resources, and support to consistently meet the requirements and maintain the highest level of safety and security for our community.
Below is a summary of the contract value and all amendments, including the proposed:
Conclusion:
Staff recommends that the City Council approve Amendment No. 4 with JAS Pacific, increasing the contract for an additional amount of $516,000, for a total contract not-toexceed of $1,126,000, to meet the demand of Building and Safety services, including plan checks, permit issuance, and inspection activity for development through FY 2023-24.
Steve Carmona
SC:AB:JG:jf
Enclosures: 1) Amendment No. 4
2) Amendment No. 3
3) Amendment No. 2
4) Amendment No. 1
5) Agreement No. 20-1932
Agreement/Amendment Expiration Date Amount NTE
Agreement No. 20-1932 6/30/2022 250,000 $ $ 250,000
Amendment #1 6/30/2022 180,000 $ $ 430,000
Amendment #2 6/30/2022 180,000 $ $ 610,000
Amendment #3 6/30/2024 $ - $ 610,000
Proposed Amendment #4 6/30/2024 516,000 $ $ 1,126,000
Total: $ 1,126,000 $ 1,126,000
AMENDMENT NO. 4
TO PROFESSIONAL SERVICES AGREEMENT NO. 20-1932
WITH JAS PACIFIC
THIS AMENDMENT NO. 4 TO AGREEMENT NO. 20-1932 FOR
PROFESSIONAL SERVICES WITH JAS PACIFIC., (“Amendment No. 4"), effective as of the date specified in paragraph 4 hereof, is made and entered into by and between the CITY OF PICO RIVERA (“CITY”), and JASON ADDISON SMITH CONSULTING SERVICES, INC., dba JAS Pacific, a California Corporation (“CONSULTANT”).
RECITALS
A. CITY and CONSULTANT (collectively referred to as the “PARTIES”) have previously executed that certain Agreement No. 20-1932 Professional Services Agreement Between the City of Pico Rivera and JAS Pacific. dated January 15 2020, as amended by Amendments Nos. 1, 2,3, to the Professional Services Agreement with JAS Pacific dated October 13, 2021, May 10, 2022, June 27, 2023 respectively (collectively referred to as the “Agreement”) relating to professional services in the City of Pico Rivera.
B. Pursuant to Sections 5 and 29 of the Agreement, the PARTIES desire to amend
5.1 of the Agreement for the purpose of increasing the not-to-exceed amount of Consultant’s Services as set forth herein,
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. MODIFICATION OF ESTIMATED AMOUNT.
The compensation as set forth in Section 5 of the Agreement shall be modified as follows:
Consultant shall provide the services described in Section 5.1 regarding Consultant’s Services and shall be compensated in accordance with Approved Fee Schedule set forth in Section 3.2 and the total compensation and costs payable to Consultant under this Agreement shall be increased by $516,000.00 for a total notto-exceed amount of $1,126,000.00.
2. EFFECT OF AMENDMENTS.
Except as modified herein, either expressly or by necessary implication, the terms and provisions of the Agreement between the CITY and CONSULTANT shall remain in full force and effect. If there is conflict between this Amendment No. 4 and the Agreement, the terms of this Amendment No. 4 will prevail.
Enclosure 1
6a
Amendment No. 4 to Agreement No. 20-1932
JAS PACIFIC
3. EFFECTIVE DATE.
Unless otherwise specified herein, this Amendment No. 4 shall become effective as of the date set forth below on which the last of the parties, whether CITY or CONSULTANT, executes this Amendment No.4.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 4 to be executed and attested by their respective officers hereunto duly authorized. “CITY” “CONSULTANT”
CITY OF PICO RIVERA JAS PACIFIC.
______________________________ _________________________________ Erik Lutz, Mayor
Title: _____________________________
Dated: ________________________ Dated: ____________________________ ATTEST: APPROVED AS TO FORM:
___________________________ _________________________________ Cynthia Ayala, Jr Deputy City Clerk Arnold M. Alvarez-Glasman, City Attorney Enclosure 2
6b
Enclosure 3
6c
Enclosure 4
6d
Enclosure 5
6e
To: Mayor and City Council
From: City Manager
Meeting Date: August 1, 2023
Subject: TELEGRAPH ROAD BRIDGE OVER THE RIO HONDO
CHANNEL – APPROVAL OF MAINTENANCE
AGREEMENT BETWEEN THE CITIES OF DOWNEY,
COMMERCE, AND PICO RIVERA
Recommendation:
1. Approve a joint Bridge Maintenance Agreement for the Telegraph Road Bridge over the Rio Hondo Channel with the cities of Downey and Commerce; and
2. Authorize the Mayor to execute an agreement in a form approved by the City Attorney.
Fiscal Impact:
The Telegraph Road Bridge over the Rio Hondo Channel is jointly owned by the cities of Commerce (23%), Downey (27%) and Pico Rivera (50%). The City of Pico Rivera is responsible for 50% of the costs for improvements, repairs, or any other expenditures incurred for the safety of this bridge. This item involves the execution of a Bridge Maintenance Agreement among the three (3) agencies to establish said responsibilities.
There is no fiscal impact to the General Fund and no appropriation is requested at this time.
Background:
In March 2022, a small encampment fire occurred under the Telegraph Road Bridge, over the Rio Hondo Channel. It is believed that the fire was caused by transients who were temporarily residing there. After the fire, the City of Pico Rivera took the initiative to conduct a study in collaboration with an on-call consultant. The purpose of this study was to thoroughly inspect the affected areas and provide a detailed report on any fire damage that was discovered. The cities of Commerce, Downey, and Pico Rivera have maintained close communication and will discuss the next steps as soon as the investigation is concluded. The report recommendations may prompt a need for funding, 7 CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 TELEGRAPH ROAD BRIDGE OVER THE RIO HONDO CHANNEL – APPROVAL OF
MAINTENANCE AGREEMENT BETWEEN THE CITIES OF DOWNEY, COMMERCE,
AND PICO RIVERA
therefore, if deemed necessary, staff will present an item at a forthcoming City Council meeting.
Discussion:
The incident that occurred in 2021 necessitated and led to the establishment of a joint agreement. Currently, there is no existing cooperative agreement in place to define the responsibilities among the three (3) jurisdictions as far as which agency is the designated lead agency when improvements or repairs need to be made. In addition, there is no agreement in place defining the cost sharing percentages among the three (3) agencies when expenditures on the bridge are necessary, such as studies, improvements, repairs, or inspections. The location of the bridge is depicted in Exhibit A of the agreement.
A cooperative Bridge Maintenance Agreement (Enclosure 1) has been prepared and initiated by the City of Downey. The agreement specifies the City of Pico Rivera with 50% jurisdiction, as the lead agency when improvements or repairs to the bridge are required or in the event of an emergency. If damage occurs to the bridge, whether the damage occurs in one (1) jurisdiction or equally across each of the three (3) jurisdictions, the City of Pico Rivera will be the designated lead agency and will be responsible for obtaining quotes from Los Angeles County or a contractor to make the necessary repairs to the bridge. Upon completion of the repair work, the City of Pico Rivera will invoice the cities of Downey and Commerce for their respective shares of the cost, which will be proportional to their ownership percentage of the bridge. If the City of Pico Rivera is unable to initiate the work and notify the other two (2) cities, the City of Downey shall assume the role as lead agency and provide 24 hours advance notification to the other cities. Should the City of Downey be unable to initiate the work and provide notification to the other cities after five (5) working days, the City of Commerce shall assume the role as lead agency after 24 hours advance notification to the other two (2) cities. If neither Downey nor Commerce are able to accept the role of lead agency, the City of Pico Rivera shall remain the lead agency.
Conclusion:
The City of Commerce approved the cooperative agreement on April 19, 2023, and the City of Downey approved the cooperative agreement on June 13, 2023. Therefore, staff recommends the approval of the attached maintenance agreement between the cities of Commerce, Downey, and Pico Rivera to provide maintenance to the Telegraph Road Bridge over the Rio Hondo Channel and establish cost sharing responsibilities, roles and the terms of improving or maintaining the bridge, including, if the bridge is damaged and requires repair.
CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 TELEGRAPH ROAD BRIDGE OVER THE RIO HONDO CHANNEL – APPROVAL OF
MAINTENANCE AGREEMENT BETWEEN THE CITIES OF DOWNEY, COMMERCE,
AND PICO RIVERA
Steve Carmona
SC:NN:MPC:np
Enclosure: 1) Bridge Maintenance Agreement/Exhibit A
7a
To: Mayor and City Council
From: City Manager
Meeting Date: August 1, 2023
Subject: RESURFACING OVERLAY AND RECONSTRUCTION
PROJECT (CIP NO. 50048) – APPROVE CONTRACT
CHANGE ORDER NO. 1
Recommendation:
1. Approve Contract Change Order (CCO) No. 1 (Enclosure 1) for changes to the contract plans and specifications for the Resurfacing Overlay and Reconstruction Project, CIP No. 50048 (Project), in the amount of $188,471.61 for a total not-toexceed construction contract amount of $9,003,616.61;
2. Authorize the City Manager or his designee to issue CCO No. 1 for the Project; and
3. Approve increasing Task Order to PPM Group (Enclosure 2) for additional construction management and inspection services for the Project in the amount of $104,842.50, for a total not-to-exceed task order amount of $237,682.50.
Fiscal Impact:
CIP No. 50048 budget included $8,995,000 in Certificate of Participation (COP) Fund (Account No. 305.70.7300.54500-50048), $800,000 in SB1 Fund (Account No. 202.70.7300.54500-50048), and $250,000 in Cal Recycle Fund (Account No. 671.70.7300.54500-50048). The combined appropriations for this Project total $10,045,000. Sufficient funding is available for the CCO and task order change requests.
No additional funding is needed at this time, and there is no fiscal impact to the General Fund.
Discussion:
The scope of the Project includes street resurfacing, reconstruction (where poor pavement and/or the subgrade has degraded to the extent that resurfacing would not be 8 CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 RESURFACING OVERLAY AND RECONSTRUCTION PROJECT (CIP NO. 50048) – APPROVE CONTRACT CHANGE ORDER NO. 1
effective), replacement of damaged curb and gutter, reconstruction of cross gutters prone to local flooding, new striping, and the necessary replacement of traffic signs.
On January 25, 2022, the City Council authorized a construction award to R.J. Noble Company in the amount of $8,815,145 and authorized the Public Works Director to process change orders in an amount not-to-exceed 10% of the total construction contract amount, as needed, up to $881,515 for construction contingency. Change Order No.1 is required in the amount of $188,471.61 for a total contract amount of $9,003,616.61.
On December 13, 2021, a request for task proposals (RFTP) was sent to pre-qualified firms under the City’s on-call agreements to provide construction management and inspection services. Staff evaluated and selected PPM Group, Inc. to provide construction management and inspection services for a not-to-exceed amount of $132,840. Issuance of the task for construction management and inspection services to PPM Group, Inc. was in accordance with the current on-call agreement. The PPM Group, Inc. has requested a purchase order increase in the amount of $104,842 due to construction schedule time extensions, schedule delays, utility coordination delays and the additional scope of work items requested by the City.
Contract Change Order No. 1
The changes to the plans and specification to be approved by Contract Change Order No. 1 include the following eight (8) items:
Item No. Description of Change Change in
Contract Price
1. Removal of two (2) trees on Gallatin Road near Durfee Avenue $5,200.00
2. Reimbursement for payment of Pico Water District for lowering four (4) water service lines on Lexington Road North of Whittier Boulevard, needed to regrade roadway
$35,138.45
3. Additional striping for Gallatin Road bike lane(s) $13,138.45
4. Increase in asphalt Oil and Trucking price per Caltrans industry index $198,151.93
5. Additional striping for crosswalks at Coffman and Pico Road and Noroco Drive $1,602.06
6. Additional work at El Atacor #2 at Whittier Boulevard and Lindsay Avenue. for ADA compliance $3,901.98
7. Additional striping at Paramount Boulevard for school crosswalk legends $5,138.74
8. Deduction (credit) of existing Macadam used as basecourse ($73,800.00) Net Change in Contract Price: $188,471.61
For the eight (8) items above, a time extension of 173 non-compensatory working days is added to the contract for inclement weather, additional removal and replacement of existing concrete flatwork, utility conflicts, and asphalt-industry procurement issues. The revised last day of work as authorized by this change order will be May 16, 2023.
CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 RESURFACING OVERLAY AND RECONSTRUCTION PROJECT (CIP NO. 50048) – APPROVE CONTRACT CHANGE ORDER NO. 1
An additional change order is being negotiated to address the lapse in contractual time through completion.
Task Order Increase
On-call construction services are paid by the actual hours spent on the job. PPM’s original Task Order was for an amount of $132,840, which correlates with 868 man-hours. Due to the additional construction time extension as discussed above, PPM’s request for the additional $104,842 represents the actual additional time spent on the Project plus the estimated time to finish. Any remaining balance in the Purchase Order upon project completion will be returned to the fund balances.
Conclusion:
Staff recommends authorization of Contract Change Order No. 1 to be issued by the City Manager or his designee to R.J. Noble Company in the amount of $188,471.61 for a total not-to-exceed construction contract amount of $9,003,616.61, and authorization of increased Task Order to PPM Group to be issued by the City Manager or his designee for additional construction management and inspection services in the amount of $104,842.50, for a total not-to-exceed task order amount of $237,682.50.
Steve Carmona
SC:NN:GE:MA:np
Enclosures: 1) Contract Change Order No. 1
2) Task Order to PPM Group
8a
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May 10, 2023
To: City of Pico Rivera
Att.: Michael Ackerman
Interim City Engineer
Project: Street Rehabilitation at Various Location
Project Number: CIP No. 50048
From: PPM Group Inc.
Zouheir Saleh
Construction Manager
Subject: Additional CM Funding for Project No. 50048
Dear Mr. Ackerman,
Per our discussion and your concurrence, please, we are requesting a change order for the sum of $104,842.50 to cover our CM fees as shown on the breakdown table below. This sum includes our anticipated work for May 2023.
As you are aware, this project was originally scheduled to be completed in 80 working days.
The first day of work was 6/20/22. However, we are still in the final punch list phase, and the delayed is to the following factors:
1. Various street work and over 44 streets. Efficiency in scheduling concurrent work was not well planned.
2. Lack of consistency in keeping work schedules
3. Fiber Optic work by others at various work locations was not completed in timely manner which forced contractor to reschedule start of his work and only did laying out and other minor work.
4. Additional curb removal request by city.
5. Asphalt replacement not noted in the plans and city requested removal.
6. Design delays on some of the issues such as addition of ADA ramps
7. At Lexington lowering the water meters. The contractor wanted municipal to do it. It took three months delay to schedule them.
8. Galeton stripping delayed two months until city decided on bicycles lane configurations.
9. Lindsey and Whittier new configuration. One month delay by design to resolve ADA issues.
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10. Contractor modified their work schedule activities around and scattered their work during these delays.
We are requesting additional funds in order to pay PPM Group for previous months (approved) and projected month of May as shown in the table below.
Approved Original CM Budget $132,840.00
Remaining Budget as of December 2022 $12,402.50
Outstanding Invoices Amount
December Billing (Actual) $23,900.00
January Billing (Actual) $21,615.00
February Billing (Actual) 23,295.00
March Billing (Actual) $17,060.00
April Billing (Actual) $12,975.00
May Billing (Estimated) $18,400.00
Total CM Budget Needed $117,245.00
Remaining Budget as of December 2022 -$12,402.50
Total CCO Required $104,842.50
We would appreciate expediting the processing of this request.
Respectfully,
Zouheir Saleh
Zouheir Saleh, PE, CCM, QSP/D
Senior Project/Construction Manager
ENCLOSURE 2
To: Mayor and City Council
From: City Manager
Meeting Date: August 1, 2023
Subject: CITYWIDE TRAFFIC SIGNAL UPGRADES (CIP NO. 21348), FEDERAL PROJECT NO. HSIPL-5351 (037) – NOTICE OF
COMPLETION
Recommendation:
1. Accept the work completed for the Citywide Traffic Signal Upgrades Project, HSIPL-5351 (037) (CIP No. 21348), constructed by California Professional Engineering, Inc. and authorize the City Clerk’s Office to file the Notice of Completion with the Los Angeles County Registrar-Recorder;
2. Approve contract change orders in the total amount of $102,655 for additional work performed on the project and authorize the City Manager or his designee to execute contract change orders; and
3. Authorize the City Manager to release the retention and all other monies due in accordance with the statutory waiting period upon recordation of the Notice of Completion.
Fiscal Impact:
In fiscal year (FY) 2016-17, the City was awarded a Federal Highway Safety Improvement Program (HSIP) - Cycle 7 Grant in the amount of $853,100 (Fund 698) to be used for Traffic Signal Upgrades. Additionally, $1,010,000 in Proposition C funds (Fund 206) had been appropriated for this project in FY 2020-21 and FY 2021-22. The total project funding is $1,863,100 for the design and construction of the project. The total approximate project expenditure is $1,740,111. No additional funding is required, and there is no fiscal impact to the General Fund.
Discussion:
In November 2015, the City was awarded a grant for a Federal HSIP - Cycle 7 program to improve traffic signals at various intersections throughout the City. The project was programmed into the City’s Capital Improvement Program as the Citywide Traffic Signal 9 CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 CITYWIDE TRAFFIC SIGNAL UPGRADES (CIP NO. 21348), FEDERAL PROJECT NO.
HSIPL-5351 (037) – NOTICE OF COMPLETION
Upgrades Project (CIP No. 21348), Federal Project No. HSIPL-5351 (037). This project consists of traffic signal modifications, including but not limited to, signal hardware upgrades and installation of emergency vehicle preemption devices at the following 19 intersections, as applicable:
1. Beverly Boulevard and Acacia Avenue
2. Paramount Boulevard and Washington Boulevard
3. Rosemead Boulevard and Mines Avenue
4. Rosemead Boulevard and Slauson Avenue
5. Rosemead Boulevard and Telegraph Road
6. Rosemead Boulevard and Washington Boulevard
7. Rosemead Boulevard and Whittier Boulevard
8. Slauson Avenue and Passons Boulevard
9. Whittier Boulevard and Acacia Avenue
10.Whittier Boulevard and Durfee Avenue
11.Whittier Boulevard and Gregg Road
12.Whittier Boulevard and Lexington Road
13.Whittier Boulevard and Lindsey Avenue
14.Whittier Boulevard and Passons Boulevard
15.Beverly Boulevard and Rosemead Boulevard
16.Beverly Road and Rosemead Boulevard
17.Paramount Boulevard and Mines Avenue
18.Paramount Boulevard and Slauson Avenue
19.Whittier Boulevard and Paramount Boulevard
On June 21, 2021, City Council awarded a contract to California Professional Engineering, Inc. in the amount of $1,304,785 for the construction of CIP No. 21348. The final construction contract amount with California Professional Engineering, Inc. is $1,407,440, which includes two (2) construction change orders (Enclosure 1) in the amount of $102,655 that were deemed necessary to address unforeseen conditions. The following tables below provide a summary of the contract change orders. [This space intentionally left blank]
CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 CITYWIDE TRAFFIC SIGNAL UPGRADES (CIP NO. 21348), FEDERAL PROJECT NO.
HSIPL-5351 (037) – NOTICE OF COMPLETION
Change Order No. 1
The changes to the plans and specification to be approved by Change Order No. 1 include the following four (4) items:
Item No. Description of Change
Change in
Contract
Price
1. Remove and replace traffic signal pole at Whittier Boulevard and Acacia Avenue $41,810.35
2. Traffic signal pole modifications at Beverly Boulevard and Acacia Avenue $15,493.83
3. Traffic signal modifications at Whittier Boulevard and Gregg Road ($803.28)
4. Time Extension $0.00
Total Change in Contract Price: $56,500.90
Change Order No. 2
The changes to the plans and specification to be approved by Change Order No. 2 include the following 13 items:
Item No. Description of Change Change in
Contract Price
1. D-4 software for traffic signal controllers $8,432.49
2. New traffic signal head at Whittier Boulevard and Lexington Road $1,154.65
3. Relocate pull box at northwest corner of Whittier Boulevard and Lindsey Avenue $2,804.85
4. Furnish and install GPS-Emergency Vehicle Pre-Emption device at Whittier Boulevard and Lindsey Avenue $12,517.80
5. Furnish and install modified foundations for traffic signal poles at Whittier Boulevard and Gregg Road $12,372.11
6. Remove streetlight pole at Whittier Boulevard and Gregg Road $3,711.46
7. Furnish and install photocell for illuminated street name signs at Whittier Boulevard and Lindsey Avenue $919.55
8. Relocate existing pedestrian push button pole at Whittier Boulevard and Gregg Road $3,925.35
CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 CITYWIDE TRAFFIC SIGNAL UPGRADES (CIP NO. 21348), FEDERAL PROJECT NO.
HSIPL-5351 (037) – NOTICE OF COMPLETION
9. Additional potholing for traffic signal poles at Whittier Boulevard and Gregg Road $1,285.09
10. Furnish and install additional pull boxes $2,600.00
11. Credit for labor and equipment to install luminaires ($2,975.00)
12. Credit for labor and equipment to install Type 15TS traffic signal pole foundations ($594.25)
13. Time Extension $0.00
Total Change in Contract Price: $46,154.10
The tables below summarize the total project cost and funding:
Funding Category Budget
Highway Safety Improvement Program – Fund 698 $853,100
Prop C – Fund 206 $1,010,000
TOTAL PROJECT BUDGET: $1,863,100
Project Activity Cost
Project Administration $80,000
Design $108,813
Construction $1,304,785
Construction Change Order Nos. 1 and 2 $102,655
Construction Management & Inspection $143,858
TOTAL PROJECT COST: $1,740,111
TOTAL PROJECT FUNDING: $1,863,100
TOTAL PROJECT EXPENDITURE $1,740,111
ESTIMATED AMOUNT REMAINING: $122,989
Construction was completed on June 8, 2023. Delays in the completion of the construction contract were due to material procurement for traffic signal poles and conflicts with underground utilities. The final walk through, punch list items, and project administration have been completed. Staff recommends the filing of the Notice of Completion with the Los Angeles County Registrar-Recorder.
CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 CITYWIDE TRAFFIC SIGNAL UPGRADES (CIP NO. 21348), FEDERAL PROJECT NO.
HSIPL-5351 (037) – NOTICE OF COMPLETION
Conclusion:
The total cost of the project, including design, project administration, construction management, inspection, and labor compliance services is $1,740,111. The remaining fund balance of $122,989 will be unencumbered and moved back to the City’s local return Prop C fund balance to be allocated for future capital improvement projects. Staff recommends filing the Notice of Completion with the Los Angeles County RegistrarRecorder, approve Change Order Nos. 1 and 2, and releasing the retention to California Professional Engineering, Inc., following the statutory waiting period upon the recordation of the Notice of Completion.
Steve Carmona
SC:NN:KG:np
Enclosure: 1) Construction Change Order Nos. 1 and 2
CITY OF PICO RIVERA
Project No. 21348
GP-1
CITY OF PICO RIVERA
PUBLIC WORKS DEPARTMENT
Capital Projects Division
CONTRACT CHANGE ORDER NO. 1
PROJECT NAME: Traffic Signal Upgrades Citywide Project
TO: California Professional Engineering, Inc.
You are hereby instructed to comply with the following changes from the Contract Plans and Specifications:
SUMMARY OF CHANGES
Description
(Detailed Explanation Attached)
Change in
Contract
Price1
Change
in
Work
Days
1. Additional Traffic Signal Pole “G” at Whittier & Acacia $41,810.35
2. Traffic Signal Modification at Beverly & Acacia $15,493.83
3. Traffic Signal Modification at Whittier & Gregg ($803.28)
4. Time Extension – Supply Chain Shortage Due to COVID $0.00 125 Net Change in Contract Price and Work Days $56,500.90 125 1Deduction or decrease in Contract Price is denoted in parentheses.
The following change is hereby made a part of the Contract Documents and shall be performed under the same terms and conditions as required by the original Contract Documents. Except as modified herein, the original Contract Documents and all prior amendments shall remain in full force and effect and all of the terms of the Contract Documents are hereby incorporated in this Change Order.
SUMMARY OF ALL CHANGE ORDERS
ORIGINAL CONTRACT AMOUNT ........................... $1,304,785.00 CCO1 ........................................................................... $56,500.90 TOTAL ..................................................................... $1,361,285.90
SUMMARY OF WORKING DAYS
FIRST DAY OF WORK: ...................................... October 25, 2021 CONTRACT WORKING DAYS: ................................................ 160 TIME EXTENSION: CCO 1 ..................................................... 125 NEW TOTAL WORKING DAYS: ............................................... 285 LAST DAY OF WORK: .................................... December 15, 2022 9a
CITY OF PICO RIVERA
Project No. 21348
GP-2
CHANGE ORDER DETAIL
Change Order No.: 1
Project Name: CIP No. 21348 - Traffic Signal Update Citywide Projects The changes or interpretations described and noted herein are hereby authorized. The signed original of this order is on file in the Department of Public Works. Shown as separate paragraphs:
(A) Reason for Change; (B) Description of Change; (C) Change in Contract Costs; and (D) Change in Completion Date.
Item No. 1: Additional Traffic Signal Pole “G” at Whittier & Acacia A. Reason for Change:
The City of Pico Rivera requested additional work to replace a damage traffic signal pole “G” at the SW corner of Whittier and Acacia. This traffic signal pole was not include in the original bid package Plan Sheets because damage to this pole happen after bid was accepted.
B. Description of Change:
Memo to Designer No. 1 directed the Contractor to remove existing pole, equipment, and foundation completely Install new foundation, pole, mast arm, and associated equipment as shown on Plan Sheet 5 at the SW corner of Whittier and Acacia.
ITEM DESCRIPTION UNIT UNIT
PRICE
BID OR
CURRENT
APPROVED
QTY
FINAL
QTY
CHANGE CHANGE
IN COST1
01 Additional
Traffic Signal
Pole “G” at
Whittier &
Acacia
1 LS $41,810.35 1 1 1 $41,810.35
C. Change in Contract Cost:
Add $41,810.35
D. Change in Completion Date:
Add 0 Working Days
CITY OF PICO RIVERA
Project No. 21348
GP-3
Item No. 2: Traffic Signal Modification at Beverly & Acacia A. Reason for Change:
During potholing activities, underground utility conflicts were encountered at proposed traffic signal pole loaction E. Signal pole E loacation changed in the field leading to a modification of the pole type to increase of the size of signal mast arm. Refer to Plan Sheet 3 at Beverly & Acacia for details
B. Description of Change:
Traffic signal pole modification for pole E from Type 24-4-100 to Type 26-4-100 with a chage to the mast arm from 35’ to 40’.
ITEM DESCRIPTION UNIT UNIT
PRICE
BID OR
CURRENT
APPROVED
QTY
FINAL
QTY
CHANGE CHANGE
IN COST1
02 Beverly &
Acacia
Potholing
Change to
Standards
1 LS $15,493.83 1 1 1 $15,493.83
C. Change in Contract Cost:
Add $15,493.83
D. Change in Completion Date:
Add 0 Working Days
Item No. 3: Traffic Signal Modification at Whittier and Gregg A. Reason for Change:
During potholing activities, underground utility conflicts were encountered at proposed traffic signal pole loactions. Signal pole B loacation changed in the field leading to a modification of the pole type to decrease the pole size. Refer to Plan Sheet 6 at Whitier & Gregg for details.
B. Description of Change:
Traffic signal pole modification for pole B from Type 1-A to Type PPB Post.
CITY OF PICO RIVERA
Project No. 21348
GP-4
ITEM DESCRIPTION UNIT UNIT
PRICE
BID OR
CURRENT
APPROVED
QTY
FINAL
QTY
CHANGE CHANGE
IN COST1
03 Whittier &
Gregg
Potholing
Change to
Standards
1 LS ($803.28) 1 1 1 ($803.28)
C. Change in Contract Cost:
Deduct ($803.28)
D. Change in Completion Date:
Add 0 Working Days
Item No. 4: Time Extension – Supply Chain Shortage Due to COVID A. Reason for Change:
A total of 125 working days are added to the contract due to procurement time of project materials, caused by the COVID-19 Pandemic impact to the Global supply chain.
B. Description of Change:
No cost contract time extension due to the delays by other outside of the Contractor’s control.
ITEM DESCRIPTION UNIT UNIT
PRICE
BID OR
CURRENT
APPROVED
QTY
FINAL
QTY
CHANGE CHANGE
IN COST1
04 Time
Extension
Supply Chain
Shortage Due
to COVID
1 LS $0.00 1 1 1 $0.00
C. Change in Contract Cost:
Add $0.00
D. Change in Completion Date:
Add 125 Working Days
SIGNATURE PAGE TO FOLLOW:
To: Mayor and City Council
From: City Manager
Meeting Date: August 1, 2023
Subject: MAJOR CORRIDORS MEDIAN AND PARKWAY
BEAUTIFICATION PROJECT NO. 50075, CCL-5351(041);
AND ROSEMEAD BOULEVARD MEDIAN AND PARKWAY
BEAUTIFICATION PROJECT NO. 50076, CCL-5351(042) –
REJECT BIDS
Recommendation:
1. Reject all bids for the Pico Rivera - Major Corridors Median and Parkway Beautification Project No. 50075, CCL-5351(041); and Rosemead Boulevard Median and Parkway Beautification Project No. 50076 (Project), CCL-5351(042); and
2. Authorize the City Clerk to re-advertise the Notice Inviting Bids (NIB).
Fiscal Impact:
The fiscal year (FY) 2023-24 Adopted Budget includes funding for CIP No. 50075 in the amount of $6,071,557 and CIP No. 50076 in the amount of $5,346,557, with a total FY 2023-24 available budget of $11,418,114. No additional appropriation is needed at this time.
Discussion:
The California Department of Transportation (Caltrans) developed the Clean California Local Grant Program (CCLGP) to provide approximately $296 million to beautify and improve local streets and roads, tribal lands, parks, pathways, transit centers, and other public spaces. The goal is to reduce the amount of waste and debris within public rightsof-ways, parks, and other public spaces; enhance, rehabilitate, restore, or install measures to beautify and improve public spaces and mitigate the urban heat island effect; enhance public health and cultural connection; and advance equity for underserved communities.
10 CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 MAJOR CORRIDORS MEDIAN AND PARKWAY BEAUTIFICATION PROJECT NO. 50075, CCL-5351(041); AND ROSEMEAD BOULEVARD MEDIAN AND PARKWAY BEAUTIFICATION PROJECT NO. 50076, CCL-5351(042) – REJECT BIDS
Staff formally requested proposals for design and construction support services. On September 27, 2022, the City Council awarded a Professional Services Agreement to Moore Iacofano Goltsman, Inc. (MIG, Inc.) to provide design services including bidding support, construction support, and preparation of record drawings.
On June 9, 2023, and June 16, 2023, the Notice Inviting Bids (NIB) was advertised in the Cerritos Newspaper and was posted on PlanetBids through the City’s website. On July 17, 2023, two (2) bids were received through PlanetBids.
The following table summarizes the bids received:
Contractor Amount
1. Environmental Construction, Inc. $15,623,888
2. Nationwide Construction Services, Inc. $16,735,412
Upon evaluation of the bids, it was discovered that these were substantially over the engineer’s estimate by more than 50%. According to the Pico Rivera Municipal Code (PRMC), the City Council has the authority to reject all bids. PRMC Section 3.20.150, Rejection of Bids, states: “In its discretion, the City Council may reject any and all bids presented and re-advertise for bids.”
Conclusion:
Staff recommends rejecting all bids received for the Project, re-evaluating the bid documents, and requests authorization to re-advertise for construction.
Steve Carmona
SC:NN:GE:NC:np
To: Mayor and City Council
From: City Manager
Meeting Date: August 1, 2023
Subject: FOURTH QUARTER TREASURER’S REPORT AND THE
MONTHLY INVESTMENT TRANSACTION REPORT AS OF
JUNE 30, 2023 – FISCAL YEAR 2022-2023
Recommendation:
1. Receive and file the Treasurer’s Report for the quarter ending June 30, 2023, which represents balances and activities for the fourth quarter (April through June) of the 2022-23 fiscal year; and
2. Receive and file the Treasurer’s Monthly Investment Transaction Report as of June 30, 2023.
Fiscal Impact:
There is no fiscal impact to the General Fund from this item. On a quarterly basis, the Administrative Services Department staff allocates the appropriate interest income to the various funds. This shows as revenues to the respective funds.
Discussion:
The Treasurer's Report (Enclosure 1) provides a synopsis of investment activity for the City of Pico Rivera’s (City) investment portfolio for the fiscal year (FY) 2022-23 fourth quarter ending June 30, 2023. The report provides information on assets, allocations, average maturities, yields, and valuations for each of the three (3) portfolios. A discussion of market conditions is included to give additional perspective to these measurements.
As of June 30, 2023, the City's investment portfolios are in full compliance with the City's Investment Policy, California Government Code Section 53601, and have sufficient cash flow from a combination of liquid and maturing securities, bank deposits and income to meet the City's expenditure requirements. The paragraphs below provide a summary of the investment results from the fourth quarter.
Total Pooled Cash and Investments during the quarter totaled $115,621,366. This total amount consisted of $9,143,220 in the City’s accounts with its banking partner 11 CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 FOURTH QUARTER TREASURER’S REPORT AND THE MONTHLY INVESTMENT TRANSACTION REPORT AS OF JUNE 30, 2023 – FISCAL YEAR 2022-2023
Commercial Bank of California (CBC), $75,188,870 in the State Treasurer’s Local Agency Investment Fund (LAIF) and $31,289,275 managed by Chandler Asset Management (Chandler). The City also had $885,101 held by various Trustee Accounts, all related to the City’s bond issues (1999 Water Revenue Bonds, etc.).
The total 2018 Certificates of Participation, Series A (COPS) managed by Wilmington Trust reflect an ending balance of $5,540,665.
The Pico Rivera Innovative Municipal Energy (PRIME) accounts, an Enterprise Fund, reflect two (2) primary accounts. The first account, the Insured Cash Sweep (ICS) account, receives and records investment income. The ICS account, as of June 30, 2023, has an ending balance of $7,336,420. The second account, the Public Fund account, receives Electronic Data Interchange (EDI) collection payments and executes vendor payments for the purchase of energy. The Public Fund account, as of June 30, 2023, has an ending balance of $832,939. The ICS and Public Fund accounts are managed by River City Bank (RCB).
Chandler Asset Management Managed Portfolio
The City entered into a discretionary investment advisory agreement in December 2017, with Chandler, a Securities and Exchange Commission (SEC) registered investment advisor, to manage a portion of the City's portfolio in a disciplined, active manner that complies with the City's investment policy and stated objectives of safety, liquidity, and yield. After detailed consultation with Chandler's investment team, the City selected the Limited Maturity investment strategy, benchmarked against the Bank of America Merrill Lynch 1-3 Year US Treasury & Agency Index. The strategy invests in a well-diversified portfolio of high-quality fixed-income securities. To maintain compliance with the City's investment policy, Chandler continues to invest in securities that reflect the guidelines set forth in the City's Investment Policy, most recently approved on April 11, 2023.
To ensure the safety of the portfolio, investments that hold the highest credit quality are selected. The Chandler Managed Portfolio is comprised primarily of Treasury Securities and Federal Government-sponsored entity debt, otherwise known as federal agency securities. Federal agency securities continue to be regarded as among the safest securities in the global market. Two (2) of the government-sponsored agencies, the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) remain under conservatorship and carry an implicit guarantee by the Federal Government. In addition, both are carefully monitored by the City’s Treasurer to ensure the continued safety of the City’s funds.
The Portfolio Holding Report (Table 1) reflects the types of security holdings in the City’s investment fund. The portfolio of the June 30, 2023 market value represents a total of $31,289,275, an increase of $695 from the March 31, 2023 market value of $31,288,580.
At the period ending June 30, 2023, the portfolio held a diverse portfolio holding seven (7) different security types. The largest security holding consists of Treasury Securities CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 FOURTH QUARTER TREASURER’S REPORT AND THE MONTHLY INVESTMENT TRANSACTION REPORT AS OF JUNE 30, 2023 – FISCAL YEAR 2022-2023
of $14,734,728. These Treasury Securities are one of the highest-quality debt instruments.
The Portfolio Holdings Report also provides the portfolio’s Par values (nominal value of a bond); Book yield (Internal Rate of Return); Book value (value of a security); Market YTM (long-term bond yield); Market value (amount security can be sold on a given market); Accrued interest (interest earned); Total portfolio (Market value plus accrued interest); and finally, Maturity Duration (bond sensitivity of price that may change in interest rates during duration).
Table 1 - Portfolio Holding Report
The Investments by Type (Chart 1) reflects the makeup of the portfolio holdings by security type. The portfolio holds 47% in US Treasuries (government treasury bonds, notes, and bills), 13% of total investments in federal agency securities, 24% in corporate medium-term notes, 7% in asset-backed securities, 5% in collateralized mortgage obligations, which are collateralized by a pool of assets, and the remainder in money market funds and supranational.
Chart 1 - Investments by Type
CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 FOURTH QUARTER TREASURER’S REPORT AND THE MONTHLY INVESTMENT TRANSACTION REPORT AS OF JUNE 30, 2023 – FISCAL YEAR 2022-2023
The Investment Rating chart (Chart 2) illustrates the portfolios’ investment grade of holdings. This rating provides the City assurance of risk associated with the quality of the holdings’ investment grade. As demonstrated in the chart below, 95.4% of the total portfolio consists of investments rated “A” or higher as of June 30, 2023, a slight increase of 1.2% from March 31, 2023.
Chart 2 - Investment Ratings
The City’s portfolio remains highly rated, liquid, and diversified; it is well-positioned to withstand today’s medium-term economic uncertainties. Recent economic data from the US Department of Labor and the US Department of Commerce continues to suggest positive, but below-trend growth this year. Although the pace of job growth is moderating, the labor market remains solid. Inflationary trends are subsiding, but core levels remain well above the Federal Reserve’s (Fed) target. Over the fourth quarter of the fiscal year, the yield curve inversion steepened while the Fed raised the Federal Funds overnight rate by another 25 basis points to combat inflation. The inverted shape of the yield curve indicates the probability of a recession is increasing. Given the lagged effects of restrictive monetary policy and tighter financial conditions, market participants expect the Fed will remain data dependent and tread cautiously going forward.
Local Agency Investment Funds (LAIF)
To manage liquidity, the Pico Rivera Pooled Investment Portfolio is invested in LAIF. The LAIF March 31, 2023 market value represents a total of $66,201,441, and the June 30, 2023 market value of $75,188,870. The increase of $9.0 million in balance from last quarter was primarily related to net transfers of $8.8 million from the City’s operating bank account with CBC to LAIF in April and May. Most of the transfers were attributed to revenues from property tax and vehicle license fees of $9.0 million. The LAIF Quarterly Performance report for June 30, 2023, shows that the apportionment rate is now at 3.15%, and the quarterly yield has risen to 3.01%. These figures represent an increase from the previous quarter's rates of 2.74% and 2.63%, respectively.
AAA
14.8%
AA
62.3%
A
18.3%
NR
4.6%
CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 FOURTH QUARTER TREASURER’S REPORT AND THE MONTHLY INVESTMENT TRANSACTION REPORT AS OF JUNE 30, 2023 – FISCAL YEAR 2022-2023
The City participates in the State of California LAIF portfolio program. The program consists of local agencies participating in a large portfolio to invest using the State Treasurer's Office for investments at no additional cost to the taxpayer. The Local Investment Advisory Board (LIAB) provides oversight for LAIF.
LAIF administrative costs are minimal and assessed quarterly. The Government Code states administrative costs are not to exceed 5% of the quarterly earnings of the fund.
The characteristics of the LAIF portfolio reflect minimal credit risk with safety in investing of high-quality securities. LAIF funds are protected by statute and are not borrowable.
The comparison of LAIF to the Chandler portfolio as shown in Graph 1 below, highlights the differences in investment security types and portfolio duration. Whereas LAIF takes on a more conservative approach and focuses on securities with shorter average maturity, LAIF, and Chandler follow similar investment guidelines for safety, liquidity, and return.
Graph 1 – LAIF and CAM from
June 2018 through June 2023
Staff has continuously monitored the City’s investment portfolio and performance on an ongoing basis. As shown in Graph 1 above, the yield of the Chandler portfolio has historically outperformed the yield experienced from our LAIF portfolio except in the first through the fourth quarter of this fiscal year. This stems from LAIF having a shorter weighted-average maturity than the Chandler portfolio, so it responds more quickly to the rises and falls in market yields. The Chandler portfolio yield rates are locked in for an extended period through the reinvestment and purchase of longer-duration securities.
During the fourth quarter, the Chandler portfolio reinvested $3.3 million of maturing securities at an average purchase yield of 4.54%. As staff has demonstrated above, the Chandler portfolio is managed within the City’s investment policy guidelines.
CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 FOURTH QUARTER TREASURER’S REPORT AND THE MONTHLY INVESTMENT TRANSACTION REPORT AS OF JUNE 30, 2023 – FISCAL YEAR 2022-2023
As part of the staff’s commitment to the City’s stated objectives of safety, liquidity, and yield, staff continuously researches alternative investment opportunities to enhance the City’s investment portfolio. Given the Federal Reserve’s recent interest rate hikes, staff will present their recommendations to the City Council, seeking increased flexibility in managing future interest changes.
Monthly Investment Transaction Report
Per the City’s Investment Policy approved by the City Council on April 11, 2023, the City Treasurer submits a monthly investment transaction report to the City Council within 45 days of the end of the reporting period in accordance with California Government Code Section 53607.
The monthly investment transactions summary updates the City Council on the City’s monthly transactions of the City’s investment portfolio for the month ending June 30, 2023. The statements enclosed include transactions of the City’s investments with LAIF and Chandler (Enclosures 2 and 3).
Conclusion:
All investments are maintained in accordance with California Government Code Section 53601 and the City’s investment policy approved by the City Council on April 11, 2023.
The City Treasurer/Director of Administrative Services certifies that the funds are invested to provide sufficient cash flow for a period of six (6) months. Staff recommends receiving and filing the Treasurer’s Report for the quarter ending June 30, 2023, which represents balances and activities for the fourth quarter (April through June) of the 2022-23 fiscal year and the Treasurer’s Monthly Investment Transaction Report as of June 30, 2023.
Steve Carmona
SC:JG:JM:ep
Enclosures: 1) Treasurer’s Report for Fourth Quarter Ending June 30, 2023 2) LAIF Statement for the Month Ending June 30, 2023
3) Chandler Asset Management Transaction Ledger for June 2023
CITY OF PICO RIVERA
TREASURER'S REPORT4TH QTR APR 2023 ‐ JUN 2023TYPE OF INVESTMENT Interest Rate Issuer Reporting Date Investment Income Ending Balance Source of Market Valuation Local Agency Investment Fund (LAIF) 3.15 LAIF 6/30/2023 573,637.60 75,188,870.11 LAIF Statements Demand Deposits 0.05 CBC 6/30/2023 82.07 9,143,220.43 CBC Statements Chandler Investments* 2.32 Chandler Investments 6/30/2023 166,772.00 31,289,275.00 Chandler Portfolio Summary TOTAL CASH & INVESTMENTS: Exclude Water Fund 550 TOTAL CASH & INVESTMENTS: $ 740,491.67 $ 115,621,365.54 Revenue Bonds, 1999 Bond Fund Water Authority 122073‐001 US Bank 6/30/2023 249.63 9,826.77 US Bank/RECON StatementsRevenue Bonds, 1999 Bond Fund Water Authority 122073‐002 US Bank 6/30/2023 1,643.60 74,983.34 US Bank/RECON Statements Revenue Bonds, 1999 Bond Fund Water Authority 122073‐003 US Bank 6/30/2023 7,716.96 198,333.38 US Bank/RECON Statements Revenue Bonds, 1999 Water Rate Stabilization 122073‐011 US Bank 6/30/2023 6,710.06 600,000.00 US Bank/RECON Statements Revenue Bonds, 2021 Tax Allocation Refunding Bonds 245558‐000 US Bank 6/30/2023 ‐ ‐ US Bank/RECON Statements Revenue Bonds, 2021 Tax Allocation Refunding Bonds 245558‐001 US Bank 6/30/2023 75.06 74.81 US Bank/RECON Statements Revenue Bonds, 2021 Tax Allocation Refunding Bonds 245558‐002 US Bank 6/30/2023 19.94 1,882.92 US Bank/RECON Statements Revenue Bonds, 2021 Tax Allocation Refunding Bonds 245558‐003 US Bank 6/30/2023 ‐ ‐ US Bank/RECON Statements Revenue Bonds, 2021 Tax Allocation Refunding Bonds 245558‐004 US Bank 6/30/2023 ‐ ‐ US Bank/RECON Statements TOTAL FISCAL AGENT (TRUSTEE) INVESTMENTS TOTAL (TRUSTEE) INVESTMENTS: $ 16,415.25 $ 885,101.22 TOTAL CASH & TRUSTEE INVESTMENTS: $ 756,906.92 $ 116,506,466.76 Dividends Ending Balance
2018 COPS 130877 Wilmington Trust 6/30/2023 68,220.14 5,540,665.48 Wilmington Trust Statement TOTAL 2018 COPS: $ 68,220.14 $ 5,540,665.48
ENTERPRISE FUNDS Interest earned Ending BalanceRiver City Bank (PRIME) RIVER CITY BANK INSURED CASH SWEEP (ICS) Account 6/30/2023 54,758.54 7,336,419.93 River City Bank River City Bank (PRIME) RIVER CITY BANK Operating Account 6/30/2023 ‐ 832,939.30 River City Bank TOTAL River City Bank: $ 54,758.54 $ 8,169,359.23
Jane GuoDirector of Administrative Services and City Treasurer, City of Pico Rivera * Average Purchase Yield: The average yield on an investment or a portfolio is the sum of all interest, dividends, or other income that the investment generates, divided by the age of the investment or the length of time the investor has held it.
I certify that this investment portfolio is in conformity with the Investment Policy of the City of Pico Rivera. The investment Program provides sufficient liquidity to meet a minimum of the next six month's estimated expenditures.
Enclosure 1
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Transaction
Date Tran Category
Tran Type
Description Security Description Quantity Price Principal Interest Total Amount 6/1/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 9,200.00 1.00000 9,200.00 - 9,200.00 6/1/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 3,706.30 1.00000 3,706.30 - 3,706.30 6/8/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 12,656.25 1.00000 12,656.25 - 12,656.25 6/14/2023 Acquisitions Purchase American Express Credit Trust 2023-1 A 130,000.00 0.99991 129,988.47 - 129,988.47 6/15/2023 Acquisitions Purchase FHLMC K069 A2 500,000.00 0.95238 476,191.41 619.69 476,811.10 6/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 450,000.00 1.00000 450,000.00 - 450,000.00 6/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 2,817.50 1.00000 2,817.50 - 2,817.506/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 358.42 1.00000 358.42 - 358.426/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 678.00 1.00000 678.00 - 678.00 6/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 3,413.36 1.00000 3,413.36 - 3,413.366/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 47.33 1.00000 47.33 - 47.33 6/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 394.62 1.00000 394.62 - 394.626/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 212.67 1.00000 212.67 - 212.67 6/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 11,902.23 1.00000 11,902.23 - 11,902.236/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 591.58 1.00000 591.58 - 591.586/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 219.33 1.00000 219.33 - 219.336/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 933.17 1.00000 933.17 - 933.176/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 1,442.42 1.00000 1,442.42 - 1,442.42 6/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 3,050.54 1.00000 3,050.54 - 3,050.546/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 5,769.09 1.00000 5,769.09 - 5,769.09 6/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 20,840.85 1.00000 20,840.85 - 20,840.85 6/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 884.34 1.00000 884.34 - 884.346/15/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 3,939.44 1.00000 3,939.44 - 3,939.44 6/16/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 428.38 1.00000 428.38 - 428.386/20/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 4,644.51 1.00000 4,644.51 - 4,644.51 6/20/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 279.75 1.00000 279.75 - 279.75 6/20/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 9,067.71 1.00000 9,067.71 - 9,067.71 6/21/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 294.00 1.00000 294.00 - 294.00 6/21/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 66.00 1.00000 66.00 - 66.00 6/21/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 5,026.49 1.00000 5,026.49 - 5,026.49 6/26/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 8,525.16 1.00000 8,525.16 - 8,525.16 6/26/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 172.00 1.00000 172.00 - 172.006/26/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 1,312.08 1.00000 1,312.08 - 1,312.08 6/26/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 7,295.16 1.00000 7,295.16 - 7,295.16 6/26/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 113,458.15 1.00000 113,458.15 - 113,458.15 6/26/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 1,143.75 1.00000 1,143.75 - 1,143.75 6/27/2023 Acquisitions Purchase US Treasury Bill 650,000.00 0.98280 638,821.85 - 638,821.85 6/30/2023 Acquisitions Purchase First American Govt Obligation Fund Class Y 11,625.00 1.00000 11,625.00 - 11,625.006/15/2023 Dispositions Maturity US Treasury Note 450,000.00 1.00000 450,000.00 - (450,000.00)6/15/2023 Dispositions Paydown Honda Auto Receivables Trust 2022-1 A3 - - - 219.33 (219.33) 6/15/2023 Dispositions Paydown American Express Credit Trust 2022-2 A - - - 678.00 (678.00) 6/15/2023 Dispositions Paydown John Deere Owner Trust 2020-A A3 3,047.01 1.00000 3,047.01 3.53 (3,050.54) 6/15/2023 Dispositions Paydown John Deere Owner Trust 2022-C A3 - - - 933.17 (933.17) 6/15/2023 Dispositions Paydown Mercedes-Benz Auto Receivables 2022-1 A2 19,877.07 1.00000 19,877.07 963.78 (20,840.85) 6/15/2023 Dispositions Paydown Mercedes-Benz Auto Lease Trust 2021-B A3 11,869.15 1.00000 11,869.15 33.08 (11,902.23) City of Pico Rivera Portfolio
Chandler Investment Transactions
June 2023
Enclosure 3
11c
Transaction
Date Tran Category
Tran Type
Description Security Description Quantity Price Principal Interest Total Amount City of Pico Rivera Portfolio
Chandler Investment Transactions
June 2023
6/15/2023 Dispositions Paydown Mercedes-Benz Auto Receivable 2023-1 A3 - - - 394.62 (394.62) 6/15/2023 Dispositions Paydown Toyota Auto Receivables 2020-D A3 3,933.04 1.00000 3,933.04 6.40 (3,939.44) 6/15/2023 Dispositions Paydown Hyundai Auto Receivables Trust 2023-A A3 - - - 591.58 (591.58) 6/15/2023 Dispositions Paydown John Deere Owner Trust 2020-B A3 1,439.85 1.00000 1,439.85 2.57 (1,442.42) 6/15/2023 Dispositions Paydown John Deere Owner Trust 2021-B A3 5,725.36 1.00000 5,725.36 43.73 (5,769.09) 6/15/2023 Dispositions Paydown Toyota Auto Receivable Own 2020-A A3 883.12 1.00000 883.12 1.22 (884.34) 6/15/2023 Dispositions Paydown Toyota Auto Receivables Trust 2021-D A3 - - - 47.33 (47.33)6/15/2023 Dispositions Paydown John Deere Owner Trust 2022-A A3 - - - 212.67 (212.67) 6/15/2023 Dispositions Paydown John Deere Owner Trust 2021-A A3 3,397.93 1.00000 3,397.93 15.43 (3,413.36) 6/15/2023 Dispositions Paydown John Deere Owner Trust 2022-B A3 - - - 358.42 (358.42) 6/16/2023 Dispositions Paydown GM Auto Receivable Trust 2023-2 A3 - - - 428.38 (428.38) 6/20/2023 Dispositions Paydown Verizon Owner Trust 2020-B A 9,055.80 1.00000 9,055.80 11.91 (9,067.71) 6/20/2023 Dispositions Paydown Honda Auto Receivables Trust 2020-3 A3 4,634.89 1.00000 4,634.89 9.62 (4,644.51) 6/20/2023 Dispositions Paydown Honda Auto Receivables 2022-2 A3 - - - 279.75 (279.75) 6/21/2023 Dispositions Paydown Honda Auto Receivables Owner 2023-1 A3 - - - 294.00 (294.00) 6/21/2023 Dispositions Paydown Honda Auto Receivables Trust 2021-4 A3 - - - 66.00 (66.00)6/21/2023 Dispositions Paydown Honda Auto Receivables Trust 2021-1 A3 5,015.81 1.00000 5,015.81 10.68 (5,026.49) 6/26/2023 Dispositions Paydown BMW Vehicle Lease Trust 2022-1 A3 8,453.75 1.00000 8,453.75 71.41 (8,525.16) 6/26/2023 Dispositions Paydown BMW Vehicle Lease Trust 2021-2 A3 7,283.28 1.00000 7,283.28 11.88 (7,295.16) 6/26/2023 Dispositions Paydown FHLMC K054 A2 - - - 1,143.75 (1,143.75) 6/26/2023 Dispositions Paydown BMW Vehicle Lease Trust 2023-1 A3 - - - 172.00 (172.00) 6/26/2023 Dispositions Paydown FHLMC K034 A2 112,641.58 1.00000 112,641.58 816.57 (113,458.15)6/26/2023 Dispositions Paydown FHLMC K073 A2 - - - 1,312.08 (1,312.08)6/14/2023 Dispositions Sale First American Govt Obligation Fund Class Y 129,988.47 1.00000 129,988.47 - (129,988.47)6/15/2023 Dispositions Sale First American Govt Obligation Fund Class Y 476,811.10 1.00000 476,811.10 - (476,811.10)6/27/2023 Dispositions Sale First American Govt Obligation Fund Class Y 638,821.85 1.00000 638,821.85 - (638,821.85)6/12/2023 Dispositions Security Withdrawal First American Govt Obligation Fund Class Y 2,509.46 1.00000 2,509.46 - (2,509.46)6/23/2023 Dispositions Security Withdrawal First American Govt Obligation Fund Class Y 247.32 1.00000 247.32 - (247.32) 6/1/2023 Other Transactions Dividend First American Govt Obligation Fund Class Y 745,484.00 0.00497 3,706.30 - 3,706.30 6/1/2023 Other Transactions Interest Amazon.com Inc Note 400,000.00 0.02300 9,200.00 - 9,200.00 6/8/2023 Other Transactions Interest FHLB Note 450,000.00 0.01688 7,593.75 - 7,593.75 6/8/2023 Other Transactions Interest FHLB Note 450,000.00 0.01125 5,062.50 - 5,062.50 6/15/2023 Other Transactions Interest US Treasury Note 450,000.00 0.00125 562.50 - 562.50 6/15/2023 Other Transactions Interest National Rural Utilities Note 80,000.00 0.01725 1,380.00 - 1,380.00 6/15/2023 Other Transactions Interest US Treasury Note 700,000.00 0.00125 875.00 - 875.00 6/30/2023 Other Transactions Interest US Treasury Note 600,000.00 0.01938 11,625.00 - 11,625.00 Changes of Market Values and Accrued Interests (155,777.29)Net Investment Transactions $ (78,523.97) Beginning Balance as of 5/31/2023 31,367,799.43Ending Balance as of 6/30/2023 $ 31,289,275.46 To: Mayor and City Council
From: City Manager
Meeting Date: August 1, 2023
Subject: CANCELLATION OF THE AUGUST 8, 2023, AND AUGUST 22, 2023 CITY COUNCIL REGULAR MEETINGS
Recommendation:
1. Approve the cancellation of the August 8, 2023 and August 22, 2023 City Council Regular meetings; and
2. Direct the Jr. Deputy City Clerk to post a Notice of Cancellation for both meetings by August 2, 2023.
Fiscal Impact:
There is no fiscal impact to the General Fund associated with the recommended actions.
Background:
On September 8, 2015 the City Council approved and passed Resolution No. 6827, which states that the second meetings of July, November, and December will be cancelled. This decision was made in consideration of vacations and holiday schedules.
Both the City Council (Council) and City staff (staff) have been actively participating in efforts that require more travel than in prior years. As a result, the suggested meeting cancellations will provide Council and staff members with additional time to advance high-priority projects and programming during the remainder of August, ensuring that it does not conflict with the scheduled Council meetings in future months.
Discussion:
After conferring with staff, City Management has confirmed that there are no pressing deadlines or pending items that could not be dealt with at the next regularly scheduled 12 CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023 CANCELLATION OF THE AUGUST 8, 2023, AND AUGUST 22, 2023, CITY COUNCIL
REGULAR MEETINGS
meeting of September 12, 2023. Removing the meetings scheduled for August this year will not cause any disruptions or delays to the City’s business operations or the decision-making process. Should urgent matters arise during the break, special meetings may be called.
In efforts to provide an alternate channel for public participation, constituents have the option of providing public comment by emailing the City Clerk’s office during the break and be read into the record at the following regularly scheduled meeting. Additionally, constituents are encouraged to engage with the Council in more informal settings such as the City’s summer programming and City events.
The City’s goal is to maintain a high performing organization that values fiscal sustainability, transparency, accountability, and organizational efficiency and simultaneously mitigating a balance between legislative responsibilities and personal time which is crucial in creating an effective functioning Council and staff.
Conclusion:
It is recommended that the City Council authorize the cancellation of the August 8, 2023 and August 22, 2023 City Council Regular meetings and direct the Jr. Deputy City Clerk to post a Notice of Cancellation for both meetings by August 2, 2023 ensuring that the necessary posting and noticing requirements are met and that a timely communication about the recess has been provided to the public.
Steve Carmona
SC:CA:gsm
Tuesday, April 11, 2023
A Regular Meeting of the Successor Agency to the Pico Rivera Redevelopment Agency was held in the Council Chamber, Pico Rivera City Hall, 6615 Passons Boulevard, Pico Rivera, California.
Meeting was jointly held with the City Council and the Successor Agency to the Pico Rivera Redevelopment Agency. Items appear as listed on the combined agenda for the meeting of April 11, 2023.
Chairman Lutz called the meeting to order at 6:02 p.m. on behalf of the Successor Agency.
PRESENT: Camacho, Garcia, Lara, Sanchez, Lutz
ABSENT: None
PUBLIC COMMENTS: None
CONSENT CALENDAR:
11. Minutes:
• Approved Successor Agency to the Pico Rivera Redevelopment Agency regular meeting of December 13, 2022.
12. Approve a Resolution Ratifying the Investment Policy for the Successor Agency for Fiscal Year 2023-24 . (700)
1. Approved Resolution No. SA-23-26 ratifying the Investment Policy for the fiscal year 2023-24 governing investments for the Successor Agency.
Resolution No. SA-23-26 A RESOLUTION TO THE SUCCESSOR AGENCY
TO THE DISSOLVED REDEVELOPMENT AGENCY OF THE CITY OF PICO RIVERA, CALIFORNIA, RATIFYING THE “INVESTMENT POLICY” FOR FISCAL YEAR 2023-24
Motion by Director Camacho, seconded by Vice Chairman Lara to approve Consent Calendar Items No. 11 and 12. Motion carries by the following roll call vote:
AYES: Camacho, Garcia, Lara, Sanchez, Lutz
NOES: None
CONSENT CALENDAR ITEMS PULLED FOR FURTHER DISCUSSION: None REGULAR AGENDA: None
CLOSED SESSION(S): None
ADJOURNMENT: 13
4-11-23. Successor Agency Minutes
Chairman Lutz adjourned the Successor Agency to the Redevelopment Agency meeting at 7:34 p.m. There being no objection it was so ordered.
AYES: Camacho, Garcia, Lara, Sanchez, Lutz
NOES: None
________________________________
Erik Lutz, Chairman
ATTEST:
_______________________________
Cynthia Ayala, Interim Agency Secretary
I hereby certify that the foregoing is a true and correct report of the proceedings of the Successor Agency to the Pico Rivera Redevelopment Agency regular meeting dated April 11, 2023 and received and filed by the Successor Agency to the Pico Rivera Redevelopment Agency on August 1, 2023.
________________________________
Cynthia Ayala, Interim Agency Secretary
To: Chairman and Directors
From: Executive Director
Meeting Date: August 1, 2023
Subject: APPROVE A RESOLUTION RATIFYING THE
INVESTMENT POLICY FOR THE SUCCESSOR AGENCY
FOR FISCAL YEAR 2023-2024
Recommendation:
1. Approve a resolution ratifying the Investment Policy for the Successor Agency for fiscal year (FY) 2023-24 to include Placement Service Funds as permissible investments for the Successor Agency;
2. Authorize staff to establish an Insured Cash Sweep (ICS) Account with the Commercial Bank of California (CBC) to optimize the City’s investment portfolio; and
3. Authorize staff to transfer $10 million from the Local Agency Investment Fund (LAIF) account to the newly established ICS account.
Fiscal Impact:
Should the Successor Agency (Agency) approve the recommendations, the Agency will transfer $10 million from the LAIF account to the ICS account. As the Agency’s total investments do not change, there is no fiscal impact to the General Fund associated with the approval of the above recommendations.
Background:
The Investment Policy (Policy) for the Agency is intended to provide guidelines for the prudent investment of the Agency's available resources and outline policies for maximizing the efficiency of the Agency's cash management process. The ultimate goal of an investment policy is to enhance the Agency’s economic status while protecting its pooled cash. In accordance with California Government Code (Gov. Code) section 53646(a)(2), an annual rendering of the Policy shall be presented to the Agency for consideration at a public meeting. In April 2023, staff presented the updated Investment Policy to the Agency Board. Since then, staff researched various options to optimize the Agency’s investment portfolio and identified an ICS account, a type of Placement Service Fund, as the most favorable option. This report seeks the Agency’s approval to 14 SUCCESSOR AGENCY TO PRRA AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023
APPROVE A RESOLUTION RATIFYING THE INVESTMENT POLICY FOR THE SUCCESSOR AGENCY FOR FISCAL YEAR 2023-2024
update the Investment Policy to include the Placement Service Funds as a permitted investment type, establish a new ICS with CBC, and transfer $10 million from the Agency’s LAIF account to the newly established ICS account.
Discussion:
In April 2023, staff presented the updated Investment Policy to the Agency Board.
Since then, staff researched various options to optimize the Agency’s investment portfolio. Currently, the Agency utilizes the services of Chandler Asset Management (Chandler), the Agency’s investment adviser, to invest and manage $31 million of the Agency’s idle cash, which ranges from $97-$106 million. The remaining funds are invested in LAIF, which the State Treasurer operates.
The Agency’s current investments with Chandler and LAIF have been prudent and appropriate. In light of the Federal Reserve’s ten interest rate hikes since March 2022, staff conducted thorough research to explore alternative investment opportunities that offer greater flexibility with future interest changes while maintaining a delicate equilibrium between safety, liquidity, and yield strategy. In this endeavor, staff evaluated several options, including California CLASS Prime, California Asset Management Program (CAMP) Cash Reserve Portfolio, Treasury Bonds with Chandler, and an Insured Cash Sweep Account, a Placement Services Fund, with the Commercial Bank of California.
The Agency has maintained a longstanding relationship with CBC since April 2016, during which time it has consistently received quality services. CBC offers an investment option known as the ICS account, leveraging the services of IntraFi. IntraFi is a privately held firm and is home to the largest banking network of its kind and a chosen partner by more than 3,000 of the nation’s banks and other financial institutions and most minority depository institutions. As CBC is a member of the IntraFi network, once the Agency establishes the ICS account with CBC, any deposits in the ICS account are strategically divided into amounts below the standard Federal Deposit Insurance Corporation (FDIC) insurance maximum of $250,000 and placed in deposit accounts at other banks within the IntraFi network.
When the Agency establishes the ICS account with CBC, the Agency will continue to have a single bank relationship with CBC and obtain one detailed, periodic statement.
The funds will be placed in interest-bearing money market accounts at competitive interest rates. These interests are earned through multiple banks of the Agency’s choice within the network. A list identifying IntraFi network banks appears at https://www.intrafi.com/network-banks. The Agency may exclude banks from eligibility to receive its funds. As all of the accounts are money market accounts, the Agency is allowed to withdraw six (6) times in a month, with same-day liquidity, without any penalty.
SUCCESSOR AGENCY TO PRRA AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023
APPROVE A RESOLUTION RATIFYING THE INVESTMENT POLICY FOR THE SUCCESSOR AGENCY FOR FISCAL YEAR 2023-2024
Following the thorough analysis, it has been concluded that this ICS Placement Service Fund account will help to supplement the Agency’s investment strategy and effectively fulfills the Agency's requirements for daily liquidity, FDIC-insured safety, and a competitive rate of return. Although Placement Service Funds have been deemed permissible investments in accordance with Gov. Code section 53601, staff recommends that the Agency incorporate this investment type into the Investment Policy, Section 8.0, as an authorized and suitable investment. Staff has thereby updated the Policy to reflect this additional investment type for review and consideration, as, presented in Exhibit A of the resolution.
Conclusion:
Staff recommends the Agency approve a resolution (Enclosure 1) ratifying the Investment Policy for the Successor Agency for FY 2023-24 to help ensure the safety and liquidity of the Agency’s idle cash. The enclosed Policy conforms to Government Code sections 53600 through 53609 and 53630 through 53686. All permitted investment types are also represented within Exhibit A of Enclosure 1. Staff also recommend that the Successor Agency approve the establishment of an ICS account with CBC and transferring $10 million from LAIF to the ICS account to balance the needs for daily liquidity, FDIC-insured safety, and a competitive return.
Steve Carmona
SC:AG:JG:ep
Enclosure: 1) Resolution/Exhibit A – Investment Policy for the Successor Agency RESOLUTION NO. SA-23-__
A RESOLUTION OF THE SUCCESSOR AGENCY TO THE DISSOLVED
REDEVELOPMENT AGENCY OF THE CITY OF PICO RIVERA,
CALIFORNIA, APPROVING THE INVESTMENT POLICY FOR FISCAL
YEAR 2023-24
WHEREAS, the City of Pico Rivera (City) and the Successor Agency to the Dissolved Redevelopment Agency of the City of Pico Rivera (Successor Agency) have funds not required to satisfy immediate financial obligations; and WHEREAS, the subject funds should be wisely and prudently invested in approved investment instruments; and
WHEREAS, the Investment Policy for the City and Successor Agency (Policy), attached hereto as Exhibit A and made part of this Resolution, states it should be reviewed and approved by the City Council at least annually at a public meeting; and WHEREAS, the City’s and Successor Agency’s Treasurer/Director of Administrative Services and the City’s outside investment advisor, Chandler Asset Management, have determined that the existing and amended Policy adequately complies with California Government Code (Gov. Code) section 53600, et seq., government investment requirements; and
WHEREAS, the Policy was presented and considered by the City and Successor Agency for ratification at a duly noticed public meeting as required under Gov. Code section 53646(a)(2).
NOW, THEREFORE, BE IT RESOLVED by the Successor Agency to the dissolved Redevelopment Agency of the City of Pico Rivera as follows:
SECTION 1. The Policy is hereby ratified and adopted for Fiscal Year 2023-234 pursuant to the requirements outlined in Gov. Code section 53600, et seq.
SECTION 2. The Successor Agency Secretary shall attest to the passage of this resolution, and it shall thereupon be in full force and effect. [Signatures on the following page]
Enclosure 1
14a
RESOLUTION NO. SA-23-__
APPROVED AND PASSED this 1st day of August 2023.
_________________________________
Erik Lutz, Chairman
ATTEST: APPROVED AS TO FORM:
___________________________ __________________________________ Cynthia Ayala, Agency Secretary Arnold M. Alvarez-Glasman, Agency Counsel AYES:
NOES:
ABSENT:
ABSTAIN:
Page | i
CITY OF PICO RIVERA
Administrative Services Department
Investment Policy for
the City of Pico Rivera
and Successor Agency
Exhibit A
City of Pico Rivera
Investment Policy
Page | ii
TABLE OF CONTENTS
1.0 Policy .............................................................................. 3
2.0 Scope.............................................................................. 3
3.0 Prudence......................................................................... 4
4.0 Objective ........................................................................ 5
5.0 Delegation of Authority ................................................... 6
6.0 Ethics and Conflicts of Interest ....................................... 7
7.0 Authorized Financial Dealers and Institutions ................. 8
8.0 Authorized and Suitable Investments.............................. 8
9.0 Review of Investment Portfolio .....................................14
10.0 Investment Pools/Mutual Funds....................................14
11.0 Collateralization............................................................15
12.0 Safekeeping and Custody.............................................15
13.0 Diversification ...............................................................16
14.0 Maximum Maturities......................................................16
15.0 Internal Controls ...........................................................17
16.0 Cash Management .......................................................17
17.0 Performance Standards................................................18
18.0 Reporting......................................................................18
19.0 Investment Policy Adoption...........................................19
20.0 Glossary .......................................................................20 City of Pico Rivera
Administrative Services Department
6615 Passons Boulevard
Pico Rivera, CA 90660
Phone 562.801.4392 • Fax 562.942.8828
City of Pico Rivera
Investment Policy August 2023
Page | 3
1.0 Policy
The purpose of this document is to provide guidelines for the prudent investment of the City and Successor Agency’s idle cash and outline policies for maximizing the efficiency of the City/Successor Agency’s cash management system. The ultimate goal is to ensure security, maintain liquidity, and seek yield where appropriate. This investment policy is in accordance with the provisions in Sections 16429.1 and 53600 through 53684 of the California Government Code. (For the purposes of the remainder of this policy, any reference to “City” is inclusive of the Successor Agency.)
2.0 Scope
Included in the scope of the City’s investment policy are the following major guidelines and practices to be used in achieving the City’s primary investment objectives:
• Investment Authority and Responsibilities
• Eligible Financial Institutions
• Authorized Investments
• Investment Parameters
• Cash Management
• Evaluation of Investment Performance
• Investment Reporting
• Investment Policy Review and Adoption
It is intended that this policy cover all funds and investment activities under the direct authority of the City of Pico Rivera, Pico Rivera Successor Agency (formerly known as the Redevelopment Agency), Pico Rivera Housing Assistance Agency, the Pico Rivera Water Authority, and all other funds and investment activities under the direct authority of the Pico Rivera City Treasurer, except for bond proceeds which are governed by their respective indenture agreements.
Subject to the prior written consent and approval of the City Treasurer and City Manager, City of Pico Rivera
Investment Policy August 2023
Page | 4
financial assets held and invested by trustees or fiscal agents are excluded from this policy. However, such assets are nevertheless subject to the regulations established by the State of California pertaining to investments by local agencies as well as the related bond indentures.
3.0 Prudence
Pursuant to California Government Code, Section 53600.3, all persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the Prudent Investor Standard:
“…all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the Agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the Agency.
Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.” Investment officers and other authorized persons responsible for managing City funds acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes provided that the Investment officers or other authorized persons acted in good faith. Deviations from expectations of a security’s credit or market risk should be reported to the governing body in a timely fashion and appropriate action should be taken to control adverse developments.
City of Pico Rivera
Investment Policy August 2023
Page | 5
4.0 Objective
In accordance with Government Code Section 53600.5, the primary objectives, in priority order, of investment activities shall be safety, liquidity, and yield:
Safety
Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk.
Credit Risk – is the risk of loss due to the failure of an issuer of a security. The City will minimize credit risk by:
o Limiting investments to the safest types of securities o Diversifying the investment portfolio so that potential losses on individual securities will be minimized.
Market Rate Risk – is the risk of market fluctuations due to overall changes in the general level of interest rates. The City will minimize the market rate risk by:
o Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity
o Investing operating funds primarily in shorter-term securities, money market mutual funds, or similar investment pools
Liquidity
The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands (static liquidity). Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets City of Pico Rivera
Investment Policy August 2023
Page | 6
(dynamic liquidity). A portion of the portfolio also will be placed in money market mutual funds or local government investment pools which offer same-day liquidity for short term funds.
Yield
The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The City will invest in relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall not normally be sold prior to maturity with the following exceptions:
o A security with declining credit may be sold early to minimize loss of principal.
o A security swap would improve the quality, yield, or target duration in the portfolio.
o Liquidity needs of the portfolio require that the security be sold.
5.0 Delegation of Authority
The City Council is responsible for the management of the City’s funds, including the administration of this investment policy. Management responsibility for the cash management of the City’s funds is hereby delegated to the Treasurer.
The Treasurer will be responsible for all transactions undertaken and will establish a system of procedures and controls to regulate the activities of subordinate officials and employees. Such procedures will include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Treasurer.
City of Pico Rivera
Investment Policy August 2023
Page | 7
The City may engage the services of one or more external investment advisers, who are registered under the Investment Advisers Act of 1940, to assist in the management of the City’s investment portfolio in a manner consistent with the City’s objectives. External investment advisers may be granted discretion to purchase and sell investment securities in accordance with this investment policy.
The City's overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The City recognizes that in a diversified portfolio, occasional measured losses may be inevitable and must be considered within the context of the overall portfolio’s return and the cash flow requirements of the City.
6.0 Ethics and Conflicts of Interest
The City adopts the following policy concerning conflicts of interest:
Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution and management of the investment program, or that could impair their ability to make impartial decisions.
Officers and employees involved in the investment process shall disclose to the City Clerk any material interest in financial institutions that conduct business with the City of Pico Rivera and they shall further disclose any personal financial/investment positions that could be related to the performance of the City’s investment portfolio.
Officers and employees shall not undertake personal investment transactions with the same individual with whom business is conducted on behalf of the City.
If there is an event subject to disclosure that could impair the ability of an officer or employee to make impartial decisions, the officer or employee must notify the City Manager in writing within ten (10) days.
City of Pico Rivera
Investment Policy August 2023
Page | 8
7.0 Authorized Financial Dealers and Institutions
Pursuant to the State Code, Section 53601.5, the City shall transact business only with issuers, banks, savings and loans and registered investment securities dealers. The purchase of any investment, other than those purchased directly from the issuer, shall be purchased either from an institution licensed by the State of California as a broker/dealer, as defined in Section 25004 of the Corporations Code, who is a member of the National Association of Securities Dealers or a member of a Federally regulated securities exchange, a National or State-Chartered Bank, a Federal or State Association (as defined by Section 5102 of the Financial Code), or a brokerage firm designated as a Primary Government Dealer by the Federal Reserve Bank.
The Director of Finance will maintain a list of financial institutions authorized to provide investment services to the City, will not give full discretionary authority to external investment managers and will not use external investment managers to purchase or sell securities or manage the City’s portfolio unless specifically approved by the City Council with a contract signed by the Mayor and City Attorney.
8.0 Authorized and Suitable Investments
Investment of City funds is governed by the California Government Code Sections 16429.1 and 53601. Investments may not have a term or maturity at the time of investment of longer than that authorized by Section 53601 or five (5) years unless the City Council has granted prior express authority. The percentage limitations shall apply to investments at the time of purchase. This investment policy further restricts the permitted investments to those below:
State Treasurer Local Agency Investment Fund (LAIF)
Government Code Section 16429.1: The City may invest up to the maximum amount pursuant to LAIF policy. LAIF is a diversified investment pool administered by the California State Treasurer. Monies invested with LAIF are pooled with State monies in City of Pico Rivera
Investment Policy August 2023
Page | 9
order to earn the maximum rate of return consistent with safe and prudent treasury management. The City, Housing Authority and Successor Agency have separate accounts, so the combined limit is three times the LAIF Policy maximum.
Local Government Investment Pools
Government Code Section 53601(p): The City may invest in a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in 53601 (a) to (q), inclusive. There is no issuer limitation for Local Government Investment Pools.
US Government and Federal Agency Obligations
Government Code Sections 53601 (b) and (f): There is no limitation on the maximum of the City’s portfolio that may be invested in U.S. government obligations, U.S. government agency obligations, and U.S. government instrumentality obligations, which have a liquid market with a readily determinable market value. The maximum percent of agency callable securities in the portfolio will be 20%.
Bankers Acceptances
Government Code Section 53601 (g): Up to twenty percent (20%) of the City’s portfolio may be invested in Bankers Acceptances which are defined as bills of exchange or time drafts, drawn on and accepted by a commercial bank, which are eligible for purchase by the Federal Reserve System, although no more than 5% of the portfolio may be invested in Bankers Acceptances with any one commercial bank. Additionally, the maturity periods cannot exceed 180 days. Government Code Section 53601(g) allows 40% (30% with one bank).
Municipal SecuritiesGovernment Code Section 53601 (C): Up to 30% of the City’s portfolio may be invested in obligations of the City, the State of California and any local agency within in the State City of Pico Rivera
Investment Policy August 2023
Page | 10
of California. The securities must be “A” rated by one NRSRO. No more than 5% per issuer.
Government Code Section 53601 (D): Up to 30% of the City’s portfolio may be invested in obligations of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California. The securities must be “A” rated by one NRSRO. No more than 5% per issuer.
Commercial Paper
Government Code Section 53601 (h): A maximum of twenty-five percent (25%) of the City’s portfolio may be invested in highest tier (e.g. A-1, P-1, F-1 or higher) commercial paper as rated by Moody’s, Standard and Poor’s or Fitch rating service. Issuing corporations must be organized and operating in the United States, have $500 million total assets, and have at least an “A” rating (by Moody’s, Standard and Poor’s or Fitch) on debt other than commercial paper. The maturity period cannot exceed 270 days. No more than 5% of the portfolio may be invested in any single issuer.
Repurchase Agreements
Government Code Section 53601 (j): Although permitted by State Statute, repurchase agreements and reverse repurchase agreements will not be used without prior City Council approval.
Certificates of Deposit and Passbook Savings Accounts
Government Code Section 53601 (i): There is no limit as to the amount of the investment portfolio that may be deposited in passbook savings accounts. Negotiable certificates of deposit are limited to thirty percent (30%) of the City’s monies which may be invested.
For Negotiable certificates of deposits greater than the FDIC insured amount, the issuer City of Pico Rivera
Investment Policy August 2023
Page | 11
must be have short term ratings of “A-1” or long term ratings of “A” by a NRSRO. No more than 5% of the portfolio may be invested in any single issuer.
Corporate Medium Term Notes
Government Code Section 53601 (k): A maximum of 30% of the City’s portfolio may be invest in corporate medium term notes. The issuer is a corporation organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. The securities are rated in a rating category of “A” or its equivalent or better by at least one NRSRO. No more than 5% of the portfolio may be invested in any single issuer.
Asset Backed, Mortgage-Backed, Mortgage Pass-Through Securities, and Collateralized Mortgage Obligations.
Government Code Section 53601 (o): A maximum of 20% of the City’s portfolio may be invested in the above mentioned securities from issuers not defined in US Government and Federal Agency Obligations section. The securities must be rated “AA” or better by one NRSRO. No more than 5% of the portfolio may be invested in any single issuer.
Supranational Securities
Government Code Section 53601 (q): A maximum of 20% of the City’s portfolio may be invested in Supranational securities. The City can only purchase US dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank. The securities must be rated “AA” or better by one NRSRO. No more than 10% of the portfolio may be invested in any single issuer.
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Money Market Funds
Government Code Section 53601 (l): Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec 80al et seq.) may be purchased if they meet the requirements of Government Code Section 53601 (l). No more than 20 percent of the total assets of the investments held by a local agency may be invested in mutual funds, and no more than 10 percent in any one mutual fund.
Placement Service Funds
Government Code Section 53601.8: A local agency that has the authority under law to invest funds, at its discretion, may invest a portion of its surplus funds in deposits at a commercial bank, savings back, savings and loan association, or credit union that uses a private sector entity that assists in the placement of deposits. The private placement service that allows local agencies to purchase more than $250,000 in demand deposits, money market accounts, or CDs from a single financial institution while still maintaining FDIC insurance coverage. The financial institution facilitates the trading of deposits among the participating institutions in amounts that are less than $250,000 each so that FDIC coverage is maintained. No more than 50 percent of the total assets of the investments held by a local agency may be invested in a combination of placement service funds (e.g., CDARS) and Certificates of Deposit. Under a provision sunsetting on January 1, 2026, the maximum percentage of the portfolio reverts back to 30%.
Other Investments
Other investments that are or become legal investments pursuant to the State of California Government Code may be purchased only after the specific approval by the City Council.
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Prohibited Investments
The City of Pico Rivera shall not invest in any investment instrument/pool/fund unless specifically allowed under the “Investment Types” section of this policy.
The City of Pico Rivera shall comply with Government Code Section 53631.5 which states, “[a] local agency shall not invest any funds pursuant to this article in inverse floaters, range notes, or interest-only strips that are derived from a pool of mortgages” and that “[a] local agency shall not invest any funds pursuant to this article in any security that could result in zero interest accrual if held to maturity.” Under a provision sunsetting on January 1, 2026, securities backed by the U.S. Government that could result in a zeroor negative-interest accrual if held to maturity are permitted.
The purchase of a security with a forward settlement date exceeding 45 days from the time of the investment is prohibited.
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Legislative Changes
Any State of California legislative action that further restricts allowable maturities, investment types or percentage allocations will be incorporated into the City of Pico Rivera Investment Policy and supersede any and all previous applicable language. If the City is holding an investment that is subsequently prohibited by a legislative change, the City may hold that investment, if it is deemed prudent by the Investment Officer, until the maturity date to avoid an unnecessary loss.
9.0 Review of Investment Portfolio
The securities held at the City of Pico Rivera must be in compliance with Section 8.0 Authorized and Suitable Investments at the time of purchase. Because some securities may not comply with Section 8.0 Authorized and Suitable Investments subsequent to the date of purchase, The Treasurer shall at least annually review the portfolio to identify those securities that so not comply. The Treasurer shall establish procedures to report to the City of Pico Rivera and to its oversight committee, should one exist, major and critical incidences of noncompliance identified through the review of the portfolio.
10.0 Investment Pools/Mutual Funds
As stated, a thorough investigation of an investment pool or mutual fund is required prior to investing and on a continual basis. At a minimum, the following information shall be on file for each pool and/or mutual fund:
1. A description of eligible investment securities, and a written statement of investment policy and objectives;
2. A description of interest calculations, how interest is distributed, and how gains and losses are treated;
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3. A description of how these securities are safeguarded (including the settlement process), and how often these securities are priced and the program audited;
4. A description of who may invest in the program, how often, and the size of deposits and withdrawals;
5. A schedule for receiving statements and portfolio listings;
6. Whether reserves, retained earnings, etc. are utilized by the pool/fund;
7. A fee schedule and when and how fees are assessed; and
8. Whether the pool/fund is eligible for bond proceeds and/or will it accept such proceeds.
11.0 Collateralization
California law requires that public funds be collateralized. The depository must secure its public fund accounts by maintaining with the agent of the depository government securities having a market value of at least one hundred ten percent (110%) of the value of the public fund accounts. If a depository uses mortgage-backed securities (i.e., promissory notes secured by first mortgages or first deeds of trust) as collateral for public deposits, the market value of the mortgage-backed securities must be at least one hundred fifty percent (150%) of the value of the public fund accounts.
The collateralization requirement may be waived to the extent that funds are federally insured (currently up to $250,000 per institution). For deposits equivalent to the maximum insured amount, security may also be waived for interest accrued on the deposit provided the interest is computed by the depository on the average daily balance of the deposits, paid monthly and computed on a 360-day basis.
12.0 Safekeeping and Custody
Securities will be held by an independent third-party custodian selected by the City as evidenced by safekeeping receipts in the City’s name and monthly reports from the custodian. All investment transactions shall be conducted on a delivery-versus-payment City of Pico Rivera
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basis.
13.0 Diversification
The investments shall be diversified by:
• The diversification requirements included in the “Authorized Investments” section of this policy are designed to mitigate credit risk in the portfolio. No more than 5% of the total portfolio may be deposited with or invested in securities issued by any single issuer unless otherwise specified in this policy. • Avoiding investment in securities that have low ratings • Investing in securities with varying maturities, and
• Continuously investing a portion of the portfolio in readily available funds such as local government investment pools (LAIF), or money market funds to ensure that appropriate liquidity is maintained in order to meet ongoing obligations.
14.0 Maximum Maturities
In order to minimize the impact of market risk, it is intended that all investments will be held to maturity.
To the extent possible, the City shall attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the City will not directly invest in securities maturing more than five (5) years from the date of purchase or in accordance with state and local statutes and ordinances.
Investments may be sold prior to maturity for cash flow, appreciation purposes or in order to limit losses; however, no investment shall be made based solely on earnings anticipated from capital gains.
Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds.
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15.0 Internal Controls
The Director of Finance is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived and (2) the valuation of costs and benefits requires estimates and judgments by management.
Accordingly, the investment officer shall establish a process for an annual independent review by an external auditor to assure compliance with policies and procedures. The internal controls shall address the following points:
• Control of collusion.
• Separation of transaction authority from accounting and recordkeeping. • Custodial safekeeping.
• Avoidance of physical delivery securities.
• Clear delegation of authority to subordinate staff members. • Written confirmation of transactions for investments and wire transfers. • Development of a wire transfer agreement with the lead bank and third party custodian
16.0 Cash Management
To obtain a reasonable return on public funds, the following cash management practices will be followed:
• Maintain maximum investment of all City funds not required to meet immediate cash flow needs.
• Except for cash in certain restricted and special funds, the City will consolidate cash balances from all funds to maximize investment earnings. Investment City of Pico Rivera
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income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles. • Maximize the City’s cash flow through immediate deposit of all receipts, use of direct deposit when available, and appropriate timing of payment to vendors. • Maximize cash flow information available through the use of only one operating bank account.
17.0 Performance Standards
The investment portfolio will be designed to obtain a market average rate of return during budgetary and economic cycles, taking into account the City’s investment risk constraints and cash flow needs.
The investment portfolio shall be structured to optimize the return given the risk constraints and cash flow needs.
Investment performance shall be continually monitored and evaluated by the Investment Officer. Investment performance statistics and activity reports shall be generated on a quarterly basis for presentation to the City Council.
The Investment officer shall monitor and evaluate the portfolio’s performance relative to the chosen market benchmark(s), which will be included in the quarterly investment report. The Investment officer shall select an appropriate, readily available index to use as a market benchmark.
18.0 Reporting
Monthly transaction reports will be submitted by the Treasurer to the City Council within 45 days of the end of the reporting period in accordance with California Government Code Section 53607. The City Treasurer shall prepare and submit a quarterly investment report to the City Council. This report will include the following elements relative to the investments held at quarter-end.
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1. Face value
2. Security description
3. Coupon rate
4. Maturity date
5. Investment rating
6. Investment type
7. Purchase date
8. Cost of security
9. Purchase yield
10. Estimated market value
11. Amortized premium/discount
12. Statement relating the report to the Statement of Investment Policy
13. Statement of sufficiency of funds to meet the next six months’ obligations
19.0 Investment Policy Adoption
The Statement of Investment Policy shall be submitted annually to the City Council for adoption. The policy shall be reviewed at least annually to ensure its consistency with the overall objectives of the City and its relevance to current law and financial and economic trends. Any modifications made thereto must be approved by the City Council.
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20.0 Glossary
AGENCIES. Shorthand market terminology for any obligation issued by a governmentsponsored entity (GSE), or a federally related institution. Most obligations of GSEs are not guaranteed by the full faith and credit of the US government. Examples are:
FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the agricultural industry. FFCB issues discount notes and bonds.
FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing market. FHLB issues discount notes and bonds.
FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit and liquidity in the housing market. FHLMC, also called “FreddieMac” issues discount notes, bonds and mortgage pass-through securities.
FNMA. Like FHLB and FreddieMac, the Federal National Mortgage Association was established to provide credit and liquidity in the housing market. FNMA, also known as “FannieMae,” issues discount notes, bonds and mortgage passthrough securities.
GNMA. The Government National Mortgage Association, known as “GinnieMae,” issues mortgage pass-through securities, which are guaranteed by the full faith and credit of the US Government.
PEFCO. The Private Export Funding Corporation assists exporters. Obligations of PEFCO are not guaranteed by the full faith and credit of the US government.
TVA. The Tennessee Valley Authority provides flood control and power and promotes development in portions of the Tennessee, Ohio, and Mississippi River valleys. TVA currently issues discount notes and bonds.
ASKED. The price at which a seller offers to sell a security.
ASSET BACKED SECURITIES. Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.
AVERAGE LIFE. In mortgage-related investments, including CMOs, the average time to expected receipt of principal payments, weighted by the amount of principal expected.
BANKER’S ACCEPTANCE. A money market instrument created to facilitate international trade transactions. It is highly liquid and safe because the risk of the trade transaction is transferred to the bank which “accepts” the obligation to pay the investor.
BENCHMARK. A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy.
BID. The price at which a buyer offers to buy a security.
BROKER. A broker brings buyers and sellers together for a transaction for which the broker receives a commission. A broker does not sell securities from his own position.
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CALLABLE. A callable security gives the issuer the option to call it from the investor prior to its maturity. The main cause of a call is a decline in interest rates. If interest rates decline since an issuer issues securities, it will likely call its current securities and reissue them at a lower rate of interest. Callable securities have reinvestment risk as the investor may receive its principal back when interest rates are lower than when the investment was initially made.
CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs may be marketable.
CERTIFICATE OF DEPOSIT ACCOUNT REGISTRY SYSTEM (CDARS). A private placement service that allows local agencies to purchase more than $250,000 in CDs from a single financial institution (must be a participating institution of CDARS) while still maintaining FDIC insurance coverage. CDARS is currently the only entity providing this service. CDARS facilitates the trading of deposits between the California institution and other participating institutions in amounts that are less than $250,000 each, so that FDIC coverage is maintained.
COLLATERAL. Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public monies.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO). Classes of bonds that redistribute the cash flows of mortgage securities (and whole loans) to create securities that have different levels of prepayment risk, as compared to the underlying mortgage securities.
COMMERCIAL PAPER. The short-term unsecured debt of corporations.
COST YIELD. The annual income from an investment divided by the purchase cost.
Because it does not give effect to premiums and discounts which may have been included in the purchase cost, it is an incomplete measure of return.
COUPON. The rate of return at which interest is paid on a bond.
CREDIT RISK. The risk that principal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer.
CURRENT YIELD. The annual income from an investment divided by the current market value. Since the mathematical calculation relies on the current market value rather than the investor’s cost, current yield is unrelated to the actual return the investor will earn if the security is held to maturity.
DEALER. A dealer acts as a principal in security transactions, selling securities from and buying securities for his own position.
DEBENTURE. A bond secured only by the general credit of the issuer.
DELIVERY VS. PAYMENT (DVP). A securities industry procedure whereby payment for a security must be made at the time the security is delivered to the purchaser’s agent.
DERIVATIVE. Any security that has principal and/or interest payments which are subject to uncertainty (but not for reasons of default or credit risk) as to timing and/or amount, or any security which represents a component of another security which has been separated from other components (“Stripped” coupons and principal). A derivative City of Pico Rivera
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is also defined as a financial instrument the value of which is totally or partially derived from the value of another instrument, interest rate, or index.
DISCOUNT. The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker’s acceptances, are known as discount securities. They sell at a discount from par, and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons, trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality.
DIVERSIFICATION. Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk.
DURATION. The weighted average time to maturity of a bond where the weights are the present values of the future cash flows. Duration measures the price sensitivity of a bond to changes in interest rates. (See modified duration).
FEDERAL FUNDS RATE. The rate of interest charged by banks for short-term loans to other banks. The Federal Reserve Bank through open-market operations establishes it.
FEDERAL OPEN MARKET COMMITTEE. A committee of the Federal Reserve Board that establishes monetary policy and executes it through temporary and permanent changes to the supply of bank reserves.
LEVERAGE. Borrowing funds in order to invest in securities that have the potential to pay earnings at a rate higher than the cost of borrowing.
LIQUIDITY. The speed and ease with which an asset can be converted to cash.
LOCAL AGENCY INVESTMENT FUND (LAIF). A voluntary investment fund open to government entities and certain non-profit organizations in California that is managed by the State Treasurer’s Office.
LOCAL GOVERNMENT INVESTMENT POOL. Investment pools that range from the State Treasurer’s Office Local Agency Investment Fund (LAIF) to county pools, to Joint Powers Authorities (JPAs). These funds are not subject to the same SEC rules applicable to money market mutual funds.
MAKE WHOLE CALL. A type of call provision on a bond that allows the issuer to pay off the remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a lump sum payment that equals the net present value (NPV) of future coupon payments that will not be paid because of the call. With this type of call, an investor is compensated, or "made whole."
MARGIN. The difference between the market value of a security and the loan a broker makes using that security as collateral.
MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates.
MARKET VALUE. The price at which a security can be traded.
MARKING TO MARKET. The process of posting current market values for securities in a portfolio.
MATURITY. The final date upon which the principal of a security becomes due and payable.
The investment’s term or remaining maturity is measured from the settlement date to final maturity.
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MEDIUM TERM NOTES. Unsecured, investment-grade senior debt securities of major corporations which are sold in relatively small amounts on either a continuous or an intermittent basis. MTNs are highly flexible debt instruments that can be structured to respond to market opportunities or to investor preferences.
MODIFIED DURATION. The percent change in price for a 100 basis point change in yields.
Modified duration is the best single measure of a portfolio’s or security’s exposure to market risk.
MONEY MARKET. The market in which short-term debt instruments (T-bills, discount notes, commercial paper, and banker’s acceptances) are issued and traded.
MORTGAGE PASS-THROUGH SECURITIES. A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security.
MUNICIPAL SECURITIES. Securities issued by state and local agencies to finance capital and operating expenses.
MUTUAL FUND. An entity which pools the funds of investors and invests those funds in a set of securities which is specifically defined in the fund’s prospectus. Mutual funds can be invested in various types of domestic and/or international stocks, bonds, and money market instruments, as set forth in the individual fund’s prospectus. For most large, institutional investors, the costs associated with investing in mutual funds are higher than the investor can obtain through an individually managed portfolio.
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO).
A credit rating agency that the Securities and Exchange Commission in the United States uses for regulatory purposes. Credit rating agencies provide assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's.
NEGOTIABLE CD. A short-term debt instrument that pays interest and is issued by a bank, savings or federal association, state or federal credit union, or state-licensed branch of a foreign bank. Negotiable CDs are traded in a secondary market and are payable upon order to the bearer or initial depositor (investor).
PREMIUM. The difference between the par value of a bond and the cost of the bond, when the cost is above par.
PREPAYMENT SPEED. A measure of how quickly principal is repaid to investors in mortgage securities.
PREPAYMENT WINDOW. The time period over which principal repayments will be received on mortgage securities at a specified prepayment speed.
PRIMARY DEALER. A financial institution (1) that is a trading counterparty with the Federal Reserve in its execution of market operations to carry out U.S. monetary policy, and (2) that participates for statistical reporting purposes in compiling data on activity in the U.S. Government securities market.
PRUDENT PERSON (PRUDENT INVESTOR) RULE. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as “Investments shall be managed with City of Pico Rivera
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the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes.”
REALIZED YIELD. The change in value of the portfolio due to interest received and interest earned and realized gains and losses. It does not give effect to changes in market value on securities, which have not been sold from the portfolio.
REGIONAL DEALER. A financial intermediary that buys and sells securities for the benefit of its customers without maintaining substantial inventories of securities and that is not a primary dealer.
REPURCHASE AGREEMENT. Short-term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller’s point of view, the same transaction is a reverse repurchase agreement.
SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the customer’s name.
STRUCTURED NOTE. A complex, fixed income instrument, which pays interest, based on a formula tied to other interest rates, commodities, or indices. Examples include inverse floating rate notes which have coupons that increase when other interest rates are falling, and which fall when other interest rates are rising, and "dual index floaters," which pay interest based on the relationship between two other interest rates - for example, the yield on the ten-year Treasury note minus the Libor rate.
Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements.
SUPRANATIONAL. A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries.
TOTAL RATE OF RETURN. A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio.
U.S. TREASURY OBLIGATIONS. Securities issued by the U.S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk, and are the benchmark for interest rates on all other securities in the US and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds.
TREASURY BILLS. All securities issued with initial maturities of one year or less are issued as discounted instruments, and are called Treasury bills. The Treasury currently issues three- and six-month T-bills at regular weekly auctions. It also issues “cash management” bills as needed to smooth out cash flows.
TREASURY NOTES. All securities issued with initial maturities of two to ten years are called Treasury notes, and pay interest semi-annually.
TREASURY BONDS. All securities issued with initial maturities greater than ten years are called Treasury bonds. Like Treasury notes, they pay interest semi-annually.
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VOLATILITY. The rate at which security prices change with changes in general economic conditions or the general level of interest rates.
YIELD TO MATURITY. The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost.
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APPENDIX 1
The authorized investment officers as stated in accordance with the City of Pico Rivera Investment Policy, are responsible for administering an investment program which:
• Adheres to the Statement of Investment Policy
• Prioritizes safety and liquidity
• Determines risk and optimizes return
• Provides for a system of due diligence in making investment decisions.
Delivery vs. Payment – all trades of marketable securities will be executed by delivery vs. payment to ensure that securities are deposited in an eligible financial institution prior to the release of City funds.
INVESTMENT
PROCESS
To: Mayor and City Council
From: City Manager
Meeting Date: August 1, 2023
Subject: APPROVE THE PICO RIVERA INNOVATIVE MUNICIPAL
ENERGY (PRIME) POWER CHOICE SOLAR AND
BATTERY RESIDENTIAL PROGRAM
Recommendation:
1. Approve the Pico Rivera Innovative Municipal Energy (PRIME) Power Choice Solar and Battery Program; and
2. Authorize the City Manager to negotiate and execute all contracts related to the PRIME Power Choice Solar and Battery Residential Program through a partnership with Participate.Energy, LLC and Tesla Energy Operations, Inc., in a form approved by the City Attorney.
Fiscal Impact:
There is no fiscal impact to the General Fund. The current program design calls for the City of Pico Rivera to collect a fee of $0.40 per watt during the construction phase in connection with the required development services. The City will also receive a nominal operating service fee of $0.02 per kilowatt-hour (kWh) generated and $15.00 per month for each Powerwall installed over the life of the program. The revenue generated from this program will be deposited into Account No. 560.00.0000-47750 (General/Demand and Collections).
Background:
On January 24, 2017, the City Council adopted Ordinance No. 1105, establishing a Community Choice Aggregation (CCA) program: Pico Rivera Innovative Municipal Energy (PRIME). PRIME began serving customers on September 1, 2017, with the promise to keep energy decisions local, increase the amount of locally supplied renewable energy to Pico Rivera residents, and provide price stability and long-term electricity cost savings and other benefits for the community. 15 CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023
APPROVE THE PICO RIVERA INNOVATIVE MUNICIPAL ENERGY (PRIME) POWER
CHOICE SOLAR AND BATTERY RESIDENTIAL PROGRAM
At the March 28, 2023, City Council meeting, CalChoice and Participate.Energy (P.E.) presented a new program and potential partnership between the City, P.E., and Tesla– the PRIME Power Choice Program–to provide PRIME customers a residential solar and storage solution. At this meeting, the City Council had several questions, which staff indicated that they would bring back an item to the City Council for discussion and formal approval.
The responses to those questions are summarized below:
City Council Questions
Q. What would happen in the case of residents that have solar through a previous purchase or lease and want to participate in the Power Choice Program? A. The resident may have entered into a long-term lease, in which case the program would not be able to buy them out of the contract; however, if the systems are fully paid for, P.E. and Tesla are working to retrofit systems to allow for storage (i.e., batteries).
Q. What is the process for a resident to sign up for the Power Choice Program.
A. This process is described in the “Facilitating Program Participation” Section below.
Q. The program offers no upfront costs, but are they stuck in a 25-year loan? A. The “Transferability” Section below covers this question.
Q. It seems the homeowner is not financially responsible for the system, if so, explain.
A. The financial responsibility lies with the homeowner for this product, not the City or Prime. This is further explained in the “Customer Participation Agreement” below.
Q. How does this system work in the Time-of-Use (TOU) environment, where energy is much more expensive during peak demand?
A. In the current TOU environment, customers can purchase energy at a low cost during off-peak hours when there is an abundance of solar energy supply; however, energy becomes more expensive due to limited energy supply and high demand during the evening hours. The Power Choice Program allows participants to use energy from solar panels during the day at $0.145 kWh to power their homes and replenish the accompanying Tesla Powerwall at the same rate. During peak demand hours, the home will use the stored power at no additional cost since the cost was already captured at the time when the battery was charged.
Q. What are the percentage savings for a general customer if they participate in the Power Choice Program versus a traditional loan?
A. We have created “Table 1b. Cost Benefit by Alternatives” to illustrate the costs considering having no equipment, purchasing equipment with cash or a loan, and participating in the PRIME Power Choice Program.
CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023
APPROVE THE PICO RIVERA INNOVATIVE MUNICIPAL ENERGY (PRIME) POWER
CHOICE SOLAR AND BATTERY RESIDENTIAL PROGRAM
Q. In the scenario of heat waves, would residents be obligated to reduce energy usage? A. While all residents are encouraged to reduce energy usage during heatwave events, the Tesla solar and battery systems allow flexibility due to the system’s self-sustaining design. Electricity is produced from solar during daylight hours, which allows the homeowner to use said energy to power their home and store excess energy in batteries during daylight hours. The energy stored in the batteries can then be used during the evening, minimizing the homeowner’s negative impacts of heatwave events (i.e., planned and unplanned power outages and conservation).
Discussion:
The Power Choice Program furthers the solar market's democratization by allowing all residents to qualify through a no-consumer credit check process, zero upfront cost, and low energy rates. Historically, these programs have been primarily accessible to individuals with acceptable credit scores, limiting the benefits to those who can afford these systems. This program will allow all residents–through PRIME–access to energy savings and resiliency.
The subsequent sections below will elaborate on the key benefits to PRIME Customers. • Accessible solar financing and installation at $115 per month; • Comprehensive integration with PRIME’s services;
• Access to backup power during emergency power shutoffs or blackouts; and • Competitive and stable energy rates at $0.145 kWh with a 1.9% annual escalator.
The Power Choice Program aims to address the impacts of State regulations, which have increased housing development costs and electricity consumers’ bottom-line bills, by making solar and storage systems accessible through zero up-front cost turnkey solutions. California’s Title 24 Building Energy Efficiency Standards and Time-of-Use (TOU) rate structures are among the State regulations that have impacted housing development and energy bill costs.
Title 24 – Building Energy Efficiency Standards
Title 24 is a set of energy efficiency standards and regulations established by the California Energy Commission (CEC) that requires–among other things–to incorporate renewable energy systems into buildings, such as solar photovoltaic (PV) systems.
Changes to State regulations have impacted the types of cost-effective systems, such as Net Energy Metering (NEM), a program and framework that compensates renewable energy system owners for the excess electricity they generate and feed back to the grid.
For example, NEM 2.0 provided generous incentives to solar panel owners by compensating them for excess energy generated and fed to the grid. However, with the abundance of solar energy, the previously generous rates were no longer sustainable.
For this reason, the State implemented NEM 3.0, which among other things, CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023
APPROVE THE PICO RIVERA INNOVATIVE MUNICIPAL ENERGY (PRIME) POWER
CHOICE SOLAR AND BATTERY RESIDENTIAL PROGRAM
disincentivized solar panel-only systems and instead incentivized solar and battery storage systems.
Time-of-Use (TOU) Rate Structure
The State structured electricity rates based on the time of day and season, also called Time-of-Use (TOU) rates. The TOU rates were meant to change consumer behavior by encouraging energy consumption during off-peak hours (i.e., 8 AM – 4 PM) to reduce the strain on the grid during peak demand hours (i.e., 4 PM - 9 PM). In other words, the TOU rate structure maximizes energy usage during daylight when there is an abundance of solar energy. Conversely, the energy supply is limited during non-daylight hours when individuals return home from work, the regulations aim to discourage energy usage at this time by increasing electricity rates.
The TOU rates are primarily impactful in the summertime when the Southern California region is prone to heat waves, which cause households to increase energy usage to operate cooling systems. The increased usage and demand strain the grid which leads to blackouts. This situation also results in expensive electricity bills due to usage during peak demand hours and blackouts due to high energy demand pinned against a limited energy supply. The Power Choice Program addresses the dilemma through a localized residential solar and storage solution accessible to all PRIME customers.
The Power Choice Program entails several agreements between the program partners (i.e., the City, P.E., and Tesla) and the program participant (i.e., PRIME customers). The program is structured through several agreements that stipulate the roles and responsibilities, associated costs, and operation and maintenance. Below is a brief description of each agreement.
The Framework Agreement and New Home Builder Framework Agreement The Framework Agreement provides details on the structure of the agreement between the City, P.E., and Tesla; it describes the responsibilities of each partner.
Under the proposed program, the different partners would hold the following responsibilities:
• P.E. is the financier responsible for funding, procuring, and managing the Power Choice Program, including ongoing operations.
• Tesla manufactures solar and battery equipment and is responsible for designing, building, and installing residential roof solar and battery. Additionally, Tesla would be responsible for the operation and maintenance of the system during the life of the contract.
• The City, through PRIME, will lend its creditworthiness to pursue an equitable process by ensuring that program participation is not subject to individual credit approvals. Additionally, PRIME will purchase the energy generated from solar and battery equipment and sell said energy to the program participant at a competitive CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023
APPROVE THE PICO RIVERA INNOVATIVE MUNICIPAL ENERGY (PRIME) POWER
CHOICE SOLAR AND BATTERY RESIDENTIAL PROGRAM
rate. Finally, PRIME will support the program partners by marketing the Power Choice Program to Pico Rivera residents.
The New Home Builder Framework Agreement is between Tesla and a new home builder or developer. This agreement stipulates that the home builder or developer agrees to purchase solar and battery equipment directly from Tesla, and Tesla will supply the equipment to the developer in at least 21 days. It also covers the specifications the home builder must meet for Tesla to be able to design, install, and maintain solar and battery equipment.
Power Purchase, Program Management, and Program Support Agreements The Master Power Purchase Agreement (PPA) between the City and P.E. stipulates that the City will purchase the energy that is generated from the behind-the-meter solar and battery systems while, in parallel, selling energy and battery services to the homeowners as part of the proposed PRIME Power Choice Program.
The proposed wholesale PPA rate from P.E. to the City is $0.145 per kWh with a 1.9% escalator. Additionally, P.E. will pay a fee to the City consisting of the following:
• $0.40 per watt during the construction phase (i.e., design and installation of solar and battery system), the cost is captured in watts because, during this phase, there is no energy usage/activity; therefore, an effective way to quantify energy is through the potential storage and total single output;
• An operating service fee of $0.02 per kilowatt-hour (kWh) generated; and • $15 per month for each Powerwall (i.e., Tesla battery) installed over the life of the program.
Customer Participation Agreement
The Customer Participation Agreement between P.E., Tesla and PRIME customers consists of two (2) components:
1) The energy generation cost - Proposed at $0.145 per kWh with a 1.9% annual escalator, and;
2) The monthly lease for the Tesla solar and battery system - Proposed at $115 per month for the first battery and $75 for each additional battery. The proposed term of each agreement is between 25-30 years.
Program participants are responsible for “shade management,” which entails maintaining the solar panels clear from obstructions, i.e., trees trimmed and washing dirt off the panels. However, P.E. and Tesla are responsible for monitoring and maintaining the systems at no cost to the customer. This includes no-cost replacement of batteries, which have an operating life of 10 years.
CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023
APPROVE THE PICO RIVERA INNOVATIVE MUNICIPAL ENERGY (PRIME) POWER
CHOICE SOLAR AND BATTERY RESIDENTIAL PROGRAM
Transferability
The Customer Participation Agreement also addresses transferability. Should the program participant choose to sell their home, they would have two (2) options: 1) opt out of the program by purchasing the system before the sale of the home or 2) transfer the contract to the new homebuyer. Unlike common solar financing programs, the Power Choice Program does not require an underwriting process or securing the loan against the title of the property. Staff anticipates that a new buyer and participant will be inclined to carry on the contract due to Title 24 regulations which require energy efficiency solutions such as solar and storage systems. Moreover, the estimated electricity rates under this program are anticipated to be significantly lower than those not participating; these savings may be appealing to a homebuyer.
Equipment Cost Comparison
Staff conducted a cost analysis to compare the costs of owning a similar system through a loan against the Power Choice Program. Table 1b below demonstrates the immediate and 25-year cost burden for residents without a system, purchasing a system with cash or a loan, and participating in the PRIME Power Choice Program.
Table 1a. Cost of Tesla Solar and Powerwall – 616 kWh/mo Average PRIME Customer Home Energy Need - 616kWh/month = 7,392kWh/yr
4.86 kW Solar Panels - 7,334 kWh/yr $ 14,434
Powerwall (1) $ 14,700
Solar & Powerwall Discount $ (3,700)
System Price $ 25,434
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CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023
APPROVE THE PICO RIVERA INNOVATIVE MUNICIPAL ENERGY (PRIME) POWER
CHOICE SOLAR AND BATTERY RESIDENTIAL PROGRAM
Table 1b. Cost Benefit by Alternatives
No System Cash Purchase Loan*
PRIME
Power
Choice
Upfront
Costs
Cash Paid - ($25,434) (2,543) -
Fed. Tax Credits (30%)** - $7,630 $7,630 -
Sale of SREC - $292 $292 -
Total Cost After Savings - ($17,512) $5,379 -
Monthly
Costs
Loan Payment - - ($244) -
Power Choice Payment - - - ($115)
Energy from the System - - - ($89)
Energy from the GRID ($204) ($2) ($2) ($2)
Total Monthly Cost ($204) ($2) ($246) ($206)
One-Time
Expense
Battery Replacement (x2)
+ Maintenance - ($25,900) ($25,900) -
25-Year Cost
Analysis
Projected 25-Year System
Cost - ($43,412) ($64,432) -
Projected 25-Year Energy
Costs (PRIME) ($109,300) ($8,268) ($8,268) ($74,301)
Total 25-Year Cost ($109,300) ($51,680) ($72,700) ($74,301) Additional 25-Year Energy Need Baseline $109,300 $109,300 $109,300 $109,300 25-Year Projected Net Energy Savings $0 $57,621 $36,600 $34,999 *Assumes $2,543 down payment, 180-month term, 10% APR - will require customer to qualify. ** Assumes homeowner can efficiently use tax credits
While the program solves many energy-related problems and increases accessibility to solar and storage systems, this program may not be the right solution for all PRIME customers. A program analysis reviewed rates and determined that customers consuming more than 616 kWh per month are likely to benefit from the program. The table below demonstrates a bill comparison between the potential programs available to Pico Rivera residents, assuming a baseline energy consumption of 616 kWh with one battery system installed.
Table 2. Energy Program Rate Comparison at 616 kWh
Schedule D SCE PRIME POWER PRIME FUTURE POWER CHOICE
Generation Rate $/kWh $0.15450 $0.15518 $0.16518 $0.14500 SCE Delivery Rate $/kWh 0.18211 $0.17681 $0.17681 $0
Surcharges $/kWh N/A $ (0.00020) $ (0.00020) $115*
Total Costs $/kWh $0.33661 $0.33179 $0.34179 $0.33169
Avg. Mo. Bill $ $207.35 $204.38 $212.54 $204.32
*The $115 pertains to the monthly system lease.
Table 2 above demonstrates that households consuming at least 616 kWh per month will break even compared to existing rates. However, staff anticipates that energy rates will continue to increase in the following years; therefore, the gap between the Power Choice Program and the other programs will gradually increase.
CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023
APPROVE THE PICO RIVERA INNOVATIVE MUNICIPAL ENERGY (PRIME) POWER
CHOICE SOLAR AND BATTERY RESIDENTIAL PROGRAM
Facilitating Program Participation
Customers interested in the Power Choice Program will experience a seamless participation process and have two (2) options:
1. Developers and homeowners interested in participating in the program will find program information on PRIME’s website and add basic home information to a fillable form. Once the form is completed, information will be sent directly to Tesla, who will follow up with the customer.
2. Tesla will enable ordering directly from the Tesla.com website. Tesla will be responsible for all installation-related work, including permitting systems throughout the City.
The program participant will receive ongoing operations and maintenance through the life of the agreement at no additional cost by Tesla. The benefits of this program to the customer have garnered notable interest, indicative of P.E. having approximately 300 participants.
Benefits to the City and PRIME
The Power Choice Program will benefit the City and PRIME operations in the following ways:
• Environmental stewardship through increased localized renewable energy supply; • Reduce stress on the grid to avoid power outages;
• Meet State Renewable Portfolio Standard (RPS) requirements, which mandate 100% renewable energy procurements by 2045;
• Comply with State-mandated Resource Adequacy (RA) requirements, which are monthly and annual thresholds established by the California Public Utilities Commission (CPUC) to ensure that all load-serving entities (energy providers), like PRIME, demonstrate sufficient power procured to meet peak demand; and • May decrease the need to purchase unhedged RA supply during heat events that tend to be 40-50% more expensive than hedged supply. Hedged energy refers to a strategy that entails the proactive purchase of energy (e.g., a year or two ahead) to meet anticipated energy demands; this method allows PRIME to purchase energy at a competitive price. Conversely, unhedged energy refers to the purchase of energy during unplanned, high-demand events.
• If approved, this will enable the City to generate the following fees from this program:
o $0.40 per watt for each installation of solar and battery system o $0.02 kWh for the operating service fee; and
o $15 per month per Powerwall.
Program Risks
Staff analyzed the risks associated with the program and its proposed partner in terms of continuity and found minimal risks. Staff found that if P.E. ceases to exist:
CITY COUNCIL AGENDA REPORT – SPECIAL MEETING OF AUGUST 1, 2023
APPROVE THE PICO RIVERA INNOVATIVE MUNICIPAL ENERGY (PRIME) POWER
CHOICE SOLAR AND BATTERY RESIDENTIAL PROGRAM
• The equipment will continue to fulfill its purpose (i.e., powering homes and batteries) since investments toward the systems are made upfront. • PRIME will continue to purchase and sell the energy as designed due to contract protections around bankruptcy and default (i.e., Section 12 of the PPA).
Finally, staff found that the P.E. LLC created a separate entity, specifically for the PRIME Power Choice Program to ensure that programs or operations from other entities doing business with P.E. do not impact PRIME.
Alignment with City Council Goals
The proposed action meets the City’s Strategic Plan goals of the following:
• Fiscal and Organizational Sustainability – Strategy 1.2, “Identify and implement opportunities for financial efficiency.”
• Economic Development and Land Use - Strategy 2.4, “Establish the City of Pico Rivera as an environmentally friendly, sustainable community that attracts green industries.”
• Health, Wellness and Safety – Strategy 4.3, “Maintain a clean, safe, attractive environment to sustain a high quality of life for residents,” and Strategy 4.4, “Promote healthy living to maintain a thriving population.” Conclusion:
Staff recommends that the City Council approve the PRIME Choice Solar and Battery Residential Program and authorizes the City Manager to negotiate and execute the proposed PRIME Power Choice Solar and Battery Residential Program agreements in a form approved by the City Attorney.
Steve Carmona
SC:AG:VHF:smc
Enclosures: 1) Framework Agreement
2) Master Power Purchase Agreement
3) Program Management Agreement
4) Program Support Service Fee Agreement
5) Customer Participation Agreement
6) New Home Builder Framework Agreement
7) Customer Order and Program Terms
Framework CalChoice Distributed Energy Resource Program Agreement This Framework CalChoice Distributed Energy Resource Program Agreement (this “Agreement”) is entered into as of [February 1, 2023] (the “Effective Date”), among the parties listed below (each, a “Party” and together the “Parties”). This Agreement comprises (i) the Key Terms set out below (the “Key Terms”), and (ii) all schedules referenced in the “Attachments” section of the Key Terms.
Key Terms
This Agreement sets out the terms and conditions on which the California Choice Energy Authority (“CalChoice”) and the City of Pico Rivera (“Member”) shall market and offer a program for the deployment of traditional solar PV systems and Powerwalls to certain residential customers (“Customers”) and new homes builders (“Builders”) located in the Member territory, with sales and educational support provided by Member, product and product installation support provided by Tesla, purchase and operation of System by Participate Energy Fund I, LLC (“Program Fund”) for the sale of energy from the Systems to Member for resale to Customers (the “Program”).
Parties:
Tesla: Tesla, Inc., a corporation organized under the laws of Delaware.
CalChoice: California Choice Clean Energy Authority, a California Joint Powers Authority.
Member: City of Pico Rivera, a California municipal corporation.
The Program Fund: PE Fund Pico Rivera, LLC
Framework Agreement Term:
Term: The period commencing on the Effective Date and ending on the second (2nd) anniversary of the Effective Date (the “Term”), which shall automatically be extended for additional, one-year periods upon the expiration of the thencurrent Term unless terminated early in accordance with this Agreement.
Notices:
Tesla Notice Address: 1 Tesla Road, Austin, TX 78725, USA.
Attn: Energy Notices / Legal Department
Phone: +1. 512.516.8177.
Email: [email protected].
Tesla Address for submission of
Purchase Orders:
www.tesla.com
CalChoice Notice Address: 44933 Fern Avenue, Lancaster, CA 93534.
Attn: Jason Caudle, City Manager
Phone: 661.723.6110
[email protected]
Member Notice Address: 6615 Passons Blvd, Pico Rivera, CA 90660 Attn: Steven Carmona, City Manager
[email protected]
Program Fund Notice Address: Participate.Energy, LLC
Attn: Ethan Friedman
c/o Virtual Post Solutions, Inc.
2093 Philadelphia Pike #3125
Claymont, DE 19703
[email protected]
Enclosure 1
15a
NDA:
NDAs: The non-disclosure agreement dated [MMM DD, YYYY] between Tesla, Participate.Energy and Member.
Attachments:
The attachments below are incorporated by reference into this Agreement. In the event of any conflict, the order of precedence shall be (i) these Key Terms and (ii) the Schedules, in order of appearance.
Schedule 1: Program Terms and Conditions
Schedule 2: Pricing
Attachment A: Form of Customer Agreement
Attachment B: Form of New Homes Builder Framework Agreement Attachment C: Form of Customer Order – Program Terms
EXECUTED by the Parties on the Effective Date.
CALIFORNIA CHOICE CLEAN ENERGY AUTHORITY
(SIGNATURE)
(PRINT NAME)
(PRINT TITLE)
CITY OF PICO RIVERA
(SIGNATURE)
(PRINT NAME)
(PRINT TITLE)
TESLA, INC.
(SIGNATURE)
(PRINT NAME)
(PRINT TITLE)
PE FUND PICO RIVERA, LLC
(SIGNATURE)
(PRINT NAME)
(PRINT TITLE)
Schedule 1
Program Terms and Conditions
1. The Program. The objective of the Program is to deploy eligible Systems with a target of 500 MW of direct current capacity throughout the territorial boundaries of Member and the Community Choice Aggregation (“CCA”) service territories managed by Member or its CCA partners, including, but not limited to, the cities of:
San Jacinto, Pico Rivera, Rancho Mirage, Apple Valley, Pomona, Baldwin Park, Santa Barbara, Palmdale, and Lancaster (the “Territory”), as further set forth in this Agreement (the “Objective”).
2. Program Development.
(a) Geographic Focus. Membershall target all residential Customers and Builderslocated or operating within the portion of the Territory that is located within Member’s jurisdictional boundaries (the “Member Territory”) through the Master Marketing Plan.
(b) Site Eligibility. Eligible sites include existing single-family residential properties (“Existing Homes”) and single-family residential properties under construction by participating Builders in accordance with a New Homes Builder Framework (“New Homes”) located in the Member Territory. (c) Marketing Strategy & Outreach. The Master Marketing Plan shall be jointly developed by the Parties and designed to enlist the participation of Customers and Builders located in the Member Territory.
(i) Marketing Strategy. Within thirty (30) days, Member shall develop a strategy for marketing and promoting the Program, including:
1. Specific tactics that will be used to execute the Master Marketing Plan strategy;
2. An annual budget and description of dedicated resources that will be used to support Program marketing efforts;
3. Specific communications to be made through its sales channels; and
4. Dedicated education and links to the Tesla Products Offering on the Member website. (ii) Marketing Outreach. Member shall provide consistent and targeted marketing outreach consistent with the Master Plan to prospective Customers and Builders in the Member Territory.
(d) Sales Support. Member shall:
(i) Provide sales support for interested Customers and Builders by phone, email, and chat; (ii) Provide educational information regarding Tesla Products, economics, billing, maintenance, installation and technical performance of the System and components thereof; and (iii) Convert inbound interest and leads into Orders that (i) that Customers may submit to Tesla through the Existing Homes Retrofit Energy Order Tool; and (ii) participating Builders may submit to Tesla through the New Homes Energy Order Tool. (e) Order Funding. CalChoice and Member shall facilitate the establishment of a fund (the “Program Fund”) that shall be obligated to pay for Orders placed in accordance with the Program criteria set forth herein and that shall own and operate the Systems in accordance with the terms and conditions of each Customer Agreement.
3. Customer Eligibility; Engagement.
(a) Eligibility. To be eligible for participation in the Program, a Customer must: (i) either own an Existing Home or have entered into an agreement with a Builder to purchase a New Home, (ii) be an existing participant, or agree to become a participant, in the CalChoice Member’s Community Choice Aggregation program (“CCA”) with utility service provided by Southern California Edison (“Utility”), (iii) agree to host a System installed on the Home and to provide the Program Fund, as System owner, and its agents with a non-exclusive license (the “Site License”) for access to the Site for the entire term of the Customer’s participation in the Program for the purposes operating and maintaining the System; and (iv) agree to purchase an equivalent amount of energy generated by the System pursuant to a Solar Power Purchase & Energy Storage Services Agreement (each, a “Customer Agreement”) using the form attached hereto as Attachment A. (b) Customer Engagement. Member shall direct Customers with New Homes to accept the transfer and assumption of a Customer Agreement from a participating Builder in accordance with the terms and conditions of the applicable New Homes Builder Framework as more particularly described in Section 4. Member shall direct Customers with Existing Homes to place Orders directly with Tesla and to enter into a Customer Agreement in accordance with Section 5.
4. New Homes Builder Framework Agreement.
(a) Builder Framework Agreement. During the Term, the Parties may consider Builders for participation in the Program. Upon Tesla confirmation of Builder eligibility, Member and each participating Builder will enter into a New Homes Builder Framework Agreement (the “Builder Framework”) in the form attached as Attachment B. Material deviations from the Builder Framework are not permitted without unanimous written agreement of the Parties. (b) Builder Framework Obligations. Member will require, pursuant to each Builder Framework, that Builders deliver and maintain the following to remain eligible for participation in the Program:
(i) A fully executed Builder Framework;
(ii) Community Specific Terms setting forth the Tesla Product Suite, eligible System information and Pricing applicable to the particular subdivision of new homes (each, a “Community”); (iii) An executed Builder non-disclosure agreement in the form attached to the Builder Framework;
(iv) Orders as set forth in Section 5 placed in accordance with each Builder Framework; (v) For each Order, a “solar ready” home that will include internal conduit installation, roof dry in and order details developed in consultation with the buyer of each applicable home in the Community (each, a “Home Owner”) sufficient for Tesla to complete installation of Tesla Products and the home to pass inspection by the applicable building department as the authority having jurisdiction (“AHJ”); and
(vi) Ongoing compliance with the Builder Framework and Program requirements as Tesla, Member and CalChoice may mutually agree to update from time to time.
5. Orders.
(a) During the Term, Member shall direct eligible Customers to the Existing Homes Energy Order Tool at www.tesla.com and Builders to the New Homes Energy Order Tool developed by Tesla for each Builder to place orders for Tesla Products for installation on Existing Homes or New Homes in the Member Territory in accordance with these Program terms and the form of Customer Order – Program Terms set forth in Attachment C (“Orders”).
(b) Tesla shall deliver and install Tesla Products in accordance with each applicable Order. The Program Fund shall purchase and pay for the quantities and types of Tesla Products at the prices stated in each applicable Order. Tesla will review each submitted Order to ensure that it tracks the Program criteria and the Community Specific Terms, if applicable. If Tesla reasonably believes that the Order does not track the Program criteria or the Community-Specific Terms, it will notify the Parties and the Parties will then reasonably cooperate to resolve the issue. (c) For each Order that is accepted by Tesla (each, an "Accepted Order"), Tesla shall supply, install and commission the Tesla Products at the Site identified in that Accepted Order in accordance with that Accepted Order and the Work Standards described in Section 8(a) (the “Work”). Accepted Orders will be subject to Tesla’s standard terms and conditions. (d) For purposes of this Agreement and each Accepted Order, “Tesla Products” means a Traditional PV System with a Powerwall, as more particularly set forth in the Community Specific Guidelines of each Builder Framework. A “Traditional PV System” means a traditional solar photovoltaic generating system comprising of solar modules, an inverter and various balance of system components. A “Powerwall” means an energy storage system manufactured by Tesla and accompanying Tesla accessories. Each Traditional PV System, Powerwallshall consist of those that correspond to the specifications published in the Tesla Partner Portal as of the date when an Order for such Tesla Product is submitted.
(e) Tesla agrees to provide Member with access to a platform managed by Tesla that enables access to and control of distributed energy resource assets (“DER Assets”), manufactured by Tesla and owned directly or indirectly by Member or the Program Fund, for monitoring, aggregation, and control (the “Aggregation Platform”). Tesla will not charge Member or the Program Fund any fees for access or use of the platform, but otherwise reserves the right to establish the terms and conditions for Member’s access to the Aggregation Platform within an Aggregation Platform Subscription Agreement. Access to the Aggregation Platform excludes aggregation services offered by Tesla.
(f) The Parties acknowledge and agree that Tesla can choose at any time to discontinue a product, feature or option related to any one or more Tesla Products and, in Tesla’s sole discretion, can choose whether to provide a comparable product, feature or option, or terminate any affected Order before installation of any Tesla Product. If Tesla fails to provide a comparable product, feature or option to Member’s reasonable satisfaction, Member may terminate any affected Order before installation of any Tesla Product.
6. Pricing; Order Payment.
(a) Pricing. Programmatic pricing for Tesla Products is set forth in Schedule 2 (the “Pricing”). The System size or design may be adjusted by Tesla in its reasonable discretion based on a variety of factors, including installation complexity or product availability, provided that the Pricing remains at or below the Pricing set forth on the Program website. If that happens, we will update the Pricing in the applicable Order; Orders with updated Pricing that exceeds the Pricing set forth on the Program website and that are not accepted will be terminated. (b) Order Payment. For Accepted Orders, the price for the Work performed by Tesla under each Accepted Order shall be the Contract Price identified in that Accepted Order. The Program Fund shall pay the Contract Price for each Accepted Order plus applicable taxes within 30 days after receipt of Tesla’s invoice, which Tesla shall provide after the affected Tesla Products have been installed and passed inspection by the AHJ. Passed inspection shall also be deemed “Acceptance” in this Agreement and in each Builder Framework.
7. Title; Risk of Loss. Title to and risk of loss for the Tesla Products shall pass to the Program Fund after Acceptance.
8. Permits. Customers and Builders, as the case may be, shall bear the obligation to obtain and maintain all permits required for Tesla to install each Tesla Product (the “Permits”), except that Tesla shall include the cost of Permits in Orders for Existing Homes.
9. Installation.
(a) Work Standards. Tesla, or its approved subcontractors, will perform the Work according to Tesla’s standard practices and the “Tesla Work Standards” set forth in Exhibit 2 to each Builder Framework exercising the reasonable skill and care of an installation contractor and in accordance with mandatory laws, regulations and permits applicable to the Work. (b) Subcontractors. Tesla will be responsible for all work performed by, and acts or omissions of, each subcontractor and will ensure that all subcontractors are licensed as required by applicable law. (c) Safety. Tesla shall ensure that all Tesla employees and subcontractors comply with Builder’s safety procedures and requirements while on Sites during prosecution of the Work.
10. Failure to Perform.
(a) If any Party believes that any other Party is not satisfying its obligations under this Agreement or with respect to an Order, such Party must notify the other Party in writing. Whichever Party is notified of not meeting its obligations will have 30 days after receiving that notice to correct the issue. If not, whoever gave the notice can terminate the affected Order or this Agreement in accordance with Section 13.
(b) In addition, if Tesla notifies the Parties of the Program Fund’s failure to pay the Price for an Order, Tesla can suspend our work on that Order and, if not cured within ten (10) days, Tesla can suspend performance under this Agreement.
(c) If a Customer or Builder terminates an Order for Tesla’s failure to perform before installation of the Tesla Products for that Order has commenced, we will return any payment(s) made toward the Price for those products.
(d) If either party terminates an Order for the other party’s failure to perform, except as specified in the next sentence, Tesla may take back all components of any Tesla Products we delivered but that have not yet been installed for that Order and shall not have any further obligation to deliver product pursuant to this Agreement or that Order. In addition, if an Order is terminated pursuant to this Section, Tesla will complete the installation of Tesla Products where installation is partially complete, unless otherwise requested by the Program Fund (in which case, Tesla will deinstall and remove the Tesla Products from the affected home and return the jobsite to its original condition, at no cost). Each Party will also be able to pursue all rights and remedies available at law or in equity with respect to the failure to perform, except as otherwise provided in Section 13, below.
Breaches of one or more Orders will not constitute breaches under any other Orders or under this Agreement, and breaches of this Agreement independent of any Orders shall not constitute breaches of any Orders.
11. Warranties.
(a) Starting on the date of installation, Tesla warrants to the Program Fund that all materials, equipment and work furnished by Tesla as part of an Order will be:
(i) of good quality, free from fault and defects, and
(ii) performed in a good and workmanlike manner, in accordance with all applicable laws, building codes and ordinances, and in strict conformity with the Order.
If the Program Fund notifies Tesla within 1 year after Acceptance (for Existing Homes) or the initial close of escrow by a Home Owner (for New Homes), Tesla shall, at its sole expense, immediately correct or replace any Work that is defective or determined to be not in accordance with the requirements of the above warranties.
(b) Tesla’s warranties in this Agreement are limited, as they do not cover (i) any defect or damage to the extent caused (A) by events that are (1) beyond Tesla’s reasonable control, (2) not reasonably foreseeable, and (3) not caused by Tesla’s or its subcontractor’s negligence, or (B) by Customer or Program Fund misuse or negligence, and (ii) any material or equipment connected to the Tesla Products that Tesla did not install. Tesla is not providing any warranties in connection with this Agreement other than those in this Agreement or in the product warranties provided by Tesla pursuant to Section 11(c), even if those other warranties are express or implied by any law. (c) Tesla's warranties under this Agreement shall in all cases survive termination of this Agreement and the transfer of title in the home to a third-party purchaser, except for a Home Owner (whose warranty is set forth in Sections 11(e) and 11(f)).
(d) With respect to any warranty claim by the Program Fund under Section 11(a) for the correction, replacement and warranty work, the remedies set forth in Section 11(a) and in Sections 10(d) and 11, as applicable, are the Program Fund’s sole and exclusive remedies. For clarity, the foregoing shall not limit the Program Fund’s ability to bring claims for other purposes not related to the correction, replacement and warranty work as set forth in this Section 11(d), including, without limitation, the Program Fund’s rights to indemnification under Section 14. (e) If a Home Owner exercises a buyout option and purchases any Tesla Product from the Program Fund, Tesla will cover each Home Owner with limited warranties for Tesla Products in the forms attached as Exhibit 3 to each Builder Framework, as applicable. (f) In addition, Tesla will provide to each Home Owner the workmanship warranty attached as Exhibit 4 to each Builder Framework, assuming the Program Fund assigns that warranty to the Home Owner.
(g) The manuals and equipment warranties for Tesla Products are available upon request after each Order.
12. Proprietary Rights.
(a) Ownership. As between the Parties, Tesla shall remain the sole and exclusive owner of any and all Proprietary Rights associated with the System or any parts or derivations thereof. “Proprietary Rights” means patents, trademarks, copyrights, mask work rights, trade secrets and any other intellectual or proprietary rights.
(b) License. Tesla hereby grants to Member and CalChoice a limited, non-exclusive, nonsublicensable, non-transferable license to use the materials that Tesla provides for implementing the Master Marketing Plan and marketing the Plan in accordance with this Agreement. Except for the foregoing, no license or other right to Tesla’s Proprietary Rights is granted or implied hereby.
13. Termination.
(a) Termination for Cause. Each party may terminate its participation in this Agreement or any Accepted Order for cause in the event (i) an insolvency event involving one of the other parties; or (iii) any party has materially breached any provision of this Agreement (other than non-payment) and, within 30 days after receipt of written notice of such breach from a non-breaching party, the breaching party has failed to cure such breach or, in the event the breach cannot reasonably be cured within such 30 day period, submit a plan for cure acceptable to each non-breaching party in its reasonable discretion. The termination of this Agreement by any single party shall result in the termination of this Agreement as to all parties.
(b) Insolvency Event. An “Insolvency Event” occurs with respect to a Party (i) if it is adjudged bankrupt; (ii) if it makes a composition or arrangement with its creditors; (iii) if it has a winding up petition or a petition for an administration order presented against it; (iv) if it has a receiver or manager or administrative receiver or provisional liquidator appointed; or (v) upon the happening of any other event of insolvency.
(c) Effects of Termination. Except as otherwise set forth in this Agreement, the expiration or termination of this Agreement will not affect any rights or obligations of the Parties that were incurred or that accrued prior to such expiration or termination. Termination shall not be deemed an election of remedies, and the non-defaulting party shall have all rights and remedies available under applicable law in connection with and following such termination.
14. Indemnification.
(a) No party to this Agreement will be obligated to indemnify any other party from any losses, damages, liabilities, deficiencies, actions, judgments, interest, awards, penalties, fines, costs or expenses, including reasonable legal fees (“Losses”) arises out of or due to the negligence or willful misconduct of such other Party. For purposes of this Agreement and each Builder Framework, “Indemnified Parties” means for each Party, (i) the Party and any person providing financing to the Party with respect to the System, (ii) any affiliate of the persons set forth in clause (i), and (iii) any director, officer, partner, member, manager, agent or employee of a person described in clause (i) or (ii); and, “Indemnifying Party” means each other Party, as the context requires. (b) Tesla’s Indemnities. Tesla will indemnify, defend and hold harmless each other Party’sIndemnified Parties from any Losses arising out of any claim, action, suit, proceeding, investigation made or brought by any third party (“Claims”):
i. that Tesla Products (or any component or software thereof) or Tesla’s Work pursuant to any Accepted Order infringes the intellectual property rights of a third party, other than a Claim for which such Party is responsible under Section 11(c). In addition, if such Party is enjoined from the use, operation or enjoyment of Tesla Products or any part thereof as a result of any Claim alleging that Tesla Products or Tesla’s Work infringes the intellectual property rights of a third party, Tesla will at no cost to such Party, at Tesla’s option: (1) have such injunction removed, (2) substitute non-infringing goods or processes, or (3) modify the infringing goods or processes so they become noninfringing and provide the same or better functionality and performance relative to the affected item’s then-current functionality and performance; and ii. in connection with the design, construction, installation, workmanship, materials or functionality of any materials, equipment and work furnished by Tesla, except with respect to any modification by any party other than Tesla (directly or indirectly) or use or reuse of Tesla Products that are the subject of an Accepted Order other than as permitted under this Agreement or their warranties.
(c) Member, CalChoice and Program Fund Intellectual Property Indemnity. Member, CalChoice and Program Fund will indemnify and hold harmless Tesla and Tesla’s Indemnified Parties from any Losses arising out of Claims alleging infringement to the extent involving:
i. a particular design, process or product required or specified pursuant to any Accepted Order or where the copyright violations are contained in drawings, specifications or other documents prepared or provided by You or others for whom You are responsible, ii. any modification by any party other than Tesla (directly or indirectly), use or reuse of Tesla Products other than as permitted under this Agreement or their warranties, iii. use of Tesla Products in combination with any other products, materials or equipment not expressly authorized in writing by Tesla in circumstances where the infringement would have been avoided by the use of Tesla Products not so combined, unless such other products, materials or equipment are provided, required or approved by Tesla (as indicated by reasonable evidence) for, or are intrinsic to, use of Tesla Products, or iv. any modifications or changes made to Tesla Products by any party other than Tesla other than at the direction (as indicated by reasonable evidence) of Tesla in circumstances where the infringement would have been avoided without such modifications or changes.
15. Limitation of Liability. Except for indemnification obligations (Section 14), breach of confidentiality (Section 17), or any gross negligence or willful misconduct, the Program Fund’s and Tesla’s total liability for all damages of any kind arising out this Agreement will not exceed $1,000,000.00 and neither Member nor CalChoice shall bear any liability for any damages of any kind arising out this Agreement. Also, no party will have to pay any other party for any indirect, special or consequential damages.
16. Force Majeure. Each Party shall be excused from performance and shall not be considered to be in breach with respect to any obligation hereunder other than any obligation to pay money due and owing, if and to the extent that such Party’s failure of, or delay in, performance is caused by or results from acts or circumstances beyond the reasonable control of such Party (a “Force Majeure Event”); provided:
(a) such Party gives the other Parties notice describing the particulars of the Force Majeure Event as soon as is reasonably practicable and in any event within ten (10) Business Days after the discovery of the Force Majeure Event and its impact on such Party’s performance; (b) the suspension of performance is of no greater scope and of no longer duration than is reasonably required by the Force Majeure Event;
(c) the Party uses reasonable endeavors to:
(i) overcome or mitigate the effects of such occurrence, and (ii) minimize costs and expenses attendant to or arising from such occurrence; (d) when the Party is able to resume performance of the affected obligations, such Party shall so notify the other Party and promptly resume performance;
17. Confidentiality; Publicity.
(a) Except for communications exchanged between each Party, each Party will keep any disclosures, as well as the terms of this Agreement, confidential in accordance with the non-disclosure agreements between them (the “NDAs”) and agree that this Agreement is confidential information of each of them for purposes of the NDAs. (Even though the NDAs are separate documents, they are considered part of this Agreement).
(b) Neither Party will advertise or issue any public announcement about this Agreement, or use the other Party’s mark, name or logo in any marketing literature, web sites, articles, press releases (including interviews with representatives of media organizations of any form), or any other document or electronic communication, without the other Party’s written consent. (c) Nothing in this Agreement, the NDAs, or any other agreement between the Parties limits or prohibits any announcement, disclosure, or other act that is required by law.
18. Governing Law; Disputes.
(a) The Parties agree to comply with all applicable laws and regulations in connection with this Agreement. This Agreement is governed by the laws of the State of California. Any dispute arising out of or relating to this Agreement shall be brought in the Superior Court of California, County of Los Angeles, or the United States District Court for the Central District of California. (b) Neither of us is bound by any terms relating to Tesla Products or other matters covered by this Agreement or any Order that are not contained in this Agreement or the affected Order. (c) Each of the Parties also agree to promptly notify the other’s senior level management if there is any dispute relating to this Agreement or any Orders and to try to resolve the dispute in good faith.
If we are unable to resolve a dispute within 20 days after that notice is given, then either of us can take the dispute to arbitration through Judicial Arbitration and Mediation Services (“JAMS”) according to JAMS Streamlined Arbitration Rules. The existence, content and result of the arbitration will be confidential. The arbitration will be conducted by a single arbitrator in English and in Los Angeles, California, unless otherwise agreed by the Parties. We will each bear our own expenses in the arbitration and will share equally the costs of the arbitration unless the arbitrator assigns costs to one of us. Judgment upon the award rendered in the arbitration may be entered in any court of competent jurisdiction
19. Miscellaneous.
(a) Representations. Each Party represents and warrants to the other Parties that (i) it is a legal entity, duly organized, validly existing and in good standing under the laws of jurisdiction of incorporation; (ii) this Agreement constitutes a legal, valid and binding obligation of such Party enforceable in accordance with its terms; and (iii) the execution, delivery and performance of this Agreement (A) is within its powers, (B) has been duly authorized by all requisite action and (C) will not violate any agreement, commitment, certificate or other document to which it is a party or by which any of its assets may be bound or affected.
(b) Compliance with Law. Each Party will comply with all applicable laws and regulations in connection with its performance under Agreement.
(c) Notices. All notices under this Agreement must be in writing and must be sent via email, or express and/or certified mail, to the contacts identified in the Key Terms. (d) Assignment. Tesla can assign this Agreement and each Accepted Order (i) to an affiliate and (ii) as collateral in connection with its financing activities, in either case without the need for consent from any other Party.
(e) Insurance. Each Party shall carry and maintain in force, with reputable insurance companies authorized to do business in the jurisdictions where the portion of the Member Territory is located.
Each of the Parties shall each maintain all insurance that such Party is required by law to maintain.
In connection with the Work pursuant to each Builder Framework and Accepted Order, Tesla shall be required to maintain insurance as set forth in Exhibit 6 to the Builder Framework. (f) Cumulative and Certain Exclusive Remedies. Except as otherwise specifically set forth in this agreement, all rights and remedies provided under this Agreement are cumulative and not exclusive, and the exercise by either Party of any right or remedy does not preclude the exercise of any other rights or remedies that may now or subsequently be available at law, in equity, by statute, in any other agreement between the Parties or otherwise. (g) Entire Agreement; Severability. This Agreement constitutes the entire agreement between the Parties regarding the subject matter hereof and supersedes all prior agreements, representations and understandings, oral or written, between the Parties regarding the subject matter hereof. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, such term shall be severable from the remainder of this Agreement and the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by the law.
(h) Amendment and Modification. No amendment or modification of this Agreement is effective unless it is in writing and signed by each Party.
(i) Waiver. No waiver by either Party of any provision of this Agreement is effective unless explicitly set forth in writing and signed by such Party. No failure to exercise, or delay in exercising, any right or remedy arising from this Agreement operates or may be construed as a waiver thereof. No single or partial exercise of any right or remedy hereunder precludes any other or further exercise thereof or the exercise of any other right or remedy.
(j) Relationship of the Parties. The relationship between the Parties is that of independent contractors. Nothing contained in this Agreement shall be construed as creating any agency, partnership, joint venture or other form of joint enterprise, employment or fiduciary relationship between the Parties, and neither Party shall have authority to contract for or bind the other Party in any manner whatsoever.
(k) No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties hereto and their respective successors and permitted assigns and nothing herein is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
(l) Survival. Provisions of this Agreement which by their nature contemplate or govern performance or observance subsequent to the termination or expiration of this Agreement shall survive such termination or expiration.
Schedule 2
Pricing
The following terms set forth in this table listed below (the “Pricing”) shall apply to each Accepted Order as of the date the Accepted Order is received by Tesla in accordance with the terms and conditions of this Agreement. The Parties agree that Tesla may, in its reasonable discretion, based upon community-specific factors, including installation complexity, as well as recent market factors and product availability, update the Pricing applicable to each Community pursuant to each New Home Builder Framework so long as the Pricing is at or below the Pricing set forth on the Program website. Pricing shall not exceed the Pricing on the Program website absent written Notice to the Parties(including email) and written acceptance by each applicable Party or any other method as may reasonably be agreed upon by the Parties.
Solution Price
Solar PV (Rooftop) $2.42/Wp
Powerwall – 1st $11,500
Powerwall – Each Additional $7,000
15 Year Powerwall Extended Warranty - Each $650
Member Services $0.40/Wp of PV
Tesla Pre-Construction Services
Examples: Remove copper from roof; upgrade
structure; remove existing solar PV;
remove/relocate AC unit; remove/fix existing
generator; remove existing battery backup;
remove/relocate existing solar thermal;
remove/relocate rooftop vents; remove/trim tree;
clean roof surface; fix electrical code violation;
remove/relocate shelving; master-panel upgrade
(MPU) (situational)
14.5¢ PPA: $0 - $750 in pre-construction services
15.0¢ PPA: $751 - $2,500 in pre-construction services
15.5¢ PPA: $2,500 - $5,000 in pre-construction services Project Ineligible: > $5,000 in pre-construction services By way of example, for a typical System (7.6 kW Solar PV + 1 Powerwall) Solution Price
7.6 kW Solar PV $18,392
Powerwall – 1st $11,500
Powerwall – Each Additional $0 (N/A)
15 Year Powerwall Extended Warranty - Each $650
Member Services $3,040
Tesla Pre-Construction Services $2,000
TOTAL: $35,582 (corresponds to a 15.0¢ Customer PPA)
Attachment A
Form of Customer Agreement
[Insert]
Attachment B
Form of New Homes Builder Framework Agreement
[Insert]
Attachment C
Form of Customer Order – Program Terms
[Insert]
RESIDENTIAL SOLAR / ENERGY STORAGE PROGRAM
POWER PURCHASE AND SALE AGREEMENT
BETWEEN
CITY OF PICO RIVERA, A CALIFORNIA MUNICIPAL CORPORATION,
D/B/A PICO RIVERA INNOVATIVE MUNICIPAL ENERGY
AND
PARTICIPATE.ENERGY LLC
Enclosure 2
15b
i
Table of Contents
Page
ARTICLE 1 DEFINITIONS........................................................................................................... 1
1.1 Contract Definitions................................................................................................ 1
1.2 Rules of Interpretation ............................................................................................ 8 ARTICLE 2 SYSTEMS, COMMERCIAL OPERATION, FORECASTING ............................... 9
2.1 Systems................................................................................................................... 9
2.2 Commercial Operation............................................................................................ 9
2.3 Forecasting.............................................................................................................. 9 ARTICLE 3 TERM....................................................................................................................... 10
3.1 Contract Term....................................................................................................... 10
3.2 Contract Term Extension ...................................................................................... 10
3.3 Survival of Contract Provisions............................................................................ 10 ARTICLE 4 PURCHASE AND SALE........................................................................................ 10
4.1 Sale of Product...................................................................................................... 10
4.2 Sale of Green Attributes........................................................................................ 10
4.3 Compensation ....................................................................................................... 10
4.4 Ownership of Renewable Energy Incentives........................................................ 11
4.5 Future Environmental Attributes. ......................................................................... 11
4.6 Sale of Energy to Customers................................................................................. 12 ARTICLE 5 OBLIGATIONS AND DELIVERIES..................................................................... 12
5.1 Delivery................................................................................................................. 12
5.2 Title and Risk of Loss........................................................................................... 12 ARTICLE 6 TAXES..................................................................................................................... 12
6.1 Allocation of Taxes and Charges.......................................................................... 12
6.2 Cooperation........................................................................................................... 13 ARTICLE 7 MAINTENANCE OF SYSTEMS ........................................................................... 13
7.1 Maintenance of Systems....................................................................................... 13
7.2 Maintenance of Health and Safety........................................................................ 13 ARTICLE 8 METERING............................................................................................................. 13
8.1 Metering................................................................................................................ 13
8.2 Meter Verification................................................................................................. 13 ii
ARTICLE 9 INVOICING AND PAYMENT; CREDIT.............................................................. 14
9.1 Invoicing ............................................................................................................... 14
9.2 Payment................................................................................................................. 14
9.3 Books and Records ............................................................................................... 14
9.4 Payment Adjustments; Billing Errors................................................................... 14
9.5 Billing Disputes .................................................................................................... 14
9.6 Netting of Payments.............................................................................................. 15 ARTICLE 10 NOTICES............................................................................................................... 15
10.1 Addresses for the Delivery of Notices.................................................................. 15
10.2 Acceptable Means of Delivering Notice............................................................... 15 ARTICLE 11 FORCE MAJEURE ............................................................................................... 15
11.1 Definition. ............................................................................................................. 16
11.2 No Liability If a Force Majeure Event Occurs ..................................................... 16
11.3 Notice.................................................................................................................... 17
11.4 Termination Following Force Majeure Event....................................................... 17 ARTICLE 12 DEFAULTS; REMEDIES; TERMINATION ....................................................... 17
12.1 Events of Default. An “Event of Default” shall mean,........................................ 17
12.2 Remedies; Declaration of Early Termination Date............................................... 18
12.3 Termination Payment............................................................................................ 18
12.4 Notice of Payment of Termination Payment ........................................................ 19
12.5 Disputes With Respect to Termination Payment.................................................. 19
12.6 Rights And Remedies Are Cumulative................................................................. 19
12.7 Mitigation.............................................................................................................. 19 ARTICLE 13 LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES........... 19
13.1 No Consequential Damages.................................................................................. 19
13.2 Waiver and Exclusion of Other Damages............................................................. 19 ARTICLE 14 REPRESENTATIONS AND WARRANTIES; AUTHORITY ............................ 20
14.1 Seller’s Representations and Warranties .............................................................. 20
14.2 Buyer’s Effective Date Representations and Warranties...................................... 21
14.3 General Covenants................................................................................................ 22 ARTICLE 15 ASSIGNMENT...................................................................................................... 22
15.1 General Prohibition on Assignments.................................................................... 22
15.2 Permitted Assignment; Change of Control of Seller ............................................ 22
15.3 Change of Control of Buyer.................................................................................. 23 iii
ARTICLE 16 LENDER ACCOMMODATIONS ........................................................................ 23
16.1 Granting of Lender Interest................................................................................... 23
16.2 Rights of Lender ................................................................................................... 23
16.3 Cure Rights of Lender........................................................................................... 24 ARTICLE 17 DISPUTE RESOLUTION ..................................................................................... 24
17.1 Governing Law ..................................................................................................... 24
17.2 Dispute Resolution................................................................................................ 24 ARTICLE 18 INDEMNIFICATION............................................................................................ 24
18.1 Indemnification..................................................................................................... 24
18.2 Claims................................................................................................................... 25 ARTICLE 19 INSURANCE......................................................................................................... 25
19.1 Insurance............................................................................................................... 25 ARTICLE 20 CONFIDENTIAL INFORMATION ..................................................................... 27
20.1 Definition of Confidential Information................................................................. 27
20.2 Duty to Maintain Confidentiality.......................................................................... 27
20.3 Irreparable Injury; Remedies ................................................................................ 27
20.4 Disclosure to Lender............................................................................................. 27 ARTICLE 21 MISCELLANEOUS .............................................................................................. 27
21.1 Entire Agreement; Integration; Exhibits............................................................... 27
21.2 Amendments......................................................................................................... 28
21.3 No Waiver............................................................................................................. 28
21.4 No Agency, Partnership, Joint Venture or Lease.................................................. 28
21.5 Severability ........................................................................................................... 28
21.6 Forward Contract .................................................................................................. 28
21.7 Mobile-Sierra ........................................................................................................ 28
21.8 Counterparts.......................................................................................................... 29
21.9 Facsimile or Electronic Delivery .......................................................................... 29
21.10 Binding Effect....................................................................................................... 29 iv
Exhibits:
Exhibit A Included Systems List
Exhibit B Notices
Exhibit C Emergency Contact Information
1 RESIDENTIAL SOLAR / ENERGY STORAGE PROGRAM
POWER PURCHASE AND SALE AGREEMENT
This Residential Solar / Energy Storage Program Power Purchase and Sale Agreement (this “Agreement”) is made and effective as of ________, 2023 (the “Effective Date”), by and between Participate.Energy LLC (“Seller”) and CITY OF PICO RIVERA, A CALIFORNIA
MUNICIPAL CORPORATION, D/B/A PICO RIVERA INNOVATIVE MUNICIPAL ENERGY (“Buyer”). Seller and Buyer are sometimes referred to herein individually as a “Party” and jointly as the “Parties.” Unless the context otherwise specifies or requires, capitalized terms in this Agreement have the meanings set forth in Article 1.
RECITALS
A, Seller desires to develop, design, construct, finance, own and operate residential solar and energy storage systems to be located at private residences within Buyer’s service territory (each a “System” or, collectively, the “Systems”).
B. Seller desires to sell to Buyer, and Buyer is willing to purchase from Seller the Product generated by each System pursuant to the terms and conditions of this Agreement.
C. Buyer and Seller intend that Seller will add Systems to this Agreement from time to time during the Portfolio Term. Each System, once such System has reached Commercial Operation evidenced by delivery from Seller to Buyer of (i) written confirmation from the System installer that such System has been completed, and (ii) an updated Included Systems List attached hereto as Exhibit A listing such new System as a system covered under this Agreement, shall be covered under the terms of this Agreement, and Buyer shall purchase from Seller the Product generated by such System as of the Commercial Operation Date.
D. 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 Contract Definitions. The following terms, when used herein with initial capitalization, shall have the meanings set forth below:
“Affiliate” means, with respect to any Person, each Person that directly or indirectly controls, is controlled by, or is under common control with such designated Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean (a) the direct or indirect right to cast at least fifty percent (50%) of the votes exercisable at an annual general meeting (or its equivalent) of such Person or, if there are no such rights, ownership of at least fifty percent (50%) of the equity or other ownership interest in such Person, or (b) the right to direct the policies or operations of such Person.
2 “Agreement” has the meaning set forth in the Preamble and includes any exhibits, schedules and any written supplements hereto, any designated collateral, credit support or similar arrangement between the Parties.
“Bankrupt” means with respect to any entity, such entity that (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, (b) has any such petition filed or commenced against it which remains unstayed or undismissed for a period of sixty (60) days, (c) makes an assignment or any general arrangement for the benefit of creditors, (d) otherwise becomes bankrupt or insolvent (however evidenced), (e) 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 (f) is generally unable to pay its debts as they fall due. “Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. §101 et seq.), as amended, and any successor statute.
“Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday in California. A Business Day begins at 8:00 a.m. and ends at 5:00 p.m. local time for the Party sending a Notice, or payment, or performing a specified action. “Buyer” has the meaning set forth in the preamble.
“Buyer’s Service Territory” means the service territory of Buyer “Commercial Operation” means, with respect to each System, the condition existing when (i) all conditions to operate the System, including without limitation all applicable regulatory authorizations, approvals and permits for the operation of the System have been obtained, satisfied and complied with, and are in full force and effect, in order to produce, sell and transmit Energy. “Commercial Operation Date” means the first date of Commercial Operation of a System after completion of a System as confirmed in writing by the System installer. “Confidential Information” has the meaning set forth in Section 20.1. “Contract Capacity” means, with respect to each System the kW AC capacity measured at the Delivery Point set forth in the Included Systems List with respect to such System. “Capacity Charge” has the meaning set forth in Section 0 “Contract Price” has the meaning set forth in Section 0. “Contract Term” has the meaning set forth in Section 3.1. “Contract Year” means with respect to any and all Systems a twelve (12) month period beginning on the Commercial Operation Date and each successive twelve (12) month period thereafter during the Contract Term.
“Customer” means the property owner of the property where a System is located. 3 “Customer Agreement” means an agreement between the Seller and Customer relating to (a) the installation of the System at the property, (b) the sale of power generated by the System by Seller to Buyer, and (3) the sale by Buyer to the Customer of an amount of electric power, which is equivalent to electric power generated by the System located on the property. “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 the Agreement; and all reasonable attorneys’ fees and expenses incurred by the Non-Defaulting Party in connection with terminating the Agreement. “CPUC” means the California Public Utilities Commission, or successor entity. “Defaulting Party” has the meaning set forth in Section 12.1(a). “Delivered Energy” means with respect to each System all Energy produced from the System as measured in kWh at the System Delivery Point. “Delivery Point” means with respect to each System the point of delivery for Energy as set forth in the final as-built plans for such System.
“Early Termination Date” has the meaning set forth in Section 12.2. “Effective Date” has the meaning set forth on the Preamble. “Energy” means metered electrical energy, measured in kWh, which is produced by each System or by a number of Systems in the aggregate.
“Energy Rate” has the meaning set forth in Section 0
“Event of Default” has the meaning set forth in Section 12.1. “FERC” means the Federal Energy Regulatory Commission or any successor government agency.
“Force Majeure Event” has the meaning set forth in Section 11.1. “Future Environmental Attributes” shall mean, with respect to each System, any and all generation attributes (other than Green Attributes or Renewable Energy Incentives) under the RPS regulations and/or under any and all other international, federal, regional, state or other law, rule, regulation, bylaw, treaty or other intergovernmental compact, decision, administrative decision, program (including any voluntary compliance or membership program), competitive market or business method (including all credits, certificates, benefits, and emission measurements, reductions, offsets and allowances related thereto) that are attributable, now, or in the future, to the generation of electrical energy by the System.
“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 this Agreement 4 for the remaining Contract Term, determined in a commercially reasonable manner. Factors used in determining the economic benefit to a Party may include, without limitation, reference to information supplied by one or more third parties, which shall exclude Affiliates of the nondefaulting Party, including without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., NP-15), all of which should be calculated for the remaining Contract Term, and includes the value of Green Attributes and Resource Adequacy Benefits.
“Governmental Authority” means any federal, state, provincial, local or municipal government, any political subdivision thereof or any other governmental, congressional or parliamentary, regulatory, or judicial instrumentality, authority, body, agency, department, bureau, or entity with authority to bind a Party at law; provided, however, that “Governmental Authority” shall not in any event include any Party.
“Green Attributes” means any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled, attributable to the generation from the System, and its displacement of conventional Energy generation. Green Attributes include but are not limited to Renewable Energy Credits, as well as: (1) any avoided emissions of pollutants to the air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon monoxide (CO) and other pollutants; (2) any avoided emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and other greenhouse gases (GHGs) that have been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the atmosphere;1 (3) the reporting rights to these avoided emissions, such as Green Tag Reporting Rights. Green Tag Reporting Rights are the right of a Green Tag Purchaser to report the ownership of accumulated Green Tags in compliance with federal or state law, if applicable, and to a federal or state agency or any other party at the Green Tag Purchaser’s discretion, and include without limitation those Green Tag Reporting Rights accruing under Section 1605(b) of The Energy Policy Act of 1992 and any present or future federal, state, or local law, regulation or bill, and international or foreign emissions trading program. Green Tags are accumulated on a MWh basis and one Green Tag represents the Green Attributes associated with one (1) MWh of Energy. Green Attributes do not include (i) any energy, capacity, reliability or other power attributes from the System, (ii) production tax credits associated with the construction or operation of the System and other financial incentives in the form of credits, reductions, or allowances associated with the System that are applicable to a state or federal income taxation obligation, (iii) fuel-related subsidies or “tipping fees” that may be paid to Seller to accept certain fuels, or local subsidies received by the generator for the destruction of particular preexisting pollutants or the promotion of local environmental benefits, or (iv) emission reduction credits encumbered or used by the System for compliance with local, state, or federal operating and/or air 1 Avoided emissions may or may not have any value for GHG compliance purposes.
Although avoided emissions are included in the list of Green Attributes, this inclusion does not create any right to use those avoided emissions to comply with any GHG regulatory program.
5 quality permits. If the System is a biomass or landfill gas System and Seller receives any tradable Green Attributes based on the greenhouse gas reduction benefits or other emission offsets attributed to its fuel usage, it shall provide Buyer with sufficient Green Attributes to ensure that there are zero net emissions associated with the production of electricity from the System. “Green Tag Reporting Rights” means the right of a purchaser of renewable energy to report ownership of accumulated “green tags” in compliance with and to the extent permitted by Law and include, without limitation, rights under Section 1605(b) of the Energy Policy Act of 1992, and any present or future federal, state or local certification program or emissions trading program, including pursuant to the WREGIS operating rules. “Included Systems List” means a list of Systems covered by the terms of this Agreement, of which Seller will sell to Buyer, and Buyer will purchase from Seller the Product generated by each System listed thereon. The Included System List will be amended by means of Seller delivering an updated Included Systems List to Buyer from time to time, listing any new System completed by Seller. The initial Included Systems List is attached hereto as Exhibit A and subsequent Included Systems List amended as stated above shall automatically replace any prior Included Systems List as Exhibit A attached hereto. Absent manifest error or fraud, each updated Included Systems List shall be binding upon the Parties. “Indemnified Party” has the meaning set forth in Section 18.1. “Indemnifying Party” has the meaning set forth in Section 18.1. “Installed Capacity” means, with respect to each System, the System demonstrated peak System electrical output measured in kW AC at the System Delivery Point. “Interest Rate” has the meaning set forth in Section 9.2. “kW” means kilowatts measured in alternating current.
“kWh” means kilowatt-hour.
“Law” means any applicable law, statute, regulation, rule, regulation, decision, writ, order, decree or judgment, permit or any interpretation thereof, promulgated or issued by a Governmental Authority.
“Lender” means, collectively, any Person (i) providing senior or subordinated construction, interim or long-term debt or equity financing or refinancing for or in connection with the development, construction, purchase, installation or operation of the System, whether that financing or refinancing takes the form of private debt, equity, public debt or any other form (including financing or refinancing provided to a member or other direct or indirect owner of Seller), including any equity investor directly or indirectly providing financing or refinancing for the System or purchasing equity ownership interests of Seller and/or its Affiliates, and any trustee or agent acting on their behalf, (ii) providing interest rate or commodity protection under an agreement hedging or otherwise mitigating the cost of any of the foregoing obligations and/or (iii) participating in a lease financing (including a sale leaseback or leveraged leasing structure) with respect to the System.
6 “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 this Agreement for the remaining Contract Term, determined in a commercially reasonable manner. Factors used in determining economic loss to a Party may include, without limitation, reference to information supplied by one or more third parties, which shall exclude Affiliates of the non-defaulting Party, including without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., NYMEX), all of which should be calculated for the remaining Contract Term and must include the value of Green Attributes and Resource Adequacy Benefits.
“MW” means megawatts measured in alternating current.
“MWh” means megawatt-hour.
“Non-Defaulting Party” has the meaning set forth in Section 12.2. “Notice” shall, unless otherwise specified in the Agreement, mean written communications by a Party to be delivered by hand delivery, United States mail, overnight courier service, facsimile or electronic messaging (e-mail).
“Party” has the meaning set forth in the Preamble.
“Person” means any individual, sole proprietorship, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, incorporated organization, institution, public benefit corporation, unincorporated organization, government entity or other entity.
“Portfolio Term” means the time period commencing on the Effective Date and ending on the 5th anniversary thereof.
“Pre-Construction Expenses” means expenses incurred by Seller or its contractors prior to construction of a System to prepare the System site for System integration, which may include, without limitation removal of copper or other materials from roof; upgrade roof structure; removal of existing solar PV; removal or relocation of AC unit; removal or repair of existing generator; removal of existing battery backup; removal or relocation of existing solar thermal; removal or relocation of rooftop vents; removal of trees or obstructions and tree trimming; cleaning of roof surface; repair of electrical code violation; removal or relocation of shelving; or master-panel upgrade (MPU).
“Product” means, with reference to each System, all electric energy produced by the System throughout the System Delivery Term; all Green Attributes; and all Resource Adequacy Benefits, if any; generated by, associated with or attributable to the System throughout the System Delivery Term.
“Prudent Operating Practice” means the practices, methods and standards of professional care, skill and diligence engaged in or approved by a significant portion of the electric 7 power industry for facilities of similar size, type, and design, that, in the exercise of reasonable judgment, in light of the facts known at the time, would have been expected to accomplish results consistent with Law, reliability, safety, environmental protection, applicable codes, and standards of economy and expedition. Prudent Operating Practices are not necessarily defined as the optimal standard practice method or act to the exclusion of others, but rather refer to a range of actions reasonable under the circumstances.
“Qualified Assignee” means any Person that has (or will contract with a Person that has) competent experience in the operation and maintenance of similar electrical generation systems and is financially capable of performing Seller’s obligations (considering such Person’s own financial wherewithal and that of such Person’s guarantor or other credit support) under this Agreement.
“Renewable Energy Credit” has the meaning set forth in California Public Utilities Code Section 399.12(h), as may be amended from time to time or as further defined or supplemented by Law.
“Renewable Energy Incentives” means with respect to each System: (a) all federal, state, or local Tax credits or other Tax benefits associated with the construction, ownership, or production of electricity from the System (including credits under Sections 38, 45, 46 and 48 of the Internal Revenue Code of 1986, as amended); and (b) any other form of incentive relating in any way to the System that are not a Green Attribute or a Future Environmental Attribute. “Resource Adequacy Benefits” means the rights and privileges attached to the System that satisfy any entity’s resource adequacy obligations, as those obligations are set forth in CPUC Decisions 04-01-050, 04-10-035, 05-10-042, 06-06-064, 06-07-031 and any subsequent CPUC ruling or decision and shall include any local, zonal or otherwise locational attributes associated with the System.
“Seller” has the meaning set forth in the preamble.
“Settlement Amount” means the non-defaulting Party’s Costs and Losses, on the one hand, netted against its Gains, on the other. 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). The Settlement Amount does not include consequential, incidental, punitive, exemplary or indirect or business interruption damages. “System(s)” has the meaning set forth in the Recitals hereto. “System Delivery Term” means with respect to each System the period of twenty-five (25) Contract Years beginning on the Commercial Operation Date and ending on the twentieth (25th) anniversary of the Commercial Operation Date, unless terminated earlier or extended in accordance with the terms and conditions of this Agreement. In the event of an extension of a Customer Agreement beyond 25 years, the System Delivery Term for the respective System shall be extended to be co-terminus with such Customer Agreement. 8 “System Forecast List” has the meaning set forth in Section 20.1. The format of the System Forecast List shall be substantially similar to the format of the Included Systems List. “Tax” or “Taxes” means all U.S. federal, state and local and any foreign taxes, levies, assessments, surcharges, duties and other fees and charges of any nature imposed by a Governmental Authority, whether currently in effect or adopted during the Contract Term, including ad valorem, excise, franchise, gross receipts, import/export, license, property, sales and use, stamp, transfer, payroll, unemployment, income, and any and all items of withholding, deficiency, penalty, additions, interest or assessment related thereto. “Termination Payment” has the meaning set forth in Section 12.3. “Terminated Transaction” has the meaning set forth in Section 12.2. “WREGIS” means the Western Renewable Energy Generation Information System or any successor renewable energy tracking program.
1.2 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; (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 Section, paragraph, clause of, or that Party or Exhibit to, this Agreement unless otherwise specified, and in the event of a conflict, the provisions of the main body of this Agreement shall prevail over the provisions of any attachment or annex; (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 term “including” means “including without limitation” and any list of examples following such term shall in no way restrict or limit the generality of the work or provision in respect of which such examples are provided; 9 (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 in Prudent Operating Practice shall have such meaning in this Agreement or (ii) do not have well known and generally accepted meaning in Prudent Operating Practice but that have well known and generally accepted technical 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.
ARTICLE 2
SYSTEMS, COMMERCIAL OPERATION, FORECASTING
2.1 Systems. During the Portfolio Period Seller shall use reasonable commercial efforts to design, develop and install Systems in Buyer’s Service Territory. Each System developed by Seller in Buyer’s Service Territory shall be developed exclusively for inclusion under the terms of this Agreement.
2.2 Commercial Operation. Within ten (10) days after a System qualified under Section 2.1 above has reached Commercial Operation, Seller shall deliver to Buyer confirmation by the System installer either in hardcopy or electronic that such System has been completed and an updated Included Systems List adding such System thereon. Upon delivery of the updated Included Systems List, such System shall be covered under the terms of this Agreement.
2.3 Forecasting. Within ten (10) days after the end of each calendar quarter during the Portfolio Period, Seller shall deliver to Buyer a list (the “System Forecast List”) with Systems which Seller forecasts to place into Commercial Operation within ninety (90) days after the date of the System Forecast List.
10 ARTICLE 3
TERM
3.1 Contract Term. The term of this Agreement (“Contract Term”) consist of the Portfolio Term and the System Delivery Term, and shall commence on the Effective Date and shall remain in full force and effect with respect to each System until the end of the applicable System Delivery Term.
3.2 Contract Term Extension. Buyer shall have the right, but not the obligation, to extend the System Delivery Term for any System for two additional five (5) Contract Years at the then-current Contract Price, but Seller must receive Notice of such extension at least one hundred eighty days (180) before the end of the initial Contract Term or the then current extension term thereof.
3.3 Survival of Contract Provisions. Applicable provisions of this Agreement shall continue in effect after termination, including early termination, to the extent necessary to enforce or complete the duties, obligations or responsibilities of the Parties arising prior to termination.
The confidentiality obligations of the Parties under Article 19 shall remain in full force and effect for two (2) years following the termination of this Agreement, and all indemnity and audit rights shall remain in full force and effect for one (1) year following the termination of this Agreement.
ARTICLE 4
PURCHASE AND SALE
4.1 Sale of Product. Subject Seller’s document deliveries to Buyer under Section 2.2 above and the terms and conditions of this Agreement, during the Delivery Term, Seller shall sell and deliver to Buyer, and Buyer shall purchase from Seller at the applicable Energy Rate, all of the Product produced by a System delivered to the System Delivery Point. At its sole discretion, Buyer may re-sell or use for another purpose all or a portion of the Product. Buyer will have exclusive rights to offer, bid, or otherwise submit the Product from the System for resale in the market, and retain and receive any and all related revenues. Buyer has no obligation to purchase from Seller any Product from any System that is not or cannot be delivered to the System Delivery Point as a result of any circumstance, including, an outage of the System, a Force Majeure Event affecting Buyer’s ability to receive the Product (but not its ability to transmit the Product from the System Delivery Point). In no event shall Seller have the right to procure any element of the Product for sale or delivery to Buyer from sources other than the Systems covered under the terms of this Agreement.
4.2 Sale of Green Attributes. During the Delivery Term, Seller shall sell and deliver to Buyer, and Buyer shall purchase from Seller, all of the Green Attributes, attributable to the Energy produced by a Systems covered under the terms of this Agreement.
4.3 Compensation. The contract price payable by Buyer to Seller hereunder (the “Contract Price”) shall be calculated as the sum of Energy Rate and Capacity Charge. (a) Energy Rate. For each kWh delivered to a System Delivery Point Buyer shall pay Seller the following amounts (the “Energy Rate”) during the first Contract Year of each System Delivery Term:
11 (i) fourteen and one-half U.S. Cents ($0.145) for Systems with PreConstruction Costs of seven hundred fifty Dollars ($750.00) or less; (ii) fifteen U.S. Cents ($0.15) for Systems with Pre-Construction Costs exceeding seven hundred fifty Dollars ($750.00) but less than two thousand five hundred Dollars ($2,500);
(iii) fifteen and one-half U.S. Cents ($0.155) for Systems with PreConstruction Costs exceeding two thousand five hundred Dollars ($2,500) but less than five thousand Dollars ($5,000)
The applicable Energy Rate for the first Contract Year of the System Delivery Term will be set forth on the Included Systems List for each System. For each subsequent Contract Year during the System Delivery Term, the Energy Rate shall increase by one and nine-tenth percent (1.9%) annually.
(b) Capacity Charge. For each System that includes an installed and operational Tesla Powerwall, Buyer shall pay Seller a monthly fee (the “Capacity Charge”) in the amount of one hundred fifteen Dollars ($115.00), provided, that the Capacity Charge shall be reduce to seventy-five Dollars ($75.00) for any additional Tesla Powerwall installed at the same System site.
4.4 Ownership of Renewable Energy Incentives. Seller shall have all right, title and interest in and to all Renewable Energy Incentives. Buyer acknowledges that any Renewable Energy Incentives belong to Seller. If any Renewable Energy Incentives, or values representing the same, are initially credited or paid to Buyer, Buyer shall cause such Renewable Energy Incentives or values relating to same to be assigned or transferred to Seller without delay. Buyer shall reasonably cooperate with Seller, at Seller’s sole expense, in Seller’s efforts to meet the requirements for any certification, registration, or reporting program relating to Renewable Energy Incentives.
4.5 Future Environmental Attributes.
(a) The Parties acknowledge and agree that as of the Effective Date, environmental attributes sold under this Agreement are restricted to Green Attributes; however, Future Environmental Attributes may be created by a Governmental Authority through Laws enacted after the Effective Date. In such event, Buyer shall bear all costs associated with the transfer, qualification, verification, registration and ongoing compliance for such Future Environmental Attributes, but there shall be no increase in the Contract Price. Upon Seller’s receipt of Notice from Buyer of Buyer’s intent to claim such Future Environmental Attributes, the Parties shall determine the necessary actions and additional costs associated such Future Environmental Attributes. Seller shall have no obligation to alter the System unless the Parties have agreed on all necessary terms and conditions relating to such alteration and Buyer has agreed to reimburse Seller for all costs associated with such alteration. (b) If Buyer elects to receive Future Environmental Attributes pursuant to Section 4.5(a), the Parties agree to negotiate in good faith with respect to the development of further agreements and documentation necessary to effectuate the transfer of such Future 12 Environmental Attributes, including agreement with respect to (i) appropriate transfer, delivery and risk of loss mechanisms, and (ii) appropriate allocation of any additional costs, as set forth above; provided, that the Parties acknowledge and agree that such terms are not intended to alter the other material terms of this Agreement.
4.6 Sale of Energy to Customers. Buyer agrees to sell the electric energy produced by the System throughout the System Delivery Term at a price not higher than the Energy Rate and at terms no less favorable than the terms set forth under this Agreement.
ARTICLE 5
OBLIGATIONS AND DELIVERIES
5.1 Delivery.
(a) Energy. Subject to the terms and conditions of this Agreement, Seller shall make available and Buyer shall accept all Delivered Energy on an as-generated, instantaneous basis at the respective System Delivery Point. Notwithstanding anything to the contrary in this Agreement (including with respect to any Force Majeure Event), Buyer shall be responsible for all charges, penalties, ratcheted demand or similar charges, and any transmission related charges, including imbalance penalties or congestion charges associated with Delivered Energy from and after the System Delivery Point.
(b) Green Attributes. Seller hereby provides and conveys all Green Attributes associated with the Delivered Energy as part of the Product being delivered. Seller represents and warrants that Seller holds the rights to all Green Attributes from the System, and Seller agrees to convey and hereby conveys all such Green Attributes to Buyer as included in the delivery of the Product from the System.
5.2 Title and Risk of Loss.
(a) Energy. Title to and risk of loss related to the Delivered Energy generated by each System shall pass and transfer from Seller to Buyer at the System Delivery Point. (b) Green Attributes. Title to and risk of loss related to the Green Attributes shall pass and transfer from Seller to Buyer upon the transfer of such Green Attributes in accordance with WREGIS.
ARTICLE 6
TAXES
6.1 Allocation of Taxes and Charges. Seller shall pay or cause to be paid all Taxes on or with respect to any System or on or with respect to the sale and making available Product to Buyer, that are imposed on Product prior to the System Delivery Point. Buyer shall pay or cause to be paid all Taxes on or with respect to the delivery to and purchase by Buyer of Product that are imposed on Product at and from a System Delivery Point (other than withholding or other Taxes imposed on Seller’s income, revenue, receipts or employees). Notwithstanding the foregoing, each Party shall be responsible for its own Taxes calculated based on the income or profits generated in connection with the purchase and sale of the Product hereunder. If a Party is required to remit or 13 pay Taxes that are the other Party’s responsibility hereunder, such Party shall promptly pay the Taxes due and then seek and receive reimbursement from the other for such Taxes. In the event any sale of Energy hereunder is exempt from or not subject to any particular Tax, Buyer shall provide Seller with all necessary documentation within thirty (30) days after the Effective Date to evidence such exemption or exclusion. If Buyer does not provide such documentation, then Buyer shall indemnify, defend, and hold Seller harmless from any liability with respect to Taxes from which Buyer claims it is exempt.
6.2 Cooperation. Each Party shall use reasonable efforts to implement the provisions of and administer this Agreement in accordance with the intent of the Parties to minimize all Taxes, so long as no Party is materially adversely affected by such efforts. The Parties shall cooperate to minimize Tax exposure; provided, however, that neither Party shall be obligated to incur any financial or operational burden to reduce Taxes for which the other Party is responsible hereunder without receiving due compensation therefore from the other Party. All Energy delivered by Seller to Buyer hereunder shall be a sale made at wholesale, with Buyer reselling such Energy.
ARTICLE 7
MAINTENANCE OF SYSTEMS
7.1 Maintenance of Systems. Seller shall comply with Law and Prudent Operating Practice relating to the operation and maintenance of all System covered under this Agreement, and the generation and sale of Product generated therefrom.
7.2 Maintenance of Health and Safety. Seller shall take reasonable safety precautions with respect to the operation, maintenance, repair and replacement of each System. If Seller becomes aware of any circumstances relating to a System that create an imminent risk of damage or injury to any Person or any Person’s property, Seller shall take prompt, reasonable action to prevent such damage or injury and shall give Buyer’s emergency contact identified on Exhibit D Notice of such condition. Such action may include disconnecting and removing all or a portion of such System, or suspending the supply of Energy from such System to Buyer.
ARTICLE 8
METERING
8.1 Metering. Seller shall measure the amount of Energy produced at each System using a commercially available, revenue-grade metering system. Such meter shall be installed and maintained at Seller’s cost. Each meter shall be kept under seal, such seals to be broken only when the meters are to be tested, adjusted, modified or relocated. In the event that Seller breaks a seal, Seller shall notify Buyer as soon as practicable. In addition, Seller hereby agrees to provide all meter data to Buyer in a form reasonably acceptable to Buyer.
8.2 Meter Verification. If Seller has reason to believe there may be a meter malfunction, or upon Buyer’s reasonable request, Seller shall test the meters of a reasonable sample of all Systems then covered under this Agreement, but in any case, not more than 1 in every 10 Systems. The tests shall be conducted by independent third-parties qualified to conduct such tests. Buyer shall be notified seven (7) days in advance of such tests and have a right to be present during such tests. If a meter is inaccurate it shall be promptly repaired or replaced. If a meter is 14 inaccurate by more than one percent (1%) and it is not known when the meter inaccuracy commenced (if such evidence exists such date will be used to adjust prior invoices), then the invoices covering the period of time since the last meter test for the respective System shall be adjusted for the amount of the inaccuracy on the assumption that the inaccuracy persisted during one-half of such period.
ARTICLE 9
INVOICING AND PAYMENT; CREDIT
9.1 Invoicing. Seller shall make good faith efforts to deliver an aggregate invoice to Buyer for the Contract Price due for all Systems then covered under this Agreement no later than fifteen (15) Business Days after the end of the prior monthly billing period.
9.2 Payment. Buyer shall make payment to Seller for the Contract Price due and payable by wire transfer or ACH payment to the bank account provided on each monthly invoice.
Buyer shall pay undisputed invoice amounts within thirty (30) days after receipt of the invoice. If such due date falls on a weekend or legal holiday, such due date shall be the next Business Day.
Payments made after the due date will be considered late and will bear interest on the unpaid balance. If the amount due is not paid on or before the due date or if any other payment that is due and owing from one party to another is not paid on or before its applicable due date, a late payment charge shall be applied to the unpaid balance and shall be added to the next billing statement. Such late payment charge shall be calculated based on an annual interest rate equal to 10% of the total amount due. If the due date occurs on a day that is not a Business Day, the late payment charge shall begin to accrue on the next succeeding Business Day.
9.3 Books and 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 Law. Upon fifteen (15) days’ Notice to Seller, Buyer shall be granted reasonable access to the accounting books and records pertaining to all invoices generated pursuant to this Agreement.
9.4 Payment Adjustments; Billing Errors. Payment adjustments shall be made if Buyer or Seller discovers there have been good faith inaccuracies in invoicing that are not otherwise disputed under Section 9.5, or there is determined to have been a meter inaccuracy sufficient to require a payment adjustment. If the required adjustment is in favor of Buyer, Buyer’s monthly payment shall be credited in an amount equal to the adjustment. If the required adjustment is in favor of Seller, Seller shall add the adjustment amount to Buyer’s next monthly invoice.
Adjustments in favor of either Buyer or Seller shall bear interest, until settled in full, in accordance with Section 9.2, accruing from the date on which the non-erring Party received Notice thereof.
9.5 Billing Disputes. 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. Any invoice dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment. Payment of the disputed 15 amount shall not be required until the dispute is resolved. Upon resolution of the dispute, any required payment shall be made within two (2) Business Days of such resolution along with interest accrued at the Interest Rate from and including the original 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 if the other Party is not notified in accordance with this Section 9.5 within twelve (12) months after the invoice is rendered or subsequently adjusted, except to the extent any misinformation was from a third party not affiliated with any Party and such third party corrects its information after the twelve-month period. 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.
9.6 Netting of Payments. The Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other 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 Exhibits B and F, 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.
ARTICLE 10
NOTICES
10.1 Addresses for the Delivery of Notices. Any Notice required, permitted, or contemplated hereunder shall be in writing, shall be addressed to the Party to be notified at the address set forth Exhibit B or at such other address or addresses as a Party may designate for itself from time to time by Notice hereunder.
10.2 Acceptable Means of Delivering Notice. Each Notice required, permitted, or contemplated hereunder shall be deemed to have been validly served, given or delivered as follows: (a) if sent by United States mail with proper first class postage prepaid, three (3) Business Days following the date of the postmark on the envelope in which such Notice was deposited in the United States mail; (b) if sent by a regularly scheduled overnight delivery carrier with delivery fees either prepaid or an arrangement with such carrier made for the payment of such fees, the next Business Day after the same is delivered by the sending Party to such carrier; (c) if sent by electronic communication (including electronic mail, facsimile, or other electronic means) and if concurrently with the transmittal of such electronic communication the sending Party provides a copy of such electronic Notice by hand delivery or express courier, at the time indicated by the time stamp upon delivery; or (d) if delivered in person, upon receipt by the receiving Party.
Notwithstanding the foregoing, Notices of outages or other scheduling or dispatch information or requests, may be sent by electronic communication and shall be considered delivered upon successful completion of such transmission.
ARTICLE 11
FORCE MAJEURE
16 11.1 Definition.
(a) “Force Majeure Event” means any act or event that delays or prevents a Party from timely performing all or a portion of its obligations under this Agreement or from complying with all or a portion of the conditions under this Agreement if such act or event, despite the exercise of reasonable efforts, cannot be avoided by and is beyond the reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance, or noncompliance. (b) Without limiting the generality of the foregoing, so long as the following events, despite the exercise of reasonable efforts, cannot be avoided by, and are beyond the reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance or noncompliance, a Force Majeure Event may include an act of God or the elements, such as flooding, lightning, hurricanes, tornadoes, or ice storms; explosion; fire; volcanic eruption; flood; epidemic; landslide; mudslide; sabotage; terrorism; earthquake; or other cataclysmic 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. (c) Notwithstanding the foregoing, the term “Force Majeure Event” does not include (i) economic conditions that render a Party’s performance of this Agreement at the Contract Price unprofitable or otherwise uneconomic (including Buyer’s ability to buy Energy at a lower price than the Contract Price, Buyer’s inability economically to use or resell the Product purchased hereunder, or Seller’s ability to sell Energy at a higher price than the Contract Price); (ii) Seller’s inability to obtain permits or approvals of any type for the construction, operation, or maintenance of the System; (ii) the inability of a Party to make payments when due under this Agreement, unless the cause of such inability is an event that would otherwise constitute a Force Majeure Event as described above; (iv) Seller’s inability to obtain sufficient labor, equipment, materials, or other resources to build or operate the System; (v) a strike, work stoppage or labor dispute limited only to any one or more of Seller, Seller’s Affiliates, Seller’s contractors, their subcontractors thereof or any other third party employed by Seller to work on the System; or (vi) any equipment failure except if such equipment failure is caused by a Force Majeure Event.
11.2 No Liability If a Force Majeure Event Occurs. 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 a Force Majeure Event. The Party rendered unable to fulfill any obligation by reason of a Force Majeure Event 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 Event. The occurrence and continuation of a Force Majeure Event shall not suspend or excuse the obligation of a Party to make any payments due hereunder.
17 11.3 Notice. In the event of any delay or nonperformance resulting from a Force Majeure Event, the Party suffering the Force Majeure Event shall (a) as soon as practicable, notify the other Party in writing of the nature, cause, estimated date of commencement thereof, and the anticipated extent of any delay or interruption in performance, and (b) notify the other Party in writing of the cessation or termination of such Force Majeure Event, all as known or estimated in good faith by the affected Party; provided, however, that a Party’s failure to give timely Notice shall not affect such Party’s ability to assert that a Force Majeure Event has occurred unless the delay in giving Notice materially prejudices the other Party.
11.4 Termination Following Force Majeure Event. If a Force Majeure Event has occurred that has caused either Party to be wholly or partially unable to perform its obligations hereunder, and has continued for a consecutive eight (8) month period, then the non-claiming Party may terminate this Agreement upon Notice to the other Party with respect to the System experiencing the Force Majeure Event. Upon any such termination, the non-claiming Party shall have no liability to the Force Majeure Event claiming Party, save and except for those obligations specified in Section 0.
ARTICLE 12
DEFAULTS; REMEDIES; TERMINATION
12.1 Events of Default. An “Event of Default” shall mean, (a) with respect to a Party (the “Defaulting Party”) that is subject to the Event of Default the occurrence of any of the following:
(i) the failure by such Party to make, when due, any payment required pursuant to this Agreement and such failure is not remedied within five (5) Business Days after Notice thereof;
(ii) 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 default is not remedied within thirty (30) days after Notice thereof; (iii) the failure by such Party to perform any material covenant or obligation set forth in this Agreement (except to the extent constituting a separate Event of Default) and such failure is not remedied within thirty (30) days after Notice thereof; (iv) such Party becomes Bankrupt;
(v) such Party assigns this Agreement or any of its rights hereunder other than in compliance with Section 15.2; or
(vi) 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, 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.
18 (vii) with respect to Seller as the Defaulting Party, if at any time, Seller delivers or attempts to deliver to a System Delivery Point for sale under this Agreement Energy that was not generated by the respective System.
12.2 Remedies; Declaration of Early Termination Date. If an Event of Default with respect to a Defaulting Party shall have occurred and be continuing, the other Party (“NonDefaulting Party”) shall have the right (a) to send Notice, designating a day, no earlier than the day such Notice is deemed to be received and no later than twenty (20) Business Days after such Notice is deemed to be received, as an early termination date (“Early Termination Date”) of (i) the inclusion of a System under this Agreement and the respective System Delivery Term, if the Event of Default only relates to such System, or (ii) this Agreement, if the Event of Default relates to all Systems (in each case, (i) and (ii), the “Terminated Transaction”), and either the System Delivery Term (in case of option (i)) or the Contract Term (in case of Option (ii) will terminate effective as of the Early Termination Date, and all amounts owing between the Parties shall accelerate (under option (a), however, only with respect to the terminated System), and the nondefaulting party may collect liquidated damages calculated in accordance with Section 12.3 (Termination Payment) below; (b) to withhold any payments due to the Defaulting Party under this Agreement (but under option (a)(i) only with respect to the terminated System); (c) to suspend performance (but under option (a)(i) only with respect to the terminated System); and (d) to exercise any other right or remedy available at law or in equity, including injunctive relief to the extent permitted under this Agreement, except to the extent such remedies are expressly limited under this Agreement
12.3 Termination Payment. The Termination Payment (“Termination Payment”) for a Terminated Transaction shall be the aggregate of all Settlement Amounts relating to such Terminated Transaction plus any or all other amounts due to the Non-Defaulting Party relating thereto netted into a single amount. If the Non-Defaulting Party’s aggregate Gains relating to a Terminated Transaction exceed its aggregate Losses and Costs related thereto, if any, resulting from the termination of this Agreement, the Termination Payment shall be zero. The NonDefaulting Party shall calculate, in a commercially reasonable manner, a Settlement Amount for the Terminated Transaction as of the Early Termination Date. Third parties supplying information for purposes of the calculation of Gains or Losses may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors and other sources of market information. The Settlement Amount shall not include consequential, incidental, punitive, exemplary, indirect or business interruption damages, lost revenues or lost profits; provided, however, that any lost Green Attributes shall be deemed direct damages covered by this Agreement. 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 (a) 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, (b) the Termination Payment described in this section is a reasonable and appropriate approximation of such damages, and (c) the Termination Payment described in this section 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 NonDefaulting Party does not elect a Terminated Transaction as its remedy for an Event of Default by the Defaulting Party.
19 12.4 Notice of Payment of Termination Payment. As soon as practicable after a Terminated Transaction, 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 the Non-Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of such amount and the sources for such calculation. The Termination Payment shall be made to the Non-Defaulting Party, as applicable, within ten (10) Business Days after such Notice is effective.
12.5 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 five (5) Business Days of receipt of the 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. Disputes regarding the Termination Payment shall be determined in accordance with Article 16.
12.6 Rights And Remedies Are Cumulative. Except where liquidated damages are provided as the exclusive remedy, the rights and remedies of a Party pursuant to this Article 11 shall be cumulative and in addition to the rights of the Parties otherwise provided in this Agreement.
12.7 Mitigation. Any Non-Defaulting Party shall be obligated to mitigate its Costs, losses and damages resulting from any Event of Default of the other Party under this Agreement.
ARTICLE 13
LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES.
13.1 No Consequential Damages. EXCEPT TO THE EXTENT PART OF AN
EXPRESS REMEDY OR MEASURE OF DAMAGES HEREIN, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER OR ITS INDEMNIFIED PERSONS FOR ANY SPECIAL,
PUNITIVE, EXEMPLARY, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES,
OR LOSSES OR DAMAGES FOR LOST REVENUE, BUSINESS INTERRUPTION OR LOST
PROFITS, WHETHER FORESEEABLE OR NOT, ARISING OUT OF, OR IN CONNECTION
WITH THIS AGREEMENT, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE.
13.2 Waiver and Exclusion of Other Damages. 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 WAIVER OF
CONSEQUENTIAL DAMAGES, SHALL APPLY EVEN IF 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 20 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
VALUE OF ANY TAX BENEFITS, 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 RENEWABLE ENERGY INCENTIVES, IF ANY, SHALL BE DEEMED TO BE DIRECT DAMAGES.
TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE
LIQUIDATED, 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 CONTEXT 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 14
REPRESENTATIONS AND WARRANTIES; AUTHORITY
14.1 Seller’s Representations and Warranties. As of the Effective Date, Seller represents and warrants as follows:
(a) Seller is a limited liability company, duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation, and is qualified to conduct business in each jurisdiction where the failure to so qualify would have a material adverse effect on the business or financial condition of Seller. (b) Seller has the power and authority to enter into and perform this Agreement and is not prohibited from entering into this Agreement or discharging and performing all covenants and obligations on its part to be performed under and pursuant to this Agreement, except where such failure does not have a material adverse effect on Seller’s performance under this Agreement. The execution, delivery and performance of this Agreement by Seller has been duly authorized by all necessary corporate action on the part of Seller and does not and will not require 21 the consent of any trustee or holder of any indebtedness or other obligation of Seller or any other party to any other agreement with Seller.
(c) The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfillment of and compliance by Seller with the provisions of this Agreement will not conflict with or constitute a breach of or a default under any Law presently in effect having applicability to Seller, subject to any permits that have not yet been obtained by Seller, the documents of formation of Seller or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Seller is a party or by which any of its property is bound. (d) This Agreement has been duly executed and delivered by Seller. This Agreement is a legal, valid and binding obligation of Seller enforceable in accordance with its terms, except as limited by laws of general applicability limiting the enforcement of creditors’ rights or by the exercise of judicial discretion in accordance with general principles of equity.
14.2 Buyer’s Effective Date Representations and Warranties. As of the Effective Date, Buyer represents and warrants as follows:
(a) Buyer is a validly existing community choice aggregator, duly organized, validly existing and in good standing under the laws of the State of California and the rules, regulations and orders of the California Public Utilities Commission. (b) Buyer has the power and authority to enter into and perform this Agreement and is not prohibited from entering into this Agreement or discharging and performing all covenants and obligations on its part to be performed under and pursuant to this Agreement, except where such failure does not have a material adverse effect on Buyer’s performance under this Agreement. The execution, delivery and performance of this Agreement by Buyer has been duly authorized by all necessary action on the part of Buyer and does not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Buyer or any other party to any other agreement with Buyer.
(c) The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfillment of and compliance by Buyer with the provisions of this Agreement will not conflict with or constitute a breach of or a default under any Law presently in effect having applicability to Buyer, including but not limited to community choice aggregation, competitive bidding, public notice, open meetings, election, referendum, or prior appropriation requirements, the documents of formation of Buyer or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Buyer is a party or by which any of its property is bound. (d) This Agreement has been duly executed and delivered by Buyer. This Agreement is a legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as limited by laws of general applicability limiting the enforcement of creditors’ rights or by the exercise of judicial discretion in accordance with general principles of equity. (e) (e) 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 22 similar grounds with respect to itself or its revenues or assets from (1) suit, (2) jurisdiction of court, (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.
14.3 General Covenants. Each Party covenants that commencing on the Effective Date and continuing throughout the Contract Term:
(a) It shall continue to be duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and to be qualified to conduct business in each jurisdiction where the failure to so qualify would have a material adverse effect on its business or financial condition;
(b) It shall maintain (or obtain from time to time as required) all regulatory authorizations necessary for it to legally perform its obligations under this Agreement; and (c) It shall perform its obligations under this Agreement in compliance with all terms and conditions in its governing documents and any contracts to which it is a party and in material compliance with any Law.
ARTICLE 15
ASSIGNMENT
15.1 General Prohibition on Assignments. Except as provided below and in Article 15, neither Seller nor Buyer may voluntarily assign its rights nor delegate its duties under this Agreement, or any part of such rights or duties, without the written consent of the other Party.
Neither Seller nor Buyer shall unreasonably withhold, condition or delay any requested consent to an assignment that is allowed by the terms of this Agreement. Any such assignment or delegation made without such written consent or in violation of the conditions to assignment set out below shall be null and void.
15.2 Permitted Assignment; Change of Control of Seller. Seller may, without the prior written consent of Buyer, transfer or assign this Agreement to: (a) an Affiliate of Seller; (b) any Person succeeding to all or substantially all of the assets of Seller (whether voluntary or by operation of law); or (c) subject to Section 16.1, a Lender as collateral, provided however, that in each of the foregoing situations, the assignee shall be a Qualified Assignee; provided, further, that in each such case, Seller shall give Notice to Buyer no fewer than fifteen (15) Business Days before such assignment that (i) notifies Buyer of such assignment and (ii) provides to Buyer a written agreement signed by the Person to which Seller wishes to assign its interests which (y) provides that such Person will assume all of Seller’s obligations and liabilities under this Agreement upon such transfer or assignment and (z) certifies that such Person shall meet the definition of a Qualified Assignee. In the event that Buyer, in good faith, does not agree that Seller’s assignee meets the definition of a Qualified Assignee, then either Seller must agree to remain financially responsible under this Agreement, or Seller’s assignee must provide payment security in an amount and form reasonably acceptable to Buyer. Any direct or indirect change of control of Seller (whether voluntary or by operation of Law) shall be deemed an assignment under this Section 15.2. Any assignment by Seller, its successors or assigns under this Section 15.2 shall be 23 of no force and effect unless and until such Notice and agreement by the assignee have been received by Buyer.
15.3 Change of Control of Buyer. Buyer may assign its interests in this Agreement to an Affiliate of Buyer or to any entity that has acquired all or substantially all of Buyer’s assets or business, whether by merger, acquisition or otherwise without Seller’s prior written consent, provided that no fewer than fifteen (15) Business Days before such assignment Buyer (a) notifies Seller of such assignment and (b) provides to Seller a written agreement signed by the Person to which Buyer wishes to assign its interests stating that (i) such Person agrees to assume all of Buyer’s obligations and liabilities under this Agreement and under any consent to assignment and other documents previously entered into by Seller as described in Section 16.2(b) and (ii) such Person has the financial capability to perform all of Buyer’s obligations under this Agreement. In the event that Seller, in good faith, does not agree that Buyer’s assignee has the financial capability to perform all of Buyer’s obligations under this Agreement, then either Buyer must agree to remain financially responsible under this Agreement, or Buyer’s assignee must provide payment security in an amount and form reasonably acceptable to Seller. Any assignment by Buyer, its successors or assigns under this Section 15.3 shall be of no force and effect unless and until such Notice and agreement by the assignee have been received by Seller.
ARTICLE 16
LENDER ACCOMMODATIONS
16.1 Granting of Lender Interest. Notwithstanding Section 15.2 or Section 15.3, either Party may, without the consent of the other Party, grant an interest (by way of collateral assignment, or as security, beneficially or otherwise) in its rights and/or obligations under this Agreement to any Lender. Each Party’s obligations under this Agreement shall continue in their entirety in full force and effect. Promptly after granting such interest, the granting Party shall notify the Buyer in writing of the name, address, and telephone and facsimile numbers of any Lender to which the granting Party’s interest under this Agreement has been assigned. Such Notice shall include the names of the Lenders to whom all written and telephonic communications may be addressed. After giving the other Party such initial Notice, the granting Party shall promptly give the other Party Notice of any change in the information provided in the initial Notice or any revised Notice.
16.2 Rights of Lender. If a Party grants an interest under this Agreement as permitted by Section 16.1, the following provisions shall apply:
(a) Lender shall have the right, but not the obligation, to perform any act required to be performed by the granting Party under this Agreement to prevent or cure a default by the granting Party in accordance with Section 12.2, and such act performed by Lender shall be as effective to prevent or cure a default as if done by the granting Party. (b) The other Party shall cooperate with the granting Party or any Lender, to execute or arrange for the delivery of certificates, consents, opinions, estoppels, amendments and other documents reasonably requested by the granting Party or Lender in order to consummate any financing or refinancing and shall enter into reasonable agreements with such Lender that provide that Buyer recognizes the Lender’s security interest and such other provisions as may be 24 reasonably requested by Seller or any such Lender; provided, however, that all costs and expenses (including reasonable attorney’s fees) incurred by Buyer in connection therewith shall be borne by Seller.
(c) Each Party agrees that no Lender shall be obligated to perform any obligation or be deemed to incur any liability or obligation provided in this Agreement on the part of the granting Party or shall have any obligation or liability to the other Party with respect to this Agreement except to the extent any Lender has expressly assumed the obligations of the granting Party hereunder; provided that non-granting shall nevertheless be entitled to exercise all of its rights hereunder in the event that the granting Party or Lender fails to perform the granting Party’s obligations under this Agreement.
16.3 Cure Rights of Lender. The non-granting Party shall provide Notice of the occurrence of any Event of Default described in Section 12.1 or 12.2 hereof to any Lender, and such Party shall accept a cure performed by any Lender and shall negotiate in good faith with any Lender as to the cure period(s) that will be allowed for any Lender to cure any granting Party Event of Default hereunder. The non-granting Party shall accept a cure performed by any Lender so long as the cure is accomplished within the applicable cure period so agreed to between the non-granting Party and any Lender. Notwithstanding any such action by any Lender, the granting Party shall not be released and discharged from and shall remain liable for any and all obligations to the nongranting Party arising or accruing hereunder.
ARTICLE 17
DISPUTE RESOLUTION
17.1 Governing Law. 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.
17.2 Dispute Resolution. In the event of any dispute arising under this Agreement, within ten (10) days following the receipt of a Notice from either Party identifying such dispute, the Parties shall meet, negotiate and attempt, in good faith, to resolve the dispute quickly, informally and inexpensively. If the Parties are unable to resolve a dispute arising hereunder within the earlier of either thirty (30) days of initiating such discussions, or within forty (40) days after Notice of the dispute, either Party may seek any and all remedies available to it at law or in equity, subject to the limitations set forth in this Agreement.
ARTICLE 18
INDEMNIFICATION
18.1 Indemnification.
(a) Each Party (the “Indemnifying Party”) agrees to indemnify, defend and hold harmless the other Party and its Affiliates, directors, officers, employees and agents (collectively, the “Indemnified Party”) from and against all claims, demands, losses, liabilities, penalties, and expenses (including reasonable attorneys’ fees) for personal injury or death to Persons and damage to the property of any third party to the extent arising out of, resulting from, 25 or caused by the negligent or willful misconduct of the Indemnifying Party, its Affiliates, its directors, officers, employees, or agents.
(b) Nothing in this Section 18.1 shall enlarge or relieve Seller or Buyer of any liability to the other for any breach of this Agreement. Neither Party shall be indemnified for its damages resulting from its sole negligence, intentional acts or willful misconduct. These indemnity provisions shall not be construed to relieve any insurer of its obligation to pay claims consistent with the provisions of a valid insurance policy.
18.2 Claims. Promptly after receipt by a Party of any claim or notice of the commencement of any action, administrative, or legal proceeding, or investigation as to which the indemnity provided for in this Article 17 may apply, the Indemnified Party shall notify the Indemnifying Party in writing of such fact. The Indemnifying Party shall assume the defense thereof with counsel designated by such Party and satisfactory to the Indemnified Party, provided, however, that if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have reasonably concluded that there may be legal defenses available to it which are different from or additional to, or inconsistent with, those available to the Indemnifying Party, the Indemnified Party shall have the right to select and be represented by separate counsel, at the Indemnifying Party’s expense, unless a liability insurer is willing to pay such costs. If the Indemnifying Party fails to assume the defense of a claim meriting indemnification, the Indemnified Party may at the expense of the Indemnifying Party contest, settle, or pay such claim, provided that settlement or full payment of any such claim may be made only following consent of the Indemnifying Party or, absent such consent, written opinion of the Indemnified Party’s counsel that such claim is meritorious or warrants settlement. Except as otherwise provided in this Article 17, in the event that a Party is obligated to indemnify and hold the other Party and its successors and assigns harmless under this Article 17, the amount owing to the Indemnified Party will be the amount of the Indemnified Party’s damages net of any insurance proceeds received by the Indemnified Party following a reasonable effort by the Indemnified Party to obtain such insurance proceeds.
ARTICLE 19
INSURANCE
19.1 Insurance.
(a) General Liability. Seller shall maintain, or cause to be maintained at its sole expense, (i) commercial general liability insurance, including products and completed operations and personal injury insurance, in a minimum amount of one million dollars ($1,000,000) per occurrence, and an annual aggregate of not less than two million dollars ($2,000,000), endorsed to provide contractual liability in said amount, specifically covering Seller’s obligations under this Agreement and naming Buyer as an additional insured; and (ii) an umbrella insurance policy in a minimum limit of liability of five million dollars ($5,000,000) 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. (b) Employer’s Liability Insurance. Employers’ Liability insurance shall not be less than one million dollars ($1,000,000.00) for injury or death occurring as a result of each 26 accident. With regard to bodily injury by disease, the one million-dollar ($1,000,000) policy limit will apply to each employee.
(c) Workers Compensation Insurance. Seller, if it has employees, shall also maintain at all times during the Contract Term workers’ compensation and employers’ liability insurance coverage in accordance with applicable requirements of Law. (d) Business Auto Insurance. Seller shall maintain at all times during the Contract Term business auto insurance for bodily injury and property damage with limits of one million dollars ($1,000,000) per occurrence. 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.
(e) Construction All-Risk Insurance. Seller shall maintain or cause to be maintained during the construction of the System prior to the Commercial Operation Date, construction all-risk form property insurance covering the System during such construction periods, and naming the Seller (and Lender if any) as the loss payee. (f) Subcontractor Insurance. Seller shall require all of its subcontractors to carry: (i) comprehensive general liability insurance with a combined single limit of coverage not less than one million dollars ($1,000,000); (ii) workers’ compensation insurance and employers’ liability coverage in accordance with applicable requirements of Law; and (iii) business auto insurance for bodily injury and property damage with limits of one million dollars ($1,000,000) per occurrence. All subcontractors shall name Seller as an additional insured to insurance carried pursuant to clauses (f)(i) and (f)(iii). All subcontractors shall provide a primary endorsement and a waiver of subrogation to Seller for the required coverage pursuant to this Section 19.1(f). (g) Evidence of Insurance. Seller shall deliver to Buyer certificates of insurance evidencing such coverage prior to the execution of the agreement. These certificates shall specify that Buyer shall be given at least thirty (30) days prior Notice by Seller in the event of any material modification, cancellation or termination of coverage. Such insurance shall be primary coverage without right of contribution from any insurance of Buyer. Any other insurance maintained by Seller is for the exclusive benefit of Seller and shall not in any manner inure to the benefit of Buyer. Seller shall also comply with all insurance requirements by any renewable energy or other incentive program administrator or any other applicable authority. (h) Failure to Comply with Insurance Requirements. If Seller fails to comply with any of the provisions of this Article 18, Seller, among other things and without restricting Buyer’s remedies under the law or otherwise, shall, at its own cost and expense, act as an insurer and provide insurance in accordance with the terms and conditions above. With respect to the required general liability, umbrella liability and commercial automobile liability insurance, Seller shall provide a current, full and complete defense to Buyer, its subsidiaries and affiliates, and their respective officers, directors, shareholders, agents, employees, assigns, and successors in interest, in response to a third-party claim in the same manner that an insurer would have, had the insurance been maintained in accordance with the terms and conditions set forth above. In addition, alleged violations of the provisions of this Article 18 means that Seller has the initial burden of proof regarding any legal justification for refusing or withholding coverage and Seller shall face the 27 same liability and damages as an insurer for wrongfully refusing or withholding coverage in accordance with the laws of California.
ARTICLE 20
CONFIDENTIAL INFORMATION
20.1 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) proposals and negotiations until this Agreement is approved and executed by the Buyer, 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 source not subject to any restriction against disclosing such information to the recipient; and (iv) information that the recipient independently developed without a violation of this Agreement.
20.2 Duty to Maintain Confidentiality. Confidential Information will retain its character as Confidential Information but may be disclosed by the recipient if and to the extent such disclosure is required (a) to be made by any requirements of Law, including but not limited to the California Public Records Act (Government Code Section 6250 et seq.) and the Brown Act (Government Code Section 54950 et seq.), (b) pursuant to an order of a court or (c) in order to enforce this Agreement. The originator or generator of Confidential Information may use such information for its own uses and purposes, including the public disclosure of such information at its own discretion.
20.3 Irreparable Injury; Remedies. Buyer and Seller each agree that disclosing Confidential Information of the other in violation of the terms of this Article 19 may cause irreparable harm, and that the harmed Party may seek any and all remedies available to it at law or in equity, including injunctive relief and/or notwithstanding Section 13.2, consequential damages.
20.4 Disclosure to Lender. Notwithstanding anything to the contrary in this Article 20, Confidential Information may be disclosed by Seller to any potential Lender or any of its agents, consultants or trustees so long as the Person to whom Confidential Information is disclosed agrees in writing to be bound by the confidentiality provisions of this Article 19 to the same extent as if it were a Party.
ARTICLE 21
MISCELLANEOUS
21.1 Entire Agreement; Integration; Exhibits. This Agreement, together with 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 matter 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 28 are for convenience and reference purposes only. In the event of a conflict between the provisions of this Agreement and those of any Exhibit, the provisions of this Agreement shall prevail, and such Exhibit shall be corrected accordingly. 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 hereof.
21.2 Amendments. This Agreement may only be amended, modified or supplemented by an instrument in writing executed by duly authorized representatives of Seller and Buyer; provided, that, for the avoidance of doubt, this Agreement may not be amended by electronic mail communications.
21.3 No Waiver. Waiver by a Party of any default by the other Party shall not be construed as a waiver of any other default.
21.4 No Agency, Partnership, Joint Venture or Lease. Seller and the agents and employees of Seller shall, in the performance of this Agreement, act in an independent capacity and not as officers or employees or agents of Buyer. Under this Agreement, Seller and Buyer intend to act as energy service provider and energy service recipient, respectively, and do not intend to be treated as, and shall not act as, partners in, co-venturers in or lessor/lessee with respect to the System or any business related to the System. This Agreement shall not impart any rights enforceable by any third party (other than a permitted successor or assignee bound to this Agreement).
21.5 Severability. In the event that any provision of this Agreement is unenforceable or held to be unenforceable, the Parties agree that all other provisions of this Agreement have force and effect and shall not be affected thereby. The Parties shall, however, use their best endeavors to agree on the replacement of the void, illegal or unenforceable provision(s) with legally acceptable clauses which correspond as closely as possible to the sense and purpose of the affected provision and this Agreement as a whole.
21.6 Forward Contract. The Parties acknowledge and agree that this Agreement and the transactions contemplated by this Agreement constitute a “forward contract” within the meaning of the Bankruptcy Code and that Buyer and Seller are each “forward contract merchants” within the meaning of the Bankruptcy Code
21.7 Mobile-Sierra. Notwithstanding any other provision of this Agreement, neither Party shall seek, nor shall they support any third party seeking, to prospectively or retroactively revise the rates, terms or conditions of service of this Agreement through application or complaint to FERC pursuant to the provisions of Section 205, 206 or 306 of the Federal Power Act, or any other provisions of the Federal Power Act, absent prior written agreement of the Parties. Further, absent the prior written agreement in writing by both Parties, the standard of review for changes to the rates, terms or conditions of service of this Agreement proposed by a Party, a non-Party or the 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). 29 21.8 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.
21.9 Facsimile or Electronic Delivery. This Agreement may be duly executed and delivered by a Party by execution and facsimile or electronic format (including portable document format (.pdf)) delivery of the signature page of a counterpart to the other Party, and, if delivery is made by facsimile or other electronic format, the executing Party shall promptly deliver, via overnight delivery, a complete original counterpart that it has executed to the other Party, but this Agreement shall be binding on and enforceable against the executing Party whether or not it delivers such original counterpart.
21.10 Binding Effect. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. [remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date.
SELLER
Participate.Energy LLC
a Delaware limited liability company
By:
Name:
Title:
BUYER
CITY OF PICO RIVERA, A CALIFORNIA
MUNICIPAL CORPORATION, D/B/A
PICO RIVERA INNOVATIVE MUNICIPAL
ENERGY
By:
Name:
Title: _____________________
A-1
EXHIBIT A
INCLUDED SYSTEMS LIST
SYSTEM
NAME
or
ID
SYSTEM
SITE
ADDRESS or
LOCATION
SYSTEM
SYSTEM
SIZE
(kWAC)
ESTIMATED
FIRST YEAR
ANNUAL
PRODUCTION
(kWh)
FIRST YEAR
ENERGY
RATE
ENERGY
STORAGE
(No. of Tesla
Powerwall Units)
B-1
EXHIBIT B
NOTICES
Seller:
Participate.Energy LLC
2093 Philadelphia Pike #3125,
Claymont, DE 19703.
Attn: Ethan Friedman
Phone: 917-301-2621
Email: [email protected]
Buyer:
Pico Rivera Innovative Municipal Energy
6615 Passons Blvd
Pico Rivera, CA 90660
Attn: Contract Administration
Email: [email protected]
With a copy to: With a copy to:
Name:
Attorney for Buyer
Address:
Phone:
Facsimile:
Email:
Scheduling:
Participate.Energy LLC
2093 Philadelphia Pike #3125,
Claymont, DE 19703.
Attn: Ethan Friedman
Phone: 917-301-2621
Email: [email protected]
C-1
EXHIBIT C
EMERGENCY CONTACT INFORMATION
BUYER:
Steven Carmona
6615 Passons Blvd
Pico Rivera, CA 90660
Email: [email protected]
WITH COPY TO:
Cathy DeFalco, Energy Manager - Regulatory
California Choice Energy Authority (“CalChoice”)
Phone: 805-260-9047
Email: [email protected]
SELLER:
Participate.Energy LLC
2093 Philadelphia Pike #3125,
Claymont, DE 19703.
Attn: Ethan Friedman
Phone: 917-301-2621
Email: [email protected]
PROGRAM MANAGEMENT AGREEMENT
This Program Management Agreement (this “Agreement”) dated effective as of [February 1, 2023], (the “Effective Date”) is by and between CITY OF PICO RIVERA, A CALIFORNIA
MUNICIPAL CORPORATION, D/B/A PICO RIVERA INNOVATIVE MUNICIPAL ENERGY (“Program Manager”), and Participate.Energy LLC, a Delaware limited liability company (the “Owner”). The parties hereto are sometimes herein referred to individually as a “Party” and collectively as the “Parties”.
RECITALS
A. Program Manager, Owner and Tesla, Inc. (“Installer”) have entered in to certain agreements for the creation of a distributed solar and energy storage program for residential electricity customers in Program Manager’s service territory (the” Program”). Under the terms of the Program, Owner will develop, finance, and own residential solar and energy storage systems to be located at private residences within Program Manager’s service territory (each a “System” or, collectively, the “Systems”), Installer will install the Systems under an installation contract between Installer and Owner (“Installation Contract”), and Program Manager will buy from Owner the energy and certain energy attributes and benefits generated by each System under the terms of a certain power purchase agreement between the Parties of even date herewith (the “Power Purchase Agreement”).
B. Owner does not independently maintain the internal capability to perform the Program Management Services (as defined below) that Owner requires in connection with the installation of the Systems, and Program Manager’s capabilities are expected to provide significant benefits to Owner. Therefore, Owner desires to engage Program Manager to manage certain aspects of the System permit management, Installer communication, and origination of potential customers in Program Manager’s service territory, all as further set forth herein (the “Program Management Services”).
C. 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:
AGREEMENT
In consideration of the above recitals, the premises and mutual covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
1. Appointment and Term; Assumption of Development Responsibilities; Standard of Performance. Owner hereby appoints Program Manager to render the Program Management Services as further described in the Schedule of Program Management Services attached hereto as Exhibit A. Program Manager hereby accepts such appointment. The term of this Agreement shall be co-terminus with the term of the Power Purchase Agreement (“Term”).
Program Manager shall use such diligence, care and prudence in the performance of its obligations Enclosure 3
15c
2 hereunder as are commercially reasonable, and shall devote such time, effort and skills of its personnel as a reasonable service Program Manager in like position would do in like circumstances.
2. Limitations and Restrictions. Notwithstanding any provisions of this Agreement, Program Manager shall not take any action, expend any sum, make any decision, give any consent, approval or authorization, or incur any obligation with respect to any of the following matters unless and until the same has been approved by Owner:
(a) alteration of any System contemplated by the Installation Contract, except for such matters as may be expressly delegated in writing to Program Manager by Owner; (b) any proposed change in the installation of a System, or in the plans and specifications therefor as previously approved by Owner, that increases the cost thereof, or any other change that would affect the design, cost, value or quality of any of a System, except for such matters as may be expressly delegated in writing to Program Manager by Owner.
3. Standard of Conduct.
a) Program Manager shall provide the Program Management Services, perform its other obligations and exercise its rights or powers under this Agreement in a prudent manner, with the degree of skill and judgment normally exercised by Program Managers performing Program Management Services for the permitting of systems of a similar nature, and in accordance with: (i) any applicable laws and regulations; and (ii) any agreement, instrument or other document to which Owner is a party, and that Owner has delivered to Program Manager, that relates to a System or any component thereof (“Project Documents”), except to the extent Owner provides Program Manager with written instructions not to do so in the event Owner is contesting in good faith the validity or application of any such applicable laws and regulations or such term and condition of a System Document, in any reasonable manner. b) Program Manager may, at any time, if it reasonably considers it to be necessary or appropriate, request written instruction from Owner with respect to any matter contemplated by this Agreement and may defer action thereon pending the receipt of such written instructions.
c) Program Manager shall advise Owner promptly, if it becomes aware of any material inconsistency between any of the following:
(i) Owner’s instructions given in accordance with this Agreement from time to time;
(ii) any System Document;
(iii) Required insurance (if any); and
(iv) any applicable laws and regulations or Permit.
3 d) Any action taken by Program Manager in accordance with the written instructions of Owner, or failure to act pending the receipt of such written instructions, shall be deemed to be within the scope of Program Manager’s authority and in accordance with its obligations under this Agreement and, without limitation, shall not constitute gross negligence or willful misconduct as referred in Section 10(b).
4. Accounts and Records.
(a) Program Manager, shall keep such books of account and other records relating to each System as may be required by applicable laws and regulations or as reasonably requested by Owner in writing. All accounts and records relating to a System, including all correspondence, shall be surrendered to Owner upon demand without charge therefor. (b) All books and records prepared or maintained by Program Manager shall be kept and maintained at all times at secure locations accessible to Owner for audit, inspection and copying by Owner or any representative or auditor therefor or supervisory or regulatory authority upon reasonable written request.
(c) During the Term, Program Manager shall keep Owner reasonably informed as to the status of the Program Management Services provided by Program Manager. Program Manager shall notify Owner in writing of any material event related to the Program Management Services provided by Program Manager hereunder.
5. Accrual Schedule. The Program Management Agreement Fee (as defined below) shall be earned in full for a System when a System is placed in service for purposes of Sections 48 and 168 of the Internal Revenue Code, as amended, and shall be paid promptly when a System has reached final completion under the terms of the respective Installation Contract (collectively, “Final Completion”).
6. Compensation. As consideration for Program Manager’s Program Management Services to be performed under this Agreement, Owner will pay Program Manager a fee (the “Program Management Agreement Fee”) equal to Forty U.S. Cents ($0.40) multiplied by each Watt/dc of solar generating capacity for each System that has reached Final Completion and for which Program Manager has confirmed in a legally binding manner that such System will be covered under the Power Purchase Agreement for the term thereof. 4 7. Default and Remedies. If Program Manager defaults in the performance of any of its material covenants or obligations under this Agreement and such default continues unremedied for a period of 30 days after written notice thereof from Owner to Program Manager, Owner shall have the right, at its election, to exercise one or more of the following rights and remedies; provided, however, if the default is of such a nature that it cannot be cured within the 30-day period, and Program Manager has begun to cure each default within the 30-day period, Program Manager shall have an additional 60 days in which to cure said default provided it acts in good faith and with due diligence to cure the same (all of which shall be cumulative); provided, further, however, that a default under any agreement with a contractor, subcontractor, engineer or equipment Program Manager for a System, or a delay due to action or inaction by the utility shall not be deemed a default under the Agreement:
(a) terminate this Agreement; and
(b) enforce the provisions of this Agreement by legal proceedings for the specific performance of any covenant or agreement contained herein or for the enforcement of any other appropriate legal or equitable remedy and recover damages caused by any breach by Program Manager of the provisions of this Agreement, including court costs, reasonable attorneys’ fees and other expenses incurred in the enforcement of the obligations of Program Manager hereunder; and (c) exercise any and all rights and remedies that Owner (or its Members) may have under applicable laws and regulations; and
(d) in addition to any rights now or hereafter granted under applicable laws and regulations and not by way of limitation of any such rights, upon the occurrence of any event of default hereunder that is not cured within the time period specified in this Section 7, Owner is authorized to set off and to apply any amounts payable to Program Manager hereunder against and on account of the obligations of Program Manager to Owner hereunder.
8. Indemnity and Liability
(a) Limitation of Liability.
(i) Notwithstanding any provision in this Agreement to the contrary, neither Party, nor their respective Affiliates, nor any of their respective officers, directors, employees, agents, contractors, subcontractors, vendors, shareholders, members, partners or representatives, shall be liable hereunder for any consequential or indirect loss or damage, including loss of profit, cost of capital, loss of goodwill or any other special or incidental damages, it being understood that the Parties’ indemnification obligations under this Section 8 are not and shall not be deemed to be consequential or indirect loss or damage under this Section 8. (ii) Except as provided in this Section 8, Program Manager shall have no liability hereunder to Owner for damages or other amounts in connection with a breach by Program Manager of this Agreement or a failure by Program Manager to perform the Program Management Services in accordance with the terms and conditions hereof or otherwise as a result of the Program Management Services performed by Program Manager pursuant to this Agreement. 5 (iii) The Parties further agree that the waivers and disclaimers of liability, indemnities, releases from liability, and limitations on liability expressed in this Agreement shall survive termination or expiration of this Agreement, and shall apply at all times, whether in contract, equity, tort or otherwise, even in the event of the fault, negligence, including sole negligence, strict liability, or breach of the Party indemnified, released or whose liabilities are limited, and shall extend to the partners, members, principals, shareholders, directors, officers, employees and agents of each Party and its Affiliates.
(b) Indemnity. To the extent it may lawfully do so, each of Program Manager and Owner hereby indemnify, defend (with counsel of its choosing), and hold harmless the other party and its directors, agents, officers, members, employees and volunteers from and against any and all liability or claim of liability, loss or expense, including defense costs and legal fees and claims for damages of whatsoever character, nature and kind, whether directly or indirectly arising from or connected to: bodily injury, death, personal injury, or property damage caused by negligence, creation or maintenance of a dangerous condition of property, or intentional infliction of harm, including any workers’ compensation suits, liability, or expense, arising from or connected with Program Management Services performed by on behalf of the indemnifying party by any person pursuant to this Agreement; nonpayment for labor, materials, appliances, teams, or power, performed on, or furnished or contributed to the Site. Notwithstanding the above, neither Program Manager nor Owner shall be required to defend, indemnify and hold harmless the other for such other party’s negligent acts and omissions or willful misconduct. It is the intent of the Parties that where negligence is determined to have been joint or contributory, principles of comparative negligence will be followed, and each Party shall bear the proportionate cost of any loss damage, expense or liability attributable to that Party’s negligence.
9. Notices. Any notice, request, demand or other communication which is required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given:
(i) on the date of receipt by the applicable Party if personally delivered; (ii) when transmitted by the applicable Party if transmitted by telecopy, electronic mail, or other digital transmission method, subject to the sender’s facsimile machine receiving the correct answerback of the addressee and confirmation of uninterrupted transmission by a transmission report or the recipient confirming by telephone to sender that he has received the facsimile or electronic mail message; and (iii) when received by the applicable Party, if sent for next day delivery to a domestic address by recognized overnight delivery service or, if sent by certified or registered mail, return receipt requested.
Notices shall be given:
If to Owner, to:
Participate.Energy LLC
2093 Philadelphia Pike #3125,
Claymont, DE 19703.
Attn: Ethan Friedman
Phone: 917-301-2621
Email: [email protected]
6 If to Program Manager, to:
Pico Rivera Innovative Municipal Energy
6615 Passons Blvd
Pico Rivera, CA 90660
Attn: Contract Administration
Email: [email protected]
10. General Provisions.
(a) No Agency Relationship. This Agreement does not create an agency relationship between the Parties and does not establish a joint venture or partnership between the parties. Except as expressly set forth herein, neither party has the authority to bind the other party or represent to any person that the party is an agent of the other party. (b) Agreement. This Agreement consists of the terms and conditions set forth herein, as well as the appendices hereto, which are incorporated by reference herein and made part hereof.
In the event of a conflict, variation or inconsistency between the appendices hereto and the terms and conditions contained in the body of this Agreement, the latter shall control and be given priority.
(c) Relationship of the Parties.
(i) Program Manager has been retained by Owner as an independent contractor to solely perform the Program Management Services on behalf of Owner. (ii) Without limiting the relationship of any Party under any other agreement, nothing contained or implied in this Agreement shall constitute or be deemed to constitute any Party as the partner of any other Party for any purpose whatsoever; or create, or be deemed to create, any partnership between any Party and the any other Party. (iii) No Party shall by virtue of this Agreement have the power or authority to enter into any agreement or undertaking for or to act on behalf of or otherwise to bind the any other Party as to any matter or thing to be done in relation to a System or to the provision of the Program Management Services save as may be expressly authorized in this Agreement or agreed in writing between the Parties from time to time.
(d) Entire Agreement. This Agreement, the Schedules and Exhibits attached hereto contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior negotiations, undertakings and agreements. Neither Party will be bound by or deemed to have made in connection herewith any representations, warranties, commitments or undertakings, except those contained herein.
(e) Captions; Exhibits. Titles or captions of sections contained in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit, extend, describe or otherwise affect the scope or meaning of this Agreement or the intent of any provision 7 hereof. All exhibits and appendices attached hereto shall be considered a part hereof as though fully set forth herein.
(f) Amendment. This Agreement may not be amended or modified in any way unless such amendment or modification is in writing signed by duly authorized representatives of each Party.
(g) No Waivers. It is understood and agreed that any delay, waiver or omission by Owner or Program Manager to exercise any right or power arising from any breach or default by Owner or Program Manager with respect to any of the terms, provisions, or covenants of this Agreement shall not be construed to be a waiver by Owner or Program Manager of any subsequent breach or default of the same or other terms, provisions or covenants on the part of Owner or Program Manager. No waiver of any right or power by any Party under this Agreement shall be deemed effective unless in writing and signed by the waiving Party. (h) Changed Conditions; Invalidity. If there is an occurrence of an event of Force Majeure, there is a material change in market conditions affecting the prices of goods and Program Management Services constituting Development Costs, there is a change in any Project Document or financing document or Owner enters into a new Project Document or financing document affecting performance of the Program Management Services hereunder, or there is a change in any applicable Law, and any such performance or occurrence results in increased or decreased costs to Program Manager, or Owner, as the case may be, shall be entitled to an equitable budget adjustment reflecting the reasonable value of any such increased or decreased costs from such performance or occurrence, and the Parties hereby agree to adjust equitably such other provisions of this Agreement that are directly affected by such performance or occurrence; provided, however, that such adjustments must be consistent with the economic expectations and the intent of the Parties. The invalidity or unenforceability for public policy or other equitable grounds of any provision of this Agreement shall be determined only by a court of competent jurisdiction, and the Parties hereby agree to negotiate an equitable adjustment to the invalid or unenforceable provisions with a view toward affecting the purposes of this Agreement. The validity or enforceability of the remaining provisions or portions or applications hereof shall not be affected thereby.
(i) Representations and Warranties.
(i) Each Party represents and warrants to the other that:
(A) it is duly formed and validly existing under the laws of its jurisdiction of formation;
(B) it has the legal right and full power and authority to execute and deliver, and to exercise its rights and perform its obligations under, this Agreement; 8 (C) all corporate or company action required by it validly and duly to authorize the execution and delivery of, and to exercise its rights and perform its obligations under, this Agreement has been duly taken; and
(D) this Agreement constitutes a valid and binding agreement enforceable against it in accordance with its terms.
(ii) Except as expressly provided in this Agreement or as required by law, no Party makes any warranties or guarantees to the other, either express or implied, with respect to the Facility, the Program Management Services or any other subject matter of this Agreement, and, to the extent permitted by law, each Party disclaims and waives any implied warranties or warranties imposed by law.
(j) Counterparts. The Parties may execute this Agreement in two or more counterparts, which shall, in the aggregate, be signed by the Parties and each counterpart shall be deemed an original instrument as against any Party who has signed it. (k) Facsimile or Electronic Delivery. This Agreement may be duly executed and delivered by a Party by execution and facsimile or electronic format (including portable document format (.pdf)) delivery of the signature page of a counterpart to the other Party, and, if delivery is made by facsimile or other electronic format, the executing Party shall promptly deliver, via overnight delivery, a complete original counterpart that it has executed to the other Party, but this Agreement shall be binding on and enforceable against the executing Party whether or not it delivers such original counterpart.
(l) Dispute Resolution. In the event a dispute arises between the Parties regarding the application or interpretation of this Agreement, the aggrieved Party shall promptly notify the other Party of its intent to invoke this dispute resolution procedure within ten (10) Business Days after such dispute arises. If the Parties shall fail to resolve the dispute within ten (10) Business Days after delivery of such notice, each Party shall, within five (5) Business Days thereafter, nominate a senior officer of its management to meet at the Facility, or at any other mutually agreed location, to resolve the dispute. If the dispute remains unresolved within ten (10) Business Days after such a meeting has commenced, each Party, without further delay, shall have the right to pursue any and all remedies available at law or in equity. The pendency of any dispute under this Agreement shall not of itself relieve any Party of any duty to perform under this Agreement. (m) Non-Recourse. Notwithstanding anything to the contrary provided in this Agreement, it is specifically understood and agreed that there shall be absolutely no personal liability on the part of any of the partners, members, shareholders, or affiliates of the Parties, or any of their respective directors, officers, employees, agents or representatives, (each, a “Protected Person”) for the payment of any amounts due or the performance of any other obligation of any Party under this Agreement. Each Party shall look solely to the assets of the other Parties for the satisfaction of each and every right or remedy under or in connection with this Agreement. In furtherance of the foregoing, Owner and Program Manager each agrees that it shall neither seek or obtain, nor be entitled to seek or obtain, any deficiency or other judgment against any Protected Person for any action or inaction under or in connection with this Agreement, and Owner and 9 Program Manager each releases all such Protected Persons from any such claims by Program Manager or Owner, as the case may be.
[Signature Page Follows]
[Signature Page to Program Management Agreement]
IN WITNESS WHEREOF, the parties have executed this Program Management Services Agreement as of the date first written above.
PROGRAM MANAGER:
City of Pico Rivera,
a California municipal corporation,
d/b/a Pico Rivera Innovative Municipal
Energy
By: ____________________________
Name: ___________________________
Title: ___________________________
OWNER:
Participate.Energy LLC
a Delaware limited liability company
By: ____________________________
Name: ___________________________
Title: ___________________________
EXHIBIT A
PROGRAM MANAGEMENT SERVICES SCHEDULE
Program Management Services generally include all activities necessary or helpful to (a) monitor, manage, and accelerate all permitting activities for any System; (c) create a streamlined and integrated System permitting process allowing for faster System permitting;
(d) effectively communicate with and guide Installer through the System permitting process to ensure shorter permitting timelines and to avoid any permitting delays; (e) Effectively coordinate the System permitting process with all other governmental agencies involved;
(f) To the extent legally permissible, expedite the permitting for any System; and (d) prepare materials and conduct communications and outreach to residential electric power customer in its service territory to promote the Program and to encourage the installation of Systems by its customers.
PROGRAM SUPPORT AGREEMENT
This Program Support Agreement (this “Agreement”) dated effective as of December 1, 2022, (the “Effective Date”) is by and between CITY OF PICO RIVERA, A CALIFORNIA
MUNICIPAL CORPORATION, D/B/A PICO RIVERA INNOVATIVE MUNICIPAL ENERGY (“Member”), and Participate.Energy LLC, a Delaware limited liability company (the “Owner”). The parties hereto are sometimes herein referred to individually as a “Party” and collectively as the “Parties”.
RECITALS
A. Member, Owner and Tesla, Inc. (“O&M Provider”) have entered in to certain agreements for the creation of a distributed solar and energy storage program for residential electricity customers in Member’s service territory (the “Program”). Under the terms of the Program, Owner will develop, finance, and own residential solar and energy storage systems to be located at private residences within Member’s service territory (each a “System” or, collectively, the “Systems”), O&M Provider will operate and maintain the Systems under an O&M Contract between O&M Provider and Owner (the “O&M Contract”), Member will buy from Owner the energy and certain energy attributes and benefits generated by each System under the terms of a certain power purchase agreement between the Parties of even date herewith (the “Power Purchase Agreement”), and sell the electric power generated by a System to the residential customer in Member’s service territory, where the System is located (the “Customer”).
B. Buyer and Owner intend that Systems will be added to this Agreement and the Power Purchase Agreement from time to time during the term of the Power Purchase Agreement.
C. Owner does not independently maintain the internal capability to perform the Program Support Services (as defined below) that Owner requires in connection with the operation and maintenance of the Systems, and Member’s capabilities are expected to provide significant benefits to Owner. Therefore, Owner desires to engage Member to support certain aspects of the Systems operations and management as further set forth herein (the “Program Support Services”).
D. 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:
AGREEMENT
In consideration of the above recitals, the premises and mutual covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
1. Appointment and Term; Assumption of Development Responsibilities; Standard of Performance. Owner hereby appoints Member to render the Program Support Services as further described in the Schedule of Program Support Services attached hereto as Exhibit A. Member hereby accepts such appointment. The term of this Agreement shall be coterminus with the term of the Power Purchase Agreement (“Term”). Member shall use such Enclosure 4
15d
2 diligence, care and prudence in the performance of its obligations hereunder as are commercially reasonable, and shall devote such time, effort and skills of its personnel as a reasonable service provider in like position would do in like circumstances.
2. Standard of Conduct.
a) Member shall provide the Program Support Services, perform its other obligations and exercise its rights or powers under this Agreement in a prudent manner, with the degree of skill and judgment normally exercised by service providers performing operations and management services to support solar and energy storage system operations and management of a similar nature, and in accordance with: (i) any applicable laws and regulations and permits; and (ii) any agreement, instrument or other document to which Owner is a party, and that Owner has delivered to Member, that relates to the development, construction, Owner or a System or any component thereof (“System Documents”), except to the extent Owner provides Member with written instructions not to do so in the event Owner is contesting in good faith the validity or application of any such applicable laws and regulations or such term and condition of a System Document, in any reasonable manner.
b) Member may, at any time, if it reasonably considers it to be necessary or appropriate, request written instruction from Owner with respect to any matter contemplated by this Agreement and may defer action thereon pending the receipt of such written instructions. c) Member shall advise Owner promptly, if it becomes aware of any material inconsistency between any of the following:
(i) Owner’s instructions given in accordance with this Agreement from time to time;
(ii) any System Document;
(iii) Required insurance (if any); and
(iv) any applicable laws and regulations or permit.
d) Any action taken by Member in accordance with the written instructions of Owner, or failure to act pending the receipt of such written instructions, shall be deemed to be within the scope of Member’s authority and in accordance with its obligations under this Agreement and, without limitation, shall not constitute gross negligence or willful misconduct as referred in Section 7.
3. Accounts and Records.
(a) Member, on behalf of Owner, shall keep such books of account and other records relating to each System as may be required by applicable laws and regulations or reasonably requested by Owner in writing. All accounts and records relating to a System, including all correspondence, shall be surrendered to Owner upon demand without charge therefor. 3 (b) All books and records prepared or maintained by Member shall be kept and maintained at all times at secure locations accessible to Owner for audit, inspection and copying by Owner or any representative or auditor therefor or supervisory or regulatory authority upon reasonable written request.
(c) During the Term, Member shall keep Owner informed as to the status of the Program Support Services provided by Member hereunder in a frequency Member and Owner may agree to from time to time. Member shall notify Owner of any material event related to the Program Support Services provided by Member hereunder.
4. Compensation and Payment.
(a) As consideration for Member’s Program Support Services to be performed under this Agreement, Owner will pay Member a fee (the “Program Support Services Fee”) equal to (i) Two U.S. Cents ($0.02) multiplied by each Kilowatt-hour of solar energy generation for each System that has been placed into operation and for which Member has confirmed in a legally binding manner that such System will be covered under the Power Purchase Agreement for the term thereof, plus (ii) Fifteen Dollars ($15.00) per month for each Tesla Powerwall installed as part of a System that has been placed into operation and for which Member has confirmed in a legally binding manner that such System will be covered under the Power Purchase Agreement for the term thereof.
(b) The Program Support Services Fee shall become due and payable on a quarterly basis, not later than the fifteenth (15th) day after the end of each calendar quarter during the Term (each, a “Fee Calculation Period”), provided, that payment of any Program Support Services Fee due and payable shall be limited to funds available to Owner from Net Operating Cash Flow during such Fee Calculation Period. The term “Net Operating Cash Flow” as used in this Agreement shall mean the cash proceeds received by Owner under the terms of the Power Purchase Agreement during a Fee Calculation Period, reduced by (i) actual or reasonably estimated operating and maintenance expenses for all Systems in operation at any time during such Fee Calculation Period, including, without limitation insurance expenses and reasonably estimated reserves for loses, and actual or reasonably estimated System equipment replacement costs during the Term and reserves therefore, (ii) actual or reasonably estimated income or other taxes payable by Buyer with respect to such cash proceeds (iii) preferred distributions to be made and any cash flow payable, or revenue or profit participation allocated to tax or sponsor equity investors unaffiliated with Owner in accordance with the terms and conditions of the then current charter documents of Owner, and (iv) payment of all obligations, including without limitation payment of principal and interest, under any loan document binding Owner at any time during such Fee Calculation Period, or for which any System operating at any time during such Fee Calculation Period has been placed as collateral.
(c) Together with any Program Support Services Fee payment, Owner shall provide Member a written accounting for the Program Support Fee due in reasonable detail. In addition, if payment for a Fee Calculation Period is reduced to available funds for payment for the respective Fee Calculation Period in accordance with Section 4(b), above, Owner shall provide Member a written accounting in reasonable detail supporting any fee reduction during such Fee Calculation Period.
4 (d) Any portion of the Program Support Services Fee reduced during one Fee Calculation Period in accordance with Section 4(b), above, shall be added to the Program Support Services Fee becoming due and payable in the following Fee Calculation Period subject, however, to availability funds from Net Operating Cash Flow during such following Fee Calculation Period.
(e) To facilitate payment and verification, Owner 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 laws and regulations.
Upon fifteen (15) days’ Notice to Owner, Member shall be granted reasonable access to the accounting books and records pertaining to all invoices generated pursuant to this Agreement. (f) Payment adjustments shall be made if Owner or Member discovers there have been good faith inaccuracies in invoicing that are not otherwise disputed under Section 4(h), or there is determined to have been a meter inaccuracy sufficient to require a payment adjustment under the Power Purchase Agreement. If the required adjustment is in favor of Owner, Owner’s quarterly Program Support Services Fee payment shall be credited in an amount equal to the adjustment. If the required adjustment is in favor of Member, Member shall add the adjustment amount to Owner’s next quarterly Program Support Fee payment obligation, subject, however, to the limitations set forth in Section 4(b), above.
(g) If a payment due date under Section 4(b), above, falls on a weekend or legal holiday, such due date shall be the next Business Day. Payments made after the due date will be considered late and will bear interest on the unpaid balance, except, however, any payment reduction applied during a Fee Calculation Period, if paid during the next available Fee Calculation Period during which funds available to Owner from Net Operating Cash Flow first allow payment of the reduced amount. If the amount due is not paid on or before the due date or if any other payment that is due and owing from one party to another is not paid on or before its applicable due date, a late payment charge shall be applied to the unpaid balance and shall be added to the next billing statement. Such late payment charge shall be calculated based on an annual interest rate equal to 10% (the “Interest Rate”) of the total amount due. If the due date occurs on a day that is not a Business Day, the late payment charge shall begin to accrue on the next succeeding Business Day. The payment of any late payment fee by Owner shall be subject to availability of funds from Net Operating Cash Flow.
(h) 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. 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 two (2) Business Days of such resolution along with interest accrued at the Interest Rate from and 5 including the original 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 if the other Party is not notified in accordance with this Section 4(h) within twelve (12) months after the invoice is rendered or subsequently adjusted, except to the extent any misinformation was from a third party not affiliated with any Party and such third party corrects its information after the twelve-month period. 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.
5. Default and Remedies. If either Party defaults in the performance of any of its material covenants or obligations under this Agreement and such default continues unremedied for a period of (a) ten (10) days, in case of any monetary default, or (b) thirty (30) days in case of nonmonetary default, in each after written notice thereof from the non-defaulting Party to the defaulting Party, the non-defaulting Party shall have the right, at its election, to exercise one or more of the following rights and remedies; provided, however, if a non-monetary default is of such a nature that it cannot be cured within said thirty (30) day period, and the defaulting Party has begun to cure each default within the 30-day period, the defaulting Party shall have an additional 60 days in which to cure said default provided it acts in good faith and with due diligence to cure the same (all of which shall be cumulative); provided, further, however, that a default under any agreement with a contractor, subcontractor, engineer or equipment manager for a System, or a delay due to action or inaction by the utility shall not be deemed a default under the Agreement:
(a) terminate this Agreement; and
(b) enforce the provisions of this Agreement by legal proceedings for the specific performance of any covenant or agreement contained herein or for the enforcement of any other appropriate legal or equitable remedy and recover damages caused by any breach by the defaulting Party of the provisions of this Agreement, including court costs, reasonable attorneys’ fees and other expenses incurred in the enforcement of the obligations of the Defaulting Party hereunder; and
(c) exercise any and all rights and remedies that the non-defaulting Party may have under applicable laws and regulations; and
(d) in addition to any rights now or hereafter granted under applicable laws and regulations and not by way of limitation of any such rights, upon the occurrence of any event of default hereunder that is not cured within the time period specified in this Section 5, the nondefaulting Party is authorized to set off and to apply any amounts payable to the defaulting Party hereunder against and on account of the obligations of defaulting Party to the non-defaulting Party hereunder.
6. Indemnity and Liability
(a) Limitation of Liability.
6 (i) Notwithstanding any provision in this Agreement to the contrary, neither Party, nor their respective Affiliates, nor any of their respective officers, directors, employees, agents, contractors, subcontractors, vendors, shareholders, members, partners or representatives, shall be liable hereunder for any consequential or indirect loss or damage, including loss of profit, cost of capital, loss of goodwill or any other special or incidental damages, it being understood that the Parties’ indemnification obligations under this Section 6 are not and shall not be deemed to be consequential or indirect loss or damage under this Section 6. (ii) Except as provided in this Section 6, Member shall have no liability hereunder to Owner for damages or other amounts in connection with a breach by Member of this Agreement or a failure by Member to perform the Program Support Services in accordance with the terms and conditions hereof or otherwise as a result of the Program Support Services performed by Member pursuant to this Agreement.
(iii) The Parties further agree that the waivers and disclaimers of liability, indemnities, releases from liability, and limitations on liability expressed in this Agreement shall survive termination or expiration of this Agreement, and shall apply at all times, whether in contract, equity, tort or otherwise, even in the event of the fault, negligence, including sole negligence, strict liability, or breach of the Party indemnified, released or whose liabilities are limited, and shall extend to the partners, members, principals, shareholders, directors, officers, employees and agents of each Party and its Affiliates.
(b) Indemnity. To the extent it may lawfully do so, each of Member and Owner hereby indemnify, defend (with counsel of its choosing), and hold harmless the other party and its directors, agents, officers, members, employees and volunteers from and against any and all liability or claim of liability, loss or expense, including defense costs and legal fees and claims for damages of whatsoever character, nature and kind, whether directly or indirectly arising from or connected to: bodily injury, death, personal injury, or property damage caused by negligence, creation or maintenance of a dangerous condition of property, or intentional infliction of harm, including any workers’ compensation suits, liability, or expense, arising from or connected with Program Support Services performed by on behalf of the indemnifying party by any person pursuant to this Agreement; nonpayment for labor, materials, appliances, teams, or power, performed on, or furnished or contributed to the Site. Notwithstanding the above, neither Member nor Ownershall be required to defend, indemnify and hold harmless the other for such other party’s negligent acts and omissions or willful misconduct. It is the intent of the Parties that where negligence is determined to have been joint or contributory, principles of comparative negligence will be followed, and each Party shall bear the proportionate cost of any loss damage, expense or liability attributable to that Party’s negligence.
7. Notices. Any notice, request, demand or other communication which is required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given: (i) on the date of receipt by the applicable Party if personally delivered; (ii) when transmitted by the applicable Party if transmitted by telecopy, electronic mail, or other digital transmission method, subject to the sender’s facsimile machine receiving the correct answerback of the addressee and confirmation of uninterrupted transmission by a transmission report or the recipient confirming by telephone to sender that he has received the facsimile or electronic mail message; and (iii) when received by the applicable Party, if sent for next day delivery to a domestic 7 address by recognized overnight delivery service or, if sent by certified or registered mail, return receipt requested.
Notices shall be given:
If to Owner, to:
Participate.Energy LLC
2093 Philadelphia Pike #3125,
Claymont, DE 19703.
Attn: Ethan Friedman
Phone: 917-301-2621
Email: [email protected]
If to Member, to:
Pico Rivera Innovative Municipal Energy
6615 Passons Blvd
Pico Rivera, CA 90660
Attn: Contract Administration
Email: [email protected]
8. General Provisions.
(a) No Agency Relationship. This Agreement does not create an agency relationship between the Parties and does not establish a joint venture or partnership between the parties. Except as expressly set forth herein, neither party has the authority to bind the other party or represent to any person that the party is an agent of the other party. (b) Agreement. This Agreement consists of the terms and conditions set forth herein, as well as the appendices hereto, which are incorporated by reference herein and made part hereof.
In the event of a conflict, variation or inconsistency between the appendices hereto and the terms and conditions contained in the body of this Agreement, the latter shall control and be given priority.
(c) Relationship of the Parties.
(i) Member has been retained by Owner as an independent contractor to solely perform the Program Support Services on behalf of Owner. (ii) Without limiting the relationship of any Party under any other agreement, nothing contained or implied in this Agreement shall constitute or be deemed to constitute any Party as the partner of any other Party for any purpose whatsoever; or create, or be deemed to create, any partnership between any Party and the any other Party. 8 (iii) No Party shall by virtue of this Agreement have the power or authority to enter into any agreement or undertaking for or to act on behalf of or otherwise to bind the any other Party as to any matter or thing to be done in relation to a System or to the provision of the Program Support Services save as may be expressly authorized in this Agreement or agreed in writing between the Parties from time to time.
(d) Entire Agreement. This Agreement, the Schedules and Exhibits attached hereto contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior negotiations, undertakings and agreements. Neither Party will be bound by or deemed to have made in connection herewith any representations, warranties, commitments or undertakings, except those contained herein.
(e) Captions; Exhibits. Titles or captions of sections contained in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit, extend, describe or otherwise affect the scope or meaning of this Agreement or the intent of any provision hereof. All exhibits and appendices attached hereto shall be considered a part hereof as though fully set forth herein.
(f) Amendment. This Agreement may not be amended or modified in any way unless such amendment or modification is in writing signed by duly authorized representatives of each Party.
(g) No Waivers. It is understood and agreed that any delay, waiver or omission by Owner or Member to exercise any right or power arising from any breach or default by Owner or Member with respect to any of the terms, provisions, or covenants of this Agreement shall not be construed to be a waiver by Owner or Member of any subsequent breach or default of the same or other terms, provisions or covenants on the part of Owner or Member. No waiver of any right or power by any Party under this Agreement shall be deemed effective unless in writing and signed by the waiving Party.
(h) Changed Conditions; Invalidity. If there is an occurrence of an event of Force Majeure, there is a material change in market conditions affecting the prices of goods and Program Support Services constituting Development Costs, there is a change in any Project Document or financing document or Owner enters into a new Project Document or financing document affecting performance of the Program Support Services hereunder, or there is a change in any applicable Law, and any such performance or occurrence results in increased or decreased costs to Member, or Owner, as the case may be, shall be entitled to an equitable budget adjustment reflecting the reasonable value of any such increased or decreased costs from such performance or occurrence, and the Parties hereby agree to adjust equitably such other provisions of this Agreement that are directly affected by such performance or occurrence; provided, however, that such adjustments must be consistent with the economic expectations and the intent of the Parties. The invalidity or unenforceability for public policy or other equitable grounds of any provision of this Agreement shall be determined only by a court of competent jurisdiction, and the Parties hereby agree to negotiate an equitable adjustment to the invalid or unenforceable provisions with a view toward affecting the purposes of this Agreement. The validity or enforceability of the remaining provisions or portions or applications hereof shall not be affected thereby. 9 (i) Representations and Warranties.
(i) Each Party represents and warrants to the other that:
(A) it is duly formed and validly existing under the laws of its jurisdiction of formation;
(B) it has the legal right and full power and authority to execute and deliver, and to exercise its rights and perform its obligations under, this Agreement; (C) all corporate or company action required by it validly and duly to authorize the execution and delivery of, and to exercise its rights and perform its obligations under, this Agreement has been duly taken; and
(D) this Agreement constitutes a valid and binding agreement enforceable against it in accordance with its terms.
(ii) Except as expressly provided in this Agreement or as required by law, no Party makes any warranties or guarantees to the other, either express or implied, with respect to the Facility, the Program Support Services or any other subject matter of this Agreement, and, to the extent permitted by law, each Party disclaims and waives any implied warranties or warranties imposed by law.
(j) Counterparts. The Parties may execute this Agreement in two or more counterparts, which shall, in the aggregate, be signed by the Parties and each counterpart shall be deemed an original instrument as against any Party who has signed it. (k) Facsimile or Electronic Delivery. This Agreement may be duly executed and delivered by a Party by execution and facsimile or electronic format (including portable document format (.pdf)) delivery of the signature page of a counterpart to the other Party, and, if delivery is made by facsimile or other electronic format, the executing Party shall promptly deliver, via overnight delivery, a complete original counterpart that it has executed to the other Party, but this Agreement shall be binding on and enforceable against the executing Party whether or not it delivers such original counterpart.
(l) Dispute Resolution. In the event a dispute arises between the Parties regarding the application or interpretation of this Agreement, the aggrieved Party shall promptly notify the other Party of its intent to invoke this dispute resolution procedure within ten (10) Business Days after such dispute arises. If the Parties shall fail to resolve the dispute within ten (10) Business Days after delivery of such notice, each Party shall, within five (5) Business Days thereafter, nominate a senior officer of its management to meet at the Facility, or at any other mutually agreed location, to resolve the dispute. If the dispute remains unresolved within ten (10) Business Days after such a meeting has commenced, each Party, without further delay, shall have the right to pursue any 10 and all remedies available at law or in equity. The pendency of any dispute under this Agreement shall not of itself relieve any Party of any duty to perform under this Agreement. (m) Non-Recourse. Notwithstanding anything to the contrary provided in this Agreement, it is specifically understood and agreed that there shall be absolutely no personal liability on the part of any of the partners, members, shareholders, or affiliates of the Parties, or any of their respective directors, officers, employees, agents or representatives, (each, a “Protected Person”) for the payment of any amounts due or the performance of any other obligation of any Party under this Agreement. Each Party shall look solely to the assets of the other Parties for the satisfaction of each and every right or remedy under or in connection with this Agreement. In furtherance of the foregoing, Owner and Member each agrees that it shall neither seek or obtain, nor be entitled to seek or obtain, any deficiency or other judgment against any Protected Person for any action or inaction under or in connection with this Agreement, and Owner and Member each releases all such Protected Persons from any such claims by Member or Owner, as the case may be.
[Signature Page Follows]
[Signature Page to Program Support Agreement]
IN WITNESS WHEREOF, the parties have executed this Program Support Services Agreement as of the date first written above.
MEMBER:
City of Pico Rivera,
a California municipal corporation,
d/b/a Pico Rivera Innovative Municipal
Energy
By: ____________________________
Name: ___________________________
Title: ___________________________
OWNER:
Participate.Energy LLC
a Delaware limited liability company
By: ____________________________
Name: ___________________________
Title: ___________________________
EXHIBIT A
PROGRAM SUPPORT SERVICES SCHEDULE
1. Member shall provide Level 1 System Support for all Systems included under the Power Purchase Agreement, including without limitation maintaining and coordinating all personnel, activities, and infrastructure reasonably required for such Level 1 Support Services. “Level 1 Support Services” shall include:
a) Provide first contact and Customer interaction for any System-related communication via email and telephone;
b) Clarify general System functions and features via email or telephone upon receipt of Customer requests;
c) To the extent possible by telephone or email, verify, analyze and correct System problems reported by Customers;
d) Create incident reports, including initial analysis, for System problems that cannot be corrected by telephone or email;
e) Forward incident reports to Tesla promptly upon report of any System problem that cannot be corrected by Member by telephone or email;
f) Period reporting to Owner and Tesla of all significant System-related Customer interactions.
Solar PPA Disclosure Statement v. 2022
1 SOLAR ENERGY SYSTEM DISCLOSURE DOCUMENT
This disclosure shall be printed on the front page or cover page of every solar energy contract for the installation of a solar energy system on a residential building.
The estimated TOTAL COST for the solar energy system (including financing and energy / power cost if applicable) is: $________________ To make a complaint against a contractor who installs this system and/or the home improvement salesperson who sold this system, contact the Contractors State License Board (CSLB) through their website at www.cslb.ca.gov (search:
“complaint form”), by telephone at 800-321-CSLB (2752), or by writing to P.O.
Box 26000, Sacramento, CA 95826.
If the attached contract was not negotiated at the contractor's place of business, you have a Three-Day Right to Cancel the contract, pursuant to Business and Professions Code (BPC) section 7159, as noted below. For further details on canceling the contract, see the Notice of Cancellation, which must be included in your contract.
Three-Day Right to Cancel
You, the buyer, have the right to cancel this contract within three business days. You may cancel by e-mailing, mailing, faxing, or delivering a written notice to the contractor at the contractor's place of business by midnight of the third business day after you received a signed and dated copy of the contract that includes this notice. Include your name, your address, and the date you received the signed copy of the contract and this notice.
This document was developed through coordination of the California Contractors State License Board and the California Public Utilities Commission pursuant to Business and Professions Code section 7169. 1 Enclosure 5
15e
Solar PPA Disclosure Statement v. 2022
SOLAR POWER PURCHASE & ENERGY STORAGE SERVICES
DISCLOSURE STATEMENT
This statement is designed to help you understand the terms and costs of your solar power purchase and energy storage services agreement. This statement is not a substitute for reading the contract and other documents associated with this transaction. Read your contract and other documents carefully. All information presented below is subject to the terms of your contract.
Provider: [Participate Energy, LLC
pursuant to the [CCA Retail Program
Name]]
Installer: Tesla Energy Operations, Inc. Customer: [Autopopulate] Address: Address: 901 Page Avenue System Installation Address:
Fremont, CA 94538 [Autopopulate],
Tel.: (___) ___-____ Tel.: 888-765-2489
License # (if applicable): N/A State/County Contractor License #: Customer Mailing Address:
CA CSLB 888104 [Autopopulate],
Email: Email:
[[email protected]] [email protected] Email:
[Autopopulate]
Contract Date: [08/05/2022]
* NOTE: YOU ARE ENTERING INTO AN AGREEMENT TO PURCHASE POWER AND SERVICES; NOT A SOLAR SYSTEM. YOU WILL NOT OWN THE SOLAR OR BATTERY SYSTEM INSTALLED ON YOUR PROPERTY.
Electricity Rate and Term
Your rate per kilowatt-hour (kWh) for the power produced: 14.50 ¢ Your estimated first year production: [ ____ ] kWh
The length of your PPA: 25 Years
*NOTE: Your monthly solar PPA payments will be the amount of power produced times the rate per kWh above. Your monthly storage services payments will be fixed monthly fee of [$_______] for one Powerwall and [$_______] for each additional Powerwall. As a result, your payments will vary every month, but the amount you pay per each kWh will be fixed, unless you have a “PPA Payment Escalator.” See Section “PPA Payment Escalator” for factors that may affect the amount of your rate per kWh and therefore your future monthly payments.
Amount Due Up-Front
Amount you owe Provider at Agreement signing: $0.00
Amount you owe Provider at installation: $0.00
Amount you owe Provider at building inspection: $0.00
Total up-front payments you owe Provider: $0.00
Other Possible Charges
Late Charge: Late Payments accrue interest at the lesser of twelve percent (12%) annually or the maximum allowable by applicable law Estimated System Removal Fee: System Owner will remove the System from your roof while roof repairs are being made and reinstall for a competitive price.
UCC Notice Removal and Re-filing Fee: There may be up to a $250 document processing fee to have the UCC-1 financing statement or fixture filing removed for refinance and/or other real estate transaction purposes.
Non-Connection to Internet: If you do not maintain a high-speed internet connection, we will not be able to monitor the System and may be required to estimate your power usage as set forth in the Agreement.
Solar PPA Disclosure Statement v. 2022
Number of Monthly Payments: 300 monthly payments
When Payments Are Due
Your first Monthly Payment is due on the first day of the second full calendar month following the Interconnection Date. Provider will provide you with: Invoices will be included with your monthly utility bill provided by [Southern California Edison] PPA Payment Escalator
The amount of your electricity rate per kWh will increase: Annually Your electricity rate per kWh will increase by the following amount 1.90% The first increase will occur with your 13th payment.
Site & Design Assumptions for your System
Estimated gross annual electricity production in kilowatt-hours (kWh) from your System: [ ____ ] kWh Estimated annual system production decrease due to natural aging of system: 0.5% System location: rooftop
Connectivity: The solar system WILL be connected to the electric grid.
Net metering: At the time of installation, the system WILL be net metered. Net metering rules are set by the jurisdiction you live in.
Your utility offers a net energy metering policy as required under state statute or as regulated by a public utility commission.
Changes in net energy metering policy or utility rate structures during the life of the system may result in lower utility bill savings than estimated or none at all; Provider will not be responsible for reassessing the contract rate.
Security Filings
Provider MAY file a lien against your real property (e.g. a lien on your home) for non-payment by terms of the Agreement System Owner WILL file a fixture filing or a UCC-1 on the system (a public filing informing others that Provider owns the system, but does not put a lien on your home)
Repair & Maintenance
System maintenance IS included for the term of the Agreement. You are required to perform the following system maintenance:
• Shade Management: Shading on your solar display dramatically reduces electricity production. Keep trees or other tall plants trimmed to prevent shade on your system. • Panel Cleaning: Cleaning your panels of debris can improve your system performance. Flushing the panels from the ground with a water hose can let more sunlight penetrate through the glass cover.
System repairs ARE included for the term of the Agreement from Provider or a third party (such as an installer or equipment manufacturer). If all system repairs are not included, you are required to perform the following system repairs: NONE Roof Warranty
Your roof IS warranted against leaks from the system installation for the first 10 years.
Your roof IS warranted against leaks caused by removal of the system for a period of 1 year(s) following system removal at the end of the Agreement. Any portions of your roof impacted by the system WILL be substantially returned to their original condition following the removal of the system (ordinary wear and tear excepted) Transferring your PPA and Selling your Home
If you sell your home, you MAY transfer this Agreement to the purchaser(s) of your home.
If you may transfer the Agreement, the transfer will be subject to one or more of the following conditions:
• The Home Buyer enrolls in the [CCA Retail Program Name] • The Home Buyer assumes the contract.
If you sell your home, you may have the option to purchase the system.
Summary of Your Agreement
11/2022
Transfer of Obligations by Provider
The Agreement may be assigned, sold or transferred by Provider without your consent to a third-party that will be bound to all the terms of the Agreement. If such a transfer occurs, you will be notified if this will change the address or phone number to use for Agreement-related questions, payments or service requests.
Performance or Production Guarantee
Provider is NOT providing you with a Performance Guarantee Taxes
You are responsible for property taxes on property you own. Consult a tax professional to understand any tax liability that may result from entering the Agreement.
Utility and Electricity Usage/Savings Assumptions
You HAVE NOT been provided with a savings estimate based on your Agreement. If provided, the savings estimate was calculated based on: System size.
The savings estimate to you assumes the following:
Years of electricity production from your System: 25 years It is important to understand that electricity rates are estimates only. Your actual current and future utility rates and utility rate increases may vary.
Provider IS NOT guaranteeing these savings.
Renewable Energy Certificates (RECs)
Any renewable energy certificates or credits (RECs) from producing renewable solar energy with the system WILL NOT be owned by you. If you do not own the RECs, you will not be able to sell, use or claim them, and Provider, System Owner or its designee may sell the RECs to a third party who may claim clean, green or renewable energy based on its purchase of RECs from the system.
Cooling Off Period/ Right to Cancel
In addition to any rights you have under state or local law, you HAVE the right to terminate this Agreement without penalty within three (3) business days of [_______________] by notifying Provider in writing at the above address.
SEIA Solar Business Code
Provider DOES abide by and agrees to be bound by SEIA’s Solar Business Code and its complaint resolution process. For more information about the SEIA Solar Business Code and complaint resolution process, please visit http://www.seia.org/consumers
Customer’s Initials here
Summary of Your Agreement
11/2022
SUMMARY OF YOUR SOLAR POWER PURCHASE &
ENERGY STORAGE SERVICES AGREEMENT
IMPORTANT
THIS PAGE PROVIDES A SUMMARY OF KEY TERMS CONTAINED IN YOUR SOLAR
POWER PURCHASE & ENERGY STORAGE SERVICES AGREEMENT (THE “AGREEMENT”) AND IS PROVIDED AS A COURTESY. CAPITALIZED WORDS ARE DEFINED IN YOUR AGREEMENT. IN THE EVENT OF A CONFLICT BETWEEN THIS SUMMARY PAGE AND YOUR AGREEMENT, YOUR AGREEMENT CONTROLS.
HOMEOWNER(S): [Insert Owner]
[Insert Co-Owner, if any]
DATE OF AGREEMENT: [Insert Date]
MAILING ADDRESS: [Insert Street Address]
[Insert City, State & Zip]
INSTALLATION ADDRESS: [Insert Street Address]
[City], CA [Insert Zip]
$0.00 $0.XX $0.XX 25 Years
Upfront costs Rate per kWh (Year One) Monthly Fee / 1st Powerwall $0.XX / additional Powerwall
Agreement term
System installation, maintenance,
and warranty:
• We insure, maintain, and repair the System
(including the inverter) at no additional cost
to you, as specified in your Agreement.
• We provide 24/7 monitoring at no additional
cost to you, as specified in your Agreement.
• We warranty your roof against leaks and
restore your roof at the end of the Agreement,
as specified in your Agreement.
• The rate you pay us for electricity, exclusive
of taxes, will never increase by more than
X.X % per year.
Options for system purchase and
transfer:
• If you move, you may transfer your
Agreement to the purchaser of your Home, as
specified in your Agreement.
• At certain times, as specified in your
Agreement, you may purchase the System.
• These options apply during the term of your
Agreement.
Options at the end of the 25-year
term:
• [CCA Name] will remove the System at no
cost to you.
• You can upgrade to a new System with
similar technology under a new contract.
• You may purchase the System from [CCA
Name] for its fair market value as specified
in your Agreement.
• Your Agreement will renew for five (5) years
at the end of the Initial Term unless you
notify us that you prefer that it terminate.
I understand, acknowledge, and agree that this
page is a non-binding summary of the
attached Agreement. In the event of a conflict,
the provisions of the Agreement control.
________________________________
Homeowner
________________________________
Homeowner
Solar Power Purchase & Energy Storage Services Agreement 11/2022
Page | 1
SOLAR POWER PURCHASE & ENERGY STORAGE SERVICES AGREEMENT
1. INTRODUCTION
This Solar Power Purchase & Energy Storage
Services Agreement (this “Agreement”) is the
agreement between you and [Participate Energy
Fund, LLC] (the “System Owner”) (together with
its successors and assigns, or altogether, “we,”
“us” or “our”), relating to (a) the installation of a
solar panel system (the “Solar System”) plus
battery (the “Battery,” together with the Solar
System, the “System”) at your home, (b) the sale
of power generated by the Solar System (the
“System Generation”) by System Owner to the
[City/Town Name], your local Community
Choice Aggregation provider [(“CCA Name”)],
and (3) your purchase of an amount of the power
equivalent to the System Generation from your
utility in accordance with [CCA Retail Program
Name] tariff. The System has been or will be
installed by Tesla, Inc. (“Tesla”) at the
installation address (the “Property” or your
“Home”) indicated on the “Summary of Your
Solar Power Purchase & Energy Storage Services
Agreement” that accompanies this Agreement.
1. TERM
System Owner agrees to sell to [CCA Name] the
System Generation for resale to you pursuant to
the [CCA Retail Program Name] tariff of an
amount of power equivalent to the System
Generation for 25 years (300 months), plus, if the
Interconnection Date is not on the first day of a
calendar month, the number of days left in that
partial calendar month. We refer to this period of
time as the “Term.” The Term begins on the
Interconnection Date. The “Interconnection
Date” is the date that the System is turned on and
generating power. System Owner will notify you
by email and mail when your System is ready to
be turned on.
2. SOLAR POWER PURCHASE &
ENERGY STORAGE SERVICE
AGREEMENT PAYMENTS;
AMOUNTS
2.1. Power Price. During the Term, you
agree to purchase power for your Home
pursuant to the [CCA Retail Program Name]
tariff for an amount equivalent to the System
Generation. During the first year of the
Term, the power purchase price is $0.XX per
kWh, and thereafter, the price per kWh (up to
the amount of System Generation) will
annually increase by X.X% of the previous
year’s price. There are no upfront installation
costs to you.
2.2. Payments. Your monthly energy
payment obligations will be in accordance
with the [CCA Retail Program Name] tariff,
provided that for the System Generation the
amount of your payment obligations will be
calculated as the product of (A) the rate per
kWh set forth in Section 2.1 above,
multiplied by (B) the actual kWh output of
System Generation for each calendar month
during the Term; and (2) a fixed monthly fee
calculated as [$______] for the first
Powerwall plus [$_____] for each additional
Powerwall comprising your Battery for the
energy storage services throughout the Term
(“Monthly Payments”). Invoices for Monthly
Payments will be included with your monthly
utility bills provided by your utility provider
[Southern California Edison] (“Utility”).
Monthly Payments will change as your price
per kWh changes over the Term of this
Agreement and as Solar System production
varies (e.g., summer has higher production).
You will have regular access to the Solar
System’s production via your online account.
Payments due upon installation, if any, are
due immediately prior to commencement of
installation.
2.3. Estimated Production. If (i) the
System is shut down for more than seven (7)
Solar Power Purchase & Energy Storage Services Agreement 11/2022
Page | 2
full twenty-four (24) hour days cumulatively
during the Term because of your actions; (ii)
you take some action that significantly
reduces the output of the System; (iii) you
don’t trim your bushes or trees to their
appearance when you signed this Agreement
to avoid foliage growth from shading the
System; or (iv) your System is not reporting
production to System Owner (e.g., you have
disconnected the monitoring system or the
Internet connection at your Home goes down
on the reporting day), then we will
reasonably estimate the amount of power that
would have been delivered to you during
such System or reporting outages or reduced
production periods (“Estimated Production”)
and shall consider Estimated Production as
actual production for purposes of this section
3. In the first year of the Term, Estimated
Production will be based on our production
projections. After the first year of the Term,
Estimated Production will be based on
historical production for that month in the
prior year. If we bill you for Estimated
Production because your System is not
reporting production, and we subsequently
determine that we have either overestimated
or underestimated the actual production, then
we will adjust the next bill downward (to
refund overbilling) or upward (to make up for
lost billing). You will not be charged for
Estimated Production when the System is not
producing electricity due to our fault, or if it’s
due to grid failure or power outages caused
by someone other than you. WE DO NOT
WARRANT OR GUARANTEE THE
AMOUNT OF ENERGY PRODUCED BY
THE SYSTEM FOR ANY PERIOD OR
THAT YOU WILL REALIZE ANY
SAVINGS AS COMPARED TO THE
COSTS OF PURCHASING EQUIVALENT
POWER FROM YOUR LOCAL UTILITY.
3. ENERGY STORAGE SERVICES
3.1. Energy Storage Services; Grid
Outages. During the Term, System Owner
will operate and maintain the Battery and
discharge electricity from the Battery to
offset your electricity usage. We will
determine the times and rates of charging and
discharging in our sole discretion. You may
use the Battery to provide backup power to
your home in the event of a grid outage.
3.2. Energy Storage Management. You
acknowledge and agree that we may use the
Battery to support the local grid or provide
certain services, including ancillary services,
capacity, and similar services (“Energy
Storage Services”) and that we may assign
this right to third parties, including your
utility. For the avoidance of doubt, your
consent shall not be required for any actions
undertaken by us over the operation and
maintenance of the Battery, and you shall not
be entitled to any compensation in
connection with these services.
3.3. Metering. You agree to permit us to
conduct temporary shutdowns of the main
electrical service in order to install the
necessary metering to provide the Energy
Storage Services. If such a shutdown is not
permissible, then you agree to work with us
in good faith to provide real-time access to
home load data through an existing energy
management system or other means.
4. YOUR OBLIGATIONS
4.1. System, Home and Property
Maintenance.
You agree to:
only purchase electric power for your
home from [CCA Name]: (i) pursuant to the
[CCA Retail Program Name] tariff for
amounts equivalent to the System
Generation; and (ii) pursuant to any
supplemental utility tariff for your onsite
energy requirements in excess of that
satisfied by this foregoing subsection (i);
only have the System repaired pursuant to
the Limited Warranty (described in Section
5) and reasonably cooperate when repairs are
being made;
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keep trees, bushes and hedges trimmed so
that the System receives as much sunlight as
it did when Tesla installed it;
not modify your Home in a way that shades
the System;
be responsible for any conditions at your
Home that affect the installation (e.g.,
blocking access to the roof, or removing a
tree that is in the way, prior work you have
done on your Home that was not permitted);
not remove any markings or identification
tags on the System;
as set forth in 4.7, permit System Owner or
its designees, after giving you reasonable
notice, to inspect the System for proper
operation as we reasonably determine
necessary;
use the System primarily for personal,
family or household purposes, but not to heat
a swimming pool;
not do anything, permit or allow to exist
any condition or circumstance that would
cause the System not to operate as intended
at the Property;
notify System Owner (a) if you think the
System is damaged or appears unsafe, (b) if
any part of the System is stolen, and/or (c)
prior to changing your power supplier;
have anyone with an ownership interest in
your Home sign this Agreement;
return any documents we send you for
signature (like incentive claim forms) within
seven (7) days of receiving them; and
maintain and make available, at your cost,
a functioning indoor Internet connection with
one available wired Ethernet port and
standard AC power outlet within eighty (80)
feet of the System’s AC/DC inverter(s).
4.2. System Construction, Repair,
Insurance and System Owner’s
obligations.
We agree to:
schedule the installation of the System at a
mutually convenient date and time;
construct the System according to written
plans you approve or review;
provide you with a web-enabled meter to
accurately measure the amount of power the
System delivers to you;
provide you with a home energy
evaluation;
notify you if the System design has to be
materially changed so that you can review
any such changes;
clean up after ourselves during the
construction of the System;
insure the System against all damage or
loss unless (A) that damage or loss is caused
by your gross negligence; or (B) you
intentionally damage the System (Upon
damage to or destruction of the System, you
will not be entitled to receive or retain any
insurance proceeds. In cases where we bear
the risk of loss, our sole obligation to you will
be to repair or replace the System to the
extent required by the Warranty;
insure our actions, covering damages to
your property caused by faulty installation,
System malfunction or manufacturing
defects;
not be a loss payee (or named insured) on
the insurance policy covering your Home;
and
repair the System solely in accordance
with the Limited Warranty and reasonably
cooperate with you when scheduling repairs.
4.3. Home Renovations or Repairs. If you
want to make any repairs or improvements to
the Property that could interfere with the
System (such as repairing the roof where the
System is located), you may only have the
System removed and replaced pursuant to the
Limited Warranty.
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4.4. Late Charges. In addition to any other
amounts you agree to pay in this Agreement,
you agree to pay the following:
Late Payments: accrue interest at the lesser
of twelve percent (12%) annually or the
maximum allowable percentage by
applicable law.
4.5. Taxes. Your electricity rate as set forth
in this Agreement is composed of an
electricity rate plus current applicable taxes.
You agree to pay any changes in the
applicable taxes related to this Agreement.
Thus, if current tax rates change or new taxes
are imposed, your electricity rate under this
Agreement will change to reflect the changed
and/or new taxes. If this Agreement contains
a purchase option at the end of the Term, you
agree to pay any applicable tax on the
purchase price for the System. You also agree
to pay as invoiced any applicable personal
property taxes on the System.
4.6. No Alterations. You agree that you
will not make any modifications,
improvements, revisions or additions to the
System or take any other action that could
void the Limited Warranty on the System
without System Owner’s prior written
consent. If you make any modifications,
improvements, revisions or additions to the
System, they will become part of the System
and shall be System Owner’s property.
4.7. Access to the System.
4.7.1. You grant to System Owner as
well as its designees (including Tesla),
and their employees, agents and
contractors, a non-exclusive license
running with the Property with the right
to reasonably access all of the Property as
necessary for the following purposes:
installing, constructing, operating,
maintaining, owning, repairing,
removing and replacing the System or
making any additions to the System or
installing complementary technologies
on or about the location of the System;
enforcing System Owner’s rights as
to this Agreement and the System;
installing, using and maintaining
electric lines and inverters and meters,
necessary to interconnect the System to
your electric system at the Property
and/or to the utility’s electric distribution
system; and/or
taking any other action reasonably
necessary in connection with installing,
constructing, operating, maintaining,
owning, repairing, removing and
replacing the System.
This access right shall continue for up to
ninety (90) days after this PPA expires
(the “License Term”) to provide System
Owner with time to remove the System at
the end of the Agreement. We shall
provide you with reasonable notice of a
need to access the Property when giving
such notice is possible and commercially
reasonable.
4.7.2. During the time that System
Owner has access rights you shall ensure
that its access rights are preserved and
shall not interfere with or permit any
third party to interfere with such rights or
access. You agree that System Owner or
its designee may record a customary
memorandum of license in the land
records respecting the License. You
agree that the System is not a fixture, but
System Owner has the right to file any
UCC-1 financing statement or fixture
filing that confirms its interest in the
System. Neither this Agreement nor any
UCC-1 financing statement we may file
in connection with this Agreement
constitutes or imposes a consensual lien
on your Home or Property.
4.8. Indemnity. To the fullest extent
permitted by law, you shall indemnify,
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defend, protect, save and hold harmless the
City in which System was installed , System
Owner, Tesla, each of their respective elected
and appointed officials, employees, officers,
directors, agents, financing partners,
successors and assigns (the “Indemnified
Parties”) from any and all third party claims,
actions, costs, expenses (including
reasonable attorneys’ fees, expert witness
fees, and expenses), damages, liabilities,
penalties, losses, obligations, injuries,
demands and liens of any kind or nature
arising out of, connected with, relating to or
resulting from your negligence or willful
misconduct; provided, that nothing herein
shall require you to indemnify any
Indemnified Party for its own negligence or
willful misconduct. The provisions of this
paragraph shall survive termination or
expiration of this Agreement.
4.9. Payments. SUBJECT TO SECTION
4.2 ABOVE, YOU AGREE THAT THE
OBLIGATION TO PAY ALL AMOUNTS
DUE UNDER THIS AGREEMENT SHALL
BE ABSOLUTE AND UNCONDITIONAL
UNDER ALL CIRCUMSTANCES AND
NOT BE SUBJECT TO ABATEMENT,
DEFENSE, COUNTERCLAIM, SETOFF,
RECOUPMENT OR REDUCTION FOR
ANY REASON WHATSOEVER, IT
BEING THE EXPRESS INTENT OF THE
PARTIES THAT ALL AMOUNTS
PAYABLE BY YOU HEREUNDER
SHALL BE, AND CONTINUE TO BE,
PAYABLE IN ALL EVENTS INCLUDING
BY YOUR HEIRS AND ESTATE AND
YOU HEREBY WAIVE ALL RIGHTS
YOU MAY HAVE TO REJECT OR
CANCEL THIS AGREEMENT, REVOKE
ACCEPTANCE OF THE SYSTEM, OR TO
GRANT A SECURITY INTEREST IN THE
SYSTEM.
5. WARRANTY
5.1. Limited Manufacturer Warranties.
The solar panels, inverter and Powerwall each
come with a warranty from their manufacturers
(each, a “Limited Warranty”). The solar panel
warranty will be at least 25 years and will
guarantee at least 80% of nameplate capacity for
at least 25 years. The inverter warranty will cover
defects for at least 10 years. The Powerwall(s),
are covered by the Tesla Powerwall Limited
Warranty. You agree that, as the System Owner,
we have the right make warranty claims for the
solar panels or inverter or Powerwalls.
5.2. Warranty Disclaimer
YOU UNDERSTAND THAT THE SYSTEM IS
WARRANTED SOLELY UNDER THE
LIMITED MANUFACTURER WARRANTIES,
AND THAT NEITHER TESLA NOR SYSTEM
OWNER MAKES ANY REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED,
AS TO THE MERCHANTABILITY, FITNESS
FOR ANY PARTICULAR PURPOSE,
CONDITION, DESIGN, CAPACITY,
SUITABILITY OR PERFORMANCE OF THE
SYSTEM OR ITS INSTALLATION.
6. TRANSFER
You agree that System Owner may assign, sell or
transfer the System and this Agreement, or any
part of this Agreement or the exhibits, without
your consent. Such an assignment will not change
our obligation to maintain and repair your System
as set forth in the Warranty. An assignment of
System Owner’s rights and/or obligations under
this Agreement shall not result in any change to
your rights and/or obligations under this
Agreement.
7. OWNERSHIP OF THE SYSTEM; TAX
CREDITS AND/OR REBATES
You agree that the System is the System Owner’s
personal property under the Uniform Commercial
Code. You understand and agree that this
Agreement is not a contract to sell or lease the
System to you. System Owner owns the System
for all purposes, including any data generated
from the System. You shall at all times keep the
System free and clear of all liens, claims, levies
and legal processes not created by us, and shall at
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your expense protect and defend us against the
same.
You understand and agree that any and all tax
credits, incentives, renewable energy credits,
green tags, carbon offset credits, utility rebates or
any other non-power attributes of the system are
the property of and for the benefit of the System
Owner or its designee, usable at its sole
discretion. System Owner shall have the
exclusive right to enjoy and use all such benefits,
whether such benefits exist now or in the future.
You agree to refrain from entering into any
agreement with your utility that would entitle
your utility to claim any such benefits. You agree
to reasonably cooperate with System Owner so
that it may claim any tax credits, renewable
energy credits, rebates, carbon offset credits or
any other benefits from the system. This may
include to the extent allowable by law, entering
into net metering agreements, interconnection
agreements, and filing renewable energy/carbon
offset credit registrations and/or applications for
rebates from the federal, state or local
government or a local utility and giving these tax
credits, renewable energy/carbon credits, rebates
or other benefits to System Owner.
8. PURCHASING SYSTEM PRIOR TO
END OF TERM
In addition to having the option to purchase the
System at the end of the Term, you have the
option to purchase the System prior to the end of
the Term as detailed below. To exercise this
option, you must be in good standing under this
Agreement, and you need to give us at least one
(1) month, but not more than three (3) months
prior written notice. You can purchase this
System:
on the five (5) year anniversary of
the beginning of the Term and every annual
anniversary after the five (5) year
anniversary; and
at any time after the five (5) year
anniversary of the beginning of the Term,
when you sell your Home; and
if we ever cease our operations and
fail to provide for a substitute System
provider.
The price you will pay for the System under this
section will be the higher of (a) the System’s fair
market value (“FMV”) and (b) the Income Loss
(as defined below). If you and the System Owner
cannot agree upon FMV, a third-party
independent appraiser will be retained to compute
the System’s FMV. Our maintenance and repair
obligations in accordance with the Limited
Warranty set forth in Section 5 will end when and
if you purchase the System pursuant to this
section.
9. RENEWAL
If you are in compliance with this Agreement,
you have the option to renew this Agreement for
an additional five (5) year renewal period. We
will send you a renewal form three (3) months
prior to the expiration of the Term, which form
shall set forth the new Monthly Payments due
under the renewal Agreement, based on our
assessment of the then current fair market value
of the System. If you want to renew, complete the
renewal form and return it to us at least one (1)
month prior to the end of the Agreement. In the
event that you notify us that you do not agree to
the new Monthly Payments this Agreement shall
expire by its terms on the termination date. If you
don’t send us anything in writing after we send
you the renewal form, then this Agreement shall
automatically renew for an additional five (5)
year term (the “Renewal Term”) with (i) an
energy rate set at ten percent (10%) less than the
then-current average rate charged by your utility
for residential customers and (ii) a monthly
Powerwall fee set at the same fixed monthly fee
for the energy storage services as that which
applied to the Initial Term. Following renewal,
the Agreement shall terminate at the end of the
Renewal Term.
10. SELLING YOUR HOME
If you sell your Home, you can:
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Transfer the Agreement and the
Monthly Payments. If the person buying
your Home agrees to abide by the terms
and conditions for participating in the
[CCA Retail Program Name], then the
person buying your Home can sign a
transfer agreement assuming all of your
rights and obligations under this
Agreement.
Purchase the System (Section 8).
You agree to give us at least fifteen (15) days but
not more than three (3) months prior written
notice if you want someone to assume your
Agreement obligations. In connection with such
assumption, you, your approved buyer and we
shall execute a written transfer of this Agreement.
If you sell your Home and cannot comply with
any of the options above, you will be in default
under this Agreement. This Section 10 includes a
Home sale by your estate or heirs.
This Agreement is free of any restrictions that
would prevent the homeowner from freely
transferring the Home. In the event of a
foreclosure of the Home, your lender has the right
(but not the obligation) to do ONE of the
following:
terminate this Agreement and
require the System Owner to remove the
System subject to your obligations under
Sections 13 and 14;
become a beneficiary (but not
obligor) of your Agreement free of
charge (i.e., receive power from the
System and enforce the Limited
Warranty but not have the obligation to
make payment, which obligation will
remain with you – if you don’t make
timely payment, you will be in default
under Section 13 and we can terminate,
remove the System and take all other
remedies we have under Section 14;
enter into a new power purchase
agreement with us on terms no less
favorable than this Agreement; or
require transfer of this Agreement
under this Section 10 to a subsequent
purchaser of the Home.
We will not prohibit the sale, conveyance or
refinancing of the Home. The System Owner may
choose to file in the real estate records a UCC-1
financing statement (“Fixture Filing”) that
preserves its rights in the System. The Fixture
Filing is intended only to give notice of its rights
relating to the System and is not a lien or
encumbrance against the Home. The System
Owner shall explain the Fixture Filing to any
subsequent purchasers of the Home and any
related lenders as requested. The System Owner
shall also accommodate reasonable requests from
lenders or title companies to facilitate a purchase,
financing or refinancing of the Home.
EXCEPT AS SET FORTH IN THIS SECTION
10, YOU WILL NOT ASSIGN, SELL, PLEDGE
OR IN ANY OTHER WAY TRANSFER YOUR
INTEREST IN THIS AGREEMENT WITHOUT
OUR PRIOR WRITTEN CONSENT, WHICH
SHALL NOT BE UNREASONABLY
WITHHELD.
11. LOSS OR DAMAGE
Unless you are grossly negligent or you
intentionally damage the System, the System
Owner will bear all of the risk of loss, damage,
theft, destruction or similar occurrence to any or
all of the System. Except as expressly provided in
this Agreement, no loss, damage, theft or
destruction will excuse you from your obligations
under this Agreement, including Monthly
Payments.
If there is loss, damage, theft, destruction or a
similar occurrence affecting the System, and you
are not in default of this Agreement, you shall
continue to timely make all Monthly Payments
and pay all other amounts due under the
Agreement and, cooperate with us, at our sole
cost and expense, to have the System repaired
pursuant to the Limited Warranty.
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12. LIMITATION OF LIABILITY
12.1. No Consequential Damages.
LIABILITY UNDER THIS AGREEMENT
SHALL BE LIMITED TO DIRECT,
ACTUAL DAMAGES ONLY. YOU
AGREE THAT IN NO EVENT SHALL
TESLA OR EITHER PARTY BE LIABLE
TO ANY OTHER PARTY FOR
CONSEQUENTIAL, INCIDENTAL,
PUNITIVE, EXEMPLARY, SPECIAL OR
INDIRECT DAMAGES EXCEPT AS
EXPRESSLY SET FORTH IN THIS
AGREEMENT.
12.2. Actual Damages. EXCEPT FOR
CLAIMS UNDER SECTION 4.8
(INDEMNITY), NO PARTY’S LIABILITY
TO ANY OTHER WILL EXCEED AN
AMOUNT EQUAL TO THE MAXIMUM
AMOUNT THAT COULD BE PAYABLE
BY YOU UNDER SECTION 14.
DAMAGES TO YOUR HOME,
BELONGINGS OR PROPERTY
RESULTING FROM THE
INSTALLATION OR OPERATION OF
THE SYSTEM ARE COVERED IN THE
LIMITED WARRANTY SET FORTH IN
SECTION 5.
13. DEFAULT
You will be in default under this Agreement if
any of the following occur:
you fail to make any payment when it is
due and such failure continues for a period of
ten (10) days;
you fail to perform any material obligation
that you have undertaken in this Agreement
(which includes doing something you have
agreed not to do, like alter the System) and
such failure continues for a period of fourteen
(14) days after written notice;
you or your guarantor have provided any
false or misleading financial or other
information to obtain this Agreement;
you assign, transfer, encumber, sublet or
sell this Agreement or any part of the System
without our prior written consent; or
you or any guarantor makes an assignment
for the benefit of creditors, admits in writing
its insolvency, files or there is filed against
you or it a voluntary petition in bankruptcy,
is adjudicated bankrupt or insolvent or
undertakes or experiences any substantially
similar activity.
14. REMEDIES IN CASE OF DEFAULT
If you default under the terms of this Agreement,
we may take any one or more of the following
actions. If this Agreement or the law requires us
to do so, we will give you notice and wait any
period of time required before taking any of these
actions.
We may:
terminate this Agreement;
take any reasonable action to correct your
default or to prevent our loss, including by
directing your utility to file a lien against your
real property (your home); any amount we
pay will be added to the amount you owe us
and will be immediately due;
require you, at your expense, to return the
System or make it available to us in a
reasonable manner;
proceed, by appropriate court action, to
enforce performance of this Agreement and
to recover damages for your breach;
disconnect, turn off or take back the
System by legal process or self-help, subject
to applicable law.
report such non-operational status of the
System to your utility, informing them that
you are no longer net metering;
charge you a reasonable reconnection fee
for reconnecting the System to your utility or
turning your System back on after we
disconnect or turn off the System due to your
default;
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recover from you a payment equal to the (i)
any and all direct damages incurred by
System Owner as a result of your default,
plus (ii) any loss of income under any
agreement between Owner and Program
Fund with resulting for the remaining Term,
discounted to net present value at a discount
rate of 3% (“Income Loss”), plus (iii)
reasonable compensation, on a net after tax
basis assuming a tax rate of 35%, for the
loss or recapture of (A) the investment tax
credit equal to the percentage amount under
then applicable tax laws of the System cost,
including installation; and (B) accelerated
depreciation over five (5) years in a
percentage amount allowed under then
applicable tax laws of the System cost,
including installation, plus (iv) all taxes, late
charges, penalties, interest and all or any
other sums then accrued or due and owing; or
use any other remedy available to us in this
Agreement or by law.
We may submit to credit reporting agencies
(credit bureaus) negative credit reports that would
be reflected on your credit record if you do not
pay any amounts due under this Agreement as
required.
You agree to repay us for any reasonable amounts
we pay to correct or cover your default. You also
agree to reimburse us for any costs and expenses
we incur relating to the System’s return resulting
from early termination. By choosing any one or
more of these remedies, We do not give up any
right to use another remedy. By deciding not to
use any remedy should this Agreement be in
default, we do not give up our right to use that
remedy in case of a subsequent default.
15. SYSTEM REMOVAL; RETURN
At the end of the Term or the termination of this
Agreement, if this Agreement has not been
renewed or if you have not exercised your
purchase option (if any) and you have not
defaulted, then within ninety (90) days you agree
to call us at the telephone number listed in the
accompanying Disclosure Statement to schedule
a convenient time for us to remove the System
from your Home at no cost to you.
16. APPLICABLE LAW
This Agreement is made and entered into in the
State of California, and shall in all respects be
interpreted, enforced and governed under the
laws of said State. The parties agree that the
exclusive jurisdiction for any lawsuit related to or
arising under this Agreement shall be in the
Superior Court of California, County of Los
Angeles, or the United States District Court for
the Central District of California. Each party
waives any objection to jurisdiction and venue for
any such lawsuit.
17. WAIVER
Any delay or failure of a party to enforce any of
the provisions of this Agreement, including but
not limited to any remedies listed in this
Agreement, or to require performance by the
other party of any of the provisions of this
Agreement, shall not be construed to (i) be a
waiver of such provisions or a party’s right to
enforce that provision; or (ii) affect the validity of
this Agreement.
18. NOTICES
All notices under this Agreement shall be in
writing and shall be delivered by personal
delivery, facsimile transmission, electronic mail,
overnight courier, or certified or registered mail,
return receipt requested.
19. ENTIRE AGREEMENT; CHANGES
This Agreement contains the parties’ entire
agreement regarding the sale and purchase of
power generated by the System. There are no
other agreements regarding this Agreement,
either written or oral. Any change to this
Agreement must be in writing and signed by both
parties. If any portion of this Agreement is
determined to be unenforceable, the remaining
provisions shall be enforced in accordance with
their terms or shall be interpreted or re-written so
as to make them enforceable.
20. PUBLICITY
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You give us permission to take pictures of the
System as installed on your Home to show to
other customers, include in informational
materials, include in promotional materials,
and/or display on our website(s).
I have read this Agreement, including the
Exhibits, in its entirety and agree to be bound by
its terms. I also acknowledge that I have received
a complete copy of this Agreement.
Owner’s Name: [Insert]
Signature: __________________________
Date: __________________________
Co-Owner’s Name (if any): [Insert]
Signature: __________________________
Date: __________________________
[PARTICIPATE ENERGY FUND I, LLC], a
California limited liability company
Signature: __________________________
Date: __________________________
Ver.10-22 1
New Homes Builder Framework Agreement
This New Homes Builder Framework Agreement (“Agreement”) is between Participate Energy, LLC (“Program Fund” or “We” or “Us”) and __________________ (“You” or “Home Builder”) and sets forth the terms for participating in the Distributed Microgrid Program for New Homes (the “Program”) offering You the ability to place orders for supply and installation of solar panels and Powerwalls and other products as may be added from time to time (“Tesla Products”), which orders (“Orders”) will be fulfilled and installed by the Program’s authorized subcontractor, Tesla, Inc. (“Tesla”), in accordance with the terms as set forth herein.
1. Term. Unless we agree otherwise, the term of this Agreement starts on the day it is signed and ends on the third anniversary of that date. This Agreement will continue for additional, successive 1-year periods even after the initial term ends unless either party notifies the other at least 90 days before the expiration of the then-current term that this Agreement is terminated for all purposes. That termination will be effective when the then-current term expires.
2. Community Specific Terms. If You want to order Tesla Products, You must tell Us about each subdivision of new homes for which You want to order Tesla Products (“Community”) by completing Exhibit 1 and submitting it to Us at https://forms.office.com/r/WXauLgVd34. We will review Your submittal and confirm by email whether all of the Tesla Products can be installed in the Community. We may make reasonable adjustments to Your submittal in order to ensure that Tesla Products can be installed successfully in the Community and to establish pricing and quantities for those products (“Community-Specific Terms”). You agree to reasonably cooperate with Us in connection with the development of the Community-Specific Terms, including by providing Us with access to the Community. Even though the Community-Specific Terms are a separate document, they are considered part of each order You submit for the affected Community.
3. Orders.
a. Once We send You the email confirmation with the Community-Specific Terms, You may submit Orders based on this Agreement and the Community-Specific Terms. You may submit Orders for Tesla Products via the Energy Order Tool at the internet location (website) that We will provide to You. The Tesla Products You order shall be delivered and installed in accordance with Your Order. You must submit each Order at least 21 days before the installation date proposed in that Order. Your submittal of Orders in that manner means that You have agreed to the quantities and types of Tesla Products as stated in the Order (“Your Tesla Products”).
We will review Your Order to ensure that it tracks the Community Specific Terms. If We reasonably believe that the Order doesn’t track the Community-Specific Terms, We will notify You and the parties will then reasonably cooperate to resolve the issue.
b. For Your Order to be accepted by Us (each order accepted by Us, an “Accepted Order”) You must:
i. submit an Order for Tesla Products as set forth above and approved for each applicable Community; ii. agree to installation of the Tesla Products on the home corresponding to each affected Order and to host the System and, until close of escrow on the sale of the home, to purchase all of the energy from the System pursuant to an agreement with the Program Fund as System owner (each, a “Customer Agreement”);
iii. deliver a “solar ready” home that includes internal conduit installation, sufficient capacity on the electric service panel, roof dry in and order details developed in consultation with prospective home buyers sufficient for Us to install Your Tesla Products and for the home to pass inspection by the applicable building department as the authority having jurisdiction (“AHJ”). Passed inspection shall also be deemed “Acceptance” in this Agreement;
iv. assign each Customer Agreement to the applicable buyer of the home (each, a “Home Owner”) upon close of escrow on the home and assumption of the Customer Agreement by the Home Owner; and v. comply with this Agreement and Program requirements set forth by Program Fund and as may be updated from time to time.
4. Title. Title to the Tesla Products shall transfer to the Program Fund upon Acceptance in accordance with the terms and conditions of each Customer Agreement.
5. Scope of Work.
a. We will, ourselves or through our authorized subcontractors, including Tesla, oversee the design and installation of Your Tesla Products at the location listed in the Order (the “Site”), and then test it to make sure it's working properly (the “Work”) in accordance with the Tesla Work Standards attached as Exhibit 2. We will pay all installation costs, including any governmental fees for the Work. b. The Work does not include, and You will provide, internal conduit installation, roof dry in and any consultation with the person that buys each applicable home in a Community (“Home Owner”). c. You further agree to:
i. give Us and our subcontractors access to the Community so We can install Your Tesla Products, ii. reasonably cooperate with Us as We or our authorized subcontractors, including Tesla, design, install and test Your Tesla Products,
iii. install in homes covered by Your order internal conduit in accordance with Tesla’s Product Suite Pre Enclosure 6
15f
Ver.10-22 2
Wire Guidance to be provided to You by Us after preparation of the Community-Specific Terms, and iv. make sure that each Home Owner is provided with a Welcome Guide at close of escrow of their home and knows that it must contact Tesla to activate the relevant Tesla Products.
6. Subcontractors. If We intend to engage subcontractors other than Tesla to perform work related to Tesla Product installation, We will identify such subcontractors to You for Your approval, not to be unreasonably withheld or conditioned, before such subcontractor begins work within a Community. If You fail to reject a subcontractor by notice to Us delivered within five (5) business days after our identification of same pursuant to this Section 6, such subcontractor will be deemed approved by You.
7. Failure to Perform.
a. We agree to notify one another in writing if either of us is not satisfying its obligations under this Agreement or with respect to an Order. Whoever is notified of not meeting its obligations will have 30 days after receiving that notice to correct the issue. If not, whoever gave the notice can terminate this Agreement or the affected Order subject to the operation of the dispute resolution terms in Section 15(c). b. In addition, if We notify You that You have failed to fulfill the conditions for an Order, We can suspend our work on that Order.
c. If You terminate an Order for Our failure to perform before installation of Your Tesla Products for that Order has commenced, we will stop work and cancel any Order for those products. d. If either party terminates an Order for the other party’s failure to perform, except as specified in the next sentence We may take back all components of Your Tesla Products we delivered to You that have not yet been installed for that Order and shall not have any further obligation to deliver product to You pursuant to this Agreement or that Order. In addition, if an Order is terminated by You pursuant to this Section, We will complete the installation of Your Tesla Products where installation is partially complete, unless otherwise requested by You (in which case, We will deinstall and remove Your Tesla Products from the affected home and return the jobsite to its original condition, at no cost to You). Each of us will also be able to pursue all rights and remedies available at law or in equity with respect to the failure to perform, except as otherwise provided in Section 8, below. Breaches of one or more Orders will not constitute breaches under any other Orders or under this Agreement, and breaches of this Agreement independent of any Orders shall not constitute breaches of any Orders.
8. Work Standards; Warranties.
a. We agree to require that our authorized subcontractor, Tesla, will perform the Work in accordance with the Tesla Work Standards as set forth in Exhibit 2.
b. Tesla will provide limited warranties for Tesla Products in the forms attached as Exhibit 3, as applicable, which may be amended from time to time. Warranties for Tesla Products in place at the time of the Accepted Order shall apply to the Accepted Order.
c. In addition, Tesla will provide to each Home Owner the workmanship warranty attached as Exhibit 4, assuming You assign that warranty to the Home Owner.
9. Confidentiality; Publicity. Home Builder agrees to execute the non-disclosure agreement in the form attached hereto as Exhibit 5. To the extent permitted by law, each party will keep the terms of this Agreement confidential in accordance with the non-disclosure agreement (the “NDA”) and agree that this Agreement is confidential information for purposes of the NDA. (Even though the NDA is a separate document, it is considered part of this Agreement). Neither party will advertise or issue any public announcement about this Agreement, or use the other party’s mark, name or logo in any marketing literature, web sites, articles, press releases (including interviews with representatives of media organizations of any form), or any other document or electronic communication, without the other party’s written consent. You also cannot add any branding to Your Tesla Products.
10. Relationship to Home Owners. Participating Home Owners who will benefit from the Tesla Products will receive rights and warranties as set forth in the Solar Power Purchase & Energy Storage Services Agreement, which to the extent applicable will include a pass-through of the Tesla workmanship warranty to any successors (including Home Owners) during the applicable warranty period for no cost to You or a successor (including each Home Owner), and We will require Tesla to provide copies of the manuals and equipment warranties to the successor (including each Home Owner).
11. Intellectual Property. Each party (or Tesla, as the case may be) will remain the exclusive owner of any and all patents, trademarks, copyrights, trade secrets and any other intellectual or proprietary rights associated with its respective products and services and any parts or derivations thereof.
12. Home Builder Indemnity. You will defend, indemnify and hold harmless Us, any person providing financing for Us with respect to any System, any affiliate of such person providing financing, and any elected or appointed official, director, officer, partner, member, manager, agent or employee of Program Fund and each Community’s respective community choice aggregator (collectively, the “Indemnified Parties”) from any losses arising from any claim, action, suit, proceeding, investigation made or brought by any third party (“Claims”) to the extent caused by (i) injury or death of persons, or damage to or loss of property, (ii) any breach of this Agreement or applicable law by You or those for whom You are legally responsible, (iii) alleging infringement to the extent involving a particular design, process or product required or specified by Ver.10-22 3
You or where the copyright violations are contained in drawings, specifications or other documents prepared or provided by You or others for whom You are responsible, (iv) any modification by You (directly or indirectly), use or reuse of Your Tesla Products other than as permitted under this Agreement or their warranties, (v) use of Your Tesla Products in combination with any other products, materials or equipment not expressly authorized in writing by Tesla where the infringement would have been avoided by the use of Your Tesla Products not so combined, unless such other products, materials or equipment are provided, required or approved by Tesla (as indicated by reasonable evidence) for, or are intrinsic to, use of Your Tesla Products, or (vi) any modifications or changes made to Your Tesla Products by You other than at the direction (as indicated by reasonable evidence) of Tesla in circumstances where the infringement would have been avoided without such modifications or changes.
13. Limitation of Liability. Neither party will have to pay the other for any indirect damages (what lawyers call “special or consequential damages”). Also, except for a breach of confidentiality (Section 9), indemnification obligations (Section 12) or any gross negligence or willful misconduct, each party’s total liability for all damages of any kind arising out of each Order will not exceed the retail price of Your Tesla Products installed in that home.
14. Discontinuation. You understand and agree that We can choose at any time to discontinue a product, feature or option related to Your Tesla Products and that, if we do so, we can provide a comparable product, feature or option, or terminate the affected Order before installation of Your Tesla Products.
15. Compliance with Law; Governing Law; Arbitration.
a. We both agree to comply with all applicable laws and regulations in connection with this Agreement. This Agreement is governed by the laws of the State of California. Any dispute arising out of or relating to this Agreement shall be brought in the Superior Court of California, County of Los Angeles, or the United States District Court for the Central District of California, except any dispute relating to any Orders shall be brought pursuant to arbitration as set forth in Section 15(c).
b. Neither of us is bound by any terms relating to Your Tesla Products or other matters covered by this Agreement or any Order that are not contained in this Agreement or the affected Order. c. We both also agree to promptly notify the other’s senior level management if there is any dispute relating to this Agreement or any Orders and to try to resolve the dispute in good faith. If we are unable to resolve a dispute relating to an Order within 20 days after that notice is given, then either of us can take the dispute relating to such Order to arbitration through Judicial Arbitration and Mediation Services (“JAMS”) according to JAMS Streamlined Arbitration Rules. The existence, content and result of the arbitration will be confidential. The arbitration will be conducted by a single arbitrator in English and in Los Angeles, California, unless otherwise agreed by Us. We will each bear our own expenses in the arbitration and will share equally the costs of the arbitration unless the arbitrator assigns costs to one of us. Judgment upon the award rendered in the arbitration may be entered in any court of competent jurisdiction.
16. Notices. All notices under this Agreement and each Order must be in writing and must be sent via email, or express and/or certified mail, to the contacts identified in the applicable Community-Specific Terms.
17. Relationship of Parties; Assignment. This Agreement (including any orders) does not create a joint venture, partnership or agency relationship between us. Each of us can assign this Agreement and each order as collateral in connection with our financing activities and You may assign the workmanship warranty in Exhibit 4 to the Home Owner.
18. Authority. By signing this Agreement and submitting each order, each party is representing to the other that it has the authority to be bound by this Agreement, and that each party may rely on those representations. In addition, You are representing that You have the authority to be bound by each Order and to bind the person or company identified in the Order as being the buyer and You agree that Tesla may rely on that representation.
19. Insurance. With respect to each Order and through Acceptance under that Order, Home Builder shall maintain, and Program Fund shall require that its approved subcontractor, Tesla, shall maintain, the insurance set forth in Exhibit 6.
20. Third-Party Beneficiaries. The entities listed in the Community Specific Terms (if any) as express third-party beneficiaries of this Agreement shall be third party beneficiaries of this Agreement with respect to matters involving Tesla Product installations within the affected Community.
21. Survival. Sections that by their nature should survive shall survive any expiration or earlier termination of this Agreement and each Order, including Sections 8 –13, 15 –16, and 19 – this Section 21. [ Signature Page Follows ]
Ver.10-22 4
EXECUTED by the parties on __________, 2023.
[Home Builder] Participate Energy, LLC
_____________________________________________
(SIGNATURE)
_____________________________________________
(SIGNATURE)
_____________________________________________
(PRINT NAME)
_____________________________________________
(PRINT NAME)
_____________________________________________
(PRINT TITLE)
_____________________________________________
(PRINT TITLE)
Ver.10-22 5
Exhibit 1
Community Specific Terms
The following terms supplement and amend the Distributed Migrogrid Program and New Home Builder Framework Agreement and are intended to apply to each order for the Community, as applicable.
Home Builder Community
Details
Tesla Product Suite
Building Code Year
Notices Email:
Mailing:
Approved Subcontractors
Third-Party Beneficiaries
Energy System Sizes
Solar Panels (kW)
Powerwall Minimum QTY per Order
Pricing
Solar Panels ($/W)
First Powerwall per Order
Each Additional Powerwall per Order
Builder Signature:
Name:
Company:
Effective Date:
Ver.10-22 6
Exhibit 2
Tesla Work Standards
These Tesla Work Standards supplement the terms of the New Homes Builder Framework Agreement (the “Agreement”) between the Program Fund and Home Builder for each Community participating in the New Homes Solar Program offered by your respective community choice aggregator and the Program Fund through its authorized subcontractor, Tesla.
1. Tesla Scope of Work.
a. In accordance with Tesla’s standard practices and each affected Order, Tesla or its subcontractors shall design and install Your Tesla Products at the Site and complete the Work. b. Tesla will be responsible for all of its employment-related payments, contributions and obligations owed to its employees and personnel as related to the Work and for all work performed by, and all acts or omissions, of each subcontractor and will ensure that all subcontractors are licensed as required by applicable law. You will not be deemed to have any contractual obligation to any subcontractor. a. Tesla will allow You and Your subcontractors to view and review the installation process. b. Tesla will also comply with all of Your reasonable Site safety rules and allow You and Your selected roofing and other subcontractors to reasonably observe the installation process for Your Tesla Products.
2. Feedback; Acceptance.
c. Tesla encourages the submission of ideas and feedback for improvements and modifications to its performance relative to this Agreement and each Order, including with respect to Your Tesla Products and their design and integration into the homes (“Feedback”).
d. You agree to grant to Tesla a royalty-free, worldwide, perpetual license to use and incorporate into its products any Feedback provided to the other party on an as-is basis, with no representations, warranties or indemnities, which license will survive any termination of this Agreement. e. Tesla will notify You when each installation of Your Tesla Products has been completed. You will then be obligated to schedule an inspection of Your Tesla Products with the AHJ. An installation of Your Tesla Products will be considered complete only upon Passed inspection, which shall be deemed “Acceptance” of each Order. If an installation fails an inspection by the AHJ, each Party will use commercially reasonable efforts to address the deficiency and to properly install or repair Your Tesla Products promptly after such failure or rejection such that it can and seek and pass re-inspection by the AHJ.
3. Tesla Work Standard Warranties.
a. Starting on the date of installation and for a period of one (1) year after the initial close of escrow of the applicable home, Tesla warrants to You that all materials, equipment and work furnished by Tesla as part of an Order will be:
i. of good quality, free from fault and defects, and
ii. performed in a good and workmanlike manner, in accordance with all applicable laws, building codes and ordinances, and in strict conformity with the Order.
If You notify Tesla within 1 year after the initial close of escrow of the applicable home by a Home Owner, Tesla shall, at its sole expense, immediately correct or replace any Work that is defective or determined to be not in accordance with the requirements of the above warranties. b. Tesla’s warranties in this Agreement are limited, as they do not cover (i) any defect or damage to the extent caused (A) by events that are (1) beyond Tesla’s reasonable control, (2) not reasonably foreseeable, and (3) not caused by Tesla’s negligence, or (B) by Your misuse or negligence, and (ii) any material or equipment connected to Your Tesla Products that Tesla did not install. Tesla is not providing any warranties in connection with this Agreement other than those in this Agreement or in the product warranties provided by Tesla pursuant to Section 8(c), even if those other warranties are express or implied by any law. c. Tesla's warranties consistent with these terms under this Agreement shall in all cases survive termination of this Agreement and transfer of title in the home to a third-party purchaser, except for a Home Owner (whose warranties are set forth in Exhibits 3 and 4).
d. With respect to any warranty claim by You under this Section 3 for the correction, replacement and warranty work, the remedies set forth in this Section 3 and in Section 7(d) of the Agreement, as applicable, are Your sole and exclusive remedies. For clarity, the foregoing shall not limit Your ability to bring claims for other purposes not related to the correction, replacement and warranty work as set forth in this Section 3. e. The manuals and equipment warranties for Your Tesla Products are available upon request and will be sent to after You place each Order.
Ver.10-22 7
Exhibit 3
Product Warranties
Please Contact Tesla
Ver.10-22 8
Exhibit 4
Tesla Home Owner Workmanship Warranty
We might choose to make minor repairs commonly needed to install the products at no additional cost to You (like simple electric upgrades and roof preparation). We promise to repair or pay for damage we directly caused to Your home or Your property during installation of Your Tesla products. If we fail to do that, please let us know, and we will make the repair (or have someone repair it) at our cost (and that will be Your only remedy). But You need to let us know in writing and within a certain amount of time following the damage: within 4 years for Powerwall installations and within 1 year for anything else.
If there is a dispute, the maximum amount that either of us will have to pay the other is an amount equal to the retail price of the Tesla Product involved, except that Our liability for damage to a home to the extent caused by defective Tesla Products and/or Tesla workmanship will be limited to the amount the initial Home Owner paid for the home. Also, neither of us will have to pay the other for any indirect damages (what lawyers call “special or consequential damages”).
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Exhibit 5
Form of Tesla / Builder Non-Disclosure Agreement
[ insert ]
Ver.10-22 10
Exhibit 6
Insurance Coverage Requirements
1. General Obligations. Home Builder and Tesla shall be required to maintain in effect the insurance coverages referenced herein either: (a) with responsible insurance carriers with a Best Insurance Reports rating of “A-“ or better; or (b) through a formal self-insurance mechanism that has either (i) a Best Insurance Reports rating of “A-“ or better, or (ii) a financial size category of “VI” or higher, provided, that if such self-insurance program does not meet either (i) or (ii), then the party’s use of self-insurance for the coverages herein shall be subject to the other party’s approval, not to be unreasonably withheld, conditioned, or delayed.
1.1. Commercial General Liability Insurance.
1.1.1. Limits.
1.1.1.1. $5,000,000 each occurrence or per claim, combined single limit for third party bodily injury or property damage.
1.1.1.2. $5,000,000 general aggregate.
1.1.1.3. $5,000,000 products/completed operations aggregate.
1.1.2. Coverages.
1.1.2.1. The total required limits for liability coverage required herein may be met by combination of Primary and Umbrella or Excess Liability policies.
1.1.2.2. Include the other party as additional insured.
1.2. Business Automobile Liability or Similar Insurance.
1.2.1. Limits.
1.2.1.1. $1,000,000 combined single limit for third party bodily injury or property damage.
1.2.2. Coverages.
1.2.2.1. Coverage with respect to any and all vehicles of Tesla or Home Builder whether owned, hired, leased, borrowed, or non-owned, assigned to or used in connection with the Work performed under this Agreement.
1.2.2.2. Include the other party as additional insured.
1.3. Workers Compensation and Employers Liability Insurance.
1.3.1. Limits.
1.3.1.1. Workers Compensation – as required by state or federal laws. Each party may waive Workers’ Compensation Insurance requirement if they are a qualified self-insured in the state in which the Work is performed.
1.3.1.2. Employers Liability.
1.3.1.2.1. $1,000,000 bodily injury for each accident.
1.3.1.2.2. $1,000,000 bodily injury by disease for each employee.
1.3.1.2.3. $1,000,000 bodily injury by disease policy limit.
2. Other Requirements
2.1 All policies shall include a waiver of subrogation, where permitted by law. This release and waiver shall be null and void if such loss or damage may have been caused by the sole or gross negligence of the other party. If one party's insurance carrier prohibits waiver of subrogation, then each party's release and waiver shall become null and void as each waiver is given in consideration for the other.
2.2 Each party shall give the other party prior written notice in the event of cancellation, termination or for non-payment of premium of any policy required to be obtained under Attachment.
2.3 Prior to commencing any work, and upon each renewal of insurance during the term of the Agreement, Tesla and Home Builder shall provide certificates of insurance evidencing the required insurance as required by this Agreement. All certificates shall be executed by a duly authorized representative.
3. Subcontractor Requirements. The Program Fund shall require Tesla and each of its subcontractors performing Work at the Site to maintain insurance coverage in accordance with the insurance requirements of Tesla’s standard subcontract, supplier or designer agreements, as applicable.
SOLAR ENERGY SYSTEM DISCLOSURE DOCUMENT
This disclosure shall be printed on the front page or cover page of every solar energy contract for the installation of a solar energy system on a residential building.
The TOTAL COST for the solar energy system (including financing and energy / power cost if applicable) is: $0.00
To make a complaint against a contractor who installs this system and/or the home improvement salesperson who sold this system, contact the Contractors State License Board (CSLB) through their website at www.cslb.ca.gov (search:
“complaint form”), by telephone at 800-321-CSLB (2752), or by writing to P.O.
Box 26000, Sacramento, CA 95826.
If the attached contract was not negotiated at the contractor's place of business, you have a Five-Day Right to Cancel the contract, pursuant to Business and Professions Code (BPC) section 7159, as noted below. For further details on canceling the contract, see the Notice of Cancellation, which must be included in your contract.
Five-Day Right to Cancel
You, the buyer, have the right to cancel this contract within five business days. You may cancel by e-mailing, mailing, faxing, or delivering a written notice to the contractor at the contractor's place of business by midnight of the fifth business day after you received a signed and dated copy of the contract that includes this notice. Include your name, your address, and the date you received the signed copy of the contract and this notice.
This document was developed through coordination of the California Contractors State License Board and the California Public Utilities Commission pursuant to Business and Professions Code section 7169.
Enclosure 7
15g
[CCA Retail Program Name] Program Terms
Thanks for your agreement to participate in the [CCA Retail Program Name] Program (the “Program”)! Now that we have completed your order for your Solar System, including any Tesla Powerwall(s) (all of which we call your “System” below), the next step is to prepare for and schedule installation of your System. In the meantime, below are some basic terms we need you to agree to in order to make sure we are on the same page (and along with this document are some required disclosures for you to review as well). We look forward to working with you and are excited that you are joining our effort to transition the world to sustainable energy!
1. Your Program Participation. You agree to participate in the Program on the terms set forth herein, including to enter into a power purchase agreement (“PPA”) with [CCA Name] and to enroll in the applicable [CCA Retail Program Name] Program (“Participation”). Participation means You agree to allow Tesla to install the System on your home, to provide site access for regular operation and maintenance of the System and to purchase an equivalent amount of power generated by the System during the term of your PPA. You have 7 days after you agree to these terms to revoke your Participation. If you don’t do so, or if you move forward with scheduling your installation, that means you are agreeing to these Program Terms.
2. Updates to Participation Sheet. Even though we have completed an initial design of the System, we might need to make changes to that design, which also means we might need to update the System size, the estimated System production or the PPA rate based on a variety of factors, such as installation complexity or product availability. We can make minor adjustments to the size of the System provided that it does not impact projected system production by more than 20%. Your PPA rate may increase in accordance with the Program terms depending upon the scope of any required pre-installation work required to accommodate your System. If a change is expected to impact System production by more than 20% or your PPA rate, we will update the terms of your Participation. You have 7 days after you receive the updated terms to reject them. If you don’t reject them, or if you move forward with scheduling your installation, that means you are agreeing to the updated Participation terms and authorize us to develop and submit permit packets and otherwise prepare for your upcoming installation. The updated Participation terms replaces any prior terms we have agreed upon.
3. Cancellation. At any point prior to the time when we schedule your installation, either of us can cancel your order and Participation for any reason provided that we let the other know in writing (so there is no misunderstanding).
4. Permission to Operate. Tesla’s work includes ensuring that the System obtains “Permission to Operate” (or “PTO”) from your utility, provided that PTO is required for the System. There can sometimes be delays in obtaining PTO.
Tesla will work with you and your utility to try to minimize such delays.
5. Home Owner’s Association. If your home is governed by a home owner’s association or similar community organization, you are responsible for getting any required approvals and authorizations for the System.
6. Installation. We will contact you to schedule installation of the System. During installation, we might choose to make minor repairs commonly needed to install the System (like simple electric upgrades and roof preparation). We promise to repair or pay for damage we directly cause to your home or your property during installation of the System. If we fail to do that, please let us know, and we will make the repair (or have someone repair it) at our cost (and that will be your only remedy). But you need to let us know in writing and within a certain amount of time following the damage: within 10 years for Solar installations, 4 years for Powerwall installations and 1 year for anything else.
7. Equipment Limited Warranties. During the term of your Participation, any manufacturers limited warranties accrue to Participate Energy Fund I, LLC (the “System Owner”) as the owner of the System. If You (or a subsequent owner of Your home) exercises an option to purchase the System, any then-valid and assignable manufacturers limited warranties will be assignable to You (or the subsequent owner). Solar panels and inverters come with a warranty from their manufacturers. The solar panel warranty will be at least 25 years and will guarantee at least 80% of nameplate capacity for at least 25 years.
The inverter warranty will cover defects for at least 10 years. We reserve the right make warranty claims for the solar panels or inverter. If the System includes Powerwall(s), the Powerwall(s) are covered by the Tesla Powerwall Limited Warranty.
8. Site Access, Remote Monitoring and Firmware Upgrades. You agree that Tesla and the System Owner can access the System, including remotely, to monitor its performance, perform diagnostics and upgrade firmware.
Access Rights. You also hereby grant to Tesla, the System Owner and to Tesla’s or the System Owner’s agents, employees, contractors and the utility a non-exclusive license running with the Site for access to, on, over, under and across the Site the date of this Agreement until the date that is ninety (90) days following the date of expiration or earlier termination of this Agreement (the “License Term”), for the purposes of performing all of the Program-related obligations and enforcing all of the Program-related rights set forth in this Agreement and otherwise as required in order to effectuate the purposes of the Program. During the License Term, you shall preserve and protect the parties’ rights under the Licenses and access to the Site and shall not interfere, or permit any third parties under Your control to interfere with such rights or access. You agree that either Tesla or the System Owner may record a customary memorandum of license in the land records respecting the Licenses.
9. Grid Services. You agree to that the System Owner, as owner of the System, has the sole and exclusive right to use and control any Powerwall(s) installed as part of the System, except to the extent the System Owner authorizes use of any such Powerwall(s) to the extent they are available for backup power generation during a grid outage, which authorization may be granted or revoked by the System Owner or its designee at any time in its sole discretion.
10. Tesla Intellectual Property. Tesla owns all patents, trademarks, copyrights, trade secrets and any other intellectual property rights associated with the System. Tesla gives you a limited, non-exclusive, license to use any software embedded in the System solely to the extent necessary in connection with the use and operation of the System.
11. Privacy. Information developed by or shared with Tesla in accordance with this Program will be governed by Tesla’s Privacy Policy. You agree that we may share your information with [CCA Name], the System Owner, your utility provider and our respective service providers, business partners and affiliates.
12. Limitation of Liability. If there is a dispute, the maximum amount that either of us will have to pay the other is the replacement cost of the System for anything arising out of these Program terms. Also, neither of us will have to pay the other for any indirect damages (what lawyers call “special or consequential damages”).
13. Governing Law. These Program terms are governed by the laws of the State where your System is installed.
14. Notices. You can find applicable lien notices, certain warnings required by law, and details of our insurance attached to these purchase terms.
15. Agreement to Arbitrate. Please read this part carefully because it means you are agreeing that any unresolved dispute between you and Tesla will not be decided by a judge or jury in a public courtroom, but instead by a single arbitrator in a private arbitration.
If you have a dispute with Tesla, Inc. or its affiliates (which we call “Tesla”) or any party participating in the Program arising out of or relating to any aspect of this Agreement or your Participation in this Program, please send us an email to [email protected], describing your dispute and how you would like it resolved. If it is not resolved within 60 days from the date of your email, you agree that your dispute can only be resolved by a single arbitrator in an arbitration administered by the American Arbitration Association (AAA) under its Consumer Arbitration Rules. This includes claims arising before you ordered your System (such as claims related to statements Tesla made about our products). We will pay all AAA fees for any arbitration, which will be held in the city or county of your legal residence.
To learn more about the Rules and how to begin an arbitration, you can call any AAA office or go to www.adr.org.
The arbitrator can only resolve disputes between you and Tesla, and cannot consolidate claims from others without consent from you, Tesla, and the others. You can only bring claims in arbitration against Tesla in your individual capacity and not as a plaintiff or class member in any class or representative action (and the same is true for Tesla).
If a court or arbitrator decides that any part of this agreement to arbitrate cannot be enforced as to a specific claim for relief or remedy (such as what lawyers call “injunctive” or “declaratory” relief), then that claim or remedy (and only that claim or remedy) will be carved out of the arbitration and can be filed in court; all other claims must be arbitrated.
If you prefer, you can take your individual dispute to a small claims court instead. If you don’t want to agree to arbitration, you can "opt out” of arbitration by sending us a letter within 30 days after placing your initial order for your System. Please send the letter to Tesla, Inc.; P.O. Box 15430; Fremont, CA 94539-7970 and include your name, your order number, the name of the product you ordered, and a statement explaining your desire to opt out of arbitration. If you do not opt out, your agreement to arbitrate overrides any different arbitration agreement between us, including any arbitration agreement in a contract involving another Tesla product or service. [CCA Retail Program Name] Program Participation Sheet
(Home Improvement)
Your information and installation location
{&Customer.Name}
{&Customer.SpouseName}
{&Site.StreetOnContract}
{&Site.CityStateZipOnContract}
{&Customer.Phone}
Tesla Notice Information
Tesla, Inc. of 3500 Deer Creek Road, Palo Alto, CA, 94304 888-765-2489
CA CSLB 949283
Installer
Tesla Energy Operations, Inc. of {&Headquarters.FullAddress} {&Site.SCContractorLicense}
System and Purchase Price
Description of the Project and Description of the Significant Materials to be Used and Equipment to be Installed {&Table.PriceSheet}
Customer’s Initials: {{_es_signer1_initials}}
Schedule of Payments
Not Applicable. The System will be purchased by System Owner at no up-front cost to Customer.
Customer payment obligation is set forth in the Power Purchase Agreement (PPA) with [CCA Name] and will be based on the following PPA rate:
14.5¢ / kWh (Pre-construction work: < $750)
15.0¢ / kWh (Pre-construction work: $750 - $2,500)
15.5¢ / kWh (Pre-construction work: $2,500 - $5,000)
* Projects that require pre-construction work at a cost greater than $5,000 are ineligible for the Program unless Customer bears these expenses.
Powerwall pricing: $115.00 / month for the 1st Powerwall; $75.00 / month for each additional Powerwall.
The schedule of progress payments must specifically describe each phase of work, including the type and amount of work or services scheduled to be supplied in each phase, along with the amount of each proposed progress payment.
IT IS AGAINST THE LAW FOR A CONTRACTOR TO COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET DELIVERED. HOWEVER, A CONTRACTOR MAY REQUIRE A DOWNPAYMENT.
Customer’s Initials: {{_es_signer1_initials}}
Approximate Installation Start Date
7-90 days from contract signing
Approximate Completion Date
7- 90 days from the day installation begins
Signed by
Your signature
{{_es_signer1_signature}}
Name: {&Customer.Name}
Date: {{_es_signer1_date}}
{{_es_signer2_signature}}
Name: {&Customer.SpouseName}
Date: {{_es_signer2_date}}
_
_
Name: Tyler Moragne
Title: Director, Residential Operations
You are entitled to a completely filled in copy of this Agreement, signed by both you and Tesla, before any work may be started.
Exhibit 1
Cancellation Rights
(TESLA, INC. COPY)
NOTICE OF CANCELLATION
STATUTORILY-REQUIRED LANGUAGE
Notice of Cancellation
Date of Transaction: {{_es_signer1_date}}{{_es_signer2_date}} You may CANCEL this transaction, without any penalty or obligation, within THREE BUSINESS DAYS OR FIVE BUSINESS DAYS (CA CUSTOMERS ONLY) from the above date. If you cancel, any property traded in, any payments made by you under the contract or sale and any negotiable instrument executed by you will be returned within TEN DAYS following receipt by the seller (Tesla, Inc.) of your cancellation notice, and any security interest arising out of the transaction will be canceled. If you cancel, you must make available to the seller (Tesla, Inc.) at your residence, in substantially as good condition as when received, any goods delivered to you under this contract or sale, or you may, if you wish, comply with the instructions of the seller (Tesla, Inc.) regarding the return shipment of the goods at the seller’s (Tesla, Inc.’s) expense and risk. If you do make the goods available to the seller (Tesla, Inc.) and the seller (Tesla, Inc.) does not pick them up within 20 days of the date of your notice of cancellation, you may retain or dispose of the goods without any further obligation. If you fail to make the goods available to the seller (Tesla, Inc.), or if you agree to return the goods to the seller (Tesla, Inc.) and fail to do so, then you remain liable for performance of all obligations under the contract.
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice to Tesla, Inc., Document Receiving, 6569 Las Vegas Blvd. S., Unit 200, Las Vegas, NV 89119 NO LATER THAN MIDNIGHT of the date that is THREE BUSINESS DAYS OR FIVE BUSINESS DAYS (CA CUSTOMERS ONLY) from the date you signed the Agreement.
I, ____________________, hereby cancel this transaction on _________________________ [Date].
Customer’s Signature:
__________________________________________
Customer’s Signature:
__________________________________________
(CUSTOMER COPY)
NOTICE OF CANCELLATION
STATUTORILY-REQUIRED LANGUAGE
Notice of Cancellation
Date of Transaction: {{_es_signer1_date}}{{_es_signer2_date}} You may CANCEL this transaction, without any penalty or obligation, within THREE BUSINESS DAYS OR FIVE BUSINESS DAYS (CA CUSTOMERS ONLY) from the above date. If you cancel, any property traded in, any payments made by you under the contract or sale and any negotiable instrument executed by you will be returned within TEN DAYS following receipt by the seller (Tesla, Inc.) of your cancellation notice, and any security interest arising out of the transaction will be canceled. If you cancel, you must make available to the seller (Tesla, Inc.) at your residence, in substantially as good condition as when received, any goods delivered to you under this contract or sale, or you may, if you wish, comply with the instructions of the seller (Tesla, Inc.) regarding the return shipment of the goods at the seller’s (Tesla, Inc.’s) expense and risk. If you do make the goods available to the seller (Tesla, Inc.) and the seller (Tesla, Inc.) does not pick them up within 20 days of the date of your notice of cancellation, you may retain or dispose of the goods without any further obligation. If you fail to make the goods available to the seller (Tesla, Inc.), or if you agree to return the goods to the seller (Tesla, Inc.) and fail to do so, then you remain liable for performance of all obligations under the contract.
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice to Tesla, Inc., Document Receiving, 6569 Las Vegas Blvd. S., Unit 200, Las Vegas, NV 89119 NO LATER THAN MIDNIGHT of the date that is THREE BUSINESS DAYS OR FIVE BUSINESS DAYS (CA CUSTOMERS ONLY) from the date you signed the Agreement.
I, ____________________, hereby cancel this transaction on _________________________ [Date].
Customer’s Signature:
__________________________________________
Customer’s Signature:
__________________________________________
Exhibit 2
NOTICES
Bonds. The owner or tenant has the right to require the contractor to have a performance and payment bond.
Extra Work and Change Orders. Extra Work and Change Orders become part of the contract once the order is prepared in writing and signed by the parties prior to commencement of any work covered by the new change order. You may not require a contractor to perform extra or change-order work without providing written authorization prior to the commencement of work covered by the new change order. Extra work or a change order is not enforceable against you unless the change order also identifies all of the following in writing prior to the commencement of work covered by the new change order:(i) the scope of the extra work or change, (ii) the cost to be added or subtracted from the contract; and (iii) the effect the order will have on the schedule of progress payments or the completion date. Notwithstanding this provision, the Contractor shall have the right to substitute System equipment without Customer’s agreement, so long as that substitution adds no extra cost to the project and does not materially affect the System’s performance. The Contractor’s failure to comply with the requirements of this paragraph does not preclude the recovery of compensation for work performed based on legal or equitable remedies designed to prevent unjust enrichment.
Insurance Tesla carries the following insurance applicable to the work being performed under this Agreement:
• Commercial General Liability Insurance (CGL). Tesla carries commercial general liability insurance with coverage amounts that meet or exceed those required by law. • Workers' Compensation Insurance. Tesla carries workers' compensation insurance for all employees in compliance with law.
Additional Notices
California
CALIFORNIA CONTRACTOR LICENSING INFORMATION: CSLB is the state consumer protection agency that licenses and regulates construction contractors. Contact CSLB for information about the licensed contractor you are considering, including information about disclosable complaints, disciplinary actions and civil judgments that are reported to CSLB.
Use only licensed contractors. If you file a complaint against a licensed contractor within the legal deadline (usually four years), CSLB has authority to investigate the complaint. If you use an unlicensed contractor, CSLB may not be able to help you resolve your complaint. Your only remedy may be in civil court, and you may be liable for damages arising out of any injuries to the unlicensed contractor or the unlicensed contractor's employees. For more information:
-Visit CSLB’s Internet website at www.cslb.ca.gov
-Call CSLB at 800-321-CSLB (2752)
-Write CSLB at P.O. Box 26000, Sacramento, CA 95826
MECHANICS’ LIEN RELEASES
Upon satisfactory payment for any portion of the work performed, Tesla shall, prior to any further payment, furnish to Customer a full and unconditional release from any potential lien Claimant claim or mechanics’ lien pursuant to Sections 8400 and 8404 of the California Civil Code for that portion of the work for which payment has been made.
CALIFORNIA MECHANICS LIEN WARNING:
NOTICE TO PROPERTY OWNER: If bills are not paid in full for the labor, services, equipment, or materials furnished or to be furnished, a mechanic’s lien leading to the loss, through court foreclosure proceedings, of all or part of your property being so improved may be placed against the property even though you have paid your contractor in full. You may wish to protect yourself against this consequence by (1) requiring your contractor to furnish a signed release by the person or firm giving you this notice before making payment to your contractor or (2) any other method or device that is appropriate under the circumstances.
Anyone who helps improve your property, but who is not paid, may record what is called a mechanics lien on your property. A mechanics lien is a claim, like a mortgage or home equity loan, made against your property and recorded with the county recorder.
Even if you pay your contractor in full, unpaid subcontractors, suppliers, and laborers who helped to improve your property may record mechanics liens and sue you in court to foreclose the lien. If a court finds the lien is valid, you could be forced to pay twice or have a court officer sell your home to pay the lien. Liens can also affect your credit.
To preserve their right to record a lien, each subcontractor and material supplier must provide you with a document called a ‘Preliminary Notice.’ This notice is not a lien. The purpose of the notice is to let you know that the person who sends you the notice has the right to record a lien on your property if he or she is not paid.
BE CAREFUL. The Preliminary Notice can be sent up to 20 days after the subcontractor starts work or the supplier provides material. This can be a big problem if you pay your contractor before you have received the Preliminary Notices.
You will not get Preliminary Notices from your prime contractor or from laborers who work on your project. The law assumes that you already know they are improving your property.
PROTECT YOURSELF FROM LIENS. You can protect yourself from liens by getting a list from your contractor of all the subcontractors and material suppliers that work on your project. Find out from your contractor when these subcontractors started work and when these suppliers delivered goods or materials. Then wait 20 days, paying attention to the Preliminary Notices you receive.
PAY WITH JOINT CHECKS. One way to protect yourself is to pay with a joint check. When your contractor tells you it is time to pay for the work of a subcontractor or supplier who has provided you with a Preliminary Notice, write a joint check payable to both the contractor and the subcontractor or material supplier.
For other ways to prevent liens, visit CSLB’s Internet Web site at www.cslb.ca.gov or call CSLB at 800-321-CSLB (2752).
REMEMBER, IF YOU DO NOTHING, YOU RISK HAVING A LIEN PLACED ON YOUR HOME. This can mean that you may have to pay twice, or face the forced sale of your home to pay what you owe.
Schedule A
System Information
Purchaser Name and Installation Address
{&Customer.Name}
{&Customer.SpouseName}
{&Site.StreetOnContract}
{&Site.CityStateZipOnContract}
Equipment & System Installation Description
ITEM
{&Proposal.STCkW} kW (STC) PhotovotaicSystem
{&Proposal.AnnualKWHOutput,fmt=N0} kWh/yr Estimated First Year Annual Production {&Proposal.AllPanelQty} PV Panels: {&Panel[1].Make} {&Panel[1].Model} {&BatteryBackup[1].Quantity} Battery(ies): Tesla {&BatteryBackup[1].Model} {&BatteryBackup[2].Quantity} Battery(ies): Tesla {&BatteryBackup[2].Model} {&Proposal.AllInverterQty} Inverter(s): {&Inverter[1].Make} {&Inverter[2].Make}
{&Inverter[3].Make}
{&Inverter[1].Model}
{&Inverter[2].Model}
{&Inverter[3].Model}
Mounting System
System Installation
Costs
Purchase Amount
(PV System, Battery, and Installation Cost)
{&Proposal.CashContractPrice,fmt=C2}
Estimated Rebate {&Proposal.TotalRebatesToSC,fmt=C2}
Net System Cost {&Proposal.OutOfPocketCost,fmt=C2}
Schedule B
Renewable Energy Credit Agreement
1. Introduction. This Renewable Energy Credit Agreement (this “REC Agreement”) is between Tesla (“Tesla” or “we”) and you (“Customer”) concerning the Environmental Attributes associated with the electricity generated by the photovoltaic system (“Solar System”), which Tesla is installing on your home pursuant to your agreement to participate in the [CCA Retail Program Name] (the “Program Agreement”). “Environmental Attributes” are commonly referred to as renewable energy credits (“RECs”) and include all solar renewable energy credits, carbon offset credits, green tags, and other similar credits and benefits, however named, generated by or associated with the Solar System. Environmental Attributes do not include electricity or tax credits.
2. Ownership. You recognize that you will not own the Environmental Attributes to sell, use or claim, and a third party may have the right to claim clean, green or renewable energy based on its purchase of Environmental Attributes from your Solar System.
3. Your Obligations. You agree to cooperate with Tesla and the System Owner of the Solar System to allow Tesla (and any party to which the Environmental Attributes have been sold or transferred) to claim the Environmental Attributes, including, but not limited to taking the following actions:
a. To the extent allowable by law, enter into net metering agreements and interconnection agreements for the Solar System; b. Promptly, but in no case more than 7 days after an initial request, sign and/or file documentation in connection with the registration and/or transfer of the Environmental Attributes to any party to which the Environmental Attributes have been sold or transferred;
c. Maintain and make available, at your cost, a functioning indoor internet connection with the understanding that an intermittent internet connection (which includes but is not limited to temporary wireless hotspots) will not satisfy this obligation; d. Allow Tesla or the owner of the Solar System, its agent or subcontractor, to monitor and report the Solar System’s production; e. Upon reasonable prior written notice, provide Tesla, the owner of the Solar System and/or its designees, with access to the Solar System for inspections and maintenance;
f. Maintain the Solar System in good working condition; and g. Maintain the Solar System’s interconnection to the local electric utility.
Additionally, you understand that by you will have no right to sell the Environmental Attributes, or any component thereof, to any other party.
4. Remedies. If you fail to comply with the obligations set forth in Section 3 within 30 days after written notice to you, and that failure results in any disruption in the production of Environmental Attributes or Tesla’s ability to claim, transfer, or otherwise make use of the Environmental Attributes, Tesla will have the right to invoice and collect from you an amount equal to Tesla’s direct, actual damages resulting from such disruption. In no case, however, will you be liable to Tesla under this REC Agreement for amounts in excess of the REC Credit.
5. Third-Party Beneficiaries. We each agree that the owner(s) of the Solar System and the Environmental Attributes is/are intended third-party beneficiary(ies) of this REC Agreement.
I have read this REC Agreement in its entirety and I acknowledge that I have received a complete copy of this REC Agreement {{_es_signer1_signature}} Name: Tyler Moragne
Customer Signature Title: Director, Residential Energy Operations [THIS PAGE INTENTIONALLY LEFT BLANK]
BookmarkControlTable will be deleted
USState Condition Include
Condition {#IF(“{&Customer.SpouseName}”!=””)|1|0ENDIF} CoSigner_YES1,CoSigner_YES2 Condition {#IF(“{&Proposal.HasAdderID(228)}”==”True”)|1|0ENDIF }
Battery_YES1,Battery_YES2,Battery_YES3,Battery
_YES4,Battery_YES5,Battery_YES6,Battery_YES7,
Batter_YES8
Condition {#IF(“{&Proposal.HasAdderID(228)}”!=”True”)|1|0ENDIF} Battery_NO1,Battery_NO2 Condition {#IF(“{&Storage.Cost_SystemSubtotal}”>1)|1|0ENDIF} BatteryBackup_YES1,BatteryBackup_YES2,Battery Backup_YES3,BatteryBackup_YES4,BatteryBackup
_YES5
COUNCIL
MEETING
DATE
COUNCIL MEMBER REQUEST DETAIL DIRECTOR(S)
ACTION TAKEN: Memo; Staff
Report; Closed Session;
Presentation; Follow-up
Meeting; City Manager
Reports; Informal Action
DISCUSSION
ITEM
ACTION
ITEM DATE
STATUS:
Complete;
Pending;
On-going;
In-Progress
8/10/2021 Lutz/Lara Shopping Cart Ordinance Review ordinance A. Betancourt Zoning Code Update 2024 2/22/2022 8/24/2021 Pending 6/28/2022 Lara/Camacho
Battery Storage Funds Set aside $50,000 for Battery
Storage for non-profits. S. Carmona
Pending
1/24/2023 Lara/Garcia Safe Pathways to School Discuss with ERUSD Boardmembers
Ad Hoc Committee
2/14/2023 Garcia/Sanchez Ordinance Prohibiting Street Takeovers Take to City Council Adopt Ordinance 2/14/2023 6/13/2023 In-Progress 2/14/2023 Garcia/Sanchez Establishing Safe Spaces for kids Take to City Council P. Yugar 2/14/2023 8/8/2023 In-Progress 2/28/2023 Lutz/Sanchez Feasability Study Marine Corps Property Ad Hoc Committee P. Yugar 2/28/2023 3/14/2023 Lutz/Garcia Monument Marker Upgrade Passons and Washington Bl N. Negrete 5/9/2023 Camacho/Garcia Commercial Property Maintenance Ord. Take to City Council A. Betancourt 6/13/2023 Lara/Camacho Matching ransom monies for Juan Orozco Take to City Council A. Betancourt In-Progress 6/27/2023 Lara/Garcia Traveling Memorial Wall for Veterans Take to City Council P. Yugar In-Progress
GOOD OF THE ORDER