Richmond City Council
December 17, 2024

Additional Task #2 - $11,852.00
- Preparation of construction documents for the Water Tank and Pump House including architectural and structural design for both buildings. - TreanorHL $3,500.00
- Pivot Structural Engineering $8,352.00
Additional Task #3 - $18,000.00
- Preparation of sprinkler drawings for permit for the Sakai and the Oishi Houses.

Design Contingency (approx. 8% of base contract + added scope) - $7,500.00 - This hourly as-needed fee will be used to address any unknow conditions or issues that may arise during construction. This will only be billed if needed and as authorized by the client.

Restoration Design Group – Baxter Creek 10-Year Monitoring Work for Agencies - $22,400.00 - 2024 (Year 5): $ 7700.00
- 2025 (Year 6): $ 0.00
- 2026 (Year 7): $ 3500.00
- 2027 (Year 8): $ 0.00
- 2028 (Year 9): $ 3500.00
- 2029 (Year 10): $ 7700.00
- TOTAL $ 22,400.00

CSW|ST2 – Historic Structures Work - $8,500.00
- Update drawings to current CBC code.
- Additional site work to accommodate move of Sakai complex - Additional permit submittal and response to comments
- Cost estimate coordination and review

We request a total of $98,406.00 for additional work outlined above be added to our existing contract purchase order.

Thank you for the opportunity to continue our work on this important and inspiring project. I look forward to hearing from you, and please call if you have any questions.

Sincerely,
CSW|ST2 ENGINEERING GROUP, INC.

Marcia D. Vallier, PLA, ASLA,
Senior Project Manager, Landscape Architect CA L#3293, OR L#746

ENC.: TreanorHL Proposal 11-30-2023

DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151 743
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

CSW/ Stuber-Stroeh Engineering Group, Inc.
1 / 6689
98,406.00
315,729.00
✔
✔
315,729.00
315,729.00
315,729.00
315,729.00
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151 744
___ 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 Self- Insure, signed by the California Department of Industrial Relations and Self- Insurance. 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: 57E96908-3BFB-45B2-AA62-FCA722526151 745
___ Exhibit F
___ Section 8
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 R EQUIRED 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.

DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151 746
___ Exhibit F
___ Section 8
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.

DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151 747

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
REVISION NUMBER:CERTIFICATE NUMBER:COVERAGES
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
WVD
ADDL
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

AUTOSAUTOS ONLY

NON-OWNED

SCHEDULEDOWNED

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 EMPLOYEE
E.L. EACH ACCIDENT
ER
OTH-

STATUTE
PER

LIMITS(MM/DD/YYYY)

POLICY EXP
(MM/DD/YYYY)

POLICY EFF

POLICY NUMBERTYPE OF INSURANCELTR
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)
© 1988-2015 ACORD CORPORATION. All rights reserved.

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

AUTOS ONLY
3/30/2023
AssuredPartnersDesignProfessionalsInsuranceServices,LLC 3697Mt.DiabloBlvd.,Suite230
LafayetteCA94549
NancyFerrick
510-272-1400
[email protected]
License#:6003745
USSpecialtyInsuranceCompany
29599
CSWSENG-01
SentinelInsuranceCompany
11000
CSW/Stuber-StroehEngineeringGroupInc
504RedwoodBlvd.,Suite310
NovatoCA94947
HartfordAccidentandIndemnityCompany
22357

HARTFORDINSURANCECOMPANY
38288
1512885244
B
X
2,000,000
X
1,000,000
X
ContractualLiab
10,000
Included
2,000,000
4,000,000
X
X
Y
Y
57SBWBO0500
3/31/2023
3/31/2024
4,000,000
C
1,000,000
X
X
X
Y
Y
57UEGBC2987
3/31/2023
3/31/2024
B
X
X
4,000,000
Y
57SBWBO0500
3/31/2023
Y
3/31/2024
4,000,000
X
10,000
D
X
Y
57WEGAL1BZF
3/31/2023
3/31/2024
1,000,000
1,000,000
1,000,000
A
ProfessionalLiability
USS2333699
3/31/2023
3/31/2024
PerClaim
AggregateLimit
$2,000,000
$4,000,000
UmbrellaLiabilitypolicyisfollow-formtounderlying:GeneralLiability/AutoLiability/Employer'sLiability.

RE:AllOperationsoftheNamedInsured.TheCityofRichmond,itsofficers,officials,employees,agentsandvolunteersareAdditionalInsuredtoGeneral LiabilityandAutomobileLiabilityasrequiredbywrittencontractoragreement.Insuranceisprimaryandnon-contributoryperpolicyform.Scheduleof UnderlyingCoveragetoUmbrella:GeneralLiability,AutoLiabilityandEmployer'sLiability.TheUmbrellaisfollowform.AWaiverofSubrogationappliesto GeneralLiability,AutoLiabilityandWorkers'Compensation. 30DaysNoticeofCancellation.DEDUCTIBLES:ProfessionalLiabilityDeductible=$35,000per claim. ExcessLiabilitySIR=$10,000eachoccurrence.OtherLiabilityDeductibles=$0. 30DayNoticeofCancellation
CityofRichmond
450CivicCenterPlaza
Richmond,CA94804
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151 748
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

Form SS 51 14 04 17 Page 1 of 1
© 2017, The Hartford

ADDITIONAL INSURED PROVISIONS - CALIFORNIA
This endorsement modifies insurance provided under the following:

BUSINESS LIABILITY COVERAGE FORM
A. It is agreed that paragraph (2) of subsections 6.d.
and 6.f. of Section C. - WHO IS AN INSURED is
replaced by the following:
(2) The insurance afforded by paragraph (1) above
does not apply if your acts or omissions, or the
acts or omissions of those acting on your behalf,
that are alleged to have caused the "bodily
injury", "property damage" or "personal and
advertising injury", involve professional
architectural, engineering or surveying services,
including but not limited to:
(a) The preparing, approving, editing of or
failure to prepare or approve, shop
drawings, maps, opinions, reports, surveys,
change orders, field orders, designs,
drawings, specifications, warnings,
recommendations, permit applications
payment requests, manuals or instructions;
(b) Supervisory, inspection, quality control,
architectural, engineering or surveying
activities or services;
(c) Maintenance of job site safety, construction
administration, construction contracting,
construction management, computer
consulting or design software development
or programming service, or selection of a
contractor or programming service;
(d) Monitoring, sampling, or testing service
necessary to perform any of the services
included in a. b. or c. above;
(e) Supervision, hiring, employment, training or
monitoring of others who are performing
any of the services included in a., b. or c.
above.

The insurance afforded to such additional
insured:
(a) Only applies to the extent permitted by law;
and
(b) Will not be broader than that which you are
required by the contract or agreement to
provide for such additional insured.

B. It is agreed that the following paragraphs are added to the end of subsections 1. and 8. of Section F-

OPTIONAL ADDITIONAL INSURED
COVERAGES; and it is agreed the following
paragraphs replace section b. of subsection 9. of
Section F. - OPTIONAL ADDITIONAL INSURED
COVERAGES. These paragraphs do not attach or
amend the language of any of the other subsections
of Section F - OPTIONAL ADDITIONAL INSURED
COVERAGES:

The insurance afforded by this subsection does not
apply if your acts or omissions, or the acts or
omissions of those acting on your behalf, that are
alleged to have caused the "bodily injury", "property
damage" or "personal and advertising injury",
involve professional architectural, engineering or
surveying services, including but not limited to:
(a) The preparing, approving, editing of or
failure to prepare or approve, shop
drawings, maps, opinions, reports, surveys,
change orders, field orders, designs,
drawings, specifications, warnings,
recommendations, permit applications
payment requests, manuals or instructions;
(b) Supervisory, inspection, quality control,
architectural, engineering or surveying
activities or services;
(c) Maintenance of job site safety, construction
administration, construction contracting,
construction management, computer
consulting or design software development
or programming service, or selection of a
contractor or programming service;
(d) Monitoring, sampling, or testing service
necessary to perform any of the services
included in a. b. or c. above;
(e) Supervision, hiring, employment, training or
monitoring of others who are performing any
of the services included in a., b. or c. above.

The insurance afforded to such additional insured:
(a) Only applies to the extent permitted by law;
and
(b) Will not be broader than that which you are
required by the contract or agreement to
provide for such additional insured.
3ROLF\
57SBWBO0500
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151 749

BUSINESS LIABILITY COVERAGE FORM
(b) b.Rented to, in the care, custody or Coverage under this provision does not control of, or over which physical apply to:
control is being exercised for any (1) "Bodily injury" or "property damage" purpose by you, any of your that occurred; or
"employees", "volunteer workers", (2) "Personal and advertising injury"any partner or member (if you are arising out of an offense committeda partnership or joint venture), or before you acquired or formed the any member (if you are a limited organization.liability company).

4. Operator Of Mobile Equipmentb. Real Estate Manager
With respect to "mobile equipment" registered inAny person (other than your "employee" or your name under any motor vehicle registration"volunteer worker"), or any organization law, any person is an insured while driving suchwhile acting as your real estate manager. equipment along a public highway with yourc. Temporary Custodians Of Your permission. Any other person or organizationProperty responsible for the conduct of such person isAny person or organization having proper also an insured, but only with respect to liabilitytemporary custody of your property if you arising out of the operation of the equipment, anddie, but only: only if no other insurance of any kind is available (1) With respect to liability arising out of the to that person or organization for this liability. maintenance or use of that property; and However, no person or organization is an insured with respect to:(2) Until your legal representative has been appointed. a. "Bodily injury" to a co-"employee" of the person driving the equipment; ord. Legal Representative If You Die b. "Property damage" to property owned by,Your legal representative if you die, but rented to, in the charge of or occupied byonly with respect to duties as such. That you or the employer of any person who isrepresentative will have all your rights and an insured under this provision.duties under this insurance.

5. Operator of Nonowned Watercrafte. Unnamed Subsidiary With respect to watercraft you do not own thatAny subsidiary and subsidiary thereof, of is less than 51 feet long and is not being usedyours which is a legally incorporated entity to carry persons for a charge, any person is anof which you own a financial interest of insured while operating such watercraft withmore than 50% of the voting stock on the your permission. Any other person oreffective date of this Coverage Part. organization responsible for the conduct ofThe insurance afforded herein for any such person is also an insured, but only withsubsidiary not shown in the Declarations respect to liability arising out of the operationas a named insured does not apply to of the watercraft, and only if no otherinjury or damage with respect to which an insurance of any kind is available to thatinsured under this insurance is also an person or organization for this liability.insured under another policy or would be However, no person or organization is anan insured under such policy but for its insured with respect to:termination or upon the exhaustion of its limits of insurance. a. "Bodily injury" to a co-"employee" of the person operating the watercraft; or3. Newly Acquired Or Formed Organization b. "Property damage" to property owned by,Any organization you newly acquire or form, rented to, in the charge of or occupied byother than a partnership, joint venture or you or the employer of any person who islimited liability company, and over which you an insured under this provision.maintain financial interest of more than 50% of the voting stock, will qualify as a Named 6. Additional Insureds When Required By Insured if there is no other similar insurance Written Contract, Written Agreement Or available to that organization. However: Permit
a. Coverage under this provision is afforded The person(s) or organization(s) identified in only until the 180th day after you acquire a. f.Paragraphs through below are additional or form the organization or the end of the insureds when you have agreed, in a written policy period, whichever is earlier; and
Form SS 00 08 04 05 Page 11 of 24
3ROLF\
57SBWBO0500
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151 750

BUSINESS LIABILITY COVERAGE FORM
(e)contract, written agreement or because of a Any failure to make such permit issued by a state or political inspections, adjustments, tests or subdivision, that such person or organization servicing as the vendor has be added as an additional insured on your agreed to make or normally policy, provided the injury or damage occurs undertakes to make in the usual subsequent to the execution of the contract or course of business, in connection agreement, or the issuance of the permit. with the distribution or sale of the products;A person or organization is an additional
(f) Demonstration, installation,insured under this provision only for that servicing or repair operations,period of time required by the contract, except such operations performedagreement or permit.
at the vendor's premises inHowever, no such person or organization is an connection with the sale of theadditional insured under this provision if such product;person or organization is included as an (g) Products which, after distributionadditional insured by an endorsement issued or sale by you, have been labeledby us and made a part of this Coverage Part, or relabeled or used as aincluding all persons or organizations added container, part or ingredient of anyas additional insureds under the specific other thing or substance by or foradditional insured coverage grants in Section the vendor; orF. – Optional Additional Insured Coverages. (h) "Bodily injury" or "propertya. Vendors
damage" arising out of the soleAny person(s) or organization(s) (referred to negligence of the vendor for itsbelow as vendor), but only with respect to own acts or omissions or those of"bodily injury" or "property damage" arising its employees or anyone elseout of "your products" which are distributed acting on its behalf. However, thisor sold in the regular course of the vendor's exclusion does not apply to:business and only if this Coverage Part (i) The exceptions contained inprovides coverage for "bodily injury" or (d) (f)Subparagraphs or ; or"property damage" included within the (ii)"products-completed operations hazard". Such inspections, adjustments, tests or servicing as the vendor(1) The insurance afforded to the vendor has agreed to make or normallyis subject to the following additional undertakes to make in the usualexclusions:
course of business, inThis insurance does not apply to: connection with the distribution (a) "Bodily injury" or "property or sale of the products. damage" for which the vendor is (2) This insurance does not apply to anyobligated to pay damages by insured person or organization fromreason of the assumption of whom you have acquired such products,liability in a contract or agreement. or any ingredient, part or container,This exclusion does not apply to entering into, accompanying orliability for damages that the containing such products.vendor would have in the absence b. Lessors Of Equipmentof the contract or agreement;
(1) Any person or organization from(b) Any express warranty whom you lease equipment; but onlyunauthorized by you;
with respect to their liability for "bodily(c) Any physical or chemical change injury", "property damage" orin the product made intentionally "personal and advertising injury"by the vendor; caused, in whole or in part, by your (d) Repackaging, except when
maintenance, operation or use of
unpacked solely for the purpose of equipment leased to you by such inspection, demonstration, testing, person or organization. or the substitution of parts under
instructions from the manufacturer,
and then repackaged in the
original container;

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BUSINESS LIABILITY COVERAGE FORM
(2) e. Permits Issued By State Or PoliticalWith respect to the insurance afforded Subdivisionsto these additional insureds, this
insurance does not apply to any (1) Any state or political subdivision, but "occurrence" which takes place after only with respect to operations you cease to lease that equipment. performed by you or on your behalf for c. Lessors Of Land Or Premises which the state or political subdivision has issued a permit.(1) Any person or organization from (2)whom you lease land or premises, but With respect to the insurance afforded only with respect to liability arising out to these additional insureds, this of the ownership, maintenance or use insurance does not apply to:
of that part of the land or premises (a) "Bodily injury", "property damage" leased to you. or "personal and advertising
(2) With respect to the insurance afforded injury" arising out of operations to these additional insureds, this performed for the state or insurance does not apply to: municipality; or
(a) (b)Any "occurrence" which takes "Bodily injury" or "property damage" place after you cease to lease that included within the "products- land or be a tenant in that completed operations hazard". premises; or f. Any Other Party
(b) Structural alterations, new (1) Any other person or organization who construction or demolition a.is not an insured under Paragraphs operations performed by or on ethrough . above, but only with behalf of such person or respect to liability for "bodily injury", organization. "property damage" or "personal and
d. Architects, Engineers Or Surveyors advertising injury" caused, in whole or in part, by your acts or omissions or(1) Any architect, engineer, or surveyor, but the acts or omissions of those actingonly with respect to liability for "bodily on your behalf:injury", "property damage" or "personal
(a)and advertising injury" caused, in whole In the performance of your or in part, by your acts or omissions or ongoing operations; the acts or omissions of those acting on (b) In connection with your premises your behalf: owned by or rented to you; or
(a) In connection with your premises; (c) In connection with "your work" and or included within the "products-
(b) In the performance of your completed operations hazard", but ongoing operations performed by only if
you or on your behalf. (i) The written contract or written (2) With respect to the insurance afforded agreement requires you to to these additional insureds, the provide such coverage to following additional exclusion applies: such additional insured; and (ii)This insurance does not apply to This Coverage Part provides "bodily injury", "property damage" or coverage for "bodily injury" or "personal and advertising injury" "property damage" included arising out of the rendering of or the within the "products- failure to render any professional completed operations hazard". services by or for you, including: (2) With respect to the insurance afforded (a) The preparing, approving, or to these additional insureds, this failure to prepare or approve, insurance does not apply to:
maps, shop drawings, opinions, "Bodily injury", "property damage" or reports, surveys, field orders, "personal and advertising injury" change orders, designs or arising out of the rendering of, or the drawings and specifications; or failure to render, any professional (b) Supervisory, inspection, architectural, engineering or surveying architectural or engineering services, including:
activities.

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(a) The preparing, approving, or This General Aggregate limit does not failure to prepare or approve, apply to "property damage" to premises maps, shop drawings, opinions, while rented to you or temporarily reports, surveys, field orders, occupied by you with permission of the change orders, designs or owner, arising out of fire, lightning or drawings and specifications; or explosion.
(b) 3. Each Occurrence LimitSupervisory, inspection,
architectural or engineering 2.a. 2.bSubject to or above, whichever activities. applies, the most we will pay for the sum of all The limits of insurance that apply to additional damages because of all "bodily injury", D.insureds are described in Section – Limits "property damage" and medical expenses Of Insurance. arising out of any one "occurrence" is the Liability and Medical Expenses Limit shown inHow this insurance applies when other the Declarations.insurance is available to an additional insured is described in the Other Insurance Condition The most we will pay for all medical expenses E.in Section – Liability And Medical Expenses because of "bodily injury" sustained by any General Conditions. one person is the Medical Expenses Limit shown in the Declarations.No person or organization is an insured with

4. Personal And Advertising Injury Limitrespect to the conduct of any current or past partnership, joint venture or limited liability 2.b.Subject to above, the most we will pay for company that is not shown as a Named Insured in the sum of all damages because of all the Declarations. "personal and advertising injury" sustained by any one person or organization is the Personal
D. LIABILITY AND MEDICAL EXPENSES
and Advertising Injury Limit shown in theLIMITS OF INSURANCE Declarations.

1. The Most We Will Pay 5. Damage To Premises Rented To You Limit The Limits of Insurance shown in the The Damage To Premises Rented To YouDeclarations and the rules below fix the most Limit is the most we will pay under Businesswe will pay regardless of the number of: Liability Coverage for damages because of a. Insureds; "property damage" to any one premises, while b. Claims made or "suits" brought; or rented to you, or in the case of damage by fire, lightning or explosion, while rented to you orc. Persons or organizations making claims or temporarily occupied by you with permission ofbringing "suits". the owner.2. Aggregate Limits
In the case of damage by fire, lightning orThe most we will pay for: explosion, the Damage to Premises Rented To a. Damages because of "bodily injury" and You Limit applies to all damage proximately "property damage" included in the caused by the same event, whether such "products-completed operations hazard" is damage results from fire, lightning or explosion the Products-Completed Operations or any combination of these.

Aggregate Limit shown in the 6. How Limits Apply To Additional InsuredsDeclarations.

The most we will pay on behalf of a person orb. Damages because of all other "bodily organization who is an additional insuredinjury", "property damage" or "personal under this Coverage Part is the lesser of:and advertising injury", including medical a. The limits of insurance specified in aexpenses, is the General Aggregate Limit written contract, written agreement orshown in the Declarations. permit issued by a state or politicalThis General Aggregate Limit applies subdivision; orseparately to each of your "locations" b. The Limits of Insurance shown in theowned by or rented to you.

Declarations."Location" means premises involving the
Such amount shall be a part of and not in same or connecting lots, or premises addition to the Limits of Insurance shown in whose connection is interrupted only by a the Declarations and described in this Section.street, roadway or right-of-way of a railroad.

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(1)If more than one limit of insurance under this Immediately send us copies of any policy and any endorsements attached thereto demands, notices, summonses or applies to any claim or "suit", the most we will pay legal papers received in connection under this policy and the endorsements is the with the claim or "suit"; single highest limit of liability of all coverages (2) Authorize us to obtain records and applicable to such claim or "suit". However, this other information; paragraph does not apply to the Medical Expenses (3) Cooperate with us in the investigation, 3.limit set forth in Paragraph above. settlement of the claim or defense The Limits of Insurance of this Coverage Part apply against the "suit"; and separately to each consecutive annual period and to (4) Assist us, upon our request, in theany remaining period of less than 12 months, starting enforcement of any right against anywith the beginning of the policy period shown in the person or organization that may beDeclarations, unless the policy period is extended liable to the insured because of injuryafter issuance for an additional period of less than 12 or damage to which this insurancemonths. In that case, the additional period will be may also apply.deemed part of the last preceding period for purposes d. Obligations At The Insured's Own Costof determining the Limits of Insurance.

No insured will, except at that insured's own
E. LIABILITY AND MEDICAL EXPENSES cost, voluntarily make a payment, assume GENERAL CONDITIONS any obligation, or incur any expense, other than for first aid, without our consent.1. Bankruptcy
e. Additional Insured's Other InsuranceBankruptcy or insolvency of the insured or of the insured's estate will not relieve us of our If we cover a claim or "suit" under this obligations under this Coverage Part. Coverage Part that may also be covered by other insurance available to an2. Duties In The Event Of Occurrence, additional insured, such additional insuredOffense, Claim Or Suit must submit such claim or "suit" to thea. Notice Of Occurrence Or Offense other insurer for defense and indemnity.

You or any additional insured must see to However, this provision does not apply toit that we are notified as soon as the extent that you have agreed in apracticable of an "occurrence" or an written contract, written agreement oroffense which may result in a claim. To permit that this insurance is primary andthe extent possible, notice should include: non-contributory with the additional (1) How, when and where the "occurrence" insured's own insurance. or offense took place; f. Knowledge Of An Occurrence, Offense, (2) The names and addresses of any Claim Or Suit
injured persons and witnesses; and a. b.Paragraphs and apply to you or to (3) The nature and location of any injury any additional insured only when such or damage arising out of the "occurrence", offense, claim or "suit" is "occurrence" or offense. known to:
b. Notice Of Claim (1) You or any additional insured that is an individual;If a claim is made or "suit" is brought
against any insured, you or any additional (2) Any partner, if you or an additional insured must: insured is a partnership;
(1) Immediately record the specifics of the (3) Any manager, if you or an additional claim or "suit" and the date received; insured is a limited liability company; and (4) Any "executive officer" or insurance
(2) Notify us as soon as practicable. manager, if you or an additional insured is a corporation;You or any additional insured must see to it that we receive a written notice of the (5) Any trustee, if you or an additional claim or "suit" as soon as practicable. insured is a trust; or c. Assistance And Cooperation Of The (6) Any elected or appointed official, if you Insured or an additional insured is a political
subdivision or public entity.You and any other involved insured must:

Form SS 00 08 04 05 Page 15 of 24
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BUSINESS LIABILITY COVERAGE FORM
f. (3)This Paragraph applies separately to We have issued this policy in reliance you and any additional insured. upon your representations.

3. Financial Responsibility Laws b. Unintentional Failure To Disclose Hazardsa. When this policy is certified as proof of
financial responsibility for the future under If unintentionally you should fail to disclose the provisions of any motor vehicle all hazards relating to the conduct of your financial responsibility law, the insurance business at the inception date of this provided by the policy for "bodily injury" Coverage Part, we shall not deny any liability and "property damage" liability will coverage under this Coverage Part comply with the provisions of the law to because of such failure. the extent of the coverage and limits of 7. Other Insurance insurance required by that law. If other valid and collectible insurance isb. With respect to "mobile equipment" to available for a loss we cover under thiswhich this insurance applies, we will Coverage Part, our obligations are limited asprovide any liability, uninsured motorists, follows:underinsured motorists, no-fault or other a. Primary Insurancecoverage required by any motor vehicle b.law. We will provide the required limits for This insurance is primary except when those coverages. below applies. If other insurance is also primary, we will share with all that other4. Legal Action Against Us c.insurance by the method described inNo person or organization has a right under below.this Coverage Form:
b. Excess Insurancea. To join us as a party or otherwise bring us This insurance is excess over any of theinto a "suit" asking for damages from an other insurance, whether primary, excess,insured; or
contingent or on any other basis:b. To sue us on this Coverage Form unless (1) Your Workall of its terms have been fully complied
with. That is Fire, Extended Coverage,
Builder's Risk, Installation Risk orA person or organization may sue us to recover similar coverage for "your work";on an agreed settlement or on a final judgment against an insured; but we will not be liable for (2) Premises Rented To You damages that are not payable under the terms of That is fire, lightning or explosionthis insurance or that are in excess of the insurance for premises rented to youapplicable limit of insurance. An agreed or temporarily occupied by you withsettlement means a settlement and release of permission of the owner;liability signed by us, the insured and the (3) Tenant Liabilityclaimant or the claimant's legal representative.

That is insurance purchased by you to5. Separation Of Insureds cover your liability as a tenant forExcept with respect to the Limits of Insurance, "property damage" to premises rentedand any rights or duties specifically assigned to you or temporarily occupied by youin this policy to the first Named Insured, this with permission of the owner;insurance applies:
(4) Aircraft, Auto Or Watercrafta. As if each Named Insured were the only If the loss arises out of the maintenanceNamed Insured; and or use of aircraft, "autos" or watercraft tob. Separately to each insured against whom g.the extent not subject to Exclusion ofa claim is made or "suit" is brought. A.Section – Coverages.

6. Representations (5) Property Damage To Borrowed
a. When You Accept This Policy Equipment Or Use Of Elevators By accepting this policy, you agree: If the loss arises out of "property damage" to borrowed equipment or(1) The statements in the Declarations the use of elevators to the extent notare accurate and complete; k. A.subject to Exclusion of Section –(2) Those statements are based upon Coverages.representations you made to us; and

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BUSINESS LIABILITY COVERAGE FORM
(6) When You Are Added As An When this insurance is excess over other Additional Insured To Other insurance, we will pay only our share of Insurance the amount of the loss, if any, that
exceeds the sum of:That is other insurance available to (1)you covering liability for damages The total amount that all such other arising out of the premises or insurance would pay for the loss in the operations, or products and completed absence of this insurance; and operations, for which you have been (2) The total of all deductible and self- added as an additional insured by that insured amounts under all that other insurance; or insurance.
(7) When You Add Others As An We will share the remaining loss, if any, with Additional Insured To This any other insurance that is not described in Insurance this Excess Insurance provision and was not
That is other insurance available to an bought specifically to apply in excess of the additional insured. Limits of Insurance shown in the
Declarations of this Coverage Part.However, the following provisions c. Method Of Sharingapply to other insurance available to any person or organization who is an If all the other insurance permits additional insured under this Coverage contribution by equal shares, we will follow Part: this method also. Under this approach,
(a) Primary Insurance When each insurer contributes equal amounts Required By Contract until it has paid its applicable limit of insurance or none of the loss remains,This insurance is primary if you whichever comes first.have agreed in a written contract, written agreement or permit that If any of the other insurance does not permit this insurance be primary. If other contribution by equal shares, we will insurance is also primary, we will contribute by limits. Under this method, each share with all that other insurance insurer’s share is based on the ratio of its c.by the method described in applicable limit of insurance to the total below. applicable limits of insurance of all insurers.
(b) Primary And Non-Contributory 8. Transfer Of Rights Of Recovery Against To Other Insurance When Others To Us
Required By Contract a. Transfer Of Rights Of Recovery
If you have agreed in a written If the insured has rights to recover all or contract, written agreement or part of any payment, including permit that this insurance is Supplementary Payments, we have made primary and non-contributory with under this Coverage Part, those rights are the additional insured's own transferred to us. The insured must do insurance, this insurance is nothing after loss to impair them. At our primary and we will not seek request, the insured will bring "suit" or contribution from that other transfer those rights to us and help us insurance. enforce them. This condition does not
(a) (b)Paragraphs and do not apply to apply to Medical Expenses Coverage. other insurance to which the additional b. Waiver Of Rights Of Recovery (Waiver insured has been added as an Of Subrogation)
additional insured. If the insured has waived any rights of When this insurance is excess, we will recovery against any person or have no duty under this Coverage Part to organization for all or part of any payment, defend the insured against any "suit" if any including Supplementary Payments, we other insurer has a duty to defend the have made under this Coverage Part, we insured against that "suit". If no other also waive that right, provided the insured insurer defends, we will undertake to do waived their rights of recovery against so, but we will be entitled to the insured's such person or organization in a contract, rights against all those other insurers. agreement or permit that was executed prior to the injury or damage.

Form SS 00 08 04 05 Page 17 of 24
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COMMERCIAL AUTOMOBILEHA99 160312THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.COMMERCIAL AUTOMOBILE BROAD FORM ENDORSEMENTThisendorsement modifiesinsuranceprovidedunder the following:BUSINESS AUTOCOVERAGE FORMTotheextentthattheprovisionsofthisendorsementprovidebroaderbenefitstothe"insured"thanotherprovisionsoftheCoverage Form, the provisionsofthis endorsementapply.1.BROAD FORM INSURED d.Any"employee"ofyourswhileusingacovered"auto"youdon'town,hireor A.SubsidiariesandNewlyAcquiredor borrowinyourbusinessoryourFormed Organizations personal affairs.TheNamedInsuredshowninthe C.Lessorsas InsuredsDeclarations is amended to include: ParagraphA.1.-WHOISANINSURED-of (1)Anylegalbusinessentityotherthana SectionII-LiabilityCoverageisamendedtopartnershiporjointventure,formedasa add:subsidiaryinwhichyouhaveanownershipinterestofmorethan50%on e.Thelessorofacovered"auto"whilethe theeffectivedateoftheCoverage Form. "auto"isleasedtoyouunderawritten However,theNamedInsureddoesnot agreementif:includeanysubsidiarythatisan (1)Theagreementrequiresyouto"insured"underanyotherautomobile providedirectprimaryinsurancefor policyorwouldbean"insured"under the lessor andsuchapolicybutforitsterminationor (2)The "auto"isleasedwithouta driver.the exhaustionofits LimitofInsurance.Suchaleased"auto"willbeconsidereda (2)Anyorganizationthatisacquiredor covered"auto"youownandnotacovered formedbyyouandoverwhichyou "auto"you hire.maintainmajorityownership.However,theNamedInsured doesnot include any D.AdditionalInsuredifRequiredbyContractnewly formedor acquired organization: (1)ParagraphA.1.-WHOISANINSURED(a)Thatisapartnershiporjoint -ofSectionII-LiabilityCoverageisventure, amended to add:(b)Thatisan"insured"underanyother f.Whenyouhaveagreed,inawrittenpolicy, contractorwrittenagreement,thata (c)ThathasexhausteditsLimitof personororganizationbeaddedasInsurance underany other policy, or anadditionalinsuredonyourbusiness auto policy, such personor (d)180daysormoreafterits organization is an "insured", but only acquisitionorformationbyyou, totheextentsuchpersonorunlessyouhavegivenusnoticeof organizationisliablefor"bodilythe acquisitionor formation. injury"or"propertydamage"causedCoveragedoesnotapplyto"bodily by the conduct of an"insured" under injury"or"propertydamage"thatresults paragraphsa.orb.ofWhoIsAnfroman"accident"thatoccurredbefore Insuredwithregardtotheyouformed oracquiredtheorganization. ownership,maintenanceoruseofa B.Employees asInsureds covered"auto."ParagraphA.1.-WHOISANINSURED-of SECTIONII-LIABILITYCOVERAGEis amended to add:© 2011, The Hartford(Includes copyrightedmaterialFormHA 9916 0312 Page 1of5of ISOProperties,Inc.,with itspermission.) 57UEGBC2987
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151757 E.PrimaryandNon-ContributoryifTheinsuranceaffordedtoanysuch RequiredbyContractadditionalinsuredappliesonlyifthe"bodilyinjury"or"propertydamage" Onlywithrespecttoinsuranceprovidedtooccurs: anadditionalinsuredin1.D.-Additional(1)During the policyperiod, and InsuredIfRequiredbyContract,the followingprovisions apply:(2)Subsequenttothe execution of suchwritten contract, and (3)PrimaryInsuranceWhenRequiredByContract(3)Priortotheexpirationoftheperiod oftimethatthewrittencontract Thisinsuranceisprimaryifyouhaverequiressuchinsurancebe provided agreedinawrittencontractorwrittento the additionalinsured. agreementthatthisinsurancebeprimary.Ifotherinsuranceisalso (2)HowLimits Apply primary,wewillsharewithallthatotherIfyouhaveagreedinawrittencontract insurancebythemethoddescribedinorwrittenagreementthatanother OtherInsurance5.d.personororganizationbeaddedasan (4)PrimaryAndNon-ContributoryToOtheradditionalinsuredonyourpolicy,the Insurance When Required ByContractmostwewillpayonbehalfofsuchadditionalinsuredisthelesserof: Ifyouhaveagreedinawrittencontractorwrittenagreementthatthisinsurance(a)Thelimitsofinsurancespecifiedin isprimaryandnon-contributorywiththe thewrittencontractorwritten additionalinsured'sowninsurance,this agreement; or insuranceisprimaryandwewillnot(b)TheLimitsofInsuranceshownin seekcontributionfromthatotherthe Declarations. insurance.Suchamountshallbeapartofandnot (3)(4)Paragraphsanddonotapplytoother inadditiontoLimitsofInsuranceshown insurancetowhichtheadditionalinsuredintheDeclarationsanddescribedinthis hasbeen addedas anadditional insured.Section. Whenthisinsuranceisexcess,wewillhaveno (3)AdditionalInsuredsOther Insurancedutytodefendtheinsuredagainstany"suit"if Ifwecoveraclaimor"suit"underthis anyotherinsurerhasadutytodefendtheCoveragePartthat may also becoveredinsuredagainstthat"suit".Ifnootherinsurerbyotherinsuranceavailabletoan defends,wewillundertaketodoso,butwewilladditionalinsured,suchadditionalbeentitledtotheinsured'srightsagainstallinsuredmustsubmitsuchclaimor"suit" those other insurers. totheotherinsurerfordefenseandWhenthisinsuranceisexcessoverotherindemnity. insurance,wewillpayonlyourshareofthe However,thisprovisiondoesnotapplyamountoftheloss,ifany,thatexceedsthesumtotheextentthatyouhaveagreedina of:writtencontractorwrittenagreement (1)Thetotalamountthatallsuchotherthatthisinsuranceisprimaryandnon- insurancewouldpayforthelossinthecontributorywiththeadditionalinsured'sabsenceofthisinsurance; andowninsurance. (2)Thetotalofalldeductibleandself-insured (4)DutiesinTheEventOfAccident,Claim, amountsunder allthat other insurance.Suitor Loss Wewillsharetheremainingloss,ifany,bythe Ifyouhaveagreedinawrittencontractmethoddescribed in OtherInsurance5.d.orwrittenagreementthatanother 2.AUTOSRENTEDBY EMPLOYEESpersonororganizationbeaddedasan additionalinsuredonyourpolicy,the Any"auto"hiredorrentedbyyour"employee"additionalinsuredshallberequiredto onyourbehalfandatyourdirectionwillbecomplywiththeprovisionsinLOSS considered an"auto"you hire.CONDITIONS2.-DUTIESINTHEThe OTHER INSURANCEConditionisamendedEVENTOFACCIDENT,CLAIM,SUIT byaddingthefollowing:ORLOSS–OFSECTIONIV–BUSINESSAUTOCONDITIONS,inthesame manner astheNamedInsured.© 2011, The Hartford(Includes copyrightedmaterialFormHA 9916 0312 Page 2of5of ISOProperties,Inc.,with itspermission.) DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151758 5PHYSICALDAMAGE- ADDITIONALIfan"employee’s"personalinsurancealso .TEMPORARYTRANSPORTATIONEXPENSE appliesonanexcessbasistoacovered"auto" COVERAGEhiredorrentedbyyour"employee"onyourbehalfandatyourdirection,thisinsurancewill ParagraphA.4.a.ofSECTIONIII-PHYSICAL beprimarytothe"employee’s"personalDAMAGECOVERAGEisamendedtoprovideainsurance. limitof$50perdayandamaximumlimitof3.AMENDED FELLOW EMPLOYEEEXCLUSION $1,000.6.LOAN/LEASE GAP COVERAGEEXCLUSION5.-FELLOWEMPLOYEE-of SECTIONII-LIABILITYCOVERAGEdoesnot UnderSECTIONIII-PHYSICALDAMAGE applyifyouhaveworkers'compensation COVERAGE,intheeventofatotal"loss"toa insurancein-forcecoveringall ofyour covered"auto",wewillpayyouradditionallegal "employees". obligationforanydifferencebetweentheactualCoverageisexcessoveranyothercollectible cashvalueofthe"auto"atthetimeofthe"loss"insurance. andthe"outstanding balance"oftheloan/lease.4.HIREDAUTOPHYSICALDAMAGECOVERAGE "Outstandingbalance"meanstheamountyou oweontheloan/leaseatthetimeof"loss"less Ifhired"autos"arecovered"autos"forLiability anyamountsrepresentingtaxes;overdueCoverageandifComprehensive,Specified payments;penalties,interestorchargesCausesofLoss,orCollisioncoveragesare resultingfromoverduepayments;additionalprovidedunderthisCoverageFormforanymileagecharges;excess wearand tear charges;"auto"youown,thenthePhysicalDamage leaseterminationfees;securitydepositsnot Coveragesprovidedareextendedto"autos" you returnedbythelessor;costsforextendedhire orborrow,subject to the followinglimit. warranties,creditlifeInsurance,health,accidentThemostwewillpayfor"loss"toanyhired or disability insurancepurchased withtheloanor "auto"is: lease;andcarry-overbalancesfromprevious(1)$100,000; loans orleases.(2)Theactualcashvalueofthedamagedor 7.AIRBAGCOVERAGEstolenpropertyatthetimeofthe"loss"; or UnderParagraphB.EXCLUSIONS-of (3)Thecostofrepairingorreplacingthe SECTIONIII - PHYSICALDAMAGE damaged orstolen property, COVERAGE, the followingisadded:whicheverissmallest,minusadeductible.The Theexclusionrelatingtomechanicalbreakdowndeductiblewillbeequaltothelargestdeductible doesnotapplytotheaccidentaldischargeofanapplicabletoanyowned"auto"forthat airbag.coverage. No deductibleapplies to "loss"caused 8.ELECTRONICEQUIPMENT-BROADENEDby fireor lightning. Hired Auto Physical DamageCOVERAGEcoverageisexcessoveranyothercollectible a.TheexceptionstoParagraphsB.4-insurance.Subjecttotheabove limit,deductible EXCLUSIONS-ofSECTIONIII-PHYSICAL andexcessprovisions,wewillprovidecoverageDAMAGECOVERAGEarereplacedbythe equaltothe broadest coverage applicable to anyfollowing:covered"auto"you own. 4.c.4.d.Exclusionsanddonotapplyto Wewillalsocoverlossofuseofthehired "auto" equipmentdesignedtobeoperatedsolelyifitresultsfroman"accident",youarelegally byuseofthepowerfromthe"auto's"liableandthelessorincursanactualfinancial electricalsystemthat,atthetimeof"loss", loss,subjecttoamaximumof$1000per is:"accident". (1)Permanentlyinstalledinorupon Thisextensionofcoveragedoesnotapplyto the covered"auto";any"auto"youhireorborrowfromanyofyour"employees",partners(ifyouareapartnership), (2)Removablefromahousingunitmembers(ifyouarealimitedliabilitycompany), whichispermanentlyinstalledinormembers of theirhouseholds. orupon the covered"auto"; (3)Anintegralpartofthesameunit housinganyelectronic equipmentdescribedinParagraphs(1)and (2)above;or © 2011, The Hartford(Includes copyrightedmaterialFormHA 99160312 Page 3of 5of ISOProperties,Inc.,with itspermission.) DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151759 (4)Necessaryforthenormal IfanotherHartfordFinancialServicesGroup,operation of the covered"auto"or Inc.companypolicyorcoverageformthatisnotthemonitoringofthecoveredan automobilepolicy orcoverage form applies to"auto's"operating system. the same "accident", the followingapplies:b.SectionIII–VersionCA00010310ofthe (1)IfthedeductibleunderthisBusinessAuto BusinessAutoCoverageForm,Physical CoverageFormisthesmaller(orsmallest)DamageCoverage,LimitofInsurance,deductible,it will bewaived;ParagraphC.2andVersionCA00011001of (2)IfthedeductibleunderthisBusinessAutotheBusinessAutoCoverageForm,Physical CoverageFormisnotthesmaller(orDamageCoverage,LimitofInsurance, smallest)deductible,itwillbereducedbyParagraphCareeachamendedtoaddthe theamountofthesmaller(orsmallest)following: deductible.$1,500isthemostwewillpayfor"loss"in 12.AMENDEDDUTIESINTHEEVENTOF anyone"accident"toallelectronicACCIDENT, CLAIM,SUIT OR LOSSequipment(otherthanequipmentdesigned TherequirementinLOSSCONDITIONS2.a.-solelyforthereproductionofsound,andDUTIES IN THE EVENT OF ACCIDENT,CLAIM,accessoriesusedwithsuchequipment)SUITORLOSS-ofSECTIONIV-BUSINESSthatreproduces,receivesortransmits AUTOCONDITIONSthatyoumustnotifyusof audio,visualordatasignalswhich,atthe an"accident"applies only whenthe"accident" istime of "loss", is: knownto:(1)Permanentlyinstalledinorupon(1)You, ifyou arean individual;thecovered"auto"inahousing, (2)Apartner, ifyou area partnership;openingorotherlocationthat is notnormallyusedbythe"auto" (3)Amember,ifyouarealimitedliabilitymanufacturerfortheinstallationof company;orsuchequipment; (4)An executive officer or insurancemanager, if(2)Removablefromapermanently youare acorporation.installedhousingunitasdescribed13.UNINTENTIONALFAILURETODISCLOSE inParagraph2.a.aboveorisan HAZARDSintegral part of thatequipment; or Ifyouunintentionallyfailtodisclose anyhazards(3)Anintegralpartofsuch equipment. existingattheinceptiondateofyourpolicy,wec.Foreachcovered"auto",shouldlossbelimited willnotdenycoverageunderthisCoveragetoelectronicequipmentonly,ourobligationto Formbecause of suchfailure.payfor,repair,returnorreplacedamagedor 14.HIRED AUTO-COVERAGE TERRITORYstolenelectronicequipmentwillbereducedby Paragraphe.ofGENERALCONDITIONS7.-theapplicabledeductibleshowninthe POLICYPERIOD,COVERAGETERRITORY-Declarations,or$250,whicheverdeductibleis ofSECTIONIV-BUSINESSAUTO less. CONDITIONS is replaced bythefollowing:9.EXTRAEXPENSE- BROADENEDe.Forshort-termhired"autos",thecoverageCOVERAGE territorywithrespecttoLiabilityCoverageisUnderParagraphA.- COVERAGE -of SECTION anywhereintheworldprovidedthatiftheIII-PHYSICALDAMAGECOVERAGE,wewill "insured's"responsibilitytopaydamagesfor payfortheexpenseofreturningastolencovered "bodilyinjury"or"propertydamage"is "auto"toyou. determinedina "suit," the "suit" is brought in 10.GLASSREPAIR-WAIVER OFDEDUCTIBLE theUnitedStatesofAmerica,theterritoriesandpossessionsoftheUnitedStatesofUnderParagraphD.-DEDUCTIBLE-ofSECTION America,PuertoRicoorCanadaorina III-PHYSICALDAMAGECOVERAGE,the settlement weagree to.followingisadded: 15.WAIVEROF SUBROGATIONNodeductibleappliestoglassdamageiftheglass is repaired rather than replaced. TRANSFEROFRIGHTSOFRECOVERYAGAINSTOTHERSTOUS-ofSECTIONIV-11.TWO OR MOREDEDUCTIBLES BUSINESSAUTOCONDITIONSisamendedbyUnderParagraphD.-DEDUCTIBLE-ofSECTION adding the following:III-PHYSICALDAMAGECOVERAGE,thefollowingisadded: © 2011, The Hartford(Includes copyrightedmaterialFormHA 9916 0312 Page 4of 5of ISOProperties,Inc.,with itspermission.) DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151760 Wewaiveanyrightofrecoverywemayhave c.Regardlessofthenumberofautosdeemedaagainstanypersonororganizationwithwhomtotalloss,themostwewillpayunderthisyouhaveawrittencontractthatrequiressuch Hybrid,Electric,orNaturalGasVehiclewaiverbecauseofpaymentswemakefor PaymentCoverageprovisionforanyone damages underthis CoverageForm. "loss"is$10,000.16.RESULTANT MENTAL ANGUISH COVERAGE Forthepurposes of the coverageprovision, Thedefinitionof"bodilyinjury"inSECTIONV- a.A"non-hybrid"autoisdefinedasanautothat DEFINITIONS is replaced bythefollowing: usesonlyaninternalcombustionenginetomovetheautobutdoesnotincludeautos"Bodilyinjury"meansbodilyinjury,sicknessor poweredsolelyby electricityor naturalgas.diseasesustainedbyanyperson,includingmentalanguishordeathresultingfromanyof b.A"hybrid"autoisdefinedasanautowithan these. internalcombustionengineandoneormore electricmotors;andthatusestheinternal17.EXTENDED CANCELLATIONCONDITION combustionengineandoneormoreelectric Paragraph2.oftheCOMMONPOLICY motorstomovetheauto,ortheinternal CONDITIONS-CANCELLATION-applies combustionenginetochargeoneormore except asfollows: electric motors, which move the auto.Ifwecancelforanyreasonotherthan19.VEHICLEWRAPCOVERAGEnonpaymentofpremium,wewillmailordeliver Intheeventofatotallosstoan"auto"forwhichtothefirstNamedInsuredwrittennoticeof Comprehensive,SpecifiedCausesofLoss,orcancellationatleast60daysbeforetheeffective Collisioncoveragesareprovidedunderthisdate of cancellation. CoverageForm,thensuchPhysicalDamage18.HYBRID,ELECTRIC,ORNATURALGAS Coveragesare amended to addthefollowing:VEHICLEPAYMENTCOVERAGE Inadditiontotheactualcashvalue of the "auto", Intheeventofatotallosstoa"non-hybrid"auto wewillpayupto$1,000forvinylvehiclewraps forwhichComprehensive,SpecifiedCausesof whicharedisplayedonthecovered"auto"attheLoss,orCollisioncoveragesareprovidedundertimeoftotalloss.RegardlessofthenumberofthisCoverageForm,thensuchPhysical autosdeemedatotalloss,themostwewillpay Damage Coveragesare amended asfollows: underthisVehicleWrapCoverageprovisionfor a.Iftheautoisreplacedwitha"hybrid"autoor anyone"loss"is$5,000.Forpurposesofthis an auto poweredsolely byelectricity ornaturalcoverageprovision,signsorothergraphicsgas,wewillpayanadditional10%,toa paintedormagneticallyaffixedtothevehiclearemaximumof$2,500,ofthe"non-hybrid"auto’snot considered vehiclewraps.actualcashvalueorreplacementcost, whichever is less,b.Theautomust bereplacedand acopy of abill of sale or new lease agreement received byus within 60calendardays of the date of "loss," © 2011, The Hartford(Includes copyrightedmaterialFormHA 9916 0312 Page 5of 5of ISOProperties,Inc.,with itspermission.) DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151761 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

Countersigned by
Authorized Representative
(1) Printed in U.S.A.Form WC 04 03 06
Policy Expiration Date:

WAIVER OF OUR RIGHT TO RECOVER FROM

OTHERS ENDORSEMENT - CALIFORNIA
Endorsement Number:Policy Number:

Effective Date: Effective hour is the same as stated on the Information Page of the policy.

Named Insured and Address:

We have the right to recover our payments from anyone liable for an injury covered by this policy. We will not enforce our right against the person or organization named in the Schedule. (This agreement applies only to the extent that you perform work under a written contract that requires you to obtain this agreement from us.) You must maintain payroll records accurately segregating the remuneration of your employees while engaged in the work described in the Schedule.

The additional premium for this endorsement shall be 2 % of the California workers' compensation premium otherwise due on such remuneration.

SCHEDULE
Person or Organization Job Description
Any person or organization from whom you are required by written contract or agreement to obtain this waiver of rights from us
57WEGAL1BZF
03/31/2023
CSW/Stuber-StroehEngineeringGroupInc
504RedwoodBlvd.,Suite310
Novato,CA94947
03/31/2024
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151 762

QUICK REFERENCEBUSINESS LIABILITY COVERAGE FORMREAD YOUR POLICY CAREFULLY BUSINESS LIABILITY COVERAGE FORMBeginning onPageA.COVERAGES 1 1Business Liability 2Medical Expenses 2CoverageExtension -SupplementaryPaymentsB.EXCLUSIONS 3C.WHO IS AN INSURED 10D.LIABILITY AND MEDICAL EXPENSESLIMITS OF INSURANCE 14E.LIABILITY AND MEDICAL EXPENSES GENERAL CONDITIONS151. 15Bankruptcy2. 15DutiesInTheEventOf Occurrence,Offense,ClaimOrSuit3. 16FinancialResponsibilityLaws4. 16Legal ActionAgainst Us5. 16SeparationOf Insureds6. 16Representations7. 16OtherInsurance8. 17TransferOf RightsOf RecoveryAgainst OthersToUsF.OPTIONAL ADDITIONAL INSURED COVERAGES 18 18AdditionalInsuredsG.LIABILITY AND MEDICAL EXPENSES DEFINITIONS 20 FormSS 0008 0405
57SBWBO0500
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151 763

ABCDEFGHIJ

BUSINESS LIABILITY COVERAGE FORM
Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered.

Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations. The words "we", "us" and "our" refer to the stock insurance company member of The Hartford providing this insurance.

CThe word "insured" means any person or organization qualifying as such under Section . - Who Is An Insured.

GOther words and phrases that appear in quotation marks have special meaning. Refer to Section . - Liability And Medical Expenses Definitions.
(a) The "bodily injury" or "property A. COVERAGES
damage" is caused by an 1. BUSINESS LIABILITY COVERAGE (BODILY "occurrence" that takes place in the I NJURY, PROPERTY DAMAGE, PERSONAL "coverage territory";AND ADVERTISING INJURY) (b) The "bodily injury" or "propertyInsuring Agreement damage" occurs during the policy a. We will pay those sums that the insured period; and
becom
es legally obligated to pay as (c) Prior to the policy period, no insureddamages because of "bodily injury", 1.listed under Paragraph of Section"property damage" or "personal and C. – Who Is An Insured and noadvertising injury" to which this insurance "employee" authorized by you to giveappl ies. We will have the right and duty to or receive notice of an "occurrence"def end the insured against any "suit" or claim, knew that the "bodily injury"s eeking those damages. However, we will or "property damage" had occurred,have no duty to defend the insured against in whole or in part. If such a listedany "suit" seeking damages for "bodily insured or authorized "employee"i njury", "property damage" or "personal and knew, prior to the policy period, thatadv ertising injury" to which this insurance the "bodily injury" or "propertydoes not apply. damage" occurred, then any We may, at our discretion, investigate any continuation, change or resumption "occurrence"
or offense and settle any claim of such "bodily injury" or "property or "suit" that may result. But: damage" during or after the policy period will be deemed to have been(1) The amount we will pay for damages is known prior to the policy period.D.limited as described in Section - (2) To "personal and advertising injury" Liability And Medical Expenses Limits caused by an offense arising out of your Of Insurance; and business, but only if the offense was(2) Our right and duty to defend ends when committed in the "coverage territory" we have used up the applicable limit of during the policy period.insurance in the payment of judgments, c. "Bodily injury" or "property damage" will besettlements or medical expenses to which deem
ed to have been known to havethis insurance applies.
occurred
at the earliest time when anyNo other obligation or liability to pay sums or

1.i
nsured listed under Paragraph of Sectionperform acts or services is covered unless C. –
Who Is An Insured or any "employee"explicitly provided for under Coverage aut
horized by you to give or receive noticeExtension - Supplementary Payments. of an "occurrence" or claim:b. This insurance applies:
(1) Reports all, or any part, of the "bodily (1) To "bodily injury" and "property injury" or "property damage" to us or damage" only if: any other insurer; Form SS 00 08 04 05 Page 1 of 24
© 2005, The Hartford
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151764 BUSINESS LIABILITYCOVERAGE FORM(2) b.Receivesawrittenorverbaldemandor Wewillmakethesepaymentsregardlessof claimfordamagesbecauseofthe"bodily fault.Thesepaymentswillnotexceedthe injury"or"propertydamage";or applicablelimitofinsurance.Wewillpay reasonable expensesfor:(3)Becomesawarebyanyothermeansthat (1)"bodilyinjury"or"propertydamage"has Firstaidadministeredatthetimeofan occurredorhasbeguntooccur. accident;d. (2)Damagesbecauseof"bodilyinjury"include Necessarymedical,surgical,x-rayanddamagesclaimedbyanypersonor dentalservices,includingprosthetic organizationforcare,lossofservicesor devices;anddeathresultingatanytimefromthe"bodily (3)Necessaryambulance,hospital, injury". professionalnursingandfuneral e.IncidentalMedical Malpractice services.(1)"Bodilyinjury"arisingoutofthe 3.COVERAGEEXTENSION-renderingoforfailuretorender SUPPLEMENTARY PAYMENTSprofessionalhealthcareservicesasa a.Wewillpay,withrespecttoanyclaimor physician,dentist,nurse,emergency "suit"weinvestigateorsettle,orany"suit" medicaltechnicianorparamedicshall againstan insured wedefend:bedeemedtobecausedbyan (1)Allexpenses weincur."occurrence", but only if: (2)Upto$1,000forthecostofbailbonds (a)Thephysician,dentist,nurse, requiredbecauseofaccidentsortraffic emergencymedicaltechnicianor lawviolationsarisingoutoftheuseof paramedicisemployedbyyouto anyvehicletowhichBusinessLiability provide suchservices; and Coveragefor"bodily injury"applies. We (b)Youarenotengagedinthe donothave to furnishthesebonds.businessoroccupationofproviding (3)Thecostofappealbondsorbondsto suchservices. releaseattachments,butonlyforbond (2)Forthepurposeofdeterminingthe amountswithintheapplicablelimitof limitsofinsurancefor incidentalmedical insurance.Wedonothavetofurnish malpractice,anyactoromission these bonds.togetherwithallrelatedactsor (4)All reasonable expenses incurred by the omissionsinthefurnishingofthese insuredatour request to assist us in the servicestoanyonepersonwillbe investigationordefenseoftheclaimor considered one"occurrence"."suit",includingactuallossofearnings 2.MEDICAL EXPENSES upto$500adaybecauseoftimeoff InsuringAgreement fromwork.a.Wewillpaymedicalexpensesasdescribed (5)Allcoststaxedagainsttheinsuredin belowfor"bodilyinjury"causedbyan the "suit".accident: (6)Prejudgmentinterestawardedagainst (1)On premisesyou ownor rent; theinsuredonthatpartofthejudgment wepay.Ifwemakeanoffertopaythe (2)Onwaysnexttopremisesyouownor applicablelimitofinsurance,wewillnot rent;or payanyprejudgmentinterestbasedon (3)Becauseofyour operations; that period of time aftertheoffer.provided that: (7)Allinterestonthefullamountofany (1)Theaccidenttakesplaceinthe judgmentthataccruesafterentryofthe "coverageterritory"andduringthe judgmentandbeforewehavepaid, policyperiod; offeredtopay,ordepositedincourtthe partofthejudgmentthatiswithinthe (2)The expenses are incurredand reported applicable limit of insurance.touswithinthreeyearsofthedateof the accident; and (1) (7)Anyamountspaidunderthroughabovewillnotreduce the limits of insurance.(3)Theinjuredpersonsubmitsto examination,atourexpense,byphysiciansofourchoiceasoftenaswe reasonably require.Page 2of24 FormSS 0008 0405 DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151765 BUSINESS LIABILITYCOVERAGE FORMb.Ifwedefendaninsuredagainsta"suit" Solongastheaboveconditionsaremet,andanindemniteeoftheinsuredisalso attorneys'feesincurredbyusinthenamedasapartytothe"suit",wewill defenseofthatindemnitee,necessarydefendthatindemniteeifallofthe litigationexpensesincurredbyusandfollowingconditionsare met: necessarylitigationexpensesincurredbytheindemniteeatourrequestwillbe(1)The"suit"againsttheindemnitee paidasSupplementaryPayments.seeksdamagesforwhichtheinsured hasassumedtheliabilityofthe Notwithstandingtheprovisionsof 1.b.(b) B.indemniteeinacontractoragreement ParagraphofSection–thatisan "insured contract"; Exclusions,suchpaymentswillnotbe deemedtobedamagesfor"bodily (2)Thisinsuranceappliestosuchliability injury"and"propertydamage"andwill assumed bytheinsured; not reducetheLimits of Insurance.(3)Theobligation to defend, or the cost of Ourobligationtodefendaninsured's thedefenseof,thatindemnitee,has indemniteeandtopayforattorneys'fees alsobeenassumedbytheinsuredin andnecessarylitigationexpensesas the same "insured contract"; Supplementary Paymentsends when:(4)Theallegationsinthe"suit"andthe (1)Wehaveuseduptheapplicablelimit informationweknowaboutthe ofinsuranceinthepaymentof "occurrence"aresuchthatnoconflict judgments orsettlements; orappearstoexistbetweentheinterests (2)oftheinsuredandtheinterestofthe Theconditionssetforthabove,ortheindemnitee; termsoftheagreementdescribedin(6)Paragraphabove,arenolongermet.(5)Theindemniteeandtheinsuredask ustoconductandcontrolthedefense B.EXCLUSIONSofthatindemniteeagainstsuch"suit" 1.ApplicableTo Business LiabilityCoverageandagreethatwecanassignthe Thisinsurancedoes not apply to:samecounseltodefendtheinsured andtheindemnitee;and a.ExpectedOrIntendedInjury(6)The indemnitee: (1)"Bodilyinjury"or"propertydamage" expectedorintendedfromthe (a)Agreesinwritingto: standpointoftheinsured.This (i)Cooperatewithusinthe exclusiondoesnotapplyto"bodily investigation,settlementor injury"or"propertydamage"resulting defense of the "suit"; fromtheuseofreasonableforceto (ii)Immediately sendus copies of protectpersons orproperty; oranydemands, notices, (2)"Personalandadvertisinginjury"arisingsummonsesorlegalpapers outofanoffensecommittedby,atthereceivedinconnectionwith directionoforwiththeconsentorthe "suit"; acquiescenceoftheinsuredwiththe(iii)Notify any otherinsurerwhose expectationofinflicting"personalandcoverageisavailabletothe advertisinginjury".indemnitee; and b.ContractualLiability(iv)Cooperatewithuswith (1)"Bodilyinjury"or"propertydamage";orrespecttocoordinatingother (2)"Personal andadvertisinginjury"applicableinsuranceavailable to the indemnitee; and forwhichtheinsuredisobligatedtopay damagesbyreasonoftheassumptionof(b)Providesuswithwritten liabilityina contractor agreement.authorizationto: Thisexclusiondoesnotapplytoliability (i)Obtainrecordsandother for damages becauseof:informationrelatedtothe "suit"; and (a)"Bodilyinjury","propertydamage"or"personalandadvertisinginjury"that(ii)Conductandcontrolthe theinsuredwouldhaveinthedefenseoftheindemniteein absenceofthecontractorsuch"suit". agreement;orFormSS 0008 0405 Page 3of24 DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151766 BUSINESS LIABILITYCOVERAGE FORM(b) (b)"Bodilyinjury"or"propertydamage" Performingdutiesrelatedtotheassumed in a contract oragreement conductoftheinsured’sbusiness,orthatisan"insuredcontract", (2)Thespouse,child,parent,brotheror providedthe"bodilyinjury"or sisterofthat"employee"asa "property damage" occurs (1)consequenceofabove.subsequenttotheexecutionofthe Thisexclusion applies:contractoragreement.Solelyfor (1)Whethertheinsuredmaybeliableas thepurposeofliabilityassumedin anemployerorinanyothercapacity; an"insuredcontract",reasonable andattorneys'feesandnecessarylitigation expenses incurred by or for (2)Toanyobligationtosharedamages apartyotherthananinsuredare withorrepaysomeoneelsewhomustdeemedtobedamagesbecauseof paydamagesbecause of the injury."bodilyinjury"or"propertydamage" Thisexclusiondoesnotapplytoliability provided: assumedbytheinsuredunderan"insured (i)Liabilitytosuchpartyfor,orfor contract".thecostof,thatparty’sdefense f.Pollutionhasalsobeenassumedinthe (1)"Bodilyinjury","propertydamage"or same"insuredcontract",and "personalandadvertisinginjury" (ii)Suchattorneys'feesand arisingoutoftheactual,allegedor litigationexpensesarefor threateneddischarge,dispersal, defenseofthat party against a seepage,migration,releaseorescape civiloralternativedispute of "pollutants":resolutionproceedinginwhich (a)Atorfromanypremises,siteor damagestowhichthis locationwhichisorwasatanyinsurance appliesare alleged. timeownedoroccupiedby,or c.Liquor Liability rentedorloanedtoanyinsured. "Bodilyinjury"or"propertydamage"for However,thissubparagraphdoes whichanyinsuredmaybeheldliableby not apply to:reasonof: (i)"Bodilyinjury"ifsustainedwithin(1)Causingorcontributingtothe abuildingandcausedbyintoxicationofany person; smoke,fumes,vapororsootproducedbyororiginatingfrom(2)Thefurnishingofalcoholicbeveragesto equipmentthatisusedtoheat,apersonunderthelegaldrinkingageor coolordehumidifythebuilding,undertheinfluenceofalcohol;or orequipmentthatisusedto(3)Anystatute,ordinanceorregulation heatwaterforpersonaluse,byrelatingtothesale,gift,distributionor thebuilding'soccupantsortheiruseofalcoholicbeverages. guests;Thisexclusionappliesonlyifyouareinthe (ii)"Bodilyinjury"or"propertybusinessofmanufacturing,distributing, damage"forwhichyoumaybeselling,servingorfurnishingalcoholic heldliable,ifyouareabeverages. contractorandtheownerord.Workers'CompensationAndSimilar lesseeofsuchpremises,site orLaws location hasbeenaddedtoyourAnyobligationoftheinsuredundera policyasanadditionalinsuredworkers'compensation,disabilitybenefits withrespecttoyourongoingorunemploymentcompensationlawor operationsperformedforthatanysimilar law. additional insuredatthatpremises,siteorlocationande.Employer’sLiability suchpremises,siteorlocation"Bodilyinjury" to: isnotandneverwasownedor(1)An"employee"oftheinsuredarising occupiedby,orrentedorout of andinthecourse of: loanedto,anyinsured,other(a)Employmentby the insured;or thanthatadditionalinsured;or

DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151767 BUSINESS LIABILITYCOVERAGE FORM(iii)"Bodilyinjury"or"property releasedaspartofthe damage"arisingoutofheat, operationsbeingperformed smokeorfumesfroma bysuchinsured,contractoror "hostile fire"; subcontractor;(b) (ii)Atorfromanypremises,siteor "Bodilyinjury"or"propertylocationwhichisorwasatany damage"sustainedwithinatimeusedbyorforanyinsuredor buildingandcausedbytheothersforthehandling,storage, releaseofgases,fumesordisposal,processingortreatment vaporsfrommaterialsbroughtof waste; intothatbuildinginconnectionwithoperationsbeingperformed(c)Whichareorwereatanytime byyouoronyourbehalfbyatransported,handled,stored, contractororsubcontractor;ortreated,disposedof,orprocessed (iii)aswasteby orfor: "Bodilyinjury"or"property damage"arisingoutofheat, (i)Anyinsured; or smokeorfumesfroma (ii)Anypersonororganizationfor "hostile fire"; orwhomyoumaybelegally (e)Atorfromanypremises,siteorresponsible; locationonwhichanyinsuredorany(d)Atorfromanypremises,siteor contractorsor subcontractorslocationonwhichanyinsuredor workingdirectlyorindirectlyonanyanycontractorsorsubcontractors insured’sbehalfareperformingworkingdirectlyorindirectlyon operationsiftheoperationsaretoanyinsured'sbehalfare testfor,monitor,cleanup,remove,performingoperationsifthe contain,treat,detoxifyorneutralize,"pollutants"arebroughtonorto orinanywayrespondto,orassessthepremises,siteorlocationin theeffectsof,"pollutants".connectionwithsuchoperations (2)Anyloss,costorexpensearisingout bysuchinsured,contractoror of any:subcontractor.However,this (a)subparagraphdoes not apply to: Request, demand, order or statutoryorregulatoryrequirementthatany(i)"Bodilyinjury"or"property insuredorotherstestfor,monitor,damage"arisingoutofthe cleanup,remove,contain,treat,escapeoffuels,lubricantsor detoxifyorneutralize,orinanywayother operating fluidswhichare respondto,orassesstheeffectsof,neededtoperformthenormal "pollutants";orelectrical, hydraulic or (b)mechanical functions Claimorsuitbyoronbehalfofa necessaryfortheoperationof governmentalauthorityfor "mobile equipment" or itsparts, damagesbecauseoftestingfor,if such fuels, lubricants orother monitoring,cleaning up, removing, operatingfluidsescapefroma containing,treating,detoxifyingor vehiclepartdesignedtohold, neutralizing,orinanyway storeorreceivethem.This respondingto,orassessingthe exceptiondoesnotapplyifthe effects of,"pollutants"."bodilyinjury"or"property However,thisparagraphdoesnot damage"arisesoutofthe applytoliabilityfordamagesbecause intentionaldischarge,dispersal of"propertydamage"thattheinsured orreleaseofthefuels, wouldhaveintheabsenceofsuch lubricantsorotheroperating request,demand,orderorstatutoryor fluids,orifsuchfuels, regulatoryrequirement,orsuchclaim lubricantsorotheroperating or"suit"byoronbehalfofa fluidsarebroughtonortothe governmental authority.premises,siteorlocationwiththeintentthattheybedischarged, dispersedor FormSS 0008 0405 Page 5of24
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151768 BUSINESS LIABILITYCOVERAGE FORMg.Aircraft,AutoOrWatercraft (2)Theuseof"mobileequipment"in,or whileinpracticeorpreparationfor,a"Bodilyinjury"or"propertydamage"arising prearrangedracing,speedor outoftheownership,maintenance,useor demolitioncontestorinanystunting entrustmenttoothersofanyaircraft,"auto" activity.or watercraft owned or operated by or rented i.Warorloanedtoanyinsured.Useincludesoperationand"loadingorunloading". "Bodilyinjury","propertydamage"orThisexclusionapplieseveniftheclaims "personalandadvertisinginjury",howeveragainstanyinsuredallegenegligenceor caused,arising,directlyorindirectly,outof:otherwrongdoinginthesupervision,hiring, (1)War,includingundeclaredor civil war;employment,trainingormonitoringofothers (2)Warlikeactionbyamilitaryforce, bythatinsured,ifthe"occurrence"which includingactioninhinderingor causedthe"bodilyinjury"or"property defendingagainstanactualordamage" involvedtheownership, expectedattack,byanygovernment, maintenance,use orentrustmenttoothersof sovereignorotherauthorityusinganyaircraft,"auto"orwatercraftthatis military personnel orotheragents; orownedoroperatedbyorrentedorloanedto (3)Insurrection,rebellion,revolution, anyinsured. usurpedpower,oractiontakenby Thisexclusion doesnotapplyto: governmentalauthorityinhinderingor (1)Awatercraftwhileashoreonpremises defendingagainst anyofthese.youown orrent; j.Professional Services(2)Awatercraftyou donotown thatis: "Bodilyinjury","propertydamage"or (a)Lessthan51 feetlong; and "personalandadvertisinginjury"arising outoftherenderingoforfailuretorender (b)Notbeingusedtocarrypersons anyprofessionalservice.Thisincludes for acharge; but is not limited to:(3)Parkingan"auto"on,orontheways (1)Legal, accountingoradvertisingnextto,premisesyouownorrent, services;providedthe"auto"isnotownedbyor rented orloanedtoyou ortheinsured; (2)Preparing,approving,orfailingtoprepareorapprovemaps,shop(4)Liabilityassumedunderany"insured drawings,opinions,reports,surveys,contract"fortheownership, fieldorders,changeorders,designsormaintenanceoruseofaircraftor drawingsandspecifications;watercraft; (3)Supervisory,inspection,architectural (5)"Bodilyinjury"or"propertydamage" orengineering activities;arisingoutoftheoperationofanyof f.(2)theequipmentlisted in Paragraph (4)Medical,surgical,dental,x-rayor f.(3)orofthedefinitionof"mobile nursingservicestreatment,adviceor equipment";or instruction;(6)Anaircraftthatisnotownedbyany (5)Anyhealthortherapeuticservice insured and is hired,charteredor loaned treatment, advice orinstruction;withapaidcrew.However,this (6)Anyservice,treatment,adviceor exceptiondoesnotapplyiftheinsured instructionforthepurposeof hasanyotherinsurancefor such"bodily appearance orskinenhancement,hair injury"or"propertydamage",whether removalorreplacementorpersonal theotherinsuranceisprimary,excess, grooming;contingentoronanyotherbasis. (7)Opticalorhearingaidservices h.Mobile Equipment includingtheprescribing,preparation, "Bodilyinjury"or"propertydamage" fitting,demonstrationordistributionof arisingoutof: ophthalmiclensesandsimilar products orhearingaiddevices;(1)Thetransportationof"mobileequipment"byan"auto"ownedoroperatedbyorrentedorloanedtoanyinsured;or

DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151769 BUSINESS LIABILITYCOVERAGE FORM(8) (1)(3)(4)Optometryoroptometricservices Paragraphs, andofthis includingbutnotlimitedtoexamination exclusiondonotapplyto"property oftheeyesandtheprescribing, damage"(otherthandamagebyfire)to preparation,fitting,demonstrationor premises,includingthecontentsofsuch distributionofophthalmiclensesand premises, rented to you for a period of 7orsimilarproducts; fewerconsecutivedays.AseparateLimitofInsuranceappliestoDamageTo (9)Any: PremisesRentedToYouasdescribedin (a)Bodypiercing(notincludingear D.Section-Limits OfInsurance.piercing); (2)Paragraphofthisexclusiondoesnot(b)Tattooing,includingbutnotlimited applyifthepremisesare"yourwork"and totheinsertionofpigmentsintoor wereneveroccupied,rentedorheldfor undertheskin; and rentalby you.(c)Similarservices; (3) (4)Paragraphs andofthis exclusiondo (10)Servicesinthepracticeofpharmacy; not apply to the useofelevators.and (3)(4)(5)(6)Paragraphs, , andofthis (11)Computerconsulting,designor exclusiondonotapplytoliabilityassumed programmingservices,includingweb undera sidetrackagreement.sitedesign. (3)(4)Paragraphs and ofthis exclusiondo(4)(5)Paragraphs and ofthis exclusiondo notapplyto"propertydamage"to notapplytotheIncidentalMedical borrowedequipmentwhilenotbeingused Malpracticecoverageaffordedunder to performoperations at ajobsite.1.e. A.ParagraphinSection -Coverages. (6)Paragraphofthisexclusiondoesnotk.Damage ToProperty applyto"propertydamage" includedinthe "products-completed operationshazard"."Property damage" to: l.Damage ToYour Product(1)Propertyyouown,rentoroccupy, includinganycostsorexpenses "Propertydamage"to"yourproduct" incurredbyyou,oranyotherperson, arisingoutofit orany part of it.organizationorentity,forrepair, m.Damage ToYour Workreplacement, enhancement, "Propertydamage"to"yourwork"arising restorationormaintenanceofsuch out of it or any part ofit andincluded in the propertyforanyreason,including "products-completed operationshazard".preventionofinjurytoapersonor damage to another's property; Thisexclusiondoesnotapplyifthedamagedworkortheworkoutofwhich (2)Premisesyousell,giveawayor thedamageariseswasperformedonyour abandon,ifthe"propertydamage"arises behalfby asubcontractor.outofanypartofthosepremises; n.DamageToImpairedPropertyOr (3)Property loaned to you; PropertyNotPhysically Injured(4)Personalpropertyinthecare,custody "Propertydamage"to"impairedproperty" orcontrol of the insured; orpropertythathasnotbeenphysically (5)Thatparticularpartofrealpropertyon injured, arisingoutof:whichyouoranycontractorsor (1)Adefect,deficiency,inadequacyor subcontractorsworkingdirectlyor dangerousconditionin"yourproduct" indirectlyonyourbehalfareperforming or"your work"; oroperations,ifthe"propertydamage" (2)arisesoutofthoseoperations;or Adelayorfailurebyyouoranyone actingonyourbehalftoperforma (6)Thatparticularpartofanyproperty contractoragreementinaccordance thatmustberestored,repairedor withits terms.replacedbecause"yourwork"wasincorrectly performedon it. Thisexclusiondoesnotapplytotheloss ofuseofotherpropertyarisingoutof suddenandaccidentalphysicalinjuryto "yourproduct"or"yourwork"afterithas beenputtoits intendeduse.

FormSS 0008 0405 Page 7of24
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151770 BUSINESS LIABILITYCOVERAGE FORMo.RecallOfProducts,WorkOrImpaired (c)Titleofany literary orartistic work;Property (8)Arising out of anoffense committed by Damagesclaimedforanyloss,costor aninsuredwhose business is:(a)expenseincurredbyyouorothersforthe Advertising,broadcasting, lossofuse,withdrawal,recall,inspection, publishing ortelecasting;repair,replacement,adjustment,removal (b)Designingordeterminingcontent ordisposal of: of websites for others;or(1)"Yourproduct"; (c)AnInternetsearch,access, (2)"Yourwork";or contentor service provider.(3)"Impaired property"; However,thisexclusiondoesnot ifsuchproduct,workorpropertyis a.b. c.applytoParagraphs, andwithdrawnorrecalledfromthemarketor underthedefinitionof"personaland fromusebyanypersonororganization G.advertisinginjury"inSection–becauseofaknownorsuspecteddefect, LiabilityAndMedicalExpenses deficiency,inadequacyordangerous Definitions.condition in it. Forthepurposesofthisexclusion, p.Personal AndAdvertisingInjury placingan"advertisement"foror linkingtoothersonyourwebsite,by "Personal andadvertisinginjury": itself,isnotconsideredthebusiness(1)Arising out of oral, written or electronic ofadvertising,broadcasting, publicationofmaterial,ifdonebyorat publishing ortelecasting;thedirectionoftheinsuredwith (9)Arisingoutofanelectronicchatroom knowledge of itsfalsity; orbulletinboardtheinsuredhosts, (2)Arising out of oral, written or electronic owns,oroverwhichtheinsured publicationofmaterialwhosefirst exercises control;publicationtookplacebeforethe (10)Arisingoutoftheunauthorizeduseofbeginningofthepolicy period; another's name or product in youre-mail(3)Arisingoutofacriminalactcommitted address,domainnameormetatags,orbyor at the direction of the insured; anyothersimilartacticstomislead(4)Arisingoutofanybreachofcontract, another'spotentialcustomers;exceptanimpliedcontracttouse (11)Arisingoutoftheviolationofa another’s"advertisingidea"inyour person'srightofprivacycreatedby "advertisement"; anystate orfederal act.(5)Arisingoutofthefailureofgoods, However,thisexclusiondoesnot productsorservicestoconformwith applytoliabilityfordamagesthatthe anystatementofqualityor insuredwouldhaveintheabsenceof performancemadeinyour suchstate orfederal act;"advertisement"; (12)Arisingoutof:(6)Arisingoutofthewrongdescriptionof (a)An"advertisement"forotherson thepriceofgoods,productsorservices; yourweb site;(7)Arisingoutofanyviolationofany (b)Placingalinktoawebsiteof intellectualpropertyrightssuchas others onyour website;copyright,patent,trademark,trade name,tradesecret,servicemarkor (c)Contentfromawebsiteofothersotherdesignationoforiginor displayedwithinaframeorborderauthenticity. onyourwebsite.Contentincludesinformation,code,sounds,text,However,thisexclusiondoesnot graphicsorimages;orapplytoinfringement,inyour "advertisement",of (d)Computercode,softwareor programming usedtoenable:(a)Copyright; (i)Yourweb site; or(b)Slogan,unlessthesloganisalso atrademark,tradename,service (ii)The presentation or functionalitymarkorotherdesignationof origin ofan"advertisement"orotherorauthenticity; or contentonyourwebsite;

DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151771 BUSINESS LIABILITYCOVERAGE FORM(13) (a)Arisingoutofaviolationofanyanti- Maybeawardedorincurredby trustlaw; reasonofanyclaimorsuit alleging actual or threatened injury (14)Arising out of the fluctuation in price or or damage of any nature or kind to valueofanystocks,bondsorother personsorpropertywhichwould securities; or nothaveoccurredinwholeorin (15)Arisingoutofdiscriminationor part but for the "asbestos hazard";humiliationcommittedbyoratthe (b)Ariseoutofanyrequest,demand, directionofany"executiveofficer", orderorstatutoryorregulatory director,stockholder,partneror requirementthatanyinsuredor memberoftheinsured. otherstestfor,monitor,cleanup, q.ElectronicData remove,encapsulate,contain,Damagesarisingoutofthelossof,lossof treat,detoxifyorneutralizeorin useof,damageto,corruptionof,inability anywayrespondtoorassessthe toaccess,orinabilitytomanipulate effects of an"asbestos hazard"; or"electronicdata". (c)Ariseoutofanyclaimorsuitforr.Employment-RelatedPractices damagesbecauseoftestingfor,monitoring,cleaningup,removing,"Bodily injury"or "personal and advertising encapsulating,containing,treating,injury"to: detoxifyingorneutralizingorinany(1)Aperson arisingoutofany: wayrespondingtoorassessingthe(a)Refusaltoemploy thatperson; effectsofan"asbestoshazard".(b)Terminationofthatperson's t.ViolationOfStatutesThatGovernE-employment; or Mails,Fax,PhoneCallsOrOther MethodsOfSendingMaterialOr (c)Employment-related practices, Informationpolicies,actsoromissions,suchascoercion,demotion,evaluation, "Bodilyinjury","propertydamage",or reassignment, discipline, "personalandadvertisinginjury"arising defamation,harassment,humiliation directlyorindirectlyoutofanyactionor ordiscriminationdirectedatthat omissionthatviolatesorisallegedto person;or violate:(2)Thespouse,child,parent,brotheror (1)TheTelephoneConsumerProtection sisterofthatpersonasa Act(TCPA),including anyamendment consequenceof"bodilyinjury"or of oradditiontosuch law;"personaland advertising injury" to the (2)TheCAN-SPAM Act of 2003, including personatwhomanyofthe anyamendmentoforadditiontosuch employment-relatedpractices law;or(a)(b)(c)described in Paragraphs, ,or (3)Anystatute,ordinanceorregulation,aboveisdirected. otherthantheTCPAorCAN-SPAMActThisexclusion applies: of2003,thatprohibitsorlimitsthe(1)Whethertheinsuredmaybeliableas sending,transmitting,communicatingoranemployerorinanyothercapacity; distributionofmaterialorinformation.and DamageToPremisesRentedToYou–(2)Toanyobligationtosharedamages ExceptionForDamageByFire,Lightning withorrepaysomeoneelsewhomust or Explosionpaydamagesbecause of the injury. c. h.k. o.Exclusionsthroughandthroughdos.Asbestos notapplytodamagebyfire,lightningor explosiontopremisesrentedtoyouor (1)"Bodilyinjury","propertydamage"or temporarilyoccupiedby youwith permission of "personalandadvertisinginjury"theowner.AseparateLimitofInsurance arisingoutofthe"asbestoshazard".appliestothiscoverageasdescribedin (2)Anydamages,judgments,settlements, D.Section-LiabilityAndMedicalExpensesloss,costsorexpensesthat: LimitsOf Insurance.

FormSS 0008 0405 Page 9of24
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151772 BUSINESS LIABILITYCOVERAGE FORM2.ApplicableTo MedicalExpenses Coveragee.Atrust,youareaninsured.Yourtrustees arealsoinsureds,butonlywithrespectto We will not payexpenses for "bodilyinjury": theirduties astrustees.a.Any Insured 2.Eachofthefollowing is also aninsured:Toanyinsured,except"volunteerworkers". a.Employees AndVolunteer Workersb.HiredPerson Your"volunteerworkers"onlywhileTo a person hired to do work foror onbehalf performingdutiesrelatedtotheconductof ofanyinsuredoratenantofanyinsured. yourbusiness,oryour"employees",other c.InjuryOn Normally Occupied Premises thaneitheryour"executiveofficers"(ifyou Toapersoninjuredonthatpartof areanorganizationotherthana premisesyouownorrentthattheperson partnership,jointventureorlimitedliability normally occupies. company)oryourmanagers(ifyouarea limitedliabilitycompany),butonlyforacts d.Workers'CompensationAndSimilar withinthescopeoftheiremploymentby Laws youorwhileperformingdutiesrelatedto Toaperson,whetherornotan the conduct of yourbusiness."employee"ofanyinsured,ifbenefitsfor However,noneofthese"employees"or the"bodilyinjury"arepayableormustbe "volunteerworkers" areinsuredsfor:providedunderaworkers'compensation ordisability benefits law ora similarlaw. (1)"Bodilyinjury"or"personaland advertising injury":e.Athletics Activities (a)Toyou,toyourpartnersor Toapersoninjuredwhilepracticing, members(ifyouareapartnership instructingorparticipatinginanyphysical orjointventure),toyourmembers exercisesorgames,sportsorathletic (ifyouarealimitedliability contests. company),ortoaco-"employee"f.Products-CompletedOperationsHazard whileinthecourseofhisorher Includedwiththe"products-completed employmentorperformingdutiesoperationshazard". relatedtotheconductofyour business,ortoyourother g.Business LiabilityExclusions "volunteerworkers" while ExcludedunderBusinessLiabilityCoverage. performingdutiesrelatedtothe C.WHO IS AN INSURED conduct of yourbusiness;1.Ifyou aredesignated in the Declarations as: (b)Tothespouse,child,parent, brotherorsisterofthatco-a.Anindividual,youandyourspouseare "employee"orthat"volunteer insureds,butonlywithrespecttothe worker"asaconsequenceof conduct of a business of which youare the (1)(a)Paragraphabove;sole owner. (c)Forwhichthereisanyobligation b.Apartnershiporjointventure,youarean tosharedamageswithorrepay insured.Yourmembers,yourpartners,and someoneelsewhomustpay theirspousesarealsoinsureds,butonlywith damagesbecauseoftheinjury respecttotheconductofyourbusiness. (1)(a)describedinParagraphsorc.Alimitedliabilitycompany,youarean (b) above; orinsured.Yourmembersarealsoinsureds, (d)Arisingoutofhisorherproviding butonlywithrespecttotheconductofyour orfailingtoprovideprofessional business.Yourmanagersareinsureds,but healthcare services.onlywithrespecttotheirdutiesasyourmanagers. Ifyouarenotinthebusinessofprovidingprofessionalhealthcared.Anorganizationotherthanapartnership, (d)services,Paragraphdoesnotapplyjointventureorlimitedliabilitycompany,you toanynurse,emergencymedicalareaninsured.Your"executiveofficers"and technicianorparamedicemployedbydirectorsareinsureds,butonlywithrespect youtoprovidesuchservices.totheirdutiesasyourofficersordirectors.Yourstockholdersarealsoinsureds,butonly (2)"Property damage" to property:withrespecttotheirliabilityasstockholders. (a)Owned,occupiedor usedby,

DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151773 BUSINESS LIABILITYCOVERAGE FORM(b) b.Rentedto,inthecare,custodyor Coverageunderthisprovisiondoesnot controlof,oroverwhichphysical apply to:controlisbeingexercisedforany (1)"Bodilyinjury"or"propertydamage" purposebyyou,anyofyour thatoccurred;or"employees","volunteerworkers", (2)"Personalandadvertisinginjury" anypartnerormember(ifyouare arisingoutofan offensecommittedapartnershiporjointventure),or beforeyouacquiredorformedthe anymember(ifyouarealimited organization.liabilitycompany). 4.Operator Of Mobile Equipmentb.Real EstateManager Withrespectto"mobileequipment"registeredinAny person (other than your "employee"or yournameunderanymotorvehicleregistration"volunteerworker"),oranyorganization law,anypersonisaninsuredwhiledrivingsuchwhileacting asyour real estatemanager.equipmentalongapublichighwaywithyourc.TemporaryCustodiansOf Your permission.AnyotherpersonororganizationProperty responsiblefortheconductofsuchpersonisAnypersonororganizationhavingproper alsoaninsured,butonlywithrespecttoliabilitytemporarycustodyofyourpropertyifyou arising out oftheoperation of the equipment,anddie,butonly: onlyifno other insurance of anykindisavailable(1)Withrespecttoliabilityarisingoutofthe tothatpersonororganizationforthisliability.maintenanceoruseofthatproperty;and However, noperson ororganizationisaninsuredwithrespectto:(2)Untilyourlegalrepresentativehas beenappointed. a."Bodilyinjury"toaco-"employee"ofthepersondriving the equipment;ord.Legal Representative If YouDie b."Propertydamage"topropertyownedby, Yourlegalrepresentativeifyoudie,but rentedto,inthechargeoforoccupiedbyonlywithrespecttodutiesassuch.That youortheemployerofanypersonwhois representativewillhaveallyourrightsand aninsuredunder thisprovision.dutiesunder thisinsurance. 5.Operator of NonownedWatercrafte.Unnamed Subsidiary Withrespecttowatercraftyoudonotownthat Anysubsidiaryandsubsidiarythereof,of islessthan51feetlongandisnotbeingused yourswhichisa legally incorporatedentity to carry persons for a charge, any personisan ofwhichyouownafinancialinterestof insuredwhileoperatingsuchwatercraftwith morethan50%ofthevotingstockonthe yourpermission.Anyotherpersonor effectivedateofthis CoveragePart. organizationresponsiblefortheconductof Theinsuranceaffordedhereinforany suchpersonisalsoaninsured,butonlywith subsidiarynotshownintheDeclarations respecttoliabilityarisingoutoftheoperation asanamedinsureddoesnotapplyto ofthewatercraft,andonlyifnootherinjuryordamagewithrespecttowhichan insuranceofanykindisavailabletothat insuredunderthisinsuranceisalsoan personor organization for thisliability.insuredunderanotherpolicyorwouldbe However,nopersonororganizationisan aninsuredundersuchpolicybutforits insured withrespect to:terminationorupontheexhaustionofits limits of insurance. a."Bodilyinjury"toaco-"employee"ofthepersonoperating the watercraft;or3.NewlyAcquired Or Formed Organization b."Propertydamage"topropertyownedby,Anyorganizationyounewlyacquireorform, rentedto,inthechargeoforoccupiedby otherthanapartnership,jointventureor youortheemployerofanypersonwhois limitedliabilitycompany,andoverwhichyou aninsuredunder thisprovision.maintainfinancialinterestof more than 50%of thevotingstock,willqualifyasaNamed 6.AdditionalInsuredsWhenRequiredBy Insuredifthereisnoothersimilarinsurance WrittenContract,WrittenAgreementOr available to thatorganization. However: Permita.Coverageunderthisprovisionisafforded Theperson(s)ororganization(s)identifiedin onlyuntilthe180thdayafteryouacquire a. f.Paragraphsthroughbelowareadditionalorformtheorganizationortheendofthe insuredswhenyouhaveagreed,inawrittenpolicyperiod, whichever is earlier; andFormSS 0008 0405 Page 11of24 DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151774 BUSINESS LIABILITYCOVERAGE FORM (e)contract,writtenagreementorbecauseofa Anyfailuretomakesuch permitissuedbyastateorpolitical inspections,adjustments,testsor subdivision,thatsuchpersonororganization servicingasthevendorhas beaddedasanadditionalinsuredonyour agreedtomakeornormally policy,providedtheinjuryordamageoccurs undertakestomakeintheusual subsequenttotheexecutionofthecontractor courseofbusiness,inconnectionagreement, ortheissuanceofthepermit. withthedistributionorsaleofthe products;Apersonororganizationisanadditional (f)Demonstration,installation, insuredunderthisprovisiononlyforthat servicingorrepairoperations, periodoftimerequiredbythecontract, exceptsuchoperationsperformed agreementor permit. atthevendor'spremisesin However,no suchperson or organization is an connectionwiththesaleofthe additionalinsuredunderthisprovisionifsuch product;personororganizationisincludedasan (g)Productswhich,afterdistribution additionalinsuredbyanendorsementissued orsalebyyou,havebeenlabeled byusandmadeapartofthisCoveragePart, orrelabeledorusedasa includingallpersonsororganizationsadded container,partor ingredient of any asadditionalinsuredsunderthespecific otherthingorsubstancebyorfor additionalinsuredcoveragegrantsinSection the vendor; orF.–Optional AdditionalInsuredCoverages. (h)"Bodilyinjury"or"property a.Vendors damage"arisingoutofthesole Anyperson(s)ororganization(s)(referredto negligenceofthevendorforits belowasvendor),butonlywithrespectto ownactsoromissionsorthoseof"bodilyinjury"or"propertydamage"arising itsemployeesoranyoneelse outof"yourproducts"whicharedistributed acting onits behalf. However, thisorsoldintheregularcourseofthevendor's exclusiondoes not apply to:businessandonlyifthisCoveragePart (i)Theexceptionscontainedin providescoveragefor"bodilyinjury"or (d)(f)Subparagraphsor ;or"propertydamage"includedwithinthe (ii)"products-completedoperationshazard". Suchinspections,adjustments,testsorservicingasthevendor(1)Theinsuranceaffordedtothevendor has agreed to make or normallyissubjecttothefollowingadditional undertakes to make in the usualexclusions: courseof business,inThisinsurancedoes not apply to: connectionwiththedistribution(a)"Bodilyinjury"or"property orsaleoftheproducts.damage"forwhichthevendoris (2)Thisinsurancedoesnotapplytoanyobligatedtopaydamagesby insuredpersonororganizationfromreasonoftheassumptionof whom you have acquired suchproducts,liability in acontract or agreement. oranyingredient,partorcontainer,Thisexclusiondoesnotapplyto enteringinto, accompanyingorliabilityfordamagesthatthe containingsuchproducts.vendorwouldhaveintheabsence b.LessorsOfEquipmentof the contractor agreement; (1)Anypersonororganizationfrom (b)Anyexpress warranty whomyouleaseequipment;butonly unauthorizedby you; withrespecttotheirliabilityfor"bodily (c)Anyphysicalorchemicalchange injury","propertydamage"orintheproductmadeintentionally "personalandadvertisinginjury"bythevendor; caused,inwholeorinpart,byyour (d)Repackaging, except when maintenance,operationoruseof unpackedsolelyforthepurposeof equipmentleasedtoyoubysuch inspection,demonstration,testing, personor organization.orthesubstitutionofpartsunderinstructionsfromthemanufacturer,andthenrepackagedinthe original container;Page 12of24 FormSS 0008 0405 DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151775 BUSINESS LIABILITYCOVERAGE FORM(2) e.PermitsIssuedByStateOrPolitical Withrespecttotheinsuranceafforded Subdivisionstotheseadditionalinsureds,thisinsurancedoesnotapplytoany (1)Anystateorpoliticalsubdivision,but "occurrence"whichtakesplaceafter onlywithrespecttooperationsyoucease to lease thatequipment. performed byyou oron yourbehalf for c.LessorsOfLandOrPremises whichthestateorpoliticalsubdivision hasissueda permit.(1)Anypersonororganizationfrom (2)whomyouleaselandorpremises,but Withrespecttotheinsuranceafforded onlywithrespecttoliabilityarisingout totheseadditionalinsureds,this oftheownership,maintenanceoruse insurance doesnotapplyto:ofthatpartofthelandorpremises (a)"Bodilyinjury","propertydamage" leased to you. or"personalandadvertising (2)Withrespecttotheinsuranceafforded injury"arisingoutofoperations totheseadditionalinsureds,this performedforthestateor insurance doesnotapplyto: municipality; or(a) (b)Any"occurrence"whichtakes "Bodilyinjury"or"propertydamage"placeafter youcease to lease that includedwithinthe"products-landorbeatenantinthat completedoperationshazard".premises; or f.Any OtherParty(b)Structuralalterations, new (1)Anyotherpersonororganizationwho constructionordemolition a.isnotaninsuredunderParagraphsoperationsperformedbyoron ethrough.above,butonlywithbehalfofsuchpersonor respecttoliabilityfor"bodilyinjury", organization. "propertydamage"or"personaland d.Architects, EngineersOrSurveyors advertisinginjury"caused,inwholeor inpart,byyouractsoromissionsor(1)Anyarchitect,engineer,orsurveyor,but theactsoromissionsofthoseacting onlywithrespecttoliabilityfor"bodily onyour behalf:injury","propertydamage"or"personal (a)andadvertisinginjury"caused,inwhole Intheperformanceofyour orinpart,byyouractsoromissionsor ongoing operations;theactsoromissionsofthoseactingon (b)Inconnectionwithyourpremises yourbehalf: ownedby orrentedtoyou;or(a)Inconnectionwithyourpremises; (c)In connection with "your work" and or includedwithinthe"products-(b)Intheperformanceofyour completedoperationshazard",butongoingoperationsperformedby only ifyouor onyour behalf. (i)Thewrittencontractorwritten (2)Withrespecttotheinsuranceafforded agreementrequiresyouto totheseadditionalinsureds,the providesuchcoverageto followingadditional exclusionapplies: suchadditional insured;and(ii)Thisinsurancedoesnotapplyto ThisCoveragePartprovides "bodilyinjury","propertydamage"or coveragefor"bodilyinjury"or "personalandadvertisinginjury" "propertydamage"included arisingoutoftherenderingoforthe within the"products-failuretorenderanyprofessional completed operationshazard".services byor for you, including: (2)Withrespecttotheinsuranceafforded (a)Thepreparing,approving,or totheseadditionalinsureds,this failuretoprepareorapprove, insurance doesnotapplyto:maps,shopdrawings,opinions, "Bodilyinjury","propertydamage"or reports,surveys,fieldorders, "personalandadvertisinginjury" changeorders, designsor arisingoutoftherenderingof,orthe drawings andspecifications; or failuretorender,anyprofessional(b)Supervisory,inspection, architectural,engineeringorsurveying architecturalorengineering services,including:activities.FormSS 0008 0405 Page 13of24 DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151776 BUSINESS LIABILITYCOVERAGE FORM(a)Thepreparing,approving,or ThisGeneralAggregatelimitdoesnot failuretoprepareorapprove, applyto"propertydamage"topremises maps,shopdrawings,opinions, whilerentedtoyouortemporarily reports,surveys,fieldorders, occupiedbyyouwithpermissionofthe changeorders, designsor owner,arisingoutoffire,lightningordrawings andspecifications; or explosion.(b) 3.Each Occurrence LimitSupervisory,inspection, architecturalorengineering 2.a.2.bSubjectto orabove,whicheveractivities. applies,themostwewillpayforthesumofall Thelimitsofinsurancethatapplytoadditional damagesbecauseofall"bodilyinjury", D.insuredsaredescribedinSection–Limits "propertydamage"andmedicalexpenses OfInsurance. arisingoutofanyone"occurrence"istheLiabilityandMedicalExpensesLimitshownin Howthisinsuranceapplieswhenother the Declarations.insuranceisavailabletoanadditionalinsuredisdescribedintheOtherInsuranceCondition Themostwewillpayforallmedicalexpenses E.inSection– Liability AndMedicalExpenses becauseof"bodilyinjury"sustainedbyany GeneralConditions. onepersonistheMedicalExpensesLimit shownintheDeclarations.Nopersonororganizationisaninsuredwith 4.Personal AndAdvertisingInjury Limitrespecttotheconductofanycurrentorpast partnership,jointventureorlimitedliability 2.b.Subjecttoabove,themostwewillpayfor companythatisnotshownasaNamedInsuredin thesumofalldamagesbecauseofall the Declarations. "personalandadvertisinginjury"sustainedby any one person or organization is the Personal D.LIABILITYANDMEDICALEXPENSES andAdvertisingInjuryLimitshowninthe LIMITS OF INSURANCE Declarations.1.TheMost We WillPay 5.Damage ToPremisesRented ToYou LimitTheLimitsofInsuranceshowninthe TheDamageToPremisesRentedToYou Declarationsandtherulesbelowfixthemost LimitisthemostwewillpayunderBusiness wewillpay regardless of the number of: LiabilityCoveragefordamagesbecauseof a.Insureds; "propertydamage"toanyonepremises,while b.Claims made or"suits" brought;or rented to you, or in the case of damage byfire,lightningorexplosion,whilerentedtoyouor c.Persons or organizations making claims or temporarilyoccupiedby youwith permission of bringing"suits". the owner. 2.Aggregate Limits Inthecaseofdamagebyfire,lightningor The mostwe will payfor: explosion, the Damage toPremises Rented To a.Damagesbecauseof"bodilyinjury"and YouLimitappliestoalldamageproximately "propertydamage"includedinthe causedbythesameevent,whethersuch"products-completedoperationshazard"is damage results fromfire,lightning orexplosiontheProducts-CompletedOperations orany combinationofthese.AggregateLimit showninthe 6.HowLimitsApplyTo Additional InsuredsDeclarations. Themostwewillpayonbehalfofapersonor b.Damagesbecauseofallother"bodily organizationwhoisanadditionalinsured injury","propertydamage"or"personal underthis CoveragePart is the lesser of:andadvertisinginjury",includingmedical a.Thelimitsofinsurancespecifiedina expenses,istheGeneralAggregateLimit writtencontract,writtenagreementor shownintheDeclarations. permitissuedbyastateorpolitical ThisGeneralAggregateLimitapplies subdivision;orseparatelytoeachofyour"locations" b.TheLimitsofInsuranceshowninthe ownedby orrentedtoyou. Declarations."Location"meanspremisesinvolvingthe Suchamountshallbeapartofandnotin sameorconnectinglots,orpremises additiontotheLimitsofInsuranceshownin whoseconnectionisinterruptedonlybya the Declarations anddescribedinthis Section.street,roadwayorright-of-wayofa railroad.Page 14of24 FormSS 0008 0405 DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151777 BUSINESS LIABILITYCOVERAGE FORM(1)Ifmorethanonelimitofinsuranceunderthis Immediatelysenduscopiesofany policyandanyendorsementsattachedthereto demands,notices,summonsesor appliestoanyclaimor"suit",themostwewillpay legalpapersreceivedinconnection underthispolicyandtheendorsementsisthe withtheclaimor "suit";singlehighestlimitofliabilityofallcoverages (2)Authorizeustoobtainrecordsand applicabletosuchclaimor"suit".However,this other information;paragraph does not apply to theMedicalExpenses (3)Cooperatewithusintheinvestigation, 3.limit set forthinParagraph above. settlementoftheclaimordefense TheLimitsofInsuranceofthisCoveragePartapply againstthe"suit";andseparatelytoeachconsecutiveannualperiodandto (4)Assistus,uponourrequest,inthe any remaining period of less than 12 months, starting enforcementofanyrightagainstany withthebeginningofthepolicyperiodshowninthe personororganizationthatmaybe Declarations,unlessthepolicyperiodisextended liabletotheinsuredbecauseofinjury after issuance for anadditional periodoflessthan12 ordamagetowhichthisinsurance months.Inthatcase,theadditionalperiodwillbe may also apply.deemedpartofthelastprecedingperiodforpurposes d.ObligationsAt TheInsured's Own CostofdeterminingtheLimitsofInsurance. Noinsuredwill,exceptatthatinsured'sownE.LIABILITYANDMEDICALEXPENSES cost,voluntarilymakeapayment,assumeGENERAL CONDITIONS anyobligation,orincuranyexpense,otherthanforfirstaid,withoutourconsent.1.Bankruptcy e.Additional Insured'sOther InsuranceBankruptcyorinsolvencyoftheinsuredoroftheinsured'sestatewillnotrelieveusofour Ifwecoveraclaimor"suit"underthis obligationsunder thisCoverage Part. CoveragePartthatmayalsobecovered byotherinsuranceavailabletoan 2.DutiesInTheEventOfOccurrence, additionalinsured,suchadditionalinsured Offense, ClaimOrSuit mustsubmitsuchclaimor"suit"tothe a.NoticeOfOccurrenceOrOffense other insurerfordefenseand indemnity.Youoranyadditionalinsuredmustseeto However,thisprovisiondoesnotapplyto itthatwearenotifiedassoonas theextentthatyouhaveagreedina practicableofan"occurrence"oran writtencontract,writtenagreementor offensewhichmayresultinaclaim.To permitthatthisinsuranceisprimaryand the extentpossible,notice should include:non-contributorywiththeadditional (1)How,whenandwherethe"occurrence" insured's owninsurance.oroffensetookplace; f.KnowledgeOfAnOccurrence,Offense,(2)Thenamesandaddressesofany ClaimOrSuitinjuredpersons andwitnesses;and a.b.Paragraphsandapplytoyouorto(3)Thenatureandlocationofanyinjury anyadditionalinsuredonlywhensuch ordamagearisingoutofthe "occurrence",offense,claimor"suit"is "occurrence"or offense. knownto:b.NoticeOfClaim (1)Youoranyadditionalinsuredthatis anindividual;Ifaclaimismadeor"suit"isbrought againstanyinsured,youoranyadditional (2)Anypartner,ifyouoranadditional insured must: insured is apartnership;(1)Immediately record the specifics of the (3)Anymanager,ifyouoranadditional claimor"suit"andthedatereceived; insured is alimitedliability company;and (4)Any"executiveofficer"orinsurance (2)Notify usas soonas practicable. manager,ifyouoranadditional insured is acorporation;Youoranyadditionalinsuredmustseeto itthatwereceiveawrittennoticeofthe (5)Anytrustee,ifyouoranadditional claim or"suit" assoon aspracticable. insured is atrust;orc.AssistanceAndCooperationOfThe (6)Any electedor appointedofficial, ifyou Insured oranadditionalinsuredisapolitical subdivision orpublic entity.Youand anyotherinvolved insured must:

FormSS 0008 0405 Page 15of24
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151778 BUSINESS LIABILITYCOVERAGE FORMf. (3)ThisParagraphappliesseparatelyto Wehaveissuedthispolicyinreliance youand anyadditional insured. uponyour representations.3.FinancialResponsibility Laws b.UnintentionalFailureToDisclose Hazardsa.Whenthispolicyiscertifiedasproofof financialresponsibilityforthefutureunder If unintentionally youshouldfailtodisclose theprovisionsofanymotorvehicle allhazardsrelatingtotheconductofyour financialresponsibilitylaw,theinsurance businessattheinceptiondateofthis providedbythepolicyfor"bodilyinjury" CoveragePart,weshallnotdenyany liabilityand"propertydamage"liabilitywill coverageunderthisCoveragePart complywiththeprovisionsofthelawto becauseofsuch failure.theextentofthecoverageandlimitsof 7.OtherInsuranceinsurance required bythat law. Ifothervalidandcollectibleinsuranceis b.Withrespectto"mobileequipment"to availableforalosswecoverunderthis whichthisinsuranceapplies,wewill CoveragePart,ourobligationsarelimitedas provideanyliability,uninsuredmotorists, follows:underinsuredmotorists,no-faultorothera.Primary Insurancecoveragerequiredbyanymotorvehicle b.law.Wewillprovidetherequiredlimitsfor Thisinsuranceisprimaryexceptwhenthose coverages. belowapplies.Ifotherinsuranceisalso primary,wewillsharewithallthatother 4.Legal Action Against Us c.insurancebythemethoddescribedinNopersonororganizationhasarightunder below.thisCoverage Form: b.ExcessInsurancea.Tojoinusasapartyorotherwisebringus Thisinsuranceisexcessoveranyofthe intoa"suit"askingfordamagesfroman otherinsurance,whetherprimary,excess, insured;or contingent oron anyotherbasis:b.TosueusonthisCoverageFormunless (1)YourWorkallofitstermshavebeenfullycomplied with. ThatisFire,ExtendedCoverage, Builder'sRisk,InstallationRiskor Apersonororganizationmaysueustorecover similarcoverage for "yourwork";onanagreedsettlementoronafinaljudgmentagainstaninsured;butwewillnotbeliablefor (2)Premises RentedTo Youdamagesthat are not payable under the terms of Thatisfire,lightningorexplosion thisinsuranceorthatareinexcessofthe insuranceforpremisesrentedtoyou applicablelimitofinsurance. Anagreed ortemporarilyoccupiedbyyouwith settlementmeansasettlementandreleaseof permission of the owner;liabilitysignedbyus,theinsuredandthe (3)Tenant Liabilityclaimantortheclaimant'slegalrepresentative. Thatisinsurancepurchasedbyyouto 5.SeparationOfInsureds coveryourliabilityasatenantfor ExceptwithrespecttotheLimitsofInsurance, "propertydamage"topremisesrented andanyrightsordutiesspecificallyassigned toyouortemporarilyoccupiedbyyou inthispolicytothefirstNamedInsured,this withpermissionoftheowner;insurance applies: (4)Aircraft,Auto Or Watercrafta.AsifeachNamedInsuredweretheonly IfthelossarisesoutofthemaintenanceNamed Insured;and or useofaircraft, "autos" or watercraft tob.Separatelytoeachinsuredagainstwhom g.theextentnotsubjecttoExclusionofaclaimismadeor "suit"isbrought. A.Section–Coverages.6.Representations (5)PropertyDamageToBorrowed a.When YouAcceptThisPolicy Equipment Or UseOfElevatorsByaccepting thispolicy,you agree:Ifthelossarisesoutof"property damage"toborrowedequipmentor (1)ThestatementsintheDeclarations theuseofelevatorstotheextentnot areaccurateand complete; k. A.subjecttoExclusionofSection–(2)Thosestatementsarebasedupon Coverages.representationsyou made to us; and

DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151779 BUSINESS LIABILITYCOVERAGE FORM(6)WhenYouAreAddedAsAn Whenthisinsuranceisexcessoverother AdditionalInsuredToOther insurance,wewillpayonlyourshareof Insurance theamountoftheloss,ifany,that exceedsthesumof:Thatisotherinsuranceavailableto (1)youcoveringliabilityfordamages Thetotalamountthatallsuchother arisingoutofthepremisesor insurancewouldpay for the loss in the operations,or products andcompleted absenceofthis insurance;andoperations,forwhichyouhavebeen (2)Thetotalofalldeductibleandself-addedasanadditionalinsuredbythat insuredamountsunderallthatother insurance;or insurance.(7)WhenYouAddOthersAsAn Wewillshare the remaining loss,if any, withAdditionalInsuredToThis anyotherinsurancethatisnotdescribedinInsurance this ExcessInsuranceprovision andwas notThatisotherinsuranceavailabletoan boughtspecificallytoapplyinexcessoftheadditionalinsured. LimitsofInsuranceshownintheDeclarationsofthisCoveragePart.However,thefollowingprovisions c.MethodOfSharingapplytootherinsuranceavailableto anypersonororganizationwhoisan Ifalltheotherinsurancepermits additional insured under thisCoverage contribution by equal shares, we will follow Part: thismethodalso.Underthisapproach, (a)PrimaryInsuranceWhen eachinsurercontributesequalamounts RequiredBy Contract untilithaspaiditsapplicablelimitof insuranceornoneofthelossremains, Thisinsuranceisprimaryifyou whichevercomesfirst.haveagreedinawrittencontract, writtenagreementorpermitthat Ifanyoftheotherinsurancedoesnotpermitthisinsurancebeprimary.Ifother contributionbyequalshares,wewillinsuranceisalsoprimary,wewill contributebylimits.Underthismethod,eachsharewithallthatotherinsurance insurer’sshareisbasedontheratioofitsc.bythemethoddescribedin applicablelimitofinsurancetothetotalbelow. applicablelimitsofinsuranceofallinsurers.(b)PrimaryAndNon-Contributory8.TransferOfRightsOfRecoveryAgainst ToOtherInsuranceWhen OthersTo UsRequiredBy Contract a.TransferOfRightsOfRecoveryIfyouhaveagreedinawritten Iftheinsuredhasrightstorecoverallor contract,writtenagreementor partofanypayment,including permitthatthisinsuranceis SupplementaryPayments,wehavemade primaryandnon-contributorywith underthisCoveragePart,thoserightsaretheadditionalinsured'sown transferredtous.Theinsuredmustdo insurance,thisinsuranceis nothingafterlosstoimpairthem.Atour primaryandwewillnotseek request,theinsuredwillbring"suit"or contributionfromthatother transferthoserightstousandhelpus insurance. enforcethem.Thisconditiondoesnot (a)(b)Paragraphs and donot apply to apply to Medical ExpensesCoverage.other insurance to which the additional b.WaiverOfRightsOfRecovery(Waiver insuredhasbeenaddedasan Of Subrogation)additionalinsured. Iftheinsuredhaswaivedanyrightsof Whenthisinsuranceisexcess,wewill recoveryagainst anypersonor havenodutyunderthisCoveragePartto organizationforallorpartof anypayment, defend the insured against any "suit" ifany includingSupplementaryPayments,we otherinsurerhasadutytodefendthe havemadeunderthisCoveragePart,we insuredagainstthat"suit".Ifnoother alsowaivethatright,providedtheinsured insurerdefends,wewillundertaketodo waivedtheirrightsofrecoveryagainstso,butwewillbeentitledtotheinsured's suchpersonororganizationinacontract, rightsagainst allthoseotherinsurers. agreementorpermitthatwasexecuted prior to the injuryor damage.FormSS 0008 0405 Page 17of24 DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151780 BUSINESS LIABILITYCOVERAGE FORM 3.Additional Insured-GrantorOfFranchiseF.OPTIONALADDITIONALINSURED C.WHOISANINSUREDunderSectionisCOVERAGES amendedtoincludeasanadditionalinsured If listed or shown as applicable in the Declarations, theperson(s)ororganization(s)showninthe oneormoreofthefollowingOptionalAdditional DeclarationsasanAdditionalInsured-InsuredCoverages also apply. When any of these GrantorOfFranchise,butonlywithrespectto OptionalAdditionalInsuredCoveragesapply, theirliability asgrantoroffranchise to you.6.Paragraph(AdditionalInsuredsWhenRequired 4.AdditionalInsured-LessorOfLeasedbyWrittenContract,WrittenAgreementorPermit) EquipmentC.ofSection,WhoIsAnInsured,doesnotapply tothepersonororganizationshowninthe a. C.WHO IS AN INSURED under Section isDeclarations.Thesecoveragesaresubjecttothe amendedtoincludeasanadditional termsandconditionsapplicabletoBusiness insuredtheperson(s)ororganization(s) LiabilityCoverageinthispolicy,exceptas shown in the Declarations as an Additional provided below: Insured–LessorofLeasedEquipment, butonlywithrespecttoliabilityfor"bodily 1.AdditionalInsured-DesignatedPersonOr injury","propertydamage"or"personal Organization andadvertisinginjury"caused,inwholeor C.WHOISANINSUREDunderSectionis inpart,byyourmaintenance,operationoramendedtoincludeasanadditionalinsured useofequipmentleasedtoyoubysuch theperson(s)ororganization(s)showninthe person(s)or organization(s).Declarations,butonlywithrespecttoliability b.Withrespecttotheinsuranceaffordedto for"bodilyinjury","propertydamage"or theseadditionalinsureds,thisinsurance "personalandadvertisinginjury"caused,in doesnotapplytoany"occurrence"which wholeorinpart,byyouractsoromissionsor takesplaceafteryouceasetoleasethat theactsoromissionsofthoseactingonyour equipment.behalf: 5.AdditionalInsured-OwnersOrOther a.Intheperformanceofyourongoing InterestsFromWhomLandHasBeen operations; or Leasedb.Inconnectionwithyourpremisesowned a. C. WHO IS AN INSURED under Section is byor rented to you. amendedtoincludeasanadditional 2.AdditionalInsured-ManagersOrLessorsinsuredtheperson(s)ororganization(s) Of Premises shown in the Declarations as an Additional a. C.WHOISANINSUREDunderSectionis Insured– Owners Or OtherInterestsFromamendedtoincludeasanadditionalinsured WhomLandHasBeenLeased,butonly the person(s) or organization(s)shown in the withrespecttoliabilityarisingoutofthe DeclarationsasanAdditionalInsured- ownership, maintenance or useofthat part DesignatedPersonOrOrganization;butonly ofthelandleased to youand showninthe withrespecttoliabilityarisingoutofthe Declarations.ownership,maintenanceoruseofthatpartof b.Withrespecttotheinsuranceaffordedto the premises leasedtoyou andshown in the theseadditionalinsureds,thefollowing Declarations. additionalexclusions apply:b.Withrespecttotheinsuranceaffordedto Thisinsurancedoes not apply to:theseadditionalinsureds,thefollowing (1)Any"occurrence"thattakesplace additionalexclusions apply: afteryou ceasetoleasethat land;orThisinsurancedoes not apply to: (2)Structuralalterations, new (1)Any"occurrence"whichtakesplace constructionordemolitionoperations afteryouceasetobeatenantinthat performedbyoronbehalfofsuch premises; or personor organization.(2)Structuralalterations, new 6.AdditionalInsured-StateOrPoliticalconstructionordemolitionoperations Subdivision–Permitsperformedbyoronbehalfofsuch a. C.WHO IS AN INSURED under Section ispersonor organization. amendedtoincludeasanadditional insuredthestateorpoliticalsubdivision shown in the Declarations as an Additional

DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151781 BUSINESS LIABILITYCOVERAGE FORM(e)Insured–StateOrPoliticalSubdivision- AnyfailuretomakesuchPermits,butonlywithrespectto inspections,adjustments,testsoroperationsperformedbyyouoronyour servicingasthevendorhasagreedbehalfforwhichthestateorpolitical tomakeornormallyundertakestosubdivision hasissueda permit. makeintheusualcourseofbusiness,inconnectionwiththeb.Withrespecttotheinsuranceaffordedto distributionorsaleoftheproducts;theseadditionalinsureds,thefollowing (f)Demonstration,installation, additionalexclusions apply: servicingorrepairoperations, Thisinsurancedoes not apply to: exceptsuchoperationsperformed (1)"Bodilyinjury","propertydamage"or atthevendor'spremisesin "personalandadvertisinginjury" connectionwiththesaleofthearisingoutofoperationsperformedfor product;the stateor municipality;or (g)Productswhich,afterdistribution (2)"Bodilyinjury"or"propertydamage" orsalebyyou,havebeenlabeled includedinthe"product-completed orrelabeledorusedasa operations"hazard. container,partor ingredient of any 7.Additional Insured–Vendors otherthingorsubstancebyorfor the vendor; ora. C.WHO IS AN INSURED under Section isamendedtoincludeasanadditional (h)"Bodilyinjury"or"property insuredtheperson(s)ororganization(s) damage"arisingoutofthesole(referredtobelowasvendor)shown in the negligenceofthevendorforits DeclarationsasanAdditionalInsured- ownactsoromissionsorthoseof Vendor,butonlywithrespectto"bodily itsemployeesoranyoneelse injury"or"propertydamage"arisingoutof acting onits behalf. However, this"yourproducts"whicharedistributedor exclusiondoes not apply to:soldintheregularcourseofthevendor's (i)Theexceptionscontainedin businessandonlyifthisCoveragePart (d)(f)Subparagraphsor ;orprovidescoveragefor"bodilyinjury"or (ii)Suchinspections, "propertydamage"includedwithinthe adjustments,tests or servicing "products-completed operationshazard". asthevendorhasagreedto b.Theinsuranceaffordedtothevendoris makeornormallyundertakes subjecttothefollowingadditionalexclusions: tomakeintheusualcourseof (1)Thisinsurancedoes not apply to: business,inconnectionwiththedistributionorsaleofthe (a)"Bodilyinjury"or"property products.damage"forwhichthevendoris obligatedtopaydamagesby (2)Thisinsurancedoesnotapplytoany reasonoftheassumptionof insuredpersonororganizationfromliability in acontract or agreement. whomyouhaveacquiredsuch Thisexclusiondoesnotapplyto products,oranyingredient,partor liabilityfordamagesthatthe container,enteringinto, vendorwouldhaveintheabsence accompanyingorcontainingsuch of the contractor agreement; products.(b)Anyexpress warranty 8.Additional Insured–Controlling Interestunauthorizedby you; C.WHOISANINSUREDunderSectionis (c)Anyphysicalorchemicalchange amendedtoincludeasanadditionalinsured intheproductmadeintentionally theperson(s)ororganization(s)showninthe bythevendor; DeclarationsasanAdditionalInsured–ControllingInterest,butonlywithrespectto (d)Repackaging,unlessunpacked theirliability arisingoutof:solelyforthepurposeofinspection,demonstration,testing,orthe a.Theirfinancial controlofyou;or substitutionof partsunder b.Premisestheyown,maintainorcontrol instructionsfromthemanufacturer, whileyou lease oroccupy these premises.andthenrepackagedintheoriginalcontainer; FormSS 0008 0405 Page 19of24
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151782 BUSINESS LIABILITYCOVERAGE FORMThisinsurancedoesnotapplytostructural ThelimitsofinsurancethatapplytoadditionalD.alterations,newconstructionanddemolition insuredsaredescribedinSection–LimitsOfoperationsperformedbyorforthatpersonor Insurance.organization. Howthisinsuranceapplieswhenotherinsurance 9.AdditionalInsured–Owners,LesseesOr isavailabletoanadditionalinsuredisdescribedin Contractors–ScheduledPersonOr E.theOtherInsuranceConditioninSection–Organization LiabilityAndMedicalExpensesGeneral Conditions.a. C. WHO IS AN INSURED under Section is amendedtoincludeasanadditional G.LIABILITYANDMEDICALEXPENSES insuredtheperson(s)ororganization(s) DEFINITIONSshown in the Declarations as an Additional 1."Advertisement"meansthewidespreadpublic Insured–Owner,Lessees Or Contractors, disseminationofinformationorimagesthat butonlywithrespecttoliabilityfor"bodily hasthepurposeofinducingthesaleofgoods, injury","propertydamage"or"personal products orservicesthrough:andadvertisinginjury"caused,inwholeor inpart,byyouractsoromissionsorthe a. (1)Radio;actsoromissionsofthoseactingonyour (2)Television;behalf: (3)Billboard;(1)Intheperformanceofyourongoing (4)Magazine;operationsfortheadditional (5)Newspaper;insured(s);or b.TheInternet,butonlythatpartofaweb (2)Inconnectionwith"yourwork" sitethatisaboutgoods,productsor performedforthatadditionalinsured servicesforthepurposesofinducingthe andincludedwithinthe"products- sale of goods, products orservices; orcompletedoperationshazard",but c.Anyotherpublicationthatisgiven onlyifthisCoveragePartprovides widespread publicdistribution.coveragefor"bodilyinjury"or "propertydamage"includedwithinthe However, "advertisement"does not include:"products-completedoperations a.Thedesign,printedmaterial,information hazard". orimagescontainedin,onoruponthe b.Withrespecttotheinsuranceaffordedto packagingorlabelingofanygoodsor theseadditionalinsureds,thisinsurance products;ordoesnotapplyto"bodilyinjury","property b.Aninteractiveconversationbetweenordamage"or"personalanadvertising amongpersonsthroughacomputernetwork.injury"arisingoutoftherenderingof,or 2."Advertisingidea"meansanyideaforan thefailuretorender,anyprofessional "advertisement".architectural,engineeringorsurveying services,including: 3."Asbestoshazard"meansanexposureor threatofexposuretotheactualoralleged(1)Thepreparing,approving,orfailureto propertiesofasbestosandincludesthemere prepareorapprove,maps,shop presenceofasbestosinanyform.drawings,opinions,reports,surveys, fieldorders, change orders, designs or 4."Auto"meansalandmotorvehicle,traileror drawings andspecifications; or semi-trailerdesignedfortravelonpublic roads,includinganyattachedmachineryor (2)Supervisory,inspection,architectural equipment. But"auto"doesnotinclude orengineering activities. "mobile equipment".10.AdditionalInsured–Co-OwnerOfInsured5."Bodilyinjury" means physical:Premises a.Injury;C.WHOISANINSUREDunderSectionis amendedtoincludeasanadditionalinsured b.Sickness; ortheperson(s)orOrganization(s)showninthe c.DiseaseDeclarationsasanAdditionalInsured–Co- sustainedbyapersonand,ifarisingoutofthe OwnerOfInsuredPremises,butonlywith above, mental anguish ordeathatany time.respecttotheirliabilityasco-ownerofthepremisesshown in the Declarations. 6."Coverageterritory"means:

DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151783 BUSINESS LIABILITYCOVERAGE FORMa. b.The United States of America(includingits Youhavefailedtofulfillthetermsofa territoriesandpossessions),PuertoRico contractor agreement;andCanada; ifsuch property canbe restored to useby:b.Internationalwaters orairspace, but only if a.Therepair,replacement,adjustmentor theinjuryordamageoccursinthecourse removalof"yourproduct"or"yourwork"; oftravelortransportationbetweenany ora.places includedinabove; b.Yourfulfillingthetermsofthecontractor c.Allotherpartsoftheworldiftheinjuryor agreement.damage arises out of: 12."Insured contract"means:(1)Goodsorproductsmadeorsoldbyyou a.Acontractforaleaseofpremises. a.intheterritorydescribedinabove; However,thatportionofthecontractfora (2)Theactivities of a person whose home leaseofpremisesthatindemnifiesany aisintheterritorydescribedin. personororganizationfordamagebyfire, above,butisawayforashorttimeon lightningorexplosiontopremiseswhileyourbusiness; or rentedtoyouortemporarilyoccupiedby (3)"Personalandadvertisinginjury" youwithpermissionoftheowneris offensesthattakeplacethroughthe subjecttotheDamageToPremises Internetorsimilarelectronicmeansof RentedToYoulimitdescribedinSection D.communication –LiabilityandMedicalExpensesLimits of Insurance.providedtheinsured'sresponsibilitytopay b.damagesisdeterminedintheUnitedStatesof Asidetrack agreement;America(includingitsterritoriesand c.Anyeasementorlicenseagreement,possessions),PuertoRicoorCanada,ina includinganeasementorlicense "suit"onthemeritsaccordingtothe agreementinconnectionwithconstruction substantivelawinsuchterritory,orina ordemolitionoperationsonorwithin50settlement weagree to. feetofa railroad;7."Electronicdata"meansinformation,factsor d.Anyobligation,asrequiredbyordinance, programs: toindemnifyamunicipality,exceptin a.Stored asor on; connectionwith workfora municipality;b.Created orused on; or e.Anelevator maintenance agreement; orc.Transmitted to orfrom f.Thatpartofanyothercontractor agreementpertainingtoyourbusiness computersoftware,includingsystemsand (includinganindemnificationofa applicationssoftware,hardorfloppydisks, municipalityinconnectionwithwork CD-ROMS,tapes,drives,cells,data performedforamunicipality)underwhichprocessingdevicesoranyothermediawhich youassumethetortliabilityofanother areusedwithelectronicallycontrolled partytopayfor"bodilyinjury"or"property equipment. damage"toathirdpersonororganization, 8."Employee"includesa"leasedworker". providedthe"bodilyinjury"or"property "Employee"doesnotincludea"temporary damage"iscaused,inwholeorinpart,by worker". youorbythoseactingonyourbehalf. 9."Executiveofficer"meansapersonholding Tortliabilitymeansaliabilitythatwould be anyoftheofficerpositionscreatedbyyour imposedbylawintheabsenceofany charter,constitution,by-lawsoranyother contractor agreement.similargoverningdocument. f.Paragraphincludesthatpartofany10."Hostilefire"meansonewhichbecomes contractoragreementthatindemnifiesa uncontrollableorbreaksoutfromwhereitwas railroadfor"bodilyinjury"or"propertyintendedtobe. damage"arisingoutofconstructionordemolitionoperationswithin50feetofany 11."Impairedproperty"meanstangibleproperty, railroadpropertyandaffectingany railroad otherthan"yourproduct"or"yourwork",that bridgeortrestle,tracks,road-beds,tunnel, cannot beused orislessuseful because: underpassor crossing.a.Itincorporates"yourproduct"or"yourwork" f.However,Paragraphdoesnotinclude thatisknownorthoughttobedefective, thatpartofany contractor agreement:deficient,inadequateordangerous;or FormSS 0008 0405 Page 21of24
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151784 BUSINESS LIABILITYCOVERAGE FORM(1) (1)Thatindemnifiesanarchitect, Powercranes,shovels,loaders, engineerorsurveyorforinjuryor diggers ordrills; ordamage arisingoutof: (2)Roadconstructionorresurfacing (a)Preparing,approvingorfailingto equipmentsuchasgraders,scrapers prepareorapprovemaps,shop orrollers;drawings, opinions, reports, e. a.b.c.d.Vehiclesnotdescribedin,,,orsurveys,fieldorders,change abovethatarenotself-propelledandareorders,designsordrawingsand maintainedprimarilytoprovidemobilityto specifications;or permanentlyattachedequipmentofthe (b)Givingdirectionsorinstructions, followingtypes:or failingtogivethem,if that is the (1)Air compressors, pumpsand primarycauseoftheinjuryor generators, includingspraying, damage;or welding,buildingcleaning,(2)Underwhichtheinsured,ifan geophysicalexploration,lightingand architect,engineerorsurveyor, wellservicing equipment;orassumesliabilityforaninjuryor (2)Cherrypickersandsimilardevices damagearisingoutoftheinsured's usedtoraiseor lower workers;renderingorfailuretorender f. a.b.c.d.Vehiclesnotdescribedin,,,orprofessionalservices,includingthose abovemaintainedprimarilyforpurposes (1)listedinaboveandsupervisory, otherthanthetransportationofpersonsorinspection,architecturalor cargo.engineeringactivities. However,self-propelledvehicleswiththe13."Leasedworker"meansapersonleasedto followingtypesofpermanentlyattached youbyalaborleasingfirmunderan equipmentarenot"mobileequipment"but agreementbetweenyouandthelaborleasing will beconsidered"autos":firm, to perform duties related to the conduct of (1)Equipment,ofatleast1,000pounds yourbusiness."Leasedworker"doesnot grossvehicleweight,designedincludea "temporaryworker". primarilyfor:14."Loadingorunloading"meansthehandlingof (a)Snowremoval;property: (b)Roadmaintenance,butnot a.Afteritismovedfromtheplacewhereitis construction orresurfacing;oracceptedformovementintoorontoan aircraft,watercraftor "auto"; (c)Streetcleaning;b.Whileit is in oron anaircraft, watercraft or (2)Cherrypickersandsimilardevices "auto";or mountedonautomobileortruck chassisandusedtoraiseorlower c.Whileitisbeingmovedfromanaircraft, workers; andwatercraftor"auto"totheplacewhere itis finallydelivered; (3)Air compressors, pumpsandgenerators, includingspraying, but"loadingorunloading"doesnotincludethe welding,buildingcleaning, movement of property by means of a mechanical geophysicalexploration,lightingand device,otherthanahandtruck,thatisnot wellservicing equipment.attachedtotheaircraft,watercraftor"auto". 16."Occurrence"meansanaccident,including15."Mobile equipment" means any ofthefollowing continuousorrepeatedexposuretosubstantiallytypesoflandvehicles,includinganyattached thesamegeneralharmfulconditions.machineryor equipment: 17."Personaland advertising injury" means injury, a.Bulldozers,farmmachinery,forkliftsand includingconsequential"bodilyinjury",arising othervehiclesdesignedforuseprincipally out of oneor more of the followingoffenses:offpublic roads; a.Falsearrest, detention orimprisonment;b.Vehiclesmaintainedforusesolelyonor next to premisesyou ownor rent; b.Maliciousprosecution;c.Vehicles thattravel oncrawlertreads;d.Vehicles,whetherself-propelledornot,on which arepermanentlymounted:

DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151785 BUSINESS LIABILITYCOVERAGE FORMc.Thewrongfulevictionfrom,wrongfulentry Work thatmayneed service,maintenance, into,orinvasionoftherightofprivate correction,repairorreplacement,but occupancyofaroom,dwellingor whichisotherwisecomplete,willbe premisesthatthepersonoccupies, treatedas completed.committedbyoronbehalfofitsowner, The"bodilyinjury"or"propertydamage" landlordor lessor; mustoccurawayfrompremisesyouownd.Oral,writtenorelectronicpublicationof orrent,unlessyourbusinessincludesthe materialthatslandersorlibelsapersonor selling,handlingordistributionof"your organizationordisparagesaperson'sor product"forconsumptiononpremisesyou organization's goods, products orservices; ownor rent.e. b.Oral,writtenorelectronicpublicationof Doesnotinclude"bodilyinjury"or materialthatviolatesaperson'srightof "property damage" arisingoutof:privacy; (1)Thetransportationofproperty,unlessf.Copying,inyour"advertisement",a theinjuryordamagearisesoutofa person’sororganization’s"advertising conditioninoronavehiclenotowned idea" orstyle of "advertisement"; oroperatedbyyou,andthatcondition wascreatedbythe"loadingorg.Infringement of copyright, slogan, or title of unloading"ofthatvehiclebyany anyliteraryorartisticwork,inyour insured;or"advertisement"; or (2)Theexistenceoftools,uninstalled h.Discriminationorhumiliationthatresultsin equipmentorabandonedorunusedinjurytothefeelingsorreputationofa materials.naturalperson. 20."Property damage" means:18."Pollutants"meansanysolid,liquid,gaseousorthermalirritantorcontaminant,includingsmoke, a.Physicalinjurytotangibleproperty, vapor,soot,fumes,acids,alkalis,chemicalsand includingallresultinglossofuseofthat waste.Wasteincludesmaterialstoberecycled, property.Allsuchlossofuseshallbe reconditionedorreclaimed. deemedtooccuratthetimeofthe physicalinjury thatcaused it; or19."Products-completed operationshazard";b.Lossofuseoftangiblepropertythatisnot a.Includesall"bodilyinjury"and"property physicallyinjured.Allsuchlossofuse damage"occurringawayfrompremises shallbedeemedtooccuratthetimeof youownorrentandarisingoutof"your "occurrence"that causedit.product" or"your work"except: Asusedinthisdefinition,"electronicdata"is (1)Productsthatarestillinyourphysical not tangible property.possession;or 21."Suit"meansacivilproceedinginwhich(2)Workthathasnotyetbeencompleted damagesbecauseof"bodilyinjury","property orabandoned.However,"yourwork" damage"or"personalandadvertisinginjury" willbedeemedtobecompletedatthe towhichthisinsuranceappliesarealleged. earliest of the followingtimes: "Suit"includes:(a)Whenalloftheworkcalledforin a.Anarbitrationproceedinginwhichsuch yourcontract hasbeen completed. damagesareclaimedandtowhichthe (b)Whenall of the work to bedone atinsuredmustsubmitordoessubmitwiththejobsitehasbeencompletedif ourconsent; oryourcontractcallsforworkat b.Anyotheralternativedisputeresolution more than onejobsite. proceedinginwhichsuchdamagesare (c)When that part of the workdone at claimedandtowhichtheinsuredsubmits ajobsitehasbeenputtoits withour consent.intendedusebyanypersonor 22."Temporaryworker"meansapersonwhois organizationotherthananother furnishedtoyoutosubstituteforapermanentcontractororsubcontractor"employee"onleaveortomeetseasonalor working onthesameproject. short-termworkloadconditions.23."Volunteerworker" means aperson who:a.Is not your"employee"; FormSS 0008 0405 Page 23of24
DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151786 BUSINESS LIABILITYCOVERAGE FORMb. (2)Donates his orher work; Theprovidingoforfailuretoprovide warnings orinstructions.c.Actsatthedirectionofandwithinthe c.scopeofduties determined byyou;and Doesnotincludevendingmachinesor d.Isnotpaidafee,salaryorother otherpropertyrentedtoorlocatedforthe compensationbyyouoranyoneelsefor useofothersbutnotsold.theirwork performedforyou. 25."Yourwork":24."Yourproduct": a.Means:a.Means: (1)Workoroperationsperformedbyyou (1)Any goodsor products,otherthanreal oron yourbehalf;andproperty, manufactured, sold, handled, (2)Materials, partsorequipment distributedor disposed of by: furnished in connectionwith suchwork (a)You; oroperations.(b) b.Otherstradingunderyourname; Includes:or (1)Warrantiesor representations made at (c)Apersonororganizationwhose anytimewithrespecttothefitness, businessorassetsyouhave quality,durability,performanceoruse acquired;and of "yourwork";and(2) (2)Containers(otherthanvehicles), Theprovidingoforfailuretoprovide materials, partsorequipment warnings orinstructions.furnishedinconnectionwithsuch goodsor products.b.Includes:(1)Warrantiesor representations made at anytimewithrespecttothefitness, quality,durability,performanceoruse of "yourproduct"; and

DocuSign Envelope ID: 57E96908-3BFB-45B2-AA62-FCA722526151787 December 17, 2024

Community Development

DATE: December 17, 2024
TO: Mayor Martinez and Members of the City Council
FROM:

Lina Velasco, Director of Community Development
George Kabaivanov, Building Official

Subject:

Residential Rental Inspection Program Ordinance
Amendments
FINANCIAL IMPACT: There is no fiscal impact to the General Fund from the expanded rental inspection program as fees are collected directly from owners of rental property to cover program costs. The elimination of the self-certification program will increase the number of inspection fees a landlord will pay every inspection cycle (triennially or every three years).

PREVIOUS COUNCIL
ACTION:

May 16, 2023

STATEMENT OF THE
ISSUE:

In the Council-identified Strategic Goal Area 1: Improve Quantity and Quality of Housing, Especially Low-Income
Housing and Reduce Homelessness, making
amendments to the Residential Rental Inspection
Program to improve housing quality was expressed as
Goal 1.4.a. Staff has engaged with key stakeholders to develop amendments to meet these strategic goals for
Council’s consideration.

RECOMMENDED ACTION:

INTRODUCE (first reading) an Ordinance amending
Richmond Municipal Code Chapter 6.40 Residential
Rental Dwelling Unit Inspection and Maintenance to
eliminate the self-certification process, expand units
covered, including certain affordable housing units, and add other amendments to enhance the program –
Community Development Department (Lina Velasco 510-
620-6841/George Kabaivanov, 510-620-6649).

AGENDA
REPORT
788
December 17, 2024
DISCUSSION:

On May 16, 2023, City Council directed the City Attorney’s Office to work with the Community Development Department and community stakeholders to update the Residential Rental Inspection and Maintenance Ordinance. Due to the City’s desire to further expand enforcement, staff hereby proposes amendments to the current ordinance to add key amendments relating to removing the self-certification inspection process, ensuring all covered units are inspected every inspection cycle, removing exemptions from inspections for certain subsidized housing options, studying necessities for bringing the administration of the Residential Rental Inspection Program (RRIP) in-house after a phased period, and clarifying standards for habitability.

Summary of Proposed Amendments

Below is a summary of the key amendments proposed to the RRIP:

• Clarifying definitions of key parties involved in the implementation and enforcement of the program to ensure clarity in procedures and duties; • Clarifying exemptions from inspections as it relates to mobile home parks, vacant properties, transient lodging, and newly constructed buildings or accessory dwelling units to ensure exemptions from the program are narrowly targeted and tailored;
• Removing exemptions from inspections for certain subsidized housing options and in turn, limiting the exemption for subsidized housing to units occupied by Housing Choice Voucher (Section 8) tenants only to ensure that the maximum number of units within the City are properly inspected; • Expanding and clarifying standards for habitability, including detailing additional standards for interior inspections, tailoring exterior inspection standards to focus on habitability, adding language to limit potential claims that inspection approvals under the RRIP serve as approval for nonconformities for unpermitted work, and reserving sections for future development and potential adoption of provisions relating to implementation of standards geared toward energy efficiency, modernization, and decarbonization of residential rental units throughout the City, which are to be incentivized via City, State, and/or Federal programs; • Amending notification and inspection procedures to ensure tenants and owners have adequate notice and provide availability to reschedule inspection for certain circumstances;
• Shortening the duration between inspection cycles, every unit must be inspected once every three years;
• Removing the self-certification inspection process to ensure that inspections are performed by specialized officials and to encourage tenant communication/complaints of potentially substandard conditions; • Expanding standards for conducting additional inspections on a complaint basis in an effort to work with tenants to communicate and identify substandard conditions;
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December 17, 2024
• Ensuring all units are inspected on a three-year cycle and eliminating exemptions from full inspections based on prior compliance;
• Developing standards to study required actions necessary to bring administration of the RRIP in-house after a phased period;
• Expanding provisions relating to relocation of tenants to ensure tenants are aware of existing City resources to facilitate relocation; • Reserving sections for future development and potential adoption of provisions relating to implementation of a tenant habitability plan; and, • In sum, amendments largely consist of adding procedures and processes to ensure units are regularly inspected in an effort to eliminate the substandard housing stock within the City.

PUBLIC INPUT

City staff hosted a community workshop on March 14, 2024, to obtain input from landlords and residents on a draft version of the proposed Ordinance amendments.

Input from participants included and addressed the following topics: (1) concern regarding the increased costs to landlords, especially those managing affordable housing units; (2) support for expanding the RRIP to ensure tenant safety and minimum habitability standards; (3) requests to exempt Section 8 units given these units are already subject to annual habitability inspection by the U.S. Department of Housing and Urban Development; and, (4) concern regarding the lack of clarity in the Tenant Habitability Plan provisions, procedures, and requirements.

In response to the public’s input, the following key changes were made to the proposed Ordinance amendments:
 Providing Housing Choice Voucher (Section 8) units as an exempt class of units given the already existing habitability inspections;
 Reserving the establishment of climate efficiency standards aimed at identifying opportunities for landlords to electrify/decarbonize rental units; and,  Reserving the establishment of a tenant habitability plan aimed at ensuring tenant safety was considered during major repairs and construction work.

Necessary steps for successful implementation of climate efficiency guidelines and the tenant habitability plan will be studied with the support of a Partnership for the Bay’s Future Housing Fellow over the next year to allow for further study and stakeholder engagement.

ENVIRONMENTAL REVIEW

The subject Ordinance is not subject to the California Environmental Quality Act (“CEQA”) because the Ordinance does not qualify as a “project” under CEQA and because the Ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment. (State CEQA Guidelines, section 15060, subd. (c)(2), (3).) Section 15378 of the State CEQA Guidelines defines a project as the whole of an action, which could potentially result in either a direct physical change, or 790
December 17, 2024
reasonably foreseeable indirect physical change, in the environment. Here, the Ordinance will not result in any construction or development, and it will not have any effect that would physically change the environment. The Ordinance therefore does not qualify as a project subject to CEQA.

NEXT STEPS:

A second reading is required for adoption and the amendments will not become effective until thirty days after final adoption. Upon final adoption, staff will work on the implementation of the amendments and will study the steps necessary to bring the inspection program in-house for future council consideration. The current RRIP is currently carried out with the use of consultants for both the administration and inspections.

Partnership of the Bay’s Future Housing Fellow

In addition, the Partnership for the Bay’s Future awarded the City and its community partners, Movement Legal and Alliance of Californians for Community Empowerment (ACCE), a Housing Fellow to: (1) support the City in developing a process for review of Tenant Habitability Plans to preserve tenancies during major construction or repair work; and, (2) create Climate Resilient Housing Guidelines to be used in the new inspection program aimed at identifying opportunities for landlords to electrify rental units by taking advantage of existing rebate and incentive programs.

EPA Community Change Grant

In addition, the City and ACCE applied for an EPA Community Change grant for a project that would demonstrate that a new, more equitable model of building decarbonization is possible. Specifically, neighborhood-scale building decarbonization projects allow all residents—regardless of race, class, or home ownership—to receive the benefits of energy-efficient, healthy, and resilient homes.

Participants in the 40-80 residential units selected for this program will receive deep energy efficiency retrofits, high-efficiency electric appliances such as heat pumps and electric panel upgrades if necessary, and onsite solar will also be installed for all suitable rooftops in the project area to further lower energy bills. Additionally, program participants will receive electric vehicle charging and battery storage geared towards improving resilience in the case of power outages and natural disasters.

If funded, this program will have a long-term positive impact on residents by lowering utility bills, improving indoor and outdoor air quality, and providing efficient cooling heating.

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December 17, 2024
DOCUMENTS ATTACHED:

Attachment 1 – Ordinance Amending RMC Chapter 6.40
Attachment 2 – Proposed Ordinance Amendments (Redline)

792

ORDINANCE NO. XXXX

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF RICHMOND AMENDING CHAPTER 6.40 OF THE RICHMOND MUNICIPAL CODE RELATING

TO RESIDENTIAL RENTAL DWELLING UNIT INSPECTIONS, MAINTENANCE,

AND HABITABILITY

WHEREAS, Section VII of Article XI of the California Constitution provides that a City may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws;

WHEREAS, on August 2, 2005, the City of Richmond (City) adopted an ordinance (34- 05 N.S.) establishing a procedure for Residential Rental Dwelling Unit Inspection and Maintenance, adding a new Chapter 6.40 to the Richmond Municipal Code (RMC);

WHEREAS, on January 20, 2015, the City adopted an ordinance (03-15 N.S.) amending the procedure for Residential Rental Dwelling Unit Inspection and Maintenance, adding and tailoring key provisions as they relate to expanding the rental inspection program to all residential rental properties;

WHEREAS, the purpose of Chapter 6.40 of the RMC, Residential Rental Dwelling Unit Inspections and Maintenance, is to ensure the availability of affordable and safe residential rental units within the City through a program of regularly scheduled, comprehensive inspections intended to identify and require correction of substandard conditions and ensure habitability for the City’s residents living in residential rental dwelling units;

WHEREAS, the intent of this Chapter 6.40 of the RMC is to proactively identify blighted and deteriorated rental housing stock and to ensure the rehabilitation or elimination of rental housing that does not meet minimum building code and housing code standards, exterior maintenance standards, and site maintenance standards, or is otherwise not safe to occupy;

WHEREAS, Chapter 6.40 of the RMC, Residential Rental Dwelling Unit Inspection and Maintenance, sets forth regulations and enforcement provisions for the City’s Residential Rental Inspection Program (RRIP);

WHEREAS, due to the success of the RRIP and City’s desire to further expand enforcement, staff hereby proposes amendments to the current ordinance to add key amendments relating to shortening inspection cycles, removing the self-certification inspection process, ensuring all units are inspected, removing exemptions from inspections for certain subsidized housing options, studying necessities for bringing administration of the RRIP in-house after a phased period, and clarifying standards for habitability;

WHEREAS, these proposed amendments to Chapter 6.40 of the RMC shall serve as the initial phase of amendments to the RRIP as the City desires to bring forward additional amendments and enhancements after implementation including the addition of standards geared 793

toward energy efficiency, modernization, and decarbonization of rental units throughout the City, which would be incentivized via City, State, and/or Federal programs;

WHEREAS, said amendments to the RMC are permitted by law, including the California Constitution, Government Code, and Civil Code.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RICHMOND HEREBY ORDAINS AS FOLLOWS:

SECTION 1: The above recitals are true and correct and are incorporated herein.

SECTION 2: Chapter 6.40 of the Richmond Municipal Code is hereby amended and is to read in its entirety as follows:

Sections:

6.40.010 - Purpose and intent.

6.40.020 - Reserved.

6.40.030 - Definitions.

6.40.040 - Scope.

6.40.050 - Exemptions.

6.40.060 - Inspections; compliance with applicable codes and standards.

6.40.070 - Registration, application and implementation.

6.40.080 - Notification of inspection and procedures.

6.40.090 - Registration/processing fee.

6.40.100 - Inspection fee and compliance re-inspection fees.

6.40.110 - Violations.

6.40.120 - Enforcement; penalties.

6.40.130 - Relocation of tenant.

6.40.140 – Reserved.

6.40.150 - Appeal.

6.40.160 - Retaliatory eviction prohibited.

6.40.170 - Recovery of attorneys’ fees.

6.40.180 - Delinquent fees; late fee penalties.

6.40.190 - Effective date.

6.40.200 - Review by City Council.

Chapter 6.40 - RESIDENTIAL RENTAL DWELLING UNIT INSPECTION,

MAINTENANCE AND HABITABILITY

6.40.010 - Purpose and intent.

The purpose of this chapter is to safeguard and preserve the housing stock of decent, safe and sanitary residential rental dwelling units within the City and to protect persons entering 794

or residing in them by providing for a regular and comprehensive system of inspection of residential rental dwelling units and, through such inspections, identifying and requiring the correction of substandard conditions. Additionally, City Council finds that the safety of rental housing properties is increased through the participation of owners, tenants, the City, and the community.

The intent of this chapter is to proactively identify blighted and deteriorated rental housing stock and to facilitate the rehabilitation of rental housing that does not meet minimum building, housing, and health and safety code habitability standards, exterior maintenance standards, site maintenance standards, or is unsafe to occupy. It is further intended to preserve and enhance the quality of life for residents of the City living in those residential rental dwelling units.

After implementation, the City desires to bring forward additional amendments and enhancements including the addition of standards geared toward energy efficiency, modernization, and decarbonization of residential rental units throughout the City, which are to be incentivized via City, State, and/or Federal programs.

6.40.020 - Reserved.

This section is reserved for development and adoption of provisions relating to implementation of standards geared toward energy efficiency, modernization, and decarbonization of residential rental units throughout the City, which are to be incentivized via City, State, and/or Federal programs.

6.40.030 - Definitions.

As used in this chapter:
"City" means the City of Richmond.
"Inspection fee" means the amount charged per unit to be inspected at the beginning of every three (3) year cycle.
“Inspector” means the Building Official, vested with the authority to enforce this Code or otherwise delegate the implementation, administration, and enforcement of the provisions of this Code to housing inspectors, building inspectors, technical officers and employees, or other designees, all which shall have the powers as delegated by the Building Official.
"Nuisance" shall have the same meaning as set forth in California Civil Code Section 3479 and/or any condition as defined in Chapter 9.22 et seq., this Code, or any condition declared and deemed by the City Council to constitute a nuisance, or any violation of the Richmond Municipal Code.
"Owner" means the person identified and listed as having title to the residential rental dwelling unit indicated by the latest property tax assessment roll maintained by the Contra Costa County Assessor and any authorized agent, trustee, or legal representative thereof. 795

"Person" means an individual, corporation, partnership, association, or other entity. "Property" means any real property interest or estate which may be granted or devised by deed. The term "property" shall also include: tracts, lots, easements or parcels of land, and any and all improvements thereon.
"Registration/processing fee" means the flat rate, based on the legal property owner, that is payable each and every year by property owners of residential rental properties within the City or payable on a predetermined schedule.
"Residential rental dwelling unit" means a residential dwelling unit, including single family dwellings, or residential units within duplexes, triplexes or multi-family (4-units or more) residential buildings, which is not an owner-occupied unit, including rooming houses, boarding houses and single room occupancies (as defined by this Code). "Substandard dwelling" means any condition which is defined as constituting a substandard building or dwelling as defined by California Health and Safety Code Section 17920.3 et seq. or as defined by the California Building Code. “Tenant” means a tenant, subtenant, lessee, sublessee, or any other person entitled under the terms of a rental housing agreement to the use or occupancy of any residential rental dwelling unit.
"This Code" means the Richmond Municipal Code.

6.40.040 - Scope.
(a) The provisions of this chapter shall apply to all existing residential rental dwelling units located within the City limits including parking lots, driveways, landscaping, accessory structures, and fences.
(b) The provisions of this chapter shall be supplementary and complementary to all of the provisions of this Code, State law, and any law cognizable at common law or equity, and nothing herein shall be construed, read, or interpreted in any manner so as to limit any existing right or power of the City to abate and prosecute any and all nuisances or to enforce any other conditions in violation of State or local codes, including, but not limited to, any building, housing, property maintenance and public nuisance ordinances.

6.40.050 - Exemptions.
(a) Mobile Home Parks. Mobile home parks shall be exempt from this chapter. (b) Vacant Properties. Any residential rental dwelling unit(s) in a building that is properly registered as "vacant property" under Chapter 6.38 of this Code shall be exempt from this chapter. As required by Chapter 6.38 of this Code, the owner shall provide the City written notice when the property is to become occupied. Upon the City’s receipt of written notice of upcoming occupancy, the inspector shall conduct an inspection of the property pursuant to the standards in this chapter before the property is occupied.
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(c) Transient Lodging. Transient lodging as defined in section 15.04.104.020 of this Code shall be exempt from this chapter.
(d) Newly Constructed Buildings or Accessory Dwelling Units (ADUs). Newly constructed buildings or ADUs shall be exempt from this chapter for a period of five (5) years, unless a complaint of substandard or illegal conditions has been received. That five (5) year period begins to run on the date the certificate of occupancy for the dwelling was issued by the Building Regulations Division. (e) Units Occupied by Housing Choice Voucher (Section 8) Tenants. All residential rental dwelling units occupied by Housing Choice Voucher Tenants (Section 8) shall be exempt from this chapter provided that these residential rental dwelling units receive housing quality inspections by the administering agency and in accordance with the inspection schedule set by the administering agency. These units are subject to complaint-based inspections as set forth in section 6.40.070(d) of this chapter.

Nothing in this chapter, including the above-listed exemptions, shall be construed or interpreted as limiting the City's authority to investigate and compel the abatement of any violation of this Code and/or the California Code of Regulations or other duly enacted law.

6.40.060 - Inspections; compliance with applicable codes and standards. (a) Inspections. The inspector is authorized to inspect all residential rental dwelling units, both internally and externally, and their associated property to determine whether such residential rental dwelling units comply with State law, applicable provisions of this Code, and with all previous conditions of approval and agreements. Applicable provisions of this Code may come from and include, but are not limited to, the California Code of Regulations and California Codes (including the building, housing, fire, plumbing, mechanical, and electrical codes), Chapter 9.22 of this Code regulating public nuisance standards, and the standards set forth in this chapter. Interior areas of all residential rental dwellings units shall be determined by the inspector to be compliant with the regulations set forth herein including but not limited to: all bedrooms and living areas must be habitable, doors and locks must be installed and equipped with locking mechanisms, windows, window panes, and window screens must be in good condition with proper locking devices, there must be no visible mold, insects, rodents, or other pests, light switches must be functional, GFI’s must be properly installed and in working condition, all smoke detectors must be in working order and installed in all hallways and sleeping rooms, a carbon monoxide detector must be installed on each level within the residential rental unit, and all kitchen appliances must be in good working order.

After the effective date of this ordinance and before a second inspection cycle has been completed, the City shall have evaluated, assessed feasibility, and determined all requirements and procedures necessary to bring this residential rental inspection program in-house such that all inspections are conducted by City employees rather than third- party contactors. At this time, the City shall use the information gathered from the evaluation period and determine whether to implement the residential rental inspection program in-house, which may include a phase-out period where a portion of the 797

inspections are still conducted by third-party contractors. Once the residential rental inspection program is conducted exclusively by City employees, this ordinance shall be amended accordingly.
(b) Compliance with Codes and Standards. When inspections are made under this chapter, the residential rental dwelling unit(s) shall be required to be in conformance and maintained in accordance with the code standard that was in effect at the time the residential rental dwelling unit(s) was constructed, altered, remodeled, erected, or converted, except for any additional requirements mandated by this Code or State law.

Any inspection performed or approvals provided under this chapter, shall not be construed to provide approval, authorization, permitting, or otherwise grandfather in any nonconforming use or unpermitted construction, addition, or modification present in any residential rental unit.
(c) Additional Exterior Standards. In addition to the codes and standards described above, all residential rental dwelling units shall meet the following exterior maintenance standards:

(1) Residential rental dwelling units and all portions thereof, shal l have exterior walls that are weathertight , watertight, and kept free of deterioration, holes, breaks, or loose boards or coverings. Roof structures shall be watertight such that there are no defects that will allow water to enter into the residential ren tal dwelling units;
(2) The exterior finish of all residential rental dwelling units shall be maintained.

If the exterior finish of a residential rental dwelling unit is paint or stain, the residential rental dwelling shall be repainted or re-stained prior to a time when the exterior finish has substantially deteriorated;
(3) All architectural projections such as cornices, moldings, lintels, sills (and similar projections) shall be maintained in good repair and free of defects; (4) All chimneys, antennas, vents, gutters and downspouts, and similar projections or building accessories shall be maintained in a structurally sound condition and be in good repair. Such projections shall be properly secured, when applicable, to an exterior wall or roof;
(5) Windows and exterior glazing shall be soundly and adequately glazed, and free from loose and/or broken glass and cracks that could cause physical injury or allow the elements to enter the structure. Exterior doors shall be maintained in a weathertight, watertight and rodent-proof condition. Exterior doors of residential rental dwelling units shall be solid core or the equivalent and be provided with a locking device that tightly secures the door; (6) All residential rental dwelling units and exterior property shall be maintained free of rodent, insect or vermin infestation, which creates an unsafe or unsanitary environment on the subject or adjacent properties or buildings; (7) All accessory structures shall be maintained in a state of good repair or removed from the property or residential rental dwelling unit(s). Such structures shall include, but not be limited to, clubhouses, offices, maintenance buildings, carports, retaining walls, fences, garages, swimming pools, spas, hot 798

tubs and miscellaneous sheds;
(8) All parking areas on the property, if dedicated for use by the tenant(s) of the residential dwelling unit(s), shall be kept free of potholes, cracks or other deterioration. Parking areas must comply with City and State regulations. All striping and signage for multi-family (4 or more dwelling units) residential units, including parking signage and fire lane or access signage, shall be maintained in good condition and clearly legible; and,
(9)All landscaped areas serving the residential dwelling unit(s) shall be maintained in compliance with Chapter 9.22 of this Code and free of public safety hazards. Landscape areas are defined as the general landscaping area, rights-of-way and detention or pond areas. Driveways, hardscape parking areas, patios or walks are not included as landscape areas.
(d) An inspector shall not opine on who is at fault (i.e. tenant, landlord, or property owner) for any substandard condition.

6.40.070 – Registration, application and implementation. (a) It shall be the responsibility of all owners of residential rental dwelling units within the City to register such residential rental dwelling units with the Building Regulations Division and submit the registration/processing fee and the inspection fee. Payment of the registration/processing fee and inspection fee shall take place within thirty (30) days of the date on which written notification is mailed to the owner of such residential rental dwelling unit(s) by the Building Regulations Division.
(b) If the owner of the residential rental dwelling unit(s) fails to register or reregister such units in compliance with this chapter, the inspector shall register or reregister said units in the name of the owner and set a date and time for initial cycle inspection of said units, and shall send written notification to the owner that the residential rental dwelling units have been so registered and advising of the date and time set for inspection, accompanied with a bill for the registration/processing fee and the total initial inspection fee for each unit.
(c) Frequency of Periodic Inspection Cycle. The owner shall permit an inspection of all residential rental dwelling units once every three (3) years by the inspector, in order to determine whether any substandard conditions exist within such residential rental dwelling unit(s) or on the premises of the property.
(d) Complaint Based Inspections. Additional inspections of any residential rental dwelling unit may occur on a complaint basis or if the inspector has reasonable cause to believe any unit is substandard. The inspector may assess various factors to establish reasonable cause including but not limited to:
(1) The extent and seriousness of the previous or current violations observed and any reasonably anticipated effect on the tenants;
(2) The history of the residential rental dwelling unit during the past three years, including whether the residential rental dwelling unit has been the subject of orders issued by other agencies concerning health and safety violations or 799

involvement in nuisance abatement actions;
(3) The age of the residential rental dwelling unit;
(4) The record in the past three years of the persons or entities who own, manage, or control the residential rental dwelling unit(s) with respect to health or safety violations at the premises or other properties and whether the violations have been subject to enforcement action;
(5) Whether the residential rental dwelling unit(s) have delinquent fees imposed under this chapter;
(6) Whether there are tax defaults on the residential rental dwelling unit(s); (7) If master-metered residential rental dwelling unit(s), whether there are any delinquent utility bills in excess of two months; and,
(8) Any other criteria determined by the Buildings Regulations Division to be indicative of the existence of health or safety violations. (e) The existence of periodic inspections and availability of additional inspections shall not affect an inspector’s duty to respond to complaints concerning habitability of any residential rental dwelling unit. The City shall not charge any tenant for any inspection based on a complaint of State Housing Law habitability violations made by the tenant or any other person.

6.40.080 - Notification of inspection and procedures.
(a) A notice of inspection stating the date and time of the inspection shall be provided to the owner as well as to the address of the residential rental dwelling unit, which shall be sufficient to provide any tenants and occupants of the residential rental dwelling unit notice of the date and time of the inspection. The failure of either the owner or any tenants or occupants to receive notice does not affect the validity of the notice.
(b) The notice of inspection shall provide a minimum of 30 days' notice. It shall be the responsibility of the owner to provide actual notice to the individual tenants to facilitate access to the residential rental dwelling units to be inspected. (c) If an inspection is canceled or rescheduled by the inspector, a notice shall be mailed to the owner as well as the address of the residential rental dwelling unit at least three days prior to the rescheduled inspection date stating the date and time of the new inspection.
(d) If an inspection is canceled or rescheduled by the owner or the tenants of the property, the new inspection date must be within 14 days of the originally scheduled inspection date. The inspection date and time may be rescheduled once per request by the owner or collective tenants of the residential rental dwelling unit. Any additional request to be rescheduled must be for good cause and approved by the inspector.
(e) In the event an owner or tenant in possession of a residential rental dwelling unit refuses to allow access to conduct the inspection, the City may use all legal remedies 800

permitted by law per section 6.40.120 of this chapter, including issuance of a warrant to cause an inspection to take place, provided reasonable cause exists to believe that a violation of this Code or State law exists on the residential rental dwelling unit.

Inspections for the purpose of this chapter are a "necessary service" and for which entry by the owner, upon proper notice, is allowed per Civil Code 1954. (f) Upon arrival at a noticed inspection, it shall be the duty of the inspector to ensure that each individual attending the inspection identifies themselves by first and last name and provides their title to any tenants and occupants. A tenant or occupant may refuse entry to any individual who refuses to identify themselves.

6.40.090 - Registration/processing fee.

Owners of all residential rental dwelling units subject to inspection under this chapter shall pay a registration/processing fee on a pre-determined schedule in the amount set forth in the Master Fee Schedule (resolution establishing fees and charges for various municipal services). The fee will be used to finance the cost of processing and maintaining current ownership and property information and program records by City staff. If the owner fails to pay the required fee, the City shall recover it, plus accrued interest and penalties, utilizing all remedies provided by law, including placing a special assessment lien against the residential rental dwelling unit. This fee shall be known as the residential rental unit "registration/processing fee."

6.40.100 - Inspection fee and compliance re-inspection fees.

Upon a periodic or complaint-based inspection, the inspector may require the owner of a residential rental dwelling unit to perform work, take action, or refrain from an action to ensure compliance with applicable codes. The initial periodic inspection fee includes the cost of the initial periodic inspection and the first (1st) compliance re-inspection and/or the below described affidavit in lieu of the first (1st) compliance re-inspection. In those cases where the inspector has determined (based on violations designated as minor on the inspection checklist) that the violations are of a minor nature, in lieu of the compliance re-inspection, the owner shall submit a sworn declaration attesting to the repair of all listed violations within the specific time frame provided in the notice. If the owner fails to correct the violations by the second (2nd) compliance re-inspection, or fails to submit a sworn declaration attesting to repair of the minor violations within the time provided, the owner shall pay a re-inspection fee for that second (2nd) compliance re-inspection and for each additional re-inspection thereafter, as set forth in the Master Fee Schedule. If the owner fails to pay the required fee, the City shall recover it, plus accrued interest and penalties, utilizing all remedies provided by law, including placing a special assessment lien against the residential rental dwelling units.

6.40.110 - Violations.
(a) Notice of Violation.
(1) Content. Whenever it is determined by the inspector that a violation of this chapter exists, the inspector shall issue a written notice of violation. The notice shall contain a description of the violation, the specific action required to correct the violation and a demand that the violations be corrected within the specific time period listed in the notice. The notice shall contain the scheduled re- 801

inspection date and time, or in the event the violations are minor as designated on the inspection checklist, the notice shall contain a date by which the owner must provide the inspector with a sworn declaration (attached to a copy of the checklist showing the violations), that each minor item has been repaired as directed. If an inspector orders a notice to vacate, certain imminently dangerous life-safety violations are observed, or if the tenant believes that the repairs affect habitability, the relocation procedures set forth in section 6.40.130 of this chapter apply.
(2) Time for Correction. The notice shall provide a reasonable time for correction, the time shall depend on the inspector’s opinion of the time it would take a reasonably diligent person to complete the required action, the potential harm to the public welfare, health and safety, the harm to the tenant or nearby properties and the extent of the corrections required. The inspector may grant a one-time extension of the initial time to abate the violations upon written request of the owner, if (1) substantial work has been satisfactorily completed (at least 85% of the violations identified in the notice of violation); and (2) the violation is not a life safety issue. In no event shall the initial time to correct exceed one hundred twenty (120) days, nor shall any extension of time exceed sixty (60) days. Certain imminently dangerous life-safety violations may require immediate correction and are not subject to an extension of time to correct and are subject to the relocation requirements of section 6.40.130 of this chapter. (3) Service of Notice on Owner. The notice of violation may be served personally on the owner or, if the owner is not present, a copy of the notice may be posted on the property and/or by deposit in the United States mail, in a sealed envelope, postage prepaid, addressed to such person to be notified at his last known business or residence address as the same appears in the public records of the City or other records pertaining to the matter to which such notice is directed. Service by mail shall be deemed to have been completed at the time of deposit in the post office. It is unlawful and a misdemeanor for any person to remove, deface or cause the removal or defacing of any notice of violation posted on premises pursuant to this chapter. The owner’s failure to receive the notice does not take away from the validity of the notice. (4) Service of Notice on Tenants and Occupants. Any notice of violation shall also be mailed via United States mail, postage prepaid, to the residential rental dwelling unit address subject to the violations contained in the notice of violation. The notice shall contain a cover page, which states in bold text the following information:

The residential rental dwelling unit you are currently occupying has been found to have violations of the Richmond Municipal Code relating to habitability. The violations cited in this notice are to be remedied by the owner of the residential rental dwelling unit. If you are required to move out, you will receive an eviction notice or order from the City of Richmond. If you believe that the conditions cited in the notice substantially affect the habitability of your residential rental dwelling unit, you may be entitled to a rent reduction or relocation benefits as specified in the Richmond 802

Municipal Code. Upon receipt of an eviction notice or order, belief that you are entitled to a rent reduction, or have any other questions concerning your rights as a tenant, please contact Richmond’s Rent Program at: 510-234-RENT or,
http://www.ci.richmond.ca.us/3364/Richmond-Rent-Program. (5) Compliance Re-inspections. Compliance re-inspections shall be conducted to verify that the violations identified in the notice of violation have been abated, unless the violations are minor in nature (as designated by an asterisk on the inspection checklist), and the owner has submitted a sworn declaration of repair.

Violations that were not noted on the initial notice of violation but are discovered during any re-inspection due to subsequent activities, damage or deterioration, shall be subject to correction.

6.40.120 - Enforcement; penalties.

If, after a notice of violation has been issued, the owner fails to abate the violations, the City may proceed with all remedies available under this Code to compel compliance, including, but not limited to, issuing administrative citations, abatement proceedings, civil action, civil injunction and/or criminal prosecution, or any combination of remedies.

The City may also utilize the provisions of the Revenue and Taxation Code Section 24436.5 to encourage the elimination of substandard conditions in rental housing. The City is also authorized to bring an action under the Business and Professions Code for unfair business practices.

6.40.130 - Relocation of tenant.

If any residential rental dwelling unit is found to be unsafe to occupy, or is unfit to occupy pursuant to Health and Safety Code Section 17920.3, or the unit is posted by the Building Official with an order not to enter or occupy as authorized by the California Code of Regulations, Title 24, or the Uniform Code for Abatement of Dangerous Buildings, the costs and expenses of relocation of any tenant from that unit shall be the responsibility of the owner pursuant to applicable State and Federal law including but not limited to Chapters 11.100 and

11.102 of this Code. All procedures, evaluations, and decisions relating to relocation shall be exclusively handled pursuant to Chapters 11.100 and 11.102.

A tenancy is not terminated when an inspector orders the tenants to vacate the residential rental dwelling unit due to unsafe conditions. If a tenant chooses to vacate before reoccupying, the tenant’s move shall be presumed, absent evidence to the contrary, to not be “voluntary.” The owner must rent to any subsequent tenants at the same rate as the prior tenant, to the extent allowable by the Costa-Hawkins Rental Act.

6.40.140 - Reserved.

This section is reserved for development and adoption of provisions relating to implementation of a tenant habitability plan.

6.40.150 - Appeal.
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The owner of a residential rental dwelling unit or a party with a legal property interest in the dwelling unit may appeal to the City's code enforcement appeals hearing officers in the manner provided in the California Building Code for any decision by an inspector that the residential dwelling unit is in violation of habitability standards, except that all appeals must be submitted (1) in writing; and (2) provide a factual statement as to why the owner believes the inspector's determination of a violation is incorrect. The appeal must be filed within ten calendar days from the date of the decision. Failure to timely file submit a notice of appeal constitutes a waiver of the right to contest any such decision.

6.40.160 - Retaliatory eviction prohibited.

It is unlawful for an owner or landlord to recover possession of a residential rental dwelling unit or take any act against a tenant, including but not limited to, unlawful harassment in violation of Civil Code Section 1942.5 or Chapter 11.103 of this Code in retaliation against a tenant for exercising his or her rights pursuant to State or local law.

6.40.170 – Recovery of attorneys’ fees.

In any action, administrative proceeding, or special proceeding to abate a nuisance or a violation of this Code, the prevailing party may recover its reasonable attorneys' fees pursuant to Government Code Section 38773.5 unless the City elects at the outset of that action or proceeding not to seek or allow the recovery of attorneys' fees. An award of attorneys' fees to a prevailing party shall not exceed the amount of reasonable attorneys' fees incurred by the City in that action, administrative proceeding, or special proceeding. The procedures provided in this chapter are in addition to all other remedies and cost recovery options available to the City by law or in equity, including, but not limited to, those provided in Chapter 1.14 of this Code.

6.40.180 - Delinquent fees; late fee penalties.

The registration/processing fee shall be collected by an invoice sent to each owner on a pre- determined schedule. Inspection fees shall be collected once every three years by an invoice sent to the owner. If an owner of a residential rental dwelling unit subject to inspection under this chapter fails to pay either fee within thirty (30) days of the date of the invoice, the owner shall be required to pay a penalty. The penalty shall be calculated as follows:

Failure to Pay Registration/Processing Fee
and/or Inspection Fee After Due Date Penalty
Penalty
31—60 days after due date 20% of the balance due
61—90 days after due date 40% of the balance due
91 days or more after due date 50% of the balance due

6.40.190 – Effective date.

This Ordinance shall become effective thirty (30) days following its adoption.

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6.40.200 - Review by City Council.

After this chapter has been in effect for one year, the City Council shall review the administration of this chapter in order to determine and assess whether it has achieved its stated purpose and intent. The Building Official shall refer this matter to the Council for its review within a reasonable time after the chapter has been in effect for one year and thereafter annually for the next four years.

SECTION 3: Severability.

If any section, subsection, paragraph, sentence, clause or phrase of this Ordinance is for any reason held by a court of competent jurisdiction to be unconstitutional or invalid, the remaining portions of this Ordinance shall remain in full force and effect. The City Council hereby declares that it would have passed each section, subsection, paragraph, sentence, clause, or phrase of this Ordinance irrespective of the unconstitutionality or invalidity of any section, subsection, paragraph, sentence, clause or phrase.

SECTION 4: CEQA.

The City Council finds that this Ordinance is not subject to the California Environmental Quality Act (“CEQA”) because the Ordinance does not qualify as a “project” under CEQA and because the Ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment. (State CEQA Guidelines, section 15060, subd. (c)(2), (3).) Section 15378 of the State CEQA Guidelines defines a project as the whole of an action, which could potentially result in either a direct physical change, or reasonably foreseeable indirect physical change, in the environment. Here, the Ordinance will not result in any construction or development, and it will not have any effect that would physically change the environment. The Ordinance therefore does not qualify as a project subject to CEQA.

SECTION 5: Effective Date.

This Ordinance shall become effective thirty (30) days following its adoption.

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First introduced at a regular meeting of the City Council of the City of Richmond held ________________ and finally passed and adopted at a regular meeting held _________________________by the following vote:

AYES:

NOES:

ABSTENTIONS:

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ABSENT:

__________________________________

CLERK OF THE CITY OF RICHMOND
(SEAL)

Approved:

______________________
Mayor

Approved as to form:

______________________
City Attorney
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Chapter 6.40 – RESIDENTIAL RENTAL DWELLING UNIT INSPECTION AND,

MAITENANCE AND HABILITABILITY

6.40.010 - Purpose and intent.

The purpose of this chapter is to safeguard and preserve the housing stock of decent, safe and sanitary residential rental dwelling units within the City and to protect persons entering or residing in them by providing for a regular and comprehensive system of inspection of residential rental dwelling units and, through such inspections and/or owner certifications, identifying and requiring the correction of substandard conditions. Additionally, theCity Council finds that the safety of rental housing properties is increased through the participation of owners, tenants, the City, and the community.

The intent of this chapter is to proactively identify blighted and deteriorated rental housing stock and to ensurefacilitate the rehabilitation or elimination of rental housing that does not meet minimum building code and, housing code, and health and safety code habitability standards, exterior maintenance standards, and site maintenance standards, or is not safeunsafe to occupy. It is further intended to preserve and enhance the quality of life for residents of the City living in those residential rental dwelling units.

After implementation, the City desires to bring forward additional amendments and enhancements including the addition of standards geared toward energy efficiency, modernization, and decarbonization of residential rental units throughout the City, which are to be incentivized via City, State, and/or Federal programs.

6.40.020 - Reserved.

This section is reserved for development and adoption of provisions relating to implementation of standards geared toward energy efficiency, modernization, and decarbonization of residential rental units throughout the City, which are to be incentivized via City, State, and/or Federal programs.

6.40.030 - Definitions.

As used in this chapter:
"Building Official" means the person designated as the Building Official by the City Manager, or his or her designee.
"City" means the City of Richmond.
"Inspection fee" means the amount charged per unit to be inspected at the beginning of every three (3) year cycle.
"Local law enforcement or governmental entities" means any general law city, charter city, county, or city and county, or the respective departments thereof, in this State. “Inspector” means the Building Official, vested with the authority to enforce this Code or otherwise delegate the implementation, administration, and enforcement of the provisions of this Code to housing inspectors, building inspectors, technical officers and employees, or other designees, all which shall have the powers as delegated by the Building 807

Official.
"Nuisance" shall have the same meaning as set forth in California Civil Code Section 3479 and/or any condition as defined in Chapter 9.22 et seq., this Code, or any condition declared and deemed by the City Council to constitute a nuisance, or any violation of the Richmond Municipal Code.
"Owner" means the person or entity identified and listed as having title to the residential rental dwelling unit indicated by the latest property tax assessment roll maintained by the Contra Costa County Assessor and any authorized agent, trustee, or legal representative thereof. "Owners of three (3) or more residential rental dwelling units" [for the purpose of this chapter shall mean any person who owns three (3) or more rental dwelling units], even if they consist of single -family dwellings at different locations within the City or any combination of dwelling units that create an aggregate of three (3) or more residential rental dwelling units. "Person" means an individual, corporation, partnership, association, or other entity. "Property" means any real property interest or estate which may be granted or devised by deed. The term "property" shall also include: tracts, lots, easements or parcels of land, and any and all improvements thereon.
"Registration/processing fee" means the flat rate, based on the legal property owner, that is payable each and every year by property owners of three (3) or more residential rental properties within the City or payable on a pre-definedpredetermined schedule by property owners of less than three (3) or more residential rental properties within the City. . "Residential rental dwelling unit" means a residential dwelling unit, including single- family dwellings, or residential units within duplexes, triplexes or multi-family (4-units or more) residential buildings, which is not an owner occupied unit, including rooming houses, boarding houses and single room occupancies (as defined by this Code), but excluding: (1) mobile home parks; (2) any dwelling unit in a building that is properly registered as "vacant property" under Chapter 9.48 of this Code; (3) hotel and motels, bed-and-breakfasts, and similar temporary living accommodations; (4) any dwelling unit in a newly constructed building for which a certificate of occupancy was issued less than five (5) years prior, unless a complaint of substandard or illegal conditions has been received. ). "Substandard dwelling" means any condition which is defined as constituting a substandard building or dwelling as defined by California Health and Safety Code Section 17920.3 et seq. or as defined by the California Building Code. “Tenant” means a tenant, subtenant, lessee, sublessee, or any other person entitled under the terms of a rental housing agreement to the use or occupancy of any residential rental dwelling unit.
"This Code" means the Richmond Municipal Code.

6.40.030040 - Scope.
(a) The provisions of this chapter shall apply to all existing residential rental dwelling units located within the Richmond City limits including parking lots, 808

driveways, landscaping, accessory structures, and fences. (b) ProvisionsThe provisions of this chapter shall be supplementary and complementary to all of the provisions of this Code, State law, and any law cognizable at common law or equity, and nothing herein shall be construed, read, or interpreted in any manner so as to limit any existing right or power of the City of Richmond to abate and prosecute any and all nuisances or to enforce any other conditions in violation of State or local codes, including, but not limited to, any building, housing, property maintenance and public nuisance ordinances.

6.40.040050 - Exemptions.
(a) Mobile Home Parks. Mobile home parks shall be exempt from this chapter. (b) Vacant Properties. Any residential rental dwelling unit(s) in a building that is properly registered as "vacant property" under Chapter 6.38 of this Code shall be exempt from this chapter. As required by Chapter 6.38 of this Code, the owner shall provide the City written notice when the property is to become occupied. Upon the City’s receipt of written notice of upcoming occupancy, the inspector shall conduct an inspection of the property pursuant to the standards in this chapter before the property is occupied.
(c) Transient Lodging. Transient lodging as defined in section 15.04.104.020 of this Code shall be exempt from this chapter.
(d) Newly Constructed Buildings or Accessory Dwelling Units (ADUs). Newly constructed buildings or ADUs shall be exempt from this chapter for a period of five (5) years, unless a complaint of substandard or illegal conditions has been received. That five (5) year period begins to run on the date the certificate of occupancy for the dwelling was issued by the Building Regulations Division. (e) Units Occupied by Housing Choice Voucher (Section 8) Tenants. All residential rental dwelling units occupied by Housing Choice Voucher Tenants (Section 8) shall be exempt from this chapter provided that these residential rental dwelling units receive housing quality inspections by the administering agency and in accordance with the inspection schedule set by the administering agency. These units are subject to complaint based inspections as set forth in section 6.40.070(d) of this chapter.

Nothing in this chapter, including the above-listed exemptions, shall be construed or interpreted as limiting the City's authority to investigate and compel the abatement of any violation of this Code and/or the California Code of Regulations or other duly enacted law.

6.40.060 - Inspections; compliance with applicable codes and standards. (a) Inspections. The Building Official, or his or her designee, hereinafter referred to as the "inspector,"inspector is authorized to inspect all residential rental dwelling units, both internally and externally, and their associated propertiesproperty to determine whether such propertiesresidential rental dwelling units comply with State law, applicable 809

provisions of the Municipalthis Code, and with all previous conditions of approval and agreements. Applicable provisions of the Municipalthis Code may come from and include, but are not limited to, the California Code of Regulations and California Model Codes (including the building, housing, fire, plumbing, mechanical, and electrical, and swimming pool, spa, and hot tub codes), Chapter 9.22 of this Code regulating public nuisance standards, and the standards set forth in this chapter. Interior areas of all residential rental dwellings units shall be determined by the inspector to be compliant with the regulations set forth herein including but not limited to: all bedrooms and living areas must be habitable, doors and locks must be installed and equipped with locking mechanisms, windows, window panes, and window screens must be in good condition with proper locking devices, there must be no visible mold, insects, rodents, or other pests, light switches must be functional, GFI’s must be properly installed and in working condition, all smoke detectors must be in working order and installed in all hallways and sleeping rooms, a carbon monoxide detector must be installed on each level within the residential rental unit, and all kitchen appliances must be in good working order.

After the effective date of this ordinance and before a second inspection cycle has been completed, the City shall have evaluated, assessed feasibility, and determined all requirements and procedures necessary to bring this residential rental inspection program in-house such that all inspections are conducted by City employees rather than third- party contactors. At this time, the City shall use the information gathered from the evaluation period and determine whether to implement the residential rental inspection program in-house, which may include a phase-out period where a portion of the inspections are still conducted by third-party contractors. Once the residential rental inspection program is conducted exclusively by City employees, this ordinance shall be amended accordingly.
(b) Compliance with Codes and Standards. When inspections are made under this chapter, the residential rental dwelling unitsunit(s) shall be required to be in conformance and maintained in accordance with the code standard that was in effect at the time the residential rental dwelling unit(s) was constructed, altered, remodeled, erected, or converted, except for any additional requirements mandated by this Code or State law.

Any inspection performed or approvals provided under this chapter, shall not be construed to provide approval, authorization, permitting, or otherwise grandfather in any nonconforming use or unpermitted construction, addition, or modification present in any residential rental unit.
(c) Additional Exterior Standards. In addition to the codes and standards described above, all residential rental dwelling units shall meet the following exterior maintenance standards:

(1) Buildings,Residential rental dwelling units and all portions thereof, shall have exterior walls that are weathertight and, watertight, and kept free of deterioration, holes, breaks, or loose boards or coverings. Roof structures shall be watertight and not have anysuch that there are no defects that will allow water to enter into the building; residential rental dwelling units; (2) The exterior finish of all buildingsresidential rental dwelling units shall be maintained. If the exterior finish of a buildingresidential rental dwelling unit is 810

paint or stain, the buildingresidential rental dwelling shall be repainted or re- stained prior to a time when the exterior finish has substantially deteriorated; (3) All architectural projections such as cornices, moldings, lintels, sills (and similar projections) shall be maintained in good repair and free of defects; (4) All chimneys, antennas, vents, guttergutters and downspouts, and similar projections or building accessories shall be maintained in a structurally sound condition and be in good repair. Such projections shall be properly secured, when applicable, to an exterior wall or roof;
(5) Windows and exterior glazing shall be soundly and adequately glazed, and free from loose and/or broken glass and cracks that could cause physical injury or allow the elements to enter the structure. Exterior doors shall be maintained in a weathertight, watertight and rodent-proof condition. Exterior doors of residential rental dwelling units shall be solid core or the equivalent and be provided with a deadbolt-locking device that tightly secures the door; (6) All residential rental dwelling units and exterior property shall be maintained free of rodent, insect or vermin infestation, which creates an unsafe or unsanitary environment on the subject or adjacent properties or buildings; (7) All accessory structures shall be maintained in a state of good repair or removed from the subject property. or residential rental dwelling unit(s). Such structures shall include, but not be limited to, clubhouses, offices, maintenance buildings, carports, retaining walls, fences, garages, swimming pools, spas, hot tubs and miscellaneous sheds;
(8) All parking areas servingon the property, if dedicated for use by the tenant(s) of the residential dwelling unit(s)), shall be kept free of potholes, cracks or other deterioration. No dirt, grass or sod parkingParking areas are permittedmust comply with City and State regulations. All striping and signage for multi-family (4 or more dwelling units) residential units, including parking signage and fire lane or access signage, shall be maintained in good condition and clearly legible; and,
(9) All landscaped areas serving the residential dwelling unit(s) shall be maintained so as not to constitute a public safety hazard and shall be maintained in compliance with Chapter 9.22 of this Code and free of public safety hazards. Landscape areas are defined as the general landscaping area, rights-of-way and detention or pond areas. Driveways, hardscape parking areas, patios or walks are not included as landscape areas.
(d) An inspector shall not opine on who is at fault (i.e. tenant, landlord, or property owner) for any substandard condition.

6.40.050 -070 – Registration, application and implementation. (a) It shall be the responsibility of all owners of residential rental dwelling units within the City to register such residential rental dwelling units with the Building Regulations Division and submit the registration/processing fee and the inspection fee. For owners of three (3) or more residential rental dwelling units within the City, who wish to participate in the self-certification program, there is an additional obligation to complete a self- 811

certification application and apply for the self-certification program. The registration/processing fee, inspection fee, and self-certification applicationPayment of the registration/processing fee and inspection fee shall take place within thirty (30) days of the date on which written notification is mailed to the owner of such residential rental dwelling unit(s) by the Building Regulations Division.
(b) If the owner of the residential rental dwellingsdwelling unit(s) fails to register or reregister such units in compliance with this chapter, the Building Officialinspector shall register or reregister said units in the name of the owner and set a date and time for initial cycle inspection of said units, and shall send written notification to the owner that the property hasresidential rental dwelling units have been so registered and advising of the date and time set for inspection, accompanied with a bill for the registration/processing fee and the total initial inspection fee for each unit, and include information on the self- certification program. .
(c) Frequency of Periodic Inspection Cycle. The owner shall permit an inspection of the required number ofall residential rental dwelling units once every three (3) years by the inspector, the number to be determined by whether owner self-certification is sought, or if the unit does not qualify for the self-certification program, or a complaint has been received, in order to determine whether any substandard condition existsconditions exist within such residential rental dwelling unit(s) or on the premises of the property.
(d) Initial implementation of (d) Complaint Based Inspections. Additional inspections of any residential rental dwelling unit inspections may be completed in stages over a three (3) year period. Inspection of residential rental dwelling units may may occur on a random basis and/or on a complaint basis, or if the inspector has reasonable cause to believe theany unit is substandard. The inspector may assess various factors to establish reasonable cause including but not limited to:
(1) Notwithstanding any provisionsThe extent and seriousness of this chapter, any structure and/or premise that does not fully comply with the provisions of the chapter shall be subject to inspection of all previous or current violations observed and any reasonably anticipated effect on the tenants; (2) The history of the residential rental dwelling units and requiredunit during the past three years, including whether the residential rental dwelling unit has been the subject of orders issued by other agencies concerning health and safety violations or involvement in nuisance abatement actions; (3) The age of the residential rental dwelling unit;
(4) The record in the past three years of the persons or entities who own, manage, or control the residential rental dwelling unit(s) with respect to health or safety violations at the premises or other properties and whether the violations have been subject to pay all applicableenforcement action;
(5) Whether the residential rental dwelling unit(s) have delinquent fees as set forth in the Master Fee Schedule Resolution.imposed under this chapter; (2) (6) Whether there are tax defaults on the residential rental dwelling unit(s); (7) If master-metered residential rental dwelling unit(s), whether there are any 812

delinquent utility bills in excess of two months; and,
(8) Any other criteria determined by the Buildings Regulations Division to be indicative of the existence of health or safety violations. (e) The existence of periodic inspections and availability of additional inspections shall not affect an inspector’s duty to respond to complaints concerning habitability of any residential rental dwelling unit. The City shall not charge any tenant for anany inspection based on a complaint of State Housing CodeLaw habitability violations made by the tenant or any other person.

6.40.060080 - Notification of inspection and procedures. (a) A notice of inspection shall be mailed to the owner of the property stating the date and time of the inspection shall be provided to the owner as well as to the address of the residential rental dwelling unit, which shall be sufficient to provide any tenants and occupants of the residential rental dwelling unit notice of the date and time of the inspection. The failure of either the owner or any tenants or occupants to receive notice does not affect the validity of the notice. (b) The notice of inspection shall provide a minimum of 1430 days' notice. It shall be the responsibility of the owner to provide actual notice to the individual tenants to facilitate access to the residential rental dwelling units to be inspected. (c) If an inspection is cancelledcanceled or rescheduled by the inspector, a notice shall be mailed to the owner as well as the address of the residential rental dwelling unit at least 3three days prior to the scheduledrescheduled inspection date stating the date and time of the new inspection.
(d) If an inspection is cancelledcanceled or rescheduled by the owner or the tenants of the property, the new inspection date must be within 14 days of the prior scheduled inspection date. originally scheduled inspection date. The inspection date and time may be rescheduled once per request by the owner or collective tenants of the residential rental dwelling unit. Any additional request to be rescheduled must be for good cause and approved by the inspector. (e) In the event an owner or tenant in possession of the propertya residential rental dwelling unit refuses to allow access to conduct the inspection, the City Attorney may use all legal remedies permitted by law per Sectionsection 6.40.110120 of this chapter, including issuance of a warrant to cause an inspection to take place, provided reasonable cause exists to believe that a violation of the Municipalthis Code or State law exists on the subject propertyresidential rental dwelling unit. Inspections for the purpose of this chapter are a "necessary service" and for which entry by the owner, upon proper notice, is allowed per Civil Code 1954.
(f) Upon arrival at a noticed inspection, it shall be the duty of the inspector to ensure that each individual attending the inspection identifies themselves by first and last name and provides their title to any tenants and occupants. A tenant or occupant may refuse entry to any individual who refuses to identify themselves. 813

6.40.070090 - Registration/processing fee.

Owners of all residential rental dwelling units subject to inspection under this chapter shall pay a registration/processing fee on a pre-determined schedule in the amount set forth in the Master Fee Schedule (resolution establishing fees and charges for various municipal services). The fee will be used to finance the cost of processing and maintaining current ownership and property information and program records by City staff. If the owner fails to pay the required fee, the City shall recover it, plus accrued interest and penalties, utilizing all remedies provided by law, including placing a special assessment lien against the property.residential rental dwelling unit.

This fee shall be known as the residential rental unit "registration/processing Feefee."

6.40.080100 - Inspection fee and compliance re-inspection fees.

Upon an initiala periodic or complaint based inspection, the inspector may require the owner of a residential rental dwelling unit to perform work, take action, or refrain from an action to ensure compliance with applicable codes. The initial periodic inspection fee includes the cost of the initial periodic inspection and the first (1st) compliance re-inspection and/or the below described affidavit in lieu of the first (1st) compliance re-inspection. In those cases where the inspector has determined (based on violations designated as minor on the inspection checklist) that the violations are of a minor nature, in lieu of the compliance re-inspection, the owner shall submit a sworn declaration attesting to the repair of all listed violations within the specific time frame provided in the notice. If the owner fails to correct the violations by the second (2nd) compliance re-inspection, or fails to submit a sworn declaration attesting to repair of the minor violations within the time provided, the owner shall pay a re-inspection fee for that second (2nd) compliance re-inspection and for each additional re-inspection thereafter, as set forth in the Master Fee Schedule. If the owner fails to pay the required fee, the City shall recover it, plus accrued interest and penalties, utilizing all remedies provided by law, including placing a special assessment lien against the propertyresidential rental dwelling units.

6.40.090 - Exemptions.
(a) Newly Constructed Buildings. Newly constructed buildings shall be exempt from this chapter for a period of five (5) years. That five (5) year period begins to run on the date the certificate of occupancy was issued by the Building Regulations Division.
(b) Subsidized Residential Rental Buildings. Those properties where the rents and tenant incomes on 100% of the units, excluding the on -site manager units, are restricted by Federal, State or local government programs for a period of not less than thirty (30) years, and the restricting agency inspects a minimum of thirty (30%) percent of the units at least annually, shall be exempt from this chapter. In the event the thirty (30%) percent requirement is preempted by State or Federal law, that requirement for exemption shall not apply.
(c) Self-Certification Program.
(1) Owners of three (3) or more residential rental dwelling units with well-maintained properties with no existing violations of the California Code of Regulations, including the California Building Code, Health and Safety Code Section 17920.3 et seq. (St ate Housing Code), Code for Abatement of Dangerous Buildings, California Plumbing, Electrical, Fire and Mechanical Codes or Richmond Municipal Codes, may qualify to participate in the Residential Rental Dwelling Unit Inspection and Maintenance Self-Certification Program ("self-certification program"). (2) For qualifying participants of the self -certification program, the number of inspections will be limited to twenty (20) percent of the total residential rental dwelling units owned within the City and no less than one (1) residential rental dwelling u nit including multiple single-family dwellings at separate locations. Such inspections are scheduled once every three (3) years provided that 814

the conditions do not deteriorate during that time to the extent that the properties would no longer meet the program eligibility standards. The owner shall conduct a self -inspection of each unit annually. The owner shall then complete, date and sign the s elf-certification checklist for each unit, and retain the completed checklist.
(3) In order to be eligible for the self -certification program, the owner must own three (3) or more residential rental dwelling units within the City and the owner (or his or her designee) shall conduct a self -inspection of all residential rental dwellin g units, including exterior conditions and site conditions, and: (1) certify that conditions at the property achieve the minimum standards listed on the self -certification program checklist; (2) complete the self -certification application and affidavit pac ket; (3) pay the total inspection fee (based on twenty (20) percent of the total residential rental dwelling units owned within the City) as set forth in the Master Fee Schedule; and; (4) pay the registration/processing fee as set forth in the Master Fee Schedule. (A) Upon receipt of the request to participate in the self -certification program and the payment of the self -certification application fee, the registration/processing fee and the twenty (20) percent of the total inspection fee, the City will inspect 20% of the total units. (B) The residential rental property owner, or his or her designee, is required to notify the individual tenants of any inspection and facilitate access to said units, including those that will be randomly selected for an inspection by the City of Richmond. (C) If the director of the department responsible for implementation and enforcement of this chapter ("director"), or his or her designee, determines that the residential rental property is qualified to participate in the self -certification program, the p roperty owner will not be required to pay the remaining 80% inspection fee for said unit. The property owner will thereafter be required to conduct an annual self-inspection and complete the re-certification application form for the next two (2) subsequent years. (D) Each residential rental property owner and/or property management company shall be required to maintain the annual signed and dated self-certification program checklist for each unit for a minimum of three (3) years, and provide said list within 24 ho urs upon request of any inspector, code compliance officer or other City official. Failure to maintain complete checklists shall result in disqualification from the self -certification program for all rental properties of that owner for a minimum of six years (2 complete inspection cycles). (4) If the director, or his or her designee, determines that the owner of any residential dwelling unit included in this chapter is not eligible to participate in the self -certification program, each residential rental dwelling unit shall be inspected and the property owner shall be assessed the full inspection fee in the amount set forth in the Master Fee Schedule for each unit. (5) Nothing in this chapter, including the above-listed exemptions, shall be construed or interpreted as limiting the City's authority to investigate and compel the abatement of any violation of the Richmond Municipal Code and/or the California Code of Regulations or other duly enacted law. (6) Any property that participates in the self-certification program may be removed from the program for three (3) years, at any time if that property fails to meet all of the interior and exterior standards designated on the self-certification checklist. Upon removal from the program, the full inspection fee shall be due and payable. The self -certification program checklist shall be created by the department responsible for the oversight, implementation and enforcement of this chapter as designated by the City Manager.

6.40.100110 - Violations.
(a) Notice of Violation.
(1) Content. Whenever it is determined by the Inspectorinspector that a violation of this chapter exists, the inspector shall issue a written notice of violation. The notice shall contain a description of the violation, the specific 815

action required to correct the violation and a demand that the violations be corrected within the specific time period listed in the notice. The notice shall contain the scheduled re-inspection date and time, or in the event the violations are minor as designated on the inspection checklist, the notice shall contain a date by which the owner must provide the inspector with a sworn declaration (attached to a copy of the checklist showing the violations), that each minor item has been repaired as directed. If an inspector orders a notice to vacate, certain imminently dangerous life-safety violations are observed, or if the tenant believes that the repairs affect habitability, the relocation procedures set forth in section

6.40.130 of this chapter apply.
(2) Time for Correction. The notice shall provide a reasonable time for correction, the time shall depend on the inspector'sinspector’s opinion of the time it would take a reasonably diligent person to complete the required action, the potential harm to the public welfare, health and safety, the harm to the tenant or nearby properties and the extent of the corrections required. The inspector may grant a one-time extension of the initial time to abate the violations upon written request of the owner, if (1) substantial work has been satisfactorily completed (at least 85% of the violations identified in the notice of violation); and (2) the violation is not a life safety issue. In no event shall the initial time to correct exceed one hundred twenty (120) days, nor shall any extension of time exceed sixty (60) days. Certain imminently dangerous life-safety violations may require immediate correction and are not subject to an extension of time to correct and are subject to the relocation requirements of Sectionsection 6.40.170130 of this chapter.
(3) Service of Notice on Owner. The notice of violation may be served personally on the owner, or, if the owner is not present, a copy of the notice may be posted on the property and/or by deposit in the United States mail, in a sealed
envelope, postage prepaid, addressed to such person to be notified at his last known business or residence address as the same appears in the public records of the City or other records pertaining to the matter to which such notice is directed. Service by mail shall be deemed to have been completed at the time of deposit in the post office.

It is unlawful and a misdemeanor for any person to remove, deface or cause the removal or defacing of any notice of violation posted on premises pursuant to this chapter. The owner’s failure to receive the notice does not take away from the validity of the notice.
(4) (4) Service of Notice on Tenants and Occupants. Any notice of violation shall also be mailed via United States mail, postage prepaid, to the residential rental dwelling unit address subject to the violations contained in the notice of violation. The notice shall contain a cover page, which states in bold text the following information:

The residential rental dwelling unit you are currently occupying has been found to have violations of the Richmond Municipal Code relating to habitability. The violations cited in this notice are to be remedied by the owner of the residential rental dwelling unit. If you are required to move out, you will receive an eviction 816

notice or order from the City of Richmond. If you believe that the conditions cited in the notice substantially affect the habitability of your residential rental dwelling unit, you may be entitled to a rent reduction or relocation benefits as specified in the Richmond Municipal Code. Upon receipt of an eviction notice or order, belief that you are entitled to a rent reduction, or have any other questions concerning your rights as a tenant, please contact Richmond’s Rent Program at: 510-234-RENT or,
http://www.ci.richmond.ca.us/3364/Richmond-Rent-Program. (5) Compliance Re-inspections. Compliance re-inspections shall be conducted to verify that the violations identified onin the notice of violation have been abated, unless the violations are minor in nature (as designated by an asterisk on the inspection checklist), and the owner has submitted a sworn declaration of repair.

Violations that were not noted on the initial notice of violation, but are discovered during any re-inspection due to subsequent activities, damage or deterioration, shall be subject to correction.

6.40.110120 - Enforcement; penalties.

If, after a notice of violation has been issued, the owner fails to abate the violations, the City may proceed with all remedies available under the Municipalthis Code to compel compliance, including, but not limited to, issuing administrative citations, abatement proceedings, civil action, civil injunction and/or criminal prosecution, or any combination of remedies.

The City may also utilize the provisions of the Revenue and Taxation Code Section 24436.5 to encourage the elimination of substandard conditions in rental housing. The City is also authorized to bring an action under the Business and Professions Code for unfair business practices.

6.40.120130 - Relocation of tenant.

If any residential rental dwelling unit is found to be unsafe to occupy, or is unfit to occupy pursuant to Health and Safety Code Section 17920.3, or the unit is posted by the Building Official with an order not to enter or occupy as authorized by the California Code of Regulations, Title 24, or the Uniform Code for Abatement of Dangerous Buildings, the costs and expenses of relocation of any tenant from that unit shall be the responsibility of the owner pursuant to applicable State and Federal law. including but not limited to Chapters 11.100 and

11.102 of this Code. All procedures, evaluations, and decisions relating to relocation shall be exclusively handled pursuant to Chapters 11.100 and 11.102.

A tenancy is not terminated when an inspector orders the tenants to vacate the residential rental dwelling unit due to unsafe conditions. If a tenant chooses to vacate before reoccupying, the tenant’s move shall be presumed, absent evidence to the contrary, to not be “voluntary.” The owner must rent to any subsequent tenants at the same rate as the prior tenant, to the extent allowable by the Costa-Hawkins Rental Act.

6.40.130140 - Reserved.
817

This section is reserved for development and adoption of provisions relating to implementation of a tenant habitability plan.

6.40.150 - Appeal.

The owner of a residential rental dwelling unit or a party with a legal property interest in the dwelling unit may appeal to the City's code enforcement appeals hearing officers in the manner provided in the California Building Code for any decision by an inspector that the residential dwelling unit is in violation of habitability standards, except that all appeals must be submitted (1) in writing; and (2) provide a factual statement as to why the owner believes the inspector's determination of a violation is incorrect. The appeal must be filed within ten calendar days from the date of the decision. Failure to timely file submit a notice of appeal constitutes a waiver of the right to contest any such decision.

6.40.140160 - Retaliatory eviction prohibited.

It is unlawful for aan owner or landlord to recover possession of a residential rental dwelling unit or take any act against a tenant, including but not limited to, unlawful harassment in violation of Civil Code Section 1942.5 or Chapter 11.103 of this Code in retaliation against a tenant for exercising his or her rights pursuant to State or local law.

6.40.150 -170 – Recovery of attorneys'attorneys’ fees.

In any action, administrative proceeding, or special proceeding to abate a nuisance or a violation of this Code, the prevailing party may recover its reasonable attorneys' fees pursuant to Government Code sectionSection 38773.5 unless the City elects at the outset of that action or proceeding not to seek or allow the recovery of attorneys' fees. An award of attorneys' fees to a prevailing party shall not exceed the amount of reasonable attorneys' fees incurred by the City in that action, administrative proceeding, or special proceeding. The procedures provided in this chapter are in addition to all other remedies and cost recovery options available to the City by law or in equity, including, but not limited to, those provided in Chapter 1.14 of this Code.

6.40.160180 - Delinquent fees; late fee penalties.

The registration/processing fee shall be collected by an invoice sent to each residential rental property owner on a pre-determined schedule. Inspection fees shall be collected once every three (3) years by an invoice sent to the residential rental property owner. If an owner of a residential rental propertydwelling unit subject to inspection under this chapter fails to pay either fee within thirty (30) days of the date of the invoice, the owner shall be required to pay a penalty. The penalty shall be calculated as follows:
(Failure to Pay Registration/Processing Fee
and/or Inspection Fee After Due Date Penalty
Penalty
31—60 days after due date 20% of the balance due
61—90 days after due date 40% of the balance due
818

91 days or more after due date 50% of the balance due

6.40.170190 – Effective date.

This Ordinance shall become effective thirty (30) days following its adoption.

6.40.200 - Review by City Council.

After this chapter has been in effect for one (1) year, the City Council shall review the administration of this chapter in order to determine and assess whether it has achieved its stated purpose and intent. The Building Official shall refer this matter to the Council for its review within a reasonable time after the chapter has been in effect for one (1) year and thereafter annually for the next four (4) years.

819

November 26, 2024

Economic Development
PORT

DATE: November 26, 2024
TO: Mayor Martinez and Members of the City Council
FROM:

Nickie Mastay, Deputy City Manager, Internal Services
Andrea Miller, Finance Director
Nannette Beacham, Economic Development Director
Charles Gerard, Port Director
Rita Martinez, Finance Manager II

Subject:

Port Performance Audit Management Update
FINANCIAL IMPACT: To be determined.

PREVIOUS COUNCIL
ACTION:

April 16, 2024, April 30, 2024

STATEMENT OF THE
ISSUE:

Management updates on the findings from the
Government Performance & Policy (GPP) Analytics
Management and Performance Audit of the Port of
Richmond.

RECOMMENDED ACTION:

RECEIVE management updates on the findings from the
Government Performance & Policy (GPP) Analytics Port
Management and Performance Audit; and ACCEPT the
City’s plan to implement auditor recommendations –
Port/Finance (Nickie Mastay 510-620-6565/Andrea Miller
510-620-6790/Nannette Beacham 510-621-1306/Charles
Gerard 510-829-2253).

AGENDA
REPORT
820

November 26, 2024

DISCUSSION:

In June 2023, the Richmond City Council gave direction to initiate a port audit. The City of Richmond contracted with Government Performance & Policy (GPP) Analytics Inc. to conduct a management and performance audit of the Port of Richmond. The goals of the audit were to evaluate the management, efficiency, and effectiveness of all Port operations and services.

The audit provided a comprehensive review of operational and administrative functions, including but not limited to the use of public funds, compliance with regulatory requirements, internal controls, resource and City staff management, technology, stakeholder responsiveness, lease management integrity, and financial practices. The audit was performed in accordance with the International Professional Practices Framework (IPPF) by the Institute of Internal Auditors and the U.S. Government Accountability Office's Generally Accepted Government Auditing Standards (GAGAS).

On April 16, 2024, City Council received a presentation from GPP Analytics Inc. on the Management and Performance Audit of the Port of Richmond. The Council recommended that City staff adopt the recommendations in the auditor's findings, establish a plan to resolve the findings and outline which departments are responsible for resolving and implementing them.

On April 30, 2024, the Richmond City Council directed the City Manager to appropriate funds in the Fiscal Year 2024-25 budget for two City staff positions; to consider all costs associated with these two City staff positions and incorporate them when setting future fees, tariffs, and lease rates; and work with City departments referenced in the Recommendations List of the Port of Richmond Audit to return in September of 2024 with action plans and timelines for the listed recommendations. Attachment 1 is the full list of recommendations with City staff updates for each finding.

Below are highlights of City staff updates to findings from the audit report with an established plan:

Finding 1: Port Strategic Plan
The strategic planning project will start in 2025 and be completed by 2026. A facilities assessment is the preliminary step prior to the strategic plan effort, so that the results can be accounted for within the strategic plan. A Request for Proposals (RFP) was issued in August 2024 and City Council approved a consultant in October 2024 to assist Port staff in the comprehensive facilities assessment of the Point Potrero Marine Terminal wharfs, graving basins, and piers.

Finding 2: Port Procedures
The Port operates as an Enterprise Fund department under City Management, with its procedures aligned to and documented within City processes. It relies on 821

November 26, 2024
City resources and City departments for a range of support functions.

Additionally, a dedicated procedures manual can be developed to address processes unique to the Port and its operations.

Finding 3: Maintenance Staff and Deferred Maintenance
City Council approved a Capital Projects Manager position for the Fiscal Year 2024-25 budget in April 2024. The solicitation for this position was posted by Human Resources and Port Director is in process of selecting a candidate. The approved budget for the 2024-2025 fiscal year includes funding for a Management Analyst. Additionally, the Port allocated funding for a dedicated Senior Business Assistance Officer position (there is also a second Senior Business Assistance Office position in Economic Development that assists Citywide with small businesses, retention, and recruitment).

Finding 4: Finance Staff and Financial Monitoring
City Council approved a Finance Manager position for the Fiscal Year 2024-25 budget in April 2024. The Finance Department has promoted Rita Martinez to the position of Finance Manager II. Rita is dedicated to Economic Development/Port and works closely with the Port staff.

Finding 5: Lease Solicitation, Selection, and Vetting Process The lease solicitation, selection and vetting process follows the City of Richmond Real Estate processes and procedures. The Port has taken steps in broadly marketing and promoting the Port, and the Port will continue with the procurement process to ensure open and transparent selection of tenants.

Finding 6: Lease Volume Guarantee Verification and Documentation A volume verification and audit process will be built into the Port procedures manual.

Finding 7: Environmental Compliance and Lease Monitoring Port and tenants operate under lease agreements with the standards of law and environmental compliance well documented. The Port’s larger concern regarding environmental conditions is the unleased properties that are subject to vandalism, waste disposal, and blight.

Finding 8: Security at Port Facilities
The Port is implementing traffic calming measures and other safety enhancements to improve its infrastructure and ensure public safety.

Finding 9: Debt to the General Fund
City staff members identified additional promissory notes and documentation to support the loan from the General Fund to the Port. There is a Payment Schedule in place that the Port has been adhering to.

822

November 26, 2024
Finding 10: Personal Emails
City staff will work with Information Technology to ensure adherence to City policy. City staff will coordinate a corresponding update of the Administrative Manual.

In summary, City Management, Finance, and Port staff will continue to collaborate on addressing the recommendations and work with the responsible departments to resolve the identified findings. City staff respectfully requests that the City Council approve the plan to implement the auditor’s recommendations.

DOCUMENTS ATTACHED:

Attachment 1 – Management Update Port Audit Findings and Recommendations September 17th, 2024
Attachment 2 – GPP Analytics Management and Performance Audit of the Port of Richmond March 18, 2024

823
Recommendation
Number Recommendation Description Recommendation
Number Auditor Direction
Responsible
Department for
Implementation (per
auditor - GPP
recommendation)
Lead Staff Estimated
Time Frame November 2024 Update

1.1 Provide direction to the Port on its
long-term strategic goals for the
Port. This will better inform Port
staff as they develop a proposed
strategic plan.

City Council Charles Gerard/
Lizeht Zepeda 12/31/2025
The Port, as part of its planning process, will seek input from the City Council on the strategic plan. The Port will issue a Request for Proposals (RFP) for a strategic
planning consultant to guide the process in 2025.

1.2 Formally adopt a proposed Port
strategic plan developed by Port
staff. This will help give Port staff
clear direction.

City Council Charles Gerard 12/31/2026
The Port will engage City Council throughout the planning process and well present a finalized strategic plan to City Council upon completion.

1.3 Develop and present a proposed
strategic plan to the City Council.

This will provide the City Council
with a proposed plan to review that
is developed using the knowledge
of its Port staff.

Economic
Development (Port) Charles Gerard 12/31/2026
The Port will issue a Request for Proposals (RFP) for a strategic planning consultant to guide the process in 2025.

The consultant will guide and assist in development of the Port's strategic planning process and make
recommendations for a final plan.

1.4 Adopt a procedure to review the
strategic plan with the City Council
at least every five years. During the
review staff should include any
proposed revisions to the strategic
plan to be considered and possibly
adopted by the City Council at that
time.

Economic
Development (Port) Charles Gerard 12/31/2026 and
Ongoing
The Port will review and update the strategic plan every five years to reflect changes in the direction and policy as it evolves. A clear timeline for these reviews will be
incorporated into the plan itself.

2.1 Develop and maintain written
procedures for its critical operating
functions.

Economic
Development (Port)
Charles Gerard/
Lizeht Zepeda 6/30/2026
The Port operates as an Enterprise Fund department
under City Management, with its procedures aligned to and documented within City processes. It relies on City
resources and City departments for a range of support
functions. Additionally, a dedicated procedures manual can be developed to address processes unique to the Port and

2.2 Develop and document a backup
plan, or succession strategy, for
critical roles and responsibilities at
the Port.

Economic
Development (Port)
Charles
Gerard/Sharrone
Taylor
12/31/2025
Upon hiring additional headcount, and as part of the
strategic planning process, the organization of the Port will be reviewed. Target positions such as the Capital Projects Manager have well documented job descriptions. As part of the hiring process, Port management will always
consider candidates' potential for increased responsibility for the purposes of succession planning.

3.1 Appropriate funds to hire a
Maintenance Manager within the
Port.

City Council
Sharrone Taylor/
Charles Gerard/
Nannette Beacham/
Daniel Chavarria
6/30/2025
The City Council approved a Capital Projects Manager
position for the Fiscal Year 2024-25 budget in April 2024.

The solicitation for this position was posted by Human
Resources and Port Director is in the final process of
selecting a candidate. The approved budget for the 2024- 2025 fiscal year includes funding for a Management
Analyst. Additionally, the Port allocated funding for a dedicated Senior Business Assistance Officer position.

The Port anticipates these positions will be filled with full time resources within the first quarter of 2025 calendar Maintenance Staff and Deferred
Maintenance:

The audit has uncovered significant
inefficiencies in the maintenance of
the Port’s assets, leading to
unplanned financial support from the
City’s General Fund. These issues
pose a risk to the Port’s asset value
and emergency preparedness, and
ultimately its long-term operational

Management and Performance Audit of the Port of Richmond Audited by: GPP Analytics 1 Port Strategic Plan:

The Port of Richmond’s absence of a
strategic plan significantly undermines
its operational efficiency and long-
term planning, leading to unclear
investment priorities and deteriorating
infrastructure. To address these
issues, the City should develop and
formally adopt a strategic plan,
ensuring its regular review and
adaptation. This will enable the Port
to effectively allocate resources,
attract stable tenants, and secure
funding, ultimately enhancing its
viability and economic contributions.
2 Port Procedures:

The Port of Richmond’s lack of written
procedures for managing its $10.5
million in operating revenue and
$29.5 million in assets poses
significant operational and
compliance risks, especially during
staff turnover. Without documented
processes for key functions, like lease
revenue collection and maritime
operations, the Port is vulnerable to
disruptions and knowledge loss. To
mitigate these risks and ensure
consistent operation, it’s crucial for
the Port to develop and maintain
written procedures for its essential
functions and establish a succession
strategy for critical roles.
824

3.2 Direct the Port to consider all
increased costs associated with the
Maintenance Manager position and
incorporate them when setting
future fees, tariffs, and lease rates.
*Contingent on recommendation
31 City Council
Lizeht
Zepeda/Charles
Gerard/Rita Martinez
Individual lease
renewal
Port management will always seek the highest valued
lease and rent terms for facilities and properties through the City's open and transparent bidding processes and
incorporate all costs that can be associated with each
individual lease.

3.3 Develop an agreement with the
Port, or an outside vendor
managed by the Port, with a known
billing rate and set service-level
expectations for work performed, to
account for the remaining work,
such as road repairs, that cannot
be performed by the Port’s
Maintenance Manager (see
Recommendation 3 1)
Public Works
Department/Economic
Development (Port)
Charles
Gerard/Lizeht
Zepeda/Daniel
Chavarria/Rita
Martinez/ Avinesh
Nadan
12/31/2025
The Port will utilize outside vendors selected through the City's procurement process for work to be performed that requires specialized skills and/or that is outside the scope of staff's capabilities to perform. The Capital Projects Manager will provide oversight in the vender selection
process and throughout the completion of work.

3.4 Develop an interim tracking and
billing method, such as tracking
work performed using a
spreadsheet, to recoup time and
materials spent on behalf of the
Port.

Public Works
Department/Economic
Development (Port)
Charles Gerard/
Lizeht Zepeda/Rita
Martinez/ Avinesh
Nadan/ Sandi
Wong/Randall
Narron
6/30/2025
The Port develops a detailed budget and capital projects plan as part of the City's annual budget process. The
budget allocations and changes are tracked in detail. The Port may occasionally utilize other City department
services, such as Public Works. The Port will develop a spread sheet to improve tracking of cross department work and transfers of payment for such work

3.5 Perform a comprehensive facility
condition assessment of all major
Port assets after a strategic plan
has been adopted (see
Recommendation 1).

Economic
Development (Port)
Charles Gerard/
CSW 6/30/2025
The facilities assessment will precede the strategic plan effort. Therefore, the assessment results can be
accounted for within the strategic plan. Funding for a facilities assessment has been included in the 2024-2025 FY budget. A Request for Proposals (RFP) was issued in
August 2024 and City Council approved the selection of
Moffatt and Nichol in combination with Liftech for this

4.1 Appropriate funds to hire a Finance
Manager, a position that was
previously held at the Port until
Fiscal Year 2014-15.

City Council Charles Gerard/
Andrea Miller Completed
City Council approved a Finance Manager position for the Fiscal Year 2024-25 budget in April 2024. The Finance
Department has promoted Rita Martinez to the position of Finance Manager II. Rita is dedicated to Economic
Development/Port and works closely with the Port staff.

4.2 Direct the Port to consider all
increased costs associated with the
Finance Manager position and
incorporate them when setting
future fees, tariffs, and lease rates.
*Contingent on recommendation
City Council
Charles,
Gerard/Andrea Miller/
Rita Martinez
Individual lease
renewal
Port management will always seek highest valued lease
and rent terms for facilities and properties through the City's open and transparent bidding processes and
incorporate all costs that can be associated with each
individual lease.

4.3 Investigate and review the
consistency of its document
retention practices for both onsite
and offsite storage.

Finance Department/
Economic
Development (Port)
Charles,
Gerard/Andrea Miller/
Rita Martinez
9/30/2025
The Port and Finance team will review document
management and reporting practices for hard and soft
copies of documents and will improve record keeping.

4.4 Use the additional staff capacity
gained by the Port adding a
Finance Manager to perform
comprehensive and routine budget
and financial monitoring of the Port
that is in line with the Government
Finance Officer’s Association’s best
practices.
*Contingent on recommendation

4.1 Finance Department/
Economic
Development (Port)
Charles,
Gerard/Andrea Miller/
Rita Martinez
Ongoing
City Council approved a Finance Manager position for the Fiscal Year 2024-25 budget in April 2024. The Finance
Department has promoted Rita Martinez to the position of Finance Manager II. Rita is dedicated to Economic
Development/Port and works closely with the Port staff.

Rita will assist in providing comprehensive and routine budget and financial monitoring of the Port.
3 ultimately its long term operational
viability. To address these issues, we
recommend hiring a Maintenance
Manager, establishing a clear billing
system for maintenance work
performed by the Public Works
Department, and conducting a
comprehensive facility conditions
assessment to ensure asset
preservation and operational
readiness.
4 Finance Staff and Financial
Monitoring:

The Port’s financial management is
hindered by a lack of dedicated
finance staff at the Port and
insufficient financial oversight, leading
to revenue growth that lags behind
regional inflation and potential
underinvestment in operations. The
absence of a Finance Manager since
FY 2014-15 has limited the Port’s
capability for in depth financial
planning and monitoring which is
essential for strategic fee setting and
successful grant applications.

Document management issues
further complicate financial
accountability. To enhance financial
management and alignment with its
mission, the City should reinstate a
Finance Manager for the Port.
825

5.1 Write and implement Port-specific
procedures regarding how it
solicits, selects, and
vets tenants for Port properties.

The procedures should include
appropriate retention of supporting
documents such as all proposals
received, the selection criteria and
scoring, and all documents used to
vet the accuracy of the tenant’s
Economic
Development (Port)
Nannette Beacham/
Charles Gerard/
Lizeht Zepeda/ Rita
Martinez
9/30/2025
The lease solicitation, selection and vetting process follows City Richmond procurement processes
and procedures. These current procedures capture all
supporting documents such as proposals and selection
criteria.

5.2 Determine the nature of the
Surplus Property Authority and, as
recommended in the 2011 audit of
the Port, either disclose more
information about it or dissolve it if
no information exists.

City Council Nannette Beacham,
Susan Bloch 6/30/2026
The Surplus Property Authority (SPA) role has been
discussed with City Council by City Management and the
City Attorney's office. The SPA covers a portion of the Port's facilities but not all port facilities. The Port management's recommendation is that the SPA be
dissolved. When the City and the Port consider having a dedicated port board or commission, that entity will need to cover all properties and facilities within the Port's portfolio.

6.1 Write and implement a procedure
to verify all reported cargo volume
that affects revenue from lease
agreements, wharfage fees, tariffs,
or other fees that may be
calculated by the volume of cargo.

Economic
Development (Port)
Charles Gerard/
Nannette
Beacham/Lizeht
Zepeda/Andrea
Miller/Rita Martinez
12/31/2026
The Port has two tenants that handle cargo and pay on a tariff basis - AAK USA Inc. and Auto Warehousing
Company. The lease agreements incorporate standards of
reporting and payment facilitating compliance. Within the port industry, landlord ports may undertake an audit of cargo volumes every several years. The Port will engage with a consultancy to undertake a cargo volume audit

6.2 Appropriate funds and approve the
positions recommended in
Recommendation 3 and
Recommendation 4 to help ensure
that Port staff have the capacity to
carry out verification activities.

City Council
Charles Gerard/
Nannette
Beacham/Lizeht
Zepeda/Andrea
Miller/Rita Martinez
12/31/2025
Appropriations for positions in Recommendation 3 and 4 is completed. Port staff will develop a process for cargo verification at least every two years.

7.1 Include specific direction within
their policies and procedures
manual regarding inspections/
monitoring of Port properties for
tenant compliance with
environmental clauses included in
their leases as well as the San
Francisco Bay Conservation and
Development Commission policies
Economic
Development (Port)
Lizeht Zepeda/ Avery
Stark/ Charles
Gerard/ Lina Velasco
12/31/2025
The Port tenants operate under lease agreements with the standards of law, including environmental law, facilitating compliance. An operations and environmental audit
process can be built into the port procedures manual. The Port has a larger concern with the unleased properties that are subject to vandalism, waste disposal, and blight.
6 Lease Volume Guarantee Verification
and Documentation:

The Port’s lease agreement with Auto
Warehousing Co. (AWC) includes
vehicle processing guarantees critical
for offsetting bond payments. Despite
AWC’s financial compliance, the
Port’s lack of verification of reported
vehicle processing volume, and its
reliance on AWC-provided figures
without supporting evidence like
vessel manifests, undermines
revenue assurance. Industry best
practices advocate for such
verification to prevent inaccuracies
and potential fraud. Addressing
staffing shortages and implementing
robust verification procedures for
cargo volumes will enhance revenue
reliability and align the Port’s
practices with industry standards.
7 Environmental Compliance and Lease
Monitoring:

Despite tenant lease agreements
containing environmental provisions,
there’s no evidence of proactive and
systematic oversight by the Port,
attributed to insufficient procedures
and staffing. This deficiency poses
risks to the City’s legal and financial

5 Lease Solicitation, Selection, and
Vetting Process:

The Port lacks documented Port-
specific procedures for leasing,
impacting the transparency and due
diligence in tenant solicitation,
selection, and vetting. With no
records in these areas for most of the
ten lease agreements between 2013
and 2023, there’s a risk of non-
compliance with City policies and
state laws. The absence of clear
processes increases the potential for
fraud and undermines the
optimization of tenant agreements for
the Port’s benefit. Addressing these
deficiencies by establishing Port-
specific leasing procedures and
clarifying the role of the Surplus
Property Authority in the City will
enhance accountability and align
leasing practices with the Port and
826

7.2 Document staff
inspections/monitoring of Port
properties for environmental
compliance and other tenant
activities which may require a
permit from the San Francisco Bay
Conservation and Development
Commission.

Economic
Development (Port)
Lizeht Zepeda/ Avery
Stark/ Charles
Gerard/ Lina Velasco
12/31/2025
The Port Director met with all tenants, terminals and
toured/inspected their sites within this year. Tenants are responsible for their Bay Conservation and Development
Commission (BCDC) approval and permitting, use
compliance within their leased premises. Facilities
inspections can be recorded going forward for reporting purposes.

8.1 Prioritize the process of soliciting
for, and vetting, potential tenants
for vacant Port properties, in line
with the Port’s strategic plan (see
Recommendation 1).

Economic
Development (Port) Charles Gerard 6/30/2025
Staff agrees that leasing the properties is most effective at keeping them safe and secure. The Port is installing a
Flock Camera system to improve security and safety. The Port is installing traffic calming measures and other safety infrastructure. The Port has also commenced a Crime
Prevention Through Environmental Design
(CPTED)engagement with Richmond Police Department.

8.2 Establish a written procedure to
consider security services,
surveillance systems, alarm
systems, and secure fencing when
properties become vacant. This is
in line with the recommendations
made in Recommendation 2 of the
audit report
Economic
Development (Port)
Charles Gerard/ Bisa
French 12/31/2025
The Port will document and establish written procedures for ongoing security and surveillance improvements. The Port is working with Richmond Police Department on Crime Prevention Through Environmental Design (CPTED)
engagement for the Port area. The Port is installing traffic calming measures and other safety infrastructure.

9.1 Provide documentation to the Port
of Richmond and Richmond City
Council related to the original loans
to the Port and their purpose by
June 30, 2024.

Finance Department Rita Martinez Completed
Staff have identified additional promissory notes
documentation to support the loan from the General Fund to the Port. There is a Payment Schedule in place.

Additionally, the Port and the City recently refined the payment plan and shortened the loan term through a

9.2 Review all loans between the
General Fund and other City
departments and ensure
all supporting documentation is
maintained and sufficient to
demonstrate that the liability is
appropriate in compliance with
state law.

Finance Department Rita Martinez Completed
Documentation was located and presented to GPP
Analytics. The City loan liability has been audited per the City's Annual Comprehensive Financial Report (ACFR)
9 RM
7 risks to the City s legal and financial
standing. Implementing explicit
monitoring policies and documenting
compliance efforts are crucial to
mitigate potential environmental,
legal, and financial repercussions,
ensuring adherence to regulations
and safeguarding the Bay’s
environment.
8 Security at Port Facilities:

Without security, vacant Port
properties are susceptible to
trespassing and vandalism,
increasing risks and costs for the City.

With three unleased buildings as of
January 2024, a lack of security
measures has led to damage and
could complicate lease negotiations
and/or delay tenant occupancy.

Previous security efforts at Terminal 1
lack assessment for effectiveness,
highlighting the need for established
security procedures for vacant
properties. Recommendations include
prioritizing tenant solicitation for
vacant properties and establishing
security protocols to mitigate
trespassing and vandalism risks and
their associated costs.
827

9.3 If they have not received
documentation of the original loans
to the Port and their purpose by
June 30, 2024, restate and
eliminate the liability for these
loans to help maintain compliance
with state law.

City Council Rita Martinez N/A
Documentation was located and presented to GPP
Analytics. The City loan liability has been audited per the City's Annual Comprehensive Financial Report (ACFR).

10.1 Amend its Administrative Manual to
clarify its policy regarding personal
internet and email usage by City
employees.

City Managers
Office/Information
Technology
Nannette Beacham/
Charles Gerard/
Andrea Miller/ Rita
Martinez
6/30/2025
City staff will work with Information Technology to ensure adherence to City policy. City staff will coordinate a
corresponding update of the Administrative Manual.

10.2 Disseminate the amended sections
of the Administrative Manual to all
City employees and provide
specific information and
technological guidance on how to
comply with these policies and the
California Public Records Act.

City Managers
Office/Information
Technology
Nannette Beacham/
Charles Gerard/
Andrea Miller/ Rita
Martinez
6/30/2025
City staff will work with Information Technology to ensure adherence to City policy. City staff will coordinate a
corresponding update of the Administrative Manual.
10 Personal Emails:

During our audit, we noted Port and
City employees in Richmond using
personal email accounts for City
business. This practice could hinder
the City’s ability to respond to
California Public Records Act
requests, risking non-compliance, as
personal emails fall outside the City’s
purview. The City’s policies on
technology use in its Administrative
Manual are inconsistent, allowing
both ‘minimal personal use’ while also
stating that technologies are for ‘City-
related activities only’.

Recommendations include amending
the Administrative Manual for clarity
on personal internet and email usage
and educating employees on
compliance with these policies and
CPRA requirements.
828
Management and Performance
Audit of the Port of Richmond
March 18, 2024
2478 Tierra Dr, Los Osos, CA 93402
(805) 242-2071
[email protected]
www.GPPAnalytics.com
829
Table of Contents
Transmi(al Le(er .................................................................................................................... 2 Introduc5on ............................................................................................................................ 5 Findings .................................................................................................................................. 16 Finding 1: Port Strategic Plan ............................................................................................ 16 Finding 2: Port Procedures ............................................................................................... 20 Finding 3: Maintenance Staff and Deferred Maintenance ................................................ 22 Finding 4: Finance Staff and Financial Monitoring ........................................................... 25 Finding 5: Lease Solicita@on, Selec@on, and VeCng Process ........................................... 29 Finding 6: Lease Volume Guarantee Verifica@on and Documenta@on ............................. 33 Finding 7: Environmental Compliance and Lease Monitoring .......................................... 37 Finding 8: Security at Port Facili@es .................................................................................. 38 Finding 9: Debt to the General Fund ................................................................................ 41 Finding 10: Personal Emails .............................................................................................. 43 Recommenda5ons List ........................................................................................................... 45 A(achment A: Wri(en Statement for Port Audit Findings…………..…………………………………………48 A(achment B: Responses to General Comments from Original Scope……………………………………52 A(achment C: Memo II……………………………………………………………………...…………………………………55 A(achment D: Internal Audit of Port of Richmond, June 28, 2011……………………………………...…60 830

2 Transmittal Letter March 18, 2024 City Council Members City of Richmond 440 Civic Center Plaza Richmond, CA 94804 Dear Mayor, Vice-Mayor, and Members of the Richmond City Council, I am pleased to present the audit report for the "Management and Performance Audit of the Port of Richmond" conducted by GPP Analy@cs Inc. for the City of Richmond. Our audit was conducted in compliance with the Interna@onal Professional Prac@ces Framework (IPPF) of the Ins@tute of Internal Auditors and the Generally Accepted Government Audi@ng Standards (GAGAS) of the U.S. Government Accountability Office. The primary objec@ve of our audit was to assess the overall management, efficiency, and effec@veness of all Port opera@ons and services. This included a comprehensive evalua@on of: • the organiza@on's opera@onal and administra@ve func@ons, use of public funds, compliance with regulatory standards, and organiza@onal transparency; • the adequacy of control systems, resource management, staffing levels, and the effec@ve use of technology; • the responsiveness to various stakeholders and the integrity of lease management; and • the financial management prac@ces, including procurement and budge@ng processes, as well as the effec@veness of communica@on across all levels. This comprehensive approach was intended to iden@fy areas for improvement and ensure compliance across a wide range of opera@onal and administra@ve func@ons. The following is a summary of the audit findings in the report: Finding 1: Port Strategic Plan. The Port of Richmond’s absence of a strategic plan significantly undermines its opera@onal efficiency and long-term planning, leading to unclear investment priori@es and deteriora@ng infrastructure. To address these issues, the City should develop and formally adopt a strategic plan, ensuring its regular review and adapta@on. This will enable the Port to effec@vely allocate resources, adract stable tenants, and secure funding, ul@mately enhancing its viability and economic contribu@ons. Finding 2: Port Procedures. The Port of Richmond’s lack of wriden procedures for managing its $10.5 million in opera@ng revenue and $29.5 million in assets poses significant opera@onal and compliance risks, especially during staff turnover. Without documented processes for key func@ons, like lease revenue collec@on and mari@me opera@ons, the Port is vulnerable to disrup@ons and knowledge loss. To mi@gate these risks and ensure consistent opera@on, it’s crucial for the Port to develop and maintain wriden procedures for its essen@al func@ons and establish a succession strategy for cri@cal roles. 831

3 Finding 3: Maintenance Staff and Deferred Maintenance. Our audit has uncovered significant inefficiencies in the maintenance of the Port’s assets, leading to unplanned financial support from the City’s General Fund. These issues pose a risk to the Port’s asset value and emergency preparedness, and ul@mately its long-term opera@onal viability. To address these issues, we recommend hiring a Maintenance Manager, establishing clear billing system for maintenance work performed by the Public Works Department, and conduc@ng a comprehensive facility condi@ons assessment to ensure asset preserva@on and opera@onal readiness.

Finding 4: Finance Staff and Financial Monitoring. The Port’s financial management is hindered by a lack of dedicated finance staff at the Port and insufficient financial oversight, leading to revenue growth that lags behind regional infla@on and poten@al underinvestment in opera@ons.

The absence of a Finance Manager since FY 2014–15 has limited the Port’s capability for in- depth financial planning and monitoring which is essen@al for strategic fee seCng and successful grant applica@ons. Document management issues further complicate financial accountability. To enhance financial management and alignment with its mission, the City should reinstate a Finance Manager for the Port.

Finding 5: Lease Solicita5on, Selec5on, and VeSng Process. The Port lacks documented Port- specific procedures for leasing, impac@ng the transparency and due diligence in tenant solicita@on, selec@on, and veCng. With no records in these areas for most of the ten lease agreements between 2013 and 2023, there’s a risk of non-compliance with City policies and state laws. The absence of clear processes increases the poten@al for fraud and undermines the op@miza@on of tenant agreements for the Port’s benefit. Addressing these deficiencies by establishing Port-specific leasing procedures and clarifying the role of the Surplus Property Authority in the City will enhance accountability and align leasing prac@ces with the Port and community interests.

Finding 6: Lease Volume Guarantee Verifica5on and Documenta5on. The Port’s lease agreement with Auto Warehousing Co. (AWC) includes vehicle processing guarantees cri@cal for offseCng bond payments. Despite AWC’s financial compliance, the Port’s lack of verifica@on of reported vehicle processing volume, and its reliance on AWC-provided figures without suppor@ng evidence like vessel manifests, undermines revenue assurance. Industry best prac@ces advocate for such verifica@on to prevent inaccuracies and poten@al fraud. Addressing staffing shortages and implemen@ng robust verifica@on procedures for cargo volumes will enhance revenue reliability and align the Port’s prac@ces with industry standards.

Finding 7: Environmental Compliance and Lease Monitoring. Despite tenant lease agreements containing environmental provisions, there’s no evidence of proac@ve and systema@c oversight by the Port, adributed to insufficient procedures and staffing. This deficiency poses risks to the City’s legal and financial standing. Implemen@ng explicit monitoring policies and documen@ng compliance efforts are crucial to mi@gate poten@al environmental, legal, and financial repercussions, ensuring adherence to regula@ons and safeguarding the Bay’s environment.

832
4 Finding 8: Security at Port Facili5es. Without security, vacant Port proper@es are suscep@ble to trespassing and vandalism, increasing risks and costs for the City. With three unleased buildings as of January 2024, a lack of security measures has led to damage and could complicate lease nego@a@ons and/or delay tenant occupancy. Previous security efforts at Terminal 1 lack assessment for effec@veness, highligh@ng the need for established security procedures for vacant proper@es. Recommenda@ons include priori@zing tenant solicita@on for vacant proper@es and establishing security protocols to mi@gate trespassing and vandalism risks and their associated costs.

Finding 9: Debt to the General Fund. The Port’s unresolved debt to the City General Fund, ini@ally reported as $16,942,096 in 2013 and paid down to $12,485,369.72 by FY 2023–24, lacks substan@a@ng documenta@on for its origin and purpose. This absence of records complicates the Port’s ability to jus@fy the reasonableness of its fees under state law. The issue, consistent with findings from a 2011 audit, suggests a broader problem of record-keeping within City departments. Recommenda@ons include a final effort by the Finance Department to locate documenta@on for the Port loans and a review of all City department loans to ensure compliance with state law, poten@ally resta@ng and elimina@ng unsubstan@ated liabili@es to maintain legal compliance.

Finding 10: Personal Emails. During our audit, we noted Port and City employees in Richmond using personal email accounts for City business. This prac@ce could hinder the City’s ability to respond to California Public Records Act requests, risking non-compliance, as personal emails fall outside the City’s purview. The City’s policies on technology use in its Administra@ve Manual are inconsistent, allowing both ‘minimal personal use’ while also sta@ng that technologies are for ‘City-related ac@vi@es only’. Recommenda@ons include amending the Administra@ve Manual for clarity on personal internet and email usage and educa@ng employees on compliance with these policies and CPRA requirements.

We appreciate the coopera@on and assistance provided by the staff of the City of Richmond throughout this audit. Their support was instrumental in the successful comple@on of this project.

We believe this report will provide valuable insights and recommenda@ons to enhance the effec@veness of the Port’s opera@ons and strategic role within the City of Richmond. Should you require any further informa@on or wish to discuss the findings in more detail, please feel free to contact us.

Sincerely,
Julian Metcalf
Partner and CEO
GPP Analy@cs Inc.
805-242-2071
jmetcalf@[email protected]
833
5 Introduction
This audit report presents the findings of the “Management and Performance Audit of the Port of Richmond” conducted for the City of Richmond by GPP Analy@cs Inc.

Standards of Audit
This audit was conducted in accordance with the Ins@tute of Internal Auditors (IIA) Professional Prac@ces Framework (IPPF) and the U.S. Government Accountability Office’s (GAO) Generally Accepted Government Audi@ng Standards (GAGAS). 1; 2 Those standards require that we plan and perform the audit to obtain sufficient and appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objec@ves. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objec@ves.

Objec3ves of a Performance Audit
According to the U.S. GAO, the objec@ve of performance audits “include assessments of program effec@veness, economy, and efficiency; internal control; compliance; and prospec@ve analyses.” The IIA states that a performance audit “assists management and those charged with governance and oversight with, among other things, improving program performance and opera@ons, reducing costs, facilita@ng decision-making by par@es responsible for overseeing or ini@a@ng correc@ve ac@on, and contribu@ng to public accountability.” Both standards emphasize the importance of an informed assessment to improve program performance and opera@ons, reduce costs, facilitate decision-making, and contribute to public accountability.

Evidence Standards
Both the IIA and the GAO set rigorous evidence standards to ensure the reliability and credibility of performance audits. The IIA’s standards require that auditors obtain sufficient, reliable, relevant, and useful evidence to achieve the audit’s objec@ves. This involves a systema@c and disciplined approach to evaluate and improve the effec@veness of risk management, control, and governance processes. The GAO’s standards also demand that auditors gather sufficient and appropriate evidence to provide a reasonable basis for their findings and conclusions. Evidence must be convincing enough that a prudent person would reach the same conclusions as the auditor. This includes the assessment of qualita@ve and quan@ta@ve data, direct observa@ons, and the corrobora@on of evidence from mul@ple sources.

Audit Objec3ves and Methodology
As defined in our contract with the City and paraphrased here, the audit included a comprehensive evalua@on of the Port’s financial management, including the use of public funds, adherence to internal controls, and overall financial oversight. Opera@onal efficiency was reviewed, focusing on prac@ces, staffing, and poten@al for cost-effec@ve improvements. The organiza@onal structure was compared with similar en@@es to iden@fy areas for enhancement. Technology and infrastructure were assessed for adequacy and alignment with business needs. Compliance with government regula@ons and transparency in opera@ons were key areas of focus. Tenant services, stakeholder responsiveness, and 1 Ins%tute of Internal Auditors, Interna%onal Professional Prac%ces Framework 2017. 2 United States Government Accountability Office’s Government Audi%ng Standards 2018 Revision. 834

6 lease management were examined. Legal and ethical aspects, including poten@al conflicts of interest and ac@ons against delinquent tenants, were also reviewed. The audit aimed to provide thorough recommenda@ons for improving the Port’s opera@ons, ensuring effec@ve management of resources, and enhancing stakeholder rela@onships. Audit Timeline The audit process was structured as follows: Entrance Conference: July 24, 2023 Submission of Tes@ng Plan: October 19, 2023 Drar Report Submided: February 1, 2024 Exit Conference With City Staff: February 8, 2024 Final Informa@on Submided by City Staff: March 5, 2024 Revised Drar Submided: March 6, 2024 Final Report Submided: March 18, 2024 Ini$al Phase The audit was ini@ated on July 24, 2023, when GPP Analy@cs met with City and Port staff for an entrance conference at Richmond City Hall and a tour of Port facili@es. During August and September 2023, we interviewed 23 City and Port staff, Port tenants, and other stakeholders related the Port’s opera@ons. We collected documents from the Port, including two on-site visits to the Port offices to review archived materials. The City granted our team view-only access to its financial system, and we performed several analy@cal reviews of informa@on from that system, including assessing trends and a review of anomalous ac@vi@es that could signify higher risk areas. These cumula@ve ac@vi@es informed our audit’s risk assessment. Risk Assessment Process Our audit team then conducted a risk assessment, in accordance with both the Ins@tute of Internal Auditors (IIA) and Generally Accepted Government Audi@ng Standards (GAGAS), to ensure a comprehensive and compliant audit methodology. The process commenced with a preliminary survey to assess all risks and observa@ons the team noted during the ini@al phase of the audit. We then ranked the risks and observa@ons based on their poten@al likelihood and impact. This was compared against the scope of the audit and the audit resources. The audit team evaluated all ini@al evidence and informa@on, reviewed possible criteria for poten@al finding areas, performed a gap analysis to iden@fy addi@onal informa@on that was needed, and created a Tes@ng Plan. The plan was shared with Port and City staff on October 19, 2023. Port and City staff shared feedback during subsequent mee@ngs. 835

7 Tes$ng Phase During the tes@ng phase, a variety of analyses were performed, and addi@onal documents were scru@nized. The team analyzed expenditures and accounts payable records within the City’s financial system, along with accounts receivable and collec@ons. We iden@fied a random and judgmental sample of backup financial documents, which we collected on November 28, 2023, from one of the City’s off-site storage facili@es. There was a comprehensive review of 11 peer ports conducted to gain compara@ve insights. Documents such as lease agreements, tenant correspondence, citywide policies, and tenant payment records were thoroughly analyzed. City Council minutes were also reviewed to fill gaps in records that were not directly available from the Port. Furthermore, the team conducted interviews with external sources and gathered documents from relevant oversight and grantmaking organiza@ons to complement the data collected. During the tes@ng phase the audit team experienced some minor delays to the audit process. The City’s finance staff indicated that since they were undergoing their annual financial audit during the same @me and that they were be unable to provide some of the requested informa@on in a @mely manner due to limited staffing. Arer discussion with the City, we revised the audit @meline and informed the Mayor and City Council of the new @meline via email on November 7, 2023. The extended @meline proved helpful since even with the City’s assistance, the Finance department was unable to arrange our visit to their offsite storage facility un@l the end of November. Dra7 Report On February 1, 2024, GPP Analy@cs provided City staff with a confiden@al copy of our Drar Report, which they reviewed for factual accuracy and any inadvertent inclusion of confiden@al informa@on. For all feedback and requests for revisions the City was asked to provide sufficient suppor@ng evidence and documenta@on. The City confirmed it had provided all informa@on on March 5, 2024. Revised Dra7 Report Based on feedback from City staff, GPP Analy@cs amended the Drar Report and provided a Revised Drar Report to City staff on March 6, 2024, with a request for a wriden response to each of the report recommenda@ons. We received the wriden responses from the City on March 15, 2024, and they are included as adachments to this report. Final Report The Final Report, which combines the Revised Drar and the City’s wriden responses, was transmided to the Mayor and City Council on March 18, 2024. Collabora3on Acknowledgement We acknowledge and appreciate the coopera@on and assistance throughout this audit provided by Port staff, the Finance Department, the City Manager’s Office, and other City staff, as well as external stakeholders. 836

8 Ques3ons Asked in the Scope The City of Richmond provided the following ques@ons in the agreement to perform the audit. We’ve addressed each below with either an indica@on of a resul@ng finding or steps that were performed to assess the ques@on. Organiza$onal Overview 1. Is the Port making the best use of public funds? This ques@on is most directly addressed in Finding 1, which discusses the lack of a strategic plan for the Port. Without a strategic plan the Port has had a limited defini@on by which to define “best use”. The lack of a plan also limits the Port’s ability to access grant funding, which further limits its opportunity to maximize public funds. 2. Is the Port u5lizing efficient opera5ng prac5ces? In a general sense, no, the Port is not u@lizing efficient opera@ng prac@ces. As discussed in Finding 3 and Finding 4, the Port is understaffed and, since the death of the prior Port Director in 2020, it has also experienced a loss of ins@tu@onal knowledge. This has been made worse by the lack of wriden policies and procedures for key Port func@ons as discussed in Finding 2. 3. Does the Port have an effec5ve organiza5on and/or management structure, including staffing and opera5ons, when compared to other similar ports? Are there opportuni5es for improvement? As seen in the comparison chart further below in the introduc@on, the Port has limited staffing compared to most of its peers. Further, it is unusual that the Port, which is organized as an enterprise fund, is now managed within a General Fund department, and that it is overseen by the City Council directly rather than by a dedicated commission. While these two aspects of the Port’s structure are uncommon, we could not find objec@ve evidence that it is causing a problem at the @me of this report. However, if the amount of @me necessary for oversight, review, and approval increases significantly in the future, this could become a challenge for the City Council. As of January 2024, the findings in this report discussing the lack of a strategic plan and insufficient staffing represent more immediate risks to the City and the Port (Findings 1, 3, and 4 respec@vely). 4. Is the Port complying with internal controls, government rules and regula5ons? As detailed in Finding 6 and Finding 7 respec@vely, the Port is not properly monitoring its lease agreements regarding compliance with revenue volume and environmental prac@ces. 837

9 5. Does the Port’s current oversight structure guarantee transparency and public access to the informa5on? If not, what are the recommenda5ons? As men@oned above, it is unusual for a Port to be directly overseen by a general government legisla@ve body like the City Council. Most ports are overseen by a commission or board purely focused on Port-related ac@vity. While we could not find objec@ve evidence that the oversight structure has hindered transparency and access to informa@on, a dedicated Port oversight body, such as a commission appointed by the City Council, could streamline access to Port informa@on and provide more resources to monitor the Port’s ac@vi@es. Opera$ons and Maintenance 6. Does the Port have an adequate management control system for accoun5ng measuring, repor5ng, and monitoring its leases? No, Finding 6 and Finding 7 respec@vely detail how the Port is not properly monitoring its lease agreements for compliance with revenue volume and environmental prac@ces. 7. Are staffing levels appropriate for the size and complexity of the Port’s opera5ons and business requirements? No, the addi@on of a Finance Manager and Maintenance Manager, as recommended in Finding 3 and Finding 4, would free other posi@ons in the Port to beder perform their required du@es. 8. Are there opportuni5es for management/staff to carry out opera5ons in a different way that might yield desired results more effec5vely or at a lower cost? In a general sense yes, all the findings in the report point to opportuni@es to improve opera@ons that would yield more effec@ve results. Some recommenda@ons, such as adding staff, would come at a higher annual cost, but as noted in the findings these baseline opera@ng costs should be considered and included when calcula@ng all future lease terms and fees so that future revenue can more accurately reflect the cost of opera@ng the Port. 9. Is security at the Port effec5ve? What are the recommenda5ons for improvement? No, Finding 8 details security needs of the Port which are not being met and the associated risk. 10. Are there specific physical changes to infrastructure that should be made to the Port proper5es that would improve the opera5on and maintenance of the facili5es? Maintenance to Port infrastructure has oren been deferred. This is discussed in Finding 1 regarding the lack of a Port strategic plan and Finding 3 regarding the need for a Maintenance Manager. Before iden@fying specific assets that need improvement or replacement, we recommend that the Port and City Council complete and approve a strategic plan for the Port. Such a plan would then provide clear funding priori@es for any future changes to infrastructure. 838

10 11. Is technology adequate and u5lized efficiently? Is the technology in alignment with business needs and relevant industry benchmarks? Similar to Ques@on 10 above, we recommend that the Port and City Council complete and approve a strategic plan for the Port, as discussed in Finding 1. Such a plan would then provide priori@es by which to assess the adequacy of technology at the Port and where technology could be beder u@lized. As of the date of this report, the Port makes use of standard Citywide IT technology for its administra@ve opera@ons. 12. Are leases or loan rates reasonable compared to industry standards and local market? As discussed in Finding 5, we could not find documenta@on at the Port regarding how the lease rates were calculated prior to their ini@a@on or how they compared to similar commercial real estate in the City or region. Without such documenta@on it is unclear how lease terms were established and if they are appropriate. There was one excep@on, where we found documenta@on of one property that was compared to commercial real estate values, but this occurred several years arer the lease term began. Tenant Services 13. Is the Port responsive to the needs of customers, including tenants, city departments, council, members of the broader community, and regulatory agencies? Recommend how this could be more effec5ve. In the ini@al phase of the audit, we interviewed representa@ves from most tenants, a variety of relevant City staff, and the San Francisco Bay Conserva@on and Development Commission (BCDC). We also offered to interview all City Council members. We heard a variety of responses from tenants, but the most common theme was that frequent staff turnover at the Port in recent years has meant they have not always known who to contact or what to expect from the Port. The City departments we spoke with seemed engaged with Port, but we believe that some, such as the Department of Public Works, would benefit from a wriden agreement to define their rela@onship and how work performed for the Port is charged back to the General Fund (as noted in Finding 3). Staff with BCDC did provide feedback that the responsiveness of the City’s Port and the City’s Planning Department has been quite minimal and disengaged, especially rela@ve to other Bay Area ports. 14. Does the Port have an adequate management control system for measuring, repor5ng, and monitoring its leases? No, Finding 6 and Finding 7 respec@vely detail how the Port is not properly monitoring its lease agreements for compliance with revenue volume and environmental prac@ces. 839

11 15. Review and make recommenda5ons regarding policies and procedures rela5ng to tenant services. As of January 2024, the Port does not have policies and procedures specific to Port func@ons, as discussed in Finding 2. In Finding 6 and Finding 7 of this report we detail specific prac@ces the Port should follow to more effec@vely monitor its lease agreements. 16. Can the Port take any legal ac5ons against the delinquent tenants to recover lost revenue? All ac@ve lease agreements we reviewed have provisions regarding delinquent payments. Furthermore, we believe that following our recommenda@ons to increase staffing for the Port will increase the capacity of staff in exis@ng posi@ons to beder monitor delinquencies and other tenant related issues. 17. Are there any conflict-of-interest issues involving any current or former City Council members, Current or former City staff, Current or former Port’s tenants, Current and former Port’s contractors? Arer a careful review, we did not find documenta@on to support conflicts of interest between City employees and current or former Port contractors. General Administra$on 18. Is the Port adequately accoun5ng for the prudent and effec5ve management of the resources entrusted to them? As discussed in Finding 4, the Port relies on the Finance Department to manage much of its day-to-day accoun@ng financial management. We recommend adding a Finance Manager to the Port, who can beder assist the Port with directly managing its financial resources. This will allow the Finance Department to serve in an oversight capacity. 19. Is the Port following sound procurement prac5ces, budge5ng process, and accoun5ng rules? Yes, with some noted excep@ons. Our tes@ng of the Port’s financial records suggest it is following Citywide procurement and budge@ng prac@ces and accoun@ng rules. However, Finding 9 discusses debt that is recorded as owed to the General Fund by the Port, but the City lacks sufficient documenta@on to substan@ate the loan. As discussed in Finding 4, the Port would benefit from increased financial oversight by the Finance Department. 20. Review and make recommenda5ons, as applicable, on the following: a. The budge5ng process and purchasing system The Port’s budget process appeared to comply with City policies but would be strengthen with the adop@on of a strategic plan as discussed in Finding 1. Such a plan would help shape clearer budget priori@es and make beder use of the Port’s limited resources. We reviewed randomly selected samples of contracts used between fiscal years 2016–17 to 2022–23 and found corresponding records of public solicita@on and City Council minutes approving the contracts. We conducted a review of accounts payable transac@ons, or purchases that were paid by the Port. We randomly selected samples from between fiscal 840

12 years 2016–17 to 2022–23 and added numerous judgmental samples of transac@ons from a broader period that included targeted higher-risk areas such as travel, food, and other purchasing paderns. To collect most of the samples we traveled to the City’s offsite storage facility, accompanied by City staff, to review and scan suppor@ng documents. Our tes@ng did not reveal any material problems and found required approvals associated with the tested samples. However, neither the Finance Department nor the Port could locate records rela@ng to five samples out of the 41 we requested. This problem is discussed in Finding 4 of this report. b. Accoun5ng systems and cash management controls As discussed in Finding 4, adding a Finance Manager posi@on within the Port would strengthen its knowledge of its financial posi@on and management, and provide the Finance Department with more capacity to monitor the Port’s financial ac@vi@es. i. Cash management The Port reports having no direct access to cash and the Finance Department manages its liquidity. ii. Rent roll informa5on of current leases Our review of documents suggest that staff have recently beder organized and consolidated rent roll and lease informa@on. As men@oned in Finding 2, the lack of policies and procedures about cri@cal Port func@ons, such as rent collec@on, means there is a risk of loss of ins@tu@onal informa@on. iii. Transfer in and out The Port has no direct access to make transfers in and out of the Port fund. However, as noted in Finding 3 regarding the need for a Maintenance Manager at the Port, the cost of the Department of Public Works providing maintenance services for the Port is not properly tracked. This means that the true cost of internal services provided to the Port by the General Fund are not reflected in transfers out from the Port. iv. Rent roll informa5on of each sublease As discussed in Finding 6 and Finding 7 regarding lease monitoring generally, the Port is not sufficiently monitoring lease agreements, which includes any poten@al subleases, of which we found no records maintained by the Port. We do not know how common subleases are since most lease agreements with the Port and tenants disallow them. v. Loans made to the Port and other debt accrued Finding 9 addresses the lack of documenta@on our audit revealed related to loans reportedly made from the City’s General Fund to the Port. 841

13 c. The adequacy of communica5ons and feedback at all levels, including the council, tenants, management, staff, and customers See response to Ques@on 13 above. 21. Assess the adequacy of Port financial oversight from the Finance Department. As discussed in Finding 4, the Finance Department performs most of the day-to-day financial management work for the Port. We recommend adding a Finance Manager posi@on within the Port because this would provide the Finance Department with more capacity to monitor the Port’s financial ac@vi@es. Peer Summaries Figures i.1 and i.2 on the following two pages provide an overview of the structure, existence of planning documents, budgets, and staffing of eleven peer ports, rela@ve to the Port of Richmond. As noted in the text, please keep in mind that each port is unique in the markets it serves, its structure, staffing, and funding. This makes direct comparison difficult. Instead, please refer to this chart to illustrate only broader dis@nc@ons between ports. Volume measures of port ac@vi@es are mostly excluded from this chart because each port’s imports and exports have differing measures that make comparison possibly misleading. 842

14 Figure i.1: Peer Ports – Structure and Planning Port Name Structure Primary Trade and Mari3me Opera3ons Governed By Operated By Regularly Updated Strategic Plan? Richmond, CA A division of the city’s Community Development Department. Operates a seaport and property management functions. Automobiles (reported 91,252 imported in FY 2023), and cooking oils, and commercial real estate. Richmond City Council. Municipal/Port Staff No, plan drafted in 2007 but not adopted by City Council at time. Benicia, CA AMPORTS has rights to operate the Port until 2031, at which time the city may operate it as an international port or give the lands to the state. Operates a seaport. Automobiles (volume not reported), bulk cargo handling, and ship repair/maintenance. AMPORTS is the Port Authority in the Port of Benicia. Amports (private) Not public Hueneme, CA The Oxnard Harbor District is an independent special district. Operates a seaport and property management functions. Fresh produce, artmobiles ($11.1 billion in value reported imported in 2023), breakbulk, and containerized goods. 5-member commission elected at large within District. Municipal/Port Staff Yes Humboldt Bay, CA The Humboldt Bay Harbor, Recreation and Conservation District is an independent special district. Operates a seaport and property management functions. Lumber and wood products alongside bulk cargo. Offshore wind terminal is planned. 5-member commission elected by district. Municipal/Port Staff No, but the Port adopted a 2007 Management Plan. Oakland, CA Port operates as an independent department of the City of Oakland. Operates an airport, seaport, and property management functions. Container, and bulk cargo terminals, facilitating international trade. 7-member Board of Commission. Commissioners are nominated by the Mayor and appointed by the City Council. Municipal/Port Staff Yes Redwood City, CA The Port of Redwood City is an enterprise department of Redwood City. Operates a seaport, marina, park/recreation space, and property management functions. Bulk cargo movement like sand, gravel, and cement, with a presence in shipyards and marine repairs. 5-member Board of Port Commissioners, appointed by the City Council. Municipal/Port Staff Yes, citywide alignment and port specific. Stockton, CA Stockton Port District is an independent special district. Operates inland port and property management functions. Bulk cargo (agricultural, construction materials, autos) and serves as a major food processing/distribution hub. 7-member Board of Commissioners; 4 appointed by the City of Stockton and 3 by San Joaquin County. Municipal/Port Staff Yes West Sacramento, CA Sacramento-Yolo Port District is an independent special district. Operates an inland port and property management functions. Bulk cargo including agricultural, industrial, and heavy equipment. 5-member Commission. West Sacramento City Council appoints 4, Yolo County Board of Supervisors appoints 1.

Admin and property management only by Port/Municipal Staff. SSA Marine (private) operates terminal per an agreement. Yes, included in citywide plan.

Portland, OR Port District authorized by state legislation. Operates an airport, marine terminals, cruise terminal, marina, park/recreation space, and property management functions. Containerized goods, automobiles (244,934 reported imported in 2022), and grain. 9-member Board of Commissioners. Appointed by the Governor and approved by the State Senate. Municipal/Port Staff Yes Everett, WA The Port of Everett is an independent special purpose district. Operates a seaport, marina, park/recreation space, and property management functions. Bulk cargo movement (wood chips, logs, steel), aerospace, and houses paper mills and wood processing facilities. 3-member commission, elected by district. Municipal/Port Staff Yes Bellingham, WA The Port of Bellingham is a special purpose municipal corporation organized under the State of Washington Port Laws. Operates an airport, marine terminals, cruise terminal, marina, park/recreation space, and property management functions.

Cruise terminal, bulk cargo movement (coal, wood chips, steel) and houses oil refineries and chemical plants. 3-member commission, elected by voters within Whatcom County. Municipal/Port Staff Yes Olympia, WA The Port of Olympia is an independent special purpose district. Operates an airport, marine terminals, park/recreation space, and property management functions. Bulk cargo movement (wood chips, logs, gravel) and houses seafood processing facilities. 5-member commission, elected by voters within Thurston County. Municipal/Port Staff Yes 843

15 Note 1: Maintenance roles in par1cular overlap in some instances from mari1me to avia1on maintenance. For example, the Port of Portland has only two dedicated maintenance staff for its seaport but u1lized maintenance staff as needed from the avia1on division of the port. Another example is the Port of Bellingham, who has maintenance division that serves both the seaport and airport. Note 2: Unless otherwise indicated, figures exclude purely administra1ve/overhead staff such as human resources and finance.

Figure i.2: Peer Ports – Budget and Staffing
Port Name
Opera3ng Revenue Budget From Mari3me & Non-Avia3on Leasing Func3ons (FY 2023–24) Grant Revenue Budget From Mari3me & Non-Avia3on Leasing Func3ons (FY 2023–24) Property Tax Revenue Budget (FY 2023–24) Total Filled Posi3ons at Port For Any Func3on (as of January 2024) Filled Posi3ons for Mari3me Func3ons (as of January 2024) (1) Of These Posi3on How Many Perform Maintenance Work? (2) Richmond, CA $10.5 million $1.0 million None 3 *Two positions are only parttime at Port 3 *Two positions are only parttime at Port 0 Benicia, CA Not public Not public None Not public Not public Not public Hueneme, CA $24.3 million $20.2 million None 25 15 1 Humboldt Bay, CA $10.2 million $3.1 million None 11 11 6 Oakland, CA $180.2 million $17.7 million None 550 *budgeted 74 *budgeted 51 *budgeted Redwood City, CA $10.1 million $0.5 million None 14 12 1 Stockton, CA $69.8 million $16.3 million None 21 15 2 West Sacramento, CA $3.4 million (FY 2022 audited actual) None None 2.1 Admin and property management only, SSA Marine operates terminal.

2.1 Admin and property management only, SSA Marine operates terminal. 0 Municipal/Port staff dedicated to Port maintenance.

Portland, OR $46.5 million None $15.5 million *For Port overall including airport 604 10 2 *Dedicated to serving Port’s marine division, but marine division uses staff resources from airport and other divisions. Everett, WA $48.6 million $10.7 million $5.9 million *For Port overall including airport 54 23 0 Bellingham, WA $25.5 million $1.0 million $8.0 million *For Port overall including airport 131 51 27 Olympia, WA $12.3 million $4.6 million $7.9 million 50 26 12 844

16 Findings Finding 1: Port Strategic Plan Strategic Planning as an Organiza3onal Impera3ve The Port of Richmond’s lack of a formally ra@fied strategic plan significantly impairs its capacity for long-term planning and undermines efficient priori@za@on and decision-making processes. Such plans are founda@onal elements for ports and organiza@ons generally. A strategic plan crystallizes a port's vision, delineates its direc@on, and lays the groundwork for decision-making. This instrument is pivotal in naviga@ng intricate opera@onal, financial, and environmental challenges. Historical AFempts and Background Historically, discrete strategic objec@ves were interwoven within the City's annual budget documents from Fiscal Years 2009–10 through 2020–21 but were not perpetuated. A "Strategic Business Plan," ini@ated by the Port Director in 2007, was not adopted by the City Council at that @me and has not been revived according to subsequent records. The San Francisco Bay Area Seaport Plan and applicable zoning restric@ons should be used to guide the development of a strategic plan for the Port.3 The more recent Green Blue New Deal by the City Council may also influence the Port's future direc@on; however, it is yet to be synthesized into a holis@c strategic framework for the Port. Consequences of the Strategic Void The void of a strategic plan carries cri@cal implica@ons. It casts ambiguity over investment decisions in the Port’s infrastructure, which is already manifes@ng in the physical condi@on of the Port’s assets. The City’s financial records show that the Port had an accumulated deprecia@on of $63.0 million, overshadowing the assets' current book value of $24.5 million.4 This indicates a severe underinvestment in maintenance and moderniza@on (see further discussion of Port maintenance in Finding 3). The audit team's tour of the Port facili@es on July 24, 2023, anecdotally reinforces this, as we observed visible signs of deteriora@on and disrepair in various parts of the Port, as illustrated in Figure 1.1. The condi@on of Port facili@es underscores the urgency for a strategic plan to priori@ze and allocate investments efficiently and sustain the Port's fiscal viability and community economic support. 3 San Francisco Bay Area Seaport Plan. San Francisco Bay Conserva%on and Development Commission. November 2023. hPps://www.bcdc.ca.gov/seaport/seaport-plan.pdf. Accessed on February 7, 2024. 4 Calcula%on includes fixed and capital assets and excludes land owned by the Port. 845

17 Figure 1.1: Photos of Visibly Deteriora?ng Infrastructure at the Port

Source: Image taken by audit team on July 24, 2023.
846

18 Staff Decision Making and Tenant Selec3on The strategic vacuum has tangible repercussions on tenant selec@on and lease nego@a@ons, vital to securing long-term occupancy (see Finding 5). Furthermore, without a strategic plan, the Port is poten@ally disadvantaged in adrac@ng and retaining tenants that align with the City’s goals for the Port. The Port’s recent leasing history, primarily comprised of short-term agreements, reflects the absence of strategic guidance during a period of leadership vacancy. While short-term leases offer flexibility in the absence of a strategic plan, they neglect the benefits of enduring tenancies, which include tenant-driven asset improvements. For example, between the years 2021 to 2023, the Port signed nine new leases and extensions of exis@ng leases. • One lease agreement was for a year term with op@ons for five one-year extension op@ons. • Six lease agreements for five-year terms, some with one year extension op@ons. • One agreement was for a ten-year term, with two five-year extension op@ons. • One agreement for a 25-year term, with four ten-year extension op@ons. In total, seven of the nine agreements were for roughly five years or less, and two were for more than ten years. These short-term leases were made in a period when the Port’s Director posi@on was vacant and without a strategic plan to guide staff. While these leases represent a variety of proper@es and land use types, it illustrates that the Port has not been well-posi@oned to make long term leases. Longer leases are oren more beneficial as they give tenants the security and incen@ve to invest in the improvement of assets, enhancing the value and func@onality of the Port's infrastructure. Grant Funding Opportuni3es at Risk The lack of a strategic plan diminishes the Port's compe@@veness for federal grants. Grants from en@@es like the Mari@me Administra@on (MARAD) and the Environmental Protec@on Agency (EPA) oren priori@ze projects that align with a clear strategic vision and demonstrate poten@al for long-term viability. Without a strategic plan, the Port's ability to present projects that meet these criteria is hampered. In 2022, for example, significant funds were allocated by MARAD and the EPA for port improvements under various programs. The Port's inability to showcase a strategic alignment with such funding opportuni@es means forfei@ng the chance to leverage these resources for development and improvement projects. 847

19 Recommenda3ons The cumula@ve effect of these issues is a port that operates below its poten@al and misses opportuni@es to beder serve the City and community. The following recommenda@ons would ensure the Port has a strategic plan that is fully adopted, and then revisited itera@vely therearer. We recommend that the Richmond City Council: 1.1 Provide direc@on to the Port on its long-term strategic goals for the Port. This will beder inform Port staff as they develop a proposed strategic plan. 1.2 Formally adopt a proposed Port strategic plan developed by Port staff. This will help give Port staff clear direc@on. We recommend that the Port of Richmond: 1.3 Develop and present a proposed strategic plan to the City Council. This will provide the City Council with a proposed plan to review that is developed using the knowledge of its Port staff. 1.4 Adopt a procedure to review the strategic plan with the City Council at least every five years. During the review staff should include any proposed revisions to the strategic plan to be considered and possibly adopted by the City Council at that @me. 848

20 Finding 2: Port Procedures The Port is responsible for collec@ng $10.5 million of annual opera@ng revenue, the majority of which is collected from 14 lease agreements with tenants.5; 6 It also manages mari@me facili@es, infrastructure, land, and other assets, valued at $29.5 million, that are subject to regional, state, and federal regula@ons. 7 However, the Port has no wriden procedures that address these or its other key func@ons. Prior procedures may have existed, but they have not been maintained and are presumed lost. Departments Required to Maintain Procedures According to the City’s Administra@ve Manual, departments are responsible for “wri@ng and maintenance of departmental opera@ng procedures” that are dis@nct from the overall City policies.8 The City’s Administra@ve Manual does not address several ac@vi@es specific to the Port, such as revenue collec@on from leases, managing tenant occupied property, and mari@me opera@ons – meaning the Port is responsible for developing and maintaining such procedures. Furthermore, overall industry best prac@ces, such as from the Government Finance Officers Associa@on as well as the Interna@onal Organiza@on for Standardiza@on, recommend the documenta@on of policies and procedures for key func@ons of an organiza@on. Lack of Procedures Has Significant Impact During Staff Turnover The lack of procedures has the most significant impact when there is staff turnover, such as the sudden death of the former Port Director in 2020, and departures of long-term staff around the same @me. Prior staff may have had a good understanding of implicit procedures that were verbally communicated to them previously, but with no wriden procedures this informa@on is lost. This places the Port’s $10.5 million of annual opera@ng revenue at greater risk of disrup@on, risks the maintenance of the Port’s $29.5 million of infrastructure assets, and could expose the Port and City to greater compliance risk. 5 Fiscal Year 2021–22 audited financial statements. 6 As of August 2023. 7 Total asset value (including land assets) as of Fiscal Year 2022–23 according to calcula%ons provided by the City’s finance department. 8 City of Richmond Administra%ve Manual 101.1, Departmental Opera%ng Procedures. 849

21 Recommenda3ons The following recommenda@ons would help the Port reduce the risk of ins@tu@onal knowledge loss due to staff turnover, ensure cri@cal Port func@ons are performed consistently, and ul@mately help the Port beder protect its assets and opera@ng revenue. We recommend that the Port of Richmond: 2.1 Develop and maintain wriden procedures for its cri@cal opera@ng func@ons. 2.2 Develop and document a backup plan, or succession strategy, for cri@cal roles and responsibili@es at the Port. 850

22 Finding 3: Maintenance Staff and Deferred Maintenance Our audit has uncovered significant inefficiencies in the maintenance of the Port's assets, leading to unplanned financial support from the City's General Fund. These issues pose a risk to the Port’s asset value and emergency preparedness, and ul@mately its long-term opera@onal viability. Deferred Maintenance Trends The Port reported a current book value of its assets at $24.5 million for FY 2022–23, overshadowed by accumulated deprecia@on totaling $63.0 million.9 This discrepancy signals a crucial demand for extensive maintenance to sustain asset value. Despite the City’s Capital Improvement Plan (CIP) alloca@ng $10.1 million for FY 2023–24 to 2027–28, the funding falls short of bridging the gap between deprecia@on and the current value, indica@ng persistent underinvestment.10 Public Works' Role in Port Maintenance The Port's CIP oversight has historically been managed by Port staff, and most recently the Port Marke@ng/Opera@ons Manager performed those tasks. However, the City's Public Works Department has been responsible for day-to-day maintenance, ranging from road and fence repairs to electrical and plumbing work. Despite the Public Works Department's cri@cal role, they report that their current system lacks a robust mechanism for accurately tracking, repor@ng, or billing maintenance hours, which hampers financial transparency and accountability. Reported Understaffing Could Be Driving Deferred Maintenance Public Works reports that it faces a staffing shortage, hindering their capacity to meet the Port’s maintenance demands, sugges@ng a link between personnel scarcity and growing deferred maintenance. This under-resourcing raises the risk of future costs for repair and replacement, threatening the integrity and func@onality of Port assets. Port Financial Subsidiza$on Risks The Port is structured as an Enterprise Fund. The lack of tracking and billing for Public Works Department @me to the Port has rendered it impossible to determine the extent to which the General Fund is subsidizing the Port Enterprise Fund with unbilled maintenance work. Such subsidiza@on contradicts common local government prac@ce, where enterprise funds like the Port typically strive for self-sufficiency. Taking steps to track work performed through @me and materials spent on behalf of the Port, even using a spreadsheet, would help prevent use of General Fund money to support the Port. While the Port benefits from the inadvertent subsidy, it may also be receiving inadequate services due to Public Works’ staffing constraints. 9 Calcula%on includes fixed and capital assets and excludes land owned by the Port. 10 The CIP pertains primarily to large-scale ac%vi%es and is dominated by projects like the removal of Terminal 4’s wharf, electrifica%on of Terminals 7 and 8, and rou%ne dredging of the Port’s waterways. 851

23 Historical Context: The Port Maintenance Manager Un@l fiscal year 2014–15, the Port employed a Maintenance Manager responsible for minor maintenance and coordina@on of external vendors and Public Works tasks. The discon@nua@on of this role is not clearly understood by current staff but reinsta@ng it could relieve some of the Public Works Department's burden. Hiring a Maintenance Manager will also provide the Port with a dedicated posi@on who is knowledgeable about the Port’s assets and able to perform and manage day-to-day maintenance, and ul@mately beder protect and maintain the Port’s assets. This will increase Port opera@ng costs, but these costs can be incorporated into future external rates that provide the Port with self-suppor@ng revenue. Emergency Preparedness Gaps The City’s 2016 Emergency Plan lists the Port Maintenance Manager or the Chief Harbor Master as the alternate to the Port Director. As of January 2024, neither alternate posi@on exists. If called upon, per the Emergency Plan, the alternate would be expected to: “coordinate the immediate survey of Mari@me areas with ini@al assessment of damaged and undamaged areas and equipment. Restore Port condi@ons to normal as rapidly and efficiently as possible. Support emergency response and recovery efforts for the Port of Richmond, coordina@ng any resources that may become available to support the overall city response.” Presumably, another posi@on at the Port could fill this role in an interim capacity, but the vacancies add risks to the Port and City during an emergency since either a Port Maintenance Manager or the Chief Harbor Master would have the most familiarity with the Port’s infrastructure and systems. Comprehensive Facility Condi3on Assessment Needed Our analysis of accumulated deprecia@on and current asset values are largely accoun@ng calcula@ons that approximate the condi@on of assets and any reinvestment in them. For a more precise analysis, we recommend that arer a strategic plan is adopted, as recommended in Finding 1 of this audit, that the Port perform a comprehensive facility condi@on assessment of all major Port assets. Such an assessment would then be paired with the adopted strategic plan to inform future spending in the Capital Improvement Plan. Recommenda3ons Our recommenda@ons below would address these problems by helping to safeguard against escala@ng deferred maintenance and restoring a cri@cal component of the Port's emergency response structure. We recommend the Richmond City Council: 3.1 Appropriate funds to hire a Maintenance Manager within the Port. If Recommenda,on 3.1 is adopted: 3.2 Direct the Port to consider all increased costs associated with the Maintenance Manager posi@on and incorporate them when seCng future fees, tariffs, and lease rates. 852

24 We recommend the City of Richmond Public Works Department: 3.3 Develop an agreement with the Port, or an outside vendor managed by the Port, with a known billing rate and set service-level expecta@ons for work performed, to account for the remaining work, such as road repairs, that cannot be performed by the Port’s Maintenance Manager (see Recommenda@on 3.1). 3.4 Develop an interim tracking and billing method, such as tracking work performed using a spreadsheet, to recoup @me and materials spent on behalf of the Port. We recommend the Port of Richmond: 3.5 Perform a comprehensive facility condi@on assessment of all major Port assets arer a strategic plan has been adopted (see Finding 1). 853

25 Finding 4: Finance Staff and Financial Monitoring According to the City of Richmond FY2019–2020 Adopted Opera@ng Budget, the mission of the Port is as follows: The Port of Richmond is responsible for the management of all City-owned marine terminals. The Port Department performs its func@on through two divisions: Administra@on and Opera@ons. Port revenue is generated through cargo import/export and property lease agreements. The Port of Richmond is commided to preserving its historic past, integra@ng with the community, offering public access, and reducing environmental impacts.11 Financial Trends at Port Don’t Align With Its Mission Financial trends from Fiscal Year 2012–13 to 2021–22 show a misalignment with the Port’s mission. Expenses have diminished annually by an average of 2.0%, while revenue has grown by a modest 1.8% annually. 12 Although on the surface, reduced expenses may seem beneficial, they have not kept pace with the Bay Area’s Consumer Price Index infla@on rate of 3.1% annually. Consequently, revenue growth has lagged approximately one-third behind the regional infla@on rate. This shorwall is cri@cal given the Port’s revenue-genera@ng mission. Moreover, the declining expenses may indicate insufficient investment in opera@onal maintenance, poten@ally undermining the Port's capability to offer community benefits and maintain infrastructure integrity (see Figure 4.1 for financial trends). 11 City of Richmond FY 2019–2020 Adopted Opera%ng Budget. Port of Richmond Mission. hPps://www.ci.richmond.ca.us/DocumentCenter/View/51243/Adopted-FY2019-2020-Opera%ng-Budget. Accessed on February 7, 2024. 12 The calcula%on of opera%ng expenses excludes interest payments from the Port’s debt. Since, as of January 2024, the debt has nearly matured, these amounts have declined in the most recent years. Income earned from interest is similarly excluded from opera%ng revenue per accoun%ng standards. 854

26 Figure 4.1: Slow Revenue Growth and Declining Opera?ng Expenses Source: Analysis of the City’s Annual Comprehensive Financial Reports. Note 1: The calcula%on of opera%ng expenses excludes interest payments from the Port’s debt. Since, as of January 2024, the debt has nearly matured, these amounts have declined in the most recent years. Income earned from interest is similarly excluded from opera%ng revenue per accoun%ng standards. Finance Department Performs Day-To-Day Accoun3ng for Port but Does Not Monitor The Finance Department is currently performing the Port’s daily financial opera@ons and general accoun@ng. However, the department has reported that due to staffing limita@ons, comprehensive financial monitoring is beyond its current scope. This is at odds with the recommenda@ons of the Government Finance Officers Associa@on (GFOA), which stresses the necessity for regular financial monitoring and organiza@onal accountability structures.13 Presently, no evidence suggests that such monitoring ac@vi@es of the Port are being conducted by the Finance Department or other City departments. 13 Government Finance Officers Associa%on, “Best Prac%ces: Budget Monitoring”, hPps://www.gfoa.org/materials/budget-monitoring. Accessed March 5, 2024. and Government Finance Officers Associa%on, “Capital Project Monitoring and Repor%ng”. hPps://www.gfoa.org/materials/capital-project-monitoring-and-repor%ng. Accessed March 5, 2024. $-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
2012-132013-142014-152015-162016-172017-182018-192019-202020-212021-22 Operating RevenueInterest IncomeOperating ExpensesInterest Expenses on Debt Operating Revenue grewannually by an average of 1.8% per year.(1) Operating expenses declined annually by an average of 2.0% per year. (1) 855

27 Port Staff Previously Included a Finance Manager Previously, un@l FY 2014–15, the Port employed a Finance Manager who not only performed general accoun@ng tasks but also provided in-depth financial oversight and was integral to the Port’s opera@ons. The elimina@on of this role has likely impeded the Port’s financial planning capabili@es and restricted the Finance Department's capacity to conduct thorough financial trend monitoring, since it assumed all the day-to-day financial du@es for the Port. Consequences of Neglected Financial Oversight The absence of diligent financial planning and monitoring is evident in the Port’s subpar revenue performance, which also indicates a lack of strategic management in seCng fees and lease rates. Addi@onally, infrequent grant awards in the past decade may also point to a deficiency in financial planning necessary for successful grant applica@ons and administra@on. Limited Support for Grant Applica$ons and Administra$on In the past decade before January 2024, the City’s financial records show that the last significant grant awarded to the Port occurred in 2013 for $4.3 million. Subsequently, there is a nearly ten-year gap un@l July 2022, when the Port was awarded a $1.0 million grant. Financial planning is oren an important component of grant applica@ons, and when awarded, most grants require financial repor@ng specific to the grant award and project. Document Management Concerns As men@oned in the report Introduc@on, this audit encountered challenges with record retrieval. Of the 41 backup financial documents requested from our random and judgmental samples, five could not be located. One document from FY 2021–22 the Finance Department had expected to find housed at City Hall but could not locate. The other four documents, from FY 2017–18 and FY 2018–19, were expected to be stored at an offsite facility, visited by the audit team on November 28, 2023. Two of the documents were not found arer a careful search through the boxes indicated in the Finance Department’s records. The other two remaining documents were meant to be stored in a single box, but that box could not be located at the storage facility. The Finance Department has not been able to locate these records, or the missing box, since the November 2023 auditor search. Since our audit was focused on the Port and any associated financial informa@on, we did not assess the full document reten@on process of the Finance Department on a Citywide basis. Thus, we do not know if this is a larger more systemic Citywide problem. We recommend that the Finance Department inves@gate its document reten@on prac@ces for both onsite and offsite storage, and ensure its prac@ces are effec@ve. 856

28 Recommenda3ons By implemen@ng these recommenda@ons, the Port can strengthen its financial management, and beder fulfill its mission for the benefit of the community and the environment. We recommend that the Richmond City Council: 4.1 Appropriate funds to hire a Finance Manager, a posi@on that was previously held at the Port un@l Fiscal Year 2014–15. If Recommenda,on 4.1 is adopted: 4.2 Direct the Port to consider all increased costs associated with the Finance Manager posi@on and incorporate them when seCng future fees, tariffs, and lease rates. We recommend that the City of Richmond Finance Department: 4.3 Inves@gate and review the consistency of its document reten@on prac@ces for both onsite and offsite storage. If Recommenda,on 4.1 is adopted: 4.4 Use the addi@onal staff capacity gained by the Port adding a Finance Manager to perform comprehensive and rou@ne budget and financial monitoring of the Port that is in line with the Government Finance Officer’s Associa@on’s best prac@ces. 857

29 Finding 5: Lease Solicita=on, Selec=on, and Ve@ng Process No Policies or Procedures Regarding Leasing Port Proper3es There is a significant deficiency at the Port regarding its lack of documented procedures (see Finding 2). The following is a subset of that topic, but with specific implica@ons for the lack of a defined process for solici@ng, selec@ng, and veCng tenants who will lease proper@es from the Port. There are also no comprehensive Citywide policies that directly address these ac@vi@es, though some Citywide policies could apply. For example, the City’s policy AP 109 Non-Collusion with Bidder might apply to aspects of the solicita@on process for Port tenants. Policy AP 522 Purchasing Policy might also apply, but it focuses on the acquisi@on of goods and services, not the acquisi@on of tenants to lease Port or City property. Even with the lack of specific policies and procedures, the City and the Port are subject to state laws, such as the state’s prohibi@on against the gir of public funds, and other ethics requirements regarding use of public property. Port Lacks Documenta3on About How It Solicited, Selected, and VeFed Tenants According to Port records, the Port entered into ten new lease agreements between 2013 and 2023, as depicted in Figure 5.1. Our audit efforts to unearth documenta@on pertaining to how these tenants were solicited, scored, and veded turned up only a few digital or paper records. This lack of documenta@on is concerning and suggests an absence of due diligence and/or transparency in the leasing process. 858

30 Figure 5.1: Lease Agreements Signed Between 2013 and 2023 Have Almost No Suppor?ng Documents Tenant Name Property Lease Start Date Solicita5on Process Selec5on Process Ve7ng Process Addi5onal Notes Red Oak Victory Por1on of Basin #6A and appurtenant dock space. 5/1/2013 Ship had been berthed at Port prior to agreement. Selec1on directed by City Council. Directed by City Council. No records prior to lease start date. Business license issued (9/3/2015) aYer start of lease Riggers LoD Wine Company Approximately 21,000 square feet of the Rigger's LoY Building and approximately 15,000 square feet of dockside space adjacent to the Rigger's LoY Building located at 1325 Canal Boulevard, Richmond. 12/16/2014 No records of solicita1on process. No records of selec1on process. Agreement approved by City Council on Dec 16, 2014. No records prior to lease start date. Business license issued (3/4/2016) aYer start of lease.

RJJ Resource Management Corp Terminal 3, at 1411 Harbour Way South, Richmond, CA 94804. 7/1/2015 No records of solicita1on process. No records of selec1on process. Agreement approved by City Council on Jun 2, 2015. No records prior to lease start date except issuance of business license.

Dutra Group Signed Lease Agreement Port of Richmond, Pt. Potrero Marina Terminal. 6/1/2017 No records of solicita1on process. No records of original selec1on process. City Council Approved amendment in 2021. Port reviewed required insurance prior to lease term and issue business license. Tenant also a vendor to the City.

NRC Environmental Service, Inc Southside por1on of Basin 3 and appurtenant dock. 10/1/2017 No records of solicita1on process. No records of original selec1on or approval process. Port reviewed required insurance prior to lease term and issue business license. Tenant also a vendor to the City.

Sause Bros, Inc (1) Terminal 3 Machine Shop and adjacent berth. 10/1/2017 No records of solicita1on process. No records of original selec1on process. No records. Business license issued (5/21/18) aYer start of lease. Nematode Holdings, LLC 2101 Western Drive, at Terminal 4. 7/1/2020 No records of solicita1on process. No records of original selec1on process. Port reviewed required insurance and business license prior to lease term.

Terminal Three Partners, LLC Terminal 3, at 1411 Harbour Way South. 12/15/2020 Records indicated RFP was adver1sed on City's bid plaeorm, but no records of bids received were retained.

No records of selec1on process. Agreement approved by City Council on Dec 15, 2020. Staff reported to Council states “T3 Partners submiged a 1mely response to a formal request for proposals (RFP)” but no discussion of other proposals or selec1on criteria.

No records. Business license issued (12/31/2020) aYer start of lease.

Point San Pablo Harbor, Inc Property located at Terminal 4. 6/1/2021 No records of solicita1on process. No records of selec1on process. Agreement approved by City Council on Jun 15, 2020. Port reviewed required insurance and business license prior to lease term. City Council approved aYer lease term began. Source: GPP AnalyHcs review of City and Port records provided by City staff. Note 1: Sause Bros, Inc. is now a subtenant with no direct lease agreement with the Port. 859

31 Solicita$on An expected standard prac@ce would be the existence of records demonstra@ng the adver@sement and solicita@on of bids for tenancy. We discovered a singular instance of an RFP in 2020 that resulted in a property with a signed leased agreement. Even for that one example, the Port did not retain the bids they received or details of the selec@on process. We did see evidence of some RFPs related to other Port proper@es adver@sed on the City’s bid solicita@on plaworm, but none of the proper@es adver@sed were proper@es that resulted in signed lease agreements at the @me of the audit. These included the General Warehouse, the Cafeteria Building (Building 23), and Basin 1 at the Point Potrero Marine Terminal. We also found some records of unsolicited lease requests from companies and individuals interested in leasing space from the Port. However, the Port lacks any procedures about how to address these requests. The documents related to these requests were varied and lacked sufficient detail to understand the Port’s decision-making process. Selec$on The absence of documenta@on from public solicita@ons leads to an ambiguity in how tenants are evaluated and selected among other bids and proposals. This increases risk to the City of allega@ons of fraud, collusion, or abuse. The lack of transparent selec@on criteria also hampers the ability to determine if tenant selec@on is op@mized for the Port and City’s benefit. We could not find documenta@on at the Port regarding how the lease rates were calculated or how they compare to similar commercial real estate in the City or region. Without such documenta@on it is unclear how lease terms were established and if they are appropriate. There was one excep@on, where we found documenta@on of one property that was compared to the commercial real estate values, but this occurred several years arer the lease term began. VeMng Post-selec@on veCng prac@ces are oren absent, as indicated by the frequent lack of essen@al documenta@on, such as IRS form W-9, City business licenses, and proof of insurance, which should be confirmed in accordance with the City’s Purchasing Policy and terms of the lease agreements. The Port did have records of some of these documents collected for some, and others only arer the lease agreements were signed. There are other veCng ac@vi@es the Port could perform that would reduce risks to the City. Some examples include collec@ng and reviewing any required permits, proof of any state opera@ng licenses or permits, credit checks of the poten@al tenants, or reference checks with the tenants’ prior landlords. Performing these checks could help the Port ensure compliance with legal requirements and poten@ally help prevent delinquent tenant payments. 860

32 Other Problems In one instance we found a lease agreement that was approved by the City Council on a date arer the lease’s term start date. In the Port’s records we found an internal document sta@ng that “Legal advised Port director of execu@ve authority for a one-year lease”. It seems likely that since the lease was only projected to generate $8,400 per year, that it was interpreted to fall under the $10,000 threshold requiring City Council’s approval according to the City’s Procurement Policy. Another problem is that two of the Port’s tenants were awarded lease agreements while they were also vendors to the City. This circumstance may be appropriate, but there is no documenta@on about the process to award the lease agreements, and the Port is not able to demonstrate that it ensured that there was no collusion or conflicts of interest in these rela@onships or in the process of gran@ng either lease. Surplus Property Authority A 2011 audit of the Port iden@fied that some lease agreements of Port property are with the Surplus Property Authority of the City of Richmond. At the @me, the audit recommended that the City “verify the status and purpose of the Surplus Authority” and either disclose more informa@on about it or dissolve it. No Port or City officials were able to determine the purpose and nature of the Surplus Property Authority during our audit. The unclear role and purpose of the Surplus Property Authority could pose poten@al risks by adding to the inconsistency of lease agreements at the Port. As of 2023, the records provided to us by the Port indicate that 16 lease agreements were through the Surplus Property Authority, the most recent one signed in June of 2023. The City should determine the nature of the Surplus Property Authority and, as recommended in 2011, either disclose more informa@on about it or dissolve it. Recommenda3ons The recommenda@ons below will help the City and Port reduce the risk of viola@ng City policies and state laws, and help it demonstrate that lease agreements are awarded in the best interest of the Port, the City, and the community. We recommend that the Port of Richmond: 5.1 Write and implement Port-specific procedures regarding how it solicits, selects, and vets tenants for Port proper@es. The procedures should include appropriate reten@on of suppor@ng documents such as all proposals received, the selec@on criteria and scoring, and all documents used to vet the accuracy of the tenant’s informa@on. We recommend that the Richmond City Council: 5.2 Determine the nature of the Surplus Property Authority and, as recommended in the 2011 audit of the Port, either disclose more informa@on about it or dissolve it if no informa@on exists. 861

33 Finding 6: Lease Volume Guarantee Verifica=on and Documenta=on The Port's 2004 lease agreement with Auto Warehousing Co. (AWC) and its subsequent amendments, includes a minimum annual guarantee of vehicle units AWC would process. The Port lacks verifica@on and suppor@ng documenta@on for the number of vehicles AWC has processed. This guarantee was cri@cal to ensuring that the revenue generated by the agreement offsets bond payments that were due between fiscal years 2008–09 to 2023–24. AWC Lease and Bond Background Minimum Annual Guarantee and Revenue Share In 2004, the Port leased property to AWC under a 15-year lease agreement. AWC receives, stores, and ships automobiles entering the United States. The lease s@pulated the processing of 85,000 vehicles annually from American Honda Motor Company, Inc., a volume intended to secure steady wharfage and related fee revenues for the Port.14 An addi@onal revenue-sharing agreement was in place for vehicles that AWC processed from other companies, though these did not directly contribute to the minimum guarantee. 2009 Amendment and Bond Issuance The lease amendment in 2009, which accompanied a bond issuance, increased the minimum annual guarantee to 145,000 vehicles. This change was presumably intended to secure revenue surpassing the bond's annual debt service, ensuring the lease covered the cost of the bonds. According to the debt’s issuing documents, the bond proceeds were used to pay for warehousing facili@es, and improvements to rail infrastructure, and to “facili@es owned by BNSF” who operates the rail connec@ng the Port. 2019 Bond Refinancing and 2020 Lease Amendment In 2019, the City refinanced the remainder of the 2009 Bonds. The refinanced bonds paid a lower interest rate and therefore a lower annual debt service. In 2020, the Port and AWC amended the lease to lower the minimum annual guarantee to 85,000 arer the refinanced bonds matured in fiscal year 2023–23, and when AWC would have an op@on to extend the lease for another five years. Arer the bonds mature in fiscal year 2023–24, and if AWC meets the minimum annual guarantee of 85,000, we es@mate that based on current rates AWC would generate $3.4 million annually at minimum for the Port each year. Minimum Annual Guarantee Paid by AWC Despite AWC not mee@ng the minimum guaranteed vehicle volume, it fulfilled its financial obliga@ons to the City by paying the shorwall. City financial records indicate that revenue from AWC generally exceeded the annual debt service, contribu@ng to addi@onal revenue streams for the Port. See Figure 6.1 for a summary of these events and calcula@ons. 14 An amendment in 2011 added Subaru as one of the companies in the minimum annual guarantee calcula%on and included provisions for AWC to fund some tenant improvements. 862
34 Figure 6.1: Lease and Bond Timeline Summary
Fiscal Year
Minimum Annual
Guarantee
(number of vehicle
units)
Honda and Subaru
Vehicle Units
Processed
(according to Port
records reported
by AWC) (1)
Total Amount Paid By
AWC to City and Bond
Trustee (2)
Total Annual Debt
Service Payments Due
2003–04 85,000 No records available No records available none 2004–05 85,000 No records available No records available none 2005–06 85,000 No records available $2,827,750.00 none 2006–07 85,000 No records available $2,564,484.00 none 2007–08 85,000 No records available $2,301,471.00 none Lease Amended in 2009
2008–09 145,000 No records available $1,591,579.00 none 2009–10 145,000 No records available $1,082,162.00 $3,090,870.17 2010–11 145,000 71,849 $5,104,233.00 $3,282,340.00
2011–12 145,000 63,267 $5,110,927.13 $3,282,340.00
2012–13 145,000 38,106 $6,009,992.86 $5,687,340.00
2013–14 145,000 30,562 $6,878,108.75 $5,580,825.00
2014–15 145,000 30,003 $6,227,285.97 $5,581,575.00
2015–16 145,000 50,028 $5,929,429.55 $5,582,487.50
2016–17 145,000 50,245 $6,372,468.85 $5,579,937.50
2017–18 145,000 47,674 $6,445,029.07 $5,577,650.00
2018–19 145,000 45,196 $7,087,204.90 $5,578,937.50
Lease amended in 2019 (lowers annual guarantee aSer 2024).

Bonds refinanced in 2019 (lowered debt service).
2019–20 145,000 14,240 $7,113,557.33 $4,819,405.56 2020–21 145,000 8,562 $7,032,098.28 $4,683,300.00 2021–22 145,000 4,942 $6,914,214.42 $4,680,500.00 2022–23 145,000 12,444 $7,324,132.73 $4,686,500.00 2023–24 145,000 In-progress In-progress $4,263,000.00
Bonds mature in 2024. Lease with AWC has opHons to renew for two five-year terms remaining.

If extended, the 2019 revision to the lease agreement lowers the minimum guarantee to 85,000 aSer 2024.

Source: GPP AnalyHcs analysis of Port records, financial records, and bond issuance records.

Notes: (1) Other vehicles imported by AWC, but not counted in the minimum annual guarantee are not tracked by the Port or reported by AWC. However, the Port reports that AWC processed a total of 91,125 vehicles (including Honda and Subarus) in fiscal year 2023 but they were unable to provide documenta%on to support this figure.
(2) This includes payments when minimum is deficient and is net of revenue share paid back to AWC. 863

35 No Verifica3on or Documenta3on The audit found no evidence that the Port adempted independent verifica@ons of vehicle volume figures reported by AWC. The best documenta@on the Port had available was a file that AWC provided to the Port with vehicle volumes, and minimum annual guarantee calcula@ons. The Port's reliance on documenta@on provided by AWC, without suppor@ng evidence such as vessel manifests, raises concerns over the accuracy and verifiability of these cri@cal revenue-related figures. Verifica$on Is Industry Best Prac$ce An industry best prac@ce for ports is the independent verifica@on of reported cargo volumes to mi@gate the risk of inaccurate repor@ng and poten@al revenue discrepancies. This prac@ce is also true for virtually any type of organiza@on based on an accoun@ng prac@ce known as the three-way match, where items received are verified before they are paid. The Port could have significantly strengthened the verifica@on process by obtaining and reviewing corrobora@ve evidence such as vessel manifests or bills of lading, which would detail the number of vehicles transported and are required for customs clearance. These documents serve as a standard method of verifica@on recognized globally, aligning with guidelines from the Interna@onal Mari@me Organiza@on (IMO) and customs authori@es. This method of verifica@on would provide a more robust valida@on of the figures reported by AWC. While the poten@al for document falsifica@on exists, the absence of any review process essen@ally places undue reliance on AWC's self-reported data. Crea@ng and implemen@ng a procedure of rou@ne document inspec@on would bring the Port's opera@ons in line with industry standards, provide a stronger assurance of revenue accuracy, and reduce the risk of fraud or errors from tenants reported figures.15 Low Staffing at Port Contributed to Lack of Verifica$on Part of the reason this may not have been occurring could be due to the reduced of posi@ons within the Port, as discussed in Findings 3 and Finding 4 of this audit report. Furthermore, we don’t know for certain if verifica@on prac@ces had occurred previously to the tenure of current Port staff as the records may have been lost or misplaced. As implied in Finding 2, there are no known Port procedures that require verifica@on or similar ac@vi@es. 15 There are cargo verifica%on services and technologies available, but we recommend that the Port first build a prac%ce of confirming vessel cargo volume using common and widely available documents. 864

36 Recommenda3ons We recommend that the Port of Richmond: 6.1 Write and implement a procedure to verify all reported cargo volume that affects revenue from lease agreements, wharfage fees, tariffs, or other fees that may be calculated by the volume of cargo. We recommend that the Richmond City Council: 6.2 Appropriate funds and approve the posi@ons recommended in Finding 3 and Finding 4 to help ensure that Port staff have the capacity to carry out verifica@on ac@vi@es. 865

37 Finding 7: Environmental Compliance and Lease Monitoring Environmental Regulator The San Francisco Bay Conserva@on and Development Commission (BCDC) is a California State planning and regulatory agency with regional authority over the San Francisco Bay, the Bay’s shoreline band, and the Suisun Marsh. Empowered through the McAteer-Petris Act and the San Francisco Bay Plan, BCDC is responsible for enforcing environmental standards and protec@ng the Bay's ecological integrity.16; 17 Monitoring Port Proper3es As of January 2024, ac@ve leases for Port of Richmond proper@es include an ar@cle on environmental maders covering tenants’ responsibili@es regarding hazardous materials, as well as safety precau@ons and stormwater pollu@on control. However, as the City of Richmond holds the land @tles to Port proper@es, BCDC considers the City as the legal en@ty poten@ally responsible for viola@ons at those proper@es. In this context, the Port ought to be able to demonstrate a good faith effort to monitor Port proper@es for tenant compliance with the environmental requirements of their lease. Lack of Systema$c Monitoring of Port Proper$es However, during the auditors’ review they did not find evidence that the Port systema@cally monitors tenants’ compliance with these requirements at Port proper@es. Contribu@ng factors to the lack of monitoring and documenta@on may be the lack of wriden policies and procedures for the key func@ons and responsibili@es of the Port, as well as insufficient Port staffing levels (see Findings 3 and 4). The lack of monitoring for compliance poses a poten@al environmental, legal, and financial risk to the City as the en@ty responsible for Port proper@es and compliance with environmental laws and regula@ons. Recommenda3ons We recommend that the Port of Richmond: 7.1 Include specific direc@on within their policies and procedures manual regarding inspec@ons/ monitoring of Port proper@es for tenant compliance with environmental clauses included in their leases as well as the San Francisco Bay Conserva@on and Development Commission policies (see Finding 2). 7.2 Document staff inspec@ons/monitoring of Port proper@es for environmental compliance and other tenant ac@vi@es which may require a permit from the San Francisco Bay Conserva@on and Development Commission. 16 McAteer-Petris Act. hPps://www.bcdc.ca.gov/plans/mcateer_petris.html. Accessed on January 19, 2024. 17 San Francisco Bay Plan. hPps://toolkit.climate.gov/reports/san-francisco-bay-plan. Accessed on January 19, 2024. 866

38 Finding 8: Security at Port Facili=es Unique Mixed-Access Space The Port of Richmond is unique as a mixed-access space that is largely open to the public and includes industrial ac@vity, recrea@onal use, cultural resources, and office buildings. The Bay View Trail, used by pedestrians and cyclists for transit and recrea@on, wraps along the bay through the Port area. Visitors also access the Port to explore the Red Oak Victory World War II ship and museum and the Rosie the Riveter Na@onal Historical Park, which each provide a venue for educa@onal and historical exhibits that contribute to the area's cultural resources. One of the Port’s tenants, Riggers Lor Wine Company, offers tas@ngs and special events along the bay next to the Red Oak Victory and the Port Administra@ve Building. Addi@onally, the road leading to the Port includes areas with less urban development and traffic, making it popular for joy riding and spinning donuts. This unique mixture of access and use makes security at the Port both a challenge and an important considera@on. Unleased Buildings Targets for Vandalism As of January 2024, the Port of Richmond has three unleased proper@es: Basin 1, the General Warehouse, and the Cafeteria Building. Each on these proper@es has been vacant for over six months. As per the Port’s ac@ve lease agreements, Port tenants are responsible for providing security for their leased spaces. Security of proper@es which are unleased and siCng vacant is the responsibility of the City of Richmond’s Port. In the case of the unleased General Warehouse, for example, the vacant building has been vandalized and damaged (see Figure 8.1 below). The situa@on is not too surprising because, according to the Richmond Police Department, abandoned/vacant buildings do tend to become targets for trespassing and vandalism. Figure 8.1: East Facade of the General Warehouse Building, July 24, 2023 Source: Image taken by audit team.
867

39 Increased Risk and Cost to City In the case of the General Warehouse, and other future unleased buildings, damage to the building may either 1) need to be repaired by the Port, 2) weaken lease nego@a@ons because of the upfront costs to a poten@al new tenant, or 3) delay the process of moving a new tenant into the building, which would increase the probability of addi@onal vandalism and damage. Each of these scenarios will increase costs to the City of Richmond. Calls for service to the Richmond Police Department regarding trespassing, vandalism, ther, etc. are also an addi@onal cost to the City. Furthermore, any accidents that might occur on vacant Port proper@es where the condi@ons of those proper@es have become dangerous, and the accidents result in injury, may be covered by Government Code, Sec@on 835.18 In such case, the injuries could result in a suit against the City, which could also be expensive. Within this context, and the mixed access and use of Port property, condi@ons such as the stairs leading down to Basin 1 may pose addi@onal risk to the City (see Figure 8.2 below). Figure 8.2: East Side of Basin 1, July 24, 2023 Source: Image taken by audit team. Previous Security Services Used The Port’s financial records indicate that it contracted with a security provider between Fiscal Years 2016–17 and 2021–22 for security at the Port’s Terminal 1. Current staff at the Port are not aware of the effec@veness of the security services that were provided at that @me. 18 Gov Code Sec%on 835. hPps://leginfo.legislature.ca.gov/faces/codes_displaySec%on.xhtml?lawCode=GOV&sec%onNum=835. Accessed on January 16, 2024. 868

40 Procedure Needed to Address Security and Safety of Vacant Proper3es As noted in Finding 2 of this audit report, the Port lacks procedures for its cri@cal func@ons, and that includes property management and security of vacant proper@es. To address the risks related to vacant Port proper@es, such as liability to the City and damage to those proper@es, we recommend that the Port establish wriden procedures to consider security services, surveillance systems, alarm systems, and secure fencing when proper@es become vacant. This will help reduce the risk of damage to vacant proper@es that result in future repair costs and reduce the risk of injury that could result in lawsuits against the City and resul@ng future costs. Recommenda3ons We recommend that the Port of Richmond: 8.1 Priori@ze the process of solici@ng for, and veCng, poten@al tenants for vacant Port proper@es, in line with the Port’s strategic plan (see Finding 1). 8.2 Establish a wriden procedure to consider security services, surveillance systems, alarm systems, and secure fencing when proper@es become vacant. This is in line with the recommenda@ons made in Finding 2 of the audit report. 869

41 Finding 9: Debt to the General Fund The City Council passed Resolu@on No. 99-13 on October 15, 2013, which states that since 1977 the City has provided a loan and other services to the Port, which at that @me amounted to a total principal of $16,942,096 owed. While the resolu@on authorizes a promissory note facilita@ng par@al loan repayment through in-kind services—specifically, the berthing of the Red Oak Victory vessel—neither the Port nor Finance Department staff archived the promissory note or associated documents, resul@ng in a lack of records substan@a@ng the purpose of the loans. This unresolved debt is referenced further by a 2011 Port audit, which men@ons a 2006 promissory note, with a reported agreement by the Port to repay the General Fund $17,139,188. As of FY 2023–24, financial records show the Port s@ll owes the City General Fund $12,485,369.72. As was stated in the 2011 audit, “there is inadequate documenta@on of the underlying services provided by the City that led to the need for the Port’s repayment to the [City’s General Fund].” Documenta3on Deficiencies Our audit's inves@ga@on into this debt yielded no conclusive documenta@on from the Port or Finance Department related to the loan's origin or purpose. Some documenta@on presented to the City Council in recent decades state things like “the original loan dates back to the 1970s and was intended to finance container port infrastructure at Terminal 3.” However, no documents or calcula@ons could be found by City staff or the audit team showing what was spent on behalf of the Port beyond these asser@ons. This absence of documenta@on is consistent with findings from the 2011 audit, which also failed to locate records clarifying the loans' original intents. Implica3on for Port Fees and Revenues Under California State code, the fees charged by the Port must reflect the reasonable cost of provided services. Without proof of the loans and promissory notes' legi@macy, the Port faces challenges in jus@fying the reasonableness of its fees, which are based upon its opera@ng costs, including the repayment of debt. The lack of documenta@on could poten@ally conflict with state law requirements. Lack of Documenta3on Could Suggest Other Problems Our audit, limited in scope to the Port, raises concerns that the problem of maintaining essen@al financial documenta@on might extend beyond the Port to other City departments. The risk of such a systemic issue could be determined by broader review performed by the Finance Department to ensure that liabili@es across the City are substan@ated and compliant with legal standards. 870

42 Recommenda3ons Implemen@ng the following recommenda@ons would help ensure the Port remains in compliance with state laws and the fees it charges are based on the true cost of the Port’s opera@ons. We recommend that the City of Richmond Finance Department: 9.1 Provide documenta@on to the Port of Richmond and Richmond City Council related to the original loans to the Port and their purpose by June 30, 2024. 9.2 Review all loans between the General Fund and other City departments and ensure all suppor@ng documenta@on is maintained and sufficient to demonstrate that the liability is appropriate in compliance with state law. We recommend that the City Council: 9.3 If documenta@on of the original loans to the Port and their purpose have not been received by June 30, 2024, restate and eliminate the liability for these loans to help maintain compliance with state law. 871

43 Finding 10: Personal Emails Use of Personal Email Addresses The auditors have noted that Port and other City employees are periodically conduc@ng City business using their personal email accounts. This has been documented through samples of printed documents as well as emails received by the auditors from City employees. City staff report that this problem may have worsened during the rapid transi@on to remote work in 2020. However, we found documenta@on showing that Port staff had at least periodically used personal email addresses for City business during the prior decade as well. Contradic3ons in City's Administra3ve Manual The City of Richmond’s Administra@ve Manual is contradictory in its policy regarding personal internet and email usage. Its Use of Technology Policy AP 655, Sec@on B allows for minimal personal email and internet use in its Appropriate Use sec@on “to the extent that the use does not fall within one of the categories listed under prohibited uses and does not hinder a User’s ability to effec@vely and efficiently accomplish his or her job func@ons”. However, the previous two sec@ons of the policy (the Email sec@on and the Web/Internet sec@on) both begin by sta@ng that these technologies are to be used for City related ac@vi@es only: Email: “City employees shall use the electronic mail system only for City related ac@vi@es”. Web/Internet: “The Internet shall be used for City-related business only”. The contradic@ons in these policies are counterproduc@ve. It appears that the City has not created a strict culture of separa@on between City and personal business on City-owned devices, and minimally should clarify its policies for employees and provide specific informa@on and guidance on how to comply with these policies. City employees may not even be aware that they are in the wrong account or logged into a browser through a personal address. 872

44 Risk of Viola3ng the California Public Records Act If City employees are, even uninten@onally, conduc@ng City business through their personal email accounts, or through browsers in which they are logged in via a personal account, the City may be unable to comply with public requests filed under the California Public Records Act (CPRA).19 Under CPRA, any wri@ng rela@ng to the conduc@on of the public’s business which is prepared, owned, used, or retained by any state or local agency is considered a public record.20 As the City does not have access to current employees’ personal accounts, let alone past employees, they would not be able to provide these wriden documents produced by public employees. Recommenda3ons We recommend that the City Manager’s Office of Richmond: 10.1 Amend its Administra@ve Manual to clarify its policy regarding personal internet and email usage by City employees. 10.2 Disseminate the amended sec@ons of the Administra@ve Manual to all City employees and provide specific informa@on and technological guidance on how to comply with these policies and the California Public Records Act. 19 California Public Records Act, Government Code §7920.000. hPps://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?division=10.&chapter=2.&part=1.&lawCode=GOV&%tle=1. Accessed on January 18, 2024. 20 California Public Records Act, Government Code §7920.530: “‘public records’ includes any wri%ng containing informa%on rela%ng to the conduct of the public’s business prepared, owned, used, or retained by any state or local agency regardless of physical form or characteris%cs”. hPps://leginfo.legislature.ca.gov/faces/codes_displaySec%on.xhtml?lawCode=GOV&sec%onNum=7920.530. Accessed on January 18, 2024. 873

45 Recommendations List Directed to the City Manager's Office of Richmond: Number Recommenda?on Con?ngencies 10.1 Amend its Administra@ve Manual to clarify its policy regarding personal internet and email usage by City employees.

10.2 Disseminate the amended sec@ons of the Administra@ve Manual to all City employees and provide specific informa@on and technological guidance on how to comply with these policies and the California Public Records Act.

Directed to the City of Richmond Finance Department: Number Recommenda?on Con?ngencies 4.3 Inves@gate and review the consistency of its document reten@on prac@ces for both onsite and offsite storage.

4.4 Use the addi@onal staff capacity gained by the Port adding a Finance Manager to perform comprehensive and rou@ne budget and financial monitoring of the Port that is in line with the Government Finance Officer’s Associa@on’s best prac@ces. *con@ngent on recommenda@on 4.1 9.1 Provide documenta@on to the Port of Richmond and Richmond City Council related to the original loans to the Port and their purpose by June 30, 2024.

9.2 Review all loans between the General Fund and other City departments and ensure all suppor@ng documenta@on is maintained and sufficient to demonstrate that the liability is appropriate in compliance with state law.

Directed to the City of Richmond Public Works Department: Number Recommenda?on Con?ngencies

3.3 Develop an agreement with the Port, or an outside vendor managed by the Port, with a known billing rate and set service-level expecta@ons for work performed, to account for the remaining work, such as road repairs, that cannot be performed by the Port’s Maintenance Manager (see Recommenda@on 3.1).

3.4 Develop an interim tracking and billing method, such as tracking work performed using a spreadsheet, to recoup @me and materials spent on behalf of the Port. 874

46 Directed to the Port of Richmond: Number Recommenda?on Con?ngencies 1.3 Develop and present a proposed strategic plan to the City Council. This will provide the City Council with a proposed plan to review that is developed using the knowledge of its Port staff.

1.4 Adopt a procedure to review the strategic plan with the City Council at least every five years. During the review staff should include any proposed revisions to the strategic plan to be considered and possibly adopted by the City Council at that @me.

2.1 Develop and maintain wriden procedures for its cri@cal opera@ng func@ons. 2.2 Develop and document a backup plan, or succession strategy, for cri@cal roles and responsibili@es at the Port.

3.5 Perform a comprehensive facility condi@on assessment of all major Port assets arer a strategic plan has been adopted (see Finding 1).

5.1 Write and implement Port-specific procedures regarding how it solicits, selects, and vets tenants for Port proper@es. The procedures should include appropriate reten@on of suppor@ng documents such as all proposals received, the selec@on criteria and scoring, and all documents used to vet the accuracy of the tenant’s informa@on.

6.1 Write and implement a procedure to verify all reported cargo volume that affects revenue from lease agreements, wharfage fees, tariffs, or other fees that may be calculated by the volume of cargo.

7.1 Include specific direc@on within their policies and procedures manual regarding inspec@ons/ monitoring of Port proper@es for tenant compliance with environmental clauses included in their leases as well as the San Francisco Bay Conserva@on and Development Commission policies (see Finding 2).

7.2 Document staff inspec@ons/monitoring of Port proper@es for environmental compliance and other tenant ac@vi@es which may require a permit from the San Francisco Bay Conserva@on and Development Commission.

8.1 Priori@ze the process of solici@ng for, and veCng, poten@al tenants for vacant Port proper@es, in line with the Port’s strategic plan (see Finding 1).

8.2 Establish a wriden procedure to consider security services, surveillance systems, alarm systems, and secure fencing when proper@es become vacant. This is in line with the recommenda@ons made in Finding 2 of the audit report.

875

47 Directed to the Richmond City Council: Number Recommenda?on Con?ngencies 1.1 Provide direc@on to the Port on its long-term strategic goals for the Port. This will beder inform Port staff as they develop a proposed strategic plan.

1.2 Formally adopt a proposed Port strategic plan developed by Port staff. This will help give Port staff clear direc@on. 3.1 Appropriate funds to hire a Maintenance Manager within the Port.

3.2 Direct the Port to consider all increased costs associated with the Maintenance Manager posi@on and incorporate them when seCng future fees, tariffs, and lease rates. *con@ngent on recommenda@on 3.1 4.1 Appropriate funds to hire a Finance Manager, a posi@on that was previously held at the Port un@l Fiscal Year 2014–15.

4.2 Direct the Port to consider all increased costs associated with the Finance Manager posi@on and incorporate them when seCng future fees, tariffs, and lease rates. *con@ngent on recommenda@on 4.1

5.2 Determine the nature of the Surplus Property Authority and, as recommended in the 2011 audit of the Port, either disclose more informa@on about it or dissolve it if no informa@on exists.

6.2 Appropriate funds and approve the posi@ons recommended in Finding 3 and Finding 4 to help ensure that Port staff have the capacity to carry out verifica@on ac@vi@es.

9.3 If they have not received documenta@on of the original loans to the Port and their purpose by June 30, 2024, restate and eliminate the liability for these loans to help maintain compliance with state law.

876