gaps Analysis 4 4 8 16 3,980$ 3,980$
Subtotal Task 1 6 18 6 4 12 28 74 19,160$ -$ -$ -$ 19,160$ Task 2 Sewer Model Development and Calibration
2.1 Build Hydraulic Model 2 24 40 66 16,470$ 16,470$
2.2 Load Hydraulic Model 2 16 32 50 12,430$ 12,430$
2.3 Calibrate Hydraulic Model 2 16 90 40 148 39,070$ 39,070$
2.4 Model Calibration Tech Memo 2 4 8 16 30 7,750$ 7,750$ Subtotal Task 2 4 24 138 128 294 75,720$ -$ -$ -$ 75,720$ Task 3 Flow Metering Plan, Field Verification and Data Collection
3.1 Develop Flow Metering Plan 4 16 40 60 14,900$ 14,900$
3.2 Perform Flow Metering (30 meters, 6 weeks) 8 16 24 5,920$ $205,000 210,920$
3.3 Process FM data for Use in Model Calibration 4 16 40 60 14,900$ 14,900$ Subtotal Task 3 8 40 96 144 35,720$ 205,000$ -$ -$ 240,720$ Task 4 Population and Development Buildout Projections
4.1 Develop Population Projections 4 8 12 2,960$ 2,960$
4.2 Evaluate Known Planned Developments 2 12 16 30 7,590$ 7,590$
4.3 Evaluate Buildout Development Forecast 2 8 24 34 8,390$ 8,390$ Subtotal Task 4 4 24 48 76 18,940$ -$ -$ -$ 18,940$ Task 5 Land Use and Sewer System Flow Criteria
5.1 Review/analyze existing sewer flows 2 8 16 26 6,510$ 6,510$
5.2 Develop land use data and criteria 2 4 4 10 2,610$ 2,610$
5.3 Review and evaluate design criteria for sewer facilities 4 4 8 2,020$ 2,020$
5.4 Develop peaking factors 2 8 12 22 5,570$ 5,570$
5.5 Identify future users and demands 2 4 8 14 3,550$ 3,550$
5.6 Estimate phased, future sewer loadings 8 8 16 4,040$ 4,040$
5.7 Determine cost/benefit of providing public sewer to septic areas 4 16 24 44 11,140$ 11,140$ Subtotal Task 5 12 52 76 140 35,440$ -$ -$ -$ 35,440$ Task 6 Capacity Analysis and Pipeline Condition Assessment
6.1 Existing Capacity Analysis (Dry & Wet) 2 16 8 26 6,790$ 6,790$
6.2 Future Capacity Analysis (Near-Term and Buildout, Dry & Wet) 4 32 40 76 19,220$ 19,220$
6.3 Develop Capacity-Related Recommendations 4 16 16 36 9,380$ 9,380$
6.4 Condition Assessment using CCTV Data (Assume 300 segments) 8 75 83 21,285$ 21,285$
6.5 Develop Pipeline Condition-Related Recommendations 4 16 20 5,380$ 5,380$
6.6 Develop Maintenance Recommendations 2 8 10 2,690$ 2,690$
6.7 Evaluate reliability of sewer system 2 8 16 24 50 13,450$ 13,450$ Subtotal Task 6 12 14 88 123 64 301 78,195$ -$ -$ -$ 78,195$ Task 7 Pump Station Evaluations and Capital Rehab Program
7.1 Pre-Inspection Workshop (Virtual) 2 2 3 7 1,925$ 1,925$
7.2 Pump Station Facility Visits 12 16 12 40 11,200$ 2,000$ 13,200$
7.3 Pump Station Condition Assessment 8 4 24 36 9,580$ 9,580$
7.4 Forcemain Desktop Analysis 4 8 12 3,180$ 3,180$
7.5 Comprehensive List of Deficits and Recommendations 4 4 8 16 4,360$ 4,360$
7.6 Post-Inpsection Workshop (Virtual) 2 2 2 6 1,670$ 1,670$
7.7 Pump Station Condition Assessment Technical Memorandum 2 6 10 20 38 10,410$ 10,410$ Subtotal Task 7 2 38 38 77 155 42,325$ -$ -$ 2,000$ 44,325$ Task 8 Develop Comprehensive Capital Improvement Program
8.1 Develop Risk Model for Project Prioritization 8 20 28 7,260$ 7,260$
8.2 Develop Phased List of Recommended CIP Projects (Ex, 5Yr, 10Yr) 8 16 24 5,920$ 5,920$
8.3 CIP Workshop (Virtual) 4 2 2 2 10 2,800$ 2,800$
8.4 Project Description Sheets 4 4 16 4 4 8 24 64 16,800$ 16,800$
8.5 Project Cost Estimates 4 8 8 4 4 8 24 60 15,820$ 15,820$ Subtotal Task 8 8 16 42 10 8 38 64 186 48,600$ -$ -$ -$ 48,600$ Task 9 Preparation of Sewer Master Plan Documents
9.1 Prepare Draft Master Plan Report + Graphics 8 24 40 16 8 16 80 4 196 50,940$ 50,940$
9.2 Draft Report Review Workshop 2 2 2 2 8 2,170$ 2,170$ Subconsultant FeesDudek Labor Hours and Rates
Atch B
A-9451
City of Palmdale
Sanitary Sewer Master Plan Update
DUDEK FEE ESTIMATE - NEGOTIATED
October 7, 2025
Project Team Role:PIC - QA/QC
Project
Manager
Senior
Modelers
Lift Station
Lead
Electrical
Engineer Senior Engineers
Project
Engineers Admin
Flow Metering CCTV Inspection
Team Member:R. Bergholz E. Caliva S. Brown; J. Li B. Lacap J. Schneider K. Muntz, T. Eckermann
K. Jowid,
J. Arvizu
M. Kinney TOTAL
DUDEK DUDEK LABOR ADS Environmental Houston and HarrisOTHER DIRECT Billable Rate : $325 $295 $270 $285 $295 $255 $235 $165 HOURS COSTS Fee Fee COSTS TOTAL FEE Subconsultant FeesDudek Labor Hours and Rates
9.3 Prepare Draft Final Master Plan Report + Graphics 6 8 16 8 8 8 32 2 88 23,160 $ 23,160 $
9.4 Prepare Final Master Plan Report 2 4 12 2 2 4 16 2 44 11,340 $ 500 $ 11,840$ Subtotal Task 9 16 38 70 28 18 28 130 8 336 87,610 $ - $ - $ 500$ 88,110$ Task 10 Project Management
10.1 Prepare PM and QA/QC Work Plan 2 8 10 3,010 $ 3,010 $
10.2 Kickoff Meeting (in person) 8 8 8 8 32 9,400 $ 500 $ 9,900$
10.3 Project Status Meetings (Virtual) 4 24 24 12 64 18,280 $ 18,280 $
10.4 Monthly Reporting & Invoicing 24 40 64 13,680 $ 13,680 $
10.5 Subconsultant Coordination 16 16 4,720 $ 4,720 $ Subtotal Task 10 14 80 32 20 40 186 49,090 $ - $ - $ 500$ 49,590$ Total Non-Optional Hours and Fee56 202 504 102 68 278 634 48 1892 490,800 $ 205,000$ - $ 3,000$ 698,800$ Percent of Hours: 3% 11% 27% 5% 4% 15% 34% 3% 100%
Task 11 Additional CCTV Inspection
11.1 Develop CCTV Inspection Plan 4 8 16 28 7,100 $ 7,100 $
11.2 Perform CCTV Inspection (5 miles) 2 4 6 1,530 $ $51,000 52,530 $
11.3 Perform Condition Assessment of Lines (Assume 50 segments) 2 4 16 22 5,750 $ 5,750 $ Subtotal Task 11 8 12 16 20 56 14,380$ - $ 51,000$ - $ 65,380$ Total Optional and Non-Optional Hours and Fee56 210 516 102 68 294 654 48 1948 505,180 $ 205,000$ 51,000$ 3,000$ 764,180$ Optional Services
City Council Staff Report
DATE: NOVEMBER 4, 2025
TO: HONORABLE MAYOR PRO TEM AND CITY COUNCIL
FROM: PUBLIC WORKS DEPARTMENT
CAPITAL IMPROVEMENT PROGRAM DIVISION
DISTRICT: 3, 4
SUBJECT: APPROVE FIRST AMENDMENT TO TAKEOVER AGREEMENT WITH LOS ANGELES COUNTY SANITATION DISTRICT NO. 20 (45TH
STREET EAST EXTENSION TRUNK SEWER)
RECOMMENDATION
Staff recommend that the City Council:
1. Approve First Amendment to Takeover Agreement No. A-6911 with Los Angeles County Sanitation District No. 20 for 45th Street East Extension Trunk Sewer; and,
2. Authorize the Interim City Manager or his designee to execute the First Amendment to Agreement No. A -6911 with Los Angeles County Sanitation District No. 20, including minimal and/or non-substantial changes.
BACKGROUND
On April 9, 2020, the Los Angeles County Sanitation District (LACSD) and the City entered into the original Takeover Agreement ( LACSD Contract No. 5278, City Agreement No. A-6911), establishing terms for the District to take over the ownership, operation, and maintenance of approximately 5,240 linear feet of 18 -inch diameter vitrified clay pipe sewer, known as the 45th Street East Extension Trunk Sewer.
Since executing the original Agreement, LACSD has adopted new reimbursement standards that include staff costs for reviewing and approving construction submittals and as -built drawings. Since construction of the sewer line has not begun, and a significant amount of time has passed since the initial cost estimate, the original deposit of $50,000 is insufficient to cover the anticipated expenses.
The 45th Street East Extension Trunk Sewer project will upsize the existing sewer mainline from Avenue R to Avenue S, discharging into a LAC SD trunk line. The City’s 2009 Sewer Master Plan identified the existing portion of the sewer system as deficient, Report to Mayor Pro Tem and City Council
Re: First Amendment Agrmt No. A-6911 with LACSD No. 20
November 4, 2025
and constructing this relief mainline will eliminate projected future sewer surcharging.
The LACSD has recognized the relief mainline as eligible for takeover.
To accommodate the updated estimated cost of $200,000 for inspection services, staff recommend that the City Council approve this First Amendment, which will require the City to provide an additional deposit of $150,000.
DISCUSSION
The First Amendment will update Sections 10(a) and 10(b) of the original Agreement to include:
a) Actual Inspection Costs: The City will construct the sewer line at its own expense and will pay for the actual cost of LACSD’s staff to review and approve submittals and as-built drawings.
b) Deposit of Estimated Inspection Costs: The revised estimated inspection costs total $200,000, which includes:
Submittal Review: LACSD’s staff time required to review and approve all project-related submittals.
Full-Time Inspection: LACSD’s inspection services during construction to ensure compliance with LACSD standards and requirements.
Salaries, Wages, and Equipment Costs: Direct costs associated with LACSD staff providing submittal review and inspection services.
Benefits and Overhead: Added to the total salaries, wages, and equipment costs according to LACSD’s reimbursement standards.
This amendment is essential for aligning the financial terms of the Agreement with current operational needs and ensuring the successful completion of the sewer project, which is vital for improving community infrastructure.
FISCAL IMPACT
$200,000; The total estimated cost for the inspection services is now $200,000, of which $50,000 has already been paid. An additional requirement of $150,000 will be necessary to cover the updated estimated costs. Funding will be sourced from the Capital Improvement Account designated for the 45th Street East sewer upgrades project.
Report to Mayor Pro Tem and City Council
Re: First Amendment Agrmt No. A-6911 with LACSD No. 20
November 4, 2025
STRATEGIC PLAN
Goal III: Invest in infrastructure to improve community livability.
A. Plan and maintain safe and attractive neighborhoods, streets, facilities, and public spaces with exciting programming that promotes active fun for everyone.
Prepared by: Leonardo Torres, P.E.
Director of Public Works
Certified as to availability of Funds: Janelle Samson, Director of Operations Approved by: Salvador Mendez, Interim City Manager
Approved as to form: Alexandra Severino, City Attorney
ATTACHMENTS
Agrmt No. A-6911 First Amendment with LACSD No. 20
Agrmt No. A-6911 with LACSD No. 20
Cost estimate
CSD C#5278A
FIRST AMENDMENT TO TAKEOVER AGREEMENT
(45th Street East Extension Trunk Sewer)
This First Amendment to Takeover Agreement (“First Amendment”) is dated ______________, 2025 (the “First Amendment Effective Date”) and is between COUNTY SANITATION DISTRICT NO. 20 OF LOS ANGELES COUNTY, a county sanitation district organized and existing pursuant to the County Sanitation District Act, California Health and Safety Code Section 4700 et seq. (the “District”), and the CITY OF PALMDALE, a California Charter City (the “City”). The District and the City are each a “party” and together are the “parties”.
A. The Parties entered into a Takeover Agreement (CSD Contract No. 5278, City Agreement No. A-6911), dated April 9, 2020 (the “Agreement”), which sets forth the terms, conditions and requirements for the District to take over ownership, operation, and maintenance of approximately 5,240 linear feet of 18-inch diameter vitrified clay pipe sewer in 45 th Street East between Avenue R and Avenue S to be known as the 45 th Street East Extension Trunk Sewer (the “Sewer Line”) to be constructed by the City. All items not defined in this First Amendment have the meanings ascribed in the Agreement.
B. Section 10 of the Agreement requires the City to pay the District a $50,000 deposit upon execution of the Agreement to reimburse the District for its construction inspection costs. The City provided the $50,000 payment to the District in March 2020 (City Check No. 262707). Since the Agreement was executed in 2020, the District has adopted new reimbursement standards that now also include the District’s staff time to review and approve submittals during construction and to review and approve the as-built drawings once construction is completed.
C. Given the time that has elapsed since the initial inspection cost estimate was prepared by the District, the fact the City has not yet commenced construction of the Sewer Line, and considering the District’s new reimbursement standards, the $50,000 amount for the Estimated Inspection Costs is no longer sufficient. Therefore, the District seeks to update the reimbursement terms and conditions in the Agreement to better reflect the anticipated costs the District will incur during construction and to collect an additional deposit from the City based on an updated inspection cost estimate recently prepared by the District.
The District and the City, therefore, amend the Agreement as follows:
1. Amendment to Sections 10(a) and 10(b). Sections 10(a) and 10(b) of the Agreement are hereby deleted in their entirety and replaced with the following:
“a) Actual Inspection Costs. The City shall construct the Sewer Line at the City’s sole cost and expense and at no cost to the District and shall pay the District for the actual cost of the District’s staff to review and approve the as-built drawings; to review and approve submittals; and to perform the inspections described in Section 9 (“Actual Inspection Costs”). Actual Inspection Costs will include benefits and overhead 1-4Concord - Document ID: generated after first signature added to the total salaries, wages, and equipment costs of District’s staff who will provide the services described above. The District will maintain records of the Actual Inspection Costs in accordance with recognized accounting principles.
b) Deposit of Estimated Inspection Costs. Based on a cost estimate prepared in August 2025, the District estimates that its Actual Inspection Costs will be $200,000 (“Estimated Inspection Costs”). In March 2020, the City provided a deposit of $50,000 to the District towards the Estimated Inspection Costs. Therefore, concurrently with the City’s execution of this First Amendment, the City shall pay to the District the balance of $150,000 for the Estimated Inspection Costs.”
2. Representations. The City represents and warrants for the benefit and reliance of the District as follows: (a) the Agreement has not been modified, changed, altered or amended in any respect (except only by this First Amendment) and is legal, valid, and binding, in full force and effect, and enforceable in accordance with its terms; (b) there exists no breach or default, nor state of facts, nor condition which with notice, the passage of time, or both, would result in a breach or default under the Agreement on the part of the City or the District; and (c) no claim, controversy, dispute, quarrel or disagreement exists between the City and the District.
3. Miscellaneous. Except as specifically stated herein, all other terms and conditions of the Agreement remain in full force and effect. In the event of any conflict or inconsistency between the Agreement and this First Amendment, the provisions of this First Amendment will prevail. The recitals set forth in Sections A through C above are incorporated in this First Amendment by reference. Each individual signing this First Amendment warrants and represents that he or she has the full authority to execute this First Amendment on behalf of the party on whose behalf he or she so signs, and that he or she is acting within the scope of such authority.
[Signature Page Immediately Follows]
2-4Concord - Document ID: generated after first signature The parties are signing this First Amendment as of the First Amendment Effective Date.
COUNTY SANITATION DISTRICT NO.
20 OF LOS ANGELES COUNTY
By: _______________________
Stan Pegadiotes, P.E.
Section Head
Property Management Section
CITY OF PALMDALE, CALIFORNIA
Signature: _ _____
Salvador Mendez
Interim City Manager
Reviewed: __________________________________
Leonardo Torres, P.E.
Director of Public Works
APPROVED AS TO FORM:
Signature: _ ___
Alexandra Halfman
City Attorney
ATTEST:
Signature: __ __
Roxanne Faber
City Clerk
DOC 7574065 1
3-4Concord - Document ID: generated after first signature 4-4Concord - Document ID: generated after first signature
Project Name:
Engineer:
Date:
Estimated Construction Duration: 120
Construction Management Section % of Time Labor Hours Unit Cost1 Cost Civil Engineer 25 240 $147.80 $35,471.69
Supervising Engineer II 10 96 $184.06 $17,669.37
Construction Inspector III 100 960 $113.21 $108,683.47
Supervising Construction Inspector 10 96 $144.89 $13,909.08 Design Support during Construction
Civil Engineer 100 $147.80 $14,779.87
Supervising Engineer II 40 $184.06 $7,362.24
Designer II $109.64 $0.00
Total Labor Cost: $197,875.72
1 includes 70.5% for burdened benefits and 20% for paid time off Other Sections
Property Mgmt
Facilities Planning
Financial Planning
Structural
Survey (in-house)
Contingency 0 % 0
Total CM Cost: $197,875.72
Estimated Construction Cost: $0.00
% of CM Cost: #DIV/0!
45th Avenue Trunk Sewer Extension
Daniel Kim
8/18/25
working days
City Council Staff Report
DATE: NOVEMBER 4, 2025
TO: HONORABLE MAYOR PRO TEM AND CITY COUNCIL
FROM: PUBLIC WORKS DEPARTMENT
INNOVATION AND ENVIRONMENTAL DIVISION
DISTRICT: ALL
SUBJECT: AUTHORIZE A RESOURCE ADEQUACY AGREEMENT BETWEEN
ATHOS STORAGE, LLC , AN SB ENERGY COMPANY, AND
CALIFORNIA CHOICE ENERGY AUTHORITY ON BEHALF OF
ENERGY FOR PALMDALE’S INDEPENDENT CHOICE (EPIC) FOR
THE PURCHASE OF RESOURCE ADEQUACY AND LONG-TERM,
MID-TERM RELIABILITY CAPACITY
RECOMMENDATION
Staff recommend that the City Council:
1. Authorize a Resource Adequacy Agreement between Athos Storage, LLC, an SB Energy company, and California Choice Energy Authority (CalChoice), on behalf of EPIC, for the purchase of Resource Adequacy (RA) and long-term, mid-term reliability capacity; and,
2. Authorize the Interim City Manager or his designee to formally acknowledge, on behalf of the City/EPIC, the Resource Adequacy Agreement between Athos Storage, LLC and CalChoice, and to execute all necessary documents related to such acknowledgement, including minimal and/or non -substantive changes to the foregoing, subject to the approval of the City Attorney.
BACKGROUND
The City’s Community Choice Aggregation (CCA) P rogram, EPIC, was established by the City Council through adoption of Resolution No. CC 2018 -087, approving submittal of an Implementation Plan (Plan), in accordance with Public Utilities Code Section 366.2(c), on December 4, 2018. The Plan was certified b y the Energy Division on February 28, 2019, and EPIC successfully began serving customers on October 1, 2022. The actions before the City Council are in support of this effort.
Report to Mayor Pro Tem and City Council
Re: Agreement between Athos Storage, LLC and CalChoice
November 4, 2025
In order to ensure compliance with state -mandated requirements for procurement of incremental capacity and Resource Adequacy requirements, EPIC, through CalChoice, participates in the procurement of incremental capacity and RA capacity.
DISCUSSION
The California Public Utilities Commission (CPUC) previously issued Decision (D.) 21- 06-035, and subsequently Decision (D.) 23 -02-040, the latter of which mandates that load-serving entities, including CCAs, collectively procure substantial incremental capacity over a phased schedule reflecting two distinct compliance deadlines: June 1, 2026, and June 1, 2027. This procurement is intended to bolster system reliability by adding to California’s resource fleet.
To comply with the CPUC’s incremental capacity requirements for the June 1, 2027 deadline, CalChoice recommends moving forward with a 15-year agreement for incremental capacity and RA from a new, four -hour battery energy storage system located in Riverside County, California and constructed, owned and operated by Athos Storage, LLC (a special purchase entity and subsidiary of SB Energy).
In addition to providing mid -term reliability incremental capacity for the June 1, 2027 deadline, the proposed agreement also includes Resource Adequacy in the form of System RA Attributes and Flexible Capacity Resource Attributes, which EPIC is required to obtain pursuant to EPIC’s state compliance obligations for RA. The Expected Commercial Operation Date for this battery storage facility is January 1, 2027, with a Guaranteed Commercial Operation Date of May 1, 2027 . This timing aligns with the June 1, 2027, MTR compliance deadline. EPIC will receive approximately 9.29% (or 9.5 MW) of the facility’s monthly capacity for the 15-year delivery term.
The terms of the proposed agreement, including financial security, performance standards, and remedy provisions, are substantially similar to those utilized in other CalChoice agreements and adhere to industry best practices. The proposed agreement incorporates a Contingent Firm delivery structure and robust financial security requirements, which protect EPIC from project delays and/or non-performance.
As security for EPIC’s payment obligations under the proposed Resource Adequacy Agreement, Athos Storage, LLC will bec ome a Secured Creditor under th at certain Intercreditor and Collateral Agency Agreement dated November 15, 2021 , by and among River City Bank, as Collateral Agent, the Secured Creditors from time to time party thereto, and the City.
FISCAL IMPACT
$1,100,000; EPIC’s annual costs associated with the proposed Resource Adequacy Agreement are estimated to range from $1,000,000 to $1,100,000. Adequate annual Report to Mayor Pro Tem and City Council
Re: Agreement between Athos Storage, LLC and CalChoice
November 4, 2025
revenues to support this agreement are forecasted within EPIC’s Financial Pro Forma, contingent upon the appropriation of funds by the City Council during the adoption of future Palmdale Annual Budgets.
STRATEGIC PLAN
Goal II: Ensure long-term fiscal health of the City and maintain funding for services.
B. Manage resources, costs, and liabilities to ensure the City’s long-term fiscal Health
Goal III: Invest in infrastructure to improve community livability.
B. Implement and administer environmentally sustainable programs.
Prepared by: Leonardo Torres, P.E.
Director of Public Works
Certified as to availability of Funds: Janelle Samson, Director of Operations Approved by: Salvador Mendez, Interim City Manager
Approved as to form: Alexandra Severino, City Attorney
ATTACHMENTS
Resource Adequacy Agreement between Athos Storage, LLC, and CalChoice, on behalf of Energy for Palmdale’s Independent Choice (EPIC)
iv
TABLE OF CONTENTS
Page
ARTICLE 1: DEFINITIONS ..................................................................................................................... 1 ARTICLE 2: TERM; DELIVERY TERM; CONDITIONS PRECEDENT ........................................ 14
2.1 TERM. .......................................................................................................................................... 14
2.2 CONDITIONS PRECEDENT. ........................................................................................................... 14 ARTICLE 3: TRANSACTION, DELIVERY AND PAYMENT ........................................................... 15
3.1 RESOURCE ADEQUACY CAPACITY PRODUCT. ............................................................................ 15
3.2 SELLER’S AND BUYER’S OBLIGATIONS. ..................................................................................... 17
3.3 INTERCONNECTION. .................................................................................................................... 17
3.4 DELIVERY POINT. ........................................................................................................................ 17
3.5 PLANNED OUTAGES. ................................................................................................................... 18
3.6 CPUC MID-TERM RELIABILITY REQUIREMENTS. ...................................................................... 18
3.7 DELIVERY OF PRODUCT. ............................................................................................................. 19
3.8 CAISO OFFER REQUIREMENTS................................................................................................... 20
3.9 DAMAGES FOR FAILURE TO PROVIDE DESIGNATED RA CAPACITY. .......................................... 20
3.10 INDEMNITIES FOR FAILURE TO DELIVER CONTRACT QUANTITY. ............................................... 21
3.11 MONTHLY CAPACITY PAYMENT. ................................................................................................ 21
3.12 ALLOCATION OF OTHER PAYMENTS AND COSTS. ....................................................................... 22
3.13 FORCE MAJEURE. .................................................................................................................... 23 ARTICLE 4: RESERVED ........................................................................................................................ 24 ARTICLE 5: EVENTS OF DEFAULT; REMEDIES ............................................................................ 24
5.1 EVENTS OF DEFAULT. ................................................................................................................. 24
5.2 DECLARATION OF AN EARLY TERMINATION DATE AND CALCULATION OF SETTLEMENT AMOUNTS. ............................................................................................................................................... 25
5.3 NET OUT OF SETTLEMENT AMOUNTS. ........................................................................................ 26
5.4 NOTICE OF PAYMENT OF TERMINATION PAYMENT. ................................................................... 26
5.5 DISPUTES WITH RESPECT TO TERMINATION PAYMENT. ............................................................. 27
5.6 CLOSEOUT SETOFFS. ................................................................................................................... 27 ARTICLE 6: PAYMENT AND NETTING............................................................................................. 27
6.1 BILLING PERIOD. ......................................................................................................................... 27
6.2 TIMELINESS OF PAYMENT. .......................................................................................................... 27
6.3 DISPUTES AND ADJUSTMENTS OF INVOICES. .............................................................................. 28
6.4 NETTING OF PAYMENTS. ............................................................................................................. 28
6.5 PAYMENT OBLIGATION ABSENT NETTING. ................................................................................ 28
6.6 SECURITY. ................................................................................................................................... 28
6.7 RECORDS. .................................................................................................................................... 29 ARTICLE 7: LIMITATIONS .................................................................................................................. 29
7.1 NO CONSEQUENTIAL DAMAGES. ................................................................................................ 29
7.2 LIMITATION OF REMEDIES, LIABILITY AND DAMAGES............................................................... 29 ARTICLE 8: GOVERNMENTAL CHARGES ...................................................................................... 30
8.1 COOPERATION. ............................................................................................................................ 30
8.2 GOVERNMENTAL CHARGES. ....................................................................................................... 30 v
ARTICLE 9: RESERVED ........................................................................................................................ 31 ARTICLE 10: REPRESENTATIONS; WARRANTIES; COVENANTS ........................................... 31
10.1 MUTUAL REPRESENTATIONS AND WARRANTIES. ....................................................................... 31
10.2 BUYER AND SELLER COVENANTS. .......................................................................................... 31
10.3 ADDITIONAL SELLER REPRESENTATIONS, WARRANTIES AND COVENANTS. ............................. 32
10.4 PREVAILING WAGE. ................................................................................................................ 33
10.5 ADDITIONAL BUYER REPRESENTATIONS, WARRANTIES, AND COVENANTS. ............................. 33 ARTICLE 11: CONFIDENTIALITY ..................................................................................................... 33
11.1 DEFINITION OF CONFIDENTIAL INFORMATION. ...................................................................... 33
11.2 DUTY TO MAINTAIN CONFIDENTIALITY. .................................................................................... 34 ARTICLE 12: BUYER’S RE-SALE OF PRODUCT ............................................................................. 35 ARTICLE 13: CHANGE IN LAW .......................................................................................................... 35
13.1 CHANGE IN LAW...................................................................................................................... 35
13.2 COMPLIANCE EXPENDITURE CAP. .............................................................................................. 36 ARTICLE 14: COLLATERAL REQUIREMENTS .............................................................................. 36
14.1 BUYER CREDIT SUPPORT. ........................................................................................................... 36
14.2 PERFORMANCE SECURITY. .......................................................................................................... 37
14.3 FIRST PRIORITY SECURITY INTEREST IN CASH OR CASH EQUIVALENT COLLATERAL. .............. 37 ARTICLE 15: INSURANCE .................................................................................................................... 38
15.1 INSURANCE. ................................................................................................................................. 38
15.2 EVIDENCE OF INSURANCE. .......................................................................................................... 40 ARTICLE 16: PRIMARY UNIT CONSTRUCTION AND COMMERCIAL OPERATION ............ 40
16.1 CONSTRUCTION OF THE PRIMARY UNIT. .................................................................................... 40
16.2 COMMERCIAL OPERATION. ......................................................................................................... 40 ARTICLE 17: MISCELLANEOUS ........................................................................................................ 43
17.1 TITLE AND RISK OF LOSS. ........................................................................................................... 43
17.2 INDEMNITY. ................................................................................................................................. 43
17.3 ASSIGNMENT. .............................................................................................................................. 43
17.4 GOVERNING LAW AND VENUE. ................................................................................................... 44
17.5 NOTICES. ..................................................................................................................................... 44
17.6 MOBILE-SIERRA. ......................................................................................................................... 45
17.7 GENERAL. .................................................................................................................................... 45
17.8 AUDIT. ......................................................................................................................................... 46
17.9 FORWARD CONTRACT. ................................................................................................................ 46
17.10 DISPUTE RESOLUTION. ............................................................................................................ 46
17.11 COUNTERPARTS. ..................................................................................................................... 47
17.12 ELECTRONIC DELIVERY. ......................................................................................................... 47
17.13 JOINT POWERS AUTHORITY. ................................................................................................... 47
17.14 DODD-FRANK ACT. ................................................................................................................. 47
17.15 FURTHER ASSURANCES ........................................................................................................... 48
17.16 LOCKBOX ACCOUNT ............................................................................................................... 48
17.17 MARKET-BASED RATE AUTHORITY. ...................................................................................... 48
17.18 PHYSICAL TRANSACTIONS. ..................................................................................................... 48
17.19 RULES OF INTERPRETATION. ................................................................................................... 48 vi
Exhibits
Exhibit A: Form of Letter of Credit
Exhibit B: Form of Construction Start Date Certificate
Exhibit C: Form of Commercial Operation Date Certificate Exhibit D: Description of Primary Unit
Exhibit E: Reserved
Exhibit F: Progress Reporting Form
Exhibit G: Notices
1 RESOURCE ADEQUACY AGREEMENT
This Resource Adequacy Agreement (“ Agreement”) is entered into between Athos Storage, LLC (“ Seller”) and California Choice Energy Authority, a California joint powers authority, on behalf of [Member] (“Buyer”), each individually a “Party” and together the “Parties,” as of [Date] (the “Effective Date”). All capitalized terms used in this Agreement are used with the meanings ascribed to them in Article 1 to this Agreement.
RECITALS
WHEREAS, Seller intends to develop, design, construct, own, and operate the Primary Unit; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the terms and conditions set forth in this Agreement, the Product.
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the sufficiency and adequacy of which are hereby acknowledged, the Parties agree to the following:
ARTICLE 1: DEFINITIONS
1.1 “Accepted Compliance Costs” has the meaning set forth in Section 13.2(b).
1.2 “Affiliate” means, with respect to any person, any other person (other than an individual) that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such person. For this purpose, “control” means the direct or indirect ownership of fifty percent (50%) or more of the outstanding capital stock or other equity interests having ordinary voting power.
1.3 “Agreement” has the meaning set forth in the Preamble.
1.4 “Alternate Capacity” means any Replacement Capacity having at least equivalent RAR Attributes, LAR Attributes and/or FCR Attributes as the Product that would have been provided by the Primary Unit, including the same Slice -of-Day (as that term is defined in the Resource Adequacy Rulings) and related characteristics, and any successor criteria applicable to the Primary Unit; provided, if any portion of the Designated RA Capacity that Seller is seeking to replace is Designated RA Capacity having RAR Attributes and no LAR Attributes, and no such RAR capacity is available (such capacity shall also include FCR Attributes if this is a Flexible RA Product) , then Seller may replace such portion of the Designated RA Capacity with capacity having RAR Attributes and LAR Attributes (as well as FCR Attributes if this is a Flexible RA Product).
1.5 “Applicable Laws” means any law, rule, tariff, regulation, order, decision, judgment, or other legal or regulatory determination by any Governmental Body having jurisdiction or any binding interpretation of the foregoing, as any of them is amended or supplemented from time to time over one or both Parties or this Agreement, including without limitation, the Tariff.
2 1.6 “Availability Incentive Payments” means Availability Incentive Payments as defined in the Tariff.
1.7 “Availability Standards” means Availability Standards as defined in the Tariff.
1.8 “Bankrupt” means with respect to any entity, such entity (a) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar law, or has any such petition filed or commenced against it and such petition filed or commenced against it is not stayed or dismissed within ninety (90) days thereafter, (b) makes an assignment or any general arrangement for the benefit of creditors, (c) otherwise beco mes bankrupt or insolvent (however evidenced), (d) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (e) is generally unable to pay its debts as they fall due.
1.9 “Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday in California.
1.10 “Buyer” has the meaning set forth in the Preamble.
1.11 “CAISO” means the California Independent System Operator Corporation or its successor.
1.12 “CAISO Control Area” means the Control Area (as defined in the Tariff) that is operated by the CAISO.
1.13 “CAISO Controlled Grid” has the meaning set forth in the Tariff.
1.14 “Capacity Replacement Price” means (a) the price actually paid for any Replacement Capacity purchased by Buyer pursuant to Section 3.9 hereof, plus costs reasonably incurred by Buyer in purchasing such Replacement Capacity, or (b) absent a purchase of any Replacement Capacity, the market price for such Designated RA Capacity not provided at the Delivery Point. Buyer shall determine such market prices in a commercially reasonable manner.
1.15 “Change in RA Requirements” has the meaning set forth in Section 3.1(b)(iv).
1.16 “CIRA Tool” means the CAISO Customer Interface for Resource Adequacy.
1.17 “Claims” means all third party claims or actions, threatened or filed and, whether groundless, false, fraudulent or otherwise, that directly or indirectly relate to the subject matter of an indemnity, and the resulting losses, damages, expenses, attorneys’ fees a nd court costs, whether incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement.
1.18 “Commercial Operation” has the meaning set forth in Section 16.2(a).
1.19 “Commercial Operation Date” means the later of (a) January 1, 2027, and (b) the date on which Commercial Operation is achieved.
3 1.20 “Commercial Operation Delay Damages” means an amount equal to (a) the Performance Security amount required hereunder, divided by (b) .
1.21 “Compliance Actions” has the meaning set forth in Section 13.2.
1.22 “Compliance Adjusted Unit NQC” has the meaning set forth in Section 3.1(b)(iv).
1.23 “Compliance Adjustment Factor” means a ratio, (a) the numerator of which is the aggregate Unit NQC value of the Primary Unit as calculated under the CPUC and CAISO resource adequacy counting rules as of the Effective Date, and (b) the denominator of which is the Compliance Adjusted Unit NQC of the Primary Unit.
1.24 “Compliance Expenditure Cap” has the meaning set forth in Section 13.2.
1.25 “Compliance Obligation ” means the RAR, Local RAR, FCR, and any other resource adequacy or capacity procurement requirements imposed on LSEs by the CPUC pursuant to the Resource Adequacy Rulings, by the CAISO, by the WECC, or by any other Governmental Body having jurisdiction.
1.26 “Compliance Showings ” means the applicable LSE’s compliance with the Resource Adequacy Requirements of the CPUC for an applicable Showing Month.
1.27 “Contingent Firm” means Seller shall provide Buyer with the Product from the Primary Unit in the amount of the Contract Quantity. If the Primary Unit is not available to provide the full amount of the Contract Quantity as a result of any reduction of the Contract Quantity of the Primary Unit in accordance with Section 3.1(b) or due to Force Majeure, Seller shall have the option to notify Buyer that either (a) Seller will not provide the portion of the Contract Quantity attributable to such reduction during the period of such non- availability; or (b) Seller will supply Alternate Capacity to fulfill the remainder of the Contract Quantity during such period pursuant to Section 3.1(c). If Seller fails to provide Buyer with the Designated RA Capacity for a Showing Month, then Seller shall be liable for damages or required to indemnify Buyer for penalties or fines pursuant to the terms of Section 3.9 for such Showing Month.
1.28 “Confidential Information” has the meaning set forth in Article 11.
1.29 “Construction Start” has the meaning set forth in Section 16.1(a).
1.30 “Construction Start Date” has the meaning set forth in Section 16.1(a).
1.31 “Contract Price” has the meaning set forth in Section F of the Cover Sheet.
1.32 “Contract Quantity” means, with respect to any particular Showing Month of the Delivery Term, the amount of Product (in MW) set forth in Section E of the Cover Sheet, which Seller has agreed to provide to Buyer from the Shown Units for such Showing Month, subject to the terms and conditions of this Agreement; provided, however, that the Contract Quantity is equal to zero (0) MW for any Showing Month prior to the first Showing Month that commences at least forty-five days after the Commercial Operation Date.
4 1.33 “Contract Year” means a period of twelve (12) consecutive months during the Delivery Term; the first Contract Year shall commence on the Commercial Operation Date; and each subsequent Contract Year shall commence on the anniversary of the Commercial Operation Date.
1.34 “Costs” means, with respect to the Non-Defaulting Party, brokerage fees, commissions and other similar third party transaction costs and expenses reasonably incurred by such Party either in terminating any arrangement pursuant to which it has hedged its obligations or entering into new arrangements which replace a Terminated Transaction; and all reasonable attorneys’ fees and expenses incurred by the Non- Defaulting Party in connection with the termination of a Transaction.
1.35 “CPUC” means the California Public Utilities Commission or its successor.
1.36 “CPUC Filing Guide” means the annual document issued by the CPUC which sets forth the guidelines, requirements and instructions for LSE’s to demonstrate compliance with the CPUC’s resource adequacy program.
1.37 “Credit Rating” means, with respect to any entity, the rating then assigned to such entity’s unsecured, senior long- term debt obligations (not supported by third party credit enhancements) or if such entity does not have a rating for its senior unsecured long- term debt, then the rating then assigned to such entity as an issuer rating by S&P or Moody’s.
1.38 “Damage Payment” means the dollar amount that equals .
1.39 “Day-Ahead Market” has the meaning set forth in the Tariff.
1.40 “Defaulting Party” has the meaning set forth in Section 5.1.
1.41 “Delivery Point” has the meaning set forth in Section 3.4.
1.42 “Delivery Term ” means the period of Contract Years set forth on the Cover Sheet beginning on the Commercial Operation Date, unless terminated earlier in accordance with the terms and conditions of this Agreement.
1.43 “Designated RA Capacity” shall be equal to, with respect to each Showing Month of the Delivery Term, the Contract Quantity of Product for such Showing Month, including the amount of Contract Quantity that Seller has elected to provide Alternate Capacity in accordance with Section 3.1(c) , less any excused reduction in the Contract Quantity of Product for such Showing Month as described in Section 3.1 or due to Force Majeure for which Seller has not elected to provide Alternate Capacity in accordance with Section
3.1(c). For avoidance of doubt, “Designated RA Capacity” shall include any and all Alternate Capacity which Seller elects to provide from one or more Replacement Units in accordance with Section 3.1(c).
1.44 “Development Cure Period” has the meaning set forth in Section 16.2(c).
1.45 “Dispute” has the meaning set forth in Section 17.10(a).
5 1.46 “Dispute Notice” has the meaning set forth in Section 17.10(a).
1.47 “Early Termination Date” has the meaning set forth in Section 5.2.
1.48 “Effective Date” is the date set forth in the Preamble.
1.49 “Effective Flexible Capacity” or “ EFC” means the capacity of a resource that can be counted towards an LSE’s Flexible Capacity Requirements, as identified from time to time by the Tariff, the Resource Adequacy Rulings, LRA, or other Governmental Body having jurisdiction.
1.50 “Emission Reduction Credits” means emission reductions that have been authorized by a local air pollution control district pursuant to California Division 26 Air Resources; Health and Safety Code Sections 40709 and 40709.5, whereby a district has established a system by which all reductions in the emission of air contaminants that are to be used to offset certain future increases in the emission of air contaminants shall be banked prior to use to offset future increases in emissions.
1.51 “Environmental Costs” means costs incurred in connection with acquiring and maintaining all environmental permits and licenses for the Primary Unit, and the Primary Unit’s compliance with all applicable environmental laws, rules and regulations, including capital costs for pollution mitigation or installation of emissions control equipment required to permit or license the Primary Unit, all operating and maintenance costs for operation of pollution mitigation or control equipment, costs of permit maintenanc e fees and emission fees as applicable, the costs of all Emission Reduction Credits or Marketable Emission Trading Credits required by any applicable environmental laws, rules, regulations, and permits to operate the Primary Unit, and the costs associated with the disposal and clean- up of Hazardous Substances introduced to the Site, and the decontamination or remediation, on or off the Site, necessitated by the introduction of such Hazardous Substances on the Site.
1.52 “EPC Contract” means the Seller’s engineering, procurement and construction contract with the EPC Contractor.
1.53 “EPC Contractor” means Seller’s engineering, procurement and construction contractor or such Person performing those functions.
1.54 “Equitable Defenses” means any bankruptcy, insolvency, reorganization and other laws affecting creditors’ rights generally, and with regard to equitable remedies, the discretion of the court before which proceedings to obtain same may be pending.
1.55 “Event of Default” has the meaning set forth in Section 5.1.
1.56 “FCR Attributes ” means, with respect to a Resource Adequacy Resource, any and all flexible resource adequacy attributes that can be counted toward an LSE’s FCR, as they are identified from time to time by the Resource Adequacy Rulings, the Tariff, an LRA, or other Governmental Body having jurisdiction, exclusive of any LAR Attributes and any RAR Attributes.
6 1.57 “FCR Showings” means the FCR compliance showings (or similar or successor showings) an LSE is required to make to the CPUC (and, to the extent authorized by the CPUC, to the CAISO) pursuant to the Resource Adequacy Rulings and the Tariff, or to an LRA having jurisdiction over the LSE.
1.58 “FERC” means the Federal Energy Regulatory Commission or any successor government agency.
1.59 “Flexible Capacity Category” has the meaning set forth in the Resource Adequacy Rulings.
1.60 “Flexible Capacity Requirements ” or “FCR ” means the flexible capacity requirements, exclusive of LAR and RAR, established for LSEs by the CPUC pursuant to the Resource Adequacy Rulings, or by an LRA or other Governmental Body having jurisdiction.
1.61 “Flexible RA Product” means that the Product includes FCR Attributes, if applicable, as specified in Sections C and E of the Cover Sheet.
1.62 “Force Majeure” means an event or circumstance which delays or prevents a Party from performing its obligations under the Agreement, which event or circumstance was not anticipated as of the Effective Date, which is not within the reasonable control of, or the result of the negligence of, the claiming Party, and which, by the exercise of due diligence, the claiming Party is unable to overcome or avoid or cause to be avoided despite the exercise of commercially reasonable efforts. A Force Majeure event may include, but is not limited to, an act of God or the elements, such as flooding, lightning, hurricanes, tornadoes, or ice storms; explosion; fire; volcanic eruption; flood; epidemic or pandemic; landslide; mudslide; sabotage; terrorism; earthquake; other c ataclysmic events; an act of public enemy; war; blockade; civil insurrection; riot; civil disturbance; or strikes or other labor difficulties caused or suffered by a Party or any third party except as set forth below.
Force Majeure does not include (i) the loss of Buyer’s markets; (ii) Buyer’s inability economically to use or resell the Product purchased hereunder; (iii) the loss or failure of Seller’s supply (except to the extent due to a Force Majeure); (iv) Seller’s ability to sell the Product at a price greater than the Contract Price, (v) delays or nonperformance by suppliers, vendors or other third parties with whom a Party has contracted, including the EPC Contractor, except to the extent such delay or nonperformance is caused by a Force Majeure Event, or (vi) events otherwise constituting Force Majeure that prevents Seller from achieving Commercial Operation of the Primary Unit, except to the extent expressly permitted as a Development Cure Period under this Agreement.
1.63 “Full Capacity Deliverability Status” or “FCDS” has the meaning set forth in the Tariff.
1.64 “Gains” means, with respect to any Party, an amount equal to the present value of the economic benefit to it, if any (exclusive of Costs), resulting from the termination of a Terminated Transaction, determined in a commercially reasonable manner.
1.65 “Governmental Approvals” means all authorizations, consents, approvals, waivers, exceptions, variances, filings, permits, orders, licenses, exemptions, notices to and declarations of or with any Governmental Body and shall include those siting and operating 7 permits and licenses, and any of the foregoing under any applicable environmental law, that are required for the use and operation of the Primary Unit.
1.66 “Governmental Body” means (a) any federal, state, local, municipal or other government; (b) any governmental, regulatory or administrative agency, commission or other authority lawfully exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; and (c) any court or governmental tribunal; and (d) CAISO, but in all cases, excludes both Parties.
1.67 “Governmental Charges” has the meaning set forth in Section 8.2.
1.68 “Guaranteed Commercial Operation Date” is the date set forth in Section H of the Cover Sheet, subject to extension pursuant to Section 16.2(b), but as limited by Section 16.2(d).
1.69 “Hazardous Substance” means, collectively, (a) any chemical, material or substance that is listed or regulated under applicable Laws as a “hazardous” or “toxic” substance or waste, or as a “contaminant” or “pollutant” or words of similar import, (b) any petroleum or petroleum products, flammable materials, explosives, radioactive materials, asbestos, urea formaldehyde foam insulation, and transformers or other equipment that contain polychlorinated biphenyls, and (c) any other chemical or other material or substance, exposure to which is prohibited, limited or regulated by any Laws.
1.70 “Hold-Back Capacity” has the meaning set forth in Section 3.7(e).
1.71 “Imbalance Reserves” has the meaning set forth in pending Tariff language available at https://www.caiso.com/documents/all-pending-tariff-language-for-edam-dame.pdf which has been approved by FERC and shall become effective May 1, 2026.
1.72 “Interconnection Agreement” means the interconnection agreement entered into by Seller or its Affiliates pursuant to which the Primary Unit and its Interconnection Facilities will be interconnected with the Transmission System during the Delivery Term.
1.73 “Interconnection Facilities ” means the interconnection facilities, control and protective devices and metering facilities required to connect the Primary Unit with the Transmission System in accordance with the Interconnection Agreement.
1.74 “Intercreditor and Collateral Agency Agreement” means that certain Intercreditor and Collateral Agency Agreement, dated as of ______________, by and among River City Bank, as Collateral Agent, the Secured Creditors from time to time party thereto, and Member.
1.75 “Interest Rate” means, for any date, the lesser of (a) the per annum rate of interest equal to the prime lending rate as may from time to time be published in The Wall Street Journal under “Money Rates” on such day (or if not published on such day on the most recent preceding day on which published), plus two percent (2%) and (b) the maximum rate permitted by applicable law.
1.76 “Interim Deliverability Status” has the meaning set forth in the Tariff. 8 1.77 “Interim Deliverability Status Percentage” means, for each Showing Month of the Delivery Term through the Showing Month in which the Full Capacity Deliverability Status Finding or Partial Capacity Deliverability Status Finding is obtained, Member ’s Share of the capacity of the Primary Unit that has received Interim Deliverability Status for such Showing Month, divided by the Contract Quantity of RAR Attributes for such Showing Month, expressed as a percentage.
1.78 “Investment Grade” means a Credit Rating of at least “BBB -” from S&P and/or “Baa3” from Moody’s (or, if such entities cease to provide Credit Ratings, from another comparable rating agency that is reasonably acceptable to the Parties).
1.79 “Joinder” has the meaning set forth in the Intercreditor and Collateral Agency Agreement.
1.80 “Joint Powers Act ” means the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.).
1.81 “Joint Powers Agreement” means that certain Joint Powers Agreement dated August 14, 2012, as amended from time to time, under which Buyer is organized as a Joint Powers Authority in accordance with the Joint Powers Act.
1.82 “LAR” means local area reliability, which is any program of localized resource adequacy requirements established for jurisdictional LSEs by the CPUC pursuant to the Resource Adequacy Rulings, or by another LRA having jurisdiction over the LSE, as implemented in the Tariff, exclusive of FCR and RAR. LAR may also be known as local resource adequacy, local RAR, or local capacity requirement in other regulatory proceedings or legislative actions.
1.83 “LAR Attributes” means, with respect to a Unit, any and all resource adequacy attributes (or other locational attributes related to system reliability), as they are identified from time to time by the Resource Adequacy Rulings, CAISO, LRA, or other Governmental Body having jurisdiction, associated with the physical location or point of electrical interconnection of the Unit within the CAISO Control Area, that can be counted toward LAR, but exclusive of any FCR Attributes or RAR Attributes which are not associated with where in the CAISO Control Area the Unit is physically located or electrically interconnected. For clarity, it should be understood that if the CAISO, LRA, or other Governmental Body, defines new or re-defines existing local areas, then such change will not result in a change in payments made pursuant to this Agreement.
1.84 “LAR Showings” means the LAR compliance showings (or similar or successor showings) an LSE is required to make to the CPUC (and, to the extent authorized by the CPUC, to the CAISO) pursuant to the Resource Adequacy Rulings and the Tariff, or to an LRA having jurisdiction over the LSE.
1.85 “Letter(s) of Credit” means one or more irrevocable, standby letters of credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch with such bank having (a) a Credit Rating of at least “A-” with an outlook designation of “stable” from S&P or “A3” with an outlook designation of “stable” from Moody’s and (b) assets of at least ten billion 9 US dollars ($10,000,000,000), in a form as set forth in Exhibit A or as otherwise reasonably acceptable to Buyer.
1.86 “Locational Marginal Price” or “LMP” has the meaning set forth in the Tariff.
1.87 “Losses” means, with respect to any Party, an amount equal to the present value of the economic loss to it, if any (exclusive of Costs), resulting from termination of a Terminated Transaction, determined in a commercially reasonable manner.
1.88 “LRA” has the meaning set forth in the Tariff.
1.89 “LSE” means load -serving entity. LSEs may be an investor -owned utility, an electric service provider, a community aggregator or community choice aggregator, or a municipality serving load in the CAISO Control Area (excluding exports).
1.90 “Marketable Emission Trading Credits” means emissions trading credits or units pursuant to the requirements of California Division 26 Air Resources; Health & Safety Code Section 39616 and Section 40440.2 for market-based incentive programs such as the South Coast Air Quality Management District’s Regional Clean Air Incentives Market, also known as RECLAIM, and allowances of sulfur dioxide trading credits as required under Title IV of the Federal Clean Air Act (42 U.S.C. § 7651b (a) to (f)).
1.91 “Member” means [ e.g., Town of Apple Valley, California (d/b/a Apple Valley Choice Energy)].
1.92 “Member Lockbox Arrangement” has the meaning set forth in Section 14.1.
1.93 “Member’s Share” means the percentage set forth as the Member’s Share in Section B of the Cover Sheet.
1.94 “Milestones” has the meaning set forth in Section H of the Cover Sheet.
1.95 “Monthly Capacity Payment” has the meaning specified in Section 3.11 hereof.
1.96 “Moody’s” means Moody’s Investor Services, Inc. or its successor.
1.97 “NERC” means the North American Electric Reliability Corporation, or its successor.
1.98 “Net Qualifying Capacity” or “NQC” has the meaning set forth in the Tariff.
1.99 “Network Upgrades” has the meaning set forth in the Tariff.
1.100 “Non-Availability Charges” has the meaning set forth in the Tariff.
1.101 “Non-Defaulting Party” has the meaning set forth in Section 5.2.
1.102 “Notification Deadline” means, for a given Showing Month, fifteen (1 5) Business Days before the earlier of the relevant deadlines for (a) the corresponding RAR Showings and 10 FCR Showings, or (b) submission of the CAISO Supply Plan filings applicable to that Showing Month.
1.103 “Notifying Party” has the meaning set forth in Section 17.10(a).
1.104 “NQC List” means the Final Net Qualifying Capacity Report, or its successor, as published by the CAISO each year. As of the Effective Date, this report is posted on the CAISO website resource adequacy page https://www.caiso.com/generation-transmission/resource- adequacy under the “Net qualifying capacity (NQC) and effective flexible capacity (EFC)” heading.
1.105 “Outage” means any CAISO approved disconnection, separation, or reduction in the capacity of any Unit that relieves all or part of the offer obligations of the Unit consistent with the Tariff. For the avoidance of doubt, Outage shall be deemed to include Planned Outage.
1.106 “Partial Capacity Deliverability Status” has the meaning set forth in the Tariff.
1.107 “Partial Capacity Deliverability Status Finding” means a written confirmation from the CAISO that the Primary Unit is eligible for Partial Capacity Deliverability Status.
1.108 “Participating Transmission Owner” means an entity that (a) owns, operates and maintains transmission lines and associated facilities and/or has entitlements to use certain transmission lines and associated facilities and (b) has transferred to the CAISO operational control of such facili ties and/or entitlements to be made part of the CAISO Grid. The Participating Transmission Owner for purposes of this Agreement is Southern California Edison Company (“SCE”).
1.109 “Permitted Transferee” means (i) any Affiliate of Seller or (ii) any entity that satisfies, or is controlled by another Person that satisfies, the following requirements:
(a) A tangible net worth of not less than
or a Credit Rating of at least BBB - from S&P or Baa3 from Moody’s; and
(b) At least three (3) years of experience in the ownership and operations of facilities similar to the Primary Unit or has retained a third -party with such experience to operate the Primary Unit.
1.110 “Performance Security” means collateral in the form of cash or a Letter of Credit in an amount set forth in Section G of the Cover Sheet.
1.111 “Planned Outage ” means, subject to and as further described in the Tariff, a CAISO - approved planned or scheduled disconnection, separation or reduction in capacity of the Unit.
1.112 “Point of Interconnection” means the Primary Unit’s point of interconnection to the CAISO system, as further described in the Interconnection Agreement.
11 1.113 “Primary Unit” means the energy storage facility described in Section B of the Cover Sheet and Exhibit D hereof.
1.114 “Product” has the meaning set forth in Section 3.1.
1.115 “Progress Report ” means a report substantially in the form set forth in Exhibit F, the requirements for which are further set forth in Section 16.1(b).
1.116 “Prudent Operating Practice” means (a) the applicable practices, methods and acts required by or consistent with applicable laws and reliability criteria, and otherwise engaged in or approved by a significant portion of the electric power industry during the relevant time period with respect to grid-interconnected, utility-scale battery energy storage facilities in the Western United States, or (b) any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Prudent Operating Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to acceptable practices, methods or acts generally accepted in the electric power industry with respect to grid- interconnected, utility-scale battery energy storage facilities in the Western United States.
1.117 “RA Capacity” means the qualifying and deliverable capacity of the Unit for RAR , LAR, and FCR purposes, as applicable, for the Delivery Term, as determined by the CPUC, CAISO, or other Governmental Body authorized to make such determination under Applicable Laws, including the Resource Adequacy Rulings. RA Capacity encompasses the applicable RAR Attributes , LAR Attributes and FCR Attributes of the capacity provided by a Unit.
1.118 “RAR Attributes ” means, with respect to a Resource Adequacy Resource, any and all resource adequacy attributes, as they are identified from time to time by the Tariff, Resource Adequacy Rulings, LRA, or any Governmental Body having jurisdiction that can be counted toward RAR, exclusive of any LAR Attributes and FCR Attributes.
1.119 “RAR Showings” means the RAR compliance showings (or similar or successor showings) an LSE is required to make to the CPUC (and/or, to the extent authorized by the CPUC, to the CAISO), pursuant to the Tariff or Resource Adequacy Rulings, or to an LRA having jurisdiction.
1.120 “Recipient Party” has the meaning set forth in Section 17.10(a).
1.121 “Regulatory Event” has the meaning set forth in Section 17.7.
1.122 “Reliability Capacity” has the meaning set forth in pending Tariff language available at https://www.caiso.com/documents/all-pending-tariff-language-for-edam-dame.pdf which has been approved by FERC and shall become effective May 1, 2026.
1.123 “Reliability Compensation Services Tariff” has the meaning set forth in the Tariff. 12 1.124 “Replacement Capacity” has the meaning specified in Section 3.9(a) hereof.
1.125 “Replacement Unit” means a unit meeting the requirements specified in Section 3.1(c) hereof that is located within the CAISO Control Area and that is capable of providing Alternate Capacity, unless Buyer agrees to accept a Replacement Unit with different RAR Attributes and/or FCR Attributes. A Replacement Unit may not be a coal -fired or nuclear generating resource and may not be an unspecified import.
1.126 “Requested Confidential Information” has the meaning set forth in Section 11.2(c).
1.127 “Residual Unit Commitment” has the meaning set forth in the Tariff.
1.128 “Resource Adequacy Plan” has the meaning specified in the Tariff.
1.129 “Resource Adequacy Requirements” or “RAR ” means the resource adequacy requirements, exclusive of FCR and LAR, established for LSEs by the CPUC pursuant to the CPUC Decisions, by CAISO pursuant to the Tariff, or by any other Governmental Body having jurisdiction over Compliance Obligations.
1.130 “Resource Adequacy Rulings” means any applicable CPUC ruling or decision related to resource adequacy, or any other resource adequacy Law, rules or regulations enacted, adopted or promulgated by the CPUC or the CAISO, however described, as such decisions, rulings, Laws, rules or regulations may be amended or modified from time -to-time throughout the Term.
1.131 “Resold Product” has the meaning set forth in Article 12.
1.132 “Resource Adequacy Resource” has the meaning set forth in the Tariff.
1.133 “RMR Contracts” has the meaning set forth in the Tariff.
1.134 “S&P” means the Standard & Poor’s Rating Group (a division of McGraw-Hill, Inc.) or its successor.
1.135 “Schedule” or “ Scheduling” means the actions of Seller, Buyer and/or their designated representatives, including each Party’s Transmission Providers, if applicable, of notifying, requesting and confirming to each other the quantity and type of Product to be delivered on any given day or days during the Delivery Term at a specified Delivery Point.
1.136 “Scheduling Coordinator” has the same meaning as in the Tariff.
1.137 “Secured Creditor” means each PPA Provider or other party that is a Secured Creditor under the Intercreditor and Collateral Agency Agreement and its respective successors and assigns.
1.138 “Security Agreement” means the Security Agreement, dated as of [e.g., April 3, 2020] , between Member and Collateral Agent, as collateral agent for the benefit of the Secured Creditors, or any successor agreement generally available to Member’s creditors. 13 1.139 “Security Interest” has the meaning set forth in Section 14.3(a).
1.140 “Seller” has the meaning set forth in the Preamble.
1.141 “Settlement Amount” means the Non -Defaulting Party’s Costs and Losses, on the one hand, netted against its Gains, on the other, expressed in U.S. Dollars, which such party incurs as a result of a Terminated Transaction pursuant to Section 5.2.
1.142 “Showing Month” shall be the calendar month during the Delivery Term that is the subject of the RAR Showing, LAR Showing, and/or FCR Showing, as applicable, as set forth in the Resource Adequacy Rulings or Tariff. For illustrative purposes only, pursuant to the Resource Adequacy Rulings in effect as of the Effective Date, the monthly RAR Showing made in June is for the Showing Month of August.
1.143 “Shown Unit” means the Primary Unit, or any Replacement Unit and specified by Seller in a Supply Plan, but not necessarily identified by Seller to Buyer on the Effective Date.
1.144 “Site” means the real property on which the Primary Unit is located as identified in Exhibit D.
1.145 “Site Control” means that, for the Term, Seller (or, prior to the Delivery Term, its Affiliate):
(a) owns or has the option to purchase the Site; (b) is the lessee or has the option to lease the Site; or (c) is the holder of an easement or an option for an easement, ri ght-of-way grant, or similar instrument with respect to the Site.
1.146 “SP-15” means the Existing Zone Generation Trading Hub (as defined in the Tariff) for Existing Zone (as defined in the Tariff) region SP15.
1.147 “Substitute Capacity” means “RA Substitute Capacity” as defined in the Tariff.
1.148 “Substitution Rules” has the meaning specified in the Tariff.
1.149 “Supply Plan” means the supply plans, or similar or successor filings, that each Scheduling Coordinator representing RA Capacity submits to the CAISO, LRA, or other Governmental Body, pursuant to Applicable Laws, in order for that RA Capacity to count, as applicable, for RAR Attributes, LAR Attributes, and/or FCR Attributes.
1.150 “Tariff” means the tariff and protocol provisions of the CAISO, including associated rules, procedures and business practice manuals, as amended or supplemented from time to time.
1.151 “Term” has the meaning set forth in Section 2.1.
1.152 “Terminated Transaction” has the meaning set forth in Section 5.2.
1.153 “Termination Payment” has the meaning set forth in Section 5.3.
1.154 “Transmission Provider” means the CAISO.
14 1.155 “Transmission System” means the transmission facilities operated by the CAISO, which provide energy transmission service within the CAISO grid from the Point of Interconnection.
1.156 “Unit” shall mean the Primary Unit and any Replacement Units, from which Product is provided by Seller to Buyer.
1.157 “WECC” means the Western Electricity Coordinating Council.
1.158 “Work” means (a) work or operations performed by a Party or on a Party’s behalf; and (b) materials, parts or equipment furnished in connection with such work or operations; including (i) warranties or representations made at any time with respect to the fitness , quality, durability, performance or use of “a Party’s work”; and (ii) the providing of or failure to provide warnings or instructions.
ARTICLE 2: TERM; DELIVERY TERM; CONDITIONS PRECEDENT
2.1 Term.
The term of this Agreement shall commence upon the Effective Date and shall continue until the expiration of the Delivery Term, provided that this Agreement shall thereafter remain in effect until the Parties have fulfilled all obligations arising under th is Agreement, including any compensation for the Product, Termination Payment, then- owing indemnification payments or other damages, are paid in full (whether directly or indirectly, such as through set -off or netting) and the Performance Security is released and/or returned (the “Term”). All provisions relating to invoicing, payment, delivery, settlement of other liabilities incurred pursuant to this Agreement and dispute resolution survive for the period necessary to effectuate the rights of the Party benefited by such provision except as otherwise specified herein. Notwithstanding anything to the contrary in this Agreement, (i) all rights under Sections 17.2 (Indemnities) and any other indemnity rights survive the end of the Delivery Term for an additional twelve (12) months; (ii) all rights and obligations under Article 11 (Confidentiality) survive the end of the Delivery Term for an additional two (2) years; (iii) all rights and obligations under Section 16.2( g) (Limitation on Seller’s Ability to Make or Agree to Third -Party Sales from the Primary Unit after Early Termination Date), if applicable, survive early termination of this Agreement for an additional two (2) years; and (iv) all provisions relating to limitations of liability survive without limit.
2.2 Conditions Precedent.
Seller shall provide notice of the expected Commercial Operation Date for the Primary Unit to Buyer no less than sixty (60) days in advance of such date. The Delivery Term shall not commence until Seller completes to Buyer’s reasonable satisfaction each of the following conditions:
(a) Seller shall have secured all Governmental Approvals as are necessary for the safe and lawful operation and maintenance of the Primary Unit and to enable Seller to deliver the Product to Buyer.
(b) Seller shall have executed an Interconnection Agreement, which shall be in full force and effect, and a copy of the Interconnection Agreement has been delivered to Buyer. 15 (c) Seller shall have secured Site Control.
(d) Seller shall have provided to Buyer a certification of Seller and a licensed professional engineer, substantially in the form attached hereto as Exhibit C, demonstrating that the Commercial Operation Date has occurred.
(e) As of the Commercial Operation Date, no Event of Default on the part of Seller shall have occurred and be continuing.
(f) Seller has provided Buyer with a copy of written notice from the CAISO, or other evidence reasonably demonstrating, that the Primary Unit has been included in the CAISO’s NQC List.
(g) Seller shall have delivered to Buyer all insurance documents required under Article
15. (h) As of the Commercial Operation Date, Seller shall have paid Buyer for all amounts owing under this Agreement, if any, including Commercial Operation Delay Damages.
ARTICLE 3: TRANSACTION, DELIVERY AND PAYMENT
3.1 Resource Adequacy Capacity Product.
During the Delivery Term, Seller shall provide Buyer with the Contract Quantity of (i ) RAR Attributes, and (ii) FCR Attributes, if Flexible RA Product is specified in Sections C and E of the Cover Sheet to this Agreement with respect to each Showing Month (the “ Product”) on a Contingent Firm basis.
(a) Notwithstanding anything to the contrary herein, no energy or ancillary services associated with the Unit is required to be made available to Buyer as part of this Agreement and, except as set forth herein, Buyer shall not be responsible for compensating S eller for Seller’s commitments to the CAISO required by this Agreement. Seller retains the right to sell, pursuant to the Tariff, any RA Capacity that is in excess of the Primary Unit’s Contract Quantity and any RAR Attributes, LAR Attributes, or FCR Attributes not otherwise transferred, conveyed, or sold to Buyer under this Agreement.
(b) Reductions in Contract Quantity. Seller’s obligation to deliver the Contract Quantity for each Showing Month may be reduced at Seller’s option as follows:
(i) by the amount of any Planned Outages taken in accordance with Section 3.5 which exist with respect to any portion of the Primary Unit during the applicable Showing Month; provided, (A) Seller notifies Buyer by the Notification Deadline applicable to that Showing Month of the amount of Product from the Primary Unit that Buyer may include in Buyer’s Compliance Showings for each day of that month as a result of such Planned Outage, and (B) such reduction is able to be reflected on the Supply Plans in accordance with the Tariff. In the event Seller is unable to provide the Contract Quantity for any portion of a Showing Month because of a Planned Outage of the Primary Unit, Seller has the option, but not the obligation, to provide the applicable Contract Quantity for such portion(s) of such Showing Month as Alternate Capacity pursuant to Section 16 3.1(c).
(ii) if the Primary Unit experiences a reduction in Unit NQC and/or Unit EFC as determined by the CAISO and Seller has provided notice of such reduction to Buyer by the Notification Deadline. Seller’s potential reduction in the Contract Quantity of RAR Attributes for each remaining Showing Month shall equal the product of (A) the applicable Showing Month Contract Quantity and (B) the total amount (in MW) of reductions in Unit NQC since the Effective Date, divided by (C) Unit NQC as of the Effective Date. Seller’s potential reduction in the Contract Quantity of FCR Attributes for each remaining Showing Month shall equal the product of (I) the applicable Showing Month Contract Quantity and (II) the total amount (in MW) Unit EFC was reduced since the Effective Date, divided by (III) Unit EFC as of the Effective Date. If the Primary Unit experiences such a reducti on in Unit NQC and/or Unit EFC, then Seller has the option, but not the obligation, upon written notice to Buyer by the Notification Deadline, to provide the applicable portion of the Contract Quantity for such Showing Month (x) from the Primary Unit, provided the Primary Unit has sufficient remaining and available Product, and/or (y) as Alternate Capacity pursuant to Section 3.1(c).
(iii) if the Primary Unit has obtained Interim Deliverability Status of less than the Contract Quantity, for each Showing Month from the Commercial Operation Date through the earlier of (x) August 1, 2031, or (y) the Showing Month in which the Partial Capacity Deliverability Status Finding or Full Capacity Deliverability Status is obtained, Seller’s obligation to deliver the applicable Contract Quantity for such Showing Month may also be reduced by Seller if Seller has provided notice of such reduction to Buyer by the Notification Deadline. Seller’s potential reduction in the Contract Quantity of RAR Attributes and/or FCR Attributes for each Showing Month shall equal the product of (A) the applicable Showing Month Contract Quantity and (B) one (1) minus the Interim Deliverability Status Percentage for such Showing Month. For each Showing Month included in the Delivery Term prior to the Partial Capacity Deliverability Status Finding or Full Capacity Deliverability Status Finding for the Primary Unit, Seller has the option, but not the obligation, to provide all or a portion of the applicable shortfall in the Contract Quantity for such Showing Month (I) from the Primary Unit, provided the Primary Unit has sufficient remaining and available Product, and/or (II) as Alternate Capacity pursuant to Section
3.1(c). For the avoidance of doubt, Seller may not reduce its obligation to deliver the Contract Quantity under this Section 3.1(b)(iii) based on the Interim Deliverability Status of the Primary Unit for any Showing Month after July 2031.
(iv) Change in RA Requirements. If, after the Effective Date, the CAISO or the CPUC (A) replaces NQC as the value utilized to measure the qualifying capacity of the Primary Unit that can be applied toward compliance with RAR, or (B) otherwise changes the methodology for calculating the Unit NQC or the applicable successor value such that the Unit NQC or applicable successor value of the Primary Unit would be reduced (each a “Change in RA Requirements”), then from and after each such Change in RA Requirements (I) Seller will provide notice to Buyer stating the equivalent amount of qualifying capacity of the Primary Unit that can be applied toward compliance with RAR following the Change in RA Requirements (the “Compliance Adjusted Unit NQC”), and (II) Seller will be excused from delivering the portion of the Contract Quantity equal to the difference between the Unit NQC as calculated under the CPUC and CAISO resource adequacy counting rules as of the Effective Date, minus the Compliance Adjusted Unit NQC applicable after the Change in RA Requirements. 17 (c) Alternate Capacity. If Seller is unable to provide the full Contract Quantity for a Showing Month for any reason, including, without limitation, as provided in Section 3.1(b), then Seller may, at no additional cost to Buyer, provide Buyer with Alternate Capacity from one or more Replacement Units in an amount such that the total amount of Product provided to Buyer from the Primary Unit and any Replacement Unit(s) for each Showing Month is not more than the Contract Quantity, provided that in each case:
(i) Seller shall notify Buyer in writing of its intent to provide Alternate Capacity and shall identify the Replacement Unit(s) from which such Alternate Capacity shall be provided no later than the Notification Deadline for such Showing Month; (ii) The proposed Replacement Unit(s) must (1) be accepted by the CAISO, and (2) otherwise satisfy the requirements of this Agreement; (iii) Seller shall, or shall cause the Replacement Unit’s SC to, submit a Supply Plan for each Showing Month no later than the Notification Deadline for such Showing Month; and
(iv) If Seller does not comply with the requirements of Section 3.1(c) for the applicable Showing Month, then any such Replacement Unit(s) shall not be deemed a Replacement Unit for purposes of this Agreement for that Showing Month and Seller shall not receive payment for Product provided by such unit for such Showing Month.
3.2 Seller’s and Buyer’s Obligations.
Seller shall sell and deliver, or cause to be delivered, and Buyer shall purchase and receive, or cause to be received, the Designated RA Capacity of the Product at the Delivery Point, and Buyer shall pay Seller the Contract Price for the Designated RA Capacity. Seller shall be responsible for any costs or charges imposed on or associated with the Product or its delivery of the Product up to the Delivery Point. Buyer shall be responsible for any costs or charges imposed on or ass ociated with the Product or its receipt at and from the Delivery Point.
3.3 Interconnection.
Seller shall take all commercially reasonable actions necessary to obtain Interim Deliverability Status, Partial Capacity Deliverability Status for no less than the Contract Quantity , or Full Capacity Deliverability Status for the Primary Unit by the Guaranteed Commercial Operation Date or as soon as practicable thereafter if such status cannot be obtained by the Guaranteed Commercial Operation Date. Seller shall be responsible for all costs and charges associated with Interconnection Facilities and Network Upgrades necessitated by the interconnection of the Primary Unit.
3.4 Delivery Point.
The “Delivery Point” for the Unit shall be the CAISO Control Area.
18 3.5 Planned Outages.
(a) No later than January 15, April 15, July 15 and October 15 of each Contract Year, and at least sixty (60) days prior to the Commercial Operation Date, Seller shall submit to Buyer Seller’s schedule of proposed Planned Outages (“Outage Schedule”) for the Primary Unit for the following twelve (12) -month period in a form reasonably agreed to by Buyer. As soon as commercially practical but no later than ten (10) Business Days after its receipt of an Outage Schedule, Buyer shall give Notice to Seller of any reas onable request for changes to the Outage Schedule, and Seller shall, consistent with Prudent Operating Practices, accommodate Buyer’s requests regarding the timing of any Planned Outage. Seller shall deliver to Buyer the final Outage Schedule no later than ten (10) days after receiving Buyer’s comments. (b) If reasonably required in accordance with Prudent Operating Practices, Seller shall have the right, on no less than ninety (90) days advance Notice to Buyer, to propose changes to the Outage Schedule developed pursuant to Section 3.5(a); provided , Seller shall schedule all Planned Outages within the time period determined by the CAISO for the Primary Unit as a Resource Adequacy Resource that is subject to the Availability Standards to qualify for an “Approved Maintenance Outage” under the Tariff. Notwithstanding anything in this Agreement to the contrary, no Planned Outages of the Primary Unit shall be scheduled or planned from each June 1 through October 31 during the Delivery Term, unless approved by Buyer in writing in its reasonable discretion.
3.6 CPUC Mid-Term Reliability Requirements.
Buyer intends to apply this Agreement towards Member’s compliance with mandatory procurement obligations for incremental capacity pursuant to CPUC Decision 21-06-035 and any similar future compliance program administered by any regulatory agency to which Member is accountable. Seller will provide additional information and documentation to Buyer upon reasonable request to enable Buyer to demonstrate that the Primary Unit meets the procurement mandates set forth in CPUC Decision 21-06-035 to the extent such information and documentation is available to Seller and not separately available to Buyer. Seller represents and warrants to Buyer that:
(a) As of the Effective Date, the Primary Unit is not on the CPUC baseline list set forth at https://www.cpuc.ca.gov/ -/media/cpuc-website/divisions/energy- division/documents/integrated-resource-planand-long-term-procurement-plan- irpltpp/d2106035_baseline_gen_list_20220902.xlsx (updated September 2, 2022); (b) The Product shall include the exclusive right to claim the Contract Quantity of the Primary Unit as an incremental resource for purposes of CPUC Decision 21-06-035, other future CPUC decisions mandating procurement, and any other existing or future compliance program administered by any regulatory agency to which Member is accountable, with respect to the Delivery Term, provided that Seller makes no representation or warranty with respect to eligibility of the Primary Unit or Product for any such compliance program; and (c) Seller has not and will not sell, assign or transfer to any other Person or entity the right to claim procurement of the Contract Quantity of the Primary Unit as an incremental resource 19 for purposes of CPUC Decision 21-06-035 or any other existing or future compliance program administered by any regulatory agency to which Member is accountable, with respect to the Delivery Term, provided that Seller makes no representation or warranty with respect to eligibility of the Primary Unit or Product for any such compliance program.
3.7 Delivery of Product.
Seller shall provide Buyer with the Designated RA Capacity of Product for each Showing Month consistent with the following:
(a) No later than the Notification Deadline corresponding to each Showing Month of the Delivery Term, Seller shall submit, or cause the Unit’s Scheduling Coordinator to submit, Supply Plans to identify the characteristics of the Shown Unit and confirm the Designated RA Capacity provided to Buyer for each Showing Month so that the total amount of Designated RA Capacity identified and confirmed for such Showing Month equals the Designated RA Capacity, unless specifically requested not to do so by Buyer.
(b) Seller shall cause all Supply Plans to meet and be filed in conformance with the requirements of the Tariff. Seller shall submit, or cause the Shown Unit’s SC to submit, on a timely basis with respect to each applicable Showing Month, Supply Plans in accordance with the Tariff to identify and confirm the Product delivered to Buyer for each Showing Month of the Delivery Term.
(c) Seller shall identify the Shown Unit(s) and Designated RA Capacity for a Showing Month by providing Buyer with the specific Shown Unit information in the format set forth in Section B of Cover Sheet no later than the Notification Deadline for such Showing Month. (d) The Designated RA Capacity is delivered and received when the CIRA Tool shows that the Supply Plan submitted in compliance with Buyer’s instructions, including Buyer’s instructions to withhold all or part of the Designated RA Capacity from Seller’s Supply Plan for any Showing Month during the Delivery Term as set forth in Section 3.7(e), has been accepted by the CAISO. If CAISO rejects either the Supply Plan or Buyer’s Resource Adequacy Plan with respect to any part of the Designated RA Capacity in any Showing Month, the Parties will confer, make such corrections as are necessary for acceptance, and resubmit the corrected Supply Plan or Resource Adequacy Plan for validation before the applicable Notification Deadline for the relevant Showing Month. Seller has failed to deliver Product if Seller fails to submit a Supply Plan for the volume of Designated RA Capacity for any Showing Month in such amount as instructed by Buyer (but not to exceed the Designated RA Capacity) for the applicable Showing Month. Seller shall not have failed to deliver the Designated RA Capacity if Buyer fails or chooses not to submit the Shown Unit(s) and the Product in its Resource Adequacy Plan with the CPUC or CAISO. (e) No later than five (5) Business Days before the Notification Deadline for a Showing Month, Buyer may request in writing that Seller not list, or cause the Shown Unit’s Scheduling Coordinator not to list, in the Shown Unit’s Supply Plan a portion or all of the Designated RA Capacity for any portion of such Showing Month (“ Hold-Back Capacity”). Following Buyer’s request for Hold-Back Capacity, Buyer may request, in writing, that Seller make the previously requested Hold- Back Capacity available for Buyer’s us e as Substitute Capacity within the respective Showing Month. Such request shall be provided to Seller no later than five (5) Business 20 Days prior to the first day for which Buyer seeks to use such Substitute Capacity. The portion of the Designated RA Capacity that is the subject of Buyer’s request for Hold- Back Capacity shall be deemed Contract Quantity delivered consistent with Section 3.7(d) for purposes of calculating a Monthly Capacity Payment pursuant to Section 3.11. Seller shall, or shall cause the Unit’s Scheduling Coordinator to, use commercially reasonable efforts to comply with Buyer’s request under this Section 3.7(e) including taking all commercially reasonable actions to allow Buyer or a subsequent purchaser under Article 12 to utilize the applicable portion of the Designated RA Capacity that Buyer timely requested be withheld from the Supply Plans during each Showing Month under the Substitution Rules, including, but not limited to, providing Buyer or subsequent purchaser under Article 12 with all information needed to utilize the Substitution Rules. Seller shall not be liable for any amounts under Section 3.9 or Section 3.10 resulting from Buyer’s inability to use the Hold -Back Capacity as Substitute Capacity unless due to Seller’s unexcused failure to make the Hold-Back Capacity available for use as Substitute Capacity.
3.8 CAISO Offer Requirements.
To the extent required under the Tariff, Seller shall schedule or cause the Shown Unit’s Scheduling Coordinator to schedule with, or make available to, the CAISO the Shown Unit’s portion of the Designated RA Capacity in compliance with the Tariff and perform all, or cause the Shown Unit’s Scheduling Coordinator, owner, or operator, as applicable, to perform all obligations under the Tariff that are associated with the sale of Product hereunder. Buyer is not liable for the failure of Seller or the failure o f any Shown Unit’s Scheduling Coordinator, owner, or operator to comply with such Tariff provisions, including any penalties or fines imposed on Seller or the Shown Unit’s Scheduling Coordinator, owner, or operator for such noncompliance.
3.9 Damages for Failure to Provide Designated RA Capacity.
If Seller fails to provide Buyer with the Designated RA Capacity of Product for any Showing Month, and such failure is not excused under the terms of this Agreement, then the following shall apply:
(a) Buyer may, but shall not be required to, replace any portion of the Designated RA Capacity not provided by Seller with capacity having equivalent RAR Attributes and/or FCR Attributes as the Designated RA Capacity not provided by Seller; provided, (i) capacity having equivalent RAR Attributes and/or FCR Attributes as the Designated RA Capacity not provided by Seller is not available, then Buyer may replace such portion of the Designated RA Capacity with capacity having better RAR Attributes and/or FCR Attributes than the Designated RA Capacity not provided by Seller, and (ii) if any portion of the Designated RA Capacity that Buyer is seeking to replace is Designated RA Capacity having RAR Attributes and no LAR Attributes, and no such RAR capacity is available (such capacity shall also include FCR Attributes if this is a Flexible RA Product), then Buyer may replace such portion of the Designated RA Capacity with capacity having RAR Attributes and LAR Attributes ( as well as FCR Attributes if this is a Flexible RA Product) (“Replacement Capacity”), in either case, by entering into purchase transactions with one or more third parties, including, without limitation, third parties who have purchased capacity from Buyer, so long as such transactions are done at prevailing market prices. Buyer shall use commercially reasonable efforts to minimize damages when procuring any Replacement Capacity. 21 (b) Seller shall pay to Buyer, on the date payment would otherwise be due in respect of the Showing Month for which the failure occurred, an amount equal to the positive difference, if any, between (i) the sum of (A) the actual cost paid by Buyer for any Repla cement Capacity purchased by Buyer pursuant to Section 3.9(a) for such Showing Month, plus (B) the product of the Capacity Replacement Price times the amount of the Designated RA Capacity neither provided by Seller nor purchased by Buyer pursuant to Section 3.9(a) for such Showing Month, minus (ii) the product of the Contract Price times the amount of the Designated RA Capacity not provided by Seller for such Showing Month. If Seller fails to pay these damages, then Buyer may offset those damages owed it against any future amounts it may owe to Seller pursuant to Article 6 of this Agreement.
(c)
3.10 I
ndemnities for Failure to Deliver Contract Quantity.
Seller shall be responsible for the cost of, and agrees to indemnify, defend and hold harmless Buyer from any penalties, fines or costs assessed against Buyer by the CPUC or the CAISO, resulting from any of the following:
(a) Seller’s failure to provide any portion of the Designated RA Capacity for the respective Showing Month for the Delivery Term; or
(b) A Unit Scheduling Coordinator’s failure to submit accurate or timely Supply Plans that identify Buyer’s right, or a subsequent purchaser’s right, to the Designated RA Capacity purchased hereunder.
With respect to the foregoing, the Parties shall use commercially reasonable efforts to minimize such penalties, fines and costs; provided, in no event shall Buyer be required to use or change its utilization of its owned or controlled assets or market positions to minimize these costs, penalties and fines. If Seller fails to pay the foregoing penalties, fines or costs, or fails to reimburs e Buyer for those penalties, fines or costs, then Buyer may offset those penalties, fines or costs against any future amounts it may owe to Seller under this Agreement.
3.11 Monthly Capacity Payment.
Buyer shall make a Monthly Capacity Payment to Seller, in arrears, after the applicable Showing Month. The “Monthly Capacity Payment ” shall be equal to the product of (i) the applicable Contract Price for such month, (ii) the Designated RA Capacity, as measured by RAR Attributes, actually delivered by Seller for such month in accordance with Section 3.7, (iii) , and (iv) 1,000,
rounded to the nearest penny (i.e., two decimal places).
22 3.12 Allocation of Other Payments and Costs.
(a) Seller may retain any revenues it may receive from, and shall pay all costs charged by, the CAISO or any other third party with respect to any Unit for any products other than the Designated RA Capacity, including for (i) start -up, shut -down, and minimum load costs, (ii) capacity revenue for ancillary services, (iii) energy sales, (iv) Imb alance Reserves, (v) any revenues for black start or reactive power services, or (vi) the sale of the unit-contingent call rights on the storage capacity of the Unit to provide energy to a third party, so long as such rights do not confer on such third party the right to claim any portion of the RA Capacity sold hereunder in order to make an RAR Showing, LAR Showing, FCR Showing, or any similar capacity or resource adequacy showing with the CAISO or CPUC.
(b) Buyer shall be entitled to receive and retain all revenues associated with the Designated RA Capacity of the Unit during the Delivery Term (including any capacity or availability revenues from RMR Contracts for any Unit, Reliability Compensation Services Tariff, Residual Unit Commitment, or Reliability Capacity , or any simil ar or successor capacity payments, but excluding payments described in Section 3.12(a) above).
(c) In accordance with Section 3.11 of this Agreement:
(i) all such Buyer revenues described in Section 3.12(b) received by Seller, or a Unit’s Scheduling Coordinator, owner, or operator shall be remitted to Buyer, and Seller shall pay such revenues to Buyer if the Unit’s Scheduling Coordinator, owner, or operator fails to remit those revenues to Buyer (and upon any such payment by Seller, Seller shall be subrogated to all rights of Buyer against such Unit’s Scheduling Coordinator, owner, or operator for the amount of such revenues paid). If Seller fails to pay such revenues to Buyer, Buyer may offset any amounts owing to it for such revenues against any future amounts it may owe to Seller under this Agreement.
(ii) all such Seller, or a Unit’s Scheduling Coordinator, owner, or operator revenues described in Section 3.12(a), but received by Buyer shall be remitted to Seller, and Buyer shall pay such revenues to Seller if the Unit’s Scheduling Coordinator, owner, or operator fails to remit those revenues to Seller (and upon any such payment by Buyer, Buyer shall be subrogated to all rights of Seller against such Unit’s Scheduling Coordinator, owner, or operator for the amount of such revenues paid). If Buyer fails to pay such revenues to Seller, Seller may offset any amounts owing to it for such revenues against any future amounts it may owe to Buyer under this Agreement.
(d) If a centralized capacity market develops within the CAISO or WECC region, Buyer will have exclusive rights to offer, bid, or otherwise submit Designated RA Capacity provided to Buyer pursuant to this Agreement for re -sale in such market, and retain and re ceive any and all related revenues. Buyer shall be responsible for any material, incremental costs of offering, bidding, submitting, or re-selling Designated RA Capacity in such centralized capacity market.
(e) Buyer acknowledges and agrees that all Availability Incentive Payments are for the benefit of Seller and for Seller’s account, and that Seller shall receive, retain, or be entitled to 23 receive all credits, payments, and revenues, if any, resulting from Seller achieving or exceeding Availability Standards. The Parties acknowledge and agree that any Non-Availability Charges are the responsibility of Seller, and for Seller’s account and Se ller shall be responsible for all fees, charges, or penalties, if any, resulting from Seller failing to achieve Availability Standards.
3.13 Force Majeure.
(a) Except as provided in Section 16.2(c), neither Seller nor Buyer shall be liable to the other Party in the event it is prevented from performing its obligations hereunder in whole or in part due to Force Majeure. The Party rendered unable to fulfill any obligation by reason of a Force Majeure shall take reasonable actions necessary to remove such inability with due speed and diligence. Nothing herein shall be construed as permitting that Party to continue to fail to perform after said cause has been removed. The obligation to use due speed and diligence shall not be interpreted to require resolution of labor disputes by acceding to demands of the opposition when such course is inadvisable in the discretion of the Party having such difficulty. Neither Party shall be considered in breach or default of this Agreement if and to the extent that any failure or delay in the Party’s performance of one or more of its obligations hereunder is caused by a Force Majeure. Notwithstanding the foregoing, the occurrence and continuation of a Force Majeure Event shall not (a) suspend or excuse the obligation of Seller to achieve the Guaranteed Commercial Operation Date beyond the extensions provided in Section 16.2(c), or (b) limit Buyer’s right to declare an Event of Default pursuant to Section 5.1(d) after all applicable extensions of the Guaranteed Commercial Operation Date and receive a Damage Payment upon exercise of Buyer’s remedies pursuant to Section 5.2.
(b) Within five (5) Business Days of becoming aware of the commencement of a Force Majeure event, the claiming Party shall provide the other Party with oral notice of the event of Force Majeure, and within two (2) weeks of the initial notice of a Force Majeure event, the claiming Party shall provide the other Party with notice in the form of a letter describing in detail the occurrence giving rise to the Force Majeure event, including the nature, cause, estimated date of commencement thereof, and the anticipated extent of any delay or interruption in performance.
Failure to provide timely notice constitutes a waiver of the Force Majeure event as to all periods prior to the delivery of the notice. Upon written request from Buyer, Seller shall provide documentation demonstrating to Buyer’s reasonable satisfaction that each day of the claimed delay was the result of a Force Majeure event and did not result from Seller’s actions or failure to exercise due diligence or take reasonable actions. The claiming Party shall promptly notify the other Party in writing of the cessation or termination of such Force Majeure, all as known or estimated in good faith by the affected Party. The suspension of performance due to a claim of Force Majeure must be of no greater scope and of no longer duration than is required by the Force Majeure event.
(c) If a Force Majeure event has occurred after the Commercial Operation Date that has caused either Party to be wholly or partially unable to perform its obligations hereunder, and the impacted Party has claimed and received relief from performance of its obl igations for a consecutive twelve (12) month period, then the non-claiming Party may terminate this Agreement upon Notice to the other Party. Upon any such termination, neither Party shall have any further liability to the other Party, save and except for those obligations specified in Section 2.1, and Buyer shall promptly return to Seller any Performance Security then held by Buyer, less any amounts drawn in accordance with this Agreement.
24 ARTICLE 4: RESERVED
ARTICLE 5: EVENTS OF DEFAULT; REMEDIES
5.1 Events of Default.
An “Event of Default” shall mean, with respect to a Party (a “Defaulting Party ”), the occurrence of any of the following:
(a) the failure to make, when due, any payment required pursuant to this Agreement if such failure is not remedied within ten (10) Business Days after written notice; (b) any representation or warranty made by such Party herein is false or misleading in any material respect when made or when deemed made or repeated and such Party does not fully mitigate the adverse consequences as reasonably determined by the other Party of such incorrect representation or warranty to the other Party within thirty (30) days after written notice thereof; (c) the failure to perform any material covenant or obligation set forth in this Agreement (except to the extent constituting a separate Event of Default, and except for Seller’s obligations to deliver the Product, the exclusive remedy for which is provided in Section 3.9 and Section 3.10) if such failure is not remedied within thirty (30) Business Days after written notice; (d) the failure by Seller to achieve Commercial Operation on or before the Guaranteed Commercial Operation Date,
;
(e) if at any time, Seller delivers or attempts to deliver Product to the Delivery Point for sale under this Agreement that was not generated by the Unit, except for Alternate Capacity; (f) Seller sells, assigns, or otherwise transfers, or commits to sell, assign, or otherwise transfer, the Product, or any portion thereof, from the Primary Unit for delivery during the Delivery Term to any party other than Buyer, a subsequent purchaser under Article 12, or CAISO , except as permitted under this Agreement or as otherwise required by Applicable Law; (g) such Party becomes Bankrupt;
(h) such Party assigns this Agreement or any of its rights hereunder other than in compliance with Section 17.3, if applicable;
(i) the failure of such Party to satisfy the creditworthiness/collateral requirements agreed to pursuant to Article 14 hereof if such failure is not remedied within ten (10) Business Days after written notice, including the failure to replenish the Performance Security amount in accordance with this Agreement in the event Buyer draws against it for any reason other than to satisfy a Damage Payment or a Termination Payment;
(j) with respect to Buyer, Member defaults under the Member Lockbox Arrangement; (k) such Party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all of its assets to, another entity and, at the time of such consolidation,
25 amalgamation, merger or transfer, the resulting, surviving or transferee entity fails to assume all the obligations of such Party under this Agreement to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other Party; or (l) with respect to any outstanding Letter of Credit provided for the benefit of Buyer that is not then required under this Agreement to be canceled or returned, the failure by Seller to provide for the benefit of Buyer either (1) cash, or (2) a substitute Letter of Credit from a different issuer meeting the criteria set forth in the definition of Letter of Credit, in each case, in the amount required hereunder within ten (10) Business Days after Seller receives Notice of the occurrence of any of the following events:
(i) the issuer of the outstanding Letter of Credit shall fail to maintain a Credit Rating of at least A- by S&P or A3 by Moody’s;
(ii) the issuer of such Letter of Credit becomes Bankrupt; (iii) the issuer of the outstanding Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit and such failure shall be continuing after the lapse of any applicable grace period permitted under such Letter of Credit; (iv) the issuer of the outstanding Letter of Credit shall fail to honor a properly documented request to draw on such Letter of Credit;
(v) the issuer of the outstanding Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit; (vi) such Letter of Credit fails or ceases to be in full force and effect at any time; or
(vii) Seller shall fail to renew or cause the renewal of each outstanding Letter of Credit on a timely basis as provided in the relevant Letter of Credit and as provided in accordance with this Agreement.
5.2 Declaration of an Early Termination Date and Calculation of Settlement Amounts.
If an Event of Default with respect to a Defaulting Party shall have occurred and be continuing, the other Party (the “Non-Defaulting Party”) shall have the right to (i) designate a day, no earlier than the day such notice is effective and no later than twenty (20) days after such notice is effective, as an early termination date (“Early Termination Date”) to accelerate all amounts owing between the Parties and to liquidate and terminate this Agreement (referred to herein as a “Terminated Transaction”) between the Parties, (ii) withhold any payments due to the Defaulting Party under this Agreement; and (iii) suspend performance. If the Early Termination Date occurs before the Commercial Operation Date and Seller is the Defaulting Party, then the Damage Payment shall be owed to Buyer. If the Early Termination Date occurs before the Commercial Operation Date and Buyer is the Defaulting Party, then Seller shall calculate, in a commercially reasonable manner, a Settlement Amount for such Terminated Transaction as of the Early Termination Date (or, to the extent that in the reasonable opinion of the Non -Defaulting Party certain of such Terminated Transaction are commercially impracticable to liquidate and terminate or may not be liquidated 26 and terminated under A pplicable Law on the Early Termination Date, as soon thereafter as is reasonably practicable). If the Early Termination Date occurs after the Commercial Operation Date, then as soon as reasonably practicable, the Non -Defaulting Party shall calculate, in a commercially reasonable manner, a Settlement Amount for such Terminated Transaction as of the Early Termination Date (or, to the extent that in the reasonable opinion of the Non-Defaulting Party certain of such Terminated Transaction are commercially impracticable to liquidate and terminate or may not be liquidated and terminated under Applicable Law on the Early Termination Date, as soon thereafter as is reasonably practicable). The Gains and Losses for a Terminated Transaction shall be determined by calculating the amount that would be incurred or realized to replace or to provide the economic equivalent of the remaining payments or deliveries in respect of the Terminated Transaction. The Non- Defaulting Party (or its agent) may deter mine its Gains and Losses by reference to information either available to it internally or supplied by one or more third parties including, without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatili ties, spreads or other relevant market data in the relevant markets. Third parties supplying such information may include, without limitation, dealers in the relevant markets, end -users of the relevant product, information vendors and other sources of market information. If the Non- Defaulting Party’s Costs and Losses exceed its Gains, then the Settlement Amount shall be an amount owing to the Non-Defaulting Party. If the Non-Defaulting Party’s Gains exceed its Costs and Losses, then the Settlement Amount shall be zero dollars ($0).
5.3 Net Out of Settlement Amounts.
The Non- Defaulting Party shall net out (a) any Settlement Amount that is due to the Non - Defaulting Party, plus (b) any or all other amounts due to the Non- Defaulting Party under this Agreement against (c) all amounts due to the Defaulting Party under this Agreement, so that all such amounts shall be netted out to a single liquidated amount (the “Termination Payment ”) payable by one Party to the other. The Termination Payment shall be due to or from the Non- Defaulting Party as appropriate. Without prejudice to the Non-Defaulting Party’s duty to mitigate, the Non- Defaulting Party shall not have to enter into replacement transactions to establish a Settlement Amount. Each Party agrees and acknowledges that (i) the actual damages that the Non- Defaulting Party would incur in connection with a Terminated Transaction would be difficult or impossible to predict with certainty, (ii) the Termination Payment described in this Section 5.3 is a reasonable and appropriate approximation of such damages, and (iii) the Termination Payment described in this Section 5.3 is the exclusive remedy of the Non- Defaulting Party in connection with a Terminated Transaction but shall not otherwise act to limit any of the Non-Defaulting Party’s rights or remedies if the Non-Defaulting Party does not elect a Terminated Transaction as its remedy for an Event of Default by the Defaulting Party.
5.4 Notice of Payment of Termination Payment.
As soon as practicable after a liquidation, notice shall be given by the Non-Defaulting Party to the Defaulting Party of the amount of the Termination Payment and whether the Termination Payment is due to or due from the Non- Defaulting Party. The notice s hall include a written statement explaining in reasonable detail the calculation of such amount. The Termination Payment shall be made by the Party that owes it within ten (10) days after such notice is effective.
27 5.5 Disputes with Respect to Termination Payment.
If the Defaulting Party disputes the Non- Defaulting Party’s calculation of the Termination Payment, in whole or in part, the Defaulting Party shall, within ten (10) days of receipt of Non - Defaulting Party’s calculation of the Termination Payment, provide to the Non-Defaulting Party a detailed written explanation of the basis for such dispute; provided, however, that if the Termination Payment is due from the Defaulting Party, the Defaulting Party shall first transfer Performance Security to the Non-Defaulting Party in an amount equal to the Termination Payment.
5.6 Closeout Setoffs.
After calculation of a Termination Payment in accordance with Section 5.3, if the Defaulting Party would be owed the Termination Payment, the Non-Defaulting Party shall be entitled, at its option and in its discretion, to the extent this Agreement is not y et liquidated in accordance with Section 5.2, to withhold payment of the Termination Payment to the Defaulting Party. The remedy provided for in this Section 5.6 shall be without prejudice and in addition to any right of setoff, combination of accounts, l ien or other right to which any Party is at any time otherwise entitled (whether by operation of law, contract or otherwise).
ARTICLE 6: PAYMENT AND NETTING
6.1 Billing Period.
The calendar month shall be the standard period for all payments under this Agreement (other than Termination Payments). Seller shall use commercially reasonable efforts to deliver an invoice to Buyer for the Monthly Capacity Payment within ten (10) days after the end of the prior monthly delivery period. Each invoice shall include the amount of Product and Replacement RA delivered to Buyer (if any) and (ii) a calculation of the Monthly Capacity Payment and other relevant data for the prior month; and (b) be in a format reasonably specified by Buyer, covering the Product provided in the preceding month determined in accordance with the applicable provisions of this Agreement. Each Party will render to the other Party an invoice for the payment obligations, if any, incurred hereunder during the preceding month.
6.2 Timeliness of Payment.
Buyer shall make payment to Seller for the Product by wire transfer or ACH payment to the bank account designated by Seller in Exhibit G, which may be updated by Seller by Notice hereunder; provided, however, that changes to invoice, payment, wire transfer and other banking information must be made in writing and delivered via certified mail and shall include contact information for an authorized individual who is available by telephone to verify the authenticity of such requested changes. Buyer shall pay undisputed invoiced amounts in accordance with (a) the monthly distribution date under the Member Lockbox Arrangement, if existing, of the month in which the invoice was received, provided that such invoice was received by the tenth (10 th) day of the month,
otherwise the invoice will be paid on the next month’s monthly distribution date, or (b) if the Member Lockbox Arrangement is no longer existing, thirty (30) days from receipt of the invoice, or the end of the prior monthly delivery period, whichever is later; provided, if such due date falls on a weekend or legal holiday, such due date shall be the next Business Day. Any amounts not paid by the due date will be deemed delinquent and will accrue interest at the Interest Rate, such 28 interest to be calculated from and including the due date to but excluding the date the delinquent amount is paid in full.
6.3 Disputes and Adjustments of Invoices.
A Party may, in good faith, dispute the correctness of any invoice or any adjustment to an invoice, rendered under this Agreement or adjust any invoice for any arithmetic or computational error within twelve (12) months of the date the invoice, or adjustment to an invoice, was rendered. In the event an invoice or portion thereof, or any other claim or adjustment arising hereunder, is disputed, payment of the undisputed portion of the invoice shall be required to be made when due, with notice of the objection given to the other Party. Any invoice dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment. Payment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of the dispute, any required payment shall be made within five (5) Business Days of such resolution along with interest accrued at the Interest Rate from and including the due date to but excluding the date paid.
Inadvertent overpayments shall be returned upon request or deducted by the Party receiving such overpayment from subsequent payments, with interest accrued at the Interest Rate from and including the date of such overpayment to but excluding the date repaid or deducted by the Party receiving such overpayment. Any dispute with respect to an invoice is waived unless the other Party is notified in accordance with this Section 6.3 within twelve (12) months after the invoice is rendered or any specific adjustment to the invoice is made. If an invoice is not rendered within twelve (12) months after the close of the month during which performance occurred, the right to payment for such performance is waived.
6.4 Netting of Payments.
The Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other under this Agreement on the same date through netting, in which case all amounts owed by each Party to the other Party for the purchase and sale of Product during the monthly billing period under this Agreement, including any related damages calculated pursuant to Sections 3.9, 3.10 or 16.2( b), interest, and payments or credits, shall be netted so that only the excess amount remaining due shall be paid by the Party who owes it.
6.5 Payment Obligation Absent Netting.
If no mutual debts or payment obligations exist and only one Party owes a debt or obligation to the other during the monthly billing period, including, but not limited to, any related damage amounts calculated pursuant to Sections 3.9 or 3.10, interest, and payments or credits, that Party shall pay such sum in full when due.
6.6 Security.
Unless the Party benefiting from the Performance Security notifies the other Party in writing, and except in connection with a liquidation and termination in accordance with Article 5, all amounts netted pursuant to this Article 6 shall not take into account or include any Performance Security which may be in effect to secure a Party’s performance under this Agreement.
29 6.7 Records.
To facilitate payment and verification, each Party shall maintain all books and records necessary for billing and payments, including copies of all invoices under this Agreement, for a period of at least two (2) years or as otherwise required by Applicable Law. Upon fifteen (15) days’ Notice to the other Party, either Party shall be granted reasonable access to the accounting books and records within the possession or control of the other Party pertaining to all invoices generated pursuant to this Agreement. Seller acknowledges that in accordance with California Government Code Section 8546.7, Seller may be subject to audit by the California State Auditor with regard to Seller’s performance of this Agreement because the compensation under this Agreement exceeds Ten Thousand Dollars ($10,000).
ARTICLE 7: LIMITATIONS
7.1 No Consequential Damages.
EXCEPT TO THE EXTENT (A) PART OF AN EXPRESS REMEDY OR MEASURE OF
DAMAGES HEREIN, (B) PART OF A THIRD PARTY INDEMNITY CLAIM UNDER ARTICLE 16, (C) INCLUDED IN A LIQUIDATED DAMAGES CALCULATION, OR (D) RESULTING FROM A PARTY’S WILLFUL MISCONDUCT, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER OR ITS INDEMNIFIED PERSONS FOR ANY SPECIAL,
PUNITIVE, EXEMPLARY, INDIRECT, OR CONSEQUENTIAL DAMAGES, OR LOSSES OR
DAMAGES FOR LOST REVENUE OR LOST PROFITS, WHETHER FORESEEABLE OR
NOT, ARISING OUT OF, OR IN CONNECTION WITH THIS AGREEMENT, BY STATUTE, IN TORT OR CONTRACT.
7.2 Limitation of Remedies, Liability and Damages.
EXCEPT AS EXPRESSLY SET FORTH HEREIN, THERE IS NO WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM THAT THE
EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. ALL LIMITATIONS OF
LIABILITY CONTAINED IN THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THOSE PERTAINING TO SELLER’S LIMITATION OF LIABILITY AND THE PARTIES’
WAIVER OF CONSEQUENTIAL DAMAGES, SHALL APPLY EVEN I F THE REMEDIES
FOR BREACH OF WARRANTY PROVIDED IN THIS AGREEMENT ARE DEEMED TO “FAIL OF THEIR ESSENTIAL PURPOSE” OR ARE OTHERWISE HELD TO BE INVALID OR UNENFORCEABLE.
FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS AND EXCLUSIVE
REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR
MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED.
IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR’S LIABILITY SHALL BE LIMITED TO DIRECT DAMAGES ONLY. THE 30 VALUE OF ANY TAX CREDITS, DETERMINED ON AN AFTER -TAX BASIS, LOST DUE TO BUYER’S DEFAULT (WHICH SELLER HAS NOT BEEN ABLE TO MITIGATE AFTER
USE OF REASONABLE EFFORTS) AND AMOUNTS DUE IN CONNECTION WITH THE
RECAPTURE OF ANY TAX CREDITS, IF ANY, SHALL BE DEEME D TO BE DIRECT DAMAGES. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, INCLUDING UNDER SECTIONS 3.9, 3.10, 5.2, 5.3, 16.2(b) AND 16.2(e),
THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR
IMPOSSIBLE TO DETERMINE, THAT OTHERWISE OBTAINING AN ADEQUATE
REMEDY IS INCONVENIENT, AND THAT THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE ANTICIPATED HARM OR LOSS. IT IS THE
INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES
AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR
CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY,
WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. THE PARTIES HEREBY WAIVE ANY RIGHT TO CONTEST SUCH PAYMENTS AS AN UNREASONABLE PENALTY.
THE PARTIES ACKNOWLEDGE AND AGREE THAT MONEY DAMAGES AND THE
EXPRESS REMEDIES PROVIDED FOR HEREIN ARE AN ADEQUATE REMEDY FOR THE
BREACH BY THE OTHER OF THE TERMS OF THIS AGREEMENT, AND EACH PARTY
WAIVES ANY RIGHT IT MAY HAVE TO SPECIFIC PERFORMANCE WITH RESPECT TO ANY OBLIGATION OF THE OTHER PARTY UNDER THIS AGREEMENT.
ARTICLE 8: GOVERNMENTAL CHARGES
8.1 Cooperation.
Each Party shall use reasonable efforts to implement the provisions of and to administer this Agreement in accordance with the intent of the Parties to minimize all taxes, so long as neither Party is materially adversely affected by such efforts.
8.2 Governmental Charges.
Seller shall pay or cause to be paid all taxes imposed by any government authority (“Governmental Charges”) on or with respect to the Product or a transaction arising prior to the Delivery Point.
Buyer shall pay or cause to be paid all Governmental Charges on or with respect to the Product or a transaction at and from the Delivery Point (other than ad valore m, franchise or income taxes which are related to the sale of the Product and are, therefore, the responsibility of the Seller). In the event Seller is required by law or regulation to remit or pay Governmental Charges which are Buyer’s responsibility hereunder, Buyer shall promptly reimburse Seller for such Governmental Charges. If Buyer is required by law or regulation to remit or pay Governmental Charges which are Seller’s responsibility hereunder, Buyer may deduct the amount of any such Governmental Charges from the sums due to Seller under Article 6 of this Agreement. Nothing shall obligate or cause a Party to pay or be liable to pay any Governmental Charges for which it is exempt under the law.
31 ARTICLE 9: RESERVED
ARTICLE 10: REPRESENTATIONS; WARRANTIES; COVENANTS
10.1 Mutual Representations and Warranties.
On the Effective Date, each Party represents and warrants to the other Party that:
(a) it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and is qualified to conduct business in the state of California; (b) it has all regulatory authorizations necessary for it to legally perform its obligations under this Agreement, except all permits necessary to construct, operate and maintain the Primary Unit and sell the Product therefrom in the case of Seller; (c) the execution, delivery and performance of this Agreement are within its powers, have been duly authorized by all necessary action and do not violate any of the terms and conditions in its governing documents, any contracts to which it is a party or any Applicable Law applicable to it;
(d) this Agreement and each other document executed and delivered in accordance with this Agreement constitutes its legally valid and binding obligation enforceable against it in accordance with its terms; subject to any Equitable Defenses. (e) it is not Bankrupt and there are no proceedings pending or being contemplated by it or, to its knowledge, threatened against it which would result in it being or becoming Bankrupt; (f) there is not pending or, to its knowledge, threatened against it or any of its Affiliates any legal proceedings that could materially adversely affect its ability to perform its obligations under this Agreement;
(g) it is a “forward contract merchant” within the meaning of the United States Bankruptcy Code; and
(h) it has entered into this Agreement in connection with the conduct of its business and it has the capacity or ability to make or take delivery of Product.
10.2 Buyer and Seller Covenants.
(a) Buyer and Seller shall, throughout the Delivery Term, take all commercially reasonable actions and execute any and all documents or instruments reasonably necessary to ensure Buyer’s right to the use of the Contract Quantity for the sole benefit of Buyer or any subsequent purchaser under Article 12, and that Buyer may use the Contract Quantity for the purpose of meeting its Compliance Obligations. Such commercially reasonable actions shall include, without limitation:
(i) Cooperating with and providing, and in the case of Seller causing the Unit’s Scheduling Coordinator, owner, or operator to cooperate with and provide requested supporting 32 documentation to the CAISO, the CPUC, or any other Governmental Body responsible for administering the applicable Compliance Obligations, including, to the extent applicable, (1) to demonstrate that the Designated RA Capacity can be delivered to the CAISO controlled grid for the minimum hours required to satisfy RAR pursuant to the “deliverability” standards established by the CAISO or other Governmental Body of competent jurisdiction, and (2) provision of a Supply Plan to the CAISO by Seller or its Scheduling Coordinator and sufficient information to allow for the submission of a complete Resource Adequacy Plan by Buyer's Scheduling Coordinator; and
(ii) Negotiating in good faith to make necessary amendments, if any, to this Agreement to conform it to subsequent clarifications, revisions, or decisions rendered by the CAISO, CPUC, FERC, or other Governmental Body having jurisdiction to administer RAR, LAR, or FCR so as to maintain the benefits of the bargain struck by the Parties on the Effective Date; provided, however, that such commercially reasonable actions shall not include any obligation that the owner or operator of the Unit undertake capital improvements, Unit enhancements, or the construction of new facilities nor in any way limit the Parties with respect to advocacy for any regulatory policies or market changes before any entity.
10.3 Additional Seller Representations, Warranties and Covenants.
Seller represents, warrants and covenants to Buyer that:
(a) As of the Effective Date, the Primary Unit has received an allocation of 102.3 MW of TP Deliverability (as defined in the Tariff);
(b) Throughout the Delivery Term, the Unit qualifies as a Resource Adequacy Resource that is eligible to provide the Product pursuant to the Tariff and the Resource Adequacy Rulings;
(c) Throughout the Delivery Term, Seller owns or has the exclusive right to the RA Capacity sold under this Agreement;
(d) Throughout the Delivery Term, no portion of the Contract Quantity has been committed by Seller to any third party in order to satisfy Compliance Obligations or analogous obligations in CAISO markets or non-CAISO markets;
(e) The aggregation of all amounts of Product that Seller has sold, assigned, or transferred for the Shown Unit for each Showing Month during the Delivery Term does not exceed such Shown Unit’s Net Qualifying Capacity and, if applicable, the Shown Unit’s Effective Flexible Capacity, for that Shown Unit for such Showing Month;
(f) Throughout the Delivery Term, with respect to the RA Capacity provided under this Agreement, Seller shall, and the Unit’s Scheduling Coordinator is obligated to, comply with Applicable Laws, including the Tariff, relating to the Compliance Obligations appl icable to the Product;
(g) Seller has notified the Scheduling Coordinator of the Unit that, throughout the Delivery Term, Seller has transferred the Designated RA Capacity to Buyer, and that the 33 Scheduling Coordinator is obligated to deliver the Supply Plans in accordance with this Agreement and the Tariff;
(h) Seller has notified the Scheduling Coordinator of the Unit that Seller is obligated, throughout the Delivery Term, to cause the Unit’s Scheduling Coordinator to provide to Buyer, before the Notification Deadline, the Designated RA Capacity of the Unit that is to be submitted in the Supply Plan associated with this Agreement for the applicable period; and (i) Seller has notified the Unit’s Scheduling Coordinator that, throughout the Delivery Term, Buyer is entitled to the revenues set forth in Section 3.12(b) of this Agreement and that such Scheduling Coordinator is obligated to promptly deliver those revenues to Buyer, along with appropriate documentation supporting the amount of those revenues.
10.4 Prevailing Wage .
To the extent applicable to the Primary Unit, Seller shall ensure that all employees hired by Seller, and its contractors and subcontractors, that will perform construction work or provide services at the Site related to construction of the Primary Unit are paid wages in accordance with the requirements of California Labor Code Section 1720.6 and Public Utilities Code Section 769.2.
Nothing herein shall require Seller, its contractors and subcontractors to comply with, or assume liability created by other inapplicable provisions of any applicable labor Laws. Buyer agrees that Seller’s obligations under this Section 10.4 will be satisfied upon the execution of a project labor agreement related to construction of the Primary Unit.
10.5 Additional Buyer Representations, Warranties, and Covenants.
Buyer warrants and covenants that with respect to its contractual obligations under this Agreement, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from (1) suit, (2) jurisdiction of court (provided that such court is located within a venue permitted under Applicable Law and under the Agreement), (3) relief by way of injunction, order for specific performance or recovery of property, (4) attachment of assets, or (5) execution or enforcement of any judgment; provided, however, that nothing in this Agreement shall waive the obligations or rights set forth in the California Tort Claims Act (Government Code Section 810 et seq.).
ARTICLE 11: CONFIDENTIALITY
11.1 Definition of Confidential Information.
The following constitutes “Confidential Information,” whether oral or written which is delivered by Seller to Buyer or by Buyer to Seller including: (a) the terms and conditions of, and proposals and negotiations related to, this Agreement, and (b) information that either Seller or Buyer stamps or otherwise identifies as “confidential” or “proprietary” before disclosing it to the other.
Confidential Information does not include (i) information that was publicly available at the time of the disclosure, other than as a result of a disclosure in breach of this Agreement; (ii) information that becomes publicly available through no fault of the recipient after the time of the delivery; (iii) information that was rightfully in the possession of the recipient (without confidential or proprietary restriction) at the time of delivery or that becomes available to the recipient from a 34 source not subject to any restriction against disclosing such information to the recipient; (iv) information that the recipient independently developed without a violation of this Agreement; and (v) information that is determined by Buyer to be subject to the California Public Records Act.
11.2 Duty to Maintain Confidentiality.
Neither Party shall disclose Confidential Information to a third party (other than the Party’s or its Affiliates’ employees, actual or potential provider of debt, equity or tax equity financing or refinancing for or in connection with the development, construction, purchase, installation or operation of the Primary Unit, contractors, insurers, lenders or potential lenders, investors or potential investors, counsel, accountants or advisors who have a need to know such information and have agreed to keep such terms confidential) except in order to comply with any applicable law, regulation, or any exchange, control area or independent system operator rule or in connection with any court or regulatory proceeding; provided, however, each Party shall, to the extent practicable, use reasonable efforts to prevent or limit the disclosure. The Parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with, this confidentiality obligation.
(a) Notwithstanding the foregoing, the Parties agree that Buyer may disclose the information pertaining to this Agreement to any Governmental Body, the CPUC, the CAISO or any LRA having jurisdiction in order to support its Compliance Showings or other regulatory compliance filings and Seller may disclose the transfer of the Designated RA Capacity under this Agreement to the Scheduling Coordinator of the Unit in order for such Scheduling Coordinator to timely submit accurate Supply Plans; provided, each disclosing Party shall use reasonable efforts to limit, to the extent possible, the ability of any such applicable Governmental Body, CAISO, or Scheduling Coordinator to further disclose such information. In addition, in the event Buyer resells all or any portion of the Designated RA Capacity to another party, Buyer shall be permitted to disclose to the other party to such resale transaction all such information to the extent such disclosure is necessary to affect such resale transaction; provided, such other party agrees to keep such information confidential.
(b) The Parties acknowledge and agree that the Agreement and any transactions entered into in connection herewith are subject to the requirements of the California Public Records Act (California Government Code Section 7920.000 et seq.). In order to designate information as confidential, the Disclosing Party must clearly stamp and identify the specific portion of the material designated with the word “Confidential.” The Parties agree not to over-designate material as Confidential Information. Over-designation includes stamping whole agreements, entire pages or series of pages as “Confidential” that clearly contain information that is not Confidential Information.
(c) Upon request or demand of any third person or entity not a Party hereto to Buyer pursuant to the California Public Records Act for production, inspection and/or copying of Confidential Information (“Requested Confidential Information”), Buyer shall as soon as practical notify Seller in writing via email that such request has been made. Seller shall be solely responsible for taking at its sole expense whatever legal steps are necessary to prevent release of the Requested Confidential Information to the third party by Buyer. If Seller takes no such action after receiving the foregoing notice from Buyer, Buyer shall, at its discretion, be permitted to comply with the 35 third party’s request or demand and is not required to defend against it. If Seller does take or attempt to take such action, Buyer shall provide timely and reasonable cooperation to Seller, if requested by Seller, and Seller agrees to indemnify and hold harmless Buyer from any claims, liability, award of attorneys’ fees, or damages, and to defend any action, claim or lawsuit brought against Buyer for Buyer’s refusal to disclose any Requested Confidential Information.
ARTICLE 12: BUYER’S RE-SALE OF PRODUCT
No later than two (2) Business Days prior to the Notification Deadline for any Showing Month of the Delivery Term, Buyer may provide written notice to Seller of Buyer’s intent to re-sell all or a portion of the Product and any associated rights, in each case, acquired under this Agreement. If Buyer re -sells all or a portion of the Product and any associated rights acquired under this Agreement in accordance with this Article 12 (“ Resold Product”), Seller agrees, and agrees to cause the Unit’s Scheduling Coordinator, to follow Buyer’s reasonable instructions with respect to providing such Resold Product to subsequent purchasers of such Resold Product to the extent such instructions are consistent with Seller’s obligations under this Agreement. Seller further agrees, and agrees to cause the Unit’s Scheduling Coordinator, to take all commercially reasonable actions and execute any and all documents or instruments reasonably necessary to allow such subsequent purchasers to use such Resold Product in a manner consistent with Buyer’s rights under this Agreement. If Buyer incurs any liability to any purchaser of such Resold Product directly due to the failure of Seller or the Unit’s Scheduling Coordina tor to comply with the terms of this Agreement, then Seller shall be liable to Buyer for any liabilities Seller would have incurred under this Agreement if Buyer had not resold the Product, including without limitation, pursuant to Sections 3.9 and 3.10.
In the event there is any Resold Product, Buyer agrees to notify Seller that such a sale has occurred and agrees to provide Seller with the information specified below promptly following such sale (and any other information reasonably requested by Seller s o that Seller may perform its obligations in this Article 12) and promptly notify Seller of any subsequent changes to such information with respect to any particular sale: (i) benefitting load serving entity SC identification number (SCID), (ii) volume (in MW) of Resold Product, and (iii) subsequent sale delivery period for Resold Product.
ARTICLE 13: CHANGE IN LAW
13.1 Change in Law.
The Parties acknowledge that an essential purpose of this Agreement is to provide Product that complies with the Resource Adequacy Rulings. The Parties acknowledge that Governmental Authorities, including the CPUC and CAISO, may undertake actions to implement changes in Law. Seller agrees, subject to the provisions of this Article 13 to use commercially reasonable efforts to cooperate with respect to any future changes to this Agreement needed to satisfy requirements of Governmental Authorities associated with changes in Law to maximize benefits to Buyer, including: (i) the modification of the description of the Product as may be required, including updating the Agreement to reflect any mandatory contractual language required by Governmental Authorities; or (ii) submission of any reports, data, or other information required by Governmental Authorities; provided, Seller shall have no obligation to modify this Agreement, 36 or take other actions not required under this Agreement, if such modifications or actions would materially adversely affect, or could reasonably be expected to have or result in a material adverse effect on, any of Seller's rights, benefits, risks and/or obligations under this Agreement.
13.2 Compliance Expenditure Cap.
If a change in Laws occurring after the Effective Date has increased Seller’s known or reasonably expected costs to obtain, maintain, convey or effectuate Buyer’s use of any Product in accordance with this Agreement (any action required to be taken by Seller to comply with such change in Law, a “Compliance Action”), then the Parties agree that the maximum aggregate amount of in costs and expenses Seller shall be required to bear during the term of this Agreement to comply with all of such obligations shall be capped at per MW of
Contract Quantity of RAR Attributes in aggregate (the “Compliance Expenditure Cap”). (a) If Seller reasonably anticipates the need to incur out -of-pocket expenses in excess of the Compliance Expenditure Cap in order to take any Compliance Action, Seller shall provide Notice to Buyer of such anticipated out-of-pocket expenses. (b) Buyer will have sixty (60) days to evaluate such Notice (during which time period Seller is not obligated to take any Compliance Actions described in the Notice) and shall, within such time, either (1) agree to reimburse Seller for all of the costs that exceed the Compliance Expenditure Cap (such Buyer-agreed upon costs (including lost production, if any), the “Accepted Compliance Costs”), or (2) waive Seller’s obligation to take such Compliance Actions, or any part thereof for which Buyer has not agreed to reimburse Seller. (c) If Buyer agrees to reimburse Seller for the Accepted Compliance Costs, then Seller shall take such Compliance Actions covered by the Accepted Compliance Costs as agreed upon by the Parties and Buyer shall reimburse Seller for Seller’s actual costs to effect the Compliance Actions, not to exceed the Accepted Compliance Costs, within sixty (60) days from the time that Buyer receives an invoice and documentation of such costs from Seller. (d) Any change in the economic value of any Product provided by Seller to Buyer resulting from any change in Law shall not affect the Contract Price or Buyer’s obligation to make payments required hereunder.
ARTICLE 14: COLLATERAL REQUIREMENTS
14.1 Buyer Credit Support.
(a) To secure Buyer’s obligations under this Agreement, Seller shall have the right to execute a Joinder, which shall allow Seller to become a PPA Provider and Secured Creditor under the Intercreditor and Collateral Agency Agreement for so long as Member is subject to the Security Agreement and Lockbox Account (or any successor arrangement generally available to Buyer’s creditors and permitted under Section 14.1 (b)(iii)) (the current arrangement and any successor arrangement generally available to Member’s creditors is the “Member Lockbox Arrangement”). (b) Under the Member Lockbox Arrangement:
37 (i) Buyer shall cause Member to provide notice to Seller of the termination of all security interests under the Security Agreement.
(ii) Buyer further agrees it will cause Member to not create any additional security interests (i) under the Security Agreement on terms more favorable than those currently offered to Seller, or (ii) under any arrangement similar to the Security Agreement that is generally available to Member’s creditors unless Seller is offered the right to participate in such arrangement on terms no less favorable than those offered to the other participants. (iii) In addition, so long as Buyer (or Member, as applicable) is not in default under this Agreement and Member is not in default under the Intercreditor and Collateral Agency Agreement or the Security Agreement, Buyer may request the dissolution of the current Member Lockbox Arrangement in order to permit Member to enter into a substantially similar successor Member Lockbox Arrangement and, provided that Seller is allowed to become a PPA Provider (or its equivalent) and Secured Creditor (or its equivalent) under the successor Member Lockbox Arrangement and upon Seller’s entering into such successor Member Lockbox Arrangement (which shall not be unreasonably withheld, conditioned or delay by Seller), Seller hereby agrees that (x) its security interest under the Security Agreement shall terminate, without further action, effective upon the termination of the security interests of all other PPA Providers under the Security Agreement and the grant of a security interest under the successor Member Lockbox Arrangement, and (y) if requested by Buyer, Seller would promptly execute a written termination statement confirming such termination in accordance with Section 7.12 of the Security Agreement.
14.2 Performance Security.
Seller shall deliver Performance Security to Buyer within thirty (30) days after the Effective Date.
Seller shall maintain the Performance Security in full force and effect, and shall, within ten (10) Business Days after any draws made by Buyer in accordance with this Agreement, replenish the Performance Security, until the following have occurred: (a) the Delivery Term has expired or terminated early; and (b) all payment obligations of Seller then due and payable under this Agreement, including compensation for penalties, termination damages, indemnification payments or other damages are paid in full (whether directly or indirectly such as through set-off or netting).
Following the occurrence of both events, Buyer shall promptly return to Seller the unused portion of the Performance Security. If the Performance Security is a Letter of Credit and the issuer of such Letter of Credit (i) fails to maintain the minimum Credit Rating set forth in the definition of Letter of Credit, (ii) indicates its intent not to renew such Letter of Credit and such Letter of Credit expires prior to the end of the Delivery Term, or (iii) fails to honor Buyer’s properly documented request to draw on such Letter of Credit by such issuer, Seller shall have ten (10) Business Days to either post cash or deliver a substitute Letter of Credit that meets the requirements set forth in the definition of Performance Security.
14.3 First Priority Security Interest in Cash or Cash Equivalent Collateral. (a) To secure its obligations under this Agreement, and until released as provided herein, Seller hereby grants to Buyer a present and continuing first -priority security interest (“Security Interest”) in, and lien on (and right to net against), and assignment of the Performance Security, any other cash collateral and cash equivalent collateral posted under this Agreement, and 38 any and all interest thereon or proceeds resulting therefrom or from the liquidation thereof, whether now or hereafter held by, on behalf of, or for the benefit of Buyer, and Seller agrees to take all action as Buyer reasonably requires in order to perfect Buyer’s Security Interest in, and lien on (and right to net against), such collateral and any and all proceeds resulting therefrom or from the liquidation thereof.
(b) Upon or any time after the occurrence of an Event of Default caused by Seller, an Early Termination Date resulting from an Event of Default caused by Seller, or an occasion provided for in this Agreement where Buyer is authorized to retain all or a portion of the Performance Security, Buyer may do any one or more of the following (in each case subject to the final sentence of this Section 14.3):
(i) Exercise any of its rights and remedies with respect to the Performance Security including any such rights and remedies under Applicable Law then in effect; (ii) Draw on any outstanding Letter of Credit issued for its benefit and retain any cash held by Buyer as Performance Security; and
(iii) Liquidate the Performance Security then held by or for the benefit of Buyer free from any claim or right of any nature whatsoever of Seller, including any equity or right of purchase or redemption by Seller.
Buyer shall apply the proceeds of the collateral realized upon the exercise of any such rights or remedies to reduce Seller’s obligations under this Agreement (Seller remains liable for any amounts owing to Buyer after such application), subject to Buyer’s obligation to return any surplus proceeds remaining after these obligations are satisfied in full.
ARTICLE 15: INSURANCE
15.1 Insurance.
Prior to the start of construction of the Primary Unit and thereafter throughout the remainder of the Term, Seller shall procure and maintain the following insurance coverage and require and cause its contractors to maintain the same levels of coverage. For the avoidance of doubt, the obligations of Seller in this Section 15.1 constitute a material obligation of this Agreement. (a) Workers’ Compensation and Employers’ Liability.
(i) If it has employees, workers’ compensation insurance indicating compliance with any applicable labor codes, acts, Applicable Laws or statutes, California state or federal, where Seller performs Work.
(ii) Employers’ liability insurance will not be less than one million dollars ($1,000,000) for injury or death occurring as a result of each accident. With regard to bodily injury by disease, the one million dollar ($1,000,000) policy limit will apply to each employee.
(b) Commercial General Liability.
39 (i) Commercial general liability insurance, including products and completed operations and personal injury insurance, in a minimum amount of two million dollars ($2,000,000) per occurrence, and an annual aggregate of not less than five million dollars ($5,000,000), endorsed to provide contractual liability in said amount (subject to policy terms and conditions), specifically covering Seller’s insurable indemnity obligations under this Agreement and including Buyer as an additional insured but only to the extent of Seller’s insurable indemnity obligations under this Agreement. Limits may be satisfied through a combination of primary and excess policies.
(ii) An umbrella insurance policy in a minimum limit of liability of ten million dollars ($10,000,000).
(iii) Defense costs shall be provided as an additional benefit and not included within the limits of liability. Such insurance shall contain standard cross -liability and severability of interest provisions.
(c) Business Auto.
(i) Business auto insurance for bodily injury and property damage with limits of one million dollars ($1,000,000) per occurrence.
(ii) Such insurance shall cover liability arising out of Seller’s use of all owned (if any), non- owned and hired vehicles, including trailers or semi -trailers in the performance of the Agreement.
(d) Construction All- Risk Insurance.
(i) During the construction of the Primary Unit prior to the Commercial Operation Date, construction all -risk form property insurance covering the Primary Unit during such construction periods, and naming Seller (and/or Lender if any) as the loss payee.
(e) Contractor’s Pollution Liability.
(i) If the scope of Work involves areas of known pollutants or contaminants, Seller shall maintain or require to be maintained, pollution liability coverage for bodily injury, property damage, including clean-up costs and defense costs resulting from sudden, and accidental conditions, including the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, hydrocarbons, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water shall be maintained, and may be included as part of the time element pollution coverage under the above General Liability insurance. (ii) The limit will be at least two million dollars ($2,000,000.00) each occurrence for bodily injury and property damage.
(iii) The policy will endorse Buyer as additional insured but only to the extent of Seller’s insurable indemnity obligations under this Agreement. 40 15.2 Evidence of Insurance.
Prior to the start of construction of the Primary Unit and upon annual renewal thereafter, Seller shall deliver to Buyer certificates of insurance evidencing the coverage required under this Agreement. These certificates shall specify that Buyer shall be given at least thirty (30) days prior notice by Seller in the event of any cancellation or termination of coverage, except ten (10) days for nonpayment of premium. With the exception of Workers Compensation/Employers Liability, such insurance shall be primary coverage without right of contribution from any insurance of Buyer.
ARTICLE 16: PRIMARY UNIT CONSTRUCTION AND COMMERCIAL OPERATION
16.1 Construction of the Primary Unit.
(a) Construction Start. “Construction Start” will occur upon satisfaction of the following: Seller has executed an engineering, procurement, and construction contract (or equivalent agreements) and issued thereunder a notice to proceed or its equivalent that authorizes the contractor to mobilize to the Site and begin physical construction of the Primary Unit at the Site. The date of Construction Start will be evidenced by and subject to Seller’s delivery to Buyer of a certificate substantially in the form attached as Exhibit B hereto, and the date certified therein shall be the “Construction Start Date.”
(b) Progress Reports . Within fifteen (15) days after the close of (i) each calendar quarter from the first calendar quarter following the Effective Date until the Construction Start Date and (ii) each calendar month from the first calendar month following the Construction Sta rt Date until the Commercial Operation Date, Seller shall provide to Buyer a Progress Report and agree to regularly scheduled meetings between representatives of Buyer and Seller to review such monthly reports and discuss Seller’s construction progress. The form of the Progress Report is set forth in Exhibit F. Seller shall also provide Buyer with any reasonable requested documentation (subject to confidentiality restrictions) directly related to the achievement of Milestones within ten (10) Business Days of receipt of such request by Seller. Seller shall also provide Buyer with any information in Seller’s possession that is reasonably requested by Buyer for Buyer to demonstrate to the CPUC, CAISO, or other Governmental Bodies that Buyer has met its appl icable resource adequacy requirements, including providing status reports to the CPUC with respect to the Primary Unit. Subject to the provisions of Section 16.2, so long as Seller complies with its obligations under this Section 16.1(b), Seller shall not be considered in default of its obligations under this Agreement solely as a result of missing any Milestone.
16.2 Commercial Operation.
(a) Commercial Operation . “ Commercial Operation ” means the condition existing when Seller has fulfilled all of the conditions precedent in Section 2.2 of this Agreement and provided notice to Buyer substantially in the form of Exhibit C. Seller shall cause Commercial Operation for the Primary Unit to occur by the Guaranteed Commercial Operation Date, as such date may be extended pursuant to Section 16.2(b) and Section 16.2(c), subject to the limitations in Section 16.2(d).
41 (b) Commercial Operation Delay Damages.
(c) Extension of Guaranteed Commercial Operation Date . The Guaranteed Commercial Operation Date shall, subject to notice and documentation requirements set forth in Section 16.2(d), be automatically extended on a day- for-day basis (the “Development Cure Period”) for the duration of any and all delays arising out of the following circumstances to the extent the following circumstances are not the result of Seller’s failure to take all commercially reasonable actions to meet its requirements and deadlines: (a) a Force Majeure event occurs, or (b) the upgrades identified in the Interconnection Agreement for the Primary Unit (not including Network Upgrades required for the Primary Unit to obtain a Full Capacity Deliverability Status Finding that are not required for the Primary Unit to achieve the Commercial Operation Date) are not complete and ready for such Primary Unit to connect and sell Product by the date that is three (3) months prior to the Guaranteed Commercial Operation Date, despite the exercise of diligent and commercially reasonable efforts by Seller. Notwithstanding anything in this Agreement to the contrary, the cumulative extensions granted under the Development Cure Period shall not exceed one hundred eighty (180) days. Upon request from Buyer, Seller shall provide documentation reasonably demonstrating that the delays described above did not result from Seller’s actions or failure to take commercially reasonable actions.
(d) Maximum Milestone Extensions.
(e) Termination for Failure to Achieve Guaranteed Commercial Operation Date.
42 (f) Limitation of Seller’s Pre-Commercial Operation Date Liability.
(g) Limitation on Seller’s Ability to Make or Agree to Third -Party Sales from the Primary Unit after Early Termination Date .
43 ARTICLE 17: MISCELLANEOUS
17.1 Title and Risk of Loss.
Title to and risk of loss related to the Product shall transfer from Seller to Buyer at the Delivery Point. Seller warrants that it will deliver to Buyer the Designated RA Capacity free and clear of all liens, security interests, claims and encumbrances o r any interest therein or thereto by any person arising prior to the Delivery Point.
17.2 Indemnity.
(a) Indemnity by Seller. Seller shall release, indemnify and hold harmless Buyer or Buyer’s respective directors, officers, agents, and representatives against and from any and all loss, Claims, actions or suits associated with third party claims, including costs and attorney’s fees resulting from, or arising out of or in any way connected with Seller’s construction, operation and/or maintenance of the Primary Unit, including without limitation any Environmental Costs and any loss, Claim, action or suit, for or on account of injury to, bodily or otherwise, or death of persons, or for damage to or destruction of property belonging to Buyer, Seller, or others, excepting only such loss, Claim, action or suit as may be caused solely by the willful misconduct or gr oss negligence of Buyer, its Affiliates, or Buyer’s and Affiliates’ respective agents, employees, directors, or officers.
(b) Indemnity by Buyer. Buyer shall release, indemnify and hold harmless Seller, its directors, officers, agents, and representatives against and from any and all loss, Claims, actions or suits, including costs and attorney’s fees resulting from, or arising out of or in any wa y connected with Buyer’s access to the Primary Unit site, including any loss, Claim, action or suit, for or on account of injury to, bodily or otherwise, or death of persons, or for damage to or destruction of property belonging to Buyer, Seller, or others, excepting only such loss, Claim, action or suit as may be caused solely by the willful misconduct or gross negligence of Seller, its Affiliates, or Seller’s and Affiliates’ respective agents, employees, directors or officers. (c) No Dedication . Without limitation of each Party’s obligations under Sections
17.2(a) and 17.2(b) herein, nothing in this Agreement shall be construed to create any duty to, any standard of care with reference to, or any liability to any person or entity not a Party to this Agreement. No undertaking by one Party to the other under any provision of this Agreement shall constitute the dedication of that Party’s system or any portion thereof to the other Party or the public, nor affect the status of Buyer as an independent public utility corporation or Seller as an independent individual or entity.
17.3 Assignment.
Neither Party shall assign this Agreement or its rights hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed;
44 provided, however, Seller may, without the consent of Buyer, (i) transfer, sell, pledge, encumber or assign this Agreement or the accounts, revenues or proceeds hereof in connection with any financing or other financial arrangements, (ii) transfer or assign this Agreement to an A ffiliate of such Party which Affiliate’s creditworthiness is equal to or higher than that of such Party, or (iii) transfer or assign this Agreement to any Permitted Transferee ; provided, however, that in the case of any such assignment pursuant to clause (ii) or clause (iii), any such assignee shall agree in writing to be bound by the terms and conditions hereof and so long as the transferring Party delivers such tax and enforceability assurance as the non- transferring Party may rea sonably request. In connection with any financing or refinancing of the Primary Unit, Buyer shall in good faith negotiate and agree upon a consent to collateral assignment of this Agreement in a form that is commercially reasonable and customary in the industry. Seller shall pay Buyer’s reasonable expenses, including attorneys’ fees, incurred to provide consents, estoppels, or other required documentation in connection with Seller’s financing for the Primary Unit. Buyer will have no obligation to provide any consent, or enter into any agreement, that materially and adversely affects any of Buyer’s rights, benefits, risks or obligations under this Agreement.
17.4 Governing Law and Venue.
This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced and performed in accordance with the laws of the state of California, without regard to principles of conflicts of Law. To the extent enforceable at such time, each Party waives its respective right to any jury trial with respect to any litigation arising under or in connection with this Agreement. Each of the Parties irrevocably and unconditionally agrees that any suit, action or other proceeding arising out of or relating to this Agreement, the transactions contemplated hereby, any provision hereof or the breach, performance, enforcement or validity or invalidity of this Agreement or any provision hereof shall be filed in either the United States District Court for the Central District of California or the Superior Court of California, City of Los Angeles, as appropriate (and agrees not to commence any suit, action or proceeding relating thereto except in such courts). Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, the transactions contemplated hereby, any provision hereof or the breach, performance, enforcement or validity or invalidity of this Agreement or any provision hereof in the United States District Court for the Central District of California or the Superior Court of California, City of Los Angeles, as appropriate, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Notwithstanding the foregoing, each Party agrees that a final judgment (i.e., judgment after any appeals that may be duly made) in any suit, action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment in any jurisdiction or in any other manner provided in law or in equity.
17.5 Notices.
All notices, requests, statements or payments shall be made as specified in Exhibit G. Notices (other than scheduling requests) shall, unless otherwise specified herein, be in writing and may be delivered by hand delivery, United States mail, overnight courier service, or email. Notice by email or hand delivery shall be effective at the close of business on the day actually received, if received during business hours on a Business Day, and otherwise shall be effective at the close of 45 business on the next Business Day. Notice by overnight United States mail or courier shall be effective on the next Business Day after it was sent. A Party may change its addresses by providing notice of same in accordance herewith.
17.6 Mobile-Sierra.
Absent the agreement of all Parties to the proposed change, the standard of review for changes to any rate, charge, classification, term or condition of this Agreement, whether proposed by a Party (to the extent that any waiver below is unenforceable or ineffective as to such Party), a non- party or FERC acting sua sponte, shall be the ‘public interest’ standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956), and clarified by Morgan Stanley Capital Group, Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 (2008); NRG Power Marketing LLC v.
Maine Public Utility Commission, 558 U.S. 527 (2010).
Notwithstanding any provision of this Agreement, and absent the prior written agreement of the Parties, each Party, to the fullest extent permitted by Applicable Laws, for itself and its respective successors and assigns, hereby also expressly and irrevocably waives any rights it can or may have, now or in the future, whether under Sections 205, 206, or 306 of the Federal Power Act or otherwise, to seek to obtain from FERC by any means, directly or indirectly (through complaint, investigation, supporting a third party seeking to obtain or otherwise), and each hereby covenants and agrees not at any time to seek to so obtain, an order from FERC changing any section of this Agreement specifying any rate or other material economic terms and conditions agreed to by the Parties.
17.7 General.
This Agreement, together with the Cover Sheet and Exhibits attached hereto constitutes the entire agreement and understanding between Seller and Buyer with respect to the subject matter hereof and supersedes all prior agreements relating to the subject mat ter hereof, which are of no further force or effect. The Exhibits attached hereto are integral parts hereof and are made a part of this Agreement by reference. The headings used herein are for convenience and reference purposes only. This Agreement shall be considered for all purposes as prepared through the joint efforts of the Parties and shall not be construed against one Party or the other as a result of the preparation, substitution, submission or other event of negotiation, drafting or execution here of. This Agreement may only be amended, modified or supplemented by an instrument in writing executed by duly authorized representatives of Seller and Buyer; provided, this Agreement may not be amended by electronic mail communications. This Agreement shall not impart any rights enforceable by any third party (other than a permitted successor or assignee bound to this Agreement). Waiver by a Party of any default by the other Party shall not be construed as a waiver of any other default. Any provision declared or rendered unlawful by any applicable court of law or regulatory agency or deemed unlawful because of a statutory change (individually or collectively, such events referred to as “Regulatory Event”) will not otherwise affect the remaining lawful obligations that arise under this Agreement; provided, further, that if a Regulatory Event occurs, the Parties shall use commercially reasonable efforts to reform this Agreement in order to give effect to the original intention of the Parties. All indemnity and audit rights shall survive the 46 termination of this Agreement for twelve (12) months. This Agreement shall be binding on each Party’s successors and permitted assigns.
17.8 Audit.
Each Party has the right, at its sole expense and during normal working hours, to examine the records of the other Party to the extent reasonably necessary to verify the accuracy of any statement, charge or computation made pursuant to this Agreement. If requested, a Party shall provide to the other Party statements evidencing the Designated RA Capacity delivered hereunder.
If any such examination reveals any inaccuracy in any statement, the necessary adjustments in such statement and the payments thereof will be made promptly and shall bear interest calculated at the Interest Rate from the date the overpayment or underpayment was made until paid; provided, however, that no adjustment for any statement or payment will be made unless objection to the accuracy thereof was made prior to the lapse of twelve (12) months from the rendition thereof, and thereafter any objection shall be deemed waived.
17.9 Forward Contract.
The Parties acknowledge and agree that this Agreement constitutes a “forward contract” within the meaning of the United States Bankruptcy Code.
17.10 Dispute Resolution.
(a) In the event of any claim, controversy or dispute between the Parties arising out of or relating to or in connection with this Agreement (including any dispute concerning the validity of this Agreement or the scope and interpretation of this Section 17.10) (a “Dispute”), any Party (the “Notifying Party”) may deliver to the other Parties (the “Recipient Party ”) notice of the Dispute with a detailed description of the underlying circumstances of such Dispute (a “ Dispute Notice”). The Dispute Notice shall include a schedule of the availability of the Notifying Party’s senior officers (having a title of senior vice president (or its equivalent) or higher) duly authorized to settle the Dispute during the thirty (30) day period following the delivery of the Dispute Notice. (b) The Recipient Party shall, within five (5) Business Days following receipt of the Dispute Notice, provide to the Notifying Party a brief summary of the Recipient Party’s position on the Dispute and a parallel schedule of availability of the Recipient Party’s senior officers (having a title of senior vice president (or its equivalent) or higher) duly authorized to settle the Dispute. Following delivery of the respective senior officers’ schedules of availability, the senior officers of the Parties shall meet and confer as often as they deem reasonably necessary during the remainder of the thirty (30) day period in good faith negotiations to resolve the Dispute to the satisfaction of each Party.
(c) In the event a Dispute is not resolved pursuant to the procedures set forth in Sections 17.10(a) and (b) by the expiration of the thirty (30) day period set forth in Section 17.10(b), then a Party may pursue any legal remedy available to it in accordance with this Agreement.
47 17.11 Counterparts.
This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument and each of which shall be deemed an original.
17.12 E lectronic Delivery.
This Agreement may be duly executed and delivered by a Party by electronic format (including portable document format (.pdf)) delivery of the signature page of a counterpart to the other Party.
17.13 Joint Powers Authority.
Buyer is organized as a Joint Powers Authority in accordance with the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) pursuant to its Joint Powers Agreement and is a public entity separate from its constituen t members. Except as otherwise set forth in this Agreement with respect to the Member Lockbox Arrangement, Buyer shall solely be responsible for all debts, obligations and liabilities accruing and arising out of this Agreement.
Except as otherwise set forth in this Agreement with respect to the Member Lockbox Arrangement, Seller shall have no rights and shall not make any claims, take any actions or assert any remedies against any of Buyer’s constituent members, or the employees, directors, officers, consultants or advisors or Buyer or its constituent members, in connection with this Agreement.
17.14 Dodd-Frank Act.
The Parties intend this Agreement to be a “Forward Capacity Transaction” within the meaning of Commodity Futures Trading Commission, Final Order in Response to a Petition From Certain Independent System Operators and Regional Transmission Organizations To Exempt Specified Transactions Authorized by a Tariff or Protocol Approved by the Federal Energy Regulatory Commission, 78 Fed. Reg. 19,880 (Apr. 2, 2013). Notwithstanding the prior sentence, if and to the extent that this Agreement and the performance of the Parties’ obligations requires any reporting to the Commodity Futures Exchange Commission (together with any successor body, the “CFTC”) pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, Seller shall be responsible for all such reporting (and Seller shall bear all costs and expenses associated therewith) and shall be the reporting counterparty for purposes of any applicable parts of the regulations of the CFTC promulgated under the Commodity Exchange Act. Buyer shall promptly provide information reasonably required by Seller for any such reporting and Seller shall be entitled to report and disclose information concerning all swaps t ransacted under this Agreement (including information regarding the economic terms and valuations of this Agreement) to any applicable Governmental Authority (or a third party swap data repository as required by a Governmental Authority), from time to time , to the extent required by any applicable laws, regulations, rules or orders of any Governmental Authority. Additionally, to the extent either Party needs additional information or details from the other Party in order to comply with any such applicable laws, regulations, rules or orders (including information concerning such other Party’s organization, corporate status, status under the CFTC’s regulations and/or unique entity identifier), such other Party shall promptly provide such additional information or details to the first Party upon request therefor. Buyer shall promptly reimburse Seller for any costs, fines or penalties Seller incurs as a result of Buyer’s failure to comply with this Section 17.13. Seller shall promptly 48 reimburse Buyer for any costs Buyer incurs as a result of Seller’s failure to comply with this Section 17.13 and the Commodity Exchange Act, except to the extent such costs are a result of any action or omission of Buyer. Notwithstanding any provision of this Agreement to the contrary, no Event of Default, termination event, or other similar event shall be deemed to occur under this Agreement solely on the basis of a breach of any covenant or agreement in this Section 17.13 other than the obligation to make reimbursement payments.
17.15 Further Assurances.
Each of the Parties hereto agrees to provide such information, execute and deliver any instruments and documents and to take such other actions as may be necessary or reasonably requested by the other Party which are not inconsistent with the provisions of this Agreement and which do not involve the assumptions of obligations other than those provided for in this Agreement, to give full effect to this Agreement and to carry out the intent of this Agreement.
17.16 Lockbox Account .
For so long as the Member Lockbox Arrangement exists, Buyer’s obligations to make payments with respect to this Agreement are to be made solely from the Member Lockbox Account, as set forth in the applicable Member Security Agreement. For so long as the Member Lockbox Arrangement exists, obligations to make payments under this Agreement do not constitute any kind of indebtedness of Member or create any kind of lien on, or security interest in, any property or revenues of Member, except as set forth in the Member Lockbox Arrangement.
17.17 Market-Based Rate Authority.
Seller agrees, in accordance with Federal Energy Regulatory Commission (FERC) Order No. 697, to, upon request of Buyer, submit a letter of concurrence in support of any affirmative statement by Buyer that this Agreement does not transfer “ownership or control of generation capacity” from Seller to Buyer as the term “ownership or control of generation capacity” is used in 18 CFR Section
35.42. Seller also agrees that it will not, in filings, if any, made subject to Order Nos. 652 and 697, claim that this Agreement conveys ownership or control of generation capacity from Seller to Buyer.
17.18 Physical Transactions.
The Parties understand and agree that the transactions under this Agreement are physical transactions for deferred delivery, and that the Parties contemplate making or taking physical delivery of electric energy or capacity. Buyer is a California communit y choice aggregator engaged in the business of delivering electric energy and capacity to its retail load and routinely makes or takes delivery of electric energy and capacity in order to provide service to its retail electric customers.
17.19 Rules of Interpretation.
In this Agreement, except as expressly stated otherwise or unless the context otherwise requires:
(a) headings and the rendering of text in bold and italics are for convenience and reference purposes only and do not affect the meaning or interpretation of this Agreement; 49 (b) words importing the singular include the plural and vice versa and the masculine, feminine and neuter genders include all genders;
(c) the words “hereof”, “herein”, and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) a reference to an Article, Section, paragraph, clause, Party, or Exhibit is a reference to that Article, Section, paragraph, clause of, or that Party or Exhibit to, this Agreement unless otherwise specified;
(e) a reference to a document or agreement, including this Agreement shall mean such document, agreement or this Agreement including any amendment or supplement to, or replacement, novation or modification of this Agreement, but disregarding any amendment, supplement, replacement, novation or modification made in breach of such document, agreement or this Agreement;
(f) a reference to a Person includes that Person’s successors and permitted assigns; (g) the terms “include” and “including” mean “include or including (as applicable) without limitation” and any list of examples following such term shall in no way restrict or limit the generality of the word or provision in respect of which such examples are provided; (h) references to any statute, code or statutory provision are to be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or reenacted, and include references to all bylaws, instruments, orders and regulations for the time being made thereunder or deriving validity therefrom unless the context otherwise requires; (i) in the event of a conflict, a mathematical formula or other precise description of a concept or a term shall prevail over words providing a more general description of a concept or a term;
(j) references to any amount of money shall mean a reference to the amount in United States Dollars;
(k) the expression “and/or” when used as a conjunction shall connote “any or all of”; (l) words, phrases or expressions not otherwise defined herein that (i) have a generally accepted meaning shall have such meaning in this Agreement or (ii) do not have well known and generally accepted meaning but that have well known and generally accepted te chnical or trade meanings, shall have such recognized meanings; and
(m) each Party acknowledges that it was represented by counsel in connection with this Agreement and that it or its counsel reviewed this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
CONFIDENTIAL
CALCHOICE DRAFT
10/17/2025
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the Effective Date.
ATHOS STORAGE, LLC CALIFORNIA CHOICE ENERGY
AUTHORITY, a California joint
powers authority
By: __________________________ By: __________________________
Name: __________________________ Name: __________________________
Title: __________________________ Title: __________________________
ACKNOWLEDGED:
City of _________, a California municipal corporation and charter city (d/b/a ______________)
[Name of Member]
By:
Name:
Title:
Exhibit A - 1
EXHIBIT A: FORM OF LETTER OF CREDIT
[NOTE: SELLER REVIEWING NEW PROPOSED FORM]
[Issuing Bank Letterhead and Address]
IRREVOCABLE STANDBY LETTER OF CREDIT NO. [XXXXXXX]
Date: _____________________
Bank Ref.: _________________
Stated Amount: US$_______________
Beneficiary:
California Choice Energy Authority
Attn: Cathy DeFalco
44933 Fern Avenue
Lancaster, CA 93534
Applicant:
[Entity]
[on behalf of entity]
[address]
[Attn:]
To Whom It May Concern:
By the order of [Entity name, state of formation, type of entity] (“Applicant”), we, [Bank name and address] (“Issuer”) hereby issue our Irrevocable Standby Letter of Credit No. [ XXXXXX] (the “Letter of Credit ”) in favor of California Choice Energy Authority, a California joint powers authority (“Beneficiary”), for an amount of U.S. $[ XXXXXX] (United States Dollars [ XXXXXX] and 00/100) (“Stated Amount”), pursuant to that certain Energy Storage Resource Adequacy Agreement dated as of [ Date] and as amended (the “Agreement ”) b etween Applicant and Beneficiary. This Letter of Credit shall become effective immediately and shall expire on [ Date] which is one year after the issue date of this Letter of Credit, or any expiration date extended in accordance with the terms hereof (the “Expiration Date”).
Funds under this Letter of Credit are available to Beneficiary by valid presentation on or before the Expiration Date of a dated statement purportedly signed by Beneficiary’s duly authorized representative, in the form attached hereto as Exhibit A, containing one of the two alternative paragraphs set forth in paragraph 2 therein, referencing our Letter of Credit No. [ XXXXXX] (“Drawing Certificate”).
The Drawing Certificate may be presented by (a) physical delivery to bank address at [bank address], (b) as a PDF attachment to an email to [ Bank email address] or (c) facsimile to [ Bank fax number] confirmed by [email to [Bank email address]]. Transmittal by facsimile or email shall be deemed delivered when received.
The original of this Letter of Credit (and all amendments, if any) is not required to be presented in connec
tion with any presentment of a Drawing Certificate by Beneficiary hereunder in order to
Exhibit A - 2
receive payment.
We hereby agree with the Beneficiary that all documents presented under and in compliance with the terms of this Letter of Credit, that such drafts will be duly honored upon presentation to the Issuer on or before the Expiration Date. All payments made under this Letter of Credit shall be made with Issuer’s own immediately available funds by means of wire transfer in immediately available United States dollars to Beneficiary’s account as indicated by Beneficiary in its Drawing Certificate or in a communication accompanying its Drawing Certificate.
Partial draws are permitted under this Letter of Credit and shall reduce the Stated Amount available under this Letter of Credit, and this Letter of Credit shall remain in full force and effect with respect to any continuing balance; provided that the aggregate draws on this portfolio shall not exceed the Stated Amount at the time of such draw.
This Letter of Credit is not transferrable. Any purported transfer shall be deemed void in all respects. All account charges are the sole responsibility of the Applicant.
It is a condition of this Letter of Credit that the Expiration Date shall be deemed automatically extended without an amendment for a one year period beginning on the present Expiration Date hereof and upon each anniversary for such date, unless at least one hundred twenty (120) days prior to any such Expiration Date we have sent to you written notice by overnight courier service that we elect not to extend this Letter of Credit, in which case it will expire on such Expiration Date, or such later date as may be specified in such notice. No presentation made under this Letter of Credit after such Expiration Date (or such later date, if applicable) will be honored.
This Letter of Credit is issued subject to the rules of the ‘International Standby Practices 1998’, International Chamber of Commerce Publication No. 590 (“ISP98”) and, as to matters not addressed by ISP98, shall be governed and construed in accordance with the laws of state of New York.
Notwithstanding any reference in this Letter of Credit to any other documents, instruments or agreements (other than as set forth in the immediately prior paragraph), this Letter of Credit contains the entire agreement between Beneficiary and Issuer relating to the obligations of Issuer hereunder.
Please address all correspondence regarding this Letter of Credit to the attention of the Letter of Credit Department at [Bank name and address], referring specifically to Issuer’s Letter of Credit No. [ XXXXXX]. For telephone assistance, please contact Issuer’s Standby Letter of Credit Department at [Bank phone number] and have this Letter of Credit available.
All notices to Beneficiary shall be in writing and are required to be sent by certified letter, overni
ght courier, or delivered in person to: California Choice Energy Authority, Attn: Cathy DeFalco, 44933 Fern Avenue, Lancaster, CA 93534. Only notices to Beneficiary meeting the requirements of this paragraph shall be considered valid. Any notice to Beneficiary which is not in accordance with this paragraph shall be void and of no force or effect. [Bank Name]
__________________
Exhibit A - 3
[Officer name]
[Officer title]
Exhibit A
Draw
ing Certificate
(DRAW REQUEST SHOULD BE ON BENEFICIARY’S LETTERHEAD)
[Insert Bank Name and Address]
To Whom It May Concern:
The undersigned, a duly authorized representative of California Choice Energy Authority, a California joint powers authority, as beneficiary (the “ Beneficiary”) of the Irrevocable Letter of Credit No. [ XXXXXX] (the “Letter of Credit ”) issued by [ Bank name] (the “Bank”) by order of [Entity name, state of formation, type of entity ] (the “Applicant”), hereby certifies to the Bank as follows:
1. Applicant and Beneficiary are party to that certain Energy Storage Resource Adequacy Agreement dated as of [Date] (the “Agreement”).
2. Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________ because a Seller Event of Default (as such term is defined in the Agreement) has occurred or other occasion provided for in the Agreement where Beneficiary is authorized to draw on the Letter of Credit has occurred, and the amount of this draw does not exceed any limit on Beneficiary’s rights to draw on this Letter of Credit set forth in the Agreement.
OR
Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________, which equals the lesser of the full available amount under the Letter of Credit or any applicable limit on Beneficiary’s rights to draw on this Letter of Credit set forth in the Agreement, because Applicant is required to maintain the Letter of Credit in force and effect beyond the Expiration Date of the Letter of Credit but has failed to provide Beneficiary with a replacement Letter of Credit or other acceptable instrument within thirty (30) days prior to such Expiration Date.
3. The
undersigned is a duly authorized representative of California Choice Energy Authority and is authorized to execute and deliver this Drawing Certificate on behalf of Beneficiary.
You are hereby directed to make payment of the requested amount to California Choice Energy Authority by wire transfer in immediately available funds to the following account: [ Specify account information]
Cal
ifornia Choice Energy Authority
_______________________________
Exhibit A - 4
[Name and Title of Authorized Representative]
Date___________________________
Exhibit B - 1
EXHIBIT B: FORM OF CONSTRUCTION START DATE CERTIFICATE
This certification of Construction Start Date (“Certification”) is delivered by [Seller] (“Seller”) to California Choice Energy Authority, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Resource Adequacy Agreement dated [date] (the “Agreement”) by and between Seller and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
Seller hereby certifies and represents to Buyer that the Construction Start (as defined in the Agreement) has occurred, and a copy of the notice to proceed that Seller issued to its contractor as part of Construction Start is attached hereto.
IN WITNESS WHEREOF, the undersigned has executed this Certification on behalf of Seller as of the ___ day of ________.
[SELLER]
By:
Its:
Date:
Exhibit C - 1
EXHIBIT C: FORM OF COMMERCIAL OPERATION DATE CERTIFICATE
This certification (“Certification”) of Commercial Operation is delivered by [Seller] (“Seller”) to California Choice Energy Authority, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Resource Adequacy Agreement dated [date] (“Agreement”) by and between Seller and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
As of [DATE], Seller hereby certifies and represents to Buyer the following:
(a) The Primary Unit is fully operational, reliable and interconnected, fully integrated and synchronized with the Transmission System.
(b) Seller has installed equipment for the Primary Unit, and the nameplate capacity of such equipment is no less than [92 MW].
(c) Authorization to parallel the Primary Unit was obtained by the Participating Transmission Owner, SCE on [DATE].
(d) Seller has received written notice from the CAISO , or other evidence reasonably demonstrating, that the Primary Unit has been included in the CAISO’s NQC List.
[SELLER]
Signature:
Name:
Title:_______________________________
Date:_______________________________
[ENGINEER]
Signature:_____________________________
Name:_______________________________
Title:________________________________
Date:________________________________
Exhibit D - 1
EXHIBIT D: DESCRIPTION OF PRIMARY UNIT
The following describes the Primary Unit to be constructed, operated and maintained by Seller through the Term in accordance with the Agreement.
• Unit name: Athos Power Plant (Q1405)
• Resource type: Battery Storage
• Nameplate capacity: 102.3
• Location: Desert Center (Riverside County), CA
• Unit physical address: 25250 Rice Rd, Desert Center, CA 92239 • Unit elevation: 556 ft above mean sea level
• Unit latitude: Latitude:33.756897°
• Unit longitude: Longitude: -115.34146°
• Interconnection: SCE
• CAISO transmission access charge area (e.g. SDG&E): SCE • Point of interconnection: SCE 230 kV Red Bluff
• Point of interconnection address: Red Bluff Substation will be located adjacent to the south side of Interstate 10 (I-10), east of Aztec Road, and west of Corn Springs Road, in unincorporated Riverside County, California
• Existing zone (e.g. SP-15): SP-15
• PNode: Not yet assigned; to be provided by Seller prior to start of Delivery Term • CAISO Resource ID: Not yet assigned; to be provided by Seller prior to start of Delivery Term
• Substation: SCE 230 kV Red Bluff
Exhibit E - 1
EXHIBIT E:
[RESERVED]
Exhibit F - 1
EXHIBIT F: PROGRESS REPORTING FORM
Each Progress Report must include the following items:
1. Executive summary.
2. Primary Unit description.
3. Site plan of the Primary Unit.
4. Description of any material planned changes to the Primary Unit or the Site.
5. Schedule showing progress on Primary Unit construction generally and achieving each of the Milestones and the Commercial Operation Date.
6. Summary of activities during the previous quarter or month, as applicable, including any OSHA labor hour reports.
7. Forecast of activities scheduled for the current calendar quarter or month, as applicable.
8. Written description about the progress relative to the Milestones and the Commercial Operation Date, including whether Seller is on schedule with respect to the same.
9. List of issues that are likely to potentially affect achievement of the Milestones and the Commercial Operation Date.
10. Progress and schedule of the EPC Contract, all major equipment supply agreements, Governmental Approvals, technical studies, and financing arrangements.
11. Pictures, in sufficient quantity and of appropriate detail, in order to document construction and interconnection progress.
12. Any other documentation reasonably requested by Buyer.
City Council Staff Report
DATE: NOVEMBER 4, 2025
TO: HONORABLE MAYOR PRO TEM AND CITY COUNCIL
FROM: PUBLIC WORKS DEPARTMENT
ENGINEERING DIVISION
DISTRICT: 2
SUBJECT: ACCEPT NOTICE OF COMPLETION (NOC) FOR PUBLIC
LANDSCAPE IMPROVEMENTS FO R TRACT 60732 LOCATED AT
20TH STREET WEST AND QUICK STREET
RECOMMENDATION
Staff recommend that the City Council:
1. Accept the NOC for completed public landscape improvements for Tract 60732 located at 20th Street West and Quick Street; and,
2. Authorize the Interim City Manager or his designee to file the NOC and release the security for the completed public street improvements.
BACKGROUND
This project for Tract 60732 constructed public landscape improvements along 20th Street West and Quick Street . The improvements include irrigation and landscaping located within the City’s right -of-way. The improvements have been installed per the approved landscape plan and inspected and approved by City Public Works and Landscape inspection staff.
DISCUSSION
The NOC is presented in accordance with Section 16.110.060 of Palmdale’s Municipal Code. This action will accept the public landscape improvements as complete and initiate the City’s release of applicable securities posted for this project per the City’s subdivision regulations.
The required public landscape improvements are provided in the attached list of Completed Public Improvements and shown in the Site Map and have been completed to the City Engineer ’s satisfaction as required in the Subdivision/Development Report to Mayor Pro Tem and City Council
Re: NOC Completed Public Landscape Improvements for Tract 60732 November 4, 2025
Improvement Agreement between the developer and the City. As of June 26, 2025, the improvements have entered a 12-month maintenance period. After the developer fulfills a one-year maintenance period, the improvements along 20th Street West and Quick Street will be transferred from the developer to the City.
FISCAL IMPACT
$4,200; The estimated additional maintenance and administrative costs are $ 4,200 annually. These improvements make up the entirety of the landscape element included in Annexation No. 004 to Community Facility District 2022-1 (Citywide Maintenance and Services). The maintenance and administrative cost s associated with this landscaping are expected to be sustained by the annual District Cost Recovery levy and budgeted from Landscape Maintenance accounts.
STRATEGIC PLAN
Goal III: Invest in infrastructure to improve community livability.
C. Plan and maintain safe and attractive neighborhoods, streets, facilities, and public spaces with exciting programming that promotes active fun for everyone.
Prepared by: Leonardo Torres, P.E.
Director of Public Works
Certified as to availability of Funds: Janelle Samson, Director of Operations Approved by: Salvador Mendez, Interim City Manager
Approved as to form: Alexandra Severino, City Attorney
ATTACHMENTS
NOC
List of Completed Public Improvements
Site Map
Site Photo
RECORDING REQUESTED BY:
CITY OF PALMDALE
WHEN RECORDED MAIL TO:
CITY OF PALMDALE
OFFICE OF THE CITY CLERK
38300 SIERRA HIGHWAY, SUITE C
PALMDALE, CA 93550
Space above this line is for Recorder’s Use
NOTICE OF COMPLETION
Notice pursuant to Civil Code Section 3093, is hereby given that:
1. The undersigned is owner or corporate officer of the interest or estate stated below in the property hereinafter described.
2. The full name of the owner is City of Palmdale, a Municipal Corporation.
3. The full address of the owner is 38300 Sierra Highway, Palmdale, CA 93550.
4. The nature of interest or estate of the owner is: Landscape Maintenance District Improvements- TR60732.
5. A work of improvement on the property hereinafter described was completed on July 30, 2025.
6. The work done was: “Landscape Maintenance District Improvements- TR60732.”,
7. The name of the Contractor for such work of improvement: K. Hovanian Communities, Inc.
8. The property on which said work of improvement was completed is in the City of Palmdale , County of Los Angeles, State of California, and is described as follows : 20th Street West and Quick Street.
9. The address of said property is: Tract 60732.
Dated: November 04, 2025
CITY OF PALMDALE
Hamed Hashemian, City Engineer
____________________________________________________________________________
VERIFICATION
I, the undersigned, say: I am the City Engineer, the declarant of the foregoing notice of completion; I have read the said notice of completion and know the contents thereof; the same is true of my own knowledge.
I declare under penalty of perjury that the foregoing is true and correct.
Executed on November 04, 2025, in the City of Palmdale, California.
Hamed Hashemian, City Engineer
EXHIBIT A
COMPLETED PUBLIC IMPROVEMENT
Tract
Plan #
Quantity
Plant List
Security
TR 60732
Landscape Maintenance
District
LS 21-14
2,906 SQFT
97 SHRUBS, 9 TREES
33 VINE PLANTS AND
IRRIGATION SYSTEM
$23,100
EXHIBIT B
SITE MAP
EXH C
20th St. West & Quick St.
City Council Staff Report
DATE: NOVEMBER 4, 2025
TO: HONORABLE MAYOR PRO TEM AND CITY COUNCIL
FROM: PUBLIC WORKS DEPARTMENT
CAPITAL IMPROVEMENT PROGRAM DIVISION
DISTRICT: 4
SUBJECT: ACCEPT NOTICE OF COMPLETION (NOC) FOR PN 795, SAM YELLEN PARK PHASE 2 PROJECT
RECOMMENDATION
Staff recommend that the City Council:
1. Accept the NOC for PN 795, Sam Yellen Park Phase 2 Project; and,
2. Authorize the Interim City Manager or his designee to file the NOC and release the security for the completed park project improvements.
BACKGROUND
The Sam Yellen Park Phase 2 project, located at 5100 East Avenue S, has completed improvements on the park's 12 -acre property, adding significantly to the park’s facilities.
The expansion added:
A new 1,888 sq ft community center;
A public gathering plaza;
A prefabricated restroom building;
Shaded and unshaded picnic areas with tables;
Seven futsal courts;
Unique fitness stations;
A large playground for children six months to five years; and, Illuminated pedestrian walkways.
Other improvements include:
A modified roundabout entry from Avenue S connecting to the existing parking lot, providing a convenient drop-off zone;
A new 84-space parking lot accessible from Hillcrest Drive; Report to Mayor Pro Tem and City Council
Re: NOC PN 795 Sam Yellen Park Phase 2 Project
November 4, 2025
A detention basin;
New water and sewer services, storm drain improvements , and irrigation system; and,
Upgrade to Phase 1 irrigation and landscape.
Sustainability is a key focus of landscape improvements, which include water-efficient and drought-tolerant plantings and the preservation of existing Joshua trees to protect the desert ecosystem. The project also incorporated a mix of natural grass and artificial turf.
DISCUSSION
The NOC is presented by Section 16.110.060 of Palmdale’s Municipal Code. This action will accept the public improvements as complete and initiate the City’s release of applicable securities posted for this project by the City’s subdivision regulations.
FISCAL IMPACT
$0; There is no fiscal impact associated with this action. Project cost totaled $18,586,215.91 and was funded using Measure AV and Measure A funds.
STRATEGIC PLAN
Goal III: Invest in infrastructure to improve community livability.
C. Plan and maintain safe and attractive neighborhoods,streets, facilities, and public spaces with exciting programming that promotes active fun for everyone.
Prepared by: Leonardo Torres, P.E.
Director of Public Works
Certified as to availability of Funds: Janelle Samson, Director of Operations Approved by: Salvador Mendez, Interim City Manager
Approved as to form: Alexandra Severino, City Attorney
ATTACHMENTS
NOC
Project Photo
RECORDING REQUESTED BY:
City of Palmdale
Public Works Department
WHEN RECORDED MAIL TO:
City of Palmdale
Office of the City Clerk
38300 Sierra Highway, Suite C
Palmdale, CA 93550
PURSUANT TO CIVIL CODE SECTION
C.C. 3093
___________________________________________________________________________________
NOTICE OF COMPLETION
NOTICE IS HEREBY GIVEN:
1. The City of Palmdale, a municipal corporation, is the owner in fee, of certain public improvement known as Sam Yellen Park Phase 2 Project, City Project Number PN 795.
2. The City’s address is 38300 Sierra Highway, Palmdale, California 93550.
3. The general location of said public improvement is 5100 East Avenue S, Palmdale, CA 93552 from Sierra Highway to 25th Street East, Palmdale, California 93352.
4. On March 23, 2023, a construction contract for said public improvement was awarded to R.C.
Becker and Sons, Inc., 28355 Kelly Johnson Parkway, Santa Clarita, CA 91355.
5. Work under said contract was completed on September 25, 2025, to the satisfaction of the City of Palmdale, and the City hereby accepts the project as complete.
Dated: November 4, 2025 CITY OF PALMDALE
______________________________
Lee Torres, Director of Public Works
____________________________________________________________________________________________
VERIFICATION
I, the undersigned, say: I am the Director of Public Works, the declarant of the foregoing notice of completion; I have read the said notice of completion and know the contents thereof; the same is true of my own knowledge. I declare under penalty of perjury that the foregoing is true and correct.
Executed on November 4, 2025, in the City of Palmdale, California.
Lee Torres, Director of Public Works
NOTICE OF COMPLETION
Sam Yellen Park Phase 2
West View – Sam Yellen Park Phase 2
Detention Basin
New Parking Area At Hillcrest Dr. near the Futsal Courts Seven Futsal Courts Futsal Court, Shade Structure and Prefabricated Restroom
Play Area Play Area and Shade Structure
Play Area, Shade Structure and Multi-purpose Court
Play Area and Shade Structure
Upgraded Park Entrance (Roundabout) and Community Center Gathering Plaza near the Community Center Community Center Gathering Plaza
Landscape Upgrade at Phase 1
Multi-purpose Court
North View
Play Area
1 MINUTES
CITY COUNCIL
CITY HALL COUNCIL CHAMBER
38300 SIERRA HIGHWAY, SUITE B
PALMDALE, CALIFORNIA
OCTOBER 21, 2025
5:00 PM
www.cityofpalmdale.org
1) CALL MEETING TO ORDER
Mayor Pro Tem Bettencourt called the meeting to order at 5:00 pm.
Note: All City Council memberships are reflected in their City Council titles.
2) ROLL CALL MAYOR PRO TEM BETTENCOURT, COUNCILMEMBERS BISHOP, LOA, OHLSEN, ALARCÓN
PRESENT: Laura Bettencourt, Austin Bishop, Richard J. Loa, Eric Ohlsen.
ABSENT: Andrea Alarcón.
3) PLEDGE OF ALLEGIANCE AND MOMENT OF SILENCE
Councilmember Ohlsen led the Pledge of Allegiance.
Councilmember Bishop addressed the public and the Council regarding the importance of fostering an environment of respect, professionalism, and dignity during meetings. He expressed his sincere regret to anyone who may have felt disrespected and encouraged all to display professionalism, focus, and unity.
Mayor Pro Tem Bettencourt courteously reminded all attendees of the importance of following the established meeting protocols and outlined the actions that would be taken to address disruptions.
A motion was made and passed to hear item 5.4 at this time . Director of Public Works Torres presented the staff report. Mayor Pro Tem Bettencourt and the Council delivered a presentation to the family. Captain Bardon thanked all for their support during the LASD's loss of a deputy.
4) PRESENTATIONS
4.1) Proclamation in honor of Hispanic Heritage Month.
Mayor Pro Tem Bettencourt presented a proclamation to SALVA. Raices de Mi Tierra performed a dance.
2 4.2) Communications Division Update.
Communications Manager Devine-Knight presented a video.
Councilmember Bishop thanked staff for their hard work.
5) CONSENT CALENDAR
5.1) Waive full reading of the Resolution(s) and/or Ordinance(s) to be considered and voted on at this meeting. (This allows for reading the title only in lieu of reciting the entire text).
5.2) Adopt Resolution No. CC 2025 -088, a Resolution of the City Council of the City of Palmdale authorizing the Interim City Manager to execute the agreement with Delta Dental of California and granting authorization to pay all fees; and Adopt Resolution No. CC 2025-089, a Resolution of the City Council of the City of Palmdale authorizing the Interim City Manager to execute the agreement with Vision Services Plan (VSP) and granting authorization to pay all fees, each for a three -year term with the option to extend two additional one-year terms.
5.3) Approve agreement with Benchmark Resources for surface mining and reclamation act compliance services in the amount not to exceed $250,000 for a term of four (4) years.
5.4) Adopt Resolution No. CC 2025 -057, a Resolution of the City Council of the City of Palmdale approving the dual naming of Avenue Q, adding Deputy Clinkunbroomer Ave from Sierra Highway to 40th Street East.
5.5) Accept Notice of Completion (NOC) for public streets, sewer, and drainage improvements for Juniper Grove Apartments located at the southeast corner of Division Street and Avenue R.
5.6) Approve the minutes from the previous meeting.
Motion: Approve the items listed on the Consent Calendar.
Moved by Eric Ohlsen, seconded by Richard J. Loa.
Vote: Motion carried (4-0)
Yes: Laura Bettencourt, Austin Bishop, Richard J. Loa, Eric Ohlsen.
Absent: Andrea Alarcón.
6) PUBLIC HEARING
6.1) Adopt Ordinance No. 1661, an Ordinance of the City Council of the City of Palmdale, California adopting by reference the 2025 California Building Code including Appendix P, residential code including Appendix AZ, existing building code, green building standards code, energy code, plumbing code, mechanical code, electrical code, wildland -urban interface code, Title 32 Los 3 Angeles County Fire code, and proposed amendments, finding the Ordinance exempt from the California Environmental Quality Act (CEQA); and Adopt Resolution No. CC 2025 -069, A Resolution of the City Council of the City of Palmdale, California making its express findings as required by Section 17958.7 of the Health and Safety Code of the State of California relating to the adoption of the 2025 California Building Code and proposed local amendments, and finding it is not a project per CEQA.
Mayor Pro Tem Bettencourt opened the Public Hearing.
City Clerk Scott read the title of the Ordinance 1661 and the Resolution CC 2025-069
A motion was made and unanimously approved to introduce Ordinance No. 1661.
Building Official George presented the staff report.
Public Testimony: Ramil a Frohar discussed serious safety and maintenance concerns at Manzanita Heights Park on 5th Street West.
There was a discussion among the Council and staff concerning the streamlining of the extension process, reviewing and updating policies, electrification mandates, and the permitting and follow -up inspection procedures.
Motion: Adopt Ordinance No. 1661 adopting by reference the 2025 California Building Code; and Adopt Resolution No. CC 2025 -069 making its express findings as required by Section 17958.7 of the Health and Safety Code of the State of California relating to the adoption of the 2025 California Building Code and proposed local amendments.
Moved by Richard J. Loa, seconded by Austin Bishop.
Vote: Motion carried (4-0)
Yes: Laura Bettencourt, Austin Bishop, Richard J. Loa, Eric Ohlsen.
Absent: Andrea Alarcón.
6.2) Adopt Resolution No. CC 2025 -073, a Resolution of the City Council of the City of Palmdale approving the issuance of Revenue Bonds by the California Municipal Finance Authority (CMFA) in an aggregate outstanding principal amount not to exceed $20,000,000 to finance and refinance a 48-unit qualified residential rental project to be located at 38732 9th Street East for the benefit of 9th Street E. Housing, a California Limited Partnership, or another entity to be created by Milare Housing Investments, Inc. (or and affiliate), and certain other matters relating thereto.
Mayor Pro Tem Bettencourt opened the Public Hearing.
City Clerk Scott read the title of the Resolution CC 2025-073. 4 Director of Operations Samson presented the staff report.
Public Testimony: None.
Mayor Pro Tem Bettencourt closed the Public Hearing.
Councilmember Loa asked who would be responsible for the borrowed funds.
Operations Director Samson confirmed that the borrower assumes full responsibility for the funds.
Motion: Adopt Resolution No. CC 2025 -073 approving the issuance of Revenue Bonds by the California Municipal Finance Authority (CMFA) to finance and refinance a 48 -unit qualified residential rental project to be located at 38732 9th Street East for the benefit of 9th Street E. Housing, a California Limited Partnership, or another entity to be created by Milare Housing Investments, Inc.
Moved by Austin Bishop, seconded by Richard J. Loa.
Vote: Motion carried (4-0)
Yes: Laura Bettencourt, Austin Bishop, Richard J. Loa, Eric Ohlsen.
Absent: Andrea Alarcón.
6.3) Adopt Resolution No. CC 2025 -074, a Resolution of the City Council of the City of Palmdale approving the issuance of the California Municipal Finance Authority (CMFA) Exempt Facility Bonds in an aggregate principal amount not to exceed $60,000,000 for the purpose of financing or refinancing the acquisition, construction, improvement and equipping of Zenith on 25th, located at 25th Street East and East Ave. Q, and certain other matters relating thereto.
Mayor Pro Tem Bettencourt opened the Public Hearing.
City Clerk Scott read the title of the Resolution CC 2025-074.
Director of Operations Samson presented the staff report.
Public Testimony: None.
Mayor Pro Tem Bettencourt closed the Public Hearing.
Motion: Adopt Resolution No. CC 2025-074 approving the issuance of the California Municipal Finance Authority (CMFA) Exempt Facility Bonds for the purpose of financing or refinancing the acquisition, construction, improvement and equipping of Zenith on 25th, located at 25th Street East and East Ave. Q.
Moved by Richard J. Loa, seconded by Austin Bishop.
Vote: Motion carried (4-0)
Yes: Laura Bettencourt, Austin Bishop, Richard J. Loa, Eric Ohlsen. 5 Absent: Andrea Alarcón.
7) APPOINTMENT
7.1) Appoint two Councilmembers to serve on the City Manager Selection Ad Hoc Subcommittee.
Appointment and New Business Public Comments: Rich Gallego requested clarification on the Ad Hoc Subcommittee and Mayor Pro Tem Bettencourt responded.
Operations Director Samson presented the staff report and answered Council questions regarding a timeframe, process and method of the recruitment.
Motion: Appoint Mayor Pro Tem Bettencourt and Councilmember Bishop to serve on the City Manager Selection Ad Hoc Subcommittee.
Moved by Austin Bishop, seconded by Richard J. Loa.
Vote: Motion carried (4-0)
Yes: Laura Bettencourt, Austin Bishop, Richard J. Loa, Eric Ohlsen.
Absent: Andrea Alarcón.
8) NEW BUSINESS
8.1) Adopt Ordinance No. 1662, an Ordinance of the City Council of the City of Palmdale Repealing and Reenacting Chapter 5.44 of the Palmdale Municipal Code (PMC) relating to Mobile Home Space Rent Control.
Director of Housing Reyes read the title of Ordinance No. 1662 and explained the updates to section 5.44 of the Palmdale Municipal Code (PMC).
Mayor Pro Tem Bettecourt asked how many Mobile Home Parks does the update effect, and Director Reyes stated there were seven privately owned.
Motion: Introduce and Adopt Ordinance No. 1662 Repealing and Reenacting Chapter 5.44 of the Palmdale Municipal Code (PMC) relating to Mobile Home Space Rent Control.
Moved by Richard J. Loa, seconded by Eric Ohlsen.
Vote: Motion carried (4-0)
Yes: Laura Bettencourt, Austin Bishop, Richard J. Loa, Eric Ohlsen.
Absent: Andrea Alarcón.
9) CITY MANAGER’S REPORT
Interim City Manager Mendez provided an update on several community events, including the Farmer’s Market held on Fridays at Oasis Park, the Neighborhood Improvement Program Project series begins on October 25, the Making Strides Breast Cancer Walk on October 25, SAVES hosting a drive thru Halloween costume 6 distribution, Halloween with Houdini at the Palmdale Playhouse on October 31, Día de los Muertos celebration at the Palmdale Playhouse on November 2, I -LEAD Youth Conference November 7 at Legacy Commons, partnering with local Holiday Inn on 5th St to host Free Dodger Watch Party to watch the upcoming World Series games.
10) SHERIFF’S REPORT
Captain Bardon provided an update on response times for routine calls for service, the launch of a Spanish -speaking virtual deputy, the Public Safety partnership, number of arrests, Part 1 crimes, firearm recovery, graffiti -related arrests and investigations, traffic collisions, DUI enforcement and arrests, and traffic enforcement. He spoke about the haunted jail event and thanked the City for funding. Additionally, he highlighted the Faith and Blue event and extended thanks to the City for the memorial and signage honoring Deputy Clinkunbroomer. He presented Mayor Pro Tem Bettencourt with a certificate of completion for the Contract City Council Academy on behalf of the Palmdale Sheriff’s Department.
11) NON-AGENDA - Now is the time for public participation.
The following individuals provided public input: Eugene Hernandez discussed Hispanic Heritage Month, SALVA and the service provided in the community, and the lack of response from AV Edge; Yul Gevargis thanked Mayor Pro Tem Bettencourt for the town hall meeting, presented a carcass of a turtle and asked that the Barrel Springs ponds be restored; Mark Maldonado addressed comments made by Councilmember Ohlsen at the 8/19/25 meeting; Roger Soderstedt reported a missing trash can at Arnie Quinonez park; Mikki Martinez addressed comments made by Councilmember Ohlsen at a past meeting; Michael Ross requested a copy of the rules for conducting the CC meetings, spoke about the Ralph M. Brown Act, Kaleidoscope, and Item 7 .1; Denise Latanze expressed safety concerns at City Council meetings; Rich Gallego discussed his phone conversation with Councilmember Ohlsen and addressed Councilmember Bishop for his statement regarding public behavior; Marsha Furman announced the Breast Cancer Walk on Saturday, 10/25/2025, spoke about the Spanish translation, sidewalk schedule, and two-minute public comments.
Mayor Pro Tem Bettencourt requested that a schedule be posted on the website for upcoming repairs for streets, street paving, and upcoming improvements.
12) COUNCIL REPORTS, ANNOUNCEMENTS AND REQUESTS FOR FUTURE
AGENDA ITEMS
Councilmember Bishop commended the Parks and Recreation Department for their successful organization of the Kaleidoscope Festival. He discussed maintaining respect and dignity among Council members and the public during meetings.
Councilmember Ohlsen discussed his efforts to de -escalate recent tensions with the Palmdale Freedom Coalition and expressed his desire to serve the best interests of the city.
7 Mayor Pro Tem Bettencourt discussed the efforts to restore the meeting to its normal and professional proceedings.
13) CLOSED SESSION
PRESENTATION BY CITY ATTORNEY
City Attorney Severino confirmed the items would be heard as listed.
13.1) CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION Ricky Thorstensen v. City of Palmdale, et al.
Los Angeles Superior Court 22STCV29463
This closed session is being held pursuant to the authority of California Government Code Section 54956.9(d)(1).
13.2) CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION Concerning CV Communities, LLC v. Antelope Valley -East Kern Water Agency, et al.,
Los Angeles Superior Court 20STCV10953
This closed session is being held pursuant to the authority of California Government Code Section 54956.9(d)(1).
13.3) CONFERENCE WITH REAL PROPERTY NEGOTIATORS
Property Vacant Land, APN’s 3053-006-015, 016; 3053-008-001, 002, 027, 028;3053-009-004, 005; 3053-010-021, 022, Palmdale, CA 93550 Agency Negotiation: Megan Taggart, Director of Economic and Community Development, Sophia Reyes, Director of Housing, Keri Smith, Director of Parks and Recreation
Negotiating Parties: Palmdale Lots, LLC and City of Palmdale Under Negotiation: Terms of price and payment for acquisition of land with County Prop A funds
This closed session is being held pursuant to the authority of California Government Code Section 54956.8.
13.4) PUBLIC EMPLOYEE PERFORMANCE EVALUATION
Title: City Manager
This closed session is being held pursuant to the authority of California Government Code Section 54957.
13.5) PUBLIC EMPLOYEE PERFORMANCE EVALUATION
Title: City Attorney
This closed session is being held pursuant to the authority of California Government Code Section 54957.
8 14) ANNOUNCEMENT BY CITY ATTORNEY
Closed Session was held from 6:50 pm - 8:40 pm.
City Attorney Severino announced the following for item 13.1:
13.1 - There was no reportable action.
13.2 - There was no reportable action.
13.3 - There was no reportable action.
13.4 - There was no reportable action.
13.5 - The Council voted 4-0 to close any and all investigations into the City Attorney and Harper Burns LLP.
15) ADJOURNMENT
Mayor Pro Tem Bettencourt adjourned the meeting at 8:42 pm to November 4, 2025, at 5:00 p.m. in the City Hall Council Chamber located at 38300 Sierra Highway, Suite B, Palmdale, California.
PASSED, APPROVED, and ADOPTED this 4th day of November 4, 2025
Laura Bettencourt, Mayor Pro Tem
ATTEST:
Rochelle Scott, City Clerk
City Council Staff Report
DATE: NOVEMBER 4, 2025
TO: HONORABLE MAYOR PRO TEM AND CITY COUNCIL
FROM: HOUSING DEPARTMENT
DISTRICT: ALL
SUBJECT: CONDUCT PUBLIC HEARING TO OBTAIN RESIDENT INPUT ON
COMMUNITY NEEDS AND PRIORITIES FOR INCLUSION IN THE
2026-2027 ACTION PLAN
RECOMMENDATION
Staff recommend that the City Council:
1. Conduct public hearing to obtain resident input on community needs and priorities for inclusion in the 2026-2027 Action Plan.
BACKGROUND
As an entitlement and participating jurisdiction, the City receives an annual allocation of funds from the U.S. Department of Housing and Urban Development (HUD) under its Community Development Block Grant (CDBG) and Home Investment Partnership (HOME) Programs. As an entitlement and participating jurisdiction, the City is required to prepare and obtain HUD approval of a Consolidated Plan covering a period of five years.
The 2025 - 2029 Five-year Consolidated Plan was approved by Council and submitted to HUD in June 2025. The Plan addresses a variety of HUD -required issues, including the City’s plan to address affordable housing and other needs of low - and moderate-income persons.
Prior to the beginning of each grant year, the City is required to submit an Annual Action Plan to HUD. This Plan discusses and identifies the actions , programs, projects, and services to be provided during the fiscal year to meet the goals and objectives of the Consolidated Plan and outlines the expenditures for the allocated funds.
DISCUSSION
In preparation for the 2026-2027 Action Plan , the City is seeking citizen input for community needs. Holding this public hearing is a prerequisite to receiving the annual CDBG and HOME allocation. The implementation of regulations requires that a public Report to Mayor Pro Tem and City Council
RE: Public Hearing for 2026-2027 Action Plan
November 4, 2025