Rancho Cucamonga City Council
July 16, 2025

9City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 Our experience includes transitioning many of our clients from internal management of investments to the use of an external investment advisor. Our professionals have managed operating funds, capital funds, reserve funds, and bond proceeds for governmental and other public entities across the country for 40 years. We believe that our professionals’ successful management of high-quality assets is evidenced by a number of major accomplishments, including:
 Pioneering the nation’s first grassroots LGIP in 1981;  Successfully protecting our client assets during the 2007-2008 financial crisis without a loss of principal due to default or bankruptcy;
 Adopting the CFA Institute’s Global Investment Performance Standards (“GIPS®”) in 2003;  Surpassing $100 billion of public funds under management and advisement in 2014;  Actively participating in government organizations like the Government Finance Officers Association (“GFOA”), California Society of Municipal Finance Officers (“CSMFO”), the California Municipal Treasurers Association (“CMTA”), California Association of County Treasurers and Tax Collectors (“CACTTC”), the California Association of Joint Powers Authorities (“CAJPA”), and the Association of California Water Agencies (“ACWA”);
 Through membership on the GFOA’s Committee on Treasury and Investment Management, helping develop GFOA’s Best Practices related to investing public funds; and  Maintaining an unblemished record of ethics and integrity.

CASE STUDY5
City of Vista California - Total Market Value (as of June 30, 2019): $303 million In 2016, as the result of a competitive procurement process, the City of Vista (the “City”) hired PFM to manage its sizeable investment portfolio. Prior to engaging PFM, the City had managed its funds internally. At the outset of the engagement, we performed a detailed cash flow analysis to help the City assess its liquidity needs and to determine the optimal mix of liquidity and longer-term investments. We have also helped the City to update its Investment Policy and further expand its listing of permissible investments. As is appropriate for an internally-managed portfolio, the City’s portfolio was almost exclusively invested in U.S. government and municipal securities when we first began managing the City’s assets. We worked diligently to provide education to the Investment Oversight Committee (“IOC”) and staff about the benefits of further diversifying the portfolio across the full range of high-quality fixed income investment sectors permitted by California Government Code. As a result, the City’s Investment Policy has been amended over the years to gradually increase exposure to non-government sectors,

5 This example is based on factual information from investment advisory services provided by PFM Asset Management LLC. It is for general information purposes only as it is not intended to provide specific advice or any specific recommendations. The results of individual clients will vary materially depending upon various factors including, but not limited to, the size and structure of each portfolio, permitted investments, prevailing market conditions, and other events or circumstances beyond your control or the control of PFM’s asset management business. Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in these examples is not an offer to purchase or sell any securities.

10City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 and the portfolio has benefitted from enhanced interest earnings and further diversification. As of June 30, 2019, the City’s portfolio was diversified across U.S. government obligations, corporate notes, CDs, supranational obligations, and municipal obligations. The IOC also recently voted to allow investment in ABS. As a result of these expanded investment parameters and PFM’s diligent active management trading, the City’s portfolio has delivered strong outperformance compared to its performance benchmark, while meeting the City’s foremost objectives of safety and liquidity. Additionally, the City has engaged PFM to provide investment management services for its Section 115 supplemental pension trust.

2. What is your firm’s experience in developing policies and portfolio management guidelines for government portfolios?
PFM has helped hundreds of governmental entities develop, update and enhance their written investment policies and portfolio management guidelines. We help clients update their policies to incorporate best practices, reflect changes in the law, and provide the framework necessary to safeguard client assets while allowing the flexibility to safely pursue market opportunities. At the outset of an engagement with the City, we will perform a thorough Investment Policy review, providing a detailed rationale for any recommended changes.

Our professionals serve on various committees dedicated to promoting standards for local government policies. Sarah Meacham, a management director and the proposed engagement manager for this relationship with the City, is a member of the CMTA Investment Policy Certification Committee and the CSMFO Professional Standard’s Committee. Another managing director in our Western regional practice serves on the Investment Policy certification committees of both the Association of Public Treasurers of the United States and Canada (“APT of the US&C”) and CMTA.

3. Does your firm act as a bro ker or as a primary dealer in securities or receive any other form of additional compensation (including soft dollars) for the client transactions aside from the direct fee paid by clients?
In its capacity as independent investment advisor, PFM does not act as a broker-dealer. We hold no inventory of securities, do not participate in any soft dollar arrangement, and do not receive any compensation for client transactions aside from the fully-disclosed, asset-based advisory fees that are invoiced directly to our clients.

4. Provide the number and types of accounts, total asset value, and composition of portfolios currently being managed by your firm.

PFM manages accounts for cities and counties, local government agencies, public higher education institutions, not-for-profit healthcare organizations, and other institutional clients. We offer an array of investment management and consulting services to assist our clients in managing liquid funds, short- and intermediate-duration high-quality fixed income portfolios for general operating funds and reserves, as well as multi-asset class strategies for longer-term funds including endowments, pensions, and OPEB trusts. In the table on the following page, we have detailed the number and types of discretionary and non-discretionary accounts being managed by PFM.

11City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 Total Assets by Fund Type as of June 30, 2019 ($ in mil) Fund Type
Discretionary Non-Discretionary
Assets # of
Accounts Assets # of
Accounts
Operating Funds/Self-Insurance $41,626 408 $20,629 7
Bond Proceeds $8,693 122 $5 1
Retirement/Endowment/Foundation $14,370 180 $6,666 20
Pool/Terms $36,861 17 -- --
Other (includes OPEB, pool and term) $1,293 34 $10,669 8 Total $102,843 761 $37,969 36
C. Personnel

1. Identify and provide background information on the key perso n or personnel who take the most active role(s) in the administration and management of the firm.

The City will be a highly regarded and valued client at PFM. As such, we pledge significant senior-level resources to help the City. The City will be served by California investment professionals who draw insights and support from our specialist teams across PFM. In this way, the City gets the best of both worlds: local expertise with the assurance of national resources and diverse perspectives. Complete resumes for our entire team are included in Appendix A. Below, we have provided the background information of the key personnel who take the most active role in the administration and management of the firm.

FIRMWIDE OVERSIGHT
Marty Margolis, Managing Director and Chief Investment Officer (“CIO”) 41 Years of Experience | 41 Years with PFM
 Portfolio oversight
 Led the development of pooled investment programs for public agencies for more than 30 years, and pioneered the development of state-wide programs in California, Pennsylvania, Virginia, New Jersey, Florida, and Texas, among others
 Holds FINRA Series 6, 26, 52, 53, and 63 licenses
Karen Jones, CPA Australia, Managing Director
28 Years of Experience | 1 Year with PFM
 Reporting and accounting oversight
 Supervises a staff that annually processes over 100,000 security transactions with an average daily trade volume of nearly $1 billion as of June 30, 2019  Holds the CPA Australia designation

12City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 Leo Karwejna, Managing Director and Chief Compliance Officer 18 Years of Experience | 8 Years with PFM
 Compliance oversight
 Assists our professionals with specific compliance advisory guidance and leads the firm’s efforts to develop, maintain, and monitor firm-wide compliance with policies, procedures, and regulatory requirements
 Holds the FINRA Series 7 and 66 licenses

2. Identify the investment profe ssionals (portfolio managers, analysts, and researchers) employed by your firm, by classification, and specify the average number of accounts handled by portfolio managers. Are there any established limits on accounts or assets under management? PFM’s asset management practice employs 244 personnel as of June 30, 2019. Employee numbers include investment professionals and other personnel who are dedicated to our asset management efforts. The table below lists our employees by function:

Function Number of Employees
Portfolio Managers, Traders and Researchers 28
Investment Accountants 27
Client Service Group/Investment Services Group/Operations 35 Compliance/Legal 5
Client Management 117
Marketing/Communications/Research 9
Administrative Staff 23
Total 244
Our portfolio managers usually average approximately 40 actively managed accounts. Since our portfolios are managed by teams, we have no set limit on the number of accounts managed. Our team approach helps ensure that multiple investment professionals are knowledgeable about each client’s portfolio, actively participate in discussions about investment strategies, and have access to portfolio recommendations at all times. The portfolio strategy and management teams also use the team approach to provide for backup in case the primary portfolio manager/strategist is out of the office.

3. Provide resumes and biographical information on key investment professionals that will be directly involved in making recommendations and decisions for the portfolio. Include the number of years at your firm, total years of experience, and professional licenses and designations.

Include the number of accounts managed and any limits on this.

As mentioned in our response to Question C.2., our portfolio managers usually average approximately 40 actively managed accounts, with no set limit on the number of accounts managed. On the following pages, we have provided the resumes and biographical information on the key investment personnel that will be directly involved in making recommendations and decisions for the City’s portfolio.

13City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016

PRIMARY CONTACTS
Sarah Meacham, Managing Director and Co-Leader of California Practice 14 Years of Experience | 14 Years with PFM
 Engagement management and strategy development and implementation  Investment policy development and City-specific reporting guidelines  Works with the City of Rancho Mirage, City of Vista, City of Santa Clarita, and the City of Yorba Linda, among others6
 Member of CMTA’s Investment Policy Certification Committee and the CSMFO Professional Standard’s Committee
 Holds FINRA Series 6 and 63 licenses
Lesley Murphy, Senior Managing Consultant
13 Years of Experience | 12 Years with PFM
 Relationship liaison
 Matches potential clients with the appropriate PFM solution and helps ensure a smooth transition to the day-to-day relationship manager  Holds FINRA Series 7 and 63 licenses
Richard Babbe, CCM, Senior Managing Consultant
30 Years of Experience | 20 Years with PFM
 Day-to-day relationship manager
 Investment performance analysis, cash flow modeling, optimized portfolio structuring, economic research, and investment policy evaluation  Works with the Cucamonga Valley Water District, City of Vista, City of Yorba Linda, City of Lake Elsinore, and Western Riverside Council of Governments, among others6
 Holds FINRA Series 6, 7, and 63 licenses
Monique Spyke, Managing Director and Co-Head of PFM’s California Practice 16 Years of Experience | 16 Years with PFM
 Additional engagement support
 Strategy development and implementation in collaboration with the City’s portfolio management team
 Monique works with the City of Stockton and the City and County of San Francisco, among others6
 Holds FINRA Series 6 and 63 licenses

6 All client references in this response are partial client lists as of June 30, 2019. Clients included on the list above were selected based on client type and/or other non-performance based criteria to show a list of PFM’s representative clients. A full list is available upon request. This list does not represent an endorsement or testimonial of the services of PFM.

14City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 Jeremy King, Key Account Manager for the Western Region 13 Years of Experience | 6 Years with PFM
 Initial onboarding and ongoing client service support  Assists clients with statements, transactions, and online reporting needs  Holds FINRA Series 6 and 63 licenses

PORTFOLIO MANAGEMENT & STRATEGY
Ken Schiebel, CFA, Managing Director and Co-Manager of Portfolio Strategies Group 38 Years of Experience | 25 Years with PFM
 Oversees the development of innovative investment strategies for clients  Has worked with many California public agencies over the years, including the City and County of San Francisco, San Bernardino County and Orange County Transportation Authority6
 Is a CFA charterholder and holds FINRA Series 7 and 63 licenses Kyle Jones, Managing Director and Co-Manager of Portfolio Strategies Group 17 Years of Experience | 7 Years with PFM
 Lead portfolio strategist
 Oversees PFM’s internal analysis of the fixed income markets  Supports our California public agency clients, frequently presenting PFM’s strategies to the San Francisco Airport Commission and to the Metropolitan Water District of Southern California, among others6
 Holds FINRA Series 7 and 63 licenses
Bob Cheddar, CFA, Managing Director and Chief Credit Officer 21 Years of Experience | 15 Years with PFM
 Head of our internal credit research and chair of our Fixed Income Credit Committee (“Credit Committee”)
 Analysis and oversight of our clients’ credit exposure  Oversees PFM’s management of separate portfolios for cities, counties, state and local government agencies, and public finance authorities  Is a CFA charterholder and holds FINRA Series 7 and 63 licenses Joseph Creason, CFA, Senior Portfolio Manager
18 Years of Experience | 18 Years with PFM
 Fixed income portfolio manager who develops and executes customized strategies
 Sector specialist for corporates
 Member of the Credit Committee
 Is a CFA charterholder

15City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 Meredith LaBuda Sullivan, Portfolio Manager
11 Years of Experience | 8 Years with PFM
 Fixed income portfolio manager
 Develops and executes customized investment strategies  Sector specialist for federal agency and supranationals

4. Describe your firm’s training and education efforts and prog rams to keep portfolio managers informed of developments relevant to government investment managers.

As an industry leader in government investing, we devote significant time and resources to keep our professionals well informed of market and industry developments, including:
 Active membership in CSMFO, CMTA, and GFOA. PFM has also conducted numerous educational sessions at conferences of these organizations;
 Our innovative “PFM University,” which provides formal training on a wide range of topics in municipal finance, including public-sector investment topics, investment management principles and governmental accounting standards;
 Weekly internal conference calls on the economy, investment markets and credit market trends;  Monthly webinars that focus on key trends relevant to separately managed fixed income accounts;  Bi-weekly one-hour technical training sessions by subject-matter experts on topics such as managing bond proceeds, arbitrage rebate compliance, and recent tax law changes;  Regular meetings of our portfolio management personnel with major players in the fixed income markets, including government agencies (e.g., Federal Home Loan Banks, Federal Farm Credit Banks), corporate issuers, rating agencies (e.g., S&P’s and Moody’s), underwriters and Wall Street research departments; and
 Finally, we encourage all investment professionals to attain the CFA designation. As of June 30 2019, we have 24 employees who have attained the CFA designation.

5. What is the average tenure in years for professional staff i n the firm assigned to public sector clients and the main principals in the firm?
The average tenure for managing directors is 18 years, while the average tenure for professional staff within the firm is nine years.

16City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 D. Assets Under Management

1. Summarize your institutional in vestment assets under management by category as shown below for your latest reporting period.
(in Billions $)
Assets Under Management Assets Under Advisement
Governmental Non-
Governmental Governmental Non-
Governmental
Operating/Bond Funds $44.53 $1.54 $29.90 $1.33
Pensions* $4.32 $5.39 $3.26 $2.44
Foundations $0.19 $0.97 $0.03 --
Other* $44.57 $1.34 $0.71 $0.29
Total $93.61 $9.23 $33.90 $4.06
*As of June 30, 2019. Includes discretionary multi-asset class and fixed income clients. Other includes OPEB, self-insurance funds, pool, and term funds. Pension funds includes defined benefit and defined contribution funds.

2. Summarize your assets under management (institutional only) over the past five years and average assets per client.
2015 2016 2017 2018 2Q19
Total Discretionary
Assets $62.0 billion $71.0 billion $80.6 billion $94.1 billion $102.8 billion Total Clients 621 683 714 742 761
Average Assets per
Client $99.8 million $103.9 million $112.9 million $126.8 million $135.1 m illion Total Non-Discretionary
Assets $39.7 billion $41.3 billion $42.3 billion $42.0 billion $38.0 billion Total Clients 46 44 37 34 36
Average Assets per
Client $862.3 million $938.7 million $1,142.1 million $1,236.6 million $1, 054.8 million The table above includes PFM’s local government investment pool (“LGIP”) clients. Excluding LGIPs, the average assets per discretionary client are $89.5 million as of June 20, 2019.

3. Provide relevant performance statistics on a comparable port folio and compare with industry averages or benchmarks for the last one, three, five, ten-year periods and/or since inception.

Note whether these performance statistics are reported based on GIPS (Global Investment Performance Standards) formerly known as AIMR (Association for Investment Management and Research).

PFM claims compliance with the GIPS® and has prepared and presented this report in compliance with the GIPS standards. PFM has been independently verified for the periods from January 1, 2006 through December 31, 2015. Performance composites for subsequent years will be reviewed for verification later this year and will become an annual occurrence thereafter. A copy of the verification report is available upon request.

17City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis, and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

In the table below, we include a snapshot of the relevant GIPS®-compliant performance composites as of June 30, 2019, showing the performance history of PFM’s composites versus market-based indices. A copy of our GIPS®-compliant composite presentation is included in Appendix B.

4. List five comparable or most representative governmental clients with comparable portfolios to Rancho Cucamonga. Identify the nature of the funds and provide a contact name and number for each.

Client Contact Person Address Phone
Number
Nature of
Funds
Cucamonga Valley
Water District
Chad Brantley,
Director of
Finance and
Technology
10440 Ashford Street
Rancho Cucamonga, CA 91730 909.987.2591
Operating and
supplemental
pension funds
City of Yorba Linda Scott Catlett,
Finance Director
4845 Casa Loma Ave.

Yorba Linda, CA 92885 714.961.7141 Operating funds
City of Rancho Mirage
Kofi Antobam,
Director of
Administrative
Services
69-825 Highway 111
Rancho Mirage, CA 92270 760.770.3207
Operating funds
and bond
proceeds
City of Stockton
Matt Paulin,
Chief Financial
Officer
425 N. El Dorado Street
Stockton, CA 95202 209.937.8460 Operating funds
City of Vista
Mike Sylvia,

MBA, CPFO
Finance Director/
Treasurer
200 Civic Center Dr.

Vista, CA 92804 760.643.5367
Operating and
supplemental
pension funds

5. How many accounts have you gained in the last 12 months? How many accounts have been lost in the last 12 months and why?
In the last year, we have gained 44 clients and lost 13 clients. These statistics represent discretionary fixed income clients gained or lost from July 1, 2018 to June 30, 2019. Accounts were closed or lost for Strategy/Benchmark Average Annual Total Returns Duration Standard
Deviation
of Returns
No. of
Accounts
Assets
(in $ Millions)
for periods ended June 30, 2019 (5 years)
2Q19 1 Year 3 Years 5 Years 7 Years 10 Years
PFM 1-3 Year Fixed Income Composite 1.41% 4.10% 1.59% 1.43% 1.22% 1.3 9% 1.77 0.78% 155 11,885 ICE BofAML 1-3 Treasury Index 1.44% 3.96% 1.29% 1.21% 1.02% 1.20% 1.81 0.87% PFM 1-5 Year Fixed Income Composite 1.77% 5.01% 1.60% 1.75% 1.50% 1.9 9% 2.47 1.28% 127 10,188 ICE BofAML 1-5 Treasury Index 1.82% 4.89% 1.31% 1.54% 1.26% 1.73% 2.56 1.45% ICE BofAML 1-5 Gov't/Corp, AA or better 1.82% 4.95% 1.40% 1.60% 1.35% 1.83% 2.52 1.41% The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate. Data shown is prior to the deduction of investment advisory fees. GIPS compliant composite presentations are available upon request. For important disclosure information please go to pfm.com/disclosures.

Benchmark source: Bloomberg. All benchmarks represent total returns for the noted periods.

18City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 different reasons, including contract expirations, the decision to hire a different firm, or changes in senior staff who preferred to manage funds in-house. These statistics do not include spent down bond proceed accounts.

E. Investment Management Approach and Discipline

1. Briefly describe your firm’s investment management philosoph y, including your approach to managing governmental portfolios.

PFM’s investment philosophy is rooted in our commitment to the public sector. Our objectives are consistent with those of the City and are, in order of priority:
 Safety – Preservation of capital
 Liquidity – Provide liquidity when needed
 Return – Seek to optimize return, consistent with the primary objectives of safety and liquidity Our conservative approach means that we always put safety and liquidity ahead of the risks involved with simply chasing higher yields. We understand the importance of protecting the City’s investments, not only from an actual loss, but also from a loss of public trust. In serving the City, we will work diligently to:
 Deeply understand your needs. At the beginning of our engagement, we will work closely with staff and other decision-makers to gain an understanding of the City’s investment program, objectives, and cash flow needs. We will regularly review changes in the City’s financial position, incorporate industry best practices for investing and reporting, and assist with customized cash flow modeling and benchmarking to help ensure the investment strategy safely meets the City’s objectives. Our goal is to implement a successful long-term investment program that safely generates investment income the City can use to help fund its budget and capital project needs.  Create an investment program that is safe, diversified and has lower volatility. Our investment approach is based on relative value — the thorough analysis of the relative merits and risks of various investment types, maturities, issue characteristics, and credit quality. This analysis is done in the context of current and expected market conditions. We will seek to build a diversified portfolio that will perform well under a wide range of market scenarios with a focus on downside protection.  Employ a disciplined approach where duration and average maturity are positioned to a strategically determined target range. While longer duration portfolios have historically generated higher relative returns, they have done so with greater risk and volatility. Our approach is a holistic one that will incorporate our analysis of the City’s portfolio balance trends with the City’s spending plans to target an appropriate portfolio duration. That assessment will include providing the City with historical data on the risks and returns of various duration strategies, and selecting the approach most consistent with the City’s risk tolerance and return objectives. We will then carefully manage the portfolio within narrow constraints around that target to help ensure that portfolio risk and return characteristics remain within acceptable ranges. Individual maturities will be selected based upon cash flow requirements, relative value, and careful risk assessment.

19City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016  Approach risk from the perspective of a public funds investor. Our portfolios are typically of very high quality. To manage credit risk, we perform both quantitative and qualitative assessments of issuers we purchase that encompass fundamentals such as balance sheet strength, capital, liquidity, and earnings, but also qualitative factors such as governance, industry trends, and corporate citizenship. The City will benefit from our unblemished record of avoiding principal loss due to default or bankruptcy.
 Incorporate a proactive, yet low-risk approach to the ongoing management of the portfolio.

We periodically adjust key portfolio attributes such as duration and sector allocation to reflect emerging market trends. We will continually reassess every holding in the City’s portfolio, and seek opportunities to increase investment earnings by swapping one investment for another that offers higher yields, lower risk, or better quality.

We welcome the opportunity to discuss these factors in greater detail with the City.

2. How frequently do you formulate and review fixed income stra tegy? How is that carried out and who is involved?
Portfolios are managed and reviewed on a continuous, daily basis to help ensure consistency with client objectives and mandates. As part of daily practices, portfolio managers and traders discuss market developments, product offerings, new issues, and the potential impact of pending economic announcements. Portfolio manager teams also review portfolio holdings, upcoming maturities, cash flows, and any other client-specific needs.

The firm’s overall fixed-income strategy is formally reviewed on a monthly basis by PFM’s Fixed Income Investment Committee, which is supported by data and analysis produced by our Portfolio Strategies Group. The Committee reviews our overall strategy, sector allocation decisions, duration positioning, yield curve placement, and individual security assessment. Market and account performance attribution is also discussed in detail. Formal targets are established for each of the key strategy elements, documented in written minutes, and portfolio manager teams implement any changes for their accounts within individual client guidelines and investment policies. The process includes PFM’s CIO, portfolio managers, traders, strategy and research staff, and a representative from PFM’s Compliance Group.

In addition, Sarah, Richard and Lesley will keep the City informed about its portfolio by reviewing current asset allocation and strategy, current economic and market conditions, and the City’s investment goals and policies during quarterly meetings.

3. What are the primary strategi es for adding value to portfolios (e.g., market timing, credit research, trading)?
The primary way PFM adds value is by collaborating with our clients to understand their needs and using our collective expertise to develop investment strategies that are tailored to meet them. In addition, we use the following strategies:
 Understanding the City’s Cash Flows. We will begin building our investment strategy with the City by first gathering information on your historical cash flows to project future cash flows and

20City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 determine liquidity needs, as well as a liquidity cushion for unexpected future needs. Our goal in this exercise will be to assist the City in determining the appropriate balance between liquid funds, the internally managed portfolio, and a “core” balance that will be managed externally. Finding an appropriate investable balance for a core strategy can reduce significant excess liquidity, which can allow the City to increase the long-term return potential of its portfolio.  Sector Emphasis/Weighting. We regularly monitor the yield relationships between all permitted investment sectors (e.g., U.S. Treasury, Federal Agency, corporate) and recommend investments that we believe offer the best relative value. This does not mean we always buy the highest yielding investment, but the investment whose yield best compensates for the inherent risks of the investment and can be combined to create diversified portfolios.  Yield Curve Placement. Through a series of analytical models, we identify those maturities that offer the greatest value — that is, the most amount of yield or return potential for a given amount of risk.
 Issue Selection. Yields can vary significantly among issuers or, within the same issuer, among securities with similar maturities. Sometimes this is due to perceived quality differences that need to be carefully analyzed. Other times, it is due to supply differences, pricing inefficiencies, or other market anomalies. We seek to recommend securities that are both safe and offer high return potential. Our internal trading tools help us quickly identify and capitalize on pricing inefficiencies, which may result in higher portfolio yields for the City. However, quality always trumps yield in the efforts to seek higher returns.
 Credit Analysis. We employ a rigorous, market-driven approach to credit analysis that evaluates both the quantitative and qualitative aspects of issuers that we recommend for investments. Our credit research seeks to identify issuers that meet our credit quality standards and that offer incremental value with minimal credit risk, allowing us to safely increase yield. Our robust internal credit review and monitoring procedures are a critical element of the security selection process and allocations to individual issuers are limited to ensure broad diversification.  Duration Management. We add value by managing portfolio duration to manage risk and take advantage of interest rate trends, but within a narrow range around the specified benchmark. We will generally manage duration to be close to the benchmark unless we have a strong conviction about the near-term direction of interest rates.
 Active Management. While every investment is purchased with the potential to hold to maturity, changes in market conditions may present recommendations to add value by selling a security before m
aturity and reinvesting in another investment. We monitor the markets on an ongoing basis, looking for opportunities to re-balance the portfolio among sectors and/or maturities that could add value and enhance investment performance. In fact, few investments are held to maturity, as opportunities regularly present themselves to enhance performance by selling securities before maturity and reinvesting an another investment with better performance characteristics.

21City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016  Competitive Shopping. We are not a broker-dealer or bank, and we carry no inventory of securities. Rather, we competitively shop every transaction to seek to obtain best execution for our clients. For every security we buy and sell, we solicit bids from a minimum of three to five broker-dealers (when available) from our approved Issuer universe. We do this because no one broker-dealer can offer an optimal price all the time. Even small savings per trade can add up to significant additional earnings over time.
 Increased Efficiencies. We believe we will also add value to the City’s portfolio by creating operational efficiencies that may be difficult to achieve at a local government level. In our role with the City, we will take on the responsibility for many of the time-consuming, day-to-day activities related to managing a portfolio, including competitively shopping transactions, coordinating trade settlement with the broker and custodian, reconciling investment activity, monitoring credit quality, and preparing investment reports.

Adding Value Specifically for the City of Rancho Cucamonga Portfolio We have reviewed the investment policies and portfolio holdings for both the City and the Fire Protection District, as of July 31, 2019. We believe there are several ways we can partner with the City to strengthen its investment capabilities, expand investment opportunities, improve diversification, and enhance portfolio return potential. Our ideas for the City to consider include:

1. Optimizing the size of liquidity balances;

2. Extending the duration of the portfolio;

3. Diversifying the portfolio acr oss the full range of investment sectors permitted by California Government Code; and

4. Reducing callable exposure.

Details of these considerations are included on the following pages:7 Suggested Portfolio Consideration 1: Optimize Liquidity Balances At the beginning of an engagement with the City, we will perform a comprehensive analysis of historical cash flows and portfolio balances. The study will help determine the optimal allocation between funds that should be invested on a short-term basis to cover anticipated cash flows and funds that can be invested longer-term in what we call the “core portfolio.” For more information on our cash flow modeling process, please see our response to question E.11. Optimizing funds in each strategy seeks to avoid holding excess liquidity, which can be costly when rates are low, while increasing balances that can be

7 Actual yields and security availability may vary at time of purchase. As economic and market conditions may change in the future, so may our recommendations as to the sale and purchase of securities in portfolios we manage. It is not possible to invest directly in an index. All statements as to what will or may happen under certain circumstances are based on assumptions, some but not all of which are noted. Assumptions may or may not be proven correct as actual events occur, and results may depend on events outside of your or our control. Changes in assumptions may have a material effect on results. Past performance does not necessarily reflect and is not a guarantee of future results.

22City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 invested longer-term to seek higher returns over time. Using the ICE BofAML 1-5 Year Treasury/Agency Index as a proxy for longer-dated securities, for the 10 years ended June 30, 2019, 1-5 year U.S.

Treasury and federal agency obligations have delivered 1.72% in total return, 99 basis points (0.99%) higher than the return of LAIF over the same time period. Based on this historic data, this incremental 99 basis points in return would have translated into an estimated $99,000 in incremental earnings per year on $10 million transferred from LAIF to the individual portfolio.

Sources: LAIF website, Bloomberg, ICE BofAML.

Suggested Portfolio Consideration 2: Extend the Duration of the Portfolios As of July 31, 2019, the City’s portfolio had a duration of 1.26 years (excluding LAIF), while the Fire Protection District’s portfolio had a duration of 0.95 years – both relatively short. We suggest that the City consider extending the duration of both investment portfolios to take advantage of the historically higher returns of longer duration strategies. For example, the return of the ICE BofAML 1-Year U.S. Treasury Index (a proxy for the duration of the City and Fire Protection District portfolios) was 0.76%. By contrast, the return of the 1-5 Year U.S. Treasury/Agency index was 96 basis points (0.96%) higher. On average, on a portfolio size of $275 million, this 96 basis points (0.96%) in incremental return would have translated into an estimated $2.6 million in incremental earnings per year. As part of our initial discussions with the City, we will present detailed historic information, highlighting the risks, as well as the return potential of longer-duration investment strategies.

Sources: Bloomberg, ICE BofAML.

Suggested Portfolio Consideration 3: Increase Portfolio Diversification We note that the City and the Fire Protection District’s aggregate portfolios held 87% to 95% in U.S.

Treasuries, federal agency securities, or LAIF, as provided with the RFP. While these investments are fully appropriate for an internally-managed portfolio, there are significant benefits associated with broader diversification. One of the benefits of hiring PFM is the ability to safely access a wider range of investment types, such as corporate notes, negotiable CDs, ABS, and mortgage-backed securities (“MBS”). PFM’s clients benefit from our disciplined investment approach, depth of market access, diligent credit analysis process, and unblemished record of protecting clients from losses due to default or bankruptcy. Supported by PFM’s sector specialists, dedicated market resources, and conservative approach to credit, the City may want to consider further diversifying its portfolio across credit sectors, including:
 Corporate Notes. The City currently utilizes high-quality corporate notes (AA-rated and better), but the current allocation is significantly lower than the 30% maximum permitted by both California Government Code and the respective investment policies. In fact, the Fire Protection District’s portfolio has no allocation to corporate notes, whereas the City’s portfolio (including LAIF) held an 8% allocation to corporate notes. Utilizing our stringent credit review process, PFM has assisted our clients in capitalizing on the higher earnings potential of this sector, and we believe that the City

23City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 could also take advantage of this increased income potential. For example, for the 10-year period ending June 30, 2019, the ICE BofAML 1-5 Year AA Corporate Note index delivered a return 121 basis points (1.21%) higher than the return of the ICE BofAML 1-5 Year U.S. Treasury/Agency Index for the same time period. This incremental return would have translated into an estimated $121,000 in incremental earnings per year on each $10 million invested in AA-rated corporate notes over U.S. government obligations.

Sources: Bloomberg, ICE BofAML.
 Asset-Backed Securities. High quality, AAA-rated ABS offer high credit ratings, strong structural protections, and strong earnings potential compared to U.S. government securities. We note that the City’s investment policies do not currently permit investment in this sector. However, California Government Code does permit public agencies to invest up to 20% of investable balances in high- quality ABS. We have helped many clients understand and explore the benefits of investing a portion of its portfolio AAA-rated ABS, and we welcome the opportunity to further explore this topic with the City.
 Negotiable Bank Certificates of Deposit. We note that the investment policies of both the City and the Fire Protection District do currently permit up to a 30% allocation to negotiable CDs, which aligns with California Government Code allocation limits. However, neither portfolios currently contain an allocation to this sector. Further, we note that the policies do not require a minimum credit rating for this sector. We recommend an “A” minimum credit rating for this sector, and we would help the City to explore opportunities to invest in well-priced, highly rated negotiable CD issues.

Suggested Portfolio Consideration 4: Reduce Callable Exposure We observe that a sizable portion of the City’s portfolios are invested in callable Agency securities.

Callable securities have unique risk, and in particular, tend to underperform in periods of falling interest rates. We will be happy to provide PFM’s analysis of the benefits and drawbacks of investing with large allocations to callable securities. On the other hand, yield spreads on non-callable agencies are at historical lows. We believe there are alternative sectors (e.g., supranational obligations) that offer better value than either agencies or callable agencies, while maintaining the portfolios’ focus on safety, liquidity, and return.

Summary: Our Sample Portfolio
In summary, we are confident that, with our extensive credit research and disciplined investment process, we can help the City to safely enhance the earnings on both the City and the Fire Protection District portfolios.

In the chart on the following page, we provide a comparison of the City’s current portfolio (excluding LAIF and Fire Protection District balances) to PFM’s Sample Portfolio. Please note that the sample portfolio is for illustrative purposes onl
y and is subject to current market conditions and availability.

24City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016

Sources: Data for the City’s portfolio is as of July 31, 2019 and was sourced from the City’s website. Data for PFM’s Sample Portfolio is based on a hypothetical portfolio subject to the constraints of California Government Code. Asset allocations are based on PFM’s view of relative market value and are subject to change based on market conditions.

4. How are portfolios managed (e.g. by team, individual manager )? What is the back-up when the manager is away?
Portfolios are managed by teams consisting of (i) a portfolio strategist who analyzes client requirements, evaluates macro investment options, and coordinates an overall investment approach, (ii) a portfolio manager who implements the investment strategy and has discretion for sector and issue selections within the context of the approved strategy and each client’s investment policy, and (iii) traders who assemble market offerings, run comparative security analysis, execute trades on a competitive basis, and help ensure efficient settlement.

Our team approach helps ensure that multiple investment professionals are knowledgeable about each client’s portfolio, actively participate in discussions about investment strategies, and have access to portfolio recommendations at all times. The portfolio strategy and management teams also use the team approach to provide for backup in case the primary portfolio manager/strategist is out of the office.

5. What oversight is provided to portfolio managers?
Portfolio oversight is an important aspect of our management philosophy, and we have implemented stringent procedures in this regard to help to safeguard our clients’ assets.

Trading Controls
Trades can only be initiated by authorized trading personnel; the list of authorized personnel is communicated to every approved broker-dealer. For every transaction, traders prepare electronic trade confirmations, which are communicated directly to the custody bank and transmitted into our portfolio accounting system. Each trade is separately reviewed and confirmed by a portfolio manager or trader other than the one who executed the trade. Trades are routed first through Bloomberg AIM, a trade compliance system to help ensure pre-trade compliance, then to one or more electronic fixed income

25City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 platforms (e.g., Bloomberg Fixed Income Trading (“Bloomberg FIT”), MarketAxess, and TradeWeb) where we solicit competitive bids/offers from multiple approved broker-dealers and execute trades.

Accounting Controls
Accounting personnel regularly review our clients’ accounts to help ensure that funds are deposited and transferred in accordance with each client’s policies. Details on securities that are bought and sold are transmitted from our trading personnel to the Accounting Group, which includes accounting personnel that record details of security transactions in our investment accounting systems. Accounting staff also verifies all details of security transactions with custody bank and broker-dealer systems. This verification occurs within two business days after transactions are executed.

Our accounting systems provide all data necessary for internal and external reporting. Internal reporting includes data provided to the Bloomberg AIM compliance system, daily portfolio tools used by our portfolio managers and traders, and analytical and performance tracking systems. The Accounting Group also uses this data to prepare daily reports and month-end statements that are provided to our clients through our secure online system and/or mailed to clients.

Compliance Controls
Our Compliance Group serves as a final internal control in the compliance process. Before any trading activity commences, the Compliance Group reviews account setup in Bloomberg AIM to help ensure that each client’s written investment policy, permitted investments, and any special operating instructions are appropriately in place.

In addition:
 Portfolio managers and traders review daily holdings reports for each portfolio.  All trading activity is regularly reviewed by the CIO.  Monthly and quarterly client reports can be used to affirm compliance with client guidelines.  Investment mandates are monitored through weekly internal portfolio reports that show detailed holdings, sector allocations, and key performance drivers, such as duration.

6. Describe your firm’s in-house technical and research capabil ities. Are outside sources used by the firm on a regular basis? Describe your credit review process. Does your firm assign credit research to specialists?
PFM specializes in managing short- and intermediate-term fixed income assets of public agencies, so we have tailored our research capabilities to this narrow area of the market. Accordingly, our research and technical capabilities are focused only on those investments suitable for the public sector — government securities, high-grade corporate, asset-backed and municipal securities, Agency MBS and money market securities.

The majority of our macro and strategic research is conducted internally and includes:

26City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016  A dedicated Portfolio Strategies Group that analyzes macro-level trends in the fixed income markets to evaluate investment recommendations appropriate for the City’s objectives.  Investment specialists who focus on specific sectors within the high-quality fixed income universe.  Internally developed models that help assess which market sectors have the most favorable relative value.
 Weekly in-depth internal research reports focused on key asset sectors.  Yield curve diagnostics that evaluate which maturities might offer the best risk/return characteristics.  Analysis on real-time market pricing data that allow our portfolio managers to assess and take advantage of minute-to-minute changes in pricing and price relationships between sectors, maturities, and specific issues.

While our primary investment research and analysis is done internally, we also have access to a wide range of external sources of economic and market information, including:
 Bloomberg;
 Credit Research from Moody’s, S&P, and CreditSights;
 Analyst research;
 Research and views of financial industry economists; and  Electronic real-time trading platforms including Bloomberg FIT, TradeWeb, and MarketAxess.

These external sources of information provide alternative perspectives that we feel enhance our portfolio management process. In this way, we can blend multiple views on the economy with our own analysis to synthesize an optimal strategy.

Credit Review Process
PFM employs an extensive credit review process built upon our own independent, in-depth analysis of issuers — a process that helped to keep our clients out of the headlines during the 2007-2008 credit crisis by avoiding financially unstable issuers. We do not rely solely on rating agencies; rather, employ a market-driven approach that evaluates both the quantitative and qualitative aspects of credit issuers. We base our analysis primarily on both issuer-specific and macro trends, which we believe provides a thorough understanding of the issuer.

The specialists in our Credit Committee, managed by our Chief Credit Officer and comprised of our CIO, six portfolio managers, two portfolio strategists, and a representative from our Compliance Group, are the cornerstone of our credit review process. The Credit Committee meets on a monthly basis, or more frequently if warranted by market conditions, and is responsible for defining our credit research process and standards, approving new issuers, monitoring credit sectors, and overseeing our Approved Issuer universe. All portfolio managers and traders are restricted to purchasing only those issuers on our Approved Issuer universe. Issuers are added if they:

27City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016  Meet our stringent credit requirements;
 Are frequent issuers; and
 Offer yields that represent value in their respective sector and industry.

Formal credit reviews are conducted at least annually for each issuer. This is supplemented by quarterly reviews of financial reports, as well as daily monitoring of market developments. A thorough interim review may be triggered by changes in markets (indicated by changes in equity prices, interest rate spreads, etc.), releases of issuer-specific news (e.g., earnings or credit ratings), or macro events (e.g., new regulations). Issuers are monitored on an ongoing basis and are proactively removed from the approved universe if conditions warrant.

Our holistic approach to credit coupled with the direct involvement of our portfolio management team has resulted in what we believe are favorable outcomes during times of stress. External research is used as a complement to the internal research conducted by portfolio managers, investment specialists and the Portfolio Strategies Group.

7. Describe the procedures your firm has in place to address th e potential or actual credit downgrade of an issuer and disclose and advise the client of the situation.

Our goal is to identify potential downgrades before they occur. In the event that our opinion of the credit quality of an issuer changes, we first determine whether those circumstances will continue to impact the creditworthiness of an issuer. In some cases, further purchases of an issuer may be suspended until a thorough review is completed, or in more serious cases, holdings are liquidated. In cases where the credit event is likely to be a one-time event (e.g., a one-time write-off, or it the issuer was downgraded but assigned a stable outlook) and the security is still rated within policy limits, no action may be necessary. If circumstances are serious, uncertain, or likely to lead to additional potential downgrades, immediate action may be taken. Considerations of a sale will include the remaining time to maturity, policy requirements regarding downgrades, and the state of the market. We seek to immediately notify our clients when our opinion of the credit quality of an issuer changes.

8. What percentage of your research is conducted in-house? Desc ribe your research capability.

The majority of our research is conducted in-house. Our research capability is detailed our response to question E.6.

9. What technical analysis (if any) do you use?
We use several proprietary models to help assess value, manage risk, and identify new investment opportunities. These tools allow our portfolio managers to process vast amounts of market information quickly, to identify trends and to analyze investment value. While we do monitor trends through technical analysis (the term used for forecasting the direction of prices through the study of past market data), we do not rely heavily on this method. Our method is a dual approach, using both top-down and bottom-up analysis — an approach that begins with analysis of macro-economic conditions and bond market trends. We monitor changes in the business cycle, Federal Reserve policy, and a variety of key

28City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 economic indicators. We also analyze shifts in the level and shape of the yield curve, sector and industry trends, and a wide range of price and yield relationships. We then blend this information with a careful and detailed analysis of individual investment characteristics and risks. Our findings help us determine appropriate duration and maturity positioning, sector weighting, and security selection.

10. What role does interest-rate forecasting play in your portf olio management strategy? While we do monitor interest rate trends, we do not rely heavily on interest rate forecasting in the development or implementation of our investment strategy. However, we may target a portfolio duration that is a bit shorter or longer based on a view of the current rate trend, the position of current rates within recent trading ranges, and our assessment of risk/reward. For example, throughout most of 2018 when interest rates were rising, we positioned our client portfolios slightly short of the duration of the portfolios’ respective benchmarks in order to mitigation the negative market value swings that occur in a rising interest rate environment. By contrast, since we are now in a stable to declining interest rate environment, we are managing our client portfolios to closely match the duration of the respective benchmarks in order to mitigate volatility and capitalize on the positive market value appreciation that will occur as rates fall.

11. How will you handle fluctuating cash flows and the cash for ecasting process? Our ability to actively manage an operating fund portfolio can be invaluable to clients that experience or expect to experience fluctuations in their cash balance. In addition to being able to meet unexpected cash flows through active management, we believe that preparing a cash flow analysis/forecast is one of the most important and often overlooked aspects of developing an effective investment strategy. As a tool for effectively managing operating funds, we have developed a sophisticated cash flow model that allows us to forecast and plan for future cash flow needs. The model uses historical portfolio balance and cash flow data to determine seasonality in cash flows and broad trends in fund balances. We then incorporate any known variations from historical trends, such as near-term capital plans, changes in budgets, or other factors that could affect fund balances.

At the beginning of the engagement, we will analyze and produce a cash flow forecast by modeling the City’s historical use of cash. The cash flow projection is designed to enable the City to:
 Ensure that it has sufficient liquidity for cash needs and  Minimize balances held overnight by determining which funds can be invested longer-term.

Our analysis will inform how the portfolio is structured between short-term, highly liquid investments (with maturities matched to meet the City’s known cash flow needs) and longer-term, return-seeking investments. We always incorporate a liquidity cushion to account for unforeseen changes in cash flow patterns or to be prepared if emergency cash flow needs arise.

We will communicate regularly with the City staff by phone, email, and in-person meetings to reduce the likelihood of unexpected needs for cash. Should cash be needed, we will assist the City in raising the necessa
ry cash. Our portfolios are designed and managed in a manner that helps us to responsibly raise

29City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 cash from the portfolio in an emergency situation. Funds can generally be raised and made available by selling securities within 1-2 business days.

City of Rancho Cucamonga: Initial Cash Flow Analysis
Based on our review of the City’s monthly holdings information since December 31, 2017, which we located on the City’s website, we have performed an initial cash flow analysis. We have included the results of our initial cash flow analysis on the City’s funds on the following page. Our proprietary model analysis historic balance information in order to project future cash flow needs and seasonality. Based on the City’s historical balances from December 31, 2017 through July 31, 2019, our model indicates that the City is currently maintaining approximately $14 million in excess liquidity, even considering an additional 10% liquidity cushion as a buffer for unexpected cash flows. Dependent upon more detailed conversations with City staff regarding cash flow needs and objectives, the City may be able to prudently transfer a portion of these funds from shorter-term liquid investments to its longer-term investment portfolio (also referred to as the “core” portfolio in the chart on the following page) in order to take advantage of the higher returns typically generated by longer-term investments.

If selected as the City’s investment advisor, we will continually work with the City to optimize the allocation between liquid funds needed to meet short-term cash needs and expenditures and “core” funds, which can be invested in longer-dated, historically higher-performing obligations. $0
$50
$100
$150
$200
$250
$300
$350
Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Millions
City Portfolio – Preliminary Cash Flow Analysis
Historical and Projected Balances
December 2017 – June 2021
Initial excess liquidity -
$14 million and
projected to grow
Historical Modeled Core
Historical Modeled
Liquidity
Actual Invested Core
Projected Modeled
Liquidity
Projected Modeled Core
For illustrative purposes only.

30City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 CASE STUDY 8
Yolo County, California - Total Market Value (as of June 30, 2019): $470 million We have worked with Yolo County (the “County”) since 1998. In that time, we have partnered with the County to assess its liquidity needs through both historical and detailed cash flow analyses. The County uses local government investment pools to ensure liquidity, while we manage the remainder of the County's funds. Our customized strategy seeks to identify value in both short-term instruments (e.g., liquidity vehicles or discrete investments, such commercial paper and negotiable CDs, depending on relative value and cash flow needs), as well as longer-term core investments, such as government securities, corporates, municipals, CDs, asset-backed securities and mortgage-backed securities, for enhance returns. The balance between immediate liquid funds and longer-term core funds is optimized to meet the County’s specific circumstances. We believe that, as a result of our prudent investment strategy and effective liquidity management, the County’s portfolio has consistently outperformed its performance benchmark.

12. Describe the ongoing daily investment procedures proposed f or the City, including procedures for trades, security choice, controls, etc., and how you will provide liquidity, keeping in mind the City’s preference for a non-discretionary investment management approach.

If selected to be the City’s non-discretionary investment advisor, we will work closely with the City to establish communication procedures related to strategy development, approval of trade recommendations, and coordination of trade execution and settlement. Our goal is to mutually agree on roles and responsibilities so that we fully support your investment process and objectives. Below, we have detailed the procedures and processes that we recommend for this engagement. This method will allow the City the full benefit of PFM’s disciplined portfolio management approach, while ensuring transparent communication between the City and PFM, preserving final sign-off authority to the City.

Detailed Step-by-Step Processes for Transaction Advice and Trades We will provide City staff with specific security recommendations for pre-approval. Instead of relying on a passive approach, only contacting City staff when there is a maturity, we will proactively look for opportunities to enhance return, either through the reinvestment of maturities, or through swapping securities before maturity to better position the City’s portfolio, consistent with the City’s objectives. As such, the City should expect to hear from our portfolio management team on a regular basis. Each recommendation will be designed to advance the City’s customized strategy in order to meet the City’s investment goals. For each transaction, our portfolio management team will:

8 This example is based on factual information from investment advisory services provided by PFM Asset Management LLC. It is for general information purposes only as it is not intended to provide specific advice or any specific recommendations. The results of individual clients will vary materially depending upon various factors including, but not limited to, the size and structure of each portfolio, permitted investments, prevailing market conditions, and other events or circumstances beyond your control or the control of PFM’s asset management business. Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in these examples is not an offer to purchase or sell any securities.

31City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 Identify trade opportunities:
 Perform investment research and analysis of macroeconomic environment  Evaluate sectors and issues for relative value
 Understand current credit trends
 Identify specific issues that fit the City’s long-term investment strategy, including competitively shopping from at least six qualified brokers for the security Communicate trade recommendation to the City:
 Draw up a recommendation and present it to the City for approval  The City approves transaction
 City’s dedicated portfolio manager or trader at PFM executes trade through competitive process Example: Please see below for a sample trade recommendation:

Rationale: The above trades swap a shorter term FNMA Note for one in the 5 year area, boosting the yield of the portfolio and extending the duration in line with our current target. The security we are buying has the widest yield spread, at +11 over comparable maturity US Treasuries, of any federal agency with less than 5 years to maturity. The recommendation also invests the current balance in the sweep account at the custodian.

Coordinate trade settlement:
 Transmit trade information to both client and custodian and confirm receipt  The City receives a same day copy of the trade ticket from us, and a duplicate confirmation from the broker
 On settlement date, confirm settlement with the City’s custodian  Trade is entered into our firm’s accounting and reporting system

32City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 Controls
PFM has made substantial investments in our compliance practices — both staffing and technology — to help ensure we adhere to clients’ investment policies and state regulations.

We begin each new engagement by inputting the client’s policy and any other written guidelines into Bloomberg AIM, an automated policy compliance and trade execution system. In addition to the initial setup in Bloomberg AIM, the other components of PFM’s multi-layered compliance oversight and daily practices are described below.
 Culture of Compliance. As a registered investment advisor, PFM’s trading activity is governed by principles set forth in applicable Federal statutes. In addition, we maintain a comprehensive internal Compliance Manual that details many additional aspects of permitted and not-permitted activities.

Two key areas covered by the Compliance Manual are the exercise of fiduciary responsibilities to clients and the avoidance of conflicts of interest. The PFM trading desk also follows a detailed protocol on the execution, confirmation, and settlement of client transactions (discussed further below). These procedures include numerous checks and balances, and are designed to minimize and catch any trade errors or failed trades, whether caused by PFM, the broker counterparty or the custody bank. There is also separation of duties between trading and accounting/reporting/reconciliation.
 Automated Compliance Monitoring of Trade Activity. All of our trades are entered through Bloomberg AIM, an automated policy compliance and trade execution system. Bloomberg AIM helps ensure compliance between a client’s investment policy and a pending trade in a real-time environment. Facilitating independent Compliance team oversight, reporting, and exception resolution, Bloomberg AIM allows our portfolio managers and traders to more easily and automatically monitor appropriate allocation among individual sectors and issuers within the guidelines set forth by investment policies, greatly reducing the chance of human error in adhering to investment policies.
 Post-Trade Review. At the end of each day, after trades are entered into PFM’s portfolio accounting database (which is separately maintained in our portfolio accounting system), Bloomberg AIM is used to check this reporting database for compliance. Any exceptions are

33City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 reported to the Compliance Group. In addition, post-trade compliance is also confirmed by the following procedures:
 Portfolio managers and traders review daily holdings reports for each portfolio.  All trading activity is regularly reviewed by the CIO.  Monthly and quarterly client reports can be used to affirm compliance with client guidelines.  Transparency. Lastly, PFM maintains a culture of transparency in our reporting and communication with clients. In addition to a variety of periodic comprehensive performance reports — which address portfolio compliance—clients also have access to their portfolios on a daily basis through a secure online system so that they can review their current holdings and transactions at all times.

13. How frequently would you suggest your staff meet with City staff? Who will attend these meetings?
We believe frequent communication is crucial to the success of an investment management relationship.

We strive to be viewed as an extension of City staff, and we will work hard to earn that honor. Therefore, the members of our team will always be readily available to the City —via phone, email, webinar, or in person to help ensure the City’s investment objectives are met. We will meet with the City quarterly to review performance and attend council meetings and other ad hoc meetings as needed. We recommend these meetings to discuss strategies for the portfolio, review trading activity and performance relative to an industry benchmark and assess current market conditions. As the lead team members for this engagement, Sarah and/or Richard will attend these meetings, and we may invite other specialists to attend depending on questions or topics relevant to the City’s portfolio. This engagement with the City will represent a very important one to the PFM team on the West Coast, and we will always have adequate coverage to ensure that your investment needs will be met.

F. Reporting

1. Describe the investment accounting and reporting system used by your firm.

PFM uses SS&C CAMRA (“CAMRA”), an industry-leading investment accounting system, to produce reports on security transactions and portfolio positions (on both a fair value basis and on an amortized cost basis) and to track credit quality on issuers and securities. This system:
 Facilitates access to information within the database regarding the status of accounts managed or advised by our firm; and
 Allows us to customize reports according to the specifications of our clients.

Our dedicated accounting team specializes in public-sector accounting and includes certified public accountants (“CPAs”). Our experienced investment accounting professionals will prepare a comprehensive set of reports to keep the City informed about all investment activity. We prepare our reports in accordance with generally accepted accounting principles (“GAAP”). Additionally, our consolidated monthly statements contain the required information to comply with GASB 31 and 40, and quarterly performance data is calculated and presented in accordance with GIPS®.

34City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 Our Accounting Group regularly reviews our clients’ accounts to help ensure that funds are deposited and transferred in accordance with each client’s policies. For each account that PFM manages and/or reports on, we enter information directly into CAMRA, which will allow the City to have timely access to current portfolio holdings. Bloomberg AIM also allows for straight-through processing from trading to settlement to accounting, which helps ensure timely and accurate trading and accounting, as well as reduces the chance for error.

2. Describe the frequency and format of reports that you would provide to City staff (attach samples).

Summarized in the following table, our comprehensive reports are designed to support the City’s needs and therefore contain all information needed for state reporting standards. Our reports follow GAAP and comply with GASB requirements. At any time, authorized personnel from the City can log in through PFM’s portfolio reporting website, www.eon.pfm.com, to view past monthly portfolio statements, holdings as of the prior trading day, and the current month’s transactions through the prior trading day. Examples of monthly and quarterly reports are included in Appendix C.

Report Frequency/
Delivery Content/Features
Daily Holdings Daily

Holdings report showing securities, par, cost, duration, purchase yields, and discounts as of the prior business day.

Month-to-Date
Transactions
Daily

Description of any security transactions month-to-date as of the prior business day.

Portfolio
Holdings and
Activity
Report

Monthly

This report includes a detailed description of all securities in the portfolio; summary of realized and unrealized earnings for the month; report of all purchases, sales, maturities, interest deposits, and withdrawals for each separate account; and all the information required by GASB 31, and provides the month-end credit quality ratings to comply with the Credit Risk Disclosure requirement and duration by investment type to facilitate compliance with the Interest Rate Disclosure requirement of GASB 40.

Market Update Monthly

Summary of recent market events and the outlook for investment opportunities moving forward.

Performance
Reports
Quarterly

Quarterly reports typically include an aggregate portfolio sector, maturity, and credit-quality distribution; an aggregate view of performance portfolios by investment strategy; a portfolio strategy recap and market outlook, including recommended changes to strategy; individual portfolio sector, maturity, and credit quality distribution; performance statistics compared to a market benchmark; and a high level economic and investment-sector performance synopsis. We can customize quarterly and annual reports to meet the City’s specific needs.

Key:  Online access,  mailed,  emailed

35City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016

3. Describe method of communicating market trends and economic forecasts to City staff and elected officials (attach samples).

We monitor changes in markets every day, including interest rates, yield spreads, Fed policy, and a variety of key economic indicators. We use this data to analyze shifts in the rate level and shape of the yield curve, sector and industry trends, and a wide range of price and yield relationships. We then blend this with careful and detailed analysis of individual investment characteristics and risks.

We provide clients with updates on our views and analysis through periodic emails, the firm’s monthly market commentary, quarterly performance reports, various thought leadership and educational materials, and in-person meetings with clients. Any major event impacting the portfolio or the investment strategy will be brought to the City’s attention.

We include samples of these communications in Appendix D.

4. What performance benchmarks would you suggest for this portf olio? Provide recommendations regarding performance benchmarks for a portfolio like that of the City. What experience has the firm had in developing benchmarks for public entity operating portfolios? Client objectives differ widely, and may include goals such as achieving predictable income, maintaining level earnings, or enhancing growth of overall portfolio value. We will help the City select appropriate performance benchmarks by identifying specific risk and return objectives, and evaluating a variety of options.

With clients seeking to grow the size of their assets, we often select a total return benchmark that serves as an appropriate guide to achieving the overall growth expectations of the portfolio. We most often assist entities with selecting total return benchmarks based on the targeted maturity range of the portfolio and the types of securities permitted by the client’s investment policy. We typically recommend that our clients choose a readily-available, industry standard benchmark from a reputable provider, such as ICE BofAML.

Alternatively, the City may wish to establish a benchmark based on an objective other than generating a return in excess of a market benchmark, such as:
 Meeting the budgeted amount of investment income for the current fiscal year  Meeting an investment income target amount over a specified time period  Maximizing current portfolio yield
 Earning a market-based current yield, equal to or exceeding a specified short-term instrument like 6-month Treasury bills
We have worked with our clients to select performance benchmarks that specifically address their investment objectives, risk preferences, types of investments, maximum maturity limits, and cash-flow requirements.

It is our philosophy that a performance benchmark should reflect the client’s tolerance for risk. If selected as the City’s investment advisor, we will work with the City to select a performance benchmark that

36City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 accurately reflects the City’s investment objectives and risk-return preferences procedures. The selection of a performance benchmark will be an iterative discussion with City decision-makers and will include an in-depth discussion of various potential benchmarks and the risks and rewards associated with each.

Ultimately, as a result of these discussions, the City will feel confident in its selection of an appropriate benchmark that provides the appropriate balance between risk and return and also provides an accurate comparison of the performance of the City’s portfolios versus the performance of the larger high-quality fixed income investment markets.

Absent these discussions, it is not possible for us to recommend a specific benchmark at this time. That said, we will note that many of our clients tend to choose ICE BofAML U.S. Treasury or Treasury/Agency indices – typically either the 1-3 year or the 1-5 year indices, depending on the type of funds being managed and the risk/return preferences of the decision-makers.

CASE STUDY9
City of Santa Rosa, California - Total Market Value (as of June 30, 2019): $357 million PFM has served as the investment advisor to the City of Santa Rosa since 2007. Prior to engaging PFM, the City had managed its funds internally. At the outset of the engagement and on an ongoing basis thereafter, PFM has worked to help ensure that the City’s portfolios maintain the optimal balance between short, liquidity funds, and longer-term core funds. As a key element of our investment strategy for the core portfolio, PFM has consistently analyzed and re-evaluated the portfolio’s performance benchmark. We initially began managing funds for the City at the beginning of the 2007-2008 credit crisis. At this time of heighted sensitivity to all types of investment risk, the City chose to adopt a conservative duration stance, selecting a 1-year benchmark. Then, in 2010, as the City decision-makers became more comfortable with longer-term investing and interest rate risk, the City moved toward a longer 0-3 year benchmark. In 2014, the benchmark was extended further to a 1-3 year strategy.

Currently, we are working with the City to explore a longer 1-5 year strategy. Throughout this relationship, PFM has worked to put the City’s cash flow needs and risk/return preferences at the forefront of our portfolio analysis and recommendations. We have continually analyzed the City’s cash flow needs and projections, seeking to attain the optimal balance between liquid investments and higher- yielding, longer-term securities. Further, our efforts to educate the City decision-makers about the potential risks and returns associated with longer-duration investing have paid off for the City in terms of increased investment income. At all points throughout this process, the City’s benchmarking performance data was easily accessible and understandable.

9 This example is based on factual information from investment advisory services provided by PFM Asset Management LLC. It is for general information purposes only as it is not intended to provide specific advice or any specific recommendations. The results of individual clients will vary materially depending upon various factors including, but not limited to, the size and structure of each portfolio, permitted investments, prevailing market conditions, and other events or circumstances beyond your control or the control of PFM’s asset management business. Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in these examples is not an offer to purchase or sell any securities.

37City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 G. Fees

1. Provide the complete fee schedule that would apply to this a ccount. Provide separate fees for each portfolio (City and District). Are fees charged in arrears? For the management of the City’s funds, direct fees for investment advisory are based on AUM/advisement and are billed monthly in arrears. The fee schedule listed below will be applied to the average daily balance of AUM, aggregated across both the City and the Fire Protection District portfolios.

Assets Under Management/Advisement Fee in Basis Points (“bps”) First $100 million 8 bps (0.08%)
Next $100 million 6 bps (0.06%)
Assets over $200 million 5 bps (0.05%)
For example, on a portfolio with $275 million in AUM, the average annual fee would be $177,500, or approximately 6.5 bps (0.065%).

2. What additional expenses not c overed through the fee structure will be expected in order to implement your investment advisory services?
Our fees do not include custodial fees. Fees for custodial services will be negotiated between the City and the custodian. We have worked with many custodial banks across the country, and we are happy to work with any custodian of the City’s choosing. Additionally, if desired, we are to assist the City in the selection of a new custody bank.

H. Additional Information

1. Briefly describe any additional features, attributes, or con ditions which the City of Rancho Cucamonga should consider in selecting your firm. Describe any other services your firm can provide.

The City can be assured that PFM meets all minimum requirements of the RFP. We are an independent, registered investment advisor. As of June 30, 2019, we had $140.8 billion in total assets, including $102.8 billion in discretionary AUM and $38 billion in non-discretionary assets under advisement. In California alone, we manage and advise on $43.2 billion in assets for 167 clients, including approximately $29.4 billion for 76 cities and counties in California (as of June 30, 2019). We have provided both discretionary and non-discretionary investment services to public agencies in California since 1989, and we actively participate in numerous local government organizations across the state.

We understand that hiring an outside investment advisor for the first time is a significant step in the ongoing evolution of the City’s investment program, and we stand ready to deploy our extensive resources to help ensure that the transition is seamless. Below, we have described the attributes that we believe set us apart from other firms and that the City should consider in the selection process:
 Our Commitment to Serving California Public Agencies. We manage or advise on $43.2 billion in assets in California (as of June 30, 2019). The City’s engagement team has extensive expertise providing investment management and consulting services to 167 clients in the State as of

38City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 June 30, 2019.10 We are very familiar with the California Government Code, and we understand the opportunities and challenges facing municipalities.
 Our Resources. While we have developed technical resources that set us apart from other firms, our most significant resource is our professional staff who are experienced in providing the many investment advisory services public agencies need. Each investment decision made on behalf of a client has the input of investment professionals who have expertise in market analysis, comparative relative value, and credit analysis. Our resources also include Fixed Income Investment and Credit Committees, research analysts, accountants, compliance professionals, and client service staff to meet the City’s ongoing and evolving investment program needs.  The Depth of Our Client Education and Communications. The City’s best interests will always be our priority and, as such, our team will initiate educational opportunities, new ideas, and solutions designed to meet the City’s evolving needs. We will work to help ensure that the City’s staff is always informed about the state of the portfolio, as well as ongoing market events. All of our meetings can generally include a component of training on various topics related to management of the portfolio. Our proactive approach helps ensure that under no circumstances should the City staff be surprised by activity or events that affect the portfolio. To that end, PFM offers a variety of client education and communications on an ongoing basis.

Additional Services
In addition to the core investment advisory services that we have described throughout this proposal, PFM also provides a wide range of ancillary services to our public sector clients. These services will be negotiated under a separate contract with the City and may be provided by our affiliates. We are happy to further discuss any of these services with you.
 CAMP. Since 1989, we have also served as the investment advisor to CAMP, a California joint powers authority that operates a local government investment pool for California public entities, with fund assets of approximately $5 billion as of June 30, 2019.11  Environmental, Social, and Governance Solutions (“ESG”). As the spectrum of responsible investing continues to lengthen, our perspective remains adaptive to the evolving needs of our clients and changing market landscape. Thus, we created a structured, comprehensive, and tailored approach to help our clients determine favorable solutions and policies that help them align their portfolios with their unique goals. We can implement some of these approaches with the City’s

10 Represents discretionary and non-discretionary clients in the State of California as of June 30, 2019. 11 This information is for institutional investor use only, not for further distribution to retail investors, and does not repres ent an offer to sell or a solicitation of an offer to buy or sell any fund or other security. Investors should consider the Trust’s investment objectives, risks, charges and expenses before investing in the Trust. This and other information about the Trust is available in the Trust’s current Information Statement, which should be read carefully before investing. A copy of the Trust’s Information Statement may be obtained by calling 1-800-729-7665 or is available on the Trust’s website at www.camponline.com. While the Trust seeks to maintain a stable net asset value of $1.00 per share, it is possible to lose money investing in the Trust. An investment in the Trust is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Shares of the Trust are distributed by PFM Fund Distributors, Inc., member Financial Industry Regulatory Authority (“FINRA”) (www.finra.org) and Securities Investor Protection Corporation (“SIPC”) (www.sipc.org). PFM Fund Distributors, Inc. is a wholly owned subsidiary of PFM Asset Management LLC.

39City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 portfolio, and aid in presentations that aim to help sift through the industry jargon to identify what socially responsible investing (“SRI”) means for the City.

As SRI is an ongoing and evolving issue, we continue to expand our understanding and experience in the field by conducting more in-depth discussions with current and prospective clients, including the City, around SRI and ESG solutions and potential implications for portfolios. We have embarked upon our own firm-level discovery process regarding ESG strategies to help us evaluate this market, the current and potential client base, and our firm goals. Currently, we have numerous clients whose portfolios incorporate ESG principles in various ways including exclusionary and inclusionary ESG investing concepts.
 Section 115 Trust. PFM, in conjunction with Wells Fargo, offers a Post-Employment Benefits Trust Agreement. While PFM is not a law firm and does not provide legal advice, we worked with outside legal counsel to create the PFM/Wells Fargo Post-Employment Benefits Trust Agreement and a draft trust template for a single-employer trust. The single-employer trust template provides a basis for the establishment of an OPEB Section 115 Trust and can be further customized to the meet the needs of our clients and their legal advisors. Either trust is an Internal Revenue Code (the “Code”) Section 115 Trust, established as an integral part of a governmental entity that performs an essential government function.
 Multi-Asset Class Investing. For nearly 40 years, we have been committed to providing quality investment advisory services to public investors. These services include discretionary investment management services to pension and OPEB plans. PFM’s professionals have advised public-sector defined benefit plans and assisted boards, committees, and staff in investment-related matters since 1992. We believe our experience and strong knowledge regarding public retirement plans is hard to replicate by other firms. We believe our dedicated presence in this space gives us unique insight into the needs and challenges specific to these plans.  Treasury Consulting/Banking Services RFP. These services include the development and design of a banking services RFP customized to the specific needs of the City. In this role, we will work closely with the City to review and evaluate proposals submitted by custody service providers to help ensure that the City obtains the appropriate services to meet specified needs.  Arbitrage Rebate and Tax Compliance. The rules that govern the arbitrage rebate process are highly complex and can evolve, and the regulations and interpretations have changed over time.

PFM has its own dedicated Arbitrage and Tax Compliance Group that has developed sophisticated proprietary calculation models aiming to minimize rebate liabilities and assists tax-exempt issuers during the planning stages of their financings to determine the optimum investment of bond proceeds. With an in-depth understanding of the Internal Revenue Service Code and related Trea
sury Regulations, we are able to help ensure that our bond proceed clients maintain compliance with all tracking and reporting requirements.  Financial Advisory. Through PFM’s financial advisory business, we can provide comprehensive financial advisory services for the City. These include debt-portfolio optimization, capital planning,

40City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 revenue forecasting and evaluation, resource allocation, debt policy development, and bond or loan-transaction management, among other services.
 Management and Budget Consulting. Through our management and budget consulting practice, we can provide a broad range of services including multi-year financial planning; consolidating and shared-services analysis; operational and program analysis; revenue maximization; fleet management; and pension and OPEB review and strategies.  Swap Advisory Services. Our swap advisory business works with clients to obtain interest rate swaps, caps, and collars in order to help manage exposure to interest rates. This group also advises clients on fuel-hedging strategies.

2. Provide a copy of your firm’s most recent ADV Part II as on file with the SEC.

We include our most recent Form ADV Part II in Appendix E.

3. Provide any contract language your firm requests or requires to be included in a contract for this service.

We include our proposed changes to the City’s sample contract in Exhibit B.

4. Describe your firm’s business continuity plan, how often it is updated, and what assistance would be available to the government.

Disaster Recovery
We have a complete disaster recovery system. In the event of an emergency, our crisis management team, consisting of the firm’s managing directors, is responsible for assessing the extent of the disaster, declaring one if warranted and notifying the business recovery team, which consists of various business leaders and other critical staff. Certain business recovery team members will relocate to our disaster recovery facility (or “hot site”) located in Philadelphia, Pennsylvania, and other members will connect remotely to complete necessary tasks. Prior to their arrival at the hot site, our system recovery team (IT personnel) will help ensure that all critical applications and databases are up and running in the disaster recovery environment. All required computers, printers, fax machines, market data feeds/terminals, external trading resources and other equipment are also ready for use. Our disaster recovery plan is available for in-person review.

We also conduct disaster recovery exercises, which simulate actual disasters whereby our trading, client service and accounting facility, located in our Harrisburg office, is assumed to be destroyed or inaccessible. During the simulation, our crisis management team is responsible for assessing the extent of the disaster and declaring one if warranted. All critical business procedures are executed and validated during the test. A post mortem is held afterward whereby results are reviewed and any issues identified are addressed accordingly. We conduct several localized disaster recovery scenarios each year.

41City of Rancho Cucamonga Proposal for Investment Advisory Services | RFP #19/20-016 System Backup
All critical business applications and system configurations are routinely synchronized between our production and disaster recovery environments. Critical business data and files are replicated and backed up nightly. Transactional data (e.g., trades) are replicated to our devoted disaster recovery servers in Philadelphia every 15 minutes. Given the level of system and data redundancy in place, we can completely restore our systems environment within approximately three hours of a declared disaster.

Investment operations can be operated out of the Philadelphia office's relocation site indefinitely.

Records are backed up daily and maintained. All application and database servers have “hot” spare servers in our Philadelphia office that are updated either on a nightly basis or via “near-time” replication.

Assistance to the Government
While our business continuity plan is robust and we do not anticipate a substantial disruption of our services, should one occur, we will work with the City to address any impacts they may face from this.

5. Provide a copy of the firm’s most recent audited financial s tatement.

We include our most recent audited financial statement in Appendix F.

1 Exhibit A - Compensation

Pursuant to the terms of Section 3. Compensa tion and Section 4. Method of Payment of the Agreement for Professional Services for Professi onal Investment Advisory Services by and between the City and the Consultant:

For Services provided by the Consultant pursuan t to this Agreement, the City shall pay the Consultant an annual fee, in monthly installments, based on the daily net assets under management according to the schedule below:

Average Assets Under Management
Fees
Initial $100 million 7 basis points (0.07%)
Next $100 million 5.5 basis points (0.055%)
Above $200 million 4.5 basis points (0.045%)

“Daily net assets” is defined to include the amor tized value of securities, accrued interest and associated cash or any money market fund bala nce; provided that, “Daily net assets” does not include funds invested in the Local Agency Investment Fund (LAIF) or other outside balances.

Fee Cap
During the initial three-year term of this Agreement, the annual fee shall be subject to the fee caps described below:

Year Fee Cap
Year 1 $125,000
Year 2 $125,000
Year 3 $155,000

July 23, 2020
601 S. Figueroa Street
Suite 4500
Los Angeles, CA 90017
213.489.4075

pfm.com
Ms. Ruth Cain, CPPB
Procurement Manager
City of Rancho Cucamonga
10500 Civic Center Drive
Rancho Cucamonga, CA 91730
RE: RFP #19/20-016 Investment Advisory Services

Dear Ms. Cain:

On behalf of PFM Asset Management (PFM), thank you for continuing to engage us in the pricing and contract negotiation process for Investment Management Services for the City of Rancho Cucamonga (the “City”). We remain committed to this engagement with the City, and we want to be responsive to your request to lower our fees. Thus, we are pleased to offer an even lower fee cap than what we had provided on July 20, 2020. You had asked us to consider a fee schedule of: 6 basis points (0.06%) on the first $100 million; 4 basis points (0.04%) on the next $150 million; and 3 basis points (0.03%) on assets over $250 million. On a $275 million portfolio, this fee equates to 4.6 basis points or $127,500 annually.

While we are not proposing a change to the asset-based fee schedule provided to you on July 20, 2020, we are pleased to offer a reduced fee cap of $125,000 for the first two years of the engagement, as illustrated in the table below.

July 20, 2020
Proposed Cap
July 23, 2020
Proposed Cap Difference
Year 1 Not to exceed
$145,000 (5.3 bps)
Not to exceed
$125,000 (4.5 bps)
($20,000) or a 0.7 basis
point discount
Year 2 Not to exceed
$150,000 (5.5 bps)
Not to exceed
$125,000 (4.5 bps)
($25,000) or a 0.9 basis
point discount
Year 3 Not to exceed
$155,000 (5.6 bps)
Not to exceed
$155,000 (5.6 bps) No change
Total Discount ($45,000)

This represents $2,500 in additional savings per year compared to the schedule requested by the City, and, importantly, this represents a generous fee discount of $45,000 (10.0%) compared to the fees that we proposed on July 20, 2020 and an even deeper discount of $127,500 (23.9%) compared to the fees originally submitted in our proposal dated October 3,

City of Rancho Cucamonga
July 23, 2020

2019 (all calculations assume a portfolio size of $275 million1.) If the portfolio size were to increase, these savings would also increase.

Our goal is to exceed your expectations during the first two years of the contract by delivering economic value far above and beyond our fees and by providing superior and invaluable customer service. After two years, if you do not agree we have delivered excellent value we would be open to revising the fee for the third year. We want you to view us as an extension of your staff, and we will work hard to earn that honor. We are confident that we will be able to deliver true value to your investment program. However, if you are not completely satisfied with our services, you may cancel your contract at any time, with just 30 days’ notice.

We hope that you will be amenable to these new, lower fees that we view as highly competitive given the scope and quality of PFM’s services. We are eager to begin working with the City, and we are hopeful that we will be selected as your Investment Advisor.

Please contact me if you have any questions.

Sincerely,

Sarah Meacham
Managing Director
[email protected]
213.415.1631

1 The fee schedule will be applied to the average daily balance of AUM, aggregated across both the City and the Fire Protection District portfolios. PFM does not charge fees on funds held in vehicles not directly under our management, including Local Government Investment Pools (e.g., LAIF) and internally managed liquid funds; however, we are able to consolidate these funds in your reports.

July 20, 2020
601 S. Figueroa Street
Suite 4500
Los Angeles, CA 90017
213.489.4075

pfm.com
Ms. Ruth Cain, CPPB
Procurement Manager
City of Rancho Cucamonga
10500 Civic Center Drive
Rancho Cucamonga, CA 91730
RE: RFP #19/20-016 Investment Advisory Services

Dear Ms. Cain:

PFM Asset Management is pleased to present our best and final offer to the City of Rancho Cucamonga (the “City”) for Investment Management Services. These are extraordinary times, as the COVID-19 pandemic creates unforeseen challenges for municipalities like the City, including loss of revenue and budgetary uncertainty. As we mentioned during our interview, PFM wants to be supportive and responsive to the financial challenges that you may be facing during this time. Thus, as a testament to our commitment to this engagement with the City, we are pleased to offer a two-tier discount to our initial fee proposal. As shown below, the tier 1 discount reflects a discounted fee schedule (in basis points) based on assets under management/advisement. The tier 2 discount is a fee cap, which shall be valid for the first three years of the engagement.

Assets Under Management/Advisement Fee in Basis Points (“bps”) Assets Under
Management/Advisement
Original
Proposal Revised Proposal
Basis Points
(bps) Tier 1 Discount Tier 2 Discount
First $100 million 8 bps (0.08%) 7 bps (0.07%)
Year 1:

Not to exceed $145,000 (5.3 bps)

Year 2:

Not to exceed $150,000 (5.5 bps)

Year 3:

Not to exceed $155,000 (5.6 bps)
Next $100 million 6 bps (0.06%) 5.5 bps (0.055%)
Assets over $200 million 5 bps (0.05%) 4.5 bps (0.045%) Total for $275 million
portfolio:

6.5 bps (0.065%)
$177,500
annually

5.8 bps (0.058%)
$158,750 annually
subject to fee caps for
years 1, 2 and 3
In total, this two-tier fee proposal represents a discount of $82,500 (15.5%) over three years from our originally proposed fees calculated on a portfolio size of $275 million. If the portfolio size were to increase, these savings would also increase.

The fee schedule will be applied to the average daily balance of AUM, aggregated across both the City and the Fire Protection District portfolios.*

*Please note that PFM does not charge fees on funds held in vehicles not directly under our management, including Local Government Investment Pools (e.g., LAIF) and internally managed liquid funds; however, we are able to consolidate these funds in your reports.

City of Rancho Cucamonga
July 20, 2020

Demonstrated in our proposal and during our interview, PFM has specific ideas for enhancing the City’s earnings. We estimate that over the last 10 years, a PFM strategy would have produced approximately $32 million in additional investment earnings for the City. 1 Further, we believe that PFM offers a superior ability to execute on a customized strategy for the City.

The carefully planned and robust infrastructure supporting our daily investment procedures is critical today more than ever, and PFM has demonstrated our ability to thrive in a challenged, remote environment. Additionally, as the City navigates unforeseen changes to its budget, revenue expectations, and more, we are confident that the City will benefit from PFM’s ability to offer a wide range of educational support that encompasses much more than investing.

As an investment advisor committed to the public sector, we understand that our clients are cost-conscious stewards of public funds and often seek to minimize the cost of services in a competitive RFP process. At the same time, we believe that prudent stewardship embodies the responsible management of financial resources and values quality over quantity. Public funds deserve high-quality investment management services through experienced, dedicated resources not typically available from lower-cost providers. PFM structures our fees to be fair and competitive while accounting for the costs associated with the expertise and value delivered to our clients—both qualitatively through our suite of integrated services and quantitatively through our competitive history of portfolio performance. While we recognize occasional price differences when compared to some of our competitors, we believe our results include demonstrable value-add to our clients’ investment programs.

Please contact me if you have any questions.

Sincerely,

Sarah Meacham
Managing Director
[email protected]
213.415.1631

1 Based on PFM’s Considerations for an Expanded Policy. Please refer to slide 12 as well as the Disclosures on slide 69 in our presentation from July 10, 2020.

1 INVESTMENT ADVISOR PROVISIONS

(a) Services of Advisor (“Consultant”) . The City hereby engages the Consultant to serve as investment Consultant under the terms of this Agreement with respect to the funds described in this Agreement and such other funds as the City may from time to time assign by written notice to the Consultant (collectively the "Managed Funds"), and the Consultant accepts such appointment. In connection therewith, the Consultant will provide investment research an d supervision of the Managed Funds investments and conduct a continuous program of investment, evaluation and, when appropriate, sale and reinvestment of the Managed Funds assets. The Consultant shall continuously monitor investment opportunities and eval uate investments of the Managed Funds.

The Consultant shall furnish the City with statistical information and reports with respect to investments of the Managed Funds. The Consultant shall place all orders for the purchase, sale, loan or exchange of portfolio securities for the City's account with brokers or dealers recommended by the Consultant and/or the City, and to that end the Consultant is authorized as agent of the City to give instructions to the custodian designated by the City (the “Custodian”) as to deliveries of securities and payments of cash for the account of the City. In connection with the selection of such brokers and dealers and the placing of such orders, the Consultant is directed to seek for the City the most favor able execution and price, the determination of which may take into account, subject to any applicable laws, rules and regulations, whether statistical, research and other information or services have been or will be furnished to the Consultant by such brokers and dealers. The Custodian shall have custody of cash, assets and securities of the City. The Consultant shall not take possession of or act as custodian for the cash, securities or other assets of the City and shall have no responsibility in connect ion therewith. Authorized investments shall include only those investments which are currently authorized by the state investment statutes and the applicable covenants and as supplemented by such other written instructions as may from time to time be provided by the City to the Consultant. The Consultant shall be entitled to rely upon the City's written advice with respect to anticipated drawdowns of Managed Funds. The Consultant will observe the instructions of the City with respect to broker/dealers who are approved to execute transactions involving the Managed Funds and in the absence of such instructions will engage broker/dealers which the Consultant reasonably believes to be reputable, qualified and financially sound.

(b) Pool Compensation. Assets invested by the Consultant under the terms of this Agreement may from time to time be invested in (i) a money market mutual fund managed by the Consultant or (ii) a local government investment pool managed by the Consultant (either, a “Pool”) or in individual securities. Average daily net assets subject to the fees described in this Agreement shall

2 not take into account any funds invested in the Pool. Expenses of the Pool, including compensation for the Consultant and the Pool custodian, are described in the relevant prospectus or information statement and are paid from the Pool.

(c) Other Compensation. If and to the extent that the City shall request the Consultant to render services other than those to be rendered by the Consultant under this Agreement, such additional services shall be compensated separately on terms to be agreed upon between the Consultant and the City.

(d) Expenses. The Consultant shall furnish at its own expense all necessary administrative services, office space, equipment, clerical personnel, telephone and other communication facilities, investment Consultanty facilities, and executive and supervisory personnel for managing the Managed Funds. Except as expressly provided otherwise herein, the City shall pay all of its own expenses including, without limitation, taxes, commissions, fees and expenses of the City's independent auditors and legal counsel, if any, brokerage and other expenses connected with the execution of portfolio security transactions, insurance premiums, and fees and expenses of the Custodian.

(e) Registered Consultant; Duty of Care. The Consultant hereby represents it is a registered investment Consultant under the Investment Advisers Act of 1940. The Consultant shall immediately notify the City if at any time during the term of this Agreement it is not so registered or if its registration is suspended. The Consultant agrees to perform its duties and responsibilities under this Agreement with reasonable care. The federal securities laws impose liabilities under certain circumstances on persons who act in good faith. Nothing herein shall in any way constitute a waiver or limitation of any rights which the City may have under any federal securities laws. The City hereby authorizes the Consultant to sign I.R.S. Form W-9 on behalf of the City and to deliver such form to broker -dealers or others from time to time as required in connection with securities transactions pursuant to this Agreement.

(f) Consultant’s Other City s. The City understands that the Consultant performs investment Consultanty services for various other City s which may include investment companies, commingled trust funds and/or individual portfolios . The City agrees that the Consultant, in the exercise of its professional judgment, may give advice or take action with respect to any of its other Citys which may differ from advice given or the timing or nature of action taken with respect to the Managed Funds. The Consultant shall not have any obligation to purchase, sell or exchange any security for the Managed Funds solely by reason of the fact that the Consultant, its principals,

3 affiliates, or employees may purchase, sell or exchange such security for the account of any other City or for itself or its own accounts.

(g) Force Majeure. The Consultant shall have no liability for any losses arising out of the delays in performing or inability to perform the services which it renders under this Agreement which result from events beyond its control, including interruption of the business activities of the Consultant or other financial institutions due to acts of God, acts of governmental authority, acts of war, terrorism, civil insurrection, riots, labor difficulties, or any action or inaction of any carrier or utility, or mechanical or other malfunction.

(h) Disciplinary Actions. The Consultant shall promptly give notice to the City if the Consultant shall have been found to have violated any state or federal securities law or regulation in any final and unappealable judgment in any criminal action or civil suit in any state or federal court or in any disciplinary proceeding before the Securities and Exchange Commission (“SEC”) or any other agency or department of the United States, any registered securities exchange, FINRA, or any regulatory authority of any State based upon the performance of services as an investment Consultant.

(i) Independent Contractor. The Consultant, its employees, officers and representatives, shall not be deemed to be employees, agents (except as to the purchases or sale of securities described in subparagraph (a) above) , partners, servants, and/or joint ventures of the City by virtue of this Agreement or any actions or services rendered under this Agreement.

(j) Books. The Consultant shall maintain records of all transactions in the Managed Funds. The Consultant shall provide the City with a monthly statement showing depo sits, withdrawals, purchases and sales (or maturities) of investments, earnings received, and the value of assets held on the last business day of the month. The statement shall be in the format and manner that is mutually agreed upon by the Consultant and the City.

(k) Brochure and Brochure Supplement . The Consultant warrants that it has delivered to the City prior to the execution of this Agreement the Consultant's current S EC Form ADV, Part 2A (brochure) and Part 2B (brochure supplement) . The City acknowledges receipt of such brochure and brochure supplement prior to the execution of this Agreement.

4 (l) Execution. Each party to this Agreement represents and warrants that the person or persons signing this Agreement on behalf of such party is authorized and empowered to sign and deliver this Agreement for such party.

Last Revised: 11/27/2018
AMENDMENT NO. 001
to
Professional Services Agreement (CO #2020-089)
between
PFM Asset Management LLC (hereinafter “Consultant”)
and
City of Rancho Cucamonga (hereinafter the “City”)

This Amendment No. 001 will serve to amend the Professional Services Agreement (hereinafter “Agreement”), CO #2020-089, to incorporate the following:

Intent to extend the term of the A greement (CO #2020-089) for two additional years as per paragraph 2. Term of Agreement.

Intent to increase the not to exceed amount payable to Consultant pursuant to paragraph 3.1. Compensation in connection with extending the term of the Agreement (CO #2020-089) for two additional years. Pursuant to this Amendment No. 001, paragraph 3.1 shall be revised to provide that the full, total and complete amount payable to Consultant shall not exceed $905,000 (Nine Hundred Five Thousand Dollars), including all out- of-pocket expenses, unless the City Manager or City Council approves additional compensation.

All other Terms and Conditions of the original Agreement CO #2020-089 will remain in full effect.

IN WITNESS WHEREOF, the parties, through their respective authorized representatives, have executed this Amendment by way of signature by both parties and on the date indicated below. Please return two (2) original signed copies to the City no later than November 1, 2023. The City will process both copies for signature and provide the Consultant with one (1) fully executed copy of the Amendment.

PFM Asset Management LLC

By:

Name Date

Title
City of Rancho Cucamonga

By:

Name Date

Title

By:

Name Date
By:

Name Date

Title
(two signatures required if corporation)
Title

DocuSign Envelope ID: 7EB522ED-B19C-4D17-BEB7-D74B3D7A04A6 Managing Director
10/26/2023 | 10:35 AM PDT
10/26/2023 | 12:49 PM PDT
Mayor/President
ATTACHMENT 3

DATE: July 16, 2025
TO: Mayor and Members of the City Council
FROM: John R. Gillison, City Manager
INITIATED BY: Maritza Martinez, Public Works Services Director Daniel Akers, Public Works Services Deputy Director
Lisa O'Brien, Public Works Business Manager
Paige Eberle, Management Analyst II
SUBJECT: Consideration of Amendment No. 1 to Contract No. 2024-094 with Colts Landscape, Inc. for General Fund and LMD 1 Parkway, Paseo, and Median Island Landscape and Irrigation Maintenance Services in an Amount Not to Exceed $953,050 for FY25/26. (CITY)
RECOMMENDATION:

Staff recommends the City Council approve Amendment No. 1 to Contract No. 2024-094 with Colts Landscape, Inc., extending the term of the contract to June 30, 2026 in an amount not to exceed $953,050 for FY 2025/26.

BACKGROUND:

The Public Works Services Department and the Procurement Division routinely issue requests for proposals to ensure vendor services remain competitive. On May 15, 2024, City Council awarded a competitively bid contract (CO 2024-094) for General Fund and LMD 1 Parkway, Paseo, and Median Island Landscape and Irrigation Maintenance Services to Colts Landscape, Inc.; effective July 1, 2024 for a one (1) year term with an option to renew in one (1) year increments up to a total of six (6) additional years through June 30, 2031. Currently, all sites are maintained at Service Level A. If approved, Amendment No. 1 to contract CO 2024-094 will extend the term of the contract to June 30, 2026, with a 2.9% CPI rate increase for routine (cyclically scheduled) maintenance and as needed “extra work” line items. A copy of this agreement is available in the City Clerk’s Office.

ANALYSIS:

Colts Landscape, Inc., has submitted a Letter of Intent expressing their desire to continue providing service to the City of Rancho Cucamonga during FY 2025/26. Colts Landscape, Inc., is requesting a 2.9% CPI rate increase for routine (cyclically scheduled) maintenance and as needed “extra work” line items to cover increases in labor, material, and fuel costs.

Colts Landscape, Inc., continues to meet the services needs of the City and staff recommends the City Council approve the renewal of contract CO 2024-094 effective July 1, 2025 and approve the spending limit of $953,050 for FY 2025/26.

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FISCAL IMPACT:

The approved FY 2025/26 Budget includes $953,050 for Paseos, Parkways, and Median Island Landscape and Irrigation Maintenance in account F130 CC319 SC2105.

The contract spending limit of $953,050 includes a contingency of $95,305 for unforeseen work resulting from wind events or other emergencies.

COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

This item addresses the City Council’s core values of promoting and enhancing a safe and healthy community for all, while providing high quality outdoor spaces.

ATTACHMENTS:

None.

DATE: July 16, 2025
TO: Mayor and Members of the City Council
FROM: John R. Gillison, City Manager
INITIATED BY: Maritza Martinez, Public Works Services Director Daniel Akers. Public Works Services Deputy Director
Lisa O'Brien, Public Works Business Manager
Paige Eberle, Management Analyst II
SUBJECT: Consideration of Amendment No. 1 to Contract No. 2024-115 with CCS Facility Services for Citywide Janitorial Services in an Amount Not to Exceed $984,576 for FY25/26. (CITY)
RECOMMENDATION:

Staff recommends the City Council approve Amendment No. 1 to contract CO 2024-115 with CCS Facility Services for citywide janitorial services, extending the term of the contract to June 30, 2026 in an amount not to exceed $984,576 for FY 2025/26.

BACKGROUND:

The Public Works Services Department and the Procurement Division routinely issue requests for proposals to ensure vendor services remain competitive. On July 1, 2024, City Council awarded a competitively bid contract (CO 2024-115) for Citywide Janitorial Services to CCS Facility Services, effective July 1, 2024 for a one (1) year term with an option to renew in one (1) year increments up to a total of six (6) additional years through June 30, 2031. If approved, Amendment No. 1 to contract CO 2024-115 will extend the term of the contract to June 30, 2026, with a 3% rate increase to the contract fees.

ANALYSIS:

CCS Facility Services has submitted a Letter of Intent expressing their desire to continue providing services to the City of Rancho Cucamonga during FY 2025/26. CCS Facility Services is requesting a 3% rate increase.

CCS Facility Services continues to meet the services needs of the City and staff recommends the City Council approve the renewal of contract CO 2024-115 effective July 1, 2025 and approve the spending limit of $984,576 for FY 2025/26.

FISCAL IMPACT:

The approved FY 2025/26 Budget includes $984,576 for citywide janitorial services in several facilities contract services line items.

The contract spending limit of $984,576 includes a contingency of $49,229 for unforeseen work resulting from wind events or other emergencies.

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COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

This item addresses the City Council’s core values of promoting and enhancing a safe and healthy community for all.

ATTACHMENTS:

None.

DATE: July 16, 2025
TO: Mayor and Members of the City Council
FROM: John R. Gillison, City Manager
INITIATED BY: Peter Castro, Deputy City Manager – Administrative Services Jevin Kaye, Finance Director
SUBJECT: Consideration to Approve Amendment No. 1 of Contract No. 2025-026 with Eide Bailly, LLP for an Amount Not to Exceed $120,000 to Continue to Provide Accounting and Financial Consulting Services. (CITY) RECOMMENDATION:

Staff recommends that the City Council approve Amendment No. 1 with Eide Bailly, LLP for a total not-to-exceed $120,000.

BACKGROUND:

Over the last two years, the City’s Finance Department has experienced significant turnover of high-level staff, and to date, the Department still has two vacancies in the Senior Accountant capacity and is also in the midst of recruiting for a Finance Manager to oversee the Accounting division. Since Eide Bailly, LLP began working with the City in March, they have assisted the City in building core, foundational practices to implement in the Finance Department (i.e. monthly check lists, year-end checklists, policy analysis) and have also helped the City complete bank reconciliations, book fixed assets into Workday, assisted in preparing for the annual audit and have made recommendations on how to improve financial operations.

ANALYSIS:

On March 5, 2025, the City entered into a contract with Eide Bailly, LLP, to provide the Finance Department with Accounting and Financial Consulting Services. Since that time, Eide Bailly, LLP has assisted the Accounting Division in performing essential accounting tasks and have assisted the Department in making recommendations for policy development and organizational analysis.

With the current vacancies in Finance, extending the existing agreement will ensure continuity in Finance operations and also ensure new staff is trained with the assistance of Eide Bailly, LLP.

Should new vacancies occur, this agreement will also serve a way to provide consistency in Financial operations as Eide Bailly, LLP has staff available who understand the City’s financial system and operations.

FISCAL IMPACT:

Staff recommends that the City Council approve Amendment #1 with Eide Bailly, LLP for a total not-to-exceed $120,000. There is sufficient salary savings to fund this contract in Fiscal Year 2025/26 and Finance will submit a request for additional appropriation, if needed, in a future midyear budget report.

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COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

The approval of this item supports the City Council’s core value of providing and nurturing a high quality of life for all by demonstrating the active, prudent fiscal management of the City’s financial resources in order to support the various services the City provides to all Rancho Cucamonga stakeholders.

ATTACHMENTS:

Attachment 1 – Amendment Letter

What inspires you, inspires us. | eidebailly.com
10681 Foothill Blvd., Ste. 300 | Rancho Cucamonga, CA 91730-3831 | T 909.466.4410 | F 909.466.4431 | EOE 1 July 2, 2025
Jevin Kaye, Finance Director
City of Rancho Cucamonga
10500 Civic Center Drive
Rancho Cucamonga, CA. 91730
Dear Mr. Kaye,
Thank you for giving Eide Bailly the opportunity to provide continued services to the City. Pursuant to our Agreement for professional services dated March 10, 2025, we have prepared this amendment to our Agreement to increase the compensation set forth in Section 3.1 of the Agreement. The fee for this amendment is $120,000 bringing the Agreement total to $270,000.

The terms and definitions used herein are those set forth in the Agreement.

There shall be no change to the Scope of Work.

This Amendment and the Agreement contain the entire agreement between the Parties with respect to the
subject matter hereof, and they supersede all prior or contemporaneous agreements in connection with the subject matter. Nothing in this Amendment relieves the Consultant of its obligation to perform as required by the Agreement or any previous Addendums or Amendments unless expressly stated herein. No modification of this Amendment or the Agreement shall be binding unless executed in writing by the Parties hereto. Except as expressly modified herein, the terms and provisions of the Original Agreement remain in full force and effect.

This Amendment and other actions and documents related to t he original Agreement may be executed in any number of counterparts, each of which when executed and delivered will for all purposes be deemed to be an original, and all of which taken together will constitute one and the same document. The counterparts of this Amendment and all other actions and documents executed in connection herewith may be executed and delivered by facsimile or other electronic signature by any of the parties to any other party and the receiving party may rely on the receipt of such document so executed and delivered by facsimile or other electronic means as if the original had been received. The parties agree that the electronic signature of a party to this Amendment and any other actions and documents related to the original Agreement, shall be as valid as an original signature of such party and shall be effective to bind such party to this Amendment. The parties agree that any electronically signed document (including this Amendment) shall be deemed (i) to be “written” or “in writing,” (ii) to have been signed and (iii) to constitute a record established and maintained in the ordinary course of business and an original written record when printed from electronic files.

ATTACHMENT 1

2 For fiscal years subsequent to the one ending June 30, 2025, Eide Bailly will increase its rates by 3.5%.

Accordingly, our fees will be invoiced on an hourly basis pursuant to the chart below.

EB Staff Hourly Rate Hourly Rate*
Partner
Director
Senior Manager
$383
$361
$328
$396
$374
$339
Manager
Supervisor
$274
$243
$284
$251
Senior Associate $208 $215
Staff Associate $164 $170
*effective July 1, 2025
Services are
expected to be performed remotely. Where an on-site visit seems warranted, we will make every effort to accommodate it.

It is expected that the City accepts responsibility for the results of the services being provided and agrees to perform the following functions in connection with this engagement:
 Make all management decisions and perform all management functions,  Designate a
competent individual to oversee the services,
 Evaluate
the adequacy and results of the services performed,
 Acce
pt responsibility for the results of the services, and
 Establish and maintain internal controls, including monitoring ongoing activiti es.

Sincere
ly,
Dr. Bradford Rockabrand, CPA
Partner
*************************************************************** RESPONSE:

This letter correctly sets forth our understanding.

Acknowledged and agreed on behalf of City of Rancho Cucamonga by:

Name: _______________________________________________________________ Title: ________________________________________________________________ Date: ________________________________________________________________

DATE: July 16, 2025
TO: Mayor and Members of the City Council
FROM: John R. Gillison, City Manager
INITIATED BY: Maritza Martinez, Public Works Services Director Daniel Akers, Public Works Services Deputy Director
Lisa O'Brien, Public Works Business Manager
Paige Eberle, Management Analyst II
SUBJECT: Consideration of Amendment No. 3 to Contract No. 2022-070 with Mariposa Landscapes, Inc. for LMD 2 Parkway, Paseo, and Median Island Landscape and Irrigation Maintenance in an Amount Not to Exceed $1,746,964 for FY 2025/26. (CITY)
RECOMMENDATION:

Staff recommends the City Council approve Amendment No. 3 to contract CO 2022-070 with Mariposa Landscapes, Inc., extending the term of the contract to June 30, 2026 in an amount not to exceed $1,746,964 for FY 2025/26.

BACKGROUND:

The Public Works Services Department and the Procurement Division routinely issue requests for proposals to ensure vendor services remain competitive. On July 20, 2022, City Council awarded a competitively bid contract (CO 2022-070) for LMD 2 Parkway, Paseo, and Median Island Landscape and Irrigation Maintenance to Mariposa Landscapes, Inc., of Irwindale, California, effective July 1, 2022 for a one (1) year term with an option to renew in one (1) year increments up to a total of six (6) additional years through June 30, 2029. Currently, all sites are maintained at Service Level A. If approved, Amendment No. 3 to contract CO 2022-070 will extend the term of the contract to June 30, 2026, with a 2.9% rate increase for routine (cyclically scheduled) maintenance and as needed “extra work” line items. A copy of this agreement is available in the City Clerk’s Office.

ANALYSIS:

Mariposa Landscapes, Inc., has submitted a Letter of Intent expressing their desire to continue providing service to the City of Rancho Cucamonga during FY 2025/26. Mariposa Landscapes, Inc., is requesting a 2.9% CPI rate increase for routine (cyclically scheduled) maintenance and as needed “extra work” line items to cover increases in labor, material, and fuel costs.

Mariposa Landscapes, Inc., continues to meet the services needs of the City and staff recommends the City Council approve the renewal of contract CO 2022-070 effective July 1, 2025 and approve the spending limit of $1,746,964 for FY 2025/26.

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FISCAL IMPACT:

The approved FY 2025/26 Budget includes $1,746,964 for Paseos, Parkways, and Median Island Landscape and Irrigation Maintenance in account F131 CC319 SC2105.

The contract spending limit of $1,746,964 includes a contingency of $349,393 for unforeseen work resulting from wind events or other emergencies.

COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

This item addresses the City Council’s core values of promoting and enhancing a safe and healthy community for all, while providing high quality outdoor spaces.

ATTACHMENTS:

None.

DATE:July 16, 2025
TO:Mayor and Members of the City Council
FROM:John R. Gillison, City Manager
INITIATED BY: Elisa Cox, Assistant City Manager
Matt Marquez, Economic Development Director
Tanya Spiegel, Economic Development Manager
SUBJECT: Consideration of Amendment No. 003 to the Professional Services Agreement with Palmer Consulting for Project Management Services in the Amount of $85,000. (CITY)
RECOMMENDATION:

Staff recommends the City Council approve a one (1) year extension of an Agreement for Professional Services with Palmer Consulting for project management services in the amount of $85,000.00 and authorize the City Manager or designee to approve future one (1) year extensions as described in the Professional Services Agreement.

BACKGROUND:

On August 16, 2022, the City procured Palmer Consulting Services for strategic management services of Cucamonga Station/HART District Partnership and Economic Development Marketing Services. Procurement of Palmer Consulting Services was done through a single source transaction. The Principal for Palmer Consulting, Francie Palmer, was the designated Senior Advisor on the Marketing Outreach and Engagement Services for the Cucamonga Station and HART District proposal process for the City making Palmer Consulting the best choice for the required consulting services.

ANALYSIS:

Since the approval of the Agreement in August 2022, staff has successfully worked with Palmer Consulting to establish the Cucamonga Station Stakeholder Partners group as the leading group of experts in the regional transportation and tourism realm. Various pieces of the Economic Development Marketing and Communications Plan have been implemented including advertorials and outreach efforts.

The use of Palmer Consulting provides a critical connectivity for two interconnected projects that provide great benefit to the City for the following reasons:
Allows for more effective project management and increased accountability of related projects.
Greater continuity and integration with having a single vendor coordinating marketing strategies and key messages.

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Allows for a cohesive voice, style and feel in the City marketing and communication efforts.

FISCAL IMPACT:

The City’s Fiscal Year 2025/26 Budget allocates funding for Palmer Consulting’s scope of services in F001-CC301-6600-SC2106 (General Fund, Economic Development, Contract Services). Project management services will be provided for $85,000 for this Professional Services Agreement.

COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

This item addresses the City Council’s Core Values of “Providing and nurturing a high quality of life for all”, “Intentionally embracing and anticipating the future”, and “Equitable prosperity for all” by ensuring that Rancho Cucamonga’s vibrant economy ensures prosperity and opportunities now and in the future. It also addresses the Vision and Goals of the General Plan by establishing Rancho Cucamonga as the cultural and economic hub of the Inland Empire.

ATTACHMENTS:

Attachment 1 – Agreement for Professional Services: Contract No. 2022-117

City of Rancho Cucamonga

CONTRACT NUMBER
AGREEMENT FOR 2402.2.- 117

PROFESSIONAL SERVICES
THIS AGREEMENT is made and entered into this 1stday of
September, 2022, by and between the City of Rancho Cucamonga, a municipal corporation (" City") and Palmer Consulting, a consulting firm(" Contractor").

RECITALS
A. City hasheretofore issued its requestfor proposalsto perform the following services: Strategic Project Management Services - Cucamonga Station/ Hart District Partnership & Economic Development Maketing Services (" the Project").

B. Contractor has submitted a proposal to perform the services described in Recital " A", above, necessary to complete the Project.

C. City desires to engage Contractor to complete the Project in the manner set forth and more fully described herein.

D. Contractor representsthat it is fully qualified and licensed under the laws of the State of California to perform the services contemplated by this Agreement in a good and professional manner.

AGREEMENT
NOW, THEREFORE, in consideration of performance by the parties of the mutualpromises, covenants, andconditionshereincontained, thepartiesheretoagreeas follows:

1. Contractor' s Services.

1. 1 Scope and Level of Services. Subject to the terms and conditions set forth in this Agreement, City hereby engages Contractor to perform all services describedin Recitals "A" and `B" above, including, but not limited to SDI CoreStrengths In- Person and Virtual Workshop Facilitation, all as more fully set forth in the Contractor' s proposal, dated August 4, 2022 and entitled " Scope of Work", attached hereto as Exhibit " A", and incorporated by referenceherein. The nature, scope, and level of the servicesrequired to be performed by Contractor are set forth in the Scopeof Work and are referred to herein as " the Services." In theeventof anyinconsistenciesbetween the Scopeof Work and this Agreement, the terms and provisions of this Agreement shall control.

1. 2 Revisions to Scope of Work. Upon request of the City the Contractor will promptly meet with City staff to discuss any revisions to the Project desired by the City. Contractor agreesthat the Scope of Work may be amendedbased upon said meetings, and, by amendment to this Agreement, the parties may agree on a revision or revisions to Contractor' s compensationbasedthereon. A revision pursuant to this Section that does not increase the total cost payable to Contractor by more than ten Ve id r itials
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ATTACHMENT 1

percent ( 10%) of the total compensation specified in Section 3, may be approved in writing by City' s Manager without amendment.

1. 3 Time for Performance. Contractor shall perform all servicesunder this Agreement in a timely, regular basis consistent with industry standards for professional skill and care, and in accordancewith any scheduleof performance set forth in the Scope of Work, or as set forth in a " Schedule of Performance", if such Schedule is attached hereto as Exhibit " B".

1. 4 Standard of Care. As a material inducement to City to enter into this Agreement, Contractor hereby represents that it has the experience necessary to undertake the services to be provided. In light of such status and experience, Contractor hereby covenantsthat it shall follow the customary professional standardsin performing the Services.

1. 5 Familiarity with Services. By executing this Agreement, Contractor representsthat, to the extent required by the standardof practice, Contractor a) has investigated and considered the scope of services to be performed, (b) has carefully considered how the services should be performed, and ( c) understands the facilities, difficulties and restrictions attending performance of the services under this Agreement. Contractor representsthat Contractor, to the extent required by the standard of practice, has investigated any areas of work, as applicable, and is reasonably acquainted with the conditions therein. Should Contractor discover any latent or unknown conditions, which will materially affect the performance of services, Contractor shall immediately inform City of such fact and shall not proceed except at Contractor' s risk until written instructions arereceived from the City Representative.

2. Term of Agreement. The term of this Agreement shall be 1 (one) year(s) and shall become effective as of the date of the mutual execution by way of both parties signature ( the " Effective Date"). No work shall be conducted; service or goods will not be provided until this Agreement has been executed and requirements have been fulfilled.

Parties to this Agreement shall have the option to renew in one ( 1) year increments to a total of 3 ( three) years, unless sooner terminated as provided in Section 14 herein.

Options to renew are contingent upon the City Manager's approval, subject to pricing review, and in accordance to all Terms and Conditions stated herein unless otherwise provided in writing by the City.

3. Compensation.

3. 1 Compensation. City shall compensateContractor as set forth in Exhibit A, provided, however, that full, total and complete amount payable to Contractor shall not exceed $ 85, 000 ( Eighty Five Thousand Dollars), including all out of pocket expenses, unless additional compensation is approved by the City Manager or City Council. City shall not withhold any federal, state or other taxes, or other deductions.

However, City shall withhold not more than ten percent ( 10%) of any invoice amount Ve d r/ titials
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pending receipt of any deliverables reflected in such invoice. Under no circumstance shall Contractor be entitled to compensationfor servicesnot yet satisfactorily performed.

The parties further agreethat compensationmay be adjustedin accordance with Section 1.2 to reflect subsequent changes to the Scope of Services. City shall compensateContractor for any authorized extra servicesas setforth in Exhibit A.

4. Method of Payment.

4. 1 Invoices. Contractor shall submit to City monthly invoices for the Services performed pursuant to this Agreement. The invoices shall describe in detail the Services rendered during the period and shall separately describe any authorized extra services. Any invoice claiming compensation for extra services shall include appropriate documentation of prior authorization of such services. All invoices shall be remitted to the City of Rancho Cucamonga, California.

4. 2 City shall review such invoices and notify Contractor in writing within ten ( 10) business days of any disputed amounts.

4. 3 City shall pay all undisputed portions of the invoice within thirty 30) calendar days after receipt of the invoice' up to the not-to-exceedamounts setforth in Section 3.

4. 4 All records, invoices, time cards, cost control sheets and other records maintained by Contractor relating to services hereunder shall be available for review and audit by the City.

5. Representatives.

5. 1 City Representative. For the purposes of this Agreement, the contract administrator and City representative shall be Elisa Cox, Assistant City Manager, or such other person as designated in writing by the City (" City Representative"). It shall be Contractor' s responsibility to assure that the City Representative is kept informed of the progress of the performance of the services, and Contractor shall refer any decisionsthat must be madeby City to the City Representative.

Unless otherwise specified herein, any approval of City required hereunder shall mean the approval of the City Representative.

5. 2 Contractor Representative. For the purposes of this Agreement, Francie Palmer is hereby designated as the principal and representative of Contractor authorized to act in its behalf with respect to the services specified herein and make all decisions in connection therewith (" Contractor' s Representative"). It is expressly understood that the experience, knowledge, capability and reputation of the Contractor' s Representative were a substantial inducement for City to enter into this Agreement.

Therefore, the Contractor' s Representative shall be responsible during the term of this Agreement for directing all activities of Contractor and devoting sufficient time to personally supervise the services hereunder. Contractor may not change the Responsible Principal without the prior written approval of City.

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6. Contractor' s Personnel.

6. 1 All Services shall be performed by Contractor or under Contractor' s direct supervision, and all personnel shall possess the qualifications, permits, and licensesrequired by Stateand local law to perform such Services, including, without limitation, a City businesslicense asrequired by the City' s Municipal Code.

6. 2 Contractor shall be solely responsible for the satisfactory work performance of all personnel engagedin performing the Services and compliance with the standard of care set forth in Section 1.4.

6. 3 Contractor shall be responsible for payment of all employees' and subcontractors' wages and benefits, and shall comply with all requirements pertaining to employer' s liability, workers' compensation, unemployment insurance, and Social Security. By its execution of this Agreement, Contractor certifies that it is aware of the provisions of Section 3700 of the California Labor Code that require every employer to be insured against liability for Worker's Compensation or to undertake self-insurance in accordancewith theprovisionsof thatCode, andagreesto complywith suchprovisions before commencing the performance of the Services.

6. 4 Contractor shall indemnify, defend and hold harmless City and its elected officials, officers and employees, servants, designated volunteers, and agents servingasindependentcontractorsin therole of City officials, from anyandall liability, damages, claims, costs and expensesof any nature to the extent arising from Contractor's violations of personnel practices and/ or any violation of the California Labor Code. City shall have the right to offset against the amount of any fees due to Contractor under this Agreement any amount due to City from Contractor as a result of Contractor' s failure to promptly pay to City any reimbursement or indemnification arising under this Section 6.

7. Ownership of Work Product.

7. 1 Ownership. All documents, ideas, concepts, electronic files, drawings, photographs and any and all other writings, including drafts thereof, prepared, createdor providedby Contractorin thecourseof performingtheServices, includingany and all intellectual and proprietary rights arising from the creation of the same collectively, " Work Product"), are considered to be " works made for hire" for the benefit of the City. Upon payment being made, and provided Contractor is not in breach of this Agreement, all Work Product shall be and remain the property of City without restriction or limitation upon its use or dissemination by City. Basic survey notes, sketches, charts, computations and similar data prepared or obtained by Contractor under this Agreement shall, upon request, be made available to City. None of the Work Product shall be the subject of any common law or statutory copyright or copyright application by Contractor. In the event of the return of any of the Work Product to Contractor or its representative, Contractor shall be responsible for its safe return to City. Under no circumstances shall Contractor fail to deliver any draft or final designs, plans, drawings, reports or specifications to City upon written demand by City for their delivery, notwithstanding any disputes between Contractor and City concerning payment, 1vekdr nitials
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performance of the contract, or otherwise. This covenant shall survive the termination of this Agreement. City' s reuseof the Work Product for any purpose other than the Project, shall be at City' s sole risk.

7. 2. Assignment of Intellectual Property Interests: Upon execution of this Agreement and to the extent not otherwise conveyed to City by Section 7.1, above, the Contractor shall be deemed to grant and assign to City , and shall require all of its subcontractors to assign to City , all ownership rights, and all common law and statutory copyrights, trademarks, and other intellectual and proprietary property rights relating to the Work Product and the Project itself, and Contractor shall disclaim and retain no rights whatsoever as to any of the Work Product, to the maximum extent permitted by law.

City shall be entitled to utilize the Work Product for any and all purposes, including but not limited to constructing, using, maintaining, altering, adding to, restoring, rebuilding and publicizing the Project or any aspectof the Project.

7. 3 Title to Intellectual Property. Contractor warrants and represents that it has secured all necessary licenses, consents or approvals to use any instrumentality, thing or componentas to which any intellectualpropertyright exists, includingcomputersoftware, usedin therenderingof theServicesandtheproductionof theWork Productand/or materialsproducedunderthis Agreement, andthatCity hasfull legal title to and the right to reproduce any of the Work Product. Contractor shall defend, indemnify and hold City, and its elected officials, officers, employees, servants, attorneys, designated volunteers, and agents serving as independent contractors in the role of City officials, harmlessfrom any loss, claim or liability in anyway relatedto a claim that City' s use is violating federal, state or local laws, or any contractual provisions, relating to trade names, licenses, franchises, patents or other means of protecting intellectual property rights and/or interests in products or inventions.

Contractorshallbearall costsarisingfrom theuseof patented, copyrighted, tradesecret or trademarked documents, materials, software, equipment, devices or processesused or incorporated in the Services and materials produced under this Agreement. In the event City' s use of any of the Work Product is held to constitute an infringement and any use thereof is enjoined, Contractor, at its expense, shall: ( a) secure for City. the right to continue using the Work Product by suspension of any injunction or by procuring a license or licenses for City; or ( b) modify the Work Product so that it becomes non- infringing. This covenant shall survive the termination of this Agreement.

8. Status as Independent Contractor. Contractor is, and shall at all times remain as to City, a wholly independent contractor. Contractor shall have no power to incur any debt, obligation, or liability on behalf of City or otherwise act as an agent of City. Neither City nor any of its agents shall have control over the conduct of Contractor or any of Contractor' s employees, except as set forth in this Agreement. Contractor shall not, at any time, or in any manner, represent that it or any of its officers, agents or employees are in any manner employees of City. Contractor shall pay all required taxes on amounts paid to Contractor under this Agreement, and to defend, indemnify and hold City harmlessfrom anyandall taxes, assessments, penalties, andinterestassertedagainst City by reason of the independent contractor relationship created by this Agreement.

Y
Y
VendFir itials
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Contractor shall fully comply with the workers' compensation law regarding Contractor and Contractor' s employees

9. Confidentiality. Contractor may have access to financial, accounting, statistical, and personnel data of individuals and City employees. Contractor covenants that all data, documents, discussion, or other information developed or received by Contractor or provided for performance of this Agreement are confidential and shall not be disclosed by Contractor without prior written authorization by City. City shall grant such authorization if applicable law requires disclosure. All City data shall be returned to City upon the termination of this Agreement. Contractor' s covenant under this Section shall survive the termination of this Agreement. This provision shall not apply to information in whatever form that is in the public domain, nor shall it restrict the Contractor from giving notices required by law or complying with an order to provide information or data when such an order is issued by a court, administrative agency or other legitimate authority, or if disclosure is otherwise permitted by law and reasonably necessary for the Contractor to defend itself from any legal action or claim.

10. Conflict of Interest.

10. 1 Contractor covenants that it presently has no interest and shall not acquire any interest, direct or indirect, which may be affected by the. Services, or which would conflict in any manner with the performance of the Services. Contractor further covenants that, in performance of this Agreement, no person having any such interest shall be employed by it. Furthermore, Contractor shall avoid the appearanceof having any interest, which would conflict in any manner with the performance of the Services.

Contractor shall not accept any employment or representation during the term of this Agreement which is or may likely make Contractor " financially interested" ( as provided in California Government Code §§ 1090 and 87100) in any decision made by City on any matter in connection with which Contractor has been retained.

10. 2 Contractor further represents that it has not employed or retained any personor entity, other than a bonafide employee working exclusively for Contractor, to solicit or obtain this Agreement. Contractor has not paid or agreedto pay any person or entity, other than a bona fide employee working exclusively for Contractor, any fee, commission, gift, percentage, or any other consideration contingent upon the execution of this Agreement. Upon any breach or violation of this warranty, City shall have the right, at its sole and absolutediscretion, to terminate this Agreement without further liability, or to deduct from any sumspayable to Contractor hereunderthe full amount or value of any suchfee, commission, percentageor gift.

10. 3 Contractor has no knowledge that any officer or employee of City has any interest, whether contractual, noncontractual, financial, proprietary, or otherwise, in this transaction or in the businessof Contractor, and that if any such interest comesto the knowledge of Contractor at any time during the term of this Agreement, Contractor shall immediately make a complete, written disclosure of such interest to City, even if such interest would not be deemed a prohibited " conflict of interest" under applicable laws as described in subsection 10. 1.

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11. Indemnification.

11. 1 To the maximum extent permitted by law, the Contractor shall defend, indemnify and hold the City, and its elected officials, officers, employees, servants, volunteers, and agents serving as independent contractors in the role of City officials, ( collectively, " Indemnitees"), free and harmless with respect to any and all damages, liabilities, losses, reasonable defense costs or expenses ( collectively, " Claims"), includingbut not limited to Claimsrelatingto deathor injury to anypersonandinjury to any property, which arise out of, pertain to, or relate to the acts, omissions, activities or operations of Contractor or any of its officers, employees, subcontractors, Contractors, or agentsin theperformanceof this Agreement. ContractorshalldefendIndemniteesin any action or actions filed in connection with any such Claims with counsel of City' s choice, andshallpay all costsandexpenses, including actualattorney's feesandexperts' costs incurred in connection with such defense. The indemnification obligation herein shall not in any way be limited by the insurance obligations contained in this Agreement provided, however, that theContractorshall haveno obligationto indemnifyfor Claims arising out of the sole negligence or willful misconduct of any of the Indemnitees.

11. 2 Nonwaiver of Rights. Indemnitees do not, and shall not, waive any rights that they may possessagainst Contractor becauseof the acceptanceby City, or the deposit" with City, of any insurancepolicy or certificate required pursuant to this Agreement.

11. 3 Waiver of Right of Subrogation. Except as otherwise expressly providedin this Agreement, Contractor, on behalfof itself andall partiesclaimingunder or through it, hereby waives all rights of subrogation against the Indemnitees, while acting within the scopeof their duties, from all claims, lossesand liabilities arising out of or incident to activities or operationsperformed by or on behalf of the Contractor.

11. 4 Survival. The provisions of this Section 11 shall survive the termination of the Agreement and are in addition to any other rights or remedies which Indemniteesmayhaveunderthelaw. Paymentis notrequiredasaconditionprecedentto anIndemnitee'sright to recoverunderthis indemnityprovision, andanentryof judgment against Contractor shall be conclusive in favor of the Indemnitee' s right to recover under this indemnity provision.

12. Insurance.

12. 1 Liability Insurance. Contractor shall procure and maintain in full force and effect for the duration of this Agreement, insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the services hereunder by Contractor, and/or its agents, representatives, employees or subcontractors.

12. 2 Minimum Scopeof Insurance. Unless otherwise approvedby City, coverage shall be at least as broad as:

P2
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1) Insurance Services Office Commercial General Liability coverage ( occurrence form CG 0001).
2) Insurance Services Office form number CA 0001 ( Ed. 1/87) covering Automobile Liability, code 1 (any auto). 3) Worker' s Compensation insurance as required by the State of California, andEmployer' s Liability Insurance.

12. 3 Minimum Limits of Insurance. Contractor shall maintain limits no less than:
1) Commercial General Liability: $ 2,000,000 per occurrence for bodily injury, personal injury and property damage.

Commercial General Liability Insuranceor other form with a general aggregate limit shall apply separately to this Agreement or the general limit shall be twice the required occurrence limit.
2) Automobile Liability: $ 2,000,000 per accident for bodily injury and property damage.
3) Employer' s Liability: $ 1,000,000 per accident and in the aggregate for bodily injury or disease and Workers'
CompensationInsurancein the amount required by law.
4) The Insurance obligations under this Agreement shall be the greater of ( i) the Insurance coverages and limits carried by the Contractor; or (ii) the minimum Insurancecoverages and limits shown in this Agreement. Any insurance
proceeds in excess of the specified limits and coverage required which are applicable to a given loss, shall be available to the City. No representation is made that the minimum Insurance requirements of this Agreement are
sufficient to cover the obligations of the Contractor under this agreement.

12. 4 Deductibles and Self- Insured Retentions. Any deductibles or self- insured retentions must be declaredto and approved by the City and shall not reduce the limits of coverage. City reserves the right to obtain a full certified copy of any required insurancepolicy and endorsements.

12. 5 Other Insurance Provisions.
1) The commercial general liability and automobile liability policies are to contain the following provisions on a
separateadditionally insured endorsementnaming the City, its officers, officials, employees, designated volunteers and Vend r 1 itials
PSA without professional liability insurance( contractor) Page 8 Last Revised: 05/ 22/ 14

agents serving as independent contractors in the role of City officials, as additional insureds as respects: liability arising out of activities performed by or on behalf of
Contractor; products and completed operations of
Contractor; premises owned, occupied or used by
Contractor; and/ or automobiles owned, leased, hired or borrowed by Contractor. The coverage shall contain no limitations on the scope of protection afforded to City, its officers, officials, employees, designated volunteers or agents serving as independent contractors in the role of City officials which are not also limitations applicable to the named insured.
2) For any claims related to this. Agreement, Contractor' s insurance coverage shall be primary insurance as respects City, its officers, officials, employees, designated volunteers and agentsserving asindependent contractors in the role of City officials. Any insurance or self- insurance maintained by City, its officers, officials, employees, designated volunteers or agents serving as independent
contractors in the role of City officials shall be in excess of Contractor' s insurance and shall not contribute with it. 3) Contractor's insurance shall apply separately to each insured against whom claim is made or suit is brought,
exceptwith respectto the limits of the insurer's liability. 4) Each insurance policy required by this clause shall be endorsed to state that coverage shall not be canceled except after 30 days prior written notice by first class mail has been given to City ( ten ( 10) days prior written notice for non- payment of premium). Contractor shall provide thirty 30) days written notice to City prior to implementation of a reduction of limits or material change of insurance
coverage as specified herein.
5) Each insurance policy required . by this clause shall expressly waive the insurer' s right of subrogation against City, its elected officials, officers, employees, servants, attorneys, designated volunteers, and agents serving as independent contractors in the role of City officials.
6) Each policy shall be issued by an insurance company approvedin writing by City, which is admitted and licensed to do business in the State of California and which is rated A:VII or better according to the most recent A.M. Best Co.

Rating Guide.
11/1
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7) Each policy shall specify that any failure to comply with reporting or other provisions of the required policy,
including breaches of warranty, shall not affect the
coveragerequired to be provided.
8) Each policy shall specify that any and all costs of adjusting and/or defending any claim against any insured, including court costs and attorneys' fees, shall be paid in addition to and shall not depleteany policy limits.
9) Contractor shall provide any and all other insurance, endorsements, or exclusions as required by the City in any request for proposals applicable to this Agreement.

12. 6 Evidence of coverage.Prior to commencing performance under this Agreement, the Contractor shall furnish the City with certificates and original endorsements, or copies of each required policy, effecting and evidencing the insurance coverage required by this Agreement including ( 1) Additional Insured Endorsement( s), 2) Worker' s Compensation waiver of subrogation endorsement, and (3) General liability declarations or endorsementpagelisting all policy endorsements. The endorsementsshall be signed by a person authorized by the insurer( s) to bind coverage on its behalf. All endorsementsor policies shall be received and approved by the City before Contractor commences performance. If performance of this Agreement shall extend beyond one year, Contractor shall provide City with the required policies or endorsementsevidencing renewal of the required policies of insurance prior to the expiration of any required policies of insurance.

12. 7 Contractor agrees to include in all contracts with all subcontractors performing work pursuant to this Agreement, the same requirements and provisions of this Agreement including the indemnity and insurance requirements to the extent they apply to the scope of any such subcontractor' s work. Contractor shall require its subcontractors to be bound to Contractor and City in the same manner and to the same extent as Contractor is bound to City pursuant to this Agreement, and to require each of its subcontractors to include these same provisions in its contract with any sub- subcontractor.

13. Cooperation. In the event any claim or action is brought against City relating to Contractor' s performance or services rendered under this Agreement, Contractor shall render any reasonable assistance and cooperation that City might require.

City shall compensate Contractor for any litigation support services in an amount to be agreedupon by the parties.

14. Termination. City shall have the right to terminate this Agreement at any time for any or no reason on not less than ten ( 10) days prior written notice to Contractor. In the event City exercisesits right to terminate this Agreement, City shall pay Contractor for any services satisfactorily rendered prior to the effective date of the termination, provided Contractor is not then in breach of this Agreement. Contractor Vendor' I itials
PSA without professional liability insurance( contractor) Page 10 Last Revised: 05/ 22/ 14

shallhaveno otherclaim againstCity by reasonof suchtermination, includinganyclaim for compensation. City may terminate for cause following a default remaining uncured morethanfive (5) businessdaysafterserviceof anoticeto cureonthebreachingparty.

Contractor may terminate this Agreement for cause upon giving the City D ten ( 10) business days prior written notice for any of the following: ( 1) uncured breach by the ' City of any material term of this Agreement, including but not limited to Payment Terms; ( 2) material changes in the conditions under which this Agreement was entered into, coupled with the failure of the parties to reach accord on the fees and chargesfor any Additional Services required because of such changes.

15. Notices. Any notices, bills, invoices, or reportsauthorizedor requiredby this Agreement shall be in writing and shall be deemed received on ( a) the day of deliveryif deliveredby handor overnightcourierserviceduringContractor's andCity' s regular business hours; or (b) on the third businessday following deposit in the United Statesmail, postageprepaid, to theaddressessetforthin thisSection, or to suchother addressesas the partiesmay, from time to time, designatein writing pursuantto the provisions of this Section.

All notices shall be addressed as follows:

If to City: Elisa Cox, Assistant City Manager
City of Rancho Cucamonga
10500 Civic Center Drive
Rancho Cucamonga, CA 91730
If to Contractor: Francie Palmer, Contractor
Palmer Consulting
3583 Long Drive
Minden, NV 89430

16. Non- Discrimination and Equal Employment Opportunity. In the performance of this Agreement, Contractor shall not discriminate against any employee, subcontractor, or applicant for employment because of race, color, creed, religion, sex, marital status, national origin, ancestry, age, physical or mental handicap, medical condition, or sexual orientation. Contractor will take affirmative action to ensure that subcontractors and applicants are employed, and that employees are treated during employment, without regard to their race, color, creed, religion, sex, marital status, national origin, ancestry, age, physical or mental handicap, medical condition, or sexual orientation.

17. Assignment and Subcontracting. Contractor shall not assign or transfer any interest in this Agreement or subcontract the performance of any of Contractor' s obligations hereunder without City' s prior written consent. Except as provided herein, Vendor 1 itials
PSA without professional liability insurance( contractor) Page 11 Last Revised: 05/ 22/ 14

any attempt by Contractor to so assign, transfer, or subcontract any rights, duties, or obligations arising hereunder shall be null, void and of no effect.

18. Compliance with Laws. Contractor shall comply with all applicable federal, state and local laws, ordinances, codes and regulations in force at the time Contractor performs the Services. Contractor is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., (" Prevailing Wage Laws"), which require the payment of prevailing wage rates and compliance with other requirements on " public works" and " maintenance" projects. If the Services are being performed as part of an applicable " public works" or " maintenance" project, as defined by the Prevailing Wage Laws, and if the total compensation is $ 1,000 or more, Contractor agrees to fully comply with such Prevailing Wage Laws. The applicable prevailing wage rate determinations can be found at http:// www. dir. ca. gov/ dlsr/ DPreWageDetermination. htm Contractor shall make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the Services, available to interested parties upon request, and shall post copies at the Contractor' s principal place of business and at the Project site. Contractor shall defend, indemnify and hold the City, its elected officials, officers, employees and agentsfree and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.

19. Non-Waiver of Terms, Rights and Remedies. Waiverby eitherparty of any one or more of the conditions of performance under this Agreement shall not be a waiver of any other condition of performance under this Agreement. In no event shall the making by City of any payment to Contractor constitute or be construed as a waiver by City of any breach of covenant, or any default which may then exist on the part of Contractor, and the making of any such payment by City shall in no way impair or prejudice any right or remedy available to City with regard to such breach or default.

20. Attorney' s Fees. In the event that either party to this Agreement shall commence any legal action or proceeding to enforce or interpret the provisions of this Agreement, the prevailing party in such action or proceeding shall be entitled to recover its costsof suit, including reasonableattorney's fees andcostsof experts.

21. Exhibits; Precedence. All documents referenced as exhibits in this Agreement are hereby incorporated in this Agreement. In the event of any material discrepancy between the expressprovisions of this Agreement and the provisions of any document incorporated herein by reference, the provisions of this Agreement shall prevail.

22. Applicable Law and Venue. The validity, interpretation, and performanceof thisAgreementshallbecontrolledby andconstruedunderthelawsof the State of California. Venue for any action relating to this Agreement shall be in the San Bernardino County Superior Court.

23. Construction. In the event of any asserted ambiguity in, or dispute regarding the interpretation of any matter herein, the interpretation of this Agreement Vend
PSA without professional liability insurance( contractor) Page 12 Last Revised: 05/ 22/ 14

shallnotberesolvedby anyrulesof interpretationprovidingfor interpretationagainstthe party who causesthe uncertainty to exist or against the party who drafted the Agreement or who drafted that portion of the Agreement.

24. Entire Agreement. This Agreementconsistsof this document, andany other documents, attachments and/or exhibits referenced herein and attached hereto, each of which is incorporatedhereinby suchreference, andthesamerepresentstheentireand integrated agreement between Contractor and City. This Agreement supersedesall prior oral or written negotiations, representations or agreements. This Agreement may not be amended, noranyprovisionor breachhereofwaived, exceptin awritingsignedby the parties which expressly refers to this Agreement.

IN WITNESSWHEREOF, theparties, throughtheir respectiveauthorized representatives, have executed this Agreement as of the date first wri;._ en abo • Contractor Name: Palmer Consulting Cit of Rai . amon_,.

By: ir I__ Vi By:
r
A g?/ 20zL
Nam'- Date Date
c6-6\ 4-‘1‘kC: 4 ( Aar( e/
Title Title V
By: igta4 0_ 2_ql '
Name Date
Vt Qru o k
Title
two signatures required if corporation)
PP
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EXHIBIT A

SCOPE OF SERVICES
Activities:

VLd1rtials
PSA without professional liability insurance( contractor) Page 14 Last Revised: 05/ 22/ 14

EXHIBIT B

SCHEDULE FOR PERFORMANCE
IVVeno Initials
PSA without professional liability insurance( contractor) Page 15 Last Revised: 05/ 22/ 14

Attachment A — Sample Waiver of Subrogation
Sarni) le Only — Not all forms will look identical to this Sample)

TRAVELERS J

WORKERS COMPENSATION
AND

EMPLOYERS LIABILITY POLICY
ENDORSEMENT WC 00 03 13 ( 00)- 01
POLICY NUMBER.

WAIVER OF OUR RIGHT TO RECOVER FROM OTHERS ENDORSEMENT
We have the right to recover our payments from anyone liable for an Injury covered by this policy. We will not enforce our right against the person or organization named in the Schedule. ( This agreement applies only to the extent that you perform work under a written contract that requires you to obtain this agreement from us.) This agreement shall not operate directly or indirectly to benefit any one not named in the Schedule.

SCHEDULE
DESIGNATED PERSON:

The City of RanchoCucamonga, its officers, officials, employees, designated volunteers and agentsserving asindependentcontractorsin the role of City or nfficial. c.

DESIGNATED ORGANIZATION:

Vendor Initials
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Attachment B — Sample Additional Insured for On-going Projects POLICY NUMBER: COMMERCIAL GENERAL LIABILITY
CG 20 10 07 04
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

ADDITIONAL INSURED — OWNERS, LESSEES OR
CONTRACTORS — SCHEDULED PERSON OR

ORGANIZATION
This endorsement modifies insurance. provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE PART

SCHEDULE
Name Of Additional Insured Person( s)
Or Organization( s): Location( s) Of Covered Operations The City of Rancho Cucamonga,
its officers, officials, employees,
designated volunteers and agents
serving as independent contractors
in the role of City or officials.

Information required to complete this Schedule, if not shown above, will be shown in the Declarations.

A. Section II — Who Is An Insured is amended to B. With respect to the insurance afforded to these include as an additional insured the person( s) or additional insureds, the following additional exclu- organization( s) shown in the Schedule, but only sions apply:
with respect to liability for" bodily injury"," property This insurance does not apply to" bodily injury" ordamage" or " personal and advertising injury' property damage" occurring after:
caused, in whole or in part, by:

1. Your acts or omissions; or

1. All work, including materials, parts or equip-
ment furnished in connection with such work,

2. The acts or omissions of those acting on your on the project( other than service, maintenance behalf; or repairs) to be performed by or on behalf of in the performance of your ongoing operations for the additional insured( s) at the location of the the additional insured( s) at the location( s) desig-
covered operations has been completed; or
nated above. 2. That portion of " your work" out of which the injuryor damageariseshas beenputto its in-
tended use by any person or organization other
than another contractor or subcontractor en-
gaged in performing operations for a principal
as a part of the same project.

CG 20 10 07 04 ISO Properties, Inc., 2004 Page 1 of 1
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DATE: July 16, 2025
TO: Mayor and Members of the City Council
FROM: John R. Gillison, City Manager
INITIATED BY: Maritza Martinez, Public Works Services Director Daniel Akers. Public Works Services Deputy Director
Lisa O'Brien, Public Works Business Manager
Paige Eberle, Management Analyst II
SUBJECT: Consideration of Amendment No. 8 to Contract No. 19-187 with West Coast Arborists, Inc. for Citywide Tree Maintenance in an Amount Not to Exceed $2,020,246 for FY25/26. (CITY)
RECOMMENDATION:

Staff recommends the City Council approve Amendment No. 8 to Contract No. 19-187 with West Coast Arborists, Inc. for Citywide Tree Maintenance, extending the term of the contract to June 30, 2026 in an amount not to exceed $2,020,246 for FY 2025/26.

BACKGROUND:

On December 12, 2019, City Council awarded a competitively bid contract (CO 19-187) for Citywide Tree Maintenance to West Coast Arborists, of Anaheim, California. The contract was effective January 1, 2020 for a one (1) year term with an option to renew in one (1) year increments up to a total of six (6) additional years through June 30, 2027. These services include grid trimming, pruning, tree removals, stump grinding, planting, staking, pest control, fertilizing, watering, emergency response, and arborist services for City owned and maintained trees. The areas of work include all LMDs, CFDs, PD 85, and General Fund parkways, paseos, medians, parks, and City facilities.

If approved, Amendment No. 8 to contract CO 19-187 will extend the term of the contract to June 30, 2026 with a 2.9% CPI rate increase. A copy of this agreement is available in the City Clerk’s Office.

ANALYSIS:

West Coast Arborists, Inc. has submitted a Letter of Intent expressing their desire to continue providing service to the City of Rancho Cucamonga during FY 2025/26 with a 2.9% rate increase.

The requested increase is equal to the change in the Riverside-San Bernardino-Ontario Region Consumer Price Index (CPI-U).

West Coast Arborists continues to meet the service needs of the City and staff recommends the City Council approve the renewal of contract CO 19-187 effective July 1, 2025 through June 30, 2026 and approve the spending limit in an amount not to exceed $2,020,246 for FY 2025/26.

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FISCAL IMPACT:

The approved FY 2025/26 Budget includes $2,020,246 for citywide tree maintenance services.

The total contract spending limit of $2,020,246 includes a contingency of $404,049 for unforeseen work resulting from wind events or other emergencies.

COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

This item addresses the City Council’s core values of promoting and enhancing a safe and healthy community for all, while providing high quality outdoor spaces.

ATTACHMENTS:

None.

DATE:July 16, 2025
TO:Mayor and Members of the City Council
President and Members of the Board of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Maritza Martinez, Public Works Services Director Mike McCliman, Fire Chief
Daniel Akers. Public Works Services Deputy Director
Lisa O'Brien, Public Works Business Manager
Paige Eberle, Management Analyst II
SUBJECT: Consideration of Amendment No. 8 to Contract No. FD 18-102 with Absolute International Security, Inc. for Security Guard Services in an Amount Not to Exceed $400,000 for FY25/26. (CITY/FIRE)
RECOMMENDATION:

Staff recommends the City Council and Board of Directors approve Amendment No. 8 to Contract No. 18-102 with Absolute Security International extending the term of the contract to June 30, 2026, in an amount not to exceed $400,000 for the City and Fire District during FY 2025/2026.

BACKGROUND:

On August 15, 2018, City Council accepted the bids received for security guard services at various City facilities and awarded Contract No. 18-102 to Absolute Security International, Inc. The scope of work for this contract includes restroom lockup and gate closures at City parks, standing guard services, patrol route, special event security, fire watch detail, parking lot monitoring, and loss control. Regular security guard services are provided at the Metrolink Station and various park restroom lockup and gate closures.

The initial term of the contract had an option to renew in one year increments up to a total of five years through June 30, 2024. City Council approved a one year extension past the initial expiration date for FY 2024/2025.

ANALYSIS:

Staff is requesting Council’s approval to renew the contract for an additional year. Staff will take this time to work to complete the specifications to solicit bids for security guard services by the end of the second quarter of FY 2025/2026. Once the specifications are completed, the services will be formally bid. The goal is to have the bid process completed and a new contract awarded before the end of the fiscal year for an effective date of July 1, 2026.

Absolute Security International, Inc. has submitted a Letter of Intent expressing their desire to continue providing service to the City of Rancho Cucamonga and the Fire District during FY 2025/2026 maintaining the current rate structure without any rate increase for security services, Absolute Security International, Inc. continues to provide great service to the City and Fire District.

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If approved, Amendment 8 to Contract No. 18-102 will extend the term of the contract to June 30, 2026. A copy of this agreement is available in the City Clerk’s Office.

FISCAL IMPACT:

The proposed FY 2025/2026 Budget includes sufficient funding for security guard services in several contract services line items.

The contract spending limit of $400,000 includes a contingency of $87,400 for potential unforeseen security guard services and/or the need for special event security services.

COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:

This item addresses the City Council’s core value of promoting and enhancing a safe and healthy community for all by ensuring City and Fire District facilities are properly secured and maintained.

ATTACHMENTS:

None.

DATE: July 16, 2025
TO: Mayor and Members of the City Council
FROM: John R. Gillison, City Manager
INITIATED BY: Maritza Martinez, Public Works Services Director Daniel Akers. Public Works Services Deputy Director
Lisa O'Brien, Public Works Business Manager
Paige Eberle, Management Analyst II
SUBJECT: Consideration of Amendment No. 8 to Contract No. 16-262 with BrightView Landscape Services for PD 85 Parks Landscape and Maintenance in an Amount Not to Exceed $83,298 for FY 2025/26. (CITY)
RECOMMENDATION:

Staff recommends the City Council approve Amendment No. 8 to contract CO 16-262 with BrightView Landscape Services, Inc. for PD 85 Parks Landscape, extending the term of the contract to September 30, 2025 in an amount not to exceed $83,298.

BACKGROUND:

Staff is requesting Council’s approval to extend the term of this contract for an additional three months, through September 30, 2025. Public Works staff has submitted specifications and is working with the Procurement Division to solicit bids for PD 85 Parks Landscape and Maintenance by the end of the first quarter of FY 2025/26. The services are currently undergoing a formal bid process. The intent is to have the bid process completed and a new contract awarded before the end of the first quarter of FY2025/26.

If approved, Amendment No. 8 to contract CO 16-262 will extend the term of the contract to September 30, 2025 to cover services as the bid process nears completion and a new contract is awarded.

The Public Works Services Department (PWSD) and the Procurement Division routinely issue requests for proposals to ensure vendor services remain competitive. On November 16, 2016, City Council awarded a competitively bid contract (CO 16-262) for PD 85 Parks Landscape Maintenance to BrightView Landscape Services, of Ontario, California, effective January 1, 2017 for a six-month year term with an option to renew in one (1) year increments up to a total of seven (7) years through June 30, 2023. With Council’s approval, Public Works renewed this contract beyond the initial expiration through June 30, 2025 until specifications could be written and the services rebid.

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ANALYSIS:

BrightView Landscape Services has agreed to extend their contract with a 2.9% CPI rate increase through September 30, 2025.

BrightView Landscape Services continues to meet the services needs of the City and staff recommends the City Council approve the renewal of contract CO 16-262 effective July 1, 2025 through September 30, 2025 and approve the spending limit in an amount not to exceed $83,298 for the first quarter of FY 2025/26.

FISCAL IMPACT:

The approved FY 2025/2026 Budget includes sufficient funding for park mowing and facility maintenance in several contract services line items.

COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

This item addresses the City Council’s core values of promoting and enhancing a safe and healthy community for all, while providing high quality outdoor spaces.

ATTACHMENTS:

None.

DATE: July 16, 2025
TO: Mayor and Members of the City Council
FROM: John R. Gillison, City Manager
INITIATED BY: Maritza Martinez, Public Works Services Director Daniel Akers, Public Works Services Deputy Director
Lisa O'Brien, Public Works Business Manager
Paige Eberle, Management Analyst II
SUBJECT: Consideration of Amendment No. 9 to Contract No. 16-148 with BrightView Landscape Services for LMD 1 Parks Landscape and Maintenance in an Amount Not to Exceed $90,969 for FY 2025/26. (CITY)
RECOMMENDATION:

Staff recommends the City Council approve Amendment No. 9 to Contract No. 16-148 with BrightView Landscape Services, Inc. for LMD 1 Parks Landscape, extending the term of the contract to September 30, 2025 in an amount not to exceed $90,969.

BACKGROUND:

The Public Works Services Department (PWSD) and the Procurement Division routinely issue requests for proposals to ensure vendor services remain competitive. On June 15, 2015, City Council awarded a competitively bid contract (CO 16-148) for LMD 1 Parks Landscape Maintenance to BrightView Landscape Services, of Ontario, California, effective July 1, 2016; contract award was for a one (1) year term with an option to renew in one (1) year increments up to a total of six (6) additional years through June 30, 2023. With Council’s approval, Public Works renewed this contract beyond the initial expiration through June 30, 2025 until specifications could be written and the services rebid.

ANALYSIS:

Staff is requesting Council’s approval to extend the term of this contract for an additional three months, through September 30, 2025. Public Works staff has submitted specifications and is working with the Procurement Division to solicit bids for LMD 1 Parks Landscape and Maintenance by the end of the first quarter of FY 2025/26. The services are currently undergoing a formal bid process. The intent is to have the bid process completed and a new contract awarded before the end of the first quarter of FY2025/26.

If approved, Amendment No. 9 to contract CO 16-148 will extend the term of the contract to September 30, 2025 to cover services as the bid process nears completion and a new contract is awarded. BrightView Landscape Services has agreed to extend their contract with a 2.9% CPI rate increase through September 30, 2025.

BrightView Landscape Services continues to meet the services needs of the City. Staff

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recommends the City Council approve the extension of contract CO 16-148 effective July 1, 2025 through September 30, 2025 and approve the spending limit in an amount not to exceed $90,969 for the first quarter of FY 2025/26.

FISCAL IMPACT:

The proposed FY 2025/2026 Budget includes sufficient funding for park mowing and facility maintenance in several contract services line items.

COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

This item addresses the City Council’s core values of promoting and enhancing a safe and healthy community for all, while providing high quality outdoor spaces.

ATTACHMENTS:

None.

DATE:July 16, 2025
TO:Mayor and Members of the City Council
President and Members of the Board of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Maritza Martinez, Public Works Services Director Mike McCliman, Fire Chief
Daniel Akers, Public Works Services Deputy Director
Lisa O'Brien, Public Works Business Manager
Paige Eberle, Management Analyst II
SUBJECT: Consideration of Amendment No. 10 to Contract No. 17-143 with Mariposa Landscapes, Inc. for Park Mowing and Facility Landscape Maintenance in an Amount Not to Exceed $284,868 for FY25/26. (CITY/FIRE)
RECOMMENDATION:

Staff recommends City Council and the Fire Board of the Rancho Cucamonga Fire Protection District approve Amendment No. 10 to contract CO 17-143 with Mariposa Landscapes, Inc., extending the term of the contract to September 30, 2025 in an amount not to exceed $284,868 ($244,755 for City Facilities and $40,113 for Fire Facilities).

BACKGROUND:

The Public Works Services Department (PWSD) and the Procurement Division routinely issue requests for proposals to ensure vendor services remain competitive. On June 21, 2017, City Council awarded a competitively bid contract (CO 17-143) for Park Mowing and Facility Landscape Maintenance to Mariposa Landscapes, Inc., of Irwindale, California, effective June 21, 2017. The initial term of the contract had an option to renew in one year increments up to a total of six additional years through June 30, 2024. City Council approved a one year extension past the initial expiration date for FY 2024/2025.

ANALYSIS:

Staff is requesting Council’s approval to extend the term of this contract for an additional three months, through September 30, 2025. Public Works staff has submitted specifications and is working with the Procurement Division to solicit bids for Park Mowing and Facility Landscape Maintenance by the end of the first quarter of FY 2025/26. The services are currently undergoing a formal bid process. The intent is to have the bid process completed and a new contract awarded before the end of the first quarter of FY2025/26.

If approved, Amendment No. 10 to contract CO 17-143 will extend the term of the contract to September 30, 2025 to cover services as the bid process nears completion and a new contract is awarded.

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Mariposa Landscapes, Inc. has agreed to extend their contract with a 2.9% rate increase through September 30, 2025.

Mariposa Landscapes, Inc. continues to meet the services needs of the City and staff recommends the City Council and the Fire Board of Directors approve the extension of contract CO 17-143 effective July 1, 2025 and approve the spending limit of $284,868 ($244,755 for City Facilities and $40,113 for Fire Facilities) for the first quarter of FY 2025/2026.

FISCAL IMPACT:

The approved FY 2025/2026 Budget includes sufficient funding for park mowing and facility maintenance in several contract services line items.

COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:

This item addresses the City Council’s core values of promoting and enhancing a safe and healthy community for all, while providing high quality outdoor spaces.

ATTACHMENTS:

None.

DATE:July 16, 2025
TO:Mayor and Members of the City Council
President and Members of the Board of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Maritza Martinez, Public Works Services Director Mike McCliman, Fire Chief
Daniel Akers, Public Works Services Deputy Director
Lisa O'Brien, Public Works Business Manager
Paige Eberle, Management Analyst II
SUBJECT: Consideration of Amendment No. 14 to Contract No. 16-114 with EMCOR Services/Mesa Energy Systems for Citywide HVAC Maintenance and Repair Services in an Amount Not to Exceed $977,550 for FY25/26. (CITY/FIRE)
RECOMMENDATION:

Staff recommends the City Council and Board of Directors approve Amendment No. 14 to Contract No. 16-114 with EMCOR Services/Mesa Energy Systems extending the term of the contract to June 30, 2026 in an amount not to exceed $977,550 for routine maintenance and extra work in City and Fire District facilities during FY2025/2026.

BACKGROUND:

On April 20, 2016, the City Council and Board of Directors accepted the bids received for citywide heating, ventilation, air conditioning (HVAC) maintenance and repairs and awarded Contract No. 16-114 to EMCOR Services/Mesa Energy Systems. EMCOR provides HVAC service to all City and Fire District buildings including maintenance of all chillers, boilers, pumps, package units, and cooling towers.

The initial term of the contract was one year, with an option to renew in additional one-year increments, for a maximum of six years through June 30, 2022. With Council’s approval, Public Works renewed this contract for a third year beyond the initial expiration date on June 19, 2024.

ANALYSIS:

Staff is requesting one additional year to allow time for staff to prepare the bid documents. Staff will work to complete the specifications to solicit bids for HVAC maintenance services by the end of the second quarter of FY 2025/2026. Once the specifications are completed, the services will be formally bid. The goal is to have the bid process completed and a new contract awarded before the end of the fiscal year for an effective date of July 1, 2026.

EMCOR/Mesa Energy Systems has submitted a Letter of Intent expressing their desire to continue providing service to the City of Rancho Cucamonga and the Fire District during FY 2025/2026 with a rate increase of 2.9%. EMCOR/Mesa Energy Systems provides great service

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for the City and Fire District and is very knowledgeable of all HVAC systems installed in City and Fire District facilities. If approved, Amendment 14 to Contract No. 16-114 will extend the term of the contract to June 30, 2026 with a 2.9% rate increase to the service provided. A copy of this agreement is available in the City Clerk’s Office.

FISCAL IMPACT:

The proposed FY 2025/2026 Budget includes sufficient funding for HVAC maintenance and repairs in several contract services line items.

COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:

This item addresses the City Council’s core value of promoting and enhancing a safe and healthy community for all by ensuring City and Fire District facilities are properly maintained.

ATTACHMENTS:

None.

DATE: July 16, 2025
TO: Mayor and Members of the City Council
FROM: John R. Gillison, City Manager
INITIATED BY: Elisa C. Cox, Assistant City Manager
Jason Welday, Engineering Services Director
SUBJECT: Consideration of a Fifth Amendment to the Disposition and Development Agreement Between the City of Rancho Cucamonga, San Bernardino County Transportation Authority (SBCTA) and DesertXpress Enterprises, LLC, dba Brightline West (BLW) for a Portion of Property Located at the Northwest Corner of Milliken Avenue and Azusa Court, Including Revised Site Plan, Grant Deed, and Easements Across Portions of Right-Of-Way on 8th Street, Milliken Avenue, and the Cucamonga Station Property, for the Development of a High Speed Rail Station and Track at the Cucamonga Station in Rancho Cucamonga; and Conditions, Covenants, Restrictions, and Easements Between the City, SBCTA, and BLW Applicable to Each Entity’s Property Interests; An Environmental Assessment for the High Speed Rail Project, Including the Rancho Cucamonga Station, was Prepared by the Federal Railroad Administration. (CITY)
RECOMMENDATION:

Staff recommends the City Council authorize the City Manager to approve the Fifth Amendment to the Disposition and Development Agreement between the City of Rancho Cucamonga (City), San Bernardino County Transportation Agency (SBCTA) and DesertExpress Enterprises, LLC, dba Brightline West (BLW) for a portion of property located at the northwest corner of Milliken Avenue and Azusa Court, including Revised Site Plan, Grant Deed, and Easements Across Portions of Right-Of-Way on 8th Street, Milliken Avenue, and the Cucamonga Station Property, for the development of a high speed rail station and track at Cucamonga Station in Rancho Cucamonga’ s Haven-Arrow-Rochester Transit (HART) District; and Conditions, Covenants, Restrictions, and Easements Between the City, SBCTA, and BLW applicable to each entity’s property interests.

Authorize the City Manager to make modifications to the Disposition and Development Agreement; Conditions, Covenants, Restrictions; and Easements, and other easements referenced above provided that such modifications do not increase costs to the City or change the development plan for the site.

BACKGROUND:

The City of Rancho Cucamonga has been working with Brightline West (BLW) and the San Bernardino County Transportation Authority (SBCTA) since 2020 to bring high-speed passenger

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rail from Las Vegas, Nevada to Rancho Cucamonga, California. This first-in-the-nation 218-mile high-speed passenger rail line (over 186 mph) will begin/end in Las Vegas Nevada near the west end of the city, parallel the 15-freeway corridor, with stops in Apple Valley and Hesperia before reaching its other beginning/end at Cucamonga Station in the HART District of Rancho Cucamonga. BLW’s station at Cucamonga Station is expected to be approximately 80,000 square feet with over 5,000 parking spaces for Brightline and Metrolink customers. BLW, which currently operates a private higher speed (but not “high-speed”) commuter rail system in Florida, obtained all necessary approvals from the States of Nevada and California to locate in the freeway right- of-way, as well as the Federal Government Federal Railroad Administration for the appropriate National Environmental Protection Act (NEPA) review and approval.

Expected top speed of the zero-emission all electric train sets is between 186 mph and 200 mph and the entire trip should take approximately 2 hours. In Las Vegas the train station will be adjacent to The Strip and Interstate 15. In Rancho Cucamonga, the train station will be collocated with the existing Cucamonga Station for Metrolink (Los Angeles to San Bernardino) and with a transfer BLW passengers will have access to anywhere along the Metrolink line, including to downtown Redlands or Los Angeles, as well as direct access to Ontario International Airport through the SBCTA ONT Connector tunnel, or through the West Valley Connector to Victoria Gardens. Along with the train line, BLW will construct all stations including related parking facilities and terminal amenities.

BLW’s project is expected to generate more than $10 billion in economic impact across the two states, with over 35,000 construction jobs and 1,000 permanent jobs. The trains are fully electric with overhead catenary lines that use most of the power from emissions free sources and are built by Siemens here in the United States. Those same trains will remove over 400,000 tons of CO2 per year and reduce vehicle miles traveled by over 700,000,000 per year. At the same time, BLW together with Caltrans and the California Department of Fish and Wildlife will design and construct three wildlife crossings over the 15 freeway while improving more than 600 existing culverts and large-scale under-crossings of the I-15 corridor. The BLW line will be among the safest in the United States with zero at-grade crossings, extensive safeguards to prevent trespassing in the I-15 median, use of the European Train Control System which has an impeccable international high speed rail safety record, and grade separated crossovers for first responders and maintenance workers.

Presently, approximately 50 million one-way trips are made annually between these two destinations with 85% of them by car or bus. Those trips can take anywhere from 4 – 6 hours depending upon traffic conditions. At full operations, Brightline West expects to attract approximately 22% of the market or up to 11 million one-way trips each year. Rancho Cucamonga expects to see approximately 4-6 million passengers through its station when the line opens in late 2028 and up to 10-11 million by the time ridership stabilizes in years 7-9. This will provide a significant reduction in GHG to both California and Nevada and improve the transportation experience for both freight and passengers who continue using the 15 freeway, thus benefitting SBCTA. The higher-amenity train experience residents and tourists have come to expect (and love) in South Florida will be offered along this route as well, including but not limited to free onboard Wi-Fi, fully ADA accessibility from station to train, a wide selection of food and beverage, checked luggage and hotel check-in services.

Sale of Station Property under the Disposition and Development Agreement (“DDA”) To facilitate the project noted above, in October of 2022 the City and SBCTA approved a Disposition and Development Agreement (DDA) with BLW for a portion of the Cucamonga Station property to be developed as a High-Speed Railroad Station and related track which would be the

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origin/terminus of a high-speed rail system with Las Vegas. Specifically, the DDA involves a site located at Cucamonga Station in the HART District that is a portion of the existing Cucamonga Station parking lot jointly owned by the City and SBCTA, located on the easterly side of the Cucamonga Station, together with a small area of San Gabriel Subdivision right of way owned by SBCTA. In addition, the DDA’s approval also approved additional Conditions, Covenants, Restrictions, and Easements Between the City, SBCTA, and BLW, applicable to each entity’s property interests.

Key points of the original DDA are:
Under the DDA, the City and SBCTA will sell a +5 acre portion of the eastern half of the Station Property to BLW for their station and parking structure (plus additional easements).

The sale price will reflect fair market value as determined by an appraisal conducted between three and six months prior to the closing date, ensuring that the City and SBCTA receive the benefit of any increase in property values prior to the closing date. The revenue generated by the sale will be distributed evenly between the City and SBCTA and is expected to be used by SBCTA to improve the parking and train station on site and by the City of Rancho Cucamonga for economic development purposes to defray the local public safety and infrastructure impacts of the overall project. BLW is responsible for all closing costs.
BLW cannot close on the property until it has provided the City a project construction budget, evidence of sufficient financing sources, and a construction contract, among other conditions. The purpose of these conditions is to verify that BLW has the necessary resources to timely construct the high-speed rail station before the City and SBCTA sell the property to BLW. Closing must occur before December 31, 2025. As discussed below, BLW has requested a modification to the closing condition that requires BLW to submit evidence of all required governmental approvals prior to closing. As a condition of the sale, BLW will be required to construct and operate a high-speed rail station, including a parking structure, on the property. BLW must comply with a schedule of performance to ensure that the proposed station is built in a timely manner. The schedule of performance requires BLW to: (1) commence construction no later than three years after closing; (2) complete the station within seven years after closing; and (3) commence operation of the high-speed rail line within 18 months after completion of the station. If BLW does not comply with these milestones (subject to force majeure delays), the City and SBCTA will have a “reversionary” right to re-acquire the property from Brightline.
The City and SBCTA will retain ownership of an approximately 66,340 square foot (1.5 acre), eight-foot high, area on the ground floor of the high-speed rail station parking structure for an additional +194 spaces dedicated to Metrolink customer parking in addition to the existing +325 spaces that will remain in the western Metrolink lot plus the reconfigured +105 spaces that will remain on the east side of the existing bus loop. This section is the main subject of the proposed fifth amendment and has changed in the new DDA.
Until BLW begins construction, the site will continue to be used for Metrolink customer parking.
The DDA includes a site plan along with detailed property descriptions. The DDA reserves an easement beneath the southwest corner of the high-speed rail station property to allow for SBCTA’s future tunnel project to the Ontario International Airport. While the tunnel project is a project fully under the control of SBCTA, the City is and anticipates cooperating with SBCTA on the relevant details to bring the project to fruition. This section is a subject of the proposed fifth amendment and may change with

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the final design for the tunnel.
Inspector of Record Process – although the jurisdiction of the federal Surface Transportation Board, preempts local permitting including building permits, the Project will conform to the substantive provisions of the City’s technical codes and grading standards.

Both parties will mutually agree on several qualified firms who can provide plan check and inspection services. The selected firm by BLW will be the Inspector of Record. City inspectors are allowed to enter the property and inspect construction. Final determination of any concerns will reside with the Inspector of Record. The exception is that the Rancho Cucamonga Fire Protection District retains the right to review and approve plans and conduct inspections in accordance with all project improvements related to safety. This section has been updated from the original DDA to provide that the City and SBCTA have approval rights with respect to modification, alteration, construction, or reconstruction of facilities under the current or future ownership or exclusive operation of the City and/or SBCTA. Both parties have agreed upon an expedited review process to meet the schedule, at the developers cost. The fourth amendment also provided a process for the City’s independent review and approval of public improvements.

In addition to the Station Property, the City and/or SBCTA will convey the following real property interests to BLW for its high-speed rail system:
The City will convey an easement along 8th Street between the Station Property eastward to approximately Rochester Avenue for elevated rail tracks (the “8th Street Easement”). The City will convey an easement over a portion of the Station Property’s parking lot adjacent to Milliken Avenue for BLW’s parking structure ramp and driveway (the Milliken Easement”). This easement is setback 20 feet from Milliken to preserve space for a future widening of the street. A driveway will connect Milliken to the high-speed rail station. The City and SBCTA will convey an easement across the northwestern portion of the Station Property to Brightline for elevated rail tracks (the “Aerial Easement”). The Aerial Easement will be for aerial platform improvements supported by columns, over property owned jointly by the City and SBCTA. This easement area is approximately 0.74 acres generally with a sixteen (16) foot clearance between the ground and the aerial easement area. The Aerial Easement provides BLW with non-exclusive access rights across the property jointly owned by SBCTA and the City to get to the Aerial Easement area and defers to future right of entry agreements any need for rights above and beyond access for use of the underlying City/SBCTA property for performing maintenance or repairs to the aerial platform. Performance provisions under the Aerial Easement have been modeled after the main DDA in terms of time.
SBCTA will convey a fee interest in a strip of land (San Gabriel Subdivision or SGS) to Brightline on the northern portion of the Station Property. Terms of this conveyance are the same as the DDA’s conveyance of the jointly owned property noted above.

The original DDA has been amended four times since its approval in October 2022, most recently in June 2024. The first three amendments extended BLW’s due diligence period. The fourth amendment updated the station site plan to incorporate revised circulation and parking arrangements, amended the legal descriptions for the Station Property and the easements to reflect the revised station site plan. All the real property interests noted above will still be sold to Brightline at their appraised fair market value.

ANALYSIS:

Following the approval of Amendment No. 4 to the Disposition and Development Agreement (DDA) in July 2024, BLW proposed to modify the station property retained by the City and SBCTA,

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to locate a shared Pick Up / Drop Off (PUDO) facility to allow more efficient movement of vehicles dropping off and picking up riders of the various transit options collocated on the Cucamonga Station site. The location of the PUDO on the property retained by the City and SBCTA displaces some of the open-air parking at the Cucamonga Station into the surface property parking located on the ground level of BLW’s parking garage. The relocation of BLW’s pick up and drop off facilities to the shared PUDO results in greater space within the BLW parking structure to accommodate the lost open-air parking spaces.

Below is a summary of the major changes being proposed. A revised Site Plan that reflects, among other modifications, an updated passenger pick- up and drop-off area (PUDO) within Cucamonga Station, a modified bus loop, reconfigured Metrolink parking, and a revised configuration of service-related infrastructure within the Milliken Triangle Easement to accommodate fire access. BLW will be responsible for constructing the PUDO and relocating/reconfiguring the existing bus loop to accommodate the PUDO. BLW will maintain the PUDO area and carry insurance for liability arising in the PUDO area; BLW and the City will meet annually to agree on maintenance levels and a budget for the PUDO area. This cost is to be shared between BLW and the City in proportion to the square footage of the surface property to the square footage of the parking garage serving Brightline’s station. A modification to the condition of closing that would otherwise require BLW to obtain all required to obtain all governmental approvals and permits prior to closing. BLW has sought to exempt some governmental permits from the Fire District and the City encroachment permits, as well as other standard permits, from this closing condition. Staff continues to evaluate whether and to what extent this condition will be modified but recommends moving forward while we review this issue.
Modification to the Conditions, Covenants, Restrictions and Easements (CC&Rs) oFuture Airport Tunnel Development. SBCTA is considering moving the station for the ONT Connector Project tunnel from the westerly parking lot at Cucamonga Station with the tunnel crossing under southwest corner of the high-speed passenger rail station property to the bottom floor of BLW’s parking structure. This section requires BLW to accommodate this considered move, conditioned upon a negotiated price between SBCTA and BLW which takes into account the additional design and construction costs to do so, less a credit against the construction cost savings of no longer requiring the BLW parking structure to bridge across an underground tunnel.
oBLW has requested a credit of up to $600,000 against the rent it would otherwise pay for the construction easements.
oMinimum Parking. This section is amended for reduction in the absolute minimum number of parking spaces provided during construction from 400 to 325. Pending data from traffic counts to be taken in fall of 2025 and spring of 2026, this number may be further lowered; however, if there is an increased demand, BLW must provide a parking plan that provides for any delta between the available parking within walking distance, but no more than 1,000 feet, of the Transit Center or offsite parking with shuttle service.
oAdditional minor modifications and clean up language for the various easements, closing conditions, and infrastructure changes that may be needed with the changed site plan.
oAllowing BLW to begin work on the site before closing on the property oModifications related to maintenance and operation of the high-speed passenger rail station, parking structure, PUDO, and bus loop.

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FISCAL IMPACT:

This item has no financial impact on the adopted Budget for Fiscal Year 2025/2026. Proceeds from the sale of the property jointly held by the City and SBCTA will be split between the City and SBCTA, less any escrow costs apportioned to the seller in the transaction. The City’s share will be used for economic development efforts to offset the fiscal purposes to defray the local public safety and infrastructure impacts of the overall project.

COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

Through the construction of a unique west coast multi-modal transit facility that links commuter rail with high-speed rail with the Ontario International Airport thereby reducing GHG and congestion while improving the transit experience, this project aligns with and helps advance City Council values to “intentionally anticipate and embrace the future”, “relentlessly pursue improvement” and “promote a safe and healthy community.” ATTACHMENTS:

Attachment 1 – Proposed DDA Fourth Amendment
Attachment 2 – Proposed Revised CC&Rs

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378683.00002/

FIFTH AMENDMENT TO DISPOSITION AND DEVELOPMENT AGREEMENT

THIS FIFTH AMENDMENT TO DISPOSITION AND DEVELOPMENT
AGREEMENT ("Amendment") is entered into as of ___________________, 2025 by and among CITY OF RANCHO CUCAMONGA, a California municipal corporation ("City"), SAN BERNARDINO COUNTY TRANSPORTATION AUTHORITY, a public entity ("SBCTA"; City and SBCTA, collectively, "Seller"), and DESERTXPRESS ENTERPRISES, LLC, a Nevada limited liability company d/b/a Brightline West ("Developer").

R E C I T A L S
A. Developer and Seller are parties to that certain Disposition and Development Agreement dated as of October 5, 2022 ("Original Agreement"), as amended by that certain First Amendment to Disposition and Development Agreement dated as of February 2, 2023 ("First Amendment"), that certain Second Amendment to Disposition and Development Agreement dated as of March 6, 2023 ("Second Amendment"), that certain Third Amendment to Disposition and Development Agreement dated as of March 30, 2023 ("Third Amendment"), and that certain Fourth Amendment to Disposition and Development Agreement dated as of November 14, 2024 ("Fourth Amendment" and together with the Original Agreement, First Amendment, Second Amendment, Third Amendment, the Fourth Amendment, and this Amendment, collectively the "DDA"), pursuant to which Developer agreed to develop a train station and related infrastructure located in Rancho Cucamonga, California ("Property"), as more particularly described in the DDA.

B. All capitalized terms used but not defined herein shall have the meanings ascribed such terms in the DDA.

C. The parties desire to amend the DDA upon the terms and conditions contained herein.

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Seller and Developer agree as follows:

A G R E E M E N T

1. Incorporation of Recitals. The foregoing recitals are true and correct and are incorporated herein by reference.

2. Site Plan. The Site Plan previously attached to the DDA as Exhibit “C” (as modified by the Fourth Amendment) is hereby deleted in its entirety and replaced with the revised Site Plan attached hereto as Exhibit “C-1”, which is hereby incorporated into the DDA by this reference. The revised Site Plan reflects, among other modifications, an updated passenger pick- up and drop-off area (“PUDO”) within the Transit Center, a modified bus loop (“Bus Loop”), a revised Station Property and Reserved Property, reconfigured Metrolink parking both within the Transit Center and under the Station Property, and a revised configuration of service-related infrastructure within the Milliken Triangle Easement to accommodate fire access as requested by the Rancho Cucamonga Fire Protection District (“Fire District”). Construction phasing plans are

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attached hereto as Exhibit “C-2”, which delineate construction phasing to maintain uninterrupted Metrolink operations (“Phasing Plans”); provided, however, the availability of the Milliken Site for parking is subject to the terms of the DDArevised CC&Rs attached hereto as Schedule 1.

3. Revised Legal Descriptions. The legal descriptions previously included as Exhibit “A-3” through Exhibit “A-7”, inclusive, (as modified by the Fourth Amendment) to the DDA are hereby deleted in their entirety and replaced with the revised Exhibit “A-3” through Exhibit “A- 7” attached hereto. The legal descriptions previously included as Exhibit “B” and Exhibit “D” to the Grant Deed (as modified by the Fourth Amendment), which is Exhibit “B” to the DDA, are hereby deleted in their entirety and replaced with the revised Exhibit “B” and Exhibit “D” attached hereto. The depiction of the DXE Property in Exhibit “D2” to the Milliken Triangle Easement, which is Exhibit “G” to the DDA, is hereby deleted in its entirety and replaced with the revised Exhibit “D2” attached hereto.

4. Construction, Operation, and Maintenance of PUDO and Bus Loop. Developer shall, at its sole cost and expense, construct the reconfigured PUDO and the modified Bus Loop as part of its construction of the Improvements under the DDA. Following completion and acceptance of the Bus Loop improvements by the City and/or SBCTA, the City or SBCTA, as applicable, shall be solely responsible for the operation and maintenance of the Bus Loop. The operation and maintenance of the PUDO is addressed in the CC&Rs recorded against the Station Property, the Reserved Property and the PUDO.

5. Revised CC&Rs. The parties acknowledge and agree that they previously reviewed and mutually approved the form of the CC&Rs. Notwithstanding the foregoing, the parties have subsequently revised the form of the CC&Rs, and such revised form shall supersede and replace the previously approved CC&Rs for all purposes under the DDA. A complete copy of the revised CC&Rs is attached to this Amendment as Schedule 1 and is hereby incorporated by reference into the DDA. From and after the date hereof, all references in the Agreement to the CC&Rs shall be deemed to refer to the revised CC&Rs attached hereto as Schedule 1.

6. Access and Traffic Signal Improvements. The intersection of Anaheim Place and Azusa Court shall be designed for 2-way stop and a future traffic signal. The initial construction shall include full buildout of the intersection, including conduit/raceway for the future traffic signal and space for the future poles and support infrastructure. The parties have separately agreed to a process for developing a traffic signal in the revised CC&Rs.

7. Metrolink Parking Availability. Developer shall use commercially reasonable efforts to deliver covered Metrolink parking spaces within the Reserved Property as early as reasonably feasible in the construction process, with the goal of providing Metrolink parking availability prior to full completion of the Improvements. The City shall reasonably cooperate with Developer to facilitate such early availability to the extent possible.

8. Modified Closing Conditions. The following Seller Condition to Close of Escrow in Section 2.5 of the DDA are hereby modified as follows:
“2.5.1 Other than standard or routine permits, licenses and approvals that will be issued in the ordinary course of development, Aall critical governmental permits, licenses, and approvals

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for the development and construction of the Project shall have been issued except for any (i) City fire departmentFire District permits which require 100% construction drawings or (ii) offsite permits from the City within the public right of way; provided, however, with respect to the foregoing two exceptions, construction drawings with respect thereto shall be 60% designed and Developer will incorporate City/SBCTA’s reasonable comments (or all comments from the fire departmentFire District) into the 100% drawings for City/SBCTA’s reasonable final approval (or any approval from the fire department), and NEPA shall have been complied with respect to such permits, licenses, and approvals, as applicable, all as shown by reasonable evidence delivered to Seller that is reasonably satisfactory to City/SBCTA. Additionally, Developer shall fund an additional $2,000,000 holdback payment at the Closing, which shall be held by Escrow until Developer obtains such (i) City fire department permits and (ii) offsite permits from the City within the public right of way. ”

9. Early Construction. Developer shall have the right to commence early construction activities prior to the Closing as shown on and consistent with the Phasing Plans, which entry shall be pursuant to the terms and conditions of a separate right of entry permit as agreed and signed by the parties.

10. Full Force and Effect. This Amendment, together with the DDA, as previously amended, constitutes the entire agreement between Seller and Developer regarding the matters set forth herein or therein, and supersedes any and all prior and/or contemporaneous oral or written negotiations, agreements or understandings. Except as otherwise specifically provided herein, the DDA shall remain unmodified and shall continue in full force and effect.

11. Counterparts; Execution by Electronic Means. This Amendment may be signed by the parties in two or more counterparts which, including the execution and transmission via electronic means without the need to exchange original signatures, when taken together, shall constitute one and the same instrument and shall have the same force and effect as if the originally executed copies of this Amendment were delivered to all parties. [SIGNATURES ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date and year first above written.

SELLER:

CITY OF RANCHO CUCAMONGA,
a California municipal corporation
By:

Name:

Title:

APPROVED AS TO LEGAL FORM:

SAN BERNARDINO COUNTY

TRANSPORTATION AUTHORITY,
a public entity
By:

Name:

Title:

APPROVED AS TO LEGAL FORM:

DEVELOPER:

DESERTXPRESS ENTERPRISES, LLC,
a Nevada limited liability company
By:

Name:

Title:

APPROVED AS TO LEGAL FORM:

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EXHIBITS "A-3" – A-7
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EXHIBITS "A-3" – A-7

CITY/SBCTA PROPERTY
[See Attached]

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EXHIBITS "B" AND “C”

TO GRANT DEED
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EXHIBITS "B" AND “C” TO GRANT DEED
[See Attached]

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EXHIBIT “D2” TO

MILLIKEN TRIANGLE

EASEMENT
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EXHIBIT “D2” TO MILLIKEN TRIANGLE EASEMENT
[See Attached]

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EXHIBIT "C-1"
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EXHIBIT "C-1"

SITE PLAN
[See attached]

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EXHIBIT "C-2"
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EXHIBIT "C-2"

PHASING SCHEDULE
[See attached]

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SCHEDULE 1
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SCHEDULE 1

APPROVED FORM OF CC&RS
[See Attached]

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RECORDING REQUESTED BY:

AND WHEN RECORDED MAIL TO:

DesertXpress Enterprises, LLC
8329 W. Sunset Road, Suite 150
Las Vegas, NV 89113
Attn: David Pickett, Esq.

With a copy to:

City of Rancho Cucamonga
10500 Civic Center Drive
Rancho Cucamonga, CA 91730
Attn: City Manager
San Bernardino County Transportation
Authority
1170 W. Third Street, 2nd Floor
San Bernardino, CA 92410
Attn: Director of Transit and Rail
SPACE ABOVE THIS LINE FOR RECORDER’S USE
Free Recording Requested per Government Code 27383.

CONDITIONS, COVENANTS, RESTRICTIONS AND

EASEMENTS
(RANCHO CUCAMONGA HSR STATION)
These Conditions, Covenants, Restrictions and Easements (RANCHO CUCAMONGA HSR STATION) (this “Agreement”) are entered into as of ___________, 2025 by and among the CITY OF RANCHO CUCAMONGA, a California municipal corporation (the “City”), the SAN BERNARDINO COUNTY TRANSPORTATION AUTHORITY, a public entity (“SBCTA”), and together with the City, the “Public Agencies”, and DESERTXPRESS ENTERPRISES, LLC, a Nevada limited liability company d/b/a Brightline West and qualified to do business in California (“Developer”). The City, SBCTA, and the Developer may hereinafter be referred to individually as a “Party” and collectively as the “Parties”.

R E C I T A L S :

A. Concurrently herewith, Developer acquired from the Public Agencies that certain real property legally described on Exhibit A attached hereto (the “Station Property”) for the purpose of developing a train station and related infrastructure for a privately owned and publicly

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accessible high-speed passenger railroad and local rail service, including station parking facilities and related station uses, subject to easements reserved by the Public Agencies (the “Reserved Easements”) in the grant deed, recorded immediately prior hereto, whereby Developer acquired the Station Property (the “Grant Deed”), all in accordance with the terms and conditions of that certain Disposition and Development Agreement, dated October 5, 2022, entered into between the Parties (as amended by the first, second, third and fourth amendments, the “DDA”). The Station Property expressly excludes the Surface Property (defined below).

B. The Public Agencies retained ownership of that certain real property legally described on Exhibit B attached hereto (the “Surface Property”) for the purpose of continuing to operate surface parking separate and distinct from the HSR Station (defined below).

C. The Station Property and the Surface Property are adjacent to a transit center owned and operated by the Public Agencies and which currently includes public parking and connections to the passenger railroad service operated and maintained by SCRRA (“Metrolink”) and public buses (collectively, “Transit Center”). The Transit Center includes, without limitation, the real property on which the Transit Center is located as legally described on Exhibit C attached hereto.

D. Pursuant to the terms of the DDA, a portion of the Transit Center will be developed by Developer with a joint use passenger pick up and drop off area (“PUDO”). Following the initial development of the PUDO by Developer, the PUDO shall be operated and maintained by the Parties pursuant to the terms hereof. The PUDO includes without limitation the real property on which the PUDO is located as legally described on Exhibit D attached hereto.

E. The Station Property, the Surface Property and the PUDO (each individually a “Property” and collectively, the “Properties”) are legally independent separate interests in real property. The Station Property is above and below the Surface Property, there are easements that travel through specific limited areas of the Surface Property that permit columns and specific utilities adjacent to such columns to traverse through and exist within such specific limited areas of the Surface Property to support the HSR Station and the Surface Property requires certain easements over the Station Property to connect with the adjacent PUDO and Transit Center, all as further described herein. The Parties are entering into this Agreement to establish easements, covenants and restrictions, all intended to establish and protect the estates, general plan of ownership, use and enjoyment of each Party’s Property.

F. The Public Agencies and the Developer intend that this Agreement be a covenant running with the land pursuant to Section 1468 of the California Civil Code.

NOW, THEREFORE, for good and valuable consideration, the Parties hereby confirm the accuracy of the foregoing recitals, and covenant and agree as follows:

A G R E E M E N T :

1.DEFINITIONS. The following is not an exhaustive list of all defined terms in this Agreement and excludes many defined terms used in only one Section hereof, but instead includes certain key defined terms that are used throughout this Agreement.

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1.1Agreement. As set forth in the preamble above, Agreement means these Conditions, Covenants, Restrictions and Easements, as amended from time to time.

1.2City. As set forth in the preamble above, City means the City of Rancho Cucamonga, California.

1.3Developer Permittee. Developer Permittee means employees, agents, visitors, contractors, patrons, guests or invitees of Developer.

1.4DDA. DDA is defined in Recital A.

1.5HSR Station. HSR Station means that certain private, but publicly accessible, passenger train station, including all train platforms, common areas, and parking areas located on the Station Property and columns within easements within the Surface Property, but otherwise expressly excluding the Surface Property, including:

1.5.1 the shell (including the exterior skin) and core of the HSR Station;

1.5.2 all structural support elements existing in, on, under and throughout the HSR Station shell and core, including all footings, girders, columns, braces, foundations, load- bearing walls, utility-bearing walls and other standard support elements, and every wall, column, floor, ceiling, footing, foundation or other vertical or horizontal improvement in the HSR Station;

1.5.3 the elevators, including the elevator shafts, elevator cabs, doors, elevator lobbies, and related machinery and equipment rooms, if any, in, to and serving the HSR Station;

1.5.4 area drains, scuppers, stairways, vaults, mechanical shafts, pipes, lines, mains, conduits, flues, risers, auxiliary generator room, clarifier, and any other equipment, fixtures, machinery, system or apparatus in, to and which benefit the HSR Station; and

1.5.5 any fire and life safety and sprinkler systems in, to and serving the HSR Station, including alarms, fire sprinkler pipes, and the sensors, pipes and fire sprinkler heads.

1.6Metrolink. Metrolink is defined in Recital C.

1.7Official Records. Official Records means the Official Records of San Bernardino County, California.

1.8Party. Party is defined in the preamble.

1.9Permittee. Permittee means either a Developer Permittee or a Public Agency Permittee.

1.10Properties. Properties is defined in Recital E.

1.11PUDO. PUDO is defined in Recital D; and the PUDO includes the real property on which it is located, as legally described on Exhibit D attached hereto.

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1.12Public Agencies Permittee. Public Agencies Permittee means employees, agents, visitors, contractors, patrons, guests or invitees of either or both of the Public Agencies.

1.13San Gabriel Subdivision Lease Agreement. San Gabriel Subdivision Lease Agreement means that certain San Gabriel Subdivision Lease Agreement entered into between SBCTA and Developer, dated March 2, 2022, as amended from time to time.

1.14SBCTA. As set forth in the preamble above, SBCTA means San Bernardino County Transportation Authority.

1.15Station Property. Station Property is defined in Recital A and legally described on Exhibit A attached hereto.

1.16Surface Property. Surface Property is defined in Recital B and legally described on Exhibit B attached hereto. For purposes of interpreting the maintenance rights and obligations described in this Agreement, the actual boundaries of the Surface Property shall be deemed to extend to the interior unfinished surfaces of the walls, floors, and ceilings that surround the ground floor level (first floor) of the HSR Station and shall exclude all components of the HSR Station described below.

1.17Transit Center. Transit Center is defined in Recital C; and the Transit Center includes the real property on which it is located, as legally described on Exhibit C attached hereto.

2.USE RESTRICTIONS.

2.1Use Restrictions. The Properties shall only be operated for transit and transit-related purposes, including without limitation appurtenances and appurtenant uses thereto.

2.2Maintenance and Security. To the extent permitted by any applicable law, each Party hereby covenants and agrees to use commercially reasonable efforts to limit loitering, smoking, panhandling, vagrancy and other nuisance and/or unlawful conduct in and on its respective Property, including, without limitation, posting and maintaining signs that prohibit such activities in reasonable locations; however, (a) the Public Agencies’ obligations under this Section shall be satisfied by enforcing the prohibitions for the Surface Property with the same level of security services that the Public Agencies obtain and provide for the Transit Center, and (b) the Developer’s obligations under this Section shall be satisfied by enforcing the prohibitions for the Station Property with the level of security services required by this Section 2.2 or the highest level that Developer obtains and provides for any other train station that is owned or operated by Developer within the State of California.

2.2.1Repair and Maintenance of Vehicles and Equipment. Except for short-term emergency situations, repair or maintenance of vehicles or mechanical equipment shall not be permitted within/in or on the Properties.

2.2.2Security. Each Party shall hire and maintain all such security services, including, without limitation, the presence of onsite security personnel and the placement

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of security cameras or devices within their respective Properties, as such Party reasonably determines may be appropriate.

2.2.3Ceiling, Wall, Column and Floor Penetrations. The Public Agencies and Public Agency Permittees shall be permitted to install signs, lighting, traffic safety mirrors, security systems and other parking related equipment on interior facing walls, floors and ceilings surrounding the Surface Property and columns within the Surface Property, and in connection therewith, reasonably bolt or otherwise affix and install items on the walls, columns, floors, and ceilings that surround, or are within, the Surface Property; provided, however, that in connection with the foregoing, the Public Agencies shall not adversely impact the structural integrity of the HSR Station or any improvements therein. If a necessary repair or property improvement requires a penetration that would be reasonably likely to adversely affect the HSR Station, then the Public Agencies and/or Public Agency Permittee(s) shall reasonably coordinate such repairs or property improvements with the Developer. Notwithstanding the foregoing, nothing contained herein shall be deemed to prohibit the Public Agencies and Public Agency Permittees from reasonably painting or repainting (as necessary) parking stripes, parking stalls or directional signage on the interior facing walls, paved floors, and columns that enclose, or are within, the Surface Property. The Parties shall reasonably cooperate regarding the design and installation of exterior directional signage to the Surface Property, which shall be consistent in style with the directional signage into the parking for the HSR Station except to the extent necessary to incorporate the official seals or logos of the Public Agencies or Metrolink.

3.MAINTENANCE AND OPERATIONAL OBLIGATIONS.

3.1Maintenance and Repair. Except to the extent any damage is caused by another Party or Parties, in which event the damaging Party or Parties shall be responsible for such repair, each Party or Parties (that is, the Public Agencies) shall be solely responsible to perform all maintenance and repair obligations with respect to its or their respective Property, such that each Property is maintained in good condition and repair, including ensuring that its or their Property is on a reasonable periodic basis cleaned, swept and otherwise kept reasonably free of all trash, debris and standing water. For the avoidance of doubt, subject to the proviso at the beginning of the first sentence of this Section 3.1, Developer shall be solely responsible for maintaining the Station Property, including, without limitation, (a) the HSR Station, (b) the structural integrity of the columns which traverse the Surface Property, and (c) any utilities serving the HSR Station that traverse the Surface Property adjacent to the columns while the Public Agencies shall be solely responsible for maintaining the Surface Property, including without limitation the interior surfaces of each of the walls, columns, floors, and ceilings that surround the Surface Property, including graffiti removal. For the purposes of clarity, subject to the proviso at the beginning of the first sentence of this Section 3.1 and except for periods in which Developer is installing subterranean improvements under the Surface Property such that maintenance by the Public Agencies would interfere therewith, if the paved floor is damaged, the Public Agencies shall have the right and the obligation to repair said floor and sufficient access is hereby granted by Developer to the Public Agencies to perform such repair work. The Public Agencies’ right and obligation to make such repairs to the paved floor shall automatically terminate upon the Developer’s installation of any subterranean improvements (other than utilities or other similar installations) under the Surface Property, if ever. For the avoidance of doubt, when a Party is responsible for repair or maintenance under this Section 3.1, such responsibility shall include all costs relating thereto.

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3.2Cooperation. The Developer and the Public Agencies shall reasonably cooperate with one another in good faith in the performance of their obligations under this Section 3.

3.3Operation of HSR Station. Developer shall operate the HSR Station at the Station Property at all times Developer maintains a high-speed passenger rail system in Southern California so as to ensure that all regularly scheduled passenger trains stop at the Station Property in accordance with the San Gabriel Subdivision Lease Agreement. Express, special event, and charter train services are not required to stop at the Station Property; however, Developer may not provide only express, special event and/or charter train services.

3.4Modifications After Initial Construction. Following the completion of the HSR Station by Developer and the surface parking improvements by the Public Agencies, neither Party shall materially alter, renovate, modify or add to the exterior of any improvements without the prior written consent of the other Party, which consent is not to be unreasonably withheld, conditioned or delayed.

3.5Operation of PUDO. Developer shall operate and maintain the PUDO after completion and acceptance thereof, provided, however, that the City and/or SBCTA shall reimburse Developer on a pro rata basis for its allocable share of such operation and maintenance costs, which shall be calculated based on the square footage of the Surface Property owned by the City and/or SBCTA in relation to the square footage of the Developer’s parking garage within the HSR Station. Utility services to the PUDO shall be separately metered such that (i) irrigation water and electrical service to the Omnitrans Bus Loop and the Pedestrian Tunnel (defined below) area and associated ramps and stairs, shall be metered and billed directly to the City and/or SBCTA, and (ii) irrigation water and electrical service to all other areas within the PUDO shall be metered and billed directly to Developer. Security services for the PUDO shall be coordinated between Developer and the City and/or SBCTA, with each Party responsible for including the PUDO in its respective security patrols. Further, the Parties shall cooperate in good faith to implement the following protocols for operation of the PUDO:

3.5.1 The Parties shall meet and confer at least annually in the first quarter of the calendar year to:
(a) Address any operational needs or deficiencies related to the PUDO;
(b) Identify and agree upon estimated changes affecting estimated budget requirements for the following fiscal year (July 1 to June 30) related to obligations under these CC&Rs; and
(c) Notify the other Parties of any known security
incidents occurring within the PUDO, including, without limitation, criminal activity, vandalism, accidents involving personal injury or property damage, or other threats to the safety, integrity, or proper use of the PUDO (each, an “Incident”). Each Party shall maintain and share upon request reasonable incident logs, including time, nature, and disposition of each reported Incident.

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3.5.2 In the event of an emergency involving immediate threats to public health or safety within the PUDO, each Party shall have the independent right to respond without prior notice to the other Party, including by contacting emergency services, securing affected areas, or evacuating persons as necessary. As soon as reasonably practicable after the initial emergency response, the responding Party shall notify the other Party Parties of the nature of the emergency, the actions taken, and any follow-up measures that may be required.

3.5.3 Developer shall have primary responsibility for promulgating, posting, and enforcing reasonable rules and regulations governing the use of the PUDO, subject to City’s and/or SBCTA’s reasonable (or sole and absolute for First Amendment or other constitutional issues) approval to ensure consistency with public use requirements and all applicable laws, which the City and SBCTA shall not unreasonably withhold, condition or delay.

Each Party shall reasonably assist in the enforcement of such rules and regulations during their security patrols, including by issuing warnings or contacting law enforcement as appropriate. No Party shall independently implement new security-related policies, signage, or access restrictions within the PUDO without the prior written consent of the other Parties, except in the case of an emergency where immediate temporary action is required.

4.EASEMENTS.

4.1Easements for the Benefit of the Surface Property. The Public Agencies and Public Agency Permittees shall benefit from, and there are hereby established and grantedDeveloper hereby establishes and grants for the benefit of the Public Agencies and Public Agency Permittees, the following easements over portions of the Station Property, which shall be appurtenant to the Surface Property:

4.1.1Access Easements. Nonexclusive access easements over and across those portions of the Station Property for the purposes described below and subject to Public Agencies’ approval of plans as described in DDA Section 3.4:
(a) a pedestrian access easement across that portion of the Station Property as depicted on Exhibit E attached heretobetween the Surface Property and the Transit Center as necessary to provide for free, unrestricted and contiguous ingress and egress between the Surface Property and the Transit Center. For the avoidance of doubt, such access easement shall correspond to the actual improvements constructed from time to time that provide for such ingress and egress and not the attached legalforegoing blanket description to the extent there is any discrepancy between the two.
(b) a pedestrian access easement over and across those portions of the Station Property designated by Developer, including stair and elevator access, that provides reasonable ingress and egress between the Surface Property and the communications building on adjacent property owned by the City (“Communications Building”). For equipment trucks that are too large to fit in the Surface Property, or which are necessary to be located within close proximity to the Communications Building when performing work on or inside of the Communications Building, and for fire and/or emergency vehicle access, Developer shall designate and maintain reasonable vehicular and parking access for such vehicles within the loading area off of Milliken Avenue or the drop off/pick up area on the main floor of the Station

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Property, together with pedestrian access designated by Developer that provides reasonable ingress and egress between such parking area and the Communications Building. Additionally, Developer shall provide and maintain an access gate through the existing fence between the San Gabriel Subdivision right of way and the Communications Building and a gate through any other Developer owned physical barrier that would block access to the Communications Building, as applicable.
(c) For the avoidance of any doubt, the Grant Deed
reserves to the Public Agencies additional utility, access, construction, and use easements over portions of the Station Property, as described and depicted in the Grant Deed.

1.1.1Future Airport Tunnel Development. Developer shall coordinate with SBCTA on the design of Developer’s HSR Station to accommodate a future terminal station for the airport tunnel and shall not withhold, condition, or delay approval of actions to facilitate the delivery of a terminal station for the airport tunnel. This obligation is unconditional until approval of 100% design plans of the Developer’s HSR Station pursuant to Section 4.2.3 by the Public Agencies, after which point in time this obligation is limited to that which is commercially feasible. In all cases, this obligation extinguishes once the terminal station for the airport tunnel has completed construction on either the Transit Center or the Surface Property, and is conditional upon the parties agreeing to consideration for additional design and construction costs incurred by Developer to make such accommodations and credit towards such costs for construction savings as a consequence of not being required to bridge the HSR Station over an underground tunnel easement.

4.2Easements for the Benefit of the Station Property. The Developer and the Developer Permittees shall benefit from, and there are hereby established and grantedthe Public Agencies hereby establish and grant for the benefit of the Developer and the Developer Permittees, the following easements over portions of the Transit Center and Surface Property, which shall be appurtenant to the Station Property:

4.2.1Developer Maintenance Obligations. Nonexclusive easements within, through and across the Surface Property and the PUDO as reasonably necessary for the purpose of performing the maintenance obligations described herein and the operation and security obligations in the PUDO. The rights of Developer and Developer’s Permittees under this easement are subject to the obligation not to unreasonably interfere with the use or operation of the Surface Property, and, except in an “Emergency Situation” (as that term is defined below), to notify the Public Agencies at least thirty (30) days in advance of the dates, times and scope of maintenance and to cooperate in good faith with the Public Agencies in minimizing interference with the use and operation of the Surface Property; provided, however, if such maintenance or repair work does not impact access to or parking at the Surface Property, then Developer shall only be obligated to provide the Public Agencies with at least five (5) business days advance notice. At all times until the completion of the HSR Station, Developer shall ensure that a minimum of (1) four hundred (400) parking spaces total across the Surface Property, the Milliken Site (defined below) and Transit Center (or such lesser amount if less than 400 parking spaces total exist at such time), or (2) an Approved Lesser Amount (defined below) of parking spaces total across the Surface Property, Transit Center and other nearby parking lots if the City sells the Milliken Site, and in both events, including sufficient ADA compliant parking stalls to satisfy ADA requirements, are

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available to Public Agencies’ Permittees. Developer shall conduct parking counts on the Transit Center during the fall of 2025 and spring of 2026 and share such data with the Public Agencies for the Parties to collectively determine the actual peak parking demand, which in all events shall be no greater than 400 (“Approved Lesser Amount”). On or before the earlier of (i) August 1, 2026 or (ii) the date that less than the Approved Lesser Amount is available on the Transit Center, Milliken Site and other offsite parking areas, Developer shall obtain the administrative approval of the Public Agencies of a parking plan that provides for any delta between the available parking within such lots and the Approved Lesser Amount via parking within walking distance of the Transit Center or offsite parking with shuttle service. Such parking plan shall specifically identify any off-site parking sites and stalls with written guarantees of the availability of such parking and shuttle service, as applicable, to implement such parking plan. Additionally, Developer shall use commercially reasonable efforts to phase and stage its construction to limit, where possible, the time that the parking plan would be necessary. Anytime Developer reasonably determines that immediate maintenance or repair work is required to address an imminent threat to public health or safety (each, an “Emergency Situation”), Developer shall give notice of such Emergency Situation to the Public Agencies as soon as possible after such determination and shall have the right to immediately act on providing such maintenance and repair work as is required to address the Emergency Situation; provided, however, that the foregoing language shall not be in denigration of any obligation, liability or duty of Developer under or pursuant to this Agreement or as provided by law, and the foregoing right shall not release or relieve Developer from any responsibility, liability or indemnification obligations arising out of, resulting from or relating to this Agreement.

1.1.1Access Easements. Nonexclusive access easements over and across those portions of the Transit Center and Surface Property for the purposes described below and subject to Public Agencies’ approval of plans as described in DDA Section 3.4:

1.1.1(a) Public Easements. Fire, police, health and
sanitation and other public service personnel and vehicles shall have a permanent and perpetual easement for ingress and egress over and across the HSR Station for the performance of their respective duties. Additionally, easements are hereby reserved in favor of all Parties for emergency ingress and egress over, through and across all portions of the HSR Station. (a) a pedestrian access easement across the Surface
Property as necessary to provide for free, unrestricted and contiguous ingress and egress between the Station Property and the Transit Center. For the avoidance of doubt, such access easement shall correspond to the actual improvements constructed on the within the Surface Property.
(b) a pedestrian and vehicular access easement across
the PUDO as necessary to provide for free, unrestricted and contiguous ingress and egress between the Station Property and the PUDO. For the avoidance of doubt, such access easement shall correspond to the actual improvements constructed on the within the PUDO.

1.1.2Support Columns, Utilities, Elevators and Stairs, and Beams Serving HSR Station. Exclusive easements within, through and across only those portions of the Commented [am1]: Moved below to new section

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Surface Property expressly and specifically designated and developed with elevators and stairs, columns and beams and specified utilities (i.e., only the following utilities: storm drain; water;

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sewer; electrical; telecommunication; and data, including similar future technologies) adjacent to such columns and beams per plans approved in advance and in writing by the Public Agencies which plans specifically show such beams, columns and utilities, for the purpose of installing, constructing, inspecting, placing, maintaining, repairing, replacing, and removing the structural columns, support beams, utilities within or adjacent to such columns, footings and any other structural components or support elements existing in, on, under and throughout the HSR Station, including incidental access as necessary to access such columns, utilities and beams for such purposes (“Column and Beam Easement”). Developer and the Public Agencies shall reasonably cooperate to designate the locations of such elevators and stairs, columns, utilities and beams on such plans to facilitate the optimal, but commercially reasonable, parking and vehicular and pedestrian circulation within the Surface Property. Developer, at Developer’s sole cost and expense, shall ensure that, at all times, the columns, beams and utilities are located to provide at least 350 parking stalls available to Public Agencies’ Permittees within the Surface Property, including sufficient ADA compliant parking stalls to satisfy ADA requirements. For the avoidance of doubt, Developer, at Developer’s sole cost and expense, shall ensure that the Surface Property and the adjacent Transit Center, upon delivery by Developer to the Public Agencies following the initial construction of the Station Property by or for the benefit of Developer and temporary use and reconfiguration of the Transit Center pursuant to Section 4.2.4 below, collectively provide at least 650 parking stalls, less any stall lost to accommodate the airport tunnel connection, to the extent applicable. Additionally, Developer, at Developer’s sole cost and expense, shall ensure that the beams and any utilities adjacent to such beams are located to provide and maintain at least eight (8) feet of clear height space throughout the Surface Property. Except in an Emergency Situation, Developer shall notify the Public Agencies in writing at least thirty (30) days in advance for maintenance and at least sixty (60) days in advance for any construction, placing, repairing or removing work, of the dates, times and scope of maintenance or other work, and to cooperate in good faith with the Public Agencies in minimizing interference with the use and operation of the Surface Property; provided, however, if such maintenance or repair work does not impact parking at the Surface Property, then Developer shall only be obligated to provide the Public Agencies with at least five (5) business days advance notice. For the avoidance of doubt, if Developer desires to modify or add utilities in the future, the Public Agencies shall have reasonable review and approval rights with respect to any such modification or addition. Consistent with Section Error! Reference source not found. above, anytime Developer reasonably determines that there is an Emergency Situation, Developer shall give notice of such Emergency Situation to the Public Agencies as soon as possible after such determination and shall have the right to immediately act on providing such maintenance and repair work as is required to address the Emergency Situation; provided, however, that the foregoing language shall not be in denigration of any obligation, liability or duty of Developer under or pursuant to this Agreement or as provided by law, and the foregoing right shall not release or relieve Developer from any responsibility, liability or indemnification obligations arising out of, resulting from, or relating to this Agreement.

4.2.4Temporary Construction Parking and Staging Easement on Transit Center and Parking Easement on the Milliken Site during the Initial Construction. In connection with development of the HSR Station by Developer and during the construction thereof, the Public Agencies hereby grant to Developer a temporary construction easement for (i) construction parking and (ii) construction staging purposes on the Transit Center (“Parking and Staging Easement”). , as well as the construction of ramps and stairs on the Transit Center, per plans approved by Public Agencies in accordance with DDA Section 3.4, to facilitate ingress and

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egress between the Station Property and the Transit Center and the reconfigured pedestrian ramp for access to the pedestrian tunnel between the north and southbound Metrolink platforms (“Pedestrian Tunnel”), and tThe City hereby grants to Developer a temporary construction easement (“Milliken Parking Easement”) for Metrolink and/or construction parking on the adjacent parking lot owned by the City on Anaheim Place, abutting Azusa Court and Milliken Avenue (“Milliken Site”) until the completion of the HSR Station, but in any event no later than seven (7) years after Close of Escrow. However, with respect to the Milliken Site, the City may terminate the temporary construction Milliken Parking eEasement no earlier than six (6) months after written notice from the City to Developer indicating that the City has reached agreement with a buyer for the sale of all of the Milliken Site (or for a material portion of the Milliken Site that requires termination of such temporary construction Milliken Parking eEasement), subject only to City Council approval of the agreement, if such date is earlier than the completion of the HSR Station. Developer shall ensure that the design and construction of the ramp from the Station Property to the Transit Center is in accordance with all ADA requirements. Additionally, Developer shall ensure that the design and construction of such ramp includes and utilizes drains and non-slip surfaces; provided, however, that Developer shall ensure that such design and construction also provides for and is conducive to the commercially reasonable subsequent addition of an overhead covering to shield the ramp from rain. The Public Agencies and Developer shall coordinate regarding the location(s) and scope(s) of such construction parking and construction staging such that the combined Transit Center and Milliken Site continue to provide at least 400 325 parking stalls or an Approved Lesser Amount are available to Public Agencies’ Permittees, at least four bus drop off locations (including on Azusa Court if necessary), pedestrian access between such parking and bus drop off locations and the Metrolink platforms and legally compliant ADA parking, all in a manner reasonably acceptable to the Public Agencies. Prior to exercising any such rights described within this Section Error! Reference source not found., Developer shall provide the Public Agencies with thirty (30) days’ notice of Developer’s plans for any occupancy or use of the easement, and the Developer must demonstrate to the reasonable satisfaction of the Public Agencies that safe and adequate circulation of pedestrian, vehicular, and bus movements are and will be provided for at all times during the term(s) of the easement.

Developer shall provide the Public Agencies at least thirty (30) days’ notice of any changes to the affected area, to enable the Public Agencies to provide notice to Metrolink and/or its patrons, and such changes must otherwise be in accordance with the terms of this Agreement. Commencing on the date which Developer takes possession of any Parking and Staging Easement or Milliken Parking Easementtemporary construction easement area, Developer shall compensate the Public Agencies for the temporary construction easementuse of such area by paying them, on a monthly basis, on or before the first business day of each calendar month, without offset or deduction, a sum of money which is equal to the product of the following factors: (i) the total number of square feet then affected by the temporary construction easementapplicable easement, (ii) the affected property’s fee value per square foot, multiplied by (iii) one third of a percent (1/3%). The fee value per square foot of the affected property shall first be established by an appraisal no older than six months at the time Developer first takes possession of either of the Parking and Staging Easement or Milliken Parking Easement any temporary construction easement area and shall be scaled by a factor of one and four hundredths (1.04) each year on the anniversary of said appraisal’s date of valuation. If payment is not made within ten (10) business days after written notice from the City, then the outstanding sum shall immediately begin to accrue interest at the rate identified Commented [am2]: Moved below to a new section
Commented [am3]: Moved below to new section

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in Section 3 until paid. Notwithstanding the foregoing, Developer shall not pay forreceive a credit, not to exceed

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$600,000, toward the rent for the temporary constructionsuch easements. within the portion of the Transit Center designated for the reconfigured bus loop and PUDO during the construction of the bus loop and PUDO, given the significant improvements that Developer is making to such areas for the benefit of the Public Agencies, but Developer shall pay for other portions of the Transit Center during its use of the temporary construction easement within such portions and within the PUDO while such area is being used for construction staging relating to the Project.

During the term of the temporary construction easementParking and Staging Easement or Milliken Parking Easement, as applicable, Developer shall maintain the temporary constructionsuch easement area in good condition and repair. Following the termination of the temporary construction easementParking and Staging Easement or Milliken Parking Easement, as applicable, Developer shall promptly return the portion of the Transit Center and Milliken Site, as applicable, used for the temporary constructionsuch easement to, with respect to the Transit Center, the improved condition per the approved plans, and to the Milliken Site, its condition immediately prior to the easement term.

For all facilities that the Public Agencies will own and control, Developer shall obtain customary and usual construction and installation warranties, shall assign all such warranties, on a non-exclusive basis and to the extent assignable, to the Public Agencies with respect thereto, and shall, whether or not such warranties are assigned, reasonably cooperate with the Public Agencies to enforce such warranties as necessary, including filing and pursuing warranty claims on behalf of the Public Agencies for non-assignable warranties.

1.1.1Minimum Parking. At all times until the completion of the HSR Station, Developer shall ensure that a minimum of (1) three hundred twenty-five (325) parking spaces total across the Surface Property, the Milliken Site (defined below) and Transit Center (or such lesser amount if less than 325 parking spaces total exist at such time), or (2) an Approved Lesser Amount (defined below) of parking spaces total across the Surface Property, Transit Center and other adjacent parking lots if the City sells the Milliken Site, and in both events, including sufficient ADA compliant parking stalls to satisfy ADA requirements, are available to Public Agencies’ Permittees. Developer shall conduct parking counts on the Transit Center during the fall of 2025 and spring of 2026 and share such data with the Public Agencies for the Parties to collectively determine the actual peak parking demand, which in all events shall be no greater than 325 parking spaces (“Approved Lesser Amount”). On or before the earlier of (i) August 1, 2026 or (ii) the date that less than the Approved Lesser Amount is available on the Transit Center, Milliken Site and other adjacent parking lots, Developer shall obtain the administrative approval of the Public Agencies of a parking plan that provides for any delta between the available parking within such lots and the Approved Lesser Amount via parking within walking distance, but no more than 1,000 feet, of the Transit Center or offsite parking with shuttle service. Such parking plan shall specifically identify any off-site parking sites and stalls with written options or guarantees of the availability of such parking and shuttle service, as applicable, to implement such parking plan. Additionally, Developer shall use commercially reasonable efforts to phase and stage its construction to limit, where possible, the time that the parking plan would be necessary.

1.1.2Temporary Construction Easement on Transit Center during the Initial Construction. The Public Agencies hereby grant to Developer a temporary construction easement (“Temporary Construction Easement”) for the construction of ramps and stairs, reconfigured bus loop, the PUDO, and reconfigured parking on the Transit Center, all per plans Commented [am4]: Note: My clients do work on City projects all of the time without paying rent during construction. They have to pay prevailing wages, which we are doing here, but rent should only apply to the construction staging or construction parking that benefit the HSR station, with the $600K credit. We broke this out into its own section to avoid confusion.

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approved by Public Agencies in accordance with DDA Section 3.4, to facilitate ingress and egress between the Station Property and the Transit Center and the reconfigured pedestrian ramp for access to the pedestrian tunnel between the north and southbound Metrolink platforms (“Pedestrian Tunnel”). Developer shall ensure that the design and construction of the ramp from the Station Property to the Transit Center is in accordance with all ADA requirements.

Additionally, Developer shall ensure that the design and construction of such ramp includes and utilizes drains and non-slip surfaces; provided, however, that Developer shall ensure that such design and construction also provides for and is conducive to the commercially reasonable subsequent addition of an overhead covering to shield the ramp from rain. The Public Agencies and Developer shall coordinate to ensure that at least four bus drop off locations (including on Azusa Court if necessary), pedestrian access between such parking and bus drop off locations and the Metrolink platforms and legally compliant ADA parking, all in a manner reasonably acceptable to the Public Agencies. Prior to exercising any such rights described within this Section Error! Reference source not found., Developer shall provide the Public Agencies with thirty (30) days’ notice of Developer’s plans for any occupancy or use of the easement, and the Developer must demonstrate to the reasonable satisfaction of the Public Agencies that safe and adequate circulation of pedestrian, vehicular, and bus movements are and will be provided for at all times during the term(s) of the easement. Developer shall provide the Public Agencies at least thirty (30) days’ notice of any changes to the affected area, to enable the Public Agencies to provide notice to Metrolink and/or its patrons, and such changes must otherwise be in accordance with the terms of this Agreement. During the term of the Temporary Construction Easement, Developer shall maintain the Temporary Construction Easement area in good condition and repair. Following the termination of the Temporary Construction Easement, Developer shall promptly return the portion of the Transit Center used for the Temporary Construction Easement to the improved condition per the approved plans.

4.2.5Future Construction. During the redevelopment of the Station Property, Developer on advance written notice, including without limitation the prior written approval of the Public Agencies of replacement parking as provided below, of not less than twelve (12) months, shall have the right to temporarily close the Surface Property for a reasonable period of time not exceeding thirty-six (36) months (as the same may be extended by force majeure, but not otherwise) during the actual construction on the Station Property and subject to the terms of this Section Error! Reference source not found.. If, as a consequence of Developer’s future construction, the Public Agencies would not have at least 400 325 parking spaces available during the period of construction, Developer shall provide reasonable replacement parking, compliant with ADA and all other applicable law, taking into account both then existing ADA parking areas located on the Transit Center and ADA requirements relating to the replacement parking, as applicable, and otherwise reasonably acceptable to the Public Agencies during the construction period and thereafter until the Surface Property is returned to its prior condition. The amount of such replacement parking provided by Developer shall ensure that the Public Agencies would have (i) 400 325 parking spaces if the Public Agencies had 400 325 or more parking spaces just prior to Developer’s construction, or (ii) if the Public Agencies had less than 400 325 parking spaces just prior to Developer’s construction, an amount equal to such lesser amount. Following such construction, Developer shall promptly return the Surface Property to its prior condition as of the date Developer took possession or per revised plans approved by the Public Agencies, if applicable. As an example only, if Developer develops a larger HSR station with below grade parking and the Surface Property, at the time of such construction, is used as a

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gated surface parking lot, Developer shall restore the Surface Property to a surface parking lot, including

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striping, lighting, and gates, as applicable (including any equipment that was previously installed by the Public Agencies).

4.2.6Service Corridor for Baggage . Developer may in the future, without any obligation to do so or to continue such service once commenced, build a service corridor from baggage handling room on the Station Property that would open onto the Pedestrian Tunnel to enable baggage service between BLW trains and Metrolink Trains. Developer shall construct the connection of the service corridor with the Pedestrian Tunnel per plans approved in advance and in writing by the Public Agencies and gate such corridor from the Pedestrian Tunnel to prevent access and vagrancy issues when not in use; said gate to be located entirely on the Station Property. Developer shall coordinate with the Public Agencies regarding the design thereof to maximize the continued functionality of the Pedestrian Tunnel and any construction work relating thereto to minimize impacts to the Transit Center.

4.2.7Warranties. For all facilities that the Public Agencies will own and control, Developer shall obtain customary and usual construction and installation warranties, shall assign all such warranties, on a non-exclusive basis and to the extent assignable, to the Public Agencies with respect thereto, and shall, whether or not such warranties are assigned, reasonably cooperate with the Public Agencies to enforce such warranties as necessary, including filing and pursuing warranty claims on behalf of the Public Agencies for non-assignable warranties.

5.INSURANCE. [Note: A stand-alone policy is cost prohibitive, but the very large policies below include reinstatement language to get past risk of one very large claim wiping out the coverage].

5.1Public Agency Insurance Requirements. With respect to the Surface Property and the PUDO, at all times the Public Agencies (or one of them) shall maintain property insurance coverage in amounts and types consistent with the coverage and amounts maintained on the Transit Center. To the extent both possible and reasonably available at commercially reasonable rates, Developer will be named as an Additional Insured on said insurance coverage and the Public Agencies will provide Developer reasonable evidence of said insurance upon request. The Public Agencies shall also maintain Commercial General Liability (CGL) coverage within the PUDO and Surface Property.

5.2Developer Insurance Requirements. Developer at all times shall maintain the following insurance coverage:

5.2.1Property Insurance. With respect to the PUDOStation Property, at all times Developer shall maintain property insurance coverage in amounts and types consistent with the coverage and amounts maintained by the City and/or SBCTA on the Surface Property, PUDO and Transit Center. To the extent both possible and reasonably available at commercially reasonable rates, City and SBCTA will be named as an Additional Insured on said insurance coverage and the Developer will provide the Public Agencies reasonable evidence of said insurance upon request.

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5.2.2Commercial General Liability (CGL). Developer shall maintain the insurance coverage set forth below in this Section Error! Reference source not found. when the provisions of Section 5.3 do

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not apply. Commercial General Liability (CGL) with a limit Such insurance shall include Commercial General Liability with limits of liability of not less than twenty-five million dollars ($25,000,000) per each occurrence and a general aggregate limit of not less than twenty-five million dollars ($25,000,000) in the general aggregate. providing cCoverage for shall include bodily injury, property damage, and personal and advertising injury through any combination of primary and excess or umbrella liability insurance. policies withPolicy limits restating shall reset annually. Notwithstanding the foregoing, following the commencement of revenue service operations, the limits shall be adjusted to reflect the limit established by Congress from time to time applicable to Developer’s passenger rail operations. The CGL insurance must shall be written on an ISO occurrence form CG 00 01 04 13, or (with approval from the Public Agencies)on substitute forms providing coverage at least as broad as CG 00 01 04 13, subject to approval by the Public Agencies coverage. Developer’s CGL policy shall be primary to the CGL coverage carried by the Public Agencies with respect to the PUDO. All excess or umbrella policies must be “follow form” and afford no lessshall provide coverage no less than the primary CGL policy. Such The CGL policy shall include the Public Agencies must provide coverage to the Insured Party as additional insureds using ISO Additional Insured Endorsement CG 20 10 and or CG 20 26.

Coverage shall be provided to the Insured Party for all claims arising from the Property of the Insured Party (as defined in Section 5.4.4 below), respectively, or proximately caused by reason of construction activities and the location and placement of improvements within the Property, unless caused by an Insured Party's gross negligence or willful misconduct.

5.3Insurance During Construction. Developer shall maintain the following insurance coverage at all times during which it is performing construction work within either of the Properties:

5.3.1Commercial General Liability (CGL). Developer shall maintain Commercial General Liability (CGL) insurance with a limitlimits of liability of not less than three hundred fifty million dollars ($350,000,000) each per occurrence, three hundred fifty million dollars ($350,000,000) products and completed operations aggregate, and a general aggregate limit of not less than three hundred fifty million dollars ($350,000,000) providing coverage for bodily injury, property damage, and personal and advertising injury through any combination of primary and excess or umbrella liability insurance policies. with The CGL policy or policies shall include one reinstatement general aggregate limit for the period ofduring the policy(ies) term. Such policies must be project-specific with dedicated limits to the HSR Station. The CGL insurance must shall be written on an ISO occurrence form CG 00 01 04 13, or (with subject to approval from the Public Agencies) substitute forms providing equivalent coverage. All excess or umbrella policies must shall be “follow form” and shall afford no less coverage than that provided by the underlying primary CGL policythe primary policy. Such CGL must cover All such excess or umbrella policies shall also include a drop-down provision in the event of exhaustion or unavailability of the underlying primary limits and shall provide coverage as if primary. The CGL policy shall name the Insured Party, including the Public Agencies, as additional insureds by endorsement using ISO Additional Insured Endorsement CG 20 26 or and 20 10 04 13 and accompanied by CG 20 37 04 13 or equivalent forms with approval fromapproved by the Public Agencies, providing coverage to the Insured Party for both on-going and completed operation losses. Coverage must be provided to the Insured Party forSuch coverage shall apply to claims proximately caused by reason of the uses authorized, unless under this Agreement, except to the extent such claims are caused by the gross negligence or willful misconduct of the Insured Party.

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The policy or policies shall be endorsed to remove exclusions pertaining to any railroads.

There must not beThe CGL insurance shall not include any endorsement or modification of the CGL limiting the scope of other policy language that limits or restricts coverage for liability assumed under an insured contract. Completed operations coverage must shall extend for as long as there isthe duration of any exposure to liability under any applicable statute of repose or any other applicable statute of limitations. If completed operations coverage through for the end offull statutory exposure period is not commercially available, such completed operations coverage must shall extend for at least ten (10) years from the completion date of such improvements. All excess or umbrella policies must contain a drop-down clause in the event of exhaustion of primary limits and provide coverage for primary CGL.

5.3.2Commercial Automobile Insurance. Developer shall provide evidence ofmaintain commercial automobile liability insurance business auto coverage written on ISO form CA 00 01 10 01 (or, with approval from the Public Agencies, on substitute forms providing equivalent liability coverage) no less broad, subject to approval by the Public Agencies. with Such insurance shall provide a limit of not less than one million dollars ($1,000,000) for eachper accident. Such insurance must cover liability arising out of any auto (including owned, hired, and non-owned autos). The policy must contain an endorsement for coverage to operations in connection with a railroad. and an endorsement to cover liabilities arising out of the Motor Carrier Act - Hazardous materials clean up (MCS-90) with a sublimit of no less than one million dollars ($1,000,000). Developer shall require its general contractor to provide maintain (and shall ensure that its general contractor does maintainprovide) evidence of commercial automabile liability insurance business auto coverage written on ISO form CA 00 01 10 01 (or, with approval from the Public Agencies, substitute form providing equivalent liability coverage) with a limit not less than twenty-five million dollars ($25,000,000) for eachper accident. Such insurance must cover liability arising out of any auto (including owned, hired, and non-owned autos) and can be satisfied by a combination of primary and excess and/or umbrella policies. The policy(ies) must contain an endorsement for coverage to operations in connection with a railroad and an endorsement to cover liabilities arising out of the Motor Carrier Act - Hazardous materials clean up (MCS-90) with a sublimit of no less than one million dollars ($1,000,000). All excess or umbrella policies shall contain include a drop-down clause provision in the event of exhaustion or unavailability of the underlying primary limits and shall provide coverage for as if primary auto for commercial automobile liability.

5.3.3Workers’ Compensation and Employers Liability Insurance.

Developer shall provide evidence ofmaintain Workers’ Compensation insurance as required under in accordance with the requirements of applicable California statutes. including coverage for In addition, Developer shall provide Employer's Liability with limits of at leastnot less than one million dollars ($1,000,000) each accident, one million dollars ($1,000,000) each employee by for disease, and a policy limit of one million dollars ($1,000,000) by for disease. The Developer shall maintain excess liability policy mustinsurance includinge eEmployer's lLiability coverage with limits to at leastof not less than twenty-five million dollars ($25,000,000), and can which may be satisfied by through a combination of primary and excess and/or umbrella liability insurance policies. The workers’ compensation policies must provide the following:
(a) A waiver of subrogation in favor of the Insured Party and the Permittees of the Insured Party;

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(b) A voluntary compensation endorsement;
(c) An alternative employer endorsement, if applicable
to the Insured Party’s operations;
(d) Coverage for liability under the United States
Longshore and Harbor Workers’ Compensation Act on an "if any" basis or as otherwise appropriate;
(e) Coverage for liability under Title 46 of the U.S.C. § 688 on an “if any” basis or as otherwise appropriate; and (f) An endorsement extending the policy to cover the
liability of the insureds under the Federal Employer’s Liability Act on an “if any” basis or as otherwise appropriate.

5.3.4Professional Liability Insurance. The Developer shall provide evidence of professional liability insurance, including prior acts coverage sufficient to cover all claims arising out of any professional services, including without limitation engineering, architectural, or land surveying work required in connection with such construction, procured, and maintained by those third parties performing such work for or on behalf of Developer. For the lead design contractor for the improvements in privity with Developer, the coverage must not be less than ten million dollars ($10,000,000) per claim and in the aggregate. For environmental assessments, land surveying work and any other site work, the coverage must not be less than two million dollars ($2,000,000) per claim and in the aggregate. For architectural, geotechnical engineers, and electrical engineers, the coverage must not be less than two million dollars ($2,000,000) per claim and in the aggregate. For structural engineers and civil engineers relating to such construction, the coverage must not be less than five million dollars ($5,000,000) per claim and in the aggregate. Developer shall also require any member of its design build team, any subconsultant, or any subcontractor performing professional design services for any portion of such construction work, to obtain and maintain (and shall ensure that they do obtain and maintain) professional liability insurance providing the same coverage, with limits of at least one million dollars ($1,000,000) per claim and in the aggregate. Developer shall procure and maintain an project specific Owner’s Protective Professional Indemnity (OPPI) policy that provides coverage with limits of at least twenty-five million dollars ($25,000,000) per claim and in the aggregate for claims arising out of the liability of design and construction professionals. Such coverage must include coverage for claims filed directly against Developer by third-parties alleging negligence (arising from professional services of design firms).

No self-insured retention for Developer or any lead design entity is permitted to exceed five hundred thousand dollars ($500,000), without prior written approval from the Public Agencies, in their good faith discretion (which shall factor in whether such insurance is commercially available). Coverage must apply specifically to professional activities performed or contracted by Developer in support of the construction. The policy(ies) must have a retroactive date consistent with the inception of the first date of design or project or construction management activities, and no later than the date on which any contract or subcontract was issued. Developer

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agrees to maintain or to require its design professionals, subconsultants, or design-build subcontractors to maintain (and shall ensure that they do maintain), as appropriate, this required

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coverage for a period of no less than three years after the commencement of revenue service or to purchase an extended reporting period for no less than three years after the commencement of revenue service. If the contractor is working with a separate lead design entity, contractor must (and Developer shall ensure that contractor does) require the lead design entity to agree to maintain this coverage for a period of no less than three (3) years after completion of such construction.

5.3.5Contractor's Pollution Liability. Developer shall procure or cause to be procured contractor’s pollution liability (“CPL”) coverage throughout the period of construction. Coverage must be provided by a stand-alone policy with dedicated limits of no less than twenty-five million dollars ($25,000,000) per occurrence and twenty-five million dollars ($25,000,000) in the aggregate per policy period dedicated to the larger high speed rail project, which may include other parcels under Developer’s control or responsibilityProperty. Coverage must be written on an occurrence basis and extended for a minimum ten (10) year period or for the duration of the applicable statute of reposewith a separate limit available exclusively to the Property. The CPL policy must include coverage for investigation, removal, and remediation costs including monitoring or disposal of contaminated soil, surface water, groundwater or other media to the extent required by environmental laws caused by pollution conditions resulting from or exacerbated by covered operations; third-party bodily injury and property damage, provided that the third-party property damage liability coverage includes loss of use of damaged property or of property that has not been physically injured or destroyed, resulting from pollution conditions caused by or from conditions exacerbated by covered operations. The policy must have no exclusions or limitations for loss occurring over water including but not limited to a navigable waterway or for lead or asbestos. Coverage as required in this Section shall apply to sudden and non-sudden pollution conditions resulting from the escape or release of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids, or gases, waste materials, or other irritants, contaminants, or pollutants. The CPL policy must also provide coverage for losses due to loading, unloading or transportation and liability imposed by off-site disposal of materials at a third-party disposal site including testing, monitoring, measuring operations or laboratory analysis and remediation. If the scope of work includes the disposal of any hazardous or non-hazardous materials from the job site, Developer shall furnish the Insured Party evidence of pollution legal liability insurance maintained by the disposal site operator for losses arising from the insured facility accepting the materials, with coverage in minimum amounts of five million dollars ($5,000,000) per loss and an annual aggregate of five million dollars ($5,000,000).

5.3.6Railroad Protective Liability. Developer shall provide, or cause to be maintained, any coverage as may be required by any railroad as a condition of the railroad's consent for entry onto railroad facilities or property. Such policy shall be effective during the period any construction is being performed within 50 feet of any railroad ROW. Coverage shall be written on Insurance Services Office occurrence Form CG 00 35 (or, with approval from the railroad requiring such insurance, substitute form providing equivalent coverage) on behalf of any railroad as a named Insured, with a limit specified by any railroad.

5.3.7Builder's Risk Insurance. Developer shall, upon commencement of construction, obtain and maintain a policy of builder’s risk insurance for the construction.

Coverage shall be written on an “all risk” basis and provided through a stand-alone policy dedicated solely to the Property. The insureds must include the contractor, all subcontractors (excluding those solely responsible for design work) of any tier, suppliers, and the Insured Party.