Richmond City Council
March 21, 2023

3-21-23, CC Mtg.
 


   








 




 



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3-21-23, CC Mtg.
___ Exhibit F
___
City of Richmond - Insurance Requirements - Type 2:

Professional Services
Type 2 – Page 1 of 3
Revised: September 2011
In all instances where CONTRACTOR or its representatives will provide professional services (architects, engineers, construction management, counselors, medical professionals, hospitals, clinics, attorneys, consultants, accountants, etc.) to the City of Richmond (City), the City requires the following MINIMUM insurance requirements and limits.

CONTRACTOR shall procure and maintain for the duration of the contract, agreement, or other order for work, services or supplies, insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder and the results of that work by the CONTRACTOR, its agents, representatives, employees or subcontractors. Maintenance of proper insurance coverage is a material element of the contract. Failure to maintain or renew coverage or to provide evidence of renewal may be treated by the City as a material breach of contract.

CONTRACTOR agrees that in the event of loss due to any of the perils for which it has agreed to provide Commercial General Liability insurance, CONTRACTOR shall look solely to its insurance for recovery.

CONTRACTOR hereby grants to CITY, on behalf of any insurer providing Commercial General Liability insurance to either CONTRACTOR or CITY with respect to the services of CONSULTANT herein, a waiver of any right to subrogation which any such insurer of said CONTRACTOR may acquire against the CITY by virtue of the payment of any loss under such insurance.

Original, signed certificates and original, separate policy endorsements, naming the City as an additional insured for general liability coverage, as well as a waiver of subrogation for Workers’ Compensation insurance, shall be received and approved by the City before any work may begin. However, failure to do so shall not operate as a waiver of these insurance requirements.

City reserves the right to modify or require additional coverages for specific risk exposures depending on scope of CONTRACTORS work.

Minimum coverage is detailed below. The policy limits of coverage shall be made available to the full limits of the policy. The minimum limits stated herein shall not serve to reduce the policy limits of coverage of CONTRACTOR.

Minimum Scope of Insurance – the following forms shall be provided and coverage shall be at least as broad as the following:

1. Insurance Services Office Commercial General Liability coverage (ISO Occurrence Form CG 0001), and including coverage for bodily and personal injury, property damage, and products and completed operations (if applicable).

2. Insurance Services Office Automobile Liability coverage (ISO Form CA 0001, Code 1, Any Auto).

3. Original and Separate Additional Insured Endorsement for General Liability (ISO Form CG 20 10 11/85 or its equivalent) with primary and non-contributory language.

4. Workers’ Compensation Insurance as required by the State of California including Employer’s Liability coverage.

5. Original and Separate Waiver of Subrogation for Workers’ Compensation insurance.

6. Professional Liability or Errors & Omissions Liability Insurance appropriate to the CONTRACTOR’s profession (if required.)
Required Coverage Minimum Limits
Workers’ Compensation and
Employers’ Liability
Statutory limits as required by the State of California including $1 million Employers’ Liability per accident, per employee for bodily injury or disease.

If CONTRACTOR is self-insured, provide a certificate of Permission to SelfInsure, signed by the California Department of Industrial Relations and SelfInsurance. If contractor is a sole proprietor (has no employees) than contractor must sign “Contractor Release of Liability” found at:
http://www.ci.richmond.ca.us/index.aspx?nid=61.

General Liability
(primary and excess limits
combined)
$2,000,000 per occurrence for bodily injury, personal injury and property damage. If the policy includes a general aggregate, either the general aggregate shall apply separately to this project, service or location or the minimum required aggregate limit shall be twice the per occurrence limit ($4 million aggregate limit).

Policy shall be endorsed to name the City of Richmond as an additional insured per the conditions detailed below.

3-21-23, CC Mtg.
___ Exhibit F
___
City of Richmond - Insurance Requirements - Type 2:

Professional Services
Type 2 – Page 2 of 3
Revised: September 2011
Automobile Liability $1,000,000 per occurrence for bodily injury and property damage.

PROJECT COST REQUIRED LIMIT
$0 - $1 million $1 million p/o
$1 million - $5 million $2 million p/o
Over $5 million $5 million p/o

Professional Liability or Errors &
Omissions Liability –
Required for all professionals
including architects, engineers,
consultants, construction
management, counselors, medical
professionals, hospitals, clinics,
attorneys and accountants, & other
consultants as may be required by
the City.

Required Policy Conditions
Additional Insured Endorsement Applicable to General Liability coverage.

The City of Richmond, its officers, officials, employees, agents and volunteers are to be named as additional insureds for all liability arising out of the operations by or on behalf of the named insured including bodily injury, deaths and property damage or destruction arising in any respect directly or indirectly in the performance of this contract.

ISO form CG 20 10 (11/85) or its equivalent is required. If the Contractor is supplying their product or providing a service then the endorsement must not exclude products and completed operations coverage. If it does, then CG 20 37 (10/01) is also required.

SAMPLE Endorsements can be found at
http://www.ci.richmond.ca.us/index.aspx?nid=61.

Primary and Noncontributory The contractor’s insurance coverage must be primary coverage as it pertains to the City, its officers, officials, employees, agents and volunteers. Any insurance or self insurance maintained by the City is wholly separate from the insurance of the contractor and in no way relieves the contractor from its responsibility to provide insurance.

Waiver of Subrogation
Endorsement Form
Contractor’s insurer will provide a Waiver of Subrogation in favor of the City for Workers’ Compensation Insurance during the life of this contract.

SAMPLE Endorsements can be found at
http://www.ci.richmond.ca.us/index.aspx?nid=61.

Deductibles and Self-Insured
Retentions
Any deductible or self-insured retention must be declared to and approved by the City. At the option of the City either the insurer shall reduce or eliminate such deductibles or self-insured retention as respects the City or the CONTRACTOR shall procure a financial guarantee in an amount equal to the deductible or self-insured retention guaranteeing payment of losses and related investigations, claims administration and defense expenses.

Contractor is responsible for satisfaction of the deductible and/or self-insured retention for each loss.

A. M. Best Rating A:VII or Better. If the A.M. Best Rating falls below the required rating, CONTRACTOR must replace coverage immediately and provide notice to City.

Umbrella/Excess Liability Policies
If an Umbrella or Excess Liability Policy is used to meet the liability limits, coverage shall be as broad as specified for underlying coverage’s and cover those insured in the underlying policies.

3-21-23, CC Mtg.
___ Exhibit F
___
City of Richmond - Insurance Requirements - Type 2:

Professional Services
Type 2 – Page 3 of 3
Revised: September 2011
Claims-Made Policies
If any insurance policy is written on a claims-made form: 1) the retroactive date must be shown, and must be before the date of the contract or the beginning of contract work. 2) Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the contract of work. 3) If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the contract effective date, the Contractor must purchase an extended period coverage for a minimum of five (5) years after completion of contract work.

Subcontractors
CONTRACTOR shall include all subcontractors as insured under its policies or shall furnish to the City for review and approval, separate certificates and endorsements for each subcontractor. All coverage for subcontractors shall be subject to all of the requirements stated herein.

CONTRACTOR agrees to defend and indemnify the City of Richmond for any damage resulting to it from failure of either CONTRACTOR or any subcontractor to take out or maintain the required insurance policies. The fact that insurance is obtained by CONTRACTOR, and/or CONTRACTOR’s subcontractors, will not be deemed to release or diminish the liability of CONTRACTOR, including, without limitation, liability under the indemnity provisions of this contract. Damages recoverable by CITY from CONTRACTOR or any third party will not be limited by the amount of the required insurance coverage.

Verification of Coverage
All original certificates and endorsements shall be received and approved by the City before work may begin.

The City of Richmond reserves the right to require complete, certified copies of all required insurance policies including endorsements affecting the coverage at any time.

Original insurance certificates and required policy endorsements shall be mailed or delivered to the Designated Project Manager for the City of Richmond.

Insurance certificates and endorsements may be faxed to the Designated Project Manger. However, CONTRACTOR must mail the original certificates and endorsements to Designated Project Manager once faxed.

Continuous Coverage
CONTRACTOR shall maintain the required insurance for the life of the contract. Should the CONTRACTOR cease to have insurance as required during this time, all work by the CONTRACTOR pursuant to this agreement shall cease until insurance acceptable to the City is provided. In the event that CONTRACTOR fails to comply with the City’s insurance requirements, the City may take such action as it deems necessary to protect the City’s interests. Such action may include but is not limited to termination of the contract, withholding of payments, or other actions as the City deems appropriate.

If services or the scope of work extend beyond the expiration dates of the required insurance policies initially approved by the City, CONTRACTOR must provide updated certificates and endorsements indicating that the required coverage, terms and conditions are still in place. Renewal certificates and updated endorsements shall be mailed to the Designated Project Manager.

Cancellation
CONTRACTOR shall ensure that coverage shall not be cancelled, reduced or otherwise materially changed except after thirty (30) days’ prior written notice has been given to the City.

Reporting Requirements
Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees or volunteers.

Consistent with Public Policy
The insuring provisions, insofar as they may be judged to be against public policy shall be void and unenforceable only to the minimum extent necessary so that the remaining terms and provisions herein may be consistent with public policy and thus enforceable.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

3-21-23, CC Mtg.

City of Richmond
Revenue Forecasting Services, bidding on 01/27/2023 3:00 PM (PST)

Printed 03/03/2023
PlanetBids, Inc.

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Attachment 3 – Rating Matrix
Rater #1 Rater #2 Rater #3 Total Rater #1 Rater #2 Rater #3 Total Max Points
The Proposal/Methodology and Approach to Work - 20% 20 17 15 19 51 20 15 20 55 Experience/Past Performance/References – 20% 20 17 15 18 50 20 15 20 55 Project Team – 20% 20 20 12 20 52 20 15 20 55
Proposer Qualifications – 20% 20 20 15 20 55 20 15 20 55 Cost Proposal – 20% 20 15 10 10 35 20 15 20 55
Total Points - 100% 100 89 67 87 243 100 75 100 275
Moody's Analytics Beacon Economics

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City of Richmond
Anticipated Deficits, High Pension Debt, and
Mismanagement of Its Housing Authority Cause
the City to Be High Risk
November 2022
REPORT 2021‑806

3-21-23, CC Mtg.

For questions regarding the contents of this report, please contact our Public Affairs Office at 916.445.0255 This report is also available online at www.auditor.ca.gov | Alternative format reports available upon request | Permission is granted to reproduce reports 621 Capitol Mall, Suite 1200 | Sacramento | CA | 95814

CALIFORNIA STATE AUDITOR
916.445.0255 | TTY 916.445.0033

1.800.952.5665
For complaints of state employee misconduct,
contact us through the Whistleblower Hotline:

Don’t want to miss any of our reports? Subscribe to our email list at auditor.ca.gov

3-21-23, CC Mtg.

Michael S. Tilden Acting State Auditor
621 Capitol Mall, Suite 1200 | Sacramento, CA 95814 | 916.445.0255 | 916.327.0019 fax | www.auditor.ca.gov November 10, 2022
2021-806
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814
Dear Governor and Legislative Leaders:

Despite recent financial improvements, the city of Richmond’s long-term financial stability remains uncertain. Our office's audit of the city—conducted as part of our high-risk local government agency audit program—concludes that the city is high risk due to its anticipated deficits, high pension debt, and mismanagement of the Richmond Housing Authority (housing authority).

Richmond forecasts a significant long-term deficit, which we believe may worsen based on emerging financial trends. The city anticipates that these deficits may average as much as $6.7 million annually beginning in fiscal year 2023–24 and continue through at least fiscal year 2027–28. Despite having increased its general fund reserves to nearly $49 million in fiscal year 2021–22, Richmond projects that its deficit will deplete those reserves to less than $9 million by fiscal year 2027–28, which is well below levels recommended by financial experts.

Richmond’s growing annual pension costs are a significant barrier to balancing its budgets. In fiscal year 2020–21, Richmond paid $37 million in pension costs. However, these costs could reach $53 million by fiscal year 2028–29. Richmond attempted to mitigate its pension costs in 2005 by issuing $115 million in bonds and investing the proceeds but, after refinancing those bonds in 2022, the city now expects its residents to pay millions in annual debt service until 2044.

Finally, the mismanagement of Richmond's housing authority has resulted in the federal government disallowing millions of dollars in reimbursement of city expenses and requiring the housing authority to transfer its public housing responsibilities to other entities. However, the housing authority has missed numerous federal deadlines associated with this transfer and the city, which provides staff and financial support to the housing authority, may need to provide additional resources to resolve this ongoing problem.

Respectfully submitted,
MICHAEL S. TILDEN, CPA
Acting California State Auditor

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HIGH-RISK ISSUES
City of Richmond, Contra Costa County Risk Designation: High Risk

ISSUE PAGE
Despite Recent Improvements, Richmond’s Long-Term Financial Stability Remains Uncertain Financial Reserves Have Increased, but Risks Remain 7
Richmond Forecasts a Significant Long-Term Deficit, Which Evolving Financial Trends May Worsen 9 The City’s Debt Burden Remains High 13
Addressing Its Poorly Funded Retirement Benefits and Below-Market Compensation Will Increase Richmond’s Expenses
Significant Retirement Obligations Continue to Burden the City 17 Richmond May Have Missed Opportunities to Better Address Its Retiree Health Obligations 18 Increasing the Competitiveness of City Salaries Will Incur Additional Costs 20 The City Has Mismanaged the Richmond Housing Authority
A Decade of Mismanagement Will Result in the Housing Authority Transferring Its Public Housing Responsibilities to Other Entities 23
The Housing Authority Missed Mandatory Deadlines to Complete the Recovery Agreement 25 The Housing Authority May Owe the Internal Revenue Service $1 Million or More in Taxes and Penalties 27 The City Has Not Consistently Followed Its Contracting Policies or Updated Its Fees as Required Richmond Could Do More to Demonstrate It Is Following Requirements to Ensure the Best Value for Its Contracts 29
City Staff Have Not Updated Fee Schedules as Required 30 Appendices
Appendix A—The State Auditor’s Local High-Risk Program 33 Appendix B—Scope and Methodology 35
Agency Response
City of Richmond 39
California State Auditor's Comment on the Response From the City of Richmond 43 v

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Risks the City of Richmond Faces
Although Richmond’s general fund reserves have increased in recent years to the point where it has reserves in excess of two months of general fund expenditures, its long‑term financial stability remains in question. Its 2022 financial forecast predicts annual deficits that will grow to $13.8 million in fiscal year 2025–26 before shrinking to $9.4 million by fiscal year 2027–28; these deficits threaten to critically deplete the city’s general fund reserves. Further, Richmond’s current forecast may be underestimating inflation and does not account for the possibility of a recession in the later years of the projection. If Richmond eventually exhausts its reserves and spends more than it projects, it will need to either raise revenue or cut city expenditures or services.

Our Local Government High‑Risk Dashboard (dashboard), which we updated in October 2022, identified five areas—debt burden, pension obligations, pension costs, future pension costs, and other post employment benefits (OPEB)—in which the city's finances continue to have high risk ratings as indicated in Table 1. Although we determined that Richmond’s overall fiscal risk rating for fiscal year 2020–21 was moderate and adjusted its ranking among the highest‑risk cities from 9th to 10th, we conclude that Richmond is high risk based on the totality of factors described in this audit report, particularly its projections of future deficits.

Table 1
Richmond’s Fiscal Risk Indicators Have Improved
FINANCIAL INDICATOR 2018–19 2019–20 2020–21
Overall Risk Rating High Risk High Risk Moderate Risk
General Fund Reserves HIGH HIGH MODERATE
Debt Burden HIGH HIGH HIGH
Liquidity LOW LOW LOW
Revenue Trends MODERATE MODERATE MODERATE
Pension Obligations HIGH HIGH HIGH
Pension Funding MODERATE MODERATE LOW
Pension Costs HIGH HIGH HIGH
Future Pension Costs HIGH HIGH HIGH
OPEB Obligations MODERATE LOW LOW
OPEB Funding HIGH HIGH HIGH
Source: Analysis based on Richmond’s audited financial statements and CalPERS’ actuarial reports. 1 CALIFORNIA STATE AUDITOR
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Addressing the areas in which Richmond continues to be at high risk and counteracting the effects of its long‑term wage freezes will increase the city’s expenses. Notably, the California Public Employees’ Retirement System (CalPERS) has projected Richmond’s annual retirement costs to increase from roughly $35 million in fiscal year 2020–21 to $53 million in fiscal year 2028–29. These increasing costs are a potential barrier to the city’s ability to maintain balanced budgets. As of June 2021, Richmond has funded its OPEB trust funds—which assist the city in meeting health care obligations for retired staff—at about 27 percent of the cost of its promised future benefits and has set aside more than $7 million in fiscal year 2022–23 for increasing staff salaries and benefits that it had previously frozen to reduce costs.

However, maintaining salary increases may prove difficult as the city moves closer to deficit spending.

Richmond’s mismanagement of the Richmond Housing Authority (housing authority)—a legally separate entity created to manage low‑income housing facilities—has also increased financial risk to the city. Audits by the U.S. Department of Housing and Urban Development (HUD) noted deficiencies in financial practices, oversight, documentation, and accountability. In fact, in 2016 HUD found that the housing authority had misled HUD on the status of its finances and had submitted falsified documentation. In its report, HUD noted that the housing authority had inappropriately allowed the city to use HUD funds, the city had charged the housing authority excessive amounts for rent and services, and the city’s actions had resulted in more than $2 million in misspent HUD funds.

The housing authority signed an agreement with HUD in 2019 with the intent, according to HUD, to effectuate the transfer of the housing authority’s direct public housing responsibilities to other entities, such as developers, who will rehabilitate the properties and hold long‑term leases to use them for public housing. Richmond acknowledged this agreement through the signature of its mayor and agreed to work in good faith to assist the housing authority and HUD in accomplishing the tasks described in the agreement. However, the housing authority has missed 11 of the 26 deadlines and not completed the associated tasks needed to make this transfer, many by more than a year. As a result, some low‑income housing residents have experienced delays in the rehabilitation of their housing. Although the housing authority is a legally separate entity from the city, the city agreed to assist the housing authority with the agreement; thus, continued concerns related to the housing authority may require additional financial resources from the city.

Richmond has also not consistently followed its policies for contracting and fees. We examined 10 of Richmond’s contracts and found at least two instances in which it failed to follow contracting policies or made errors involving contract management.

For example, Richmond did not justify its use of an alternative contracting process on a $24,500 contract because it failed to make a formal determination that using this alternative process was in the city’s best interest, as it is required to do. Richmond has also not consistently updated its fees to reflect the cost of doing business, thereby forgoing revenues that could help improve its financial condition. 2 CALIFORNIA STATE AUDITOR
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Recommendations
The following are the recommendations we made as a result of our audit.

Descriptions of the findings and conclusions that led to these recommendations can be found in the sections of this report.
• To help ensure that Richmond maintains appropriate reserves for times of fiscal uncertainty, city staff should complete a review by June 2023 of Richmond’s reserve policy to determine whether a higher reserve target is appropriate. As part of the review, staff should consider all the factors the Government Finance Officers’ Association (GFOA) recommends for setting a reserve target. Once that review is complete, city staff should present proposals to the city council for modifying the city’s policy.
• To decrease the risk that Richmond will deplete its reserves, city staff should present by June 2023 to the city council a list of proposed budget actions that would help ensure balanced budgets and eliminate projected deficits. • Richmond should include multiple scenarios in its financial projections, including scenarios with potential additional risks, such as economic downturns or recessions, and how the city would continue to fund its operations under those circumstances.
• To ensure that Richmond is able to fund its retirement‑related costs, city staff should propose by June 2023 to the city council a specific policy regarding funding of its pension trust fund for this purpose. Staff should report to the city council on the estimated long‑term savings from increasing its direct payments to CalPERS as compared to investing the same amounts in its pension trust fund. Staff members should use this information to inform their recommendations related to funding targets for the pension trust fund and should consider recommending that the council increase the city’s payments directly to CalPERS. • To improve the city’s ability to pay OPEB, Richmond should implement, by June 2023 a policy identifying funds, such as surpluses or one‑time revenues, that should be contributed to the OPEB trust fund. Staff should then conduct an annual analysis to determine whether any funds available to the city are applicable under the city’s policy and should present a proposal to the city council to apply those funds to that trust fund.
• To mitigate the costs of increasing salaries, the city should perform a workforce analysis by June 2024. Based on the results of the analysis, the city council should consider eliminating vacant positions that it deems no longer necessary.

Additionally, the city should continue to assess its need for any vacant position before it seeks to fill it.
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• To ensure compliance with federal requirements, Richmond should dedicate the resources necessary to provide all records needed for an independent auditor to complete all outstanding single audits of the housing authority within the next fiscal year.
• To comply with existing legal obligations, Richmond should make available sufficient resources to enable the housing authority to resolve all past‑due requirements of the recovery agreement and to meet the remaining deadlines in a timely manner, but no later than January 2024.
• To define Richmond’s responsibility related to the housing authority, the city should immediately enter into a written agreement with the housing authority defining each entity’s financial responsibilities and it should draft plans to resolve past tax liabilities and prevent unnecessary new liabilities. • To ensure that Richmond is receiving the best value when entering into contracts, city staff should immediately begin documenting that they are following the contracting requirements in the city’s municipal code and in the contracting policies for all contracts.
• To reduce potential errors and omissions by city staff members when contracting for goods and services, by January 2023, Richmond should require its finance department to create a comprehensive checklist of required documentation for contract files that other departments must follow when conducting procurements. • To ensure that city fees appropriately cover the cost of providing services, by June 2023, Richmond should determine a cost‑effective frequency for updating its Master Fee Schedule (fee schedule) to reflect all allowable costs, including adjusting fees for inflation as appropriate. Richmond should then revise its municipal code as necessary.

Agency Comments
Richmond agreed with our recommendations. We look forward to receiving Richmond's corrective action plan by January 2023 to understand the specific actions it has undertaken, or plans to take, to address the conditions that led us to designate it as high risk.
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Introduction
The city of Richmond, located in Contra Costa County, had approximately 116,000 residents in 2021 and about 690 full‑time, budgeted employees. Richmond is a charter city and therefore has authority over its municipal affairs, and it may establish certain local ordinances beyond those that state law allows for cities that operate under general law. Voters elect a seven‑member city council. The mayor is elected separately and is one of the council members. The council in turn appoints a city manager, who implements council policy and acts as the chief executive and administrative officer of the city. Richmond provides many services to residents, including libraries, parks, community facilities, and public safety.

Richmond has had a long‑standing history of financial challenges. For example, in 2004 our office audited the city and found that it had drained its financial assets and jeopardized its financial stability by failing to control spending while its revenues decreased. In 2015 Moody's, a credit rating agency, downgraded the city’s credit rating, citing $396 million in combined governmental and enterprise debt. Further, our dashboard has assessed Richmond as having high fiscal risk every year from fiscal years 2016–17 through 2019–20. Richmond showed some improvement in our most recent analysis of its fiscal health for fiscal year 2020–21.

Despite its challenges, since fiscal year 2016–17, Richmond has received more general fund money than it has spent, as indicated in Figure 1. General fund revenue comes in part from property taxes and sales taxes, and it funds the city’s core government services, including public safety, recreation, and administration.

In fiscal year 2020–21, Richmond had general fund revenues of $179 million and expenditures of $162 million. As of June 2021, the general fund had a total balance of $49 million, $35 million of which made up the city’s reserves. The city estimates that it received $194 million in revenues and spent $166 million out of the general fund in fiscal year 2021–22.

In addition to its other responsibilities, the city operates a number of businesslike activities. One such program is the Richmond housing authority, a separate legal entity created in 1941 to manage low‑income housing facilities. Members of the city council serve on the housing authority’s board and the Richmond finance department manages the authority’s finances. Currently, the housing authority directly administers more than 240 low‑income housing units across two properties.

The housing authority receives about 40 percent of its $4.8 million in revenues from the federal government and about 16 percent from the city. As we detail later in this report, HUD found that the housing authority mismanaged its financial operations and that its external auditor had not completed several years of audits because of staff turnover and inadequate recordkeeping within the finance department. 5 CALIFORNIA STATE AUDITOR
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Figure 1
Richmond’s General Fund Revenues Have Slightly Exceeded Expenditures in Recent Years 2016–17 2017–18 2018–19 2019–20 2020–21
Fiscal Year
0 20
40 60
80 100
120
140
160
180
$200
In Millions
General Fund Revenues
General Fund Expenditures
Source: Richmond’s audited financial statements.
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Despite Recent Improvements,
Richmond’s Long‑Term Financial
Stability Remains Uncertain
Financial Reserves Have Increased, but Risks Remain
In June 2021, Richmond reached $34.7 million in general fund reserves, exceeding the minimum amount experts typically recommend. The city further estimates based on unaudited information that, as of October 2022, its reserve has since increased to almost $49 million. The GFOA recommends that a general‑purpose government establish a policy to maintain an unrestricted general fund balance that would at least cover a minimum of two months—or about 17 percent—of its regular general fund operating revenues or expenditures. Richmond’s general fund reserve policy substantially aligns with the GFOA recommendation. The policy requires the city to maintain a minimum of 15 percent of the next year’s budgeted general fund expenditures as its reserve. Richmond’s 2021 unrestricted fund balance represented more than 19 percent of its fiscal year 2020–21 general fund expenditures,1 exceeding the GFOA’s minimum recommendation. Richmond was able to reach this general fund balance partly through revenues that are unlikely to be repeated regularly, such as unexpectedly high property transfer taxes.

The city’s current reserve represents significant growth from prior years. For example, in June 2018, Richmond only had $17.7 million in reserve, just 11 percent of its expenditures.

For fiscal year 2019–20, we considered the city’s reserve level a high risk because it maintained low general fund balances compared to its expenditures and transfers, and it had had limited growth in its reserves in previous years. However, the city’s improved balance, illustrated in Figure 2, led to our updated determination that reserves are now an area of moderate risk for the city as of October 2022.

That said, Richmond may require a higher reserve target to address the specific challenges it may face. According to the GFOA, governments may need to set policies to maintain more than the minimum recommended reserves. The GFOA has identified five factors that governments should consider when setting a reserve target. As indicated in Table 2, Richmond has not sufficiently reduced or eliminated risks related to three of the five factors, which could lead the city to need greater reserves than its current policy dictates. For example, the city could experience volatile revenues and expenditures during the next few years because of unusual inflation and other economic trends. Beginning in fiscal year 2022–23, Richmond’s reserve policy now requires a range of reserves from 15 percent to 20 percent of general fund expenditures; however, this minimum may still be too low to meet the city’s needs.
1 We include in this calculation both the $162 million Richmond reported in general fund expenditures and an additional $16 million it transferred out of the general fund that year. The city’s reserve policy requires that transfers out be included along with expenditures to calculate the reserve level.
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Figure 2
Richmond Has Been Increasing Its General Fund Reserves
0 5
10 15
20 25
30 35
40 45
$50
Fiscal Year
2016–17 2017–18 2018–19 2019–20 2020–21 2021–22*
In Millions
General Fund Reserves
Source: Richmond’s audited financial statements and staff reports to the city council.

Note: This figure does not include portions of the general fund balance that Richmond identified as nonspendable or otherwise restricted.
* The fiscal year 2021–22 reserve is based on unaudited estimates from the city.

Insufficient reserves could leave Richmond unable to respond effectively to financial emergencies or maintain city services during economic downturns. Although maintaining two months of reserves is an important milestone that could help the city weather a short‑term crisis—such as emergency infrastructure replacement—the city’s minimum target of 15 percent could quickly prove inadequate in the face of a severe recession or long‑term economic downturn, especially given Richmond’s other risk factors.

In fact, Richmond’s independent auditor found that the city’s reserves constituted a significant weakness as of June 2021. The city’s auditor noted that the low general fund balance could eventually require Richmond to cut costs significantly in order to continue operations while also building up its reserves. Moreover, a city consultant has indicated that cost‑cutting measures could include reducing the overall number of city employees and shuttering certain services, such as library branches. Though dedicating funds to maintain adequate reserves could require Richmond to make difficult budgeting decisions over the next several years, doing so may be necessary to ensure that it can maintain services during uncertain economic times ahead. After we shared our concerns regarding the city’s reserve levels with Richmond, staff reported to the city council that the city 8 CALIFORNIA STATE AUDITOR
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would perform an analysis on adequate reserve levels based on the GFOA’s guidance.

Doing so will be an important step in ensuring that Richmond seeks to maintain adequate fund balances to support its unique needs.

Table 2
Richmond Has Multiple Areas of Concern That May Require Increased Reserves

GFOA IDENTIFIED

RISK FACTOR

HAS RICHMOND

REDUCED OR
ELIMINATED THE RISK?

CONDITIONS WITHIN RICHMOND
Predictability of
revenues and
expenditures
NO
Richmond has identified the potential for significant year‑to‑year variation in its revenue and expenditures. The city has also acknowledged that inflation is a significant uncertainty going forward.

Risk of one‑time
and emergency
expenditures
NO
As we discuss later in the report, the housing authority represents an ongoing risk of significant one‑time expenditures for Richmond.

Potential need for
general fund support
of other funds
NO
Several of Richmond’s other funds have had negative balances, some in excess of $2 million, that staff proposed using the general fund to stabilize in October 2022.

It remains to be seen whether the city can avoid future deficits in its other funds.

Potential impact on
bond ratings YES
Richmond’s credit rating has been steadily improving. The city recently received a reaffirmed credit rating of AA‑ from Standard & Poor’s in August 2022.

Planned other uses
for unrestricted
funds YES
Richmond has previously allocated millions in its reserves for other purposes.

In June 2021, for example, Richmond reported that more than $12 million of its $34.7 million reserve had already been allocated. In October 2022, after we highlighted this risk, staff proposed releasing the majority of its allocated funds such that only $1.4 million of the reserve would have planned uses.

Source: Richmond’s audited financial statements, Richmond’s financial projection and budget documents, staff reports to the city council, reports from credit‑rating agencies, and interviews with city budget staff.

Richmond Forecasts a Significant Long‑Term Deficit, Which Evolving Financial Trends May Worsen
Richmond’s recent budget projections—produced by two different consultants and by city staff members using various models over multiple years—all predict that it will face future deficits because of inadequate general fund revenues and rising expenditures.

For example, in 2021 a consultant anticipated annual budget deficits that would grow from $8 million in fiscal year 2022–23 to $26 million in fiscal year 2027–28, eventually declining and stabilizing at $18 million annually through fiscal year 2030–31. Richmond city staff members completed their projection in September 2022, showing less severe deficits of about $13.8 million in fiscal year 2025–26 before shrinking to $9.4 million by fiscal year 2027–28. Despite the differences between the consultant’s projections, approach, and assumptions and those of the city staff, city staff members agree that Richmond is facing future deficits. City staff have identified several long‑term obstacles to fiscal sustainability, including future costs for infrastructure maintenance, the need to fund growing retirement benefits costs, and the difficulty of addressing these challenges while building up adequate reserves. As Richmond’s consultant warned in 2021, not addressing projected budgetary shortfalls could result in the city being unable to support key city services.
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In recent years, Richmond has avoided deficits both through unexpected revenue and the implementation of a variety of short‑term and long‑term measures, as the text box describes. For example, in fiscal year 2020–21, the city anticipated $6 million in revenue from its property transfer tax; however, it received $20 million, largely due to tax revenue from several large property
sales. This unexpected $14 million—which
the city indicates is unlikely to reoccur—
accounts for the entire $10.5 million increase
in Richmond’s general fund balance for that
fiscal year. In addition, Richmond decreased
its expenses by taking steps such as keeping
certain positions vacant and freezing staff
compensation levels.

Although some of the actions Richmond
has taken—such as implementing new
voter‑approved taxes—will improve its
long‑term fiscal sustainability, others may
not be sustainable in the future. For example,
Richmond has relied on savings from
freezing cost‑of‑living adjustments to some
staff salaries since 2015; however, it recently
increased staff compensation, which will
decrease its ability to maintain balanced
budgets. Thus, Richmond will likely need to
seek additional revenue or decrease other
expenses to prevent future deficits.

In 2021 a consultant provided an overview
of past projections, an updated set of
projections, and warnings about future fiscal
issues to the city council. The consultant
warned that, although the city might
experience individual positive and negative
economic events and might employ various
strategies to report balanced budgets, it would still face a long‑term structural deficit, largely because of increasing personnel costs. Ultimately, the consultant determined that Richmond would need to increase general fund revenues or decrease expenditures by $5 million to $21 million per year in order to both balance its budget and maintain at least minimum reserve levels.

The city’s own financial forecast from September 2022 projects deficits averaging about $6.7 million annually through fiscal year 2027–28, the farthest the city has projected.

Under this forecast, which Figure 3 shows, the city predicts that it will achieve a surplus in fiscal year 2022–23 but then operate at a deficit in each of the subsequent fiscal years, peaking at a shortfall of nearly $14 million in fiscal year 2025–26. The city identified rising costs to fund retirement programs and increased city salaries as contributing factors to its projected deficit.

Examples of Strategies and
Circumstances That Allowed Richmond
to Avoid Deficits in Recent Years
The city identified key measures it employed
or circumstances it benefited from which
allowed it to avoid deficits:

New Revenue. In 2018 and 2020, Richmond
voters approved a new rate structure for taxes
collected from property sales and increased a
business tax.

Pandemic Recovery. In fiscal year 2020–21,
the economic recovery from the pandemic
contributed to the city collecting $5 million
more in sales tax than it budgeted,
$1 million more in property taxes, and
almost $1 million more in utility taxes.

Salary Savings. Until recently, Richmond had
not provided salary increases for non-public
safety staff since 2015 or for many public safety
positions since 2018.

Staff Vacancies. According to the finance
director, about 6 percent of Richmond’s
approximately 690 city positions historically
remain vacant.

Source: Richmond’s financial statements,
Richmond’s website, staff reports to the city council,
and interviews with city staff.
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Figure 3
Richmond’s Latest Projections Show Expenditures Exceeding Revenues 2022–23 2023–24 2024–25 2025–26 2026–27 2027–28
Fiscal Year
100
120
140
160
180
200
220
240
$260
In Millions
$1.3M $7.7M $13.8M $10.9M $9.4M
Projected Revenues
Projected Expenditures
Operating Deficit:

Source: Richmond’s projection documents.

Richmond’s current projections anticipate that, without significant cuts to city expenses or services or without new revenue, its general fund will run critically low on reserves in fiscal year 2027–28, reaching less than $9 million, or the equivalent of less than two weeks of expenditures, as indicated in Figure 4. Richmond’s consultant has provided a variety of options for the city council to consider as long‑term budget solutions to avoid deficits, including contracting out police services, contracting out or reducing library services, reducing social services, and substantially decreasing the city’s workforce. Richmond’s city council has not yet considered these actions because, according to the finance director, city staff is still analyzing its 2022 projection and is reviewing potential methods to create new revenue. Nevertheless, the city’s projections suggest that it will soon need to reduce its expenditures by an average of more than $6 million annually unless its revenues increase by a similar amount. Otherwise, maintaining adequate services for its residents will become increasingly difficult.
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Figure 4
Richmond’s Forecasted Deficits Could Critically Deplete Its General Fund Reserves 0 5
10 15
20 25
30 35
40 45
50 55
$60
2022–23* 2023–24 2024–25 2025–26 2026–27 2027–28
Fiscal Year
General Fund Reserves (in millions)
The city falls below
GFOA's recommended
reserve level.

The city has less
than two weeks of
expenses in reserve.

Recommended
reserve level.

Source: Documents provided by Richmond’s finance department, staff reports to the city council, and the GFOA website. * The starting fund balance in fiscal year 2022–23 is based on unaudited estimates the city published in October 2022.

Further, Richmond may encounter more severe shortfalls than it has forecast because of uncertain economic trends. First, Richmond’s staff explained that the projection assumes that inflation—which was at 8 percent year‑over‑year as of August 2022— will largely return to normal rates after a single year. Though the city’s forecast does account for certain expense increases due to inflation, such as higher health insurance costs, other expense projections may be too low if high inflation persists past 2023. The Congressional Budget Office and Federal Reserve Bank have predicted that it could take multiple years for inflation to return to long‑term average rates, indicating that the city may spend more than it projects in future years because of higher inflation.

Second, the possibility of a recession threatens the city’s long‑term revenue potential. In 2021 Richmond’s consultant noted that the city could face a mild recession beginning in fiscal year 2026–27, suggesting that including that possibility 12 CALIFORNIA STATE AUDITOR
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in projections could help determine whether Richmond’s reserves are sustainable.

However, city staff explained that the 2022 projection does not include the chance of such a recession because events near the end of the decade were too far out for the city to predict. Instead, Richmond included what staff described as a conservative estimate of revenue growth in the first few years of the projection to account for immediate recession risks based on current economic events. However, if the city experiences cyclical recessions in six‑ or seven‑year intervals, as the consultant predicted, another recession at the end of the decade could significantly reduce revenues even as the city draws down its reserves.

Applying more conservative assumptions to Richmond’s projections indicates that the city may have to make steeper budget cuts sooner than it currently projects.

For example, if current rates of inflation persist for some years, Richmond may experience higher than anticipated expenses in fiscal years 2024–25 and 2025–26.

Additionally, if Richmond experiences a recession near the end of the period covered by its forecast, it might take in less revenue in fiscal year 2027–28 than predicted or run a series of deficits in the years following the end of its projections. Such deficits could cause Richmond to face more severe or more prolonged shortfalls than predicted and thus require the city to revisit the difficult budgeting decisions the consultant proposed, such as reductions in service or workforce.

In October 2022, we updated the annual assessment of fiscal risk we conduct related to California cities, which we use in part to identify cities that may require further review. During that update, we adjusted Richmond’s overall fiscal risk rating to moderate risk based on financial information from fiscal year 2020–21. This change in rating and Richmond’s movement from the 9th to the 10th city at greatest risk reflects improvement in certain risk indicators on our online dashboard. However, Richmond retains many high‑risk characteristics, including its risk of significant projected deficits. Our ultimate designation of Richmond as high risk for the purposes of our high‑risk local government agency audit program reflects the totality of the findings in this report and informs our report title, which notes Richmond’s high‑risk status.

The City’s Debt Burden Remains High
Richmond’s large debt burden may become a significant impediment to its ability to maintain balanced budgets. As of June 2021, Richmond had about $250 million in debt related to its governmental activities. However, in fiscal year 2020–21, only $1 million of Richmond’s $162 million in operating expenditures in the city’s general fund directly supported debt service. Richmond paid the remainder of its debt service—another $20 million in fiscal year 2020–21—with the city’s other governmental funds, several of which are designated for this purpose.2 2 Richmond operates a variety of additional funds for specific purposes, such as revenue collection, public safety, and support for certain grant programs. Moreover, it has three funds designated for paying debt service. Much of the money these funds use to pay debt service comes from a special property tax that we discuss later in this section. 13 CALIFORNIA STATE AUDITOR
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These debt service payments represent a risk to the city’s overall finances, including to the general fund. If Richmond’s revenues from other sources prove insufficient, it may need to use general funds to support its debt service. Thus, the city’s management of its overall debt load will be a key step to ensuring the sustainability of its operations in the future. The city’s debt, and the potential strain it imposes on the city’s revenues, leads us to determine that Richmond’s debt burden is a high‑risk area.

Much of Richmond’s $250 million in outstanding governmental activities debt—56 percent as of June 2021—comes from its decision to create short‑term savings using pension obligation bonds. Pension obligation bonds are a type of taxable bond that cities can use to fund their retirement programs and then pay back over decades. After it issued bonds totaling almost $115 million in 2005, Richmond sent $114 million in proceeds to CalPERS to support its retirement obligations. This issuance was part of a complex set of transactions, which resulted in Richmond paying only minimal debt service until two scheduled payment updates in subsequent years. The first of the payment updates occurred in 2013 and resulted in higher annual payments for $75 million of the bonds.

A second update was set to further increase payments beginning in 2023 on another $128 million of the bonds.3
Richmond reports that it initially issued the debt in this manner because it needed short‑term budgetary savings and lacked other options because of its poor credit rating at the time. The staff asserts that the bonds and related agreements created savings on combined debt and pension costs from 2005 through 2013, allowed for smaller savings from 2013 through 2020, and would result in increased costs after 2021. Under this debt arrangement, bond payments would have increased from a range of $9 million to $13 million annually—the amounts the city reported paying from 2013 through 2022—to a range of $15 million to $22 million annually. However, Richmond refinanced this debt in September 2022.

Richmond likely missed an opportunity to lower the debt service costs for its pension obligation bonds. From 2020 through much of 2021, interest rates on U.S. treasury bonds, which influence interest rates on other bonds, were at historic lows. Before September 2022, Richmond had been working toward refinancing its pension obligation bonds for more than a year in an attempt to take advantage of these low interest rates and avoid increased debt expenses. According to Richmond’s finance director, managerial turnover and the city’s lengthy process to find financial and legal consultants caused delay.

Although the city council instructed staff in June 2022 to issue new bonds, bond interest rates began rapidly increasing in March 2022. U.S. Treasury bond rates had almost doubled from 1.65 percent at the end of April 2021 to 3.15 percent as of August 2022.

For perspective, such a rate increase on a $100 million 20‑year bond issuance would result in about $900,000 in higher payments annually. The city’s actual debt structure is more complex than a simple bond, and the city asserts that it achieved limited one‑time savings in 2022 by reducing a fee payment by more than $1 million. However, the volatile interest rates we highlight provide an example of the risks cities take when issuing or 3 The value of the bonds Richmond paid beginning in 2013 and would have begun paying in 2023 is higher than the initial $115 million in proceeds because it includes fees the city incurred both when it entered into the debt and when it subsequently negotiated its interest rates.
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refinancing pension obligation bonds generally and the importance of considering market conditions. For example, in October 2021, staff noted that an interest rate increase of even a tenth of a percent could cost the city more than $1 million in current dollars. Figure 5 shows the timeline of some of the actions Richmond has taken toward refinancing since 2021 and how interest rates have increased over that time.

Figure 5
Richmond Deliberated About Refinancing Options for More Than a Year As Borrowing Costs Rose Jan. 2021
Feb. 2021
Mar. 2021
Apr. 2021
May 2021
Jun. 2021
Jul. 2021
Aug. 2021
Sep. 2021
Oct. 2021
Nov. 2021
Dec. 2021
Jan. 2022
Feb. 2022
Mar. 2022
Apr. 2022
May. 2022
Jun. 2022
Jul. 2022
Aug. 2022
Sep. 2022
Date
U.S. 10-Year Treasury Rates*

0.0 0.5

1.0 1.5

2.0 2.5

3.0 3.5

4.0%
April 6, 2021
Staff presents analysis
and refinancing options
to city council.

April 26, 2022
Staff presents analyst's
conclusions to city council.

June 21, 2022
City council
authorizes issuance.

September 8, 2022
City issues new
bonds.

December 7, 2021
City procures a
financial analyst.

October 5, 2021
Staff recommends quick
action to refinance.

Source: U.S. Treasury website, city council meeting minutes, and staff reports to the city council. * U.S. treasury rates influence interest rates on other bonds. 15 CALIFORNIA STATE AUDITOR
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Further, when Richmond refinanced its bonds, it extended its repayment period, which will add to the total amount of interest it will pay over the lifetime of the bonds. Though the city was scheduled to finish repaying the debt service on its original pension obligation bonds by 2034, it elected to pay debt service on the new bonds until 2044—an extension of 10 years. According to the city’s financial consultant, this extension would further reduce costs to the general fund in the near term and shift more of the debt costs to the future when there would be higher tax revenues available for debt service. However, the consultant also warned that the city’s total general fund costs related to its pensions and debt service for pension obligation bonds would consequently increase by $30 million over the life of the bonds.

Richmond’s delay in refinancing its pension debt and its decision to increase the years required for debt service will impact its taxpayers for decades. Richmond pays the majority of the debt service on its pension obligation bonds through a surcharge on property taxes (pension tax). This arrangement limits the impact on the general fund of debt service for these bonds. However, it also highlights the city’s duty to its taxpayers to secure the best possible investments and to efficiently use the taxes it levies.

Please refer to the section beginning on page 3 to find the recommendations we have made to address this area of risk to the city.
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Addressing Its Poorly Funded Retirement
Benefits and Below‑Market Compensation
Will Increase Richmond’s Expenses
Significant Retirement Obligations Continue to Burden the City Richmond’s rising pension costs—the money it contributes annually to support its program to provide guaranteed retirement benefits—are an additional risk to its taxpayers and another potential barrier to maintaining balanced budgets. Richmond participates in CalPERS and pays annual contributions to its pension plans based in part on payroll size and investment growth and the size of its unfunded pension liabilities.4 In fiscal year 2020–21, the city paid more than $35 million in pension costs, almost a quarter of its $162 million in total general fund expenditures for the year; however, some of the general fund costs—about $6 million to $10 million—are typically reimbursed through the pension tax.5 As of 2022, CalPERS reported that Richmond’s annual pension costs are increasing and projects they could reach $53 million by fiscal year 2028–29. Richmond’s rising pension costs led to our determination that those pension costs are an area of high risk.

Richmond is incurring significant annual costs now because its historical contributions have been insufficient to fund all the promised pension benefits. The value of the city’s investments have not yet recovered from significant losses in fiscal year 2008–09, nor has Richmond contributed significant additional funds to make up the shortfall. Thus, Richmond’s pension funding level—the percent of assets it has relative to the cost of promised benefits—dropped to less than 71 percent in 2020, due in large part to minimal returns in several preceding years. By the end of fiscal year 2020–21, the funding level increased to more than 80 percent from strong investment returns for the CalPERS portfolio; however, this is still less than the 100 percent funding target the GFOA recommends. Further, this reported growth does not yet account for significant CalPERS investment losses in the most recent fiscal year. Although Richmond has been making annual payments assigned by CalPERS to address its shortfall, CalPERS projects that it will take decades for the payments to amount to a 100 percent funding level. These payments represent the majority of Richmond’s projected pension costs. For example, in 2022 CalPERS projected that, in fiscal year 2028–29, about 66 percent of Richmond’s payment would go to address the shortfall, while only 34 percent would fund ongoing pension costs. Contributing additional funds to CalPERS to further improve Richmond’s funding status would require difficult budgeting decisions by the city. However, additional contributions represent an opportunity to reduce cumulative city expenditures by tens or hundreds of millions of dollars in the coming decades. 4 Richmond’s investments with CalPERS are separated into two plans—one specifically for safety employees and the second for other employees.
5 In addition to the city’s two CalPERS plans, Richmond pays pension costs of less than $1.5 million for two smaller pension plans. We have focused our discussion on the two larger plans because they represent the significant majority of the city’s annual pension costs. 17 CALIFORNIA STATE AUDITOR
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In July 2022, Richmond’s city council approved the use of an irrevocable trust fund for pension costs, which would give it an additional tool to address its pension shortfall.6 According to CalPERS, such a fund can generate investment income to reduce pension impacts on city budgets and help to offset costs during financial crises. Staff members did not ask the council to adopt a specific funding schedule for the trust fund, but they reported that Richmond should be able to generate almost $1 million per year by seeking discounts from CalPERS for making the city’s annual contribution at the beginning of the fiscal year, as it did in fiscal year 2021–22.

Although Richmond’s pension trust fund may prove an effective decision, it also increases the risk the city will suffer long‑term losses compared to other investment options. Staff reported to the city council that money placed in the pension trust fund might earn more than if the city kept the money in its existing investment accounts and that investing with a private fund manager would give the city greater control over the timing and risk levels of its investments. Staff also reported that the city could use the trust fund to pay immediate pension costs in an emergency. These represent important considerations. Nonetheless, while the private fund would allow the city to take on greater risk for potentially greater returns, such an action also increases the risk of losses. Further, the outside investment manager charges higher management fees than the fees CalPERS charges for similar trust funds.

The city could do more to evaluate possible options for managing its pension costs.

Though staff members acknowledged to the city council that it would also be possible to send additional money directly to CalPERS rather than investing it in a trust fund, they did not provide the council an analysis of the relative fiscal benefits of such a strategy. Instead, they recommended using the outside trust fund because the city would be able to experience benefits sooner and have more control over its investments. The finance director asserted that the city’s management held verbal discussions on the different options available and chose the private trust fund for flexibility and investment diversification reasons, but did not provide an analysis comparing the long‑term fiscal benefits of the different options. Therefore, we are concerned that Richmond has not fully considered the value of using some or all of its expected $1 million in annual early‑payment discounts to make additional payments to CalPERS and directly address its shortfall. Additional payments would only slightly reduce Richmond’s annual contribution to CalPERS in individual years; however, they would have a cumulative effect over time, as amounts invested with the State double about every 12 years at CalPERS’ expected investment growth rate.

Richmond May Have Missed Opportunities to Better Address Its Retiree Health Obligations
In addition to its pension costs, Richmond pays significant annual costs toward retiree health benefits. Richmond’s OPEB programs fund medical insurance costs for its retired employees, with annual costs shared between the city and 6 The city already possessed a trust fund for certain retiree health funding, which we discuss in the next section. The city elected to use this trust fund for both its pension and other benefit costs by dividing it into multiple accounts going forward. We refer to these accounts as separate trust funds for the purposes of this report. 18 CALIFORNIA STATE AUDITOR
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current employees. The city has contributed an average of more than $11.5 million per year since fiscal year 2016–17. Although the city has created trust funds to address its OPEB expenses, the funds’ balances are not yet high enough to be effective. In 2008 the city established a trust fund that it could use to partially fund its future OPEB obligations in a similar manner to its approach to pension funding, a practice the GFOA recommends. As of June 2021, Richmond had $39 million in its two OPEB trust funds—significant growth over its $9 million balance in fiscal year 2016–17. However, the $39 million still represented only 27 percent of Richmond’s promised future benefits.7 This funding level is far short of the GFOA’s recommended target of 100 percent funding. As a result, the funds’ investment income has been historically inadequate to pay benefits without millions of dollars in additional annual contributions from the city.

In 2016 the city council adopted a policy to place into its OPEB trust funds half of its one‑time revenues and half of its surpluses above those needed to meet its reserve goals. However, until recently, Richmond had not made a contribution under this policy since 2018. Richmond’s finance staff explained that when the city increased its reserve target from 7 percent to 15 percent of its budgeted expenditures beginning in fiscal year 2018–19, the likelihood of dedicated contributions decreased. After we discussed the lack of contributions with city management, staff proposed and the city council approved a $6 million contribution to the OPEB trust funds in October 2022. The city also enacted a new policy in 2022 that removed the requirements for Richmond to make the types of contributions described above in the future.

We acknowledge that the city’s surplus revenue may have been limited as it built reserves and responded to the pandemic. However, finance staff were only able to provide evidence of very limited analysis they had conducted to determine whether certain unexpected revenues qualified under the policy and should have been contributed to the OPEB trust fund. Notably, Richmond did not make dedicated contributions to its trust funds in fiscal year 2020–21, despite exceeding its reserve target by $6.5 million and reporting a surplus of $10.4 million, largely as a result of tax revenue from property sales. Thus, a contribution of up to $6.5 million may have been appropriate once the city determined how much of its surplus and revenue was eligible under its policies. Finance staff asserted that Richmond did not need to contribute any of this money to OPEB because the city set aside much of its surplus for future fiscal years. However, the city’s policies did not exempt such set‑aside funds from being considered for OPEB contributions. Had Richmond completed a more thorough analysis to determine whether additional dedicated contributions were appropriate based on its OPEB funding policy and reserve policy in fiscal year 2020–21, it may have been able to more quickly increase the balance of its OPEB trust funds. Increasing this balance would allow the city to reduce its long‑term annual costs, potentially saving it millions of dollars in the coming decades. 7 The majority of Richmond’s OPEB funds are in the original trust fund it established in 2008. In 2017 the city established a second, smaller trust fund to invest OPEB funds for police officers. 19 CALIFORNIA STATE AUDITOR
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Increasing the Competitiveness of City Salaries Will Incur Additional Costs As part of Richmond’s efforts to reduce expenses, it did not provide cost‑of‑living salary increases to city employees for up to the past seven years. Richmond provides different compensation packages for several groups of employees, such as those in executive positions, staff positions, and public safety positions. For its non‑public safety employees, the city last offered a cost‑of‑living adjustment to salaries in July 2015, more than seven years ago. Meanwhile, before 2022, the city had last offered nonmanagerial public safety employees in the police and fire departments cost‑of‑living increases in 2018. As Table 3 shows, these decisions came in spite of prices having risen 24 percent since 2015.

According to Richmond’s budget administrator, these decisions to not provide salary increases represented the types of difficult steps the city has taken in order to promote fiscal stability.

Table 3
Richmond Delayed Providing Raises for Years as the Cost of Living Significantly Increased

EMPLOYEE
CATEGORY EMPLOYEE LEVEL LAST COST‑OF‑LIVING

ADJUSTMENT

RECENT OR NEXT
COST‑OF‑LIVING

ADJUSTMENT

INFLATION SINCE LAST
COST‑OF‑LIVING ADJUSTMENT
(THROUGH JUNE 2022)
Non‑Safety All July 2015 Jan. 2023 (5%) 24%
Public Safety Firefighters July 2018 June 2022 (1%) 18% Fire Management July 2018 None Scheduled 18%
Police Officers July 2018 June 2022 (1%) 18%
Police Management Jan. 2016 June 2022 (1%) 25%
Source: Richmond’s bargaining agreements, Bureau of Labor Statistics website, and compensation information on Richmond’s website.

Richmond’s decision to reduce payroll costs likely contributed to its high vacancy rate for city positions and high turnover rates among employees. Although Richmond’s overall vacancy rate varies from month to month and has been affected by such factors as hiring freezes during the pandemic, the director of finance stated that vacancy rates are about 6 percent annually—high enough to negatively affect department operations. Further, the city experienced several executive departures in recent years. As of April 2022, when the audit started, Richmond had filled some of those positions, including city manager, deputy city manager, library and community services director, and finance director, on an interim basis.8 According to the city’s data, as of April 2022, several departments were experiencing vacancy rates significantly above the 6 percent estimate. For example, the finance department reported a 24 percent vacancy rate, the police department a 20 percent vacancy rate, and the public works department a 15 percent vacancy rate. 8 As of October 2022, one deputy city manager position continues to be vacant, and the library and community services director is filled on an interim basis.
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Vacancy rates this high can affect the efficiency and effectiveness of city services and at times can result in increased costs. For example, the finance director acknowledged that Richmond’s finance department has been adversely affected by high vacancies and turnover, limiting the staff’s ability to take on projects and complete the department’s duties. Similarly, the 20 percent vacancy rate in Richmond’s police force has resulted in high overtime costs. Significant overtime can further result in issues with staff retention and may ultimately affect critical services.

Richmond is taking steps to increase employee compensation. In 2021 the city negotiated a cost‑of‑living adjustment for its non‑safety employees. Richmond agreed to a 5 percent cost‑of‑living increase to take effect in January 2023, followed by 4 percent increases in each of the next two years. Richmond also provided a cost‑of‑living salary increase in 2022 to many of its safety employees, an increase that the city acknowledged it had delayed implementing since 2020. In addition to these adjustments, a consultant to the city issued a compensation study in 2021 that determined the city was typically paying 7 percent to 8 percent below the market rate for base pay for its positions. In response, the city built funding for addressing the consultants findings into its fiscal year 2022–23 budget.

These efforts to increase compensation represent a substantial policy shift for the city, as it must now identify alternative avenues for long‑term savings or generate additional revenues. Although salary increases may assist Richmond in recruiting and retaining staff, the associated expenses will increase the burden on the annual budget. In June 2022, staff reported to the city council that the upcoming negotiated cost‑of‑living adjustments contributed to significant increases in fiscal year 2022–23 to salaries and benefits over the previous year. In total, the city expects an additional $7.4 million in fiscal year 2022–23 costs to implement compensation increases based on its consultant’s report and cost‑of‑living adjustments. The finance director explained that Richmond is considering a variety of options to address these new costs, including reducing professional service expenditures and updating some positions’ responsibilities to acknowledge that other positions are expected to remain vacant.

To alleviate the costs of increasing city employees’ compensation, Richmond should also take the opportunity to reassess the size of its staff. Richmond budgeted savings of approximately $5.8 million from fiscal year 2021–22 vacancies, and it budgeted a vacancy savings of $8.3 million for fiscal year 2022–23, which staff asserted would compensate for that year’s allocation for salary adjustment. Increasing recruitment would reduce the size of this savings. Although some recruitment is likely inevitable—for example, recruiting some additional police officers to reduce overtime—taking a measured approach to filling vacancies will allow the city the time to determine whether any departments, including police and fire, should or could operate with a smaller staff and thereby allow the city to eliminate vacant positions. For example, in fiscal year 2021–22, staff reported that eliminating 12 vacant positions in the police department saved $3 million from the police budget. The finance director has stated, that in some departments, high vacancy rates have limited operations and efficiency. Nevertheless, by assessing its staffing needs, the city may find other departments that need fewer additional staff than their vacancies would suggest.

Please refer to the section beginning on page 3 to find the recommendations we have made to address this area of risk to the city.
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The City Has Mismanaged the Richmond
Housing Authority
A Decade of Mismanagement Will Result in the Housing Authority Transferring Its Public Housing Responsibilities to Other Entities
The city has ineffectively managed the finances of the housing authority for a decade and, as a result, HUD—the federal oversight agency for local housing authorities—has directed the housing authority to transfer its programs and resources to other entities. The housing authority is a separate legal entity from the city. The city manager acknowledges that the city manages the authority’s finances but could provide no agreement between the city and the housing authority other than the city council’s approval of the authority’s budget. This included a general fund subsidy that provided $800,000 of its $4.8 million annual revenue in fiscal year 2021–22. Despite this support and assistance, the housing authority has failed to comply with basic financial requirements and best practices. This has increased the risk that neither the city, the housing authority, nor the public may be aware of the housing authority’s actual financial condition.

Most importantly, the housing authority has not completed since fiscal year 2016–17 annual financial audits required by state and federal law. In July 2022, housing authority staff requested that the authority board and the city approve a contract amendment with the authority’s financial services contractor to support the housing authority’s auditors in completing their work. According to the housing authority’s executive director, Richmond has not dedicated sufficient financial staff who are trained in federal requirements to the housing authority. City staff acknowledged in November 2018 that the city had not completed the necessary tasks to know the authority’s financial position, such as being able to provide bank reconciliations. As of October 2022, the audits remain incomplete.

The lack of audited financial statements for the housing authority has in turn affected Richmond’s financial reporting. From fiscal year 2016–17 to the most recent audited financial statements in fiscal year 2020–21, the city’s auditors noted that they could not obtain sufficient appropriate evidence to provide an audit opinion on the financial statements for Richmond’s businesslike activities, which include the housing authority.

Because the housing authority has not completed its annual financial audits since fiscal year 2016–17, neither it, the city, nor those that the authority or the city serve can be confident in the authority’s finances and its potential effects on the city.

In fiscal year 2020–21, Richmond also decided to not seek repayment for the costs of services provided to the housing authority because the expenses did not meet federal requirements. In 2021, a HUD consultant reviewed the city’s 2019 audited financial statements and found that Richmond claimed that the housing authority owed it more than $15 million for services rendered, including nearly $5 million in indirect cost allocations.

According to the HUD consultant, federal law disallowed nearly all—$14.7 million—of 23 CALIFORNIA STATE AUDITOR
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those claimed expenditures. In 2022 the city decided to withdraw its claim for these expenses and was required to write off its claim to these funds before completing its fiscal year 2020–21 financial statements.

As a result of these and other instances of financial mismanagement and in response to HUD concerns, the housing authority is planning to transfer its housing programs and resources to other agencies and partners. As Figure 6 indicates, HUD identified significant deficiencies concerning the housing authority’s financial practices, oversight, documentation, and accountability going back more than a decade. For example, in its 2009 audit, HUD found that the housing authority had issued payments for services related to the management of housing units without determining whether the invoiced amounts were appropriate. In a subsequent audit in 2016, HUD found that the housing authority had misled HUD on the status of its financial resources, submitted falsified documentation, and allowed the city to use the housing authority’s HUD funds. It also found that the city had charged the housing authority for rent and services at prices that seemed excessive. HUD found that these actions resulted in more than $2 million in misspent HUD funds and nearly another $1 million in costs the housing authority could not support. The housing authority had also incurred other questionable transactions that unnecessarily limited its resources and the effectiveness of its public housing program.

Further, in its annual evaluations of public
housing performance, HUD has regularly
found the housing authority to be deficient.

In these reviews HUD assesses and scores the
performance of public housing agencies based
on the indicators noted in the text box. For
the nine years from 2011 through 2019, HUD
designated the housing authority as below
HUD standards in seven of those years. From
2017 through 2019, HUD found the authority
to be well below standards.

As a result of the consistently poor reviews, in
2019 HUD created and the housing authority
signed a recovery agreement with the intent,
according to HUD, to bring about the transfer
of the housing authority’s direct public
housing responsibilities to other agencies and
partners. Richmond acknowledged this agreement by the signature of its mayor and agreed to work in good faith to assist the housing authority and HUD in accomplishing the tasks in the agreement, many of which are described in the next section. This process, when complete, will result in the housing authority no longer directly providing housing because private entities will rehabilitate and manage its real property under long‑term leases. The housing authority’s role will be reduced to overseeing the lease agreements. The housing authority’s partners will ultimately maintain the existing public housing in the future, but the housing authority’s delays in completing the recovery agreement—and the associated delays in maintenance and rehabilitation of affected housing units—are negatively affecting Richmond residents who currently rely on that public housing.

HUD Performance Indicators
Physical Condition Indicator—Reviews
whether the housing is decent, safe, sanitary,
and in good repair.

Management Operations Indicator—
Measures occupancy, tenant accounts
receivable, and accounts payable.

Financial Condition Indicator—Determines
whether sufficient financial resources exist to
support the provision of housing.

Capital Fund Program Indicator—Determines
whether funds are obligated and units
occupied within program grant deadlines.

Source: Federal law.
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Figure 6
HUD Has Repeatedly Identified Mismanagement of the Housing Authority After its 2009 audit of the housing
authority, HUD designated the
housing authority as a
TROUBLED AGENCY.

Deficient financial practices—such as releasing
payments without supporting documentation.

Failures in oversight—allowing payments
beyond a contract’s expiration.

Poor documentation practices—such as failing
to keep documents required for procurement
and for tenant files.

Inadequate accountability—such as:
– Rejecting the results of competitive procurement
processes.
– Staff participating in awarding contracts to entities with whom staff members had a conflict of interest.

After its 2016 audit of the housing
authority, HUD again designated
the housing authority as a
TROUBLED AGENCY.

Inadequate financial practices and lack of
accountability—exemplified by:
– Submitting documentation that misrepresented the
authority’s finances.
– Failing to conduct required procurement processes.

Weak oversight—such as:
– Housing authority staff not reviewing and approving
transactions initiated by the city.
– Providing and paying for city staff and services using authority funds without HUD approval.

HUD
HUD’s 2009 audit of the housing authority
found the following: HUD's 2016 audit found the following:

Source: HUD audit reports.

The Housing Authority Missed Mandatory Deadlines to Complete the Recovery Agreement
HUD may seek remedies because the housing authority is not complying with the recovery agreement. The recovery agreement requires the housing authority to meet target dates for 26 individual tasks, such as submitting a financing plan and issuing a request for redevelopment proposals. Due dates range from October 2019 to November 2022. The authority has made some progress in satisfying the terms of the recovery agreement. For example, the authority stated that it transferred to another organization a property that had been vacant since 2015 because it was uninhabitable. However, as of September 2022, the housing authority had missed 11 other deadlines, many by more than a year, as Figure 7 shows. In May 2022, HUD stated in a letter to the housing authority that it will not provide extensions to these 25 CALIFORNIA STATE AUDITOR
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deadlines and will instead seek remedies against the housing authority, including suspension or debarment.9 In July 2022, the housing authority reported to its board that it had not been able to meet required deadlines because of staffing shortages and unspecified "unforeseen cirumstances.” The housing authority’s executive director also indicated that, although the deadlines were originally reasonable, the pandemic has made the deadlines unreasonable, as each step required additional time to complete.

Figure 7
The Housing Authority Has Failed to Comply With HUD’s Recovery Agreement Deadlines as of September 2022
2+ YEARS
OCTOBER: Signed recovery agreement with HUD.

OCTOBER: Submit application for Richmond Village 1 & 2 property redevelopment.

APRIL: Submit final voucher program closeout audit to HUD.

MAY: Finalize contract with Nystrom property developer.

SEPTEMBER: Obtain HUD approval for Nystrom property redevelopment application.

NOVEMBER: Submit financial plan for Richmond Village 1 & 2 property redevelopment.

DECEMBER: Close conversion of Richmond Village 1 & 2 property to ownership and operation by private developers.

MAY: Obtain HUD approval for Richmond Village 3 property redevelopment application.

JUNE: Obtain vouchers to ensure continuity for Richmond Village 3 residents as property is transferred to new owner.

DECEMBER: Obtain HUD approval for a redevelopment application for undeveloped Hacienda property parcels.

DECEMBER:Begin construction of Richmond Village 3 redevelopment.

MARCH: Start Nevin Plaza redevelopment.

OVERDUE
2019
2020
2021
2022
2+ YEARS
2+ YEARS
2+ YEARS
1+ YEARS
1+ YEARS
262 DAYS
1+ YEARS
1+ YEARS
262 DAYS
202 DAYS
Source: Housing authority documentation.

Note: Overdue total as of September 19, 2022.
9 A suspension is imposed for a temporary period, pending the completion of an investigation or legal proceeding, and it results in an immediate exclusion from participation in further government transactions. A debarment sanction means that an organization and its affiliates are excluded from conducting business with any federal agency. Debarments are imposed for criminal and/or serious HUD program violations. A suspension may lead to debarment. 26 CALIFORNIA STATE AUDITOR
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Avoiding delays in the recovery agreement is critical because it helps ensure that residents have safe housing. Under federal and state law, the housing authority is responsible for ensuring that the housing units it provides are habitable and safe.

However, the housing authority has not always been able to meet HUD’s physical conditions indicator; in 2013, 2014, and 2018, the housing authority scored low enough on this indicator for HUD to require corrective action. Residents of one housing authority building sued the city and housing authority in 2015, listing mold, vermin, faulty elevators, and lax security as some of the conditions they had to endure. The city and the housing authority settled this lawsuit in 2019 for more than $650,000. The housing authority stated that it directly manages about 240 housing units in two complexes as of August 2022 and indicated that, under the recovery agreement, it will sell or transfer all the housing units to other entities.

For example, the housing authority entered into a long‑term lease with a developer for the Hacienda development, which will rehabilitate the building and manage it as affordable housing for seniors. Further delays in the housing authority’s implementation of the agreement could result in residents experiencing more problems in their housing and more lawsuits.

The Housing Authority May Owe the Internal Revenue Service $1 Million or More in Taxes and Penalties
The Internal Revenue Service (IRS) claims that the housing authority owes significant taxes and penalties from 2018 and 2019. Federal law requires the housing authority to submit tax information on property owners who receive federal funds through the housing authority—in this case through a housing voucher program—to ensure that those property owners pay the taxes they owe and, in some instances, to withhold taxes and submit them on the property owners’ behalf. The housing authority reported to its board in June 2022 that it had failed to report tax information in 2018 and 2019, and that failure to comply could result in $9 million in withholding taxes and penalties.

The housing authority took no significant action to address this potential liability until the start of this audit. However, it has been able to submit sufficient records so that the IRS agreed to reduce the remaining taxes and penalties to $1 million.

According to the housing authority’s executive director, the city, which provides financial services for the housing authority, had not provided sufficient support or resources to allow it to meet IRS requirements. The city manager indicated that the prior finance director and housing authority executive director were not engaged in the level of detail as the new finance director and executive director. Although the city is not directly liable for these debts, because it provides significant funding to the housing authority, the existence of the outstanding taxes and penalties results in increased risk to Richmond.

Please refer to the section beginning on page 3 to find the recommendations we have made to address this area of risk to the city.
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The City Has Not Consistently Followed
Its Contracting Policies or Updated Its
Fees as Required
Richmond Could Do More to Demonstrate It Is Following Requirements to Ensure the Best Value for Its Contracts
Lack of documentation sometimes makes it difficult for Richmond to demonstrate that it complies with its own contracting policies. The city’s municipal code and its purchasing policy outline requirements that promote fairness and transparency in how it selects vendors. Specifically, for contracts between $5,000 and $50,000, city staff must contact vendors to obtain three written quotes before awarding the contract. For contracts valued at $50,000 or more, the city must follow a competitive bidding process. The municipal code allows for limited exceptions to its requirements for multiple quotes or bids, such as during an emergency or when the city determines it is economical for the city to use the pricing and terms established by another public agency. Such requirements are key measures that help ensure that the city is fairly selecting vendors that provide the best value. However, when we reviewed 10 contracts the city entered into from 2019 through 2021, we identified at least two instances in which the city could not demonstrate that it followed its own procurement policies or it had made errors or omissions that could have affected its management of contracts.

In one example related to a $24,500 contract approved by the city council, Richmond did not justify its use of an alternative contracting process that allows it to purchase supplies, equipment, or services by using the pricing and terms of a contract negotiated by another public agency that has already procured those same goods or services. The municipal code allows Richmond to use this method so long as the finance department determines it would be in the city’s best interest. However, staff did not perform such an analysis and did not explain that Richmond was using this method when reporting the contract to the city council. For another contract originally bid at $63,800, city staff proposed and the city council approved a higher value of $71,200 for the contract without a documented explanation. Inconsistent documentation limits the city’s ability to demonstrate that it is properly procuring goods and services and complying with its own policies.

According to finance staff, staff from other departments typically enter into contracts that the finance staff then approves. The finance department has not required other staff to follow specific formats when submitting related documentation. When we reviewed with the finance department the various documentation issues we identified, staff acknowledged the need for stronger and more consistent contract documentation practices going forward. The finance director also noted that the finance department had enforced more rigid documentation requirements in the past but that turnover in other departments has increased the workload for finance staff because of the need to provide more training. She further explained that the city was implementing a new training program to familiarize other departments’ staff with procurement requirements. 29 CALIFORNIA STATE AUDITOR
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As we discussed earlier, competitive bidding allows the city to demonstrate that it is obtaining goods and services at the appropriate value and selecting vendors without inappropriate influence. When Richmond does not adequately document its adherence to bidding requirements or the use of allowable exceptions to its procurement process, it risks overspending for goods and services.

City Staff Have Not Updated Fee Schedules as Required
Richmond has not consistently updated its service fees, and as a result, it risks incurring general fund costs for each service those fees should cover. The city’s municipal code generally requires the city manager to update the city's fee schedule annually to ensure that fee‑supported services, such
as engineering site plan reviews or code
compliance inspections, have fees that
are sufficient to cover the cost of those
services.10 While performing the annual
update, the city must consider components
such as direct costs and overhead, as the
text box describes. The municipal code
also requires that the city’s finance director
propose quarterly to the city council any
adjustments to its taxes and fees based on
the Employment Cost Index (ECI). The ECI
is a federal economic indicator that measures
changes in hourly labor costs to employers.

Despite setting these requirements, the
city has not conducted either updates or
adjustments at the required frequency.

From 2018 through 2022, Richmond did
not review and update the full range of its
existing fees. Richmond performed three partial updates during this period—in 2018, 2020, and 2022. In 2018 Richmond analyzed the costs associated with the services its Planning Division provided and updated the associated fees. However, it updated only a selection of fees from two others of its eight fee‑levying departments and divisions: its Water Resource Recovery Division and Library and Community Services Department.

For example, the city updated only six of the 50 fees used by its Water Resource Recovery Division. It made no fee updates for the remaining city departments in 2018 and no fee updates at all in 2019 or 2021. In 2020 Richmond updated certain fees that developers could pay in lieu of constructing affordable housing units within residential development projects, but its updates did not include all fees for the Building Division or any fees for other departments or divisions in the city. Richmond’s 2022 effort was improved but still not complete. At that time, it conducted full fee updates for the police and fire departments and for Code Enforcement, and it updated a selection of 10 The fee schedule requires an annual update for a majority of the fees it lists. However, a small subset of fees, such as those levied for investigating work done without permits, require updates only as needed.

Cost Components for Fee Updates
Applicable Direct Costs, such as wages,
overtime, benefits, services, and supplies.

Applicable Indirect Costs, such as building
and equipment maintenance and operation,
communications and computer expenses.

Overhead, including but not limited to the
distributed costs of the department head
and support staff, and of the city council,
city manager, finance department, and other
staff and support services provided to the
entire city.

Other Costs, including debt service costs and
fixed asset depreciation.

Source: Richmond municipal code.
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fees for departments and divisions, including Community Development and the Library, but it did not conduct fee updates for other departments. Figure 8 provides a summary of Richmond’s fee updates for the eight key departments from 2018 through 2022.

Figure 8
Richmond Has Not Regularly Updated Its Fees and May Not Be Recovering Costs for Related Services Police Department
Fire Department
Library and Community Services
Public Works Engineering Department
Public Works Water Resource Recovery
Community Development Planning Department
Community Development Building Department
Community Development Code Enforcement
2018 2019 2020 2021 2022
The city updated the department’s fees to reflect the cost of providing services.

The city updated some but not all of the department’s fees to reflect its costs.

The city did not update any of the department’s fees to reflect the cost of providing services.

Source: Richmond municipal code and analysis of Richmond city council agenda documents from 2018 through 2022.

Note: The analysis above includes updates to existing fees and does not include the addition of various new fees the city implemented between 2018 and 2022.

Even the fee updates Richmond has completed may be inadequate. We reviewed three of the largest fees Richmond assessed—accounting for 15 percent of Richmond’s assessed fees in fiscal year 2020–21—to determine whether the city was reasonably recovering its costs. The city was unable to provide documentation detailing how it calculated costs related to an engineering permit fee for digging and therefore cannot demonstrate that it is appropriately recovering its costs. Richmond was able to provide documentation partially supporting the reasonableness of the other two fees we reviewed. In 2020 the city updated its building fees related to developing affordable housing based on a fee assessment completed in 2019, and in 2018 it updated its fees for reviews of California Environmental Quality Act filings. However, because it has 31 CALIFORNIA STATE AUDITOR
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not updated these fees in several years, it is unclear whether the updated assessments continue to cover the city’s costs. In fiscal year 2020–21, the city assessed fees of $2.1 million in developer fees and $1.6 million for environmental impact report reviews.

Richmond has also not adjusted its rates and fees for inflation as frequently as is set forth in its municipal code. We found that, from 2018 through 2022, Richmond adjusted its fee schedule to account for inflation on a roughly annual basis while the municipal code requires quarterly adjustments. The city states that it has adjusted its fees annually rather than quarterly for more than a decade because of the labor‑intensive nature of fee updates. Although that did not meet the requirements of the municipal code, we estimate that the city’s practice of adjusting its fees annually rather than quarterly resulted in a limited financial impact of $208,000 in 2021, the equivalent of only 0.7 percent of the total fees it collected.

The city indicated that updating its fees on a set schedule has not been feasible because of staffing limitations and the significant amount of labor required to calculate fee increases. The city’s assessment may be reasonable given the staffing issues we identified earlier. The city must balance the time and labor of conducting more frequent updates against any potential lost revenue to determine a reasonable frequency for conducting citywide fee updates, and it should revise its municipal code to reflect its decision on the required frequency of those updates.

Please refer to the section beginning on page 3 to find the recommendations we have made to address this area of risk to the city.

We conducted this audit in accordance with generally accepted government auditing standards and under the authority vested in the California State Auditor by Government Code section 8543 et seq. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on the audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Respectfully submitted,
MICHAEL S. TILDEN, CPA
Acting California State Auditor
November 10, 2022
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APPENDIX A
The State Auditor’s Local High‑Risk Program
Government Code section 8546.10 authorizes the California State Auditor (State Auditor) to establish a local high‑risk program to identify local government agencies that are at high risk for potential waste, fraud, abuse, or mismanagement or that have major challenges associated with their economy, efficiency, or effectiveness.

Regulations that define high risk and describe the workings of the local high‑risk program became effective on July 1, 2015. Both statute and regulations require that the State Auditor seek approval from the Joint Legislative Audit Committee (Audit Committee) to conduct audits of local entities.

To identify local entities that may be at high risk, we analyze audited financial statements and unaudited pension‑related information for more than 470 California cities. This detailed review includes using financial data to calculate indicators that may be indicative of a city's fiscal stress. These indicators enable us to assess each city’s ability to pay its bills in both the short and long term. Specifically, the indicators measure each city’s financial reserves, debt burden, cash position or liquidity, revenue trends, and ability to pay for employee retirement benefits.

In October 2019, we determined that Richmond potentially met the criteria for being at high risk. We conducted an assessment in February 2021 to determine the city’s awareness of and responses to these issues as well as to identify any other ongoing issues that could affect our determination of whether the city is at high risk. After conducting our initial assessment, we concluded that Richmond’s circumstances warranted an audit. We sought and, in June 2021, obtained approval from the Audit Committee to conduct an audit of Richmond.

If a local agency is designated as high risk as a result of an audit, it must submit a corrective action plan. If it has not provided its corrective action plan in time for inclusion in the audit report, it must provide the plan no later than 60 days after the report’s publication. It must then provide written updates every six months after the audit report is issued regarding its progress in implementing its corrective action plan. This corrective action plan must outline the specific actions the local agency will perform to address the conditions causing us to designate it as high risk and the proposed timing for undertaking those actions. We will remove the high‑risk designation when we conclude that the agency has taken satisfactory corrective action and the deficiencies in the audit have been satisfactorily addressed. 33 CALIFORNIA STATE AUDITOR
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APPENDIX B
Scope and Methodology
In June 2021, the Audit Committee approved a proposal by the State Auditor to perform an audit of Richmond under the local high‑risk audit program. We conducted an initial assessment of Richmond in February 2021 in which we reviewed the city’s finances to determine whether it demonstrated characteristics of high risk pertaining to the following six risk factors specified in state regulations:
• The local government agency’s reported financial condition has the potential to impair its ability to efficiently deliver services or to meet its financial or legal obligations.
• The local government agency’s ability to maintain or restore its financial stability is impaired.
• The local government agency’s financial reporting does not follow generally accepted government accounting principles.
• Prior audits reported findings related to financial or performance issues, and the local government agency has not taken adequate corrective action. • The local government agency uses an ineffective system to monitor and track state and local funds it receives and spends.
• An aspect of the local government agency’s operation or management is ineffective or inefficient; presents the risk for waste, fraud, or abuse; or does not provide the intended level of public service.

Based on our initial assessment, we identified concerns about Richmond’s financial condition and outlook and its debt. The following table lists the objectives that the Audit Committee approved and the methods we used to address them. 35 CALIFORNIA STATE AUDITOR
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Audit Objectives and the Methods Used to Address Them

AUDIT OBJECTIVE METHOD
1 Review and evaluate the laws,
rules, and regulations significant
to the audit objectives.

Identified and reviewed relevant federal and state laws, rules, regulations, municipal code, and other background materials applicable to the city. 2 Evaluate Richmond’s current
financial condition and ability to
meet its short‑term and long‑term
financial obligations while
continuing to provide services to
its residents.
• Developed and analyzed trends of revenues, expenditures, and other relevant financial risk indicators from fiscal years 2016–17 through 2020–21.
• Reviewed the city’s methodology for creating its financial projections and assessed whether those projections are reasonable.
• Assessed the reliability of selected data elements in the city’s financial systems.
• Reviewed the city’s financial statements and accounting records to determine the position of its enterprise funds and the degree to which it has relied on general fund subsidies in the past five fiscal years. 3 Identify the causes of Richmond’s
financial challenges and
determine whether the city has
developed an adequate plan for
addressing those challenges. This
will include assessing the city’s
efforts to improve its financial
condition by increasing revenue
and reducing expenditures.
• Interviewed city staff and reviewed documentation, such as presentations to the city council, to identify underlying revenue and expenditure issues the city believes are contributing to its financial challenges. • Reviewed Richmond’s “Plan 2030,” financial forecasts and presentations, and related documentation.
• Assessed the extent to which staff compensation contributed to Richmond’s financial challenges by doing the following: reviewed Richmond’s salary survey, budgets, and federal inflation reports to determine when the city last provided cost‑of‑living increases to its staff and to estimate the impact of inflation since that time, compared recent staff salaries in key positions to those in neighboring cities, and reviewed staffing levels for departments with significant vacancies or overtime. • Assessed risks related to the city’s reliance on pension obligation bonds and current refinancing plan based on GFOA guidance and available reports on pension costs. We also reviewed the city’s planning and costs related to its OPEB liabilities.
4 Determine whether Richmond’s
budgeting processes align
with best practices. In addition,
evaluate the city’s procedures
and underlying assumptions for
projecting future revenue and
expenditures, and determine
whether the projections result in
balanced budgets and accurate
financial forecasts.
• Evaluated the policies, processes, and practices the city used to develop its budgets and compared them with applicable criteria and GFOA best practices. We determined that the city complied with its policies, processes, and practices when developing its budget. Further, we determined that Richmond’s budgeting practices comply with GFOA best practices.
• Assessed the reasonability of assumptions used by the city in its revenue and expenditure projections. We reviewed budget and financial records to determine whether the projections resulted in balanced budgets and accurate financial forecasts from fiscal years 2016–17 through 2020–21. 5 Assess Richmond’s process for
setting, increasing, or decreasing
fees or rates to ensure that it
complies with applicable laws,
rules, regulations, and best
practices. For a selection of these
fees and rates, determine whether
they cover the city’s costs of
providing services.
• Reviewed state law, the city’s municipal code, and guidance from GFOA and the California and National Leagues of Cities to identify requirements and best practices for setting municipal fees and rates. • Interviewed staff and reviewed documentation to determine Richmond’s process for setting fees and rates. We determined whether that process complied with state law, the municipal code, and best practices. • Assessed whether city’s fees covered its costs for providing services by reviewing supporting documentation for the rates for three fees. 36 CALIFORNIA STATE AUDITOR
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AUDIT OBJECTIVE METHOD
6 Evaluate Richmond’s efforts
to address the deficiencies its
external auditors identified in their
reports for fiscal year 2018–19
and earlier years and those the
Inspector General identified in
its 2016 report related to the
Richmond Housing Authority.
• Conducted interviews and reviewed the city’s and housing authority’s documentation to determine the progress of the city and housing authority to address associated audit recommendations.
• Conducted interviews and reviewed documentation to assess the housing authority’s efforts to comply with the recovery agreement timeline.

Further, to the extent possible, we assessed the risk to the city associated with missing associated deadlines.
7 Review and assess any other
issues that are significant to the
audit.
• To assess the city council’s compliance with open‑meeting laws related to closed sessions, we reviewed five closed city council meetings held from 2018 through 2021. We had no reportable findings.
• To assess potential conflict‑of‑interest violations, we reviewed statements of economic interest submitted by the city council, mayor, and certain other leadership positions. We had no reportable findings. • Reviewed a selection of 10 contracts from the city’s purchasing database and paper records from 2019 through 2021 to determine whether the city followed its competitive bidding and contract approval requirements, the city received the services procured, and the city made payments in accordance with the contract terms.

Source: Audit workpapers.

Assessment of Data Reliability
The U.S. Government Accountability Office, whose standards we are statutorily obligated to follow, requires us to assess the sufficiency and appropriateness of computer‑processed information we use to support our findings, conclusions, or recommendations. In performing this audit, we relied on electronic reports that we obtained from the city’s financial system. We completed data validation, logic, and completeness testing. We found the city’s financial accounting system to be sufficiently reliable for the purpose of reviewing its financial condition. 37 CALIFORNIA STATE AUDITOR
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*
* California State Auditor’s comment appears on page 43. 39 CALIFORNIA STATE AUDITOR
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Comment
CALIFORNIA STATE AUDITOR’S COMMENT ON THE RESPONSE FROM

THE CITY OF RICHMOND
To provide clarity and perspective, we are commenting on Richmond's response to the audit. The number below corresponds to the number we have placed in the margin of Richmond's response.

The city’s assertion that, in the past, it did not meet minimum reserve policy targets does not align with its financial reports and policies. Richmond’s fiscal year 2020–21 reserve policy identified several types of funds that the city considered part of its reserve. Based on this policy, the city exceeded its fiscal year 2020–21 reserve target and may have been able to contribute up to $6.5 million to its OPEB trust fund. However, as we indicate on page 19, city staff did not conduct a thorough analysis of whether—under its then existing policy— these funds should have been placed in its OPEB trust fund and thus the city may have missed an opportunity to shore up this area of financial risk. 1 43 CALIFORNIA STATE AUDITOR
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March 21, 2023
Finance Department
DATE: March 21, 2023
TO: Mayor Martinez and Members of the City Council
FROM: Nickie Mastay, Deputy City Manager, Internal Services Delmy Cuellar, Director of Finance
Mubeen Qader, Deputy Director of Finance
Subject: Investment and Cash Balance Report, and Monthly Overtime Reports for the Month of January 2023
FINANCIAL IMPACT: None

PREVIOUS COUNCIL
ACTION:

N/A

STATEMENT OF THE
ISSUE:

City staff is requesting that the City Council receive the City’s Investment and Cash Balance Report and monthly
Overtime Reports for the month of January 2023.

RECOMMENDED ACTION: RECEIVE the City’s Investment and Cash Balance Report and monthly Overtime Reports for the month of
January 2023 – Finance Department (Nickie
Mastay/Mubeen Qader 510-412-2077).

DISCUSSION:

The Investment and Cash Balance Report is a monthly report of the City’s pooled cash balance. The Portfolio Management Report represents the monthly bank balances, along with market balances of permitted investments according to the City’s Investment Policy. Investment in the Local Agency Investment Fund (LAIF), money market, agency AGENDA
REPORT

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March 21, 2023
bonds, certificates of deposits, and corporate notes are all allowable and permitted according to the Fiscal Year (FY) 2022-2023 Investment Policy.

DOCUMENTS ATTACHED:

Attachment 1 – Investment and Cash Balance Report for January 2023 Attachment 2 – Overtime Report for January 2023
Attachment 3 – Overtime Public Safety Report for January 2023

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Finance Department – Treasury Division

M E M O R A N D U M
To: Mayor Martinez and Members of the City Council
From: Delmy Cuellar, Director of Finance
Mubeen Qader, Budget Administrator
Jerry Chak, Accounting Manager
Date: March 21, 2023
Subject: MONTHLY CASH BALANCES & INVESTMENT REPORT –
January 2023
Enclosed for your information are the Investment Report, Portfolio Summary, and Comparative Cash Report for the month of January 2023 prepared by the City Treasurer pursuant to the statutory requirements of the State of California.

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City of Richmond
FY2022-23
Overtime Report
PERIOD 7, JANUARY 2023
58% Threshold

ORIGINAL TRANFRS REVISED AVAILABLE PCT

APPROP ADJSTMTS BUDGET YTD EXPENDED BUDGET USED NOTES

GENERAL FUND
Summary
400031 OVERTIME/General 1,179,856 419,525 1,599,381 1,053,702 545,679 66% 400032 OVERTIME/Sworn 9,499,934 (365,435) 9,134,499 5,553,299 3,581,200 61% TOTAL GENERAL FUND 10,679,790 54,090 10,733,880 6,607,001 4,126,879 62% By Department
13 CITY MANAGER
400031 OVERTIME/General 2,500 2,500 2,500 0%
14 CITY CLERK
400031 OVERTIME/General 20,000 20,000 11,103 8,897 56%
16 COMMUNITY DEVELOPMENT -
400031 OVERTIME/General - 380 (380) 100%
Code Enforcement work performed in North Richmond's Mitigation Fund area. - -
17 FINANCE -
400031 OVERTIME/General 6,400 44,993 51,393 53,154 (1,761) 103% Short-staffed in Payroll Division. 18 HUMAN RESOURCES -
400031 OVERTIME/General 286 (286) 100%
19 POLICE
400031 OVERTIME/General 813,874 365,435 1,179,309 646,677 532,632 55% 400032 OVERTIME/Sworn 5,165,435 (365,435) 4,800,000 2,622,601 2,177,399 55% TOTAL POLICE 5,979,309 5,979,309 3,269,278 2,710,031 55% 20 FIRE
400031 OVERTIME/General - - 136 (136) 100% Short-staffed in Administration Division 400032 OVERTIME/Sworn 4,334,499 4,334,499 2,930,698 1,403,801 68% Vacation/Comp Time off; Injury-related leave and vacancies TOTAL FIRE 4,334,499 4,334,499 2,930,834 1,403,665 68%
-
23 PUBLIC WORKS & ENGINEERING SVCS
400031 OVERTIME/General 320,432 320,432 312,379 8,053 97% Abatement - increased Dumpster Day Clean-ups per CM; Streets - Assistance to Building Maintenance admin, request from CM for Rydin Rd. sunsetting clean-up, special events and storm related ativities; Parks - tree trimming, weed control and emergency call-outs; Building Maintenance - Custodial staff scrub & wax floors, carpet cleaning & re-lamping 2 weekends & holidays & COVID cleaning in disinfecting in RPD; BART, Main Library Courtyard, Recreation Center and areas across from RHA power washed 2 per month; special assignments. Stationery Engineers replasterd Richmond Swim Center , emergency repair to Plunge pump and hot water pump at Nevin housing; Fleet work on fire apparatus and storm related emergencies.

3-21-23, CC Mtg.

City of Richmond
FY2022-23
Overtime Report
58% Threshold

ORIGINAL TRANFRS REVISED AVAILABLE PCT

APPROP ADJSTMTS BUDGET YTD EXPENDED BUDGET USED NOTES
24 LIBRARY
400031 OVERTIME/General - 8,000 8,000 2,647 5,353 33% - 25 COMMUNITY SERVICES
400031 OVERTIME/General 16,650 597 17,247 26,890 (9,643) 156% Aquatics section is short-staffed (lifeguards). The Convention Center - 36 ECONOMIC DEVELOPMENT PROGRAM - -
400031 OVERTIME/General - 500 500 50 450 10%
TOTAL GENERAL FUND 10,679,790 54,090 10,733,880 6,607,001 4,126,879 62%

NON-GENERAL FUND
By Fund
1012 HILLTOP LANDSCAPE MAINT DIST
400031 OVERTIME/General 15,515 - 15,515 14,784 731 95%
1015 MARINA BAY LNDSCP & LIGHT DIST
400031 OVERTIME/General 25,300 25,300 21,707 3,593 86%
1018 RENT CONTROL
400031 OVERTIME/General - 701 (701) 100%
1050 CR-PLANNING & BUILDING
400031 OVERTIME/General 9,500 9,500 9,500 0%
1055 ENCROACHMENT SVCS
400031 OVERTIME/General 8,000 8,000 5,711 2,289 71%
4003 WASTEWATER
400031 OVERTIME/General 8,100 8,100 8,100 0%
4404 RHA-NEVIN PLAZA
400031 OVERTIME/General 15,000 15,000 15,769 (769) 105% On call emergency after hours requests and on weekends. 4405 RHA-NYSTROM VILLAGE
400031 OVERTIME/General 10,000 10,000 10,208 (208) 102% On call emergency after hours requests and on weekends. 4501 RHA-CENTRAL OFFICE COST CTR
400031 OVERTIME/General - 247 (247) 100% On call emergency after hours requests and on weekends. 5001 INSURANCE RESERVES
400031 OVERTIME/General - 163 (163) 100%
TOTAL NON-GENERAL FUNDS 91,415 - 91,415 69,291 22,124 76% Tree trimming, weed control, irrigation leaks and emergency call-outs Tree trimming, weed control, irrigation leaks and emergency call-outs

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City of Richmond
Public Safety Sworn Overtime
Fund: 0001 - General Fund
Period 1 2 3 4 5 6 7 8 9 10 11 12 Average
Month July August September October November December January February March April May June YTD YTD Remaining Monthly Target % 8% 17% 25% 33% 42% 50% 58% 67% 75% 83% 92% 100% Total $ Total % Budget Expense

ORIGINAL
BUDGET

REVISED
BUDGET
FY2017-18 Overtime - Sworn 3,169,000 3,169,000 569,194 440,670 445,282 459,402 452,278 396,762 322,524 497,979 455,202 554,449 509,368 466,567 5,569,677 175.8% (2,400,677) 464,139.77 FY2018-19 Overtime - Sworn 3,433,019 3,433,019 482,143 537,369 655,866 437,794 524,577 430,398 367,322 512,595 422,587 497,767 536,209 505,966 5,910,593 172.2% (2,477,574) 492,549.39 FY2019-20 Overtime - Sworn 5,165,435 4,800,000 473,963 469,392 491,205 509,931 449,751 473,935 390,897 498,501 501,383 479,696 560,031 439,159 5,737,844 119.5% (937,844) 478,153.64 FY2020-21 Overtime - Sworn 5,165,435 3,533,043 275,202 246,822 296,775 382,618 306,787 278,293 205,529 303,631 307,092 357,284 323,537 368,366 3,651,936 103.4% (118,893) 304,328.00 FY2021-22 Overtime - Sworn 5,165,434 5,165,434 358,067 389,828 472,454 417,698 322,193 301,011 240,070 323,173 309,207 327,424 301,721 360,540 4,123,386 79.8% 1,042,048 343,615.51 FY2022-23 Overtime - Sworn 5,165,435 4,800,000 365,627 345,212 390,077 354,865 370,205 401,964 394,652 2,622,601 54.6% 2,177,399 374,657.29 FY2017-18 Overtime - Sworn 2,486,914 2,486,914 268,465 345,174 291,221 359,542 367,182 310,508 336,315 176,449 132,298 196,306 203,912 166,108 3,153,480 126.8% (666,566) 262,789.99 FY2018-19 Overtime - Sworn 2,509,914 2,509,914 257,785 245,946 179,272 171,370 219,937 204,997 261,780 216,596 196,343 310,702 220,368 275,966 2,761,062 110.0% (251,148) 230,088.48 FY2019-20 Overtime - Sworn 4,334,499 2,509,914 295,166 277,886 286,016 300,083 332,654 382,084 347,492 328,467 350,709 302,505 264,571 325,335 3,792,969 151.1% (1,283,055) 316,080.74 FY2020-21 Overtime - Sworn 4,334,499 3,193,165 398,678 380,282 417,982 393,922 267,819 345,928 341,403 305,081 172,961 261,923 263,518 286,039 3,835,537 120.1% (642,372) 319,628.08 FY2021-22 Overtime - Sworn 3,629,097 4,334,499 334,236 434,974 358,578 358,251 352,789 327,832 427,404 396,618 297,215 351,463 715,688 429,890 4,784,938 110.4% (450,439) 398,744.82 FY2022-23 Overtime - Sworn 4,334,499 4,334,499 444,959 444,457 414,638 401,115 402,116 379,882 443,531 2,930,698 67.6% 1,403,801 418,671.16 FY2022-23 TOTAL 9,499,934 9,134,499 810,586 789,669 804,715 755,980 772,321 781,846 838,183 - - - - - 5,553,299 60.8% 3,581,200 793,328.45

BUDGET ACTUALS TOTAL

POLICE FIRE

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March 21, 2023
Information Technology
DATE: March 21, 2023
TO: Mayor Martinez and Members of the City Council
FROM: Daniel Chavarria, Director of Public Works
Sue Hartman, Director of Information Technology
Subject: Sole-Source Contract with Contra Costa Electric FINANCIAL IMPACT: Funding is allocated from the Information Technology operating budget (account 01261017-400702).

PREVIOUS COUNCIL
ACTION:

None

STATEMENT OF THE
ISSUE:

The City of Richmond needs emergency repair and
maintenance of the City Hall backup generator transfer
switch to protect essential technology equipment.

RECOMMENDED ACTION: APPROVE a sole-source contract with Contra Costa Electric in an amount not to exceed $26,500, for
emergency repair and maintenance of the City Hall
backup generator transfer switch, with a term from March 22, 2023 through June 30, 2023 – Information
Technology (Sue Hartman 510-620-6874/Daniel
Chavarria 510-620-5478).

DISCUSSION:

As part of the Civic Center retrofit in 2009, Contra Costa Electric participated in the installation of the City’s backup generator in support of the 440 and 450 Civic Center Plaza buildings. This backup generator manages and supports sustainable power during a power outage including the City’s essential technology related equipment. The current backup generator transfer switch has experienced multiple failures and requires AGENDA
REPORT

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March 21, 2023
repair and maintenance. Without this repair, the City’s technology infrastructure is at high risk for failure.

Due to unplanned Pacific Gas and Electric (PG&E) power outages, the City of Richmond's technology infrastructure has been exposed to great risk. Current technology equipment can be damaged during a power outage that, due to supply chain demands for replacement equipment, could cause long term outages including equipment in support of public safety operations.

City staff recommends approval of this contract to repair and maintain the backup generator transfer switch to provide sustainable power to the City’s technology infrastructure.

DOCUMENTS ATTACHED:

Attachment 1 – Contract with Contra Costa Electric
Attachment 2 – Sole Source
Attachment 3 – IT Purchase Authorization Form

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CITY OF RICHMOND

STANDARD CONTRACT
Department: Project Manager:

Project Manager E-mail: Project Manager Phone No:

PR No: Vendor No: P.O./Contract No:

Description of Services:

The parties to this STANDARD CONTRACT do mutually agree and promise as follows:

1. Parties. The parties to this Contract are the City of Richmond (herein referred to as the “City”) and the following named Contractor:

Company Name:

Street Address:

City, State, Zip Code:

Contact Person:

Telephone: Email:

Business License No: / Expiration Date:

A California [ ] corporation, [ ] limited liability corporation [ ] general partnership, [ ] limited partnership, [ ] individual, [ ] non-profit corporation, [ ] individual dba as [specify:] ,
[ ] other [specify:]

2. Term. The effective date of this Contract is and it
terminates unless terminated as provided herein.

3. Payment Limit. City’s total payments to Contractor under this Contract shall not exceed $ . City shall not pay for services that exceed
the Contract Payment Limit unless a contract amendment has been approved by the City Council or City Manager.

4. Contractor’s Obligations. Contractor shall provide those services and carry out that work described in the Service Plan (Exhibit A) which is attached hereto and is incorporated herein by reference, subject to all the terms and conditions contained or incorporated herein.

5. City's Obligations. City shall make to the Contractor those payments described in the Payment Provisions (Exhibit B) which are attached hereto and are incorporated herein by reference, subject to all the terms and conditions contained or incorporated herein.

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6. Authorized Representatives and Notices. This Contract is subject to the Authorized Representatives and Notices Provisions (Exhibit C) which are attached hereto and are incorporated herein by reference.

7. General Conditions. This Contract is subject to the General Conditions (Exhibit D) which are attached hereto and are incorporated herein by reference, subject to all the terms and conditions contained or incorporated herein.

8. Special Conditions. This Contract is subject to the Special Conditions (Exhibit E) (if any) which are attached hereto and are incorporated herein by reference, subject to all the terms and conditions contained or incorporated herein. (Note:
other than Public Works contracts, the City will agree to Special Conditions only in unusual circumstances.)

9. Insurance Provisions. This Contract is subject to the Insurance Provisions (Exhibit F) which are attached hereto and are incorporated herein by reference.

10. Signatures. These signatures attest the parties' Contract hereto:

CITY OF RICHMOND CONTRACTOR:
a municipal corporation

By:
(* The Corporation Chairperson of the Board,
President or Vice President should sign below)

Title: By:

I hereby certify that this Contract Title:
has been approved by City Council.

Date Signed:

By:

City Clerk
(* The Corporation Chief Financial Officer,
Secretary or Assistant Secretary should sign below)
Approved as to form:

By:

By: Title:

City Attorney
Date Signed:

(NOTE: Pursuant to California Corporations
Code Section 313, if Contractor is a corporation
or nonprofit organization, this Contract (1) must
be signed by (a) the Chairperson of the Board,
President or Vice-President and (b) the
Secretary any Assistant Secretary, the Chief
Financial Officer or any Assistant Treasurer.

LIST OF ATTACHMENTS:

Service Plan Exhibit A
Payment Provisions Exhibit B
Authorized Representatives and Notices Exhibit C
General Conditions Exhibit D
Special Conditions Exhibit E
Insurance Provisions Exhibit F
Standard Contract/EJ/TE 9-26-07

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For the Contract between the City of
Richmond and

EXHIBIT A

SERVICE PLAN
Contractor shall, to the satisfaction of the , perform the following services and be compensated as outlined below:

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Contra Costa Electric, Inc.
825 Howe Road
Martinez, CA 94553
Ph: 925.229.4250
Fax: 925.228.3265
February 23, 2023
Public Works Department
City of Richmond, CA
Attention: Daniel Chavarria
Re: Troubleshoot Breaker
Tripping Issue
Sent Via E-mail
Based on the information provided by the City of Richmond and the nature of the issue, CCE will need to perform work in phases. Phase 1 will be an initial onsite investigation to confirm equipment, locations, condition, accessibility and collect technical data. Phase 2, to be scheduled, will include technical services, by a third party testing firm, to perform testing per NETA on the reported Tripping Breaker and ATS. Equipment ID’s to be confirmed in Phase 1. Phase 3 will include an inspection of the Generator and associated components. As part of this phase both a prefunctional and functional test will be performed along with a full system inspection, start-up, 2 hour load bank, and Building Transfer.

Phase 1 ………………….………….…......................................................... $2,500.00 Phase 2……………………………………………………………………… $10,299.70
Phase 3……………………………………………………………Option A $13,645.56
Phase 3……………………………………………………………Option B $8,621.80
Contra Costa Electric appreciates your consideration, and we look forward to working with you on this project. If you have any questions or require additional information, please do not hesitate to call me at office 925-335-2839.

Sincerely,
Curt Svenpladsen
Project Manager
Contra Costa Electric -An EMCOR Company

3-21-23, CC Mtg.

Contra Costa Electric, Inc.
825 Howe Road
Martinez, CA 94553
Ph: 925.229.4250
Fax: 925.228.3265
• Clarifications:

Our base proposal includes the following:

1. Phase 2 requires shutdown of distribution panel CH-EDPH.

2. Phase 2 work to be performed during non-business hours.

3. Phase 3 work to be performed during non-business hours. Option A: One time visit includes full-service inspection, re-commissioning of generator and 2hr load bank.

Option B: Same as option A, and requires a 1 year service agreement with Koehler.

The following items are not included:

1. Temporary Power during shutdown

2. Engineering / Engineered drawings.

3. Payment & performance bond fee.

4. Permit, plan check, or inspection fees not specifically mentionedabove.

5. Utility fees & consumption charges.

6. Break area, toilets/ sanitation facilities.

7. Hazardous material handling/disposal.

8. Replacement of any equipment deemed needed and labor to install.

9. Correction of pre-existing code violations, or room type re-classification.

10. Under option A: additional support days should return visit be required.

11. Under Option B: additional support days should return visit be required This proposal, including but not limited to pricing and schedule, is made contingent upon the work addressed herein not being adversely affected, either directly or indirectly, by the COVID-19 pandemic and/or the Corona virus. This proposal is further conditioned upon the parties agreeing, prior to beginning of any work and in writing as part of any contract/subcontract, that any (i) schedule issues (including, but not limited to, delay, acceleration, compression, interference, hindrance), (ii) overtime hours or added resources to perform work, (iii) shortages (whether as to labor, subcontracted services, materials, or supplies), (iv) change orders, extra work, or extra costs, or (v) inefficiency and impacts relating to the foregoing, that arise as a result of the COVID-19 pandemic or Corona virus will entitle contractor to a change order equitably addressing impacts to its time for performance and costs.

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For the Contract between the City of
Richmond and

EXHIBIT B

PAYMENT PROVISIONS
{PLEASE NOTE THAT THE CITY OF RICHMOND SHALL NOT PAY FOR SERVICES

THAT EXCEED THE CONTRACT PAYMENT LIMIT UNLESS A CONTRACT

AMENDMENT HAS BEEN APPROVED BY THE CITY COUNCIL OR THE CITY MANAGER}

1. Provided Contractor is not in default under this Contract, Contractor shall be compensated as provided below.

2. Any and all payments made pursuant to this Contract shall be subject to the Contract Payment Limit. The Payment Limit includes expenses (phones, photo copying, meals and travel etc). Invoices, shall be adequately detailed, based on accurate records, and be in a form reasonably satisfactory to the City. Contractor may be required to provide back-up material upon request.

3. Contractor shall submit timely invoices to the following address:

Attention: City of Richmond, Finance Department - Accounts Payable Project Manager: Department:

PO Box 4046
Richmond, CA 94804-0046

4. All invoices that are submitted by Contractor shall be subject to the approval of the City’s Project Manager, before payments shall be authorized.

5. The City will pay invoice(s) within 45 days after completion of services to the City’s satisfaction. The City shall not pay late fees or interest.

6. A Richmond business license shall be obtained before any payment under this Contract shall be authorized and the business license must be kept current during the term of this Contract for payments to continue to be authorized.

7. All insurance coverage required by this Contract shall be provided by the Contractor before this Contract shall be executed by the City. The insurance coverage must be kept current during the term of this Contract for payments to continue to be authorized.

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For the Contract between the City of
Richmond and

EXHIBIT C

AUTHORIZED REPRESENTATIVES AND NOTICES

1. Notices. All notices, demands, statements, or communications provided for by this Contract shall be in writing and may be delivered by deposit in the United States mail, postage prepaid. Notices to the City shall be addressed to the Department Head and (as delineated below in section 1.1) to the project manager responsible for the administration of or the supervision of the scope of work under this Contract. Notices to the Contractor shall be addressed to the party designated by Contractor (as delineated below in section 1.2). Notice shall be deemed delivered (a) upon personal delivery; (b) as of the fifth business day after mailing by United States certified mail, postage prepaid, addressed to the proper party; or (c) as of 12:00 p.m. on the second business day immediately after the day it is deposited with and accepted by Federal Express, or a similar overnight courier service, addressed to the proper party and marked for next business day morning delivery. For the purposes of this Contract, a "business day" means any day Monday through Friday that is not a holiday recognized by the federal government or the State of California.

1. 1 CITY hereby designates as its Authorized Representative the Project Manager whose name and address are as follows:

City of Richmond
Richmond, CA 94804-0046

1. 2 CONTRACTOR hereby designates as its Authorized Representative the Project Manager whose name and address are as follows:

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EXHIBIT D

GENERAL CONDITIONS

1. Independent Contractor. Contractor acknowledges, represents and warrants that Contractor is not a regular or temporary employee, joint venturer or partner of the City, but rather an independent Contractor. This Contract shall not be construed to create an agency, servant, employee, partnership, or joint venture relationship. As an independent Contractor, Contractor shall have no authority to bind City to any obligation or to act as City's agent except as expressly provided herein. Due to the independent Contractor relationship created by this Contract, City shall not withhold state or federal income taxes, the reporting of which shall be Contractor's sole responsibility.

2. Brokers. Contractor acknowledges, represents and warrants that Contractor has not hired, retained or agreed to pay any entity or person any fee, commission, percentage, gift, or any other consideration, contingent upon or resulting from the award or making of this Contract.

3. City Property. The rights to applicable plans, drawings, reports, calculations, data, specifications, videos, graphics or other materials prepared for or obtained pursuant to this Contract, which, upon request, are to be delivered to City within a reasonable time, shall be deemed assigned to City. If applicable, Contractor shall prepare check prints upon request. Notwithstanding the foregoing, Contractor shall not be obligated to provide to City proprietary software or data which Contractor has developed or had developed for Contractor's own use; provided, however, that Contractor shall, pursuant to Section 15 below, indemnify, defend and hold harmless City from and against any discovery or Public Records Act request seeking the disclosure of such proprietary software or data.

4. Patents, Trademarks, Copyrights and Rights in Data. Contractor shall not publish or transfer any materials, discoveries, developments, concepts, designs, ideas, know how, improvements, inventions and/or original works of authorship resulting from activities supported by this Contract without the express prior written consent of the City Manager. If anything resulting from activities supported by this Contract is patentable, trademarkable, copyrightable or otherwise legally protectable, City reserves the exclusive right to seek such intellectual property rights. Notwithstanding the foregoing, Contractor may, after receiving City's prior written consent, seek patent, trademark, copyright or other intellectual property rights on anything resulting from activities supported by this Contract. However, City reserves, and Contractor irrevocably grants, a nonexclusive, fully paid-up, royalty-free, assumable, perpetual, worldwide license, with the right to transfer, sublicense, practice and exploit said license and the right to make, have made, copy, modify, make derivative works of, use, sell, General Conditions/EJ/TE 09-26-07 1 of 12

3-21-23, CC Mtg.
import, and otherwise distribute under all applicable intellectual properties without restriction of any kind said license.

Contractor further agrees to assist City, at City's expense, in every proper way to secure the City’s rights in any patents, trademarks, copyrights or other intellectual property rights relating thereto, including the disclosure to City of all pertinent information and data with respect thereto. Contractor shall also assist City in the execution of all applications, specifications, oaths, assignments, recordations, and all other instruments which City shall deem necessary in order to apply for, obtain, maintain and transfer such rights, or if not transferable, to waive such rights. Contractor shall further assist City in the execution of all applications, specifications, oaths, assignments, recordations and all other instruments which City shall deem necessary in order to assign and convey to City, and any assigns and nominees the sole and exclusive right, title and interest in and to any patents, trademarks, copyrights or other intellectual property rights relating thereto. Contractor further agrees that its obligation to execute or cause to be executed, when it is in Contractor's power to do so, any such instruments or papers shall continue during and at all times after the end of Contractor's services and until the expiration of the last such intellectual property right. Contractor hereby irrevocably designates and appoints City, and its duly authorized officers, agents and servants, as its agent and attorney-in-fact, to act for and in its behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the application for, prosecution, issuance, maintenance or transfer of letters of patents, copyright and other registrations. This power of attorney is coupled with an interest and shall not be affected by Contractor's subsequent incapacity.

5. Inspection. Contractor's performance, place of business and records pertaining to this Contract are subject to monitoring, inspection, review and audit by authorized representatives of the CITY, the State of California, and the United States Government.

If the project or services set forth in Exhibit A shall be performed on City or other public property, City shall have the right to inspect such work without notice. If such project or services shall not be performed on City or other public property, City shall have the right to inspect such work upon reasonable notice.

6. Services. The project or services set forth in Exhibit A shall be performed to the full satisfaction and approval of City. In the event that the project or services set forth in Exhibit A are also itemized by price, City, in its sole discretion, may, upon notice to Contractor, delete certain items or services set forth in Exhibit A, in which case there shall be a corresponding reduction in the amount of compensation paid to Contractor.

General Conditions/EJ/TE 09-26-07 2 of 12

3-21-23, CC Mtg.

Contractor shall, at its own cost and expense, furnish all facilities and equipment necessary for Contractor to complete the project or perform the services required herein, unless otherwise provided in Exhibit A.

7. Records. Contractor shall keep and make available for inspection and copying by authorized representatives of the City, the State of California, and the United States Government, the Contractor's regular business records and such additional records pertaining to this Contract as may be required by the City.

Contractor shall retain all documents pertaining to this Contract for a period of five (5) years after this Contract's termination (or for any further period that is required by law) and until all Federal or State audits are complete and exceptions resolved for this contract's funding period. Upon request, CONTRACTOR shall make these records available to authorized representatives of the CITY, the State of California, and the United States Government.

Contractor shall keep full and detailed accounts, maintain records, and exercise such controls as may be necessary for proper financial management under this Contract. The Contractor’s accounting and control systems shall be satisfactory to City. Contractor's accounting systems shall conform to generally accepted accounting principles and all records shall provide a breakdown of total costs charged under this Contract, including properly executed payrolls, time records, utility bills, invoices and vouchers. The City shall be afforded prompt access to Contractor's records, books, and Contractor shall preserve such project records for a period of at least five (5 years after the termination of this Contract , or for such longer period as may be required by law.

Contractor shall permit City and its authorized representatives and accountants to inspect, examine and copy Contractor's books, records, accounts, correspondence, instructions, drawings, receipts, subcontracts, purchase orders, vouchers, memoranda and other data relating to the project or services set forth in Exhibit A, and any and all data relevant to this Contract at any reasonable time for the purpose of auditing and verifying statements, invoices, or bills submitted by Contractor pursuant to this Contract and shall provide such assistance as may be reasonably required in the course of such inspection. Contractor shall also allow City access to the record keeping and accounting personnel of Contractor.

City further reserves the right to examine and re-examine said books, records, accounts, and data during the five (5 year period following the termination of this Contract; and Contractor shall in no event dispose of, destroy, alter, or mutilate said books, records, accounts, and data in any manner whatever for five (5 years after the termination of this Contract.

General Conditions/EJ/TE 09-26-07 3 of 12

3-21-23, CC Mtg.

Pursuant to California Government Code § 10527, the parties to this Contract shall be subject to the examination and audit of representatives of the Auditor General of the State of California for a period of three (3) years after final payment under this Contract. The examination and audit shall be confined to those matters connected with the performance of this Contract including, but not limited to, the cost of administering this Contract.

8. Changes and Extra Work. All changes and/or extra work under this Contract shall be performed and paid for in accordance with the following:

Only the City Council or the City Manager may authorize extra and/or changed work. Contractor expressly recognizes that other City personnel are without authorization to either order extra and/or changed work or waive contract requirements. Failure of Contractor to secure the authorization for such extra and/or changed work shall constitute a waiver of any and all right to adjustment in contract price due to such unauthorized work and Contractor thereafter shall be entitled to no compensation whatsoever for performance of such extra and/or changed work.

If Contractor is of the opinion that any work which Contractor has been directed to perform is beyond the scope of this Contract and constitutes extra work, Contractor shall promptly notify City of the fact. The City shall make a determination as to whether or not such work is, in fact, beyond the scope of this Contract and constitutes extra work. In the event that City determines that such work does constitute extra work, City shall provide extra compensation to Contractor on a fair and equitable basis. A change order or Contract Amendment providing for such compensation for extra work shall be negotiated between City and Contractor and executed by Contractor and the appropriate City official.

In the event City determines that such work does not constitute extra work, Contractor shall not be paid extra compensation above that provided herein and if such determination is made by City staff, said determination may be appealed to the City Council; provided, however, a written appeal must be submitted to the City Manager within five (5) days after the staff's determination is sent to Contractor. Said written appeal shall include a description of each and every ground upon which Contractor challenges the staff's determination.

9. Additional Assistance. If this Contract requires Contractor to prepare plans and specifications, Contractor shall provide assistance as necessary to resolve any questions regarding such plans and specifications that may arise during the period of advertising for bids, and Contractor shall issue General Conditions/EJ/TE 09-26-07 4 of 12

3-21-23, CC Mtg.
any necessary addenda to the plans and specifications as requested. In the event Contractor is of the opinion that City's requests for addenda and assistance is outside the scope of normal services, the parties shall proceed in accordance with the changes and extra work provisions of Section 8 of these General Conditions.

10. Professional Ability. Contractor acknowledges, represents and warrants that Contractor and its employees are skilled and able to competently provide the services hereunder, and possess all professional licenses, certifications, and approvals necessary to engage in their occupations.

City has relied upon the professional ability and training of Contractor as a material inducement to enter into this Contract. Contractor shall perform in accordance with generally accepted professional practices and standards of Contractor's profession. In the event that City, in its sole discretion, desires the removal of any person employed or retained by Contractor to perform services hereunder, such person shall be removed immediately upon receiving notice from City.

11. Business License. Contractor shall obtain a Richmond Business License before performing any services required under this Contract. The failure to so obtain such license shall be a material breach of this Contract and grounds for immediate termination by City; provided, however, that City may waive the business license requirement in writing under unusual or extraordinary circumstances without necessitating any modification of this Contract to reflect such waiver.

12. Termination Without Default. Notwithstanding any provision herein to the contrary, City may, in its sole and absolute discretion and without cause, terminate this Contract at any time prior to completion by Contractor of the project or services hereunder, immediately upon written notice to Contractor. Contractor may terminate this Contract at any time in its sole and absolute discretion and without cause upon 30 days' written notice to City. In the event of termination by either party, Contractor shall be compensated for: (1) all authorized work satisfactorily performed prior to the effective date of termination; (2) necessary materials or services of others ordered by Contractor for this Contract, prior to receipt of notice of termination, irrespective of whether such materials or services of others have actually been delivered, provided that Contractor is not able to cancel such orders. Compensation for Contractor in such event shall be determined by City in accordance with the percentage of the project or services completed by Contractor; and all of Contractor's finished or unfinished work product through the time of the City's last payment shall be transferred and assigned to City. Additionally, in the event of such termination, the City may proceed with the work in any reasonable manner it chooses.

General Conditions/EJ/TE 09-26-07 5 of 12

3-21-23, CC Mtg.

13. Termination in the Event of Default. Should Contractor fail to perform any of its obligations hereunder, within the time and in the manner provided or otherwise violate any of the terms of this Contract, City may immediately terminate this Contract by giving written notice of such termination, stating the reasons for such termination. Contractor shall be compensated as provided in Section 12 of these General Conditions; provided, however, there shall be deducted from such amount the amount of damage, including attorney's fees, expert witness fees and costs, if any, sustained by City by virtue of Contractor's breach of this Contract. Additionally, in the event of such termination, the City may proceed with the work in any reasonable manner it chooses.

14. Conflict of Interest. Contractor acknowledges, represents and warrants that Contractor shall avoid all conflicts of interest (as defined under any federal, state or local statute, rule or regulation, or at common law) with respect to this Contract. Contractor further acknowledges, represents and warrants that no City official or employee has any economic interest, as defined in Title 2, California Code of Regulations §§ 18703.1 through 18703.5, with Contractor that would invalidate this Contract. Contractor acknowledges that in the event that Contractor shall be found by any judicial or administrative body to have any conflict of interest (as defined above) with respect to this Contract, all consideration received under this Contract shall be forfeited and returned to City forthwith. This provision shall survive the termination of this Contract for one (1) year.

15. Indemnification. To the fullest extent permitted by law, Contractor shall indemnify, defend and hold harmless City and its officers, employees, elected and appointed officials, and volunteers (the "Indemnified Parties") from and against any and all claims, demands, causes of action, lawsuits (whether at law, equity or both), proceedings, liabilities, losses, damages, expenses, costs (including without limitation attorney's fees and costs and expert witness fees), judgments, penalties, and liens of every nature resulting from injury to or death sustained by any person (including Contractor's employees), or damage to property of any kind, or any other injury or damage whatsoever, which injury, death or damage arises out of or is in any way connected with Contractor's performance of work hereunder or its failure to comply with any of its obligations contained in this Contract, or its failure to comply with any current or prospective law, regardless of Contractor's fault or negligence, including any of the same resulting from the alleged or actual negligent act or omission of an Indemnified Party, except that said indemnity shall not be applicable to injury, death or damage to property arising from the sole or active negligence or willful misconduct of City, their officers, agents, or servants.

Notwithstanding the foregoing, in the event a particular design, process or product of a particular manufacturer is specified by City in writing, City General Conditions/EJ/TE 09-26-07 6 of 12

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shall defend, indemnify and hold Contractor harmless from any suits or claims of patent or copyright infringement arising out of Contractor's use of those specified designs, processes or products. City does not, however, consent to or authorize the unauthorized, unlicensed or otherwise impermissible use of any patented or copyrighted designs, processes, or products by Contractor. Therefore, if Contractor has any reason to believe the use of a specified design, process or product would result in the infringement of any patents or copyrights, Contractor shall promptly provide written notice thereof to City.

If Contractor is subject to a claim of patent or copyright infringement, then Contractor hereby agrees to provide City prompt notice of any such claim, and to permit City to assume and control the defense of such action, with counsel selected by City. Contractor shall not enter into any settlement of any such claim without City's prior written consent, which shall not be unreasonably withheld.

This indemnification obligation shall survive this Contract and shall not be limited by any term of any insurance policy required under this Contract; provided however, that if this Contract is for design professional services, this indemnity provision is limited to claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the design professional (as defined therein).

16. Safety. Contractor acknowledges that the City is committed to the highest standards of workplace safety. Contractor shall perform all work hereunder in full compliance with applicable local, state and federal safety requirements including but not limited to Occupational Safety and Health Administration requirements, and shall assume sole and complete responsibility for the safety of Contractor's employees and any subContractor's employees. If a death, serious personal injury or substantial property damage occurs in connection with the performance of this Contract, Contractor shall immediately notify the City by telephone.

17. Insurance. Insurance requirements are set forth in Exhibit F to this Contract. Contractor shall abide by the insurance requirements set forth in said Exhibit F.

18. Non-Liability of Officials and Employees of the City. No official or employee of the City shall be personally liable for any default or liability under this Contract.

19. Compliance with Laws. Contractor shall comply with all federal, state and local laws, statutes, ordinances, rules and regulations, and the orders and decrees of any courts or administrative bodies or tribunals, with respect to this Contract, including without limitation environmental laws, employment General Conditions/EJ/TE 09-26-07 7 of 12

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discrimination laws and prevailing wage laws. Compliance under this provision includes compliance with all provisions of the Richmond Municipal Code ("Municipal Code"), including Chapters 2.50, 2.52, 2.56, and 2.60, if applicable.

Contractor acknowledges that under § 2.60.070 of the Municipal Code ("Living Wage Ordinance"), Contractor shall promptly provide to City documents and information verifying its compliance with the Living Wage Ordinance. Also as prescribed in § 2.60.070, Contractor shall notify each of its affected employees with regards to the wages that are required to be paid pursuant to the Living Wage Ordinance.

Contractor shall comply with § 2.28.030 of the Municipal Code, obligating every Contractor or subcontractor under a contract or subcontract with the City for public work or for goods or for services to refrain from discriminatory employment or subcontracting practices on the basis of race, color, sex, sexual orientation, religious creed, national origin or ancestry of any employee, any applicant for employment or any potential subcontractor.

Contractor acknowledges that the City’s Drug Free Workplace Policy, Violence in the Workplace Policy and the Policy Against Workplace Harassment, are available on the City’s website at
http://www.ci.richmond.ca.us/workplacepolicies . Contractor agrees to abide by the terms and conditions of said policies.

20. Limitations upon Subcontracting and Assignment. This Contract binds the heirs, successors, assigns and representatives of Contractor. The Contractor shall not enter into subcontracts for any work contemplated under this Contract and shall not assign this Contract, nor any portion hereof or monies due or to become due, without the prior written consent of the City Council or its designee.

Contractor acknowledges that the services which Contractor shall provide under this Contract are unique, personal services which, except as otherwise provided herein, Contractor shall not assign or sublet to any other party without the prior written approval of City, which approval may be withheld in City's sole and absolute discretion. In the event that City, in writing, approves any assignment or subletting of this Contract or the retention of subcontractors by Contractor, Contractor shall provide to City upon request copies of each and every subcontract contract prior to the execution thereof by Contractor and subcontractor. Any assignment by Contractor of any or all of its rights under this Contract without first obtaining City's prior written consent shall be a default under this Contract.

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The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Contractor (if applicable), or of the interest of any general partner or joint venturer or syndicate member if Contractor is a partnership or joint-venture or syndicate, which shall result in a change of control of Contractor, shall be deemed an assignment. For this purpose, control shall mean fifty percent or more of the voting power or twenty-five percent or more of the assets of the corporation, partnership or joint-venture.

21. Integration. This Contract constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes any previous oral or written agreement; provided, however, that correspondence or documents exchanged between Contractor and City may be used to assist in the interpretation of the Exhibits to this Contract.

22. Modifications and Amendments. This Contract may be modified or amended only by a change order or Contract Amendment executed by both parties and approved as to form by the City Attorney.

23. Conflicting Provisions. In the event of a conflict between these General Conditions and those of any Exhibit or attachment hereto, these General Conditions shall prevail; provided, however, that any Special Conditions as set forth in Exhibit E shall prevail over these General Conditions. In the event of a conflict between the terms and conditions of any two or more Exhibits or attachments hereto, those prepared by City shall prevail over those prepared by the Contractor, and the terms and conditions preferred by the City shall prevail over those preferred by the Contractor.

24. Non-exclusivity. Notwithstanding any provision herein to the contrary, the services provided by Contractor hereunder shall be non-exclusive, and City reserves the right to employ other Contractors in connection with the project.

25. Exhibits. All Exhibits hereto are made a part hereof and incorporated herein by reference; provided, however, that any language in Exhibit A which does not pertain to the project description, proposal, scope of services, or method of compensation (as applicable) , or any corresponding responsibilities of City, shall be deemed extraneous to, and not a part of, this Contract.

26. Force Majeure. Neither party hereto shall be considered in default in the performance of its obligations hereunder to the extent that the performance of such an obligation is prevented or delayed by reason of acts of God, strikes, boycotts, lock-outs, inability to procure materials not related to the price thereof, failure of power, restrictive governmental laws and regulations enacted after the date of this Contract, riots, civil unrest, General Conditions/EJ/TE 09-26-07 9 of 12

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acts of terrorism, insurrection, war, declaration of a state or national emergency or other reasons of a like nature not within the reasonable control of such party.

27. Time of the Essence. Time is of the essence of this Contract. Contractor and City agree that any time period set forth in Exhibit A represents their best estimates with respect to completion dates and both Contractor and City acknowledge that departures from the schedule may occur.

Therefore, both Contractor and City will use reasonable efforts to notify one another of changes to the schedule. Contractor shall not be responsible for performance delays caused by others, or delays beyond Contractor's control, and such delays shall extend the times for performance of Contractor's work.

28. Confidentiality. Contractor agrees to comply with, and to require its employees, agents and partners to comply with, all applicable State or Federal statutes or regulations respecting confidentially, including but not limited to, the identity of persons served under this Contract, their records, or services provided them, and assures that:

All applications and records concerning any individual made or kept by Contractor or any public officer or agency in connection with the administration of or relating to services provided under this Contract will be confidential, and will not be open to examination for any purposes not directly connected with the administration of such service.

No person will publish or disclose or permit or cause to be published or disclosed, any list of persons receiving services, except as may be required in the administration of such service.

29. Third Parties. Nothing herein shall be interpreted as creating any rights or benefits in any third parties. For purposes hereof, transferees or assignees as permitted under this Contract shall not be considered "third parties."

30. Governing Law. This Contract shall be construed in accordance with the law of the State of California without regard to principles of conflicts of law.

This Contract is made in Contra Costa County, California, and any action relating to this Contract shall be instituted and prosecuted in the courts of Contra Costa County, California.

31. Nonrenewal. Contractor understands and agrees that there is no representation, implication, or understanding that the services provided by Contractor under this Contract will be purchased or renewed by the City under a new contract following expiration or termination of this Contract, and waives all rights or claims to notice or hearing respecting any failure General Conditions/EJ/TE 09-26-07 10 of 12

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by City to continue the purchase of all or any failure to continue purchase of all or any such services from Contractor.

32. Claims. Any claim by Contractor against City hereunder shall be subject to Government Code §§ 800 et seq. The claims presentation provisions of said Act are hereby modified such that the presentation of all claims hereunder to the City shall be waived if not made within six months after accrual of the cause of action.

33. Interpretation. This Contract shall be interpreted as if drafted by both parties.

34. Warranty. In the event that any product shall be provided to the City as part of this Contract, Contractor warrants as follows: Contractor possesses good title to the product and the right to transfer the product to City; the product shall be delivered to the City free from any security interest or other lien; the product meets any specifications contained herein; the product shall be free from material defects in materials and workmanship under normal use for a period of one (1) year from the date of delivery; and the product shall be fit for its intended purpose(s). Notwithstanding the foregoing, consumable and maintenance items (such as light bulbs and batteries) shall be warranted for a period of one hundred and eighty (180) days from the date of delivery. All repairs during the warranty period shall be promptly performed by Contractor, at Contractor's expense, including shipping.

35. Severability. In the event that any of the provisions or portions or applications thereof of this Contract are held to be unenforceable or invalid by any court of competent jurisdiction, City and Contractor shall negotiate an equitable adjustment in the provisions of the Contract with a view toward effecting the purpose of this Contract, and the validity and enforceability of the remaining provisions or portions or applications thereof, shall not be affected thereby.

36. Authority. City warrants and represents that the signatory hereto (the Mayor of the City of Richmond or the City Manager) is duly authorized to enter into and execute this Contract on behalf of City. The party signing on behalf of Contractor warrants and represents that he or she is duly authorized to enter into and execute this Contract on behalf of Contractor, and shall be personally liable to City if he or she is not duly authorized to enter into and execute this Contract on behalf of Contractor.

37. Waiver. The waiver by City of any breach of any term or provision of this Contract shall not be construed as a waiver of any subsequent breach.

Inspections or approvals, or statements by any officer, agent or employee of the City relating to the Contractor’s performance, or payments General Conditions/EJ/TE 09-26-07 11 of 12

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therefore, or any combination of these acts, shall not relieve the Contractor’s obligation to fulfill this Contract as prescribed; nor shall the City be thereby stopped from bringing any action for damages or enforcement arising from any failure to comply with any of the terms and conditions of this Contract.

38. Possessory Interest. If this Contract results in the Contractor having possession of, claim to or right to the possession of land or improvements, but does not vest ownership of the land or improvements in the same person, or if this Contract results in the placement of taxable improvements on tax exempt land (Revenue and Taxation Code 107), such interest or improvements may represent a possessory interest subject to property tax, and Contractor may be subject to the payment of property taxes levied on such interest.

39. Performance and Final Acceptance.

Contractor represents that it is experienced, qualified, registered, licensed, equipped, organized and financed to perform the services under this Contract.

Contractor shall perform the services under this Contract with that degree of skill and judgment normally exercised by professional firms performing services of a similar nature in the State of California, and shall be responsible for the professional quality, technical accuracy and coordination of the services it performs under this Contract. In addition to the other rights and remedies which City may have, Contractor shall, at its own expense, correct any services which fail to meet the above standard.

City shall provide Contractor an opportunity to cure errors and omission which may be disclosed during the review of submittals, with no increase in the authorized Contract Payment Limit. Should Contractor fail to make necessary corrections in a timely manner, such corrections shall be made by the City and the cost thereof shall be charged to Contractor.

If warranted, City shall determine, and Contractor may request such determination, that Contractor has satisfactorily completed performance of this Contract. Upon such determination, City shall issue to Contractor a written Notice of Final Acceptance, after which Contractor shall not incur further costs under this Contract. Contractor shall respond to such Notice of Final Acceptance by executing and submitting to City a Release and Certificate of Final Payment.

40. Survival. The rights and obligations of the parties which by their nature survive termination or completion of the services covered by this Contract shall remain in full force and effect after termination or completion.

General Conditions/EJ/TE 09-26-07 12 of 12

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For the Contract between the City of
Richmond and

EXHIBIT E

SPECIAL CONDITIONS
The General Conditions are hereby amended to include the following modifications and/or provisions (if applicable):

3-21-23, CC Mtg.

For the Contract between the City of
Richmond and

EXHIBIT F

INSURANCE PROVISIONS
During the entire term of this Contract and any extension or modification thereof, the CONTRACTOR shall keep in effect insurance policies meeting the insurance requirements specified in the insurance provisions which are attached hereto and incorporated herein by this reference.

3-21-23, CC Mtg.
___ Exhibit F
___ Section 8
City of Richmond - Insurance Requirements – Type 1:

Consultants and Contractors
Type 1 – Page 1 of 4
Revised: September 2011
In all instances where a CONTRACTOR or its representatives will be conducting business and/or providing services, the City requires the following MINIMUM insurance requirements and limits.

CONTRACTOR shall procure and maintain for the duration of the contract, agreement, or other order for work, services or supplies, insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder and the results of that work by the CONTRACTOR, its agents, representatives, employees or subcontractors. Maintenance of proper insurance coverage is a material element of the contract. Failure to maintain or renew coverage or to provide evidence of renewal may be treated by the City as a material breach of contract.

CONTRACTOR agrees that in the event of loss due to any of the perils for which it has agreed to provide Commercial General Liability insurance, CONTRACTOR shall look solely to its insurance for recovery. CONTRACTOR hereby grants to CITY, on behalf of any insurer providing Commercial General Liability insurance to either CONTRACTOR or CITY with respect to the services of CONSULTANT herein, a waiver of any right to subrogation which any such insurer of said CONTRACTOR may acquire against the CITY by virtue of the payment of any loss under such insurance.

Original, signed certificates and original, separate policy endorsements, naming the City as an additional insured for general liability, as well as a waiver of subrogation for Workers’ Compensation insurance, shall be received and approved by the City before any work may begin. However, failure to do so shall not operate as a waiver of these insurance requirements.

City reserves the right to modify or require additional coverages for specific risk exposures depending on scope of CONTRACTORS work.

Minimum coverage is detailed below. The policy limits of coverage shall be made available to the full limits of the policy.

The minimum limits stated herein shall not serve to reduce the policy limits of coverage of CONTRACTOR.

Minimum Scope of Insurance – the following forms shall be provided and coverage shall be at least as broad as the following:

1. Insurance Services Office Commercial General Liability coverage (ISO Occurrence Form CG 0001) including coverage for bodily and personal injury, property damage, and products and completed operations.

2. Insurance Services Office Automobile Liability coverage (ISO Form CA 0001, Code 1, Any Auto)

3. Original and Separate Additional Insured Endorsements for General Liability (ISO Form CG 20 10 11/85 or its equivalent) with primary and non-contributory language.

4. Workers’ Compensation Insurance as required by the State of California including Employer’s Liability coverage.

5. Original and Separate Waiver of Subrogation for Workers’ Compensation and Builder’s Risk/ Course of Construction Insurance.

6. Builder’s Risk/Course of Construction insurance covering all risks of loss less policy exclusions when the City of Richmond has a financial interest in the property. – (Only required for Construction Contracts involving property)

7. Contractor’s Pollution Liability (if applicable for Construction Contractors) Required Coverage Minimum Limits
Workers’ Compensation and
Employers’ Liability
Statutory limits as required by the State of California including $1 million Employers’ Liability per accident, per employee for bodily injury or disease.

If CONTRACTOR is self-insured, provide a certificate of Permission to SelfInsure, signed by the California Department of Industrial Relations and SelfInsurance. If contractor is a sole proprietor (has no employees) than contractor must sign “Contractor Release of Liability” found at:
http://www.ci.richmond.ca.us/index.aspx?nid=61.

3-21-23, CC Mtg.
___ Exhibit F
___ Section 8
City of Richmond - Insurance Requirements – Type 1:

Consultants and Contractors
Type 1 – Page 2 of 4
Revised: September 2011

PROJECT COST REQUIRED LIMIT
$0 - $5 million $2 million p/o
$5 million - $10 million $5 million p/o
Over $10 million $10 million p/o
Fireworks $5 million p/o
General Liability
(primary and excess limits
combined)

Includes coverage for bodily injury, personal injury, property damage and products and completed operations. The policy shall not exclude coverage for XCU perils (explosion, collapse, or damage to underground property).

If the policy includes a general aggregate, either the general aggregate shall apply separately to this project, service or location or the minimum required aggregate limit shall be twice the per occurrence limit ($4 million aggregate limit).

Policy shall be endorsed to name the City of Richmond as an additional insured per the conditions detailed below.

Automobile Liability $1,000,000 per occurrence for bodily injury and property damage.

Builders’ Risk/Course of
Construction – Covers property
under construction, repair or
renovation as well as equipment
and materials to be installed.
(Only required for Construction
Projects involving property and
equipment installation.)
Coverage shall include all risks of direct physical loss, excluding earthquake, for an amount equal to the full completed value of the covered structure or replacement value of alterations or additions, including soft costs and business interruption.

If the project does not involve new or major reconstruction, an Installation Floater may be acceptable. For such projects, a property installation floater shall be obtained that provides for the improvement, remodel, modification, alteration, conversion or adjustment to existing buildings, structures, processes, machinery and equipment. The Property Installation Floater shall provide property damage coverage for any building, structure, machinery or equipment damaged, impaired, broken or destroyed during the performance of the Work, including during transit, installation and testing at the City of Richmond’s site.

The City of Richmond shall be named as loss payee as its interest may appear. The insurer shall waive all rights of subrogation against City.

Contractor’s Pollution Liability (if
applicable)
Protects against:
unexpected/unintended release of
pollution resulting from contractors
covered operations such as:

HVAC, paving, carpentry, pipeline
& tank installation, drillers,
remediation contractors,
maintenance, mechanical,
demolition, excavation, grading,
street/road construction,
residential & commercial builders.

Same limits as General Liability.

Required Policy Conditions
A. M. Best Rating A:VII or Better. If the A.M. Best Rating falls below the required rating, CONTRACTOR must replace coverage immediately and provide notice to City.

Additional Insured Endorsement Applicable to General Liability Coverage.

The City of Richmond, its officers, officials, employees, agents and volunteers are to be named as additional insureds for all liability arising out of the operations by or on behalf of the named insured, including but not limited to bodily injury, deaths and property damage or destruction arising in any respect directly or indirectly in the performance of this contract.

ISO form CG 20 10 (11/85) or its equivalent is required. The endorsement must not exclude products and completed operations coverage. If it does, then CG 20 37 (10/01) is also required.

3-21-23, CC Mtg.
___ Exhibit F
___ Section 8
City of Richmond - Insurance Requirements – Type 1:

Consultants and Contractors
Type 1 – Page 3 of 4
Revised: September 2011
Additional Insured Endorsement
(continued)
SAMPLE Endorsements can be found at
http://www.ci.richmond.ca.us/index.aspx?nid=61
Primary and Noncontributory The contractor’s insurance coverage must be primary coverage as it pertains to the City, its officers, officials, employees, agents and volunteers. Any insurance or self insurance maintained by the City is wholly separate from the insurance of the contractor and in no way relieves the contractor from its responsibility to provide insurance.

Waiver of Subrogation
Endorsement Form
Contractor’s insurer will provide a Waiver of Subrogation in favor of the City for Workers Compensation and Builder’s Risk/ Course of Construction coverage during the life of this contract.

SAMPLE Endorsements can be found at
http://www.ci.richmond.ca.us/index.aspx?nid=61
Deductibles and Self-Insured
Retentions
Any deductible or self-insured retention must be declared to and approved by the City. At the option of the City either the insurer shall reduce or eliminate such deductibles or self-insured retention as respects the City or the CONTRACTOR shall procure a financial guarantee in an amount equal to the deductible or self-insured retention guaranteeing payment of losses and related investigations, claims administration and defense expenses.

Contractor is responsible for satisfaction of the deductible and/or self-insured retention for each loss.

Loss Payable Endorsement (only
required when Builder’s Risk
and/or Course of Construction
Insurance is required.)
Applicable to Builder’s Risk/Course of Construction naming the City of Richmond as Loss Payee.

SURETY BONDS
(If a Public Works/Engineering
Project)
The Contractor shall provide:

1. A Bid bond

2. A Performance Bond

3. A Payment Bond
Umbrella/Excess Liability Policies
If an Umbrella or Excess Liability Policy is used to meet the liability limits, coverage shall be as broad as specified for underlying coverages and cover those insured in the underlying policies.

Claims-Made Policies
If any insurance policy is written on a claims-made form: 1) the retroactive date must be shown, and must be before the date of the contract or the beginning of contract work. 2) Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the contract of work. 3) If coverage is canceled or nonrenewed, and not replaced with another claims-made policy form with a retroactive date prior to the contract effective date, the Contractor must purchase an extended period coverage for a minimum of five (5) years after completion of contract work.

Subcontractors
CONTRACTOR shall include all subcontractors as insured under its policies or shall furnish to the City for review and approval, separate certificates and endorsements for each subcontractor. All coverage for subcontractors shall be subject to all of the requirements stated herein.

CONTRACTOR agrees to defend and indemnify the City of Richmond for any damage resulting to it from failure of either CONTRACTOR or any subcontractor to take out or maintain the required insurance policies. The fact that insurance is obtained by CONTRACTOR, and/or CONTRACTOR’s subcontractors, will not be deemed to release or diminish the liability of CONTRACTOR, including, without limitation, liability under the indemnity provisions of this contract. Damages recoverable by CITY from CONTRACTOR or any third party will not be limited by the amount of the required insurance coverage.

3-21-23, CC Mtg.
___ Exhibit F
___ Section 8
City of Richmond - Insurance Requirements – Type 1:

Consultants and Contractors
Type 1 – Page 4 of 4
Revised: September 2011
Verification of Coverage
All original certificates and endorsements shall be received and approved by the City before work may begin. The City of Richmond reserves the right to require complete, certified copies of all required insurance policies including endorsements affecting the coverage at any time.

Original insurance certificates and required policy endorsements shall be mailed, or delivered to the Designated Project Manager for the City of Richmond.

Insurance certificates and endorsements may be faxed to the Designated Project Manager. However, Contractor must mail the original certificates and endorsements to Designated Project Manager once faxed.

Continuous Coverage
CONTRACTOR shall maintain the required insurance for the life of the contract. Should the CONTRACTOR cease to have insurance as required during this time, all work by the CONTRACTOR pursuant to this agreement shall cease until insurance acceptable to the City is provided. In the event that CONTRACTOR fails to comply with the City’s insurance requirements, the City may take such action as it deems necessary to protect the City’s interests. Such action may include but is not limited to termination of the contract, withholding of payments, or other actions as the City deems appropriate.

If services or the scope of work extend beyond the expiration dates of the required insurance policies initially approved by the City, CONTRACTOR must provide updated certificates and endorsements indicating that the required coverage, terms and conditions are still in place. Renewal certificates and updated endorsements shall be mailed to the Designated Project Manager.

Cancellation
CONTRACTOR shall ensure that coverage shall not be cancelled, reduced or otherwise materially changed except after thirty (30) days’ prior written notice has been given to the City.

Reporting Requirements
Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees or volunteers.

Consistent with Public Policy
The insuring provisions, insofar as they may be judged to be against public policy shall be void and unenforceable only to the minimum extent necessary so that the remaining terms and provisions herein may be consistent with public policy and thus enforceable.

3-21-23, CC Mtg.

SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE

THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS.

INSURER(S) AFFORDING COVERAGE
INSURER F :

INSURER E :

INSURER D :

INSURER C :

INSURER B :

INSURER A : NAIC #
NAME: CONTACT
(A/C, No): FAX
E-MAIL ADDRESS:

PRODUCER
(A/C, No, Ext): PHONE

INSURED
COVERAGES CERTIFICATE NUMBER: REVISION NUMBER:

IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed.

If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).

THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS

CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.

OTHER:
(Per accident)
(Ea accident)
$
$
N / A

SUBR WVDADDL
INSD

THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS

CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. $
$
$
$ PROPERTY DAMAGE
BODILY INJURY (Per accident)
BODILY INJURY (Per person) COMBINED SINGLE LIMIT

AUTOS ONLY

AUTOS ONLY AUTOS NON-OWNED OWNED SCHEDULED

ANY AUTO

AUTOMOBILE LIABILITY

Y / N WORKERS COMPENSATION
AND EMPLOYERS' LIABILITY OFFICER/MEMBER EXCLUDED?
(Mandatory in NH) DESCRIPTION OF OPERATIONS below
If yes, describe under

ANY PROPRIETOR/PARTNER/EXECUTIVE
$
$
$ E.L. DISEASE - POLICY LIMIT E.L. DISEASE - EA EMPLOYEEE.L. EACH ACCIDENT EROTH- STATUTE PER
(MM/DD/YYYY) LIMITS POLICY EXP(MM/DD/YYYY) POLICY EFFLTR TYPE OF INSURANCE POLICY NUMBER INSR
DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required)

EXCESS LIAB
UMBRELLA LIAB EACH OCCURRENCE $ AGGREGATE $
$
OCCUR
CLAIMS-MADE DED RETENTION $
PRODUCTS - COMP/OP AGG $ GENERAL AGGREGATE $ PERSONAL & ADV INJURY $ MED EXP (Any one person) $
EACH OCCURRENCE $ DAMAGE TO RENTED
PREMISES (Ea occurrence) $ COMMERCIAL GENERAL LIABILITY CLAIMS-MADE OCCUR GEN'L AGGREGATE LIMIT APPLIES PER: POLICY PRO- JECT LOC

CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YYYY)

CANCELLATION

AUTHORIZED REPRESENTATIVE
ACORD 25 (2016/03)
© 1988-2016 ACORD CORPORATION. All rights reserved.

CERTIFICATE HOLDER
The ACORD name and logo are registered marks of ACORD
HIRED

AUTOS ONLY
09/12/2022 ***MARSH USA INC 1166 AVENUE OF THE AMERICAS NEW YORK, NY 10036 Phone: 866-966-4664 CN102796740-CON-COS-22-23 ABCDFG X N Continental Casualty Company American Casualty Company of Reading, PA Transportation Insurance Co Continental Insurance Company 35289 20494 20427 20443 CONTRA COSTA ELECTRIC, INC 825 HOWE ROAD P.O. BOX 2523 MARTINEZ, CA 94553 NYC-009073884-87 41 [email protected] / Fax: 203-229-6787 X X
X
GL 7034187267 10/01/2022 10/01/2023 5,000,000 25,000 1,000,000 5,000,000 A X
X X
BUA 7034187298 10/01/2022 10/01/2023 5,000,000 Included C D
B
N
WC 7 34187558 (AZ, OR, WI) WC 7 34181601 (CA) WC 7 34187110 (AOS) 10/01/2022 10/01/2022 10/01/2022 10/01/2023 10/01/2023 10/01/2023 1,000,000 1,000,000 1,000,000 RE: ALL OPERATIONS ADDITIONAL INSURED UNDER ALL POLICIES (EXCEPT WORKERS COMPENSATION & EMPLOYERS LIABILITY) WHERE REQUIRED BY CONTRACT: CITY OF RICHMOND AND OTHERS AS REQUIRED BY CONTRACT. WHERE REQUIRED BY CONTRACT, COVERAGE PROVIDED TO THE ADDITIONAL INSUREDS IS PRIMARY & NON-CONTRIBUTORY. WAIVER OF SUBROGATION AS REQUIRED BY CONTRACT AND WHERE NOT PROHIBITED BY LAW. THE GENERAL LIABILITY POLICY CONTAINS NO XCU EXCLUSIONS. Auto Physical Damage 14,000,000 10,000,000 X A
CITY OF RICHMOND of Marsh USA Inc. ATTN: AL SHANKLIN, PROJECT MGR. #6 - 13TH STREET RICHMOND, CA 94801

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ACORD 101 (2008/01)
The ACORD name and logo are registered marks of ACORD
© 2008 ACORD CORPORATION. All rights reserved.

THIS ADDITIONAL REMARKS FORM IS A SCHEDULE TO ACORD FORM, FORM NUMBER: FORM TITLE:

ADDITIONAL REMARKS
ADDITIONAL REMARKS SCHEDULE Page of
AGENCY CUSTOMER ID:

LOC #:

AGENCY

CARRIER NAIC CODE

POLICY NUMBER

NAMED INSURED
EFFECTIVE DATE:
***MARSH USA INC 2 2
CONTRA COSTA ELECTRIC, INC 825 HOWE ROAD P.O. BOX 2523 MARTINEZ,CA 94553 25 Certificate of Liability Insurance CN102796740 Norwalk AUTO PHYSICAL DAMAGE COMP / COLL DEDUCTIBLE $500 FOR WORKER'S COMPENSATION, AUTO LIABILITY, GENERAL LIABILITY AND UMBRELLA LIABILITY: IN THE EVENT OF CANCELLATION OR MATERIAL CHANGE THAT REDUCES OR RESTRICTS THE INSURANCE AFFORDED BY THIS COVERAGE PART (OTHER THAN THE REDUCTION OF AGGREGATE LIMITS THROUGH PAYMENT OF CLAIMS AS APPLICABLE), INSURER AGREES TO MAIL PRIOR WRITTEN NOTICE OF CANCELLATION OR MATERIAL CHANGE TO: CERTIFICATE HOLDER SCHEDULE 1. NUMBER OF DAYS ADVANCE NOTICE: FOR ANY STATUTORILY PERMITTED REASON OTHER THAN NON-PAYMENT OF PREMIUM, THE NUMBER OF DAYS REQUIRED FOR NOTICE OF CANCELLATION AS PROVIDED IN PARAGRAPH 2 OF EITHER THE CANCELLATION COMMON POLICY CONDITIONS OR AS AMENDED BY THE APPLICABLE STATE CANCELLATION ENDORSEMENT IS INCREASED TO THE LESSER OF 60 DAYS OR THE NUMBER OF DAYS REQUIRED IN A WRITTEN CONTRACT. FOR NON-PAYMENT OF PREMIUM, THE GREATER OF (1) THE NUMBER OF DAYS REQUIRED BY STATE LAW OR (2) THE NUMBER OF DAYS REQUIRED BY WRITTEN CONTRACT. 2. NAME: NOTICE WILL BE MAILED TO: CERTIFICATE HOLDER

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I.T. – RELATED PURCHASES AUTHORIZATION
Form must be fully completed and signed prior to information technology related purchases Date ___________
Requested Vendor _______________________________________________ V# _____________ Vendor Address ________________________________________________________________ ________________________________________________________________ Contact Person ________________________________________________________________ Email Address ________________________________________________________________ Phone No ( ______ ) ____________________ Fax # __________________________ Quantity Item Unit Price Total
_____ ___________________________________ $ ________ $ ________ _____ ___________________________________ $ ________ $ ________ _____ ___________________________________ $ ________ $ ________ Total $________
Purpose
This section must be completed with respective price quote(s) included with form:
_______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ Requested by
________________________ ________________________
Department Head IT Director
________________________ ________________________
Approval Date Approval Date
Information Technology Related – Purchase Form – Rev 5-2016 02-27-2023 Contra Costa Electric, Inc. 1147 825 Howe Road, Martinez CA 94553 Curt Svenpladsen [email protected] 925 335-283 Quote Troubleshoot Breaker Tripping Issue 26,500.00 26,500.00 The City of Richmond's technology infrastructure is at great risk due to unplanned PG&E power outages. Current technology equipment can be damaged during a power outage that, due to supply chain demands for replacement equipment, could cause long term outages including equipment in support of public safety operations.

Sue
Hartman
Digitally signed by Sue
Hartman
DN: cn=Sue Hartman,
o=City of Richmond, ou=IT,
[email protected]
hmond.ca.us, c=US
Date: 2023.02.27 19:43:23
-08'00'
Sue
Hartman
Digitally signed by Sue Hartman
DN: cn=Sue Hartman, o=City of
Richmond, ou=IT,
[email protected]
.ca.us, c=US
Date: 2023.02.27 19:45:28 -08'00'
the Information Technology Department
This service and maintenance is essential for repair of the backup transfer switch. Page 856 of 1935 3-21-23, CC Mtg.

ADA (American with Disabilities Act) Compliance
Access and Accommodation
Compliance with the accessibility requirements of Section 508 of the Rehabilitation Act of 1973: In order to improve accessibility of existing technology and therefore increase the successful employment of individuals with disabilities, particularly blind and visually impaired, deaf and hard-of-hearing persons please answer the following questions:

Is this item ADA Compliant? Yes __________ No_________
If NO, please answer the following questions:

Will this item be used by the public? Yes ________ No _________ Can other vendors provide an ADA compliant product? Explain Will this item be used by City employees? Yes ________ No _________ Categories for Information Technology (IT) Product
• Software applications and operating systems
• Web-based information and applications
• Telecommunications products
• Video and multimedia products
• Desktop and portable computers
• End user hardware
Examples of Information Technology (IT) Products
• World Wide Web
• Scanners
• Printers
• Copiers
• PDAs
• Computers
• Computer Software
• Computer Operating Systems
• Phones
• Apps
• Information Kiosks
• ATMs
• Multimedia
• Videos
• Fax Machines

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March 21, 2023
Information Technology
DATE: March 21, 2023
TO: Mayor Martinez and Members of the City Council
FROM: Sue Hartman, Director of Information Technology
Subject: Resolution for Technology Related Services with Esri FINANCIAL IMPACT: There is no fiscal impact resulting from adoption of this resolution. The proposed standing orders/outline
agreements are not a commitment to spend. Only preapproved adopted budget dollars can be used with these certified vendors.

PREVIOUS COUNCIL
ACTION:

Click or tap here to enter text.

STATEMENT OF THE
ISSUE:

City staff is seeking authorization to establish standing orders/outline agreements with technology related
vendors which allow the City to expedite the procurement and deployment of software systems and other
technology related solutions.

RECOMMENDED ACTION: ADOPT a resolution renewing standing orders, establishing outline agreements for technology related
services from Esri, and authorizing the City Manager to negotiate and execute licensing, maintenance,
procurement agreements and purchase orders on forms
acceptable to the City Attorney in an amount not to
exceed $250,000 per year for fiscal years 2023-2024
through 2026-2027 - Information Technology Department
(Sue Hartman 510-620-6874).

AGENDA
REPORT

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March 21, 2023
DISCUSSION:

The utilization of standing orders/outline agreements by the Information Technology Department began in fiscal year 2000-2001. It is an effective way for the City to reduce costs and respond more quickly to service needs.

The requested resolution will cover City-wide maintenance for the Esri Geographic Information System (GIS) software which is comprised of desktop, backend database, and web GIS software including ArcGIS Advanced, ArcGIS Standard, and ArcGIS Basic licenses (floating and single-use), ArcGIS extension licenses, ArcGIS for Server license, and an enterprise geodatabase database license (incorporated as part of the ArcGIS for Server license) as well as upgrading the ESRI system to a cloud based enterprise version.

The Esri GIS software has been the City’s standard since 2001. This industry standard software is the leader in geoprocessing capabilities. The requested resolution will enable the City to renew its software maintenance with Esri and thereby stay current with the latest releases of the software and receive as needed City-wide technical support to maintain the software. Esri is the only vendor that can provide maintenance for its software.

Consistent with the City’s practice, the procurement of goods or services under the authority of this resolution will comply with the City’s internal protocols and all agreements and/or purchase order will be on forms acceptable to the City Attorney.

DOCUMENTS ATTACHED:

Attachment 1 – Resolution 2023-2027 Esri (Proposed)
Attachment 2 – Esri Maintenance Quote
Attachment 3 – Master License Agreement (2011MLA2605)
Attachment 4 – Sole Source Approval
Attachment 5 – Small Government Enterprise Agreement Justification

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RESOLUTION NO.

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RICHMOND, CALIFORNIA, RENEWING

STANDING ORDERS, ESTABLISHING OUTLINE AGREEMENTS FOR TECHNOLOGY RELATED

SERVICES FROM ESRI, AND AUTHORIZING THE CITY MANAGER TO NEGOTIATE AND

EXECUTE LICENSING, MAINTAINENCE, PROCUREMENT AGREEMENTS AND PURCHASE

ORDERS ON FORMS ACCEPTABLE TO THE CITY ATTORNEY IN AN AMOUNT NOT TO EXCEED
$250,000 PER YEAR FOR FISCAL YEARS 2023-2024 THROUGH 2026-2027.

WHEREAS in fiscal year 2000-2001, the Richmond City Council authorized establishing standing orders/outline agreements with technology related vendors which allow the City to expedite the procurement and deployment of software systems and other technology related solutions; and WHEREAS, the City of Richmond’s Information Technology Division has demonstrated that purchasing can be expedited, paperwork can be reduced, better discounts realized, and service to the public can be improved through the development and implementation of standings orders/outline agreements; and WHEREAS, Esri GIS software has been the standard geoprocessing software solution utilized by the City of Richmond since 2001; and
WHEREAS the City of Richmond wishes to renew Esri’s software maintenance services. purchase licenses, upgrade software and products within the Esri Geographic Information System (GIS) including upgrading the Esri system to a cloud-based enterprise version; and
WHEREAS, ESRI’s platform is comprised of desktop, backend database, and web GIS software including ArcGIS Advanced, ArcGIS Standard, and ArcGIS Basic licenses (floating and single-use), ArcGIS extension licenses, ArcGIS for Server license, and an enterprise geodatabase database license (incorporated as part of the ArcGIS for Server license); and
NOW THEREFORE, BE IT RESOLVED that the City Council of the City of Richmond, California, hereby authorizes the Division of Information Technology to use standing orders/outline agreements to purchase technology related goods and services, with the following company:
• Esri
FURTHERMORE, BE IT RESOLVED that the City Council of the City of Richmond authorizes the City Manager to negotiate and execute licensing, maintenance, procurement agreements and purchase orders on forms acceptable to the city attorney in an amount not to exceed $250,000 per year during the fiscal years 2023-2024 through 2026-2027.
********************************
I certify that the foregoing resolution was passed and adopted by the Council of the City of Richmond, California at a regular meeting thereof held by the following vote:

AYES:

NOES:

ABSTENTIONS:

ABSENT:

Approved:

Clerk of the City of Richmond
(Seal)
Mayor
Approved as to form:

City Attorney

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Subject: Renewal Quotation
Date: 02/16/2023
To: Henry Lei
Organization: City of Richmond
IT Dept.

Fax #: 510-620-6528 Phone #: 510-621-1298
From: Heather Carmody
Fax #: 909-793-4801 Phone #: +19093692314 Ext. 2314
Email: [email protected]
Number of pages transmitted Quotation #26121341
(including this cover sheet): 6 Document Date: 12/18/2022 Please find the attached quotation for your forthcoming term. Keeping your term current may entitle you to exclusive benefits, and if you choose to discontinue your coverage, you will become ineligible for these valuable benefits and services.

If your quote is regarding software maintenance renewal, visit the following website for details regarding the maintenance program benefits at your licensing level
http://www. esri.com/apps/products/maintenance/qualifying.cfm All maintenance fees from the date of discontinuation will be due and payable if you decide to reactivate your coverage at a later date.

Please note: Certain programs and license types may have varying benefits. Complimentary User Conference registrations, software support, and software and data updates are not included in all programs.

Customers who have multiple copies of certain Esri licenses may have the option of supporting some of their licenses with secondary maintenance.

For information about the terms of use for Esri products as well as purchase order terms and conditions, please visit
http://www. esri.com/legal/licensing/software-license.html If you have any questions or need additional information, please contact Customer Service at 888-377-4575 option 5.

Esri Inc
380 New York St
Redlands CA 92373-8118

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10 1 52384 3,000.00 3,000.00
ArcGIS Desktop Advanced Concurrent Use Primary Maintenance Start Date: 03/19/2023
End Date: 03/18/2024
1010 1 52385 1,200.00 1,200.00
ArcGIS Desktop Advanced Concurrent Use Secondary Maintenance Start Date: 03/19/2023
End Date: 03/18/2024
2010 1 86497 1,500.00 1,500.00
ArcGIS Desktop Standard Concurrent Use Primary Maintenance Start Date: 03/19/2023
End Date: 03/18/2024
3010 1 87194 700.00 700.00
ArcGIS Desktop Basic Concurrent Use Primary Maintenance City of Richmond
IT Dept.

GIS Service Div
450 Civic Center Plz
Richmond CA 94804
Attn: Henry Lei
_______________________________________________________________________ Please note Esri has introduced a price change and this quote reflects current pricing for your organization. It is important to us that we are able to continue to deliver value through enhancements to products, solutions, and capabilities.

Your renewal provides access to all the benefits you are familiar with, which you can review at https://go.esri.com/maintenance For questions related to the price change, please reach out to your assigned Esri Account Manager.

Quotation is valid for 90 days from document date.

Any estimated sales and/or use tax has been calculated as of the date of this quotation and is merely provided as a convenience for your organization's budgetary purposes. Esri reserves the right to adjust and collect sales and/or use tax at the actual date of invoicing. If your organization is tax exempt or pays state taxes directly, then prior to invoicing, your organization must provide Esri with a copy of a current tax exemption certificate issued by your state's taxing authority for the given jurisdiction.

Esri may charge a fee to cover expenses related to any customer requirement to use a proprietary vendor management, procurement, or invoice program.

To expedite your order, please reference your customer number and this quotation number on your purchase order.

Send Purchase Orders To:

Environmental Systems Research Institute, Inc.
380 New York Street
Redlands, CA 92373-8100
Attn: Heather Carmody
Please include the following remittance address
on your Purchase Order:

Environmental Systems Research Institute, Inc.

P.O. Box 741076
Los Angeles, CA 90074-1076
Item Qty Material# Unit Price Extended Price
_______________________________________________________________________________ _______________________________________________________________________________ Date: 12/18/2022 Quotation Number: 26121341
380 New York St
Redlands, CA 92373-8118
Phone: +190936923142314
Fax #: 909-793-4801
Customer Number: 237748
For questions regarding this document, please contact Customer Service at 888-377-4575.

Quotation
_______________________________________________________________________________

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Start Date: 03/19/2023
End Date: 03/18/2024
4010 8 87195 500.00 4,000.00
ArcGIS Desktop Basic Concurrent Use Secondary Maintenance Start Date: 03/19/2023
End Date: 03/18/2024
5010 1 87232 500.00 500.00
ArcGIS Spatial Analyst for Desktop Concurrent Use Primary Maintenance Start Date: 03/19/2023
End Date: 03/18/2024
6010 3 87233 200.00 600.00
ArcGIS Spatial Analyst for Desktop Concurrent Use Secondary Maintenance Start Date: 03/19/2023
End Date: 03/18/2024
7010 1 87198 500.00 500.00
ArcGIS 3D Analyst for Desktop Concurrent Use Primary Maintenance Start Date: 03/19/2023
End Date: 03/18/2024
8010 1 87192 400.00 400.00
ArcGIS Desktop Basic Single Use Primary Maintenance
Start Date: 03/19/2023
End Date: 03/18/2024
9010 5 87193 300.00 1,500.00
ArcGIS Desktop Basic Single Use Secondary Maintenance
Start Date: 03/19/2023
End Date: 03/18/2024
10010 1 115680 5,000.00 5,000.00
ArcGIS for Server Enterprise Standard Up to Four Cores from ArcIMS 9.1 Migrated Maintenance Includes Enterprise Basic Up to Four Cores from ArcSDE 9.1 Migrated Maintenance Bundle Start Date: 03/19/2023
End Date: 03/18/2024
Item Qty Material# Unit Price Extended Price
_______________________________________________________________________________ _______________________________________________________________________________

Date: 12/18/2022 Quotation Number: 26121341
380 New York St
Redlands, CA 92373-8118
Phone: +190936923142314
Fax #: 909-793-4801
Quotation

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10020 1 109839
ArcGIS for Server Enterprise Standard Up to Four Cores Migrated Maintenance Item equals $2,000.00 of the bundled price.

Start Date: 03/19/2023
End Date: 03/18/2024
10030 1 109840
ArcGIS for Server Enterprise Basic Up to Four Cores Migrated Maintenance Item equals $3,000.00 of the bundled price.

Start Date: 03/19/2023
End Date: 03/18/2024
Item Subtotal 18,900.00
Estimated Tax 0.00
Total USD 18,900.00
DUNS/CEC: 06-313-4175 CAGE: 0AMS3
Item Qty Material# Unit Price Extended Price
_______________________________________________________________________________ _______________________________________________________________________________

Date: 12/18/2022 Quotation Number: 26121341
380 New York St
Redlands, CA 92373-8118
Phone: +190936923142314
Fax #: 909-793-4801
Quotation

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Renewal Options:

Online: Renew through My Esri site at https://my.esri.com Credit Card
Purchase Order
Email Authorization
Email or Fax: Email Authorization, Purchase Order or signed quote to:

Fax: 909-307-3083
Email: [email protected]
Requests via email or signed quote indicate that you are authorized to obligate funds for your organization and your organization does not require a purchase order.

If there are any changes required to your quotation please respond to this email and indicate any changes in your invoice authorization.

If you choose to discontinue your support, you will become ineligible for support benefits and services. All maintenance fees from the date of discontinuation will be due and payable if you decide to reactivate your support coverage at a later date.

The items on this quotation are subject to and governed by the terms of this quotation, the most current product specific scope of use document found at http://assets.esri.com/content/dam/esrisites/media/legal/ product-specific-terms-of-use/e300.pdf, and your applicable signed agreement with Esri. If no such agreement covers any item quoted, then Esri's standard terms and conditions found at http://assets.esri.com/content/dam/esrisites/media/legal/ma-full/ma-full .pdf apply to your purchase of that item. Federal government entities and government prime contractors authorized under FAR 51.1 may purchase under the terms of Esri's GSA Federal Supply Schedule. Supplemental terms and conditions found at http://www.esri.com/en-us/legal/terms/state-supplemental apply to some state and local government purchases. All terms of this quotation will be incorporated into and become part of any additional agreement regarding Esri's offerings.

Acceptance of this quotation is limited to the terms of this quotation. Esri objects to and expressly rejects any different or additional terms contained in any purchase order, offer, or confirmation sent to or to be sent by buyer. Unless prohibited by law, the quotation information is confidential and may not be copied or released other than for the express purpose of system selection and purchase/license. The information may not be given to outside parties or used for any other purpose without consent from Esri. Delivery is FOB Origin.

In order to expedite processing, please reference the quotation number and any/all applicable Esri contract number(s) (e.g.

MPA, ELA, SmartBuy GSA, BPA) on your ordering document.

Item Qty Material# Unit Price Extended Price
_______________________________________________________________________________ _______________________________________________________________________________

Date: 12/18/2022 Quotation Number: 26121341
380 New York St
Redlands, CA 92373-8118
Phone: +190936923142314
Fax #: 909-793-4801
Quotation

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US FEDERAL CUSTOMERS: If you are a federal customer or a contractor purchasing on behalf of a federal customer a purchase order is required to receive an invoice. Please email the purchase order to [email protected] By signing below, you are authorizing Esri to issue a software support invoice in the amount of USD__________________ plus sales tax, if applicable.

Please check one of the following:
_____ I agree to pay any applicable sales tax.
_____ I am tax exempt. Please contact me if Esri does not have my current exempt information on file. ________________________________________ _________________________ Signature of Authorized Representative Date
________________________________________ _________________________ Name (Please Print) Title
Item Qty Material# Unit Price Extended Price
_______________________________________________________________________________ _______________________________________________________________________________

Date: 12/18/2022 Quotation No: 26121341 Customer No: 237748 380 New York St
Redlands, CA 92373-8118
Phone: +190936923142314
Fax #: 909-793-4801
Quotation

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City of Richmond CA 6-yr Esri Licensing Analysis
Option 1: continue maintenance and purchase software as-needed. The software below is a reasonable estimate based on deployment patterns of similarly sized cities.

Fiscal Year 22-23 23-24 24-25 25-26 26-27 27-28 28-29 6 year cost Existing Maintenance $ 18,900 $ 18,900 $ 20,790 $ 21,414 $ 22,056 $ 22,718 $ 23,399 ArcGIS Image Server $ 22,000 $ 5,665 $ 5,835 $ 6,010 $ 6,190 $ 6,376 ArcGIS Monitor (x2) $ 22,000 $ 5,665 $ 5,835 $ 6,010 $ 6,190 $ 6,376 ArcGIS Enterprise Staging (x2) $ 22,000 $ 5,665 $ 5,835 $ 6,010 $ 6,190 $ 6,376 Add'l ArcGIS Pro Standard users (+2/year) $ 13,860 $ 14,276 $ 14,704 $ 15,145 $ 15,600 $ 16,068 Add'l Desktop maintenance $ 2,640 $ 5,438 $ 8,402 $ 11,539 $ 14,857 Add'l Creator Named Users (+25/yr) $ 13,750 $ 28,325 $ 43,762 $ 59,950 $ 77,185 $ 95,401 Add'l Mobile Worker Named Users (+25/yr) $ 9,625 $ 19,828 $ 30,633 $ 41,965 $ 54,030 $ 66,781 Add'l AGOL Viewer Named Users (+25/yr) $ 2,750 $ 5,665 $ 8,752 $ 11,990 $ 15,437 $ 19,080 Utility Network users (x5) $ 1,100 $ 1,133 $ 1,167 $ 1,202 $ 1,238 Total $ 18,900 $ 124,885 $ 109,618 $ 143,342 $ 178,705 $ 216,281 $ 255,952 $ 1,028,784 Option 2: Small Government Enterprise Agreement. All software above is included in the SGEA (and much more).

SGEA pricing $ 85,000 $ 85,000 $ 85,000 $ 93,100 $ 93,100 $ 93,100 6 year cost ArcGIS Image Server $ - $ - $ - $ - $ - $ -
ArcGIS Monitor $ - $ - $ - $ - $ - $ -
ArcGIS Enterprise prod and staging $ - $ - $ - $ - $ - $ - Add'l ArcGIS Pro Standard users $ - $ - $ - $ - $ - $ - Add'l Named Users $ - $ - $ - $ - $ - $ -
Utility Network users $ - $ - $ - $ - $ - $ -
Total $ 85,000 $ 85,000 $ 85,000 $ 93,100 $ 93,100 $ 93,100 $ 534,300 Also included with SGEA: 50% discount on most software purchases made outside of the SGEA, and 5% training discount

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March 21, 2023
Information Technology
DATE: March 21, 2023
TO: Mayor Martinez and Members of the City Council
FROM: Sue Hartman, Director of Information Technology
Subject: Second Amendment to the Agreement with Superion, LLC for the Continued Licensed Use of the TRAKiT
FINANCIAL IMPACT: Total funding for one additional year in the amount of $51,462.92 is included in the approved fiscal year 2022- 2023. Included in this total is funding for the Information Technology operating budget $41,246.85 (account
01262417-400502). Funding for the five additional
licensees and maintenance for $10,216.07 is included in the approved fiscal year 2022-2023 Rent Control
operating budget (11850065-400220), and funding for the IVR module subscription fees totaling $7,900.79 are
included in the Planning and Building Regulations
operating budget (15063619-400502).

PREVIOUS COUNCIL
ACTION:

Contract - March 23, 2015
1 st Amendment - March 20, 2018

STATEMENT OF THE
ISSUE:

The Agreement with TRAKiT administrative software for
permitting, business licensing, code enforcement, and
Citizen Response Management (CRM) expires on March
31, 2023. City Council approval of a second amendment
extending the term and increasing the compensation
must be obtained to allow the City to continue using this service.

AGENDA
REPORT

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March 21, 2023
RECOMMENDED ACTION: APPROVE a Second Amendment to the Agreement with Superion, LLC for the continued licensed use of the
TRAKiT permitting, business licensing, code
enforcement, and Citizen Response Management
(CRM), extending the term from April 1, 2023, through
March 31, 2024, and increasing the contract payment
limit by $51,462.92, for a new total contract
compensation amount not to exceed $410,046.35 –
Information Technology (Sue Hartman 510-620-6874).

DISCUSSION:

The City’s licensing agreement with Superion, LLC for the TRAKiT permitting, business licensing, code enforcement, and Citizen Response Management (CRM) is set to expire on March 31, 2023. A Second Amendment to the Agreement is required for the continued use of this service. The proposed amendment will extend the term by one year to encompass the period of April 1, 2023, through March 31, 2024, and increase the contract compensation by $51,462.92, for a new total contract compensation amount not to exceed $410,046.35.

In addition, the amendment will not only allow for continued use but includes technical support and to receive software updates for the existing components of TRAKiT. It also includes a subscription for an interactive voice response module (IVR) for contractors and property owners to be able to schedule building inspections by phone. The Building Division has received requests to continue this subscription. Continuing this capability is more convenient for customers and saves staff time.

Lastly, the proposed amendment includes the licensing and maintenance of five additional user licenses for the Rent Control department to use the TRAKiT system for the administration and reporting required by the Just Cause and Rent Stabilization ordinance.

DOCUMENTS ATTACHED:

Attachment 1 – Original Contract
Attachment 2 – 1
st Amendment to the Contract
Attachment 3 – Proposed 2
nd Amendment to the Contract
Attachment 4 – IT Purchase Authorization
Attachment 5 – Sole-Source Justification

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CITY OF RICHMOND

CONTRACT AMENDMENT
Department: Project Manager:

Project Manager E-mail: Project Manager Phone No:

P.R. No: Vendor No: P.O./Contract No:

Description of Services:

Amendment No. ___ modifies the: (2nd or subsequent amendments attach Amendment History page)

Term, Payment Limit and Service Plan
Payment Limit and Service Plan

Term and Service Plan
Service Plan
The parties to this Contract Amendment do mutually agree and promise as follows:

1. Parties. The parties to this Contract Amendment are the City of Richmond, California, a municipal corporation (City), and the following named Contractor:

Company Name:

Street Address:

City, State, Zip Code:

Contact Person:

Telephone: Email:

Business License No: / Expiration Date:

A California [ ] corporation, [ ] limited liability corporation [ ] general partnership, [ ] limited partnership, [ ] individual, [ ] non-profit corporation, [ ] individual dba as [specify:]
[ ] other [specify:]

2. Purpose. This Contract Amendment is being entered into to amend the Contract between City and Contractor which was approved by the City Council of the City of Richmond or executed by the City Manager on , which original term commenced on and terminates with an original
contract payment limit of $ . Said contract shall hereinafter be referred to as the "Original Contract" and is incorporated herein by reference.

3. Original Contract Provisions. The parties hereto agree to continue to abide by those terms and conditions of the Original Contract, and any amendments thereto, which are unaffected by this Contract Amendment.

Information Technology Sue Hartman [email protected] (510) 620-6874 12612 4129 Superion TRAKiT Community Development Software
✔
1 Superion, LLC
1000 Business Center Drive Lake Mary, FL 32746 Tracy Bierman (800) 727-8088 [email protected] 40054787 ✔ March 20, 2018 April 1, 2018 March 31, 2023 352,283.43
DocuSign Envelope ID: 91228F5F-302D-47C7-AADE-966BC45E609D DocuSign Envelope ID: 04A5C6E1-4D8B-4D11-9434-2A1A5B8443C7

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Contract Amendment/EJ/TE 09-26-07

4. Amendment Provisions. This Contract Amendment is subject to the Amendment Provisions attached hereto, which are incorporated herein by reference, and which control over any conflicting provisions of the Original Contract, or any amendment thereto.

5. City of Richmond Business License Active Status Maintained. Pursuant to Municipal Code Section 7.04.030, the Contractor must maintain its City of Richmond business license for this Contract Amendment to be deemed to be in effect.

6. Insurance Coverage Updated and Maintained. Pursuant to the Original Contract, the Contractor shall provide the City with updated insurance certificates, and the Contractor shall maintain insurance coverage, for this Contract Amendment to be deemed to be in effect.

7. Signatures. These signatures attest the parties’ agreement hereto:

CITY OF RICHMOND, CALIFORNIA
a municipal corporation
By _______________________
Title:

I hereby certify that the Original Contract
and this Amendment have been approved
by the City Council or executed by the City
Manager.

By _______________________
City Clerk
Approved as to form:

By_______________________
City Attorney
List of Attachments:

1. Amendment Provisions

2. Updated Insurance Certificates
CONTRACTOR:
______________________________
(*The Corporation Chairperson of the Board, President or Vice-President should sign on the line below.)
By____________________________
Title:________________________
(*The Corporation Chief Financial Officer, Secretary or Assistant Secretary should sign on the line below.)
By:___________________________
Title:________________________
(NOTE: Pursuant to California Corporations
Code Section 313, if Contractor is a
corporation or nonprofit organization, this
Contract (1) should be signed by the
Chairperson of the Board, President or
Vice-President and the Chief Financial
Officer, Secretary or Assistant Secretary; (2)
should have both signatures conform to
designated representative groups pursuant
to Corporations Code Section 313.

3. Special Conditions
Superion, LLC
DocuSign Envelope ID: 91228F5F-302D-47C7-AADE-966BC45E609D CRO
DocuSign Envelope ID: 04A5C6E1-4D8B-4D11-9434-2A1A5B8443C7 Interim City Manager

3-21-23, CC Mtg.

Contract Amendment between the City of Richmond and
Amendment No. P.O./Contract No.

AMENDMENT PROVISIONS (PAYMENT LIMIT AND SERVICE PLAN)

1. Paragraph 3 (Payment Limit) of The Original Contract is hereby amended to increase the payment limit by $ . Paragraph 3 of the Original Contract is amended to read as follows:
"3. Payment Limit. City's total payments to Contractor under this Contract Amendment shall not exceed $ including expenses."
“The City of Richmond shall not pay for services that exceed the Contract Payment Limit without the prior written approval of the City Manager if the total Contract amount does not exceed $10,000 or without the prior approval of the City Council if the total Contract amount is over $10,000.”

2. The Service Plan (Exhibit A) of the Original Contract is hereby amended to include the following tasks and/or services:

Contract Amendment/EJ/TE 9-26-07
(See Special Conditions)
Superion, LLC
1 4129 6,300.00
See attached
DocuSign Envelope ID: 91228F5F-302D-47C7-AADE-966BC45E609D DocuSign Envelope ID: 04A5C6E1-4D8B-4D11-9434-2A1A5B8443C7

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Visit us at centralsqr.com
Richmond, CA
#62960 Details
Attachment A
Quote Number: 2021-62960
Richmond, CA - Add'l Script Config 2021-62960
Description
Request for assistance from Data Conversion team to recreate custom scripts Quote Includes:
- Script creation
- Config
- Testing
Quote Includes the Following Services Items:
 Public Administration: Prof-Scvs: Data Conversion Services (Remote) 32hrs @ $180 per hr.

Billed as Incurred
 Public Administration: Prof-Scvs: Project Management (Remote) 3hrs @ $180 per hr.

Billed as Incurred
Services and Personnel will be able to be scheduled upon receipt of signed quote.

Any requested modifications made during Training/Consulting and/or Development Reports must be tested within 30 days. Any requested changes beyond the 30 day period, may require an additional quote.

Note for Central Square Consulting:

DocuSign Envelope ID: 91228F5F-302D-47C7-AADE-966BC45E609D DocuSign Envelope ID: 04A5C6E1-4D8B-4D11-9434-2A1A5B8443C7

3-21-23, CC Mtg.

MORE INFORMATION AT CENTRALSQUARE.COM
Quote prepared on:

October 06, 2021
Quote prepared by:

Jakea Simons
[email protected]
Thank you for your interest in CentralSquare. CentralSquare provides software that powers over 8,000 communities. More about our products can be found at www.centralsquare.com.

WHAT SERVICES ARE INCLUDED?
_____

DESCRIPTION TOTAL
Public Administration Data Conversion Services - As Incurred 5,760.00 Public Administration Project Management Services - As Incurred 540.00 Services Total 6,300.00 USD

QUOTE SUMMARY
_____
Services Subtotal 6,300.00 USD
Quote Total 6,300.00 USD
WHAT ARE THE RECURRING FEES?
_____

TYPE AMOUNT
FIRST YEAR MAINTENANCE TOTAL 0.00
Quote #: Q-62960
Primary Quoted Solution: Community Dev
Quote expires on: November 14, 2021
Quote prepared for:

Sue Hartman
City of Richmond
450 Civic Center Plaza
Richmond, CA 94804
510-620-6745
DocuSign Envelope ID: 91228F5F-302D-47C7-AADE-966BC45E609D DocuSign Envelope ID: 04A5C6E1-4D8B-4D11-9434-2A1A5B8443C7

3-21-23, CC Mtg.

MORE INFORMATION AT CENTRALSQUARE.COM
Quote prepared on:

October 06, 2021
Quote prepared by:

Jakea Simons
[email protected]
FIRST YEAR SUBSCRIPTION TOTAL 0.00
The amount totals for Maintenance and/or Subscription on this quote include only the first year of software use and maintenance. Renewal invoices will include this total plus any applicable uplift amount as outlined in the relevant purchase agreement.

BILLING INFORMATION
_____
Fees will be payable within 30 days of invoicing.

Please note that the Unit Price shown above has been rounded to the nearest two decimal places for display purposes only.

The actual price may include as many as five decimal places. For example, an actual price of $21.37656 will be shown as a Unit Price of $21.38. The Total for this quote has been calculated using the actual prices for the product and/or service, rather than the Unit Price displayed above.

Prices shown do not include any taxes that may apply. Any such taxes are the responsibility of Customer. This is not an invoice.

For customers based in the United States or Canada, any applicable taxes will be determined based on the laws and regulations of the taxing authority(ies) governing the "Ship To" location provided by Customer on the Quote Form.

PAYMENT TERMS
_____
License Fees & Annual Subscriptions
- 100% Due Upon Contract Execution
Contract Startup
- 100% Due Upon Contract Execution
Hardware & Third-Party Software
- 100% Due Upon Contract Execution
Services
- Fixed Fee: 100% Due Upon Completion
- Time & Material: Due as Incurred
- Services Bundle: Fixed Fee, 100% Due Upon Execution
Third-Party Services
- Fixed Fee: 50% Due Upon Contract Execution; 50% Due Upon Completion Travel & Living Expenses
- Due as Incurred
DocuSign Envelope ID: 91228F5F-302D-47C7-AADE-966BC45E609D DocuSign Envelope ID: 04A5C6E1-4D8B-4D11-9434-2A1A5B8443C7

3-21-23, CC Mtg.

MORE INFORMATION AT CENTRALSQUARE.COM
Quote prepared on:

October 06, 2021
Quote prepared by:

Jakea Simons
[email protected]

PURCHASE ORDER INFORMATION
_____
Is a Purchase Order (PO) required for the purchase or payment of the products on this Quote Form? (Customer to complete) Yes [ ] No [ ]
Customer’s purchase order terms will be governed by the parties’ existing mutually executed agreement, or in the absence of such, are void and will have no legal effect.

PO Number:
_______________________________________
Initials:
_____________________________________________
City of Richmond
Signature:

Name:

Date:

Title:

DocuSign Envelope ID: 91228F5F-302D-47C7-AADE-966BC45E609D DocuSign Envelope ID: 04A5C6E1-4D8B-4D11-9434-2A1A5B8443C7

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Visit us at centralsqr.com
Additional Details
DocuSign Envelope ID: 91228F5F-302D-47C7-AADE-966BC45E609D DocuSign Envelope ID: 04A5C6E1-4D8B-4D11-9434-2A1A5B8443C7

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DocuSign Envelope ID: 91228F5F-302D-47C7-AADE-966BC45E609D DocuSign Envelope ID: 04A5C6E1-4D8B-4D11-9434-2A1A5B8443C7

3-21-23, CC Mtg.

Contract Amendment between the City of Richmond and
Amendment No. P.O./Contract No.

AMENDMENT PROVISIONS (AMENDMENT HISTORY)
The first Contract Amendment was approved by City Council of the City of Richmond or executed by the City Manager on for one or more of the
following provisions (check those that apply):

Increased contract payment limit by $ ________________for a payment limit not to exceed $ _________________________.

Term Amendment (insert new termination date):________________________

Service Plan
The second Contract Amendment was approved by City Council of the City of Richmond or executed by the City Manager on for one or more of the following provisions (check those that apply):

Increased contract payment limit by $ ________________for a payment limit not to exceed $ _________________________.

Term Amendment (insert new termination date):________________________

Service Plan
The third Contract Amendment was approved by City Council of the City of Richmond or executed by the City Manager on for one or more of the
following provisions (check those that apply):

Increased contract payment limit by $ ________________for a payment limit not to exceed $ _________________________.

Term Amendment (insert new termination date):________________________

Service Plan
The fourth Contract Amendment was approved by City Council of the City of Richmond or executed by the City Manager on for one or more of the following provisions (check those that apply):

Increased contract payment limit by $ ________________for a payment limit not to exceed $ _________________________.

Term Amendment (insert new termination date):________________________

Service Plan
The fifth Contract Amendment was approved by City Council of the City of Richmond or executed by the City Manager on for one or more of the
following provisions (check those that apply):

Increased contract payment limit by $ ________________for a payment limit not to exceed $ _________________________.

Term Amendment (insert new termination date):________________________

Service Plan
Superion, LLC
1 4129 6,300.00 358,583.43 ✔
✔
358,583.43 358,583.43 358,583.43 358,583.43
DocuSign Envelope ID: 91228F5F-302D-47C7-AADE-966BC45E609D DocuSign Envelope ID: 04A5C6E1-4D8B-4D11-9434-2A1A5B8443C7

3-21-23, CC Mtg.

Contract Amendment between the City of Richmond and
Amendment No. P.O./Contract No.

The sixth Contract Amendment was approved by City Council of the City of Richmond or executed by the City Manager on for one or more of the following provisions (check those that apply):

Increased contract payment limit by $ ________________for a payment limit not to exceed $ _________________________.

Term Amendment (insert new termination date):________________________

Service Plan
The seventh Contract Amendment was approved by City Council of the City of Richmond or executed by the City Manager on for one or more of the following provisions (check those that apply):

Increased contract payment limit by $ ________________for a payment limit not to exceed $ _________________________.

Term Amendment (insert new termination date):________________________

Service Plan
The eighth Contract Amendment was approved by City Council of the City of Richmond or executed by the City Manager on for one or more of the following provisions (check those that apply):

Increased contract payment limit by $ ________________for a payment limit not to exceed $ _________________________.

Term Amendment (insert new termination date):________________________

Service Plan
The ninth Contract Amendment was approved by City Council of the City of Richmond or executed by the City Manager on for one or more of the following provisions (check those that apply):

Increased contract payment limit by $ ________________for a payment limit not to exceed $ _________________________.

Term Amendment (insert new termination date):________________________

Service Plan
The tenth Contract Amendment was approved by City Council of the City of Richmond or executed by the City Manager on for one or more of the following provisions (check those that apply):

Increased contract payment limit by $ ________________for a payment limit not to exceed $ _________________________.

Term Amendment (insert new termination date):________________________

Service Plan
Contract Amendment/EJ/TE 11-30-07
1 Superion, LLC
358,583.43 358,583.43 358,583.43 358,583.43 358,583.43
DocuSign Envelope ID: 91228F5F-302D-47C7-AADE-966BC45E609D DocuSign Envelope ID: 04A5C6E1-4D8B-4D11-9434-2A1A5B8443C7

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___ Exhibit F
___ Section 8
City of Richmond - Insurance Requirements - Type 2:

Professional Services
Type 2 – Page 1 of 3
Revised: September 2011
In all instances where CONTRACTOR or its representatives will provide professional services (architects, engineers, construction management, counselors, medical professionals, hospitals, clinics, attorneys, consultants, accountants, etc.) to the City of Richmond (City), the City requires the following MINIMUM insurance requirements and limits.

CONTRACTOR shall procure and maintain for the duration of the contract, agreement, or other order for work, services or supplies, insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder and the results of that work by the CONTRACTOR, its agents, representatives, employees or subcontractors. Maintenance of proper insurance coverage is a material element of the contract. Failure to maintain or renew coverage or to provide evidence of renewal may be treated by the City as a material breach of contract.

CONTRACTOR agrees that in the event of loss due to any of the perils for which it has agreed to provide Commercial General Liability insurance, CONTRACTOR shall look solely to its insurance for recovery.

CONTRACTOR hereby grants to CITY, on behalf of any insurer providing Commercial General Liability insurance to either CONTRACTOR or CITY with respect to the services of CONSULTANT herein, a waiver of any right to subrogation which any such insurer of said CONTRACTOR may acquire against the CITY by virtue of the payment of any loss under such insurance.

Original, signed certificates and original, separate policy endorsements, naming the City as an additional insured for general liability coverage, as well as a waiver of subrogation for Workers’ Compensation insurance, shall be received and approved by the City before any work may begin. However, failure to do so shall not operate as a waiver of these insurance requirements.

City reserves the right to modify or require additional coverages for specific risk exposures depending on scope of CONTRACTORS work.

Minimum coverage is detailed below. The policy limits of coverage shall be made available to the full limits of the policy. The minimum limits stated herein shall not serve to reduce the policy limits of coverage of CONTRACTOR.

Minimum Scope of Insurance – the following forms shall be provided and coverage shall be at least as broad as the following:

1. Insurance Services Office Commercial General Liability coverage (ISO Occurrence Form CG 0001), and including coverage for bodily and personal injury, property damage, and products and completed operations (if applicable).

2. Insurance Services Office Automobile Liability coverage (ISO Form CA 0001, Code 1, Any Auto).

3. Original and Separate Additional Insured Endorsement for General Liability (ISO Form CG 20 10 11/85 or its equivalent) with primary and non-contributory language.

4. Workers’ Compensation Insurance as required by the State of California including Employer’s Liability coverage.

5. Original and Separate Waiver of Subrogation for Workers’ Compensation insurance.

6. Professional Liability or Errors & Omissions Liability Insurance appropriate to the CONTRACTOR’s profession (if required.)
Required Coverage Minimum Limits
Workers’ Compensation and
Employers’ Liability
Statutory limits as required by the State of California including $1 million Employers’ Liability per accident, per employee for bodily injury or disease.

If CONTRACTOR is self-insured, provide a certificate of Permission to SelfInsure, signed by the California Department of Industrial Relations and SelfInsurance. If contractor is a sole proprietor (has no employees) than contractor must sign “Contractor Release of Liability” found at:
http://www.ci.richmond.ca.us/index.aspx?nid=61.

General Liability
(primary and excess limits
combined)
$2,000,000 per occurrence for bodily injury, personal injury and property damage. If the policy includes a general aggregate, either the general aggregate shall apply separately to this project, service or location or the minimum required aggregate limit shall be twice the per occurrence limit ($4 million aggregate limit).

Policy shall be endorsed to name the City of Richmond as an additional insured per the conditions detailed below.

DocuSign Envelope ID: 91228F5F-302D-47C7-AADE-966BC45E609D DocuSign Envelope ID: 04A5C6E1-4D8B-4D11-9434-2A1A5B8443C7