Agenda Packet — Salinas City Council, June 20, 2023 (part 4 of 5)

Fee Schedule May 12, 2023

FEE SCHEDULE
FY2023-2024 FEE SCHEDULE & BASIS OF CHARGES

FOR THE CITY OF SALINAS
All Rates are Subject to Basis of Charges

PLAN REVIEW COST STRUCTURE NOTES
Plan Review Percentage: 70%
(Inclusive of all disciplines except Fire and Civil which are billed on an hourly basis)
Hourly Plan Review: $145 Non-Structural Review
$160 Structural Review
Fee includes:
 Initial review and two (2) rechecks. Hourly
charges apply after three (3) or more
rechecks.
 Shipping, courier, and electronic service.

Building
Chief Building Official ......................................................................................................................... $168/hour Structural Plan Review Engineer ........................................................................................................ $160/hour Non-Structural Plans Examiner .......................................................................................................... $145/hour Mechanical & Plumbing Plans Examiner............................................................................................ $140/hour Electrical Plans Examiner.................................................................................................................... $160/hour Certified Access Specialist (CASp) Inspector ...................................................................................... $150/hour Certified Access Specialist (CASp) Plans Examiner ............................................................................. $150/hour Senior Combination Building Inspector (Building Inspector III) ......................................................... $140/hour Commercial Building Inspector (Building Inspector II) ...................................................................... $115/hour Residential Building Inspector (Building Inspector I) .......................................................................... $100/hour Permit Manager.................................................................................................................................. $105/hour Senior Permit Technician.................................................................................................................... $85/hour Permit Technician............................................................................................................................... $75/hour Clerk/Administrator............................................................................................................................ $60/hour Civil Plan Review (Grading, Improvement Plans) ............................................................................... $160/hour Supervising Inspector of Record......................................................................................................... $169/hour Inspector of Record ............................................................................................................................ $149/hour DSA Class 1 / OSHPD A Inspector ....................................................................................................... $175/hour DSA Class 2 / OSHPD B Inspector ....................................................................................................... $145/hour DSA Class 3 / OSHPD C Inspector........................................................................................................ $103/hour GoFormz Software.................................................................................................................. $50/user monthly Code Enforcement
Code Enforcement Director.............................................................................................................. $175/hour Code Enforcement Manager ............................................................................................................ $145/hour Senior Code Enforcement Officer..................................................................................................... $115/hour

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Fee Schedule May 12, 2023
Code Enforcement Officer II............................................................................................................. $105/hour Code Enforcement Officer I .............................................................................................................. $100/hour Fire
Fire Protection Engineer (FPE) ............................................................................................................ $195/hour Fire Prevention Officer ...................................................................................................................... $148/hour Fire Plans Examiner ............................................................................................................................ $155/hour Fire Inspector II................................................................................................................................... $120/hour Fire Inspector I .................................................................................................................................... $110/hour Planning
Housing Policy Director .................................................................................................................... $205/hour Planning Director .............................................................................................................................. $180/hour Principal/Planning Manager............................................................................................................. $165/hour Senior Planner .................................................................................................................................. $155/hour Associate Planner............................................................................................................................. $135/hour Assistant Planner ............................................................................................................................. $110/hour Planning Technician.......................................................................................................................... $98/hour Project Management
Project Manager................................................................................................................................. $175/hour Principal-in-Charge ............................................................................................................................. $245/hour Engineering, Public Works Inspection, & Construction Management (Prevailing Wage) Civil Plan Review (Grading, Improvement Plans) ............................................................................... . $175/hour Traffic Engineer................................................................................................................................... . $230/hour Construction Manager…………………………………………………………………………………………….……………….……. $162/hour Certified Access Specialist (CASp) Inspector (Regular time) …………………………………………………….…….. $165/hour Certified Access Specialist (CASp) Inspector (Nighttime) ……………………………………………………….…….… $186/hour Certified Access Specialist (CASp) Inspector (Overtime)…………………………………………………………….…… $223/hour Certified Access Specialist (CASp) Plans Examiner…………………………………………………………….……..…….. $165/hour Public Works Inspector (Regular Time) ……………………………………………………………………………………..…… $153/hour Public Works Inspector (Nighttime)…………………………………………………………………………………………..…….$172/hour Public Works Inspector (Overtime) …………………………………………………………………….……………..………..…$207/hour Public Works Inspector Apprentice………………………………………………………………………………...……………… $99/hour

BASIS OF CHARGES
Rates are inclusive of “tools of the trade” such as forms, telephones, and consumables. • All invoicing will be submitted monthly.
• Staff Augmentation work (excluding plan review) is subject to 4-hour minimum charges unless stated otherwise. Services billed in 4-hour increments.

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Fee Schedule May 12, 2023
• Most plan reviews will be done in 10 business days or less and 5 business days or less for re-checks. This is not inclusive of holidays or the day of the pick-up of plans. • Expedited reviews will be billed at 1.5x the plan review fee listed in the fee schedule. Return time will be within seven (7) days of receipt of the plans from the City. • Plan review of deferred submittals & revisions will be billed at the hourly rates listed. • All plan review services will be subject to a $250.00 minimum fee if percentage-based fee or 2-hour minimum charge if hourly rates apply.
• Larger complex plan reviews can be negotiated to achieve the best possible pricing. • All plan review services will be subject to 2-hour minimum fee. • All plan review services are billed on a percentage basis and includes the initial review and 2 rechecks. - Plan reviews will be billed on an hourly basis only after the initial review and 2 rechecks unless otherwise agreed upon on a case-by-case basis.
- Fire and Civil Reviews are billed on an hourly basis and are not included in our plan review percentage.
• 4LEAF assumes that these rates reflect the FY2023-2024 contract period. There will be a 3% escalation for FY2024-2025, FY2025-2026
• Overtime and Premium time will be charged as follows:
- Regular time (work begun after 5AM or before 4PM) 1 x hourly rate - Nighttime (work begun after 4PM or before 5AM) 1.125 x hourly rate - Overtime (over 8-hour M-F or Saturdays) 1.5 x hourly rate - Overtime (over 8 hours Sat or 1st 8-hour Sun) 2 x hourly rate - Overtime (over 8 hours Sun or Holidays) 3 x hourly rate • Overtime will only be billed with prior authorization of the Director or other designated City personnel. • All work with less than 8 hours rest between shifts will be charged the appropriate overtime rate. • Mileage driven during the course of Inspections will be charged at cost plus 20%. • Payment due on receipt. All payments over 30 days will be assessed a 1.5% interest charge. • Client shall pay attorneys’ fees, or other costs incurred in collecting delinquent amounts. • Client agrees that 4LEAF’s liability will be limited to the value of services provided. • In accordance with California’s Meal Break and Rest Break Law requirements, Client will be billed one (1) additional hour per day at the regular rate for each missed meal or rest break due to Client-directed tasks or requirements. Client should allow 4LEAF’s non-exempt, hourly employees the opportunity to take their entitled rest and meal breaks during each work shift.

BASIS OF CHARGES – PREVAILING WAGE • Rates shown assume the projects will require compliance with California Prevailing Wage rate requirements and assumes the Client will be filing a PWC-100 Form to the California Department of Industrial Relations (DIR) for the projects.
• Rates for prevailing wage categories are subject to annual escalations in accordance with the bi-annual wage determinations from the California DIR.
• Per the new requirements being enforced under SB 854 and because it is assumed that a PWC-100 Form will be filed by the Client to the CA DIR for each project, 4LEAF is required to notify an authorized Apprenticeship Committee through submittal of a DAS-140 form. We are then required to make an

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Fee Schedule May 12, 2023
official request to an authorized Apprenticeship Committee for an apprentice by submitting a DAS-142 form. We are not assured the apprenticeship committee will be able to provide a suitable / qualified apprentice for the project. Per the apprenticeship requirements, the hours worked by the apprentice must be in a ratio of 1:5 for apprentice to journeyman hours. 4LEAF will not know the labor classification of the Public Works Apprentice until an Apprentice is dispatched to the site; therefore, the rates for the five Periods listed under the California DIR’s Wage determination for Building Construction Inspector were used to determine the range of hourly rates for Public Works Inspector Apprentice. • Pre-approved Overtime and Premium hours for labor categories subject to Prevailing Wage requirements will be charged per the following:
- Nighttime (work begun after 4PM or before 5AM) 1.125 x hourly rate - Overtime (over 8 hour M-F or Saturdays) 1.35 x hourly rate - Overtime (over 8 hours Sat or 1st 8 hour Sun) 1.85 x hourly rate - Overtime (over 8 hours Sun or Holidays) 2.35 x hourly rate • All invoicing will be submitted monthly.
• All work with less than 8 hours rest between shifts will be charged the appropriate overtime rate. • Project-related mileage for inspections will be billed at the allowable IRS Rate. • Payment due on receipt. All payments over 30 days will be assessed a 1.5% interest charge. • Client shall pay attorneys’ fees, or other costs incurred in collecting delinquent amounts. • Client agrees that 4LEAF’s liability will be limited to the value of services provided. • In accordance with California’s Meal Break and Rest Break Law requirements, Client will be billed one (1) additional hour per day at the regular rate for each missed meal or rest break due to Client-directed tasks or requirements. Client should allow 4LEAF’s non-exempt, hourly employees the opportunity to take their entitled rest and meal breaks during each work shift.

CSG Consultants, Inc. Contract Rates FY 23-24
City of Salinas
PlanReview
Complete Plan Review – 65% of .65 X Building Permit Fee Structural Only Plan Review – 50% of .65 X Building Permit Fee Complete Plan Review (Hourly & 4th Review Onwards) - $117 per hour Structural Only Plan Review (Hourly & 4th Review Onwards) - $128 per hour Plumbing, Mechanical, and Electrical Plan Review - $117 per hour Complete Plan Review (Onsite at Salinas) - $135 per hour, 4-hour minimum Building Official - $164 per hour
Inspection
Combination Inspector (with CSG vehicle in Salinas) - $117 per hour, 4-hour minimum FireServices
Fire Sprinkler, Alarm Systems, Site Access, etc. Plan Review and Inspection (with CSG vehicle in Salinas) - $135 per hour
Certified Access Specialist Consulting
CASp Plan Review or Consultation (offsite) - $128 per hour CASp Consultation or Inspection (Onsite at Salinas)- $164 per hour Scanning Services
IncludedinPlanReviewFees
Archiving/OtherPlans
$3.00 per sheet larger than 11” X 17”
$1.00 per sheet 11” X 17” and smaller
All hourly rates include overhead costs including, but not limited to, salaries, benefits, Workers Compensation Insurance, travel and office expenses. Overtime work will be billed at 1.5x the hourly rates indicated in the table above. Rates willremain effective through June 30, 2024. Thereafter, CSG will initiate a rate increase based on change in CPI for the applicable region. CSG will mail an invoice at the beginning of every month for services rendered during the previousmonth.

City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#23-393, Version: 1
Natividad Creek Park Restroom Rehabilitation Project (CIP 9346) Approve a Resolution accepting the bid from HA Construction for the Natividad Creek Park Restroom Rehabilitation Project and authorize the award of and execution of an Agreement between the City of Salinas and HA Construction in an amount not to exceed $181,200 and inclusive of the $151,000 bid amount and an approved 20% contingency of $30,200; and authorize the City Manager or designee to execute the Agreement.

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CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: JUNE 20, 2023
DEPARTMENT: COMMUNITY DEVELOPMENT
FROM: LISA BRINTON, DIRECTOR

THROUGH ROD POWELL, ASSISTANT DIRECTOR - ACTING
BY: LUIS OCHOA, SR. COMMUNITY DEVELOPMENT ANALYST

CRISTINA GONZALEZ, COMMUNITY DEVELOPMENT ANALYST
TITLE: NATIVIDAD CREEK PARK RESTROOM REHABILITATION
PROJECT (CIP 9346) BID ACCEPTANCE, PROJECT AWARD, AND

AGREEMENT WITH HA CONSTRUCTION
RECOMMENDED MOTION:

A motion to approve a Resolution to:

1. accept the bid from HA Construction for the Natividad Creek Park Restroom Rehabilitation Project as being the lowest and best bid; and

2. award the Natividad Creek Park Restroom Rehabilitation Project to HA Construction and authorize the execution of an Agreement Between the City of Salinas and HA Construction in an amount not to exceed $181,200 and inclusive of the $151,000 bid amount and an approved 20% contingency of $30,200; and

3. approve an increase of up to $181,200 to the Natividad Creek Park Restroom Rehabilitation Project - CIP 9346 (Project) appropriation(s); and

4. approve a transfer of up to $181,200 from the Community Development Fund to the CIP Fund (CIP 9346); and

5. authorize the City Manager or designee to execute the Agreement Between the City of Salinas and HA Construction and any necessary revisions, amendments and/or change orders applicable to the Natividad Creek Park Restroom Rehabilitation Project as needed.

EXECUTIVE SUMMARY:

The City of Salinas (City), through its U.S. Department of Housing and Urban Development (HUD) FY 2019-2020 Annual Action Plan (AAP), previously allocated a portion of its annual Community Development Block Grant (CDBG) entitlement funds to support the much-needed Natividad Creek Park Restroom Rehabilitation Project - CIP 9346 (Project). Following two rounds of solicitation of Page | 2
Project proposals, staff are recommending the selection of HA Construction as the awarded general contractor for the Project through the execution of an Agreement Between the City of Salinas and HA Construction (Agreement) in an amount not to exceed $181,200 and inclusive of total proposed construction costs as submitted in the bid proposal ($151,000) and an additional amount equal to 20% of those costs ($30,200) to support potential construction contingencies.

BACKGROUND:

Through the robust engagement involved in the development of the Alisal Vibrancy Plan, City residents identified the need to rehabilitate the restroom facility at Natividad Creek Park. In response to this identified necessity, the City’s Library and Community Services Department (LCS) conducted an in-depth assessment of the facility’s current condition and need for rehabilitation. Following the identification of an initial scope of work, the Community Development Department (CDD) and LCS collaborated to explore and secure an appropriate allocation of the City’s HUD CDBG entitlement allocation through its FY 2019-20 Annual Action Plan (AAP). Proposed rehabilitation work on the Project will include both interior and exterior improvements as well as necessary ADA upgrades to include the addition of two new ADA compliant parking spaces.

On December 17, 2023, following delays related to the prioritization of Covid-19 projects, the City published an initial Request for Proposals (RFP) for the Project with a submission deadline of January 17, 2023. From this, a total of three (3) proposals were received of which two (2) were disqualified for failure to provide all required bid materials and one (1) was rejected by Council action on April 4, 2023, due to a proposed bid amount 48% higher than the construction cost estimate provided by the Project Engineer.

On April 7, 2023, the City issued a second Project RFP with a submission deadline of May 9, 2023.

Consequently, no bids were received.

Following a thorough review of federal regulations and additional consultation with the City Attorney, staff was advised that adequate due diligence and adherence to established policies and procedures had been performed and that an option allowing for the direct solicitation of Project proposals could be pursued.

DISCUSSION:

On May 23, 2023, Housing and Community Development Division staff initiated contact with two previous RFP respondents, HA Construction and Stellar BG Inc., to inquire about their interest to resubmit an updated bid proposal. Each were given two weeks to provide an updated bid for the Project by June 6, 2023. From this process, a single bid proposal in the amount of $151,000 was received from HA Construction. With this in mind, staff are recommending that Council award the Project to HA Construction and authorize the execution of an Agreement in a total amount not to exceed $181,200 representing the proposal’s amount of $151,000 and an additional 20% of the proposed Project cost, $30,200, as a contingency to support and resolve unforeseen costs related to inflation, the delay of materials, and anticipated updates to the prevailing wages determination. In total, the proposed Agreement will include an amount not to exceed $181,200 and a targeted completion date of December 31, 2023.

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CEQA CONSIDERATION:

Categorical Exemptions. The City of Salinas determined that the project is exempt from the California Environmental Quality Act (CEQA) Guidelines Section 15301 Existing Facilities, Class I (a)(c)(d)(g) as the Project proposes rehabilitation of an existing public restroom facility. The Notice of Exemption was completed and filed with the County of Monterey on April 6, 2021.

STRATEGIC PLAN INITIATIVE:

The proposed Project supports the City of Salinas Strategic Plan 2022-2025 Goals and Strategies of Infrastructure and Environmental Sustainability, Public Safety, and Youth and Seniors through its intention to provide quality public facilities accessible to all residents.

DEPARTMENT COORDINATION:

This Project continues to involve significant inter-departmental coordination inclusive of the Community Development, Library and Community Services, Finance, and Public Works departments as well as the City Attorney. CDD staff maintain direct oversight of the Project’s construction and completion through an assigned Project Management consultant.

FISCAL AND SUSTAINABILITY IMPACT:

The proposed Agreement’s full scope of work will be funded by an available appropriation from the Community Development fund.

ATTACHMENTS:

Resolution
Agreement Between the City of Salinas and HA Construction - Draft 1 RESOLUTION NO. (N.C.S.)

A RESOLUTION OF THE SALINAS CITY COUNCIL FOR THE NATIVIDAD CREEK PARK RESTROON REHABILITATION PROJECT - CIP 9346 BID ACCEPTANCE,

PROJECT AWARD, AND EXECUTION OF AN AGREMENENT BETWEEN THE

CITY OF SALINAS AND HA CONSTRUCTION
WHEREAS, through its HUD FY 2019-20 Annual Action Plan, the Salinas City Council allocated CDBG Entitlement Funds towards the rehabilitation of the Natividad Creek Park Restroom Rehabilitation Project - CIP 9346 (Project); and WHEREAS, on December 17, 2023, the City published an initial Request for Proposals and received a total of three bids by the stipulated deadline of January 17, 2023; and WHEREAS, on April 4, 2023, following a thorough review of proposals, City Council were advised by CDD staff that two proposals were deemed incomplete and disqualified from consideration and moved to reject the one remaining proposal due to a proposed amount 148% higher than the Project Engineer’s estimate; and
WHEREAS, on April 7, 2023, the City issued a second Project RFP with a submission deadline of May 9, 2023 and received no bids;
WHEREAS, on May 23, 2023, following a review of CDBG regulations and consultation with the City Attorney, City staff initiated contact with two previous RFP respondents, HA Construction and Stellar BG Inc., to directly solicit updated Project bid proposals by June 6, 2023; and
WHEREAS, HA Construction was the only respondent to the City’s direct solicitation providing a proposal well below the Engineer’s estimate for the project in the amount of $151,000; and
WHEREAS, in consideration of potential unforeseen issues that may arise during construction of the Project, the City desires to ensure an adequate amount of funds are made available by including an additional 20% contingency amount in the Project’s budget to support the timely completion of the Project; and
WHEREAS, the City of Salinas has determined that the project is exempt from the California Environmental Quality Act (CEQA) Guidelines Section 15301 Existing Facilities, Class I (a)(c)(d)(g) as the Project proposes rehabilitation of an existing public restroom facility; and WHEREAS, on April 6, 2021 the CEQA Notice of Exemption for the Project was completed and filed with the County of Monterey; and
NOW, THEREFORE, BE IT RESOLVED that the Salinas City Council accepts the bid from HA Construction for the Natividad Creek Park Restroom Rehabilitation Project as being the lowest and best bid; and
2 BE IT FURTHER RESOLVED that Salinas City Council awards the Natividad Creek Park Restroom Rehabilitation Project – CIP 9346 to HA Construction and authorizes the execution of an Agreement Between the City of Salinas and HA Construction in an amount not to exceed $181,200, inclusive of the $151,000 bid amount and an approved 20% contingency of $30,200; and
BE IT FURTHER RESOLVED that Salinas City Council approves an increase of up to $181,200 to the Natividad Creek Park Restroom Rehabilitation Project - CIP 9346 (Project) appropriation(s); and
BE IT FURTHER RESOLVED that Salinas City Council approves a transfer of up to $181,200 from the Community Development Fund to the CIP Fund (CIP 9346); and BE IT FURTHER RESOLVED that Salinas City Council authorizes the City Manager or designee to execute the Agreement Between the City of Salinas and HA Construction and any necessary revisions, amendments and/or change orders applicable to the Natividad Creek Park Restroom Rehabilitation Project as needed.

PASSED AND APPROVED this 20th day of June 2023, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:
________________________
Kimbley Craig, Mayor
ATTEST:
_________________________
Patricia M. Barajas, City Clerk

AGREEMENT

BETWEEN THE CITY OF SALINAS AND HA CONSTRUCTION
(To be completed and submitted for project award)
THIS AGREEMENT, made and entered into this day of , 2023, by and between CITY OF SALINAS, a municipal corporation of the State of California, hereinafter called "City", and HA CONSTRUCTION hereinafter called "Contractor."

WITNESSETH
FIRST: Contractor hereby covenants and agrees to furnish and provide all labor, materials, tools, appliances, equipment, plant and transportation, and all other things required or necessary to be furnished, provide or done, and build, erect, construct and complete the work at the time and in the manner provided, and in strict accordance with, the Plans and Specifications therefore, for

NATIVIDAD CREEK PARK

RESTROOM REHABILITATION PROJECT
CIP NO.9346
adopted by the Council of the City of Salinas on June 20, 2023, and identified by the signature of Contractor and the signature of the Mayor of the City of Salinas.

SECOND: It is expressly understood and agreed that this Contract consists of the following documents, all of which are incorporated into this agreement and made a part hereof as fully and completely as if set forth herein verbatim, to wit:
a. Notice Inviting Sealed Proposals;
b. Signed and executed Bid and Proposal of Contractor, and if any signed Addendum, as accepted by City;
c. Bidder’s Statement of Financial Responsibility, Technical Ability and Experience; d. Bidder’s Statement of Subcontractors – Part I;
e. Bidder’s Statement of Subcontractors – Part II;
f. Insurance Certification;
g. Completely executed and signed all required Federal and City of Salinas forms; h. Instructions to Successful Bidder and General conditions; i. Bond of Faithful Performance;
j. Payment Bond (Labor and Materials Bond);
k. Certificate of Insurance;
l. The aforesaid Plans and Specifications;
m. Current California Building Standard Code;
n. Design Standards and Standard Specifications and Standard Plans, 2008 Edition, or as amended, or otherwise indicated in the specifications; and o. This Agreement.

THIRD: That said Contractor agrees to receive and accept the following prices as full compensation for furnishing all materials and for doing all the work embraced and contemplated in this Agreement and as set forth in the Proposal adopted by the City of Salinas, a true copy thereof hereto attached; also, for all loss or damage arising out of the nature of said work or from the action of the elements or from any unforeseen difficulties or obstructions which may arise or be encountered in the prosecution of the work until the acceptance thereof by the City of Salinas and for all risk connected with the work, and for well and faithfully completing the work, and the whole thereof, in the manner and according to the said Plans and Specifications and the provisions of this agreement, and the requirements of the City Engineer under them, to wit: The prices as set forth in the Proposal of said Contractor for the work to be constructed and completed under this Agreement, which prices shall be considered as though repeated herein.

The Contractor and City hereby agree that the Contractor shall perform the work and be paid the amount of bid items No. 1-17 specified in the Proposal of the Contractor, for the as total price of One Hundred Fifty-one Thousand ($151,000) Dollars.

The undersigned Contractor further agrees to so plan the work and to prosecute it with such diligence that said work, and all of it, shall be completed on or before the expiration of the time specified in the Proposal after execution of the Contract on behalf of the City of Salinas and the receipt from the City of Salinas of a notice to proceed with the work.

FOURTH: The City of Salinas hereby promise and agrees with said Contractor to employ, and does hereby employ, said Contractor to provide the materials and to do the work according to the terms and conditions herein contained and referred to, for the price aforesaid, and hereby Contracts to pay the same at the time, in the manner and upon the conditions set forth in the Specifications and the said parties, for themselves, their heirs, executors, administrators, successors, and assigns, do hereby agree to the full performance of the covenants herein contained.

FIFTH: No interest in this agreement shall be transferred by the Contractor to any other party, and any such transfer shall cause the annulment of this Contract, so far as the City of Salinas is concerned. All rights of action, however, for any breach of this Contract are reserved to City.

SIXTH: The Contractor shall keep harmless and indemnify the City of Salinas, its officers and employees and agents, from all loss, damage, cost or expense that arises or is set up for infringement of patent rights of anyone for use by the City of Salinas, its officers, employees or agents, or articles supplied by the Contractor under this Contract of which he/she is not entitled to use or sell. Contractor agrees to, at his/her own cost and expense, defend in court the City, its officers, agents, and employees, in any action which may be commenced or maintained against them or any of the, on account of any claimed infringement of patent rights, arising out of this agreement.

Contractor shall indemnify and save the City of Salinas and its officers, agents, and employees harmless against all claims for damages to person or property arising out of Contractor's execution of the work, or otherwise by the conduct of the Contractor or its employees, agents, Subcontractors, or others (including the active and passive negligence of the City, its officers, agents, and employees) in connection with the execution of the work covered by this Contract and any and all costs, expenses, attorney's fees and liability incurred by the City, its officers, agents, and employees) in connection with the execution of the work covered by this Contract and any and all costs, expenses, attorneys' fees and liability incurred by the City, its officers, agents, or employees in defending against such claims, whether the same proceed to judgment or not, except only those claims arising from the sole negligence or willful conduct of the City, its officers, agents, or employees. Further, Contractor at its own expense shall, upon written request by the City, defend any such suit or action brought against the City, its officers, agents, or employees.

Contractor shall reimburse the City of Salinas for all costs and expense (including but not limited to fees and charge of architects, engineers, attorneys, and other professional and court costs) incurred by the City in enforcing the provisions of this Section.

SEVENTH: The Contractor agrees to immediately repair and replace all defective material and workmanship discovered within 1 year after acceptance of final payment by Contractor and to indemnify said City of Salinas against all loss and damage occasioned by any such defect, discovered within said 1 year, even though the damage or loss may not be ascertained until after the expiration thereof. Provided, however, that if such failure of the Contractor to perform should not, by reasonable diligence, be discoverable or discovered within said 1 year, then the obligation of the Contractor to repair and replace said defective material or workmanship shall continue until one year after the actual discovery thereof.

EIGHTH: The Contractor agrees at all times during the progress of the work to carry with insurance carriers approved by the City of Salinas full coverage workmen's compensation and public liability insurance in the form and to the extent called for in Section 7-1.12 of both the Standard Specifications, State of California, May 2006, and the Design Standards and Standard Specifications, Public Works Department, City of Salinas, 2008 Edition. Certificates of Insurance must specify whether coverage is on a "claims occurrence" or "claims made" form. If the policy is "claims made", Contractor will be required to obtain a bond which must remain in effect until 12 months following work completions.

Contractor shall also advise the insurance carrier to inform the City of the unpaid limits of the policy. Such insurance policy shall contain an endorsement that the same shall not be canceled nor the amount of coverage be reduced until at least 30 days after receipt by the City of Salinas by certified or registered mail of a written notice of such cancellation or reduction in coverage.

It is acknowledged by the parties to this agreement that insurance coverage required to be provided by the Contractor or any other party in favor of the City/additional insured is intended to apply first on a primary and non-contributing basis in relation to any other insurance of self-insurance (primary or excess) available to the City and any employee of the City. The Contractor agrees to have its policies endorsed accordingly.

In addition, Contractor also accepts to provide commercial general liability (CGL) endorsement form CG 20 10 11 85. An acceptable alternative would be the use of two ISO forms together: the CG 20 10 07 04 (“ongoing operations”) and the CG 20 37 10 01 (“completed operations”). The City may also accept any other comparable endorsement, which does not further limit coverage, and which may be approved and accepted by the City’s Risk Management staff.

NINTH: Contractor agrees to comply with all applicable federal, state, and municipal laws and regulations, including but not limited to California Labor Code Division 2, Part 7, and Chapter 1.

Apprenticeship utilization: The contractor agrees to comply with the Department of Apprenticeship Standards of the California Labor Code Section 1777.5, and the following:

Prior to commencing work on the awarded contract, the Contractor shall submit contract award information (form DAS 140) to all applicable apprenticeship program(s) that can supply apprentices to the site of the public work. A copy of this information shall also be provided to the City of Salinas.

The ratio of work performed by apprentices to journeyman employed in a particular craft or trade on the public work shall be no less than one hour of apprentice work for every five hours of journeyman work.

At the end of each month of work on the contract, the Contractor and Subcontractors shall submit a record of utilization of apprentices for the previous months work.

Within 60 days after concluding work on the contract, each contractor and subcontractor shall submit to the City of Salinas and to the apprenticeship program a verified statement of the journeyman and apprentice hours performed on the contract.

IN WITNESS WHEREOF, City has caused this instrument to be executed and its corporate name and seal to be hereunto attached by its Mayor, pursuant to resolution theretofore duly adopted by the Council of the City of Salinas, and Contractor has caused this instrument to be executed, the day and year first hereinabove written.

CITY OF SALINAS, A Municipal Corporation
ATTEST: BY
Mayor
City Clerk
(Attach Notary Acknowledgment) Contractor (signature in blue ink) NOTE: Please refer to the “General Instructions to Low Bidder” for specific signature requirements.

I hereby approved the form of the foregoing Contract this day of , 20 .

Attorney for the City of Salinas
Checked by the City Engineer on
City Engineer

ALL SIGNATURES SHALL BE NOTARIZED EXCEPT THOSE OF CITY OFFICIALS City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#23-406, Version: 1
Service Agreement with Fusus
Approve a Resolution authorizing the City Manager to execute a 30-month Service Agreement with Fusus for a total cost not to exceed $250,000 to provide technology for real-time monitoring of traffic system cameras and gathering of analytical data related to traffic patterns and volume.

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CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: JUNE 20, 2023
DEPARTMENT: PUBLIC WORKS DEPARTMENT
FROM: DAVID JACOBS, DIRECTOR OF PUBLIC WORKS
BY: ANDREW EASTERLING, TRAFFIC ENGINEER
TITLE: SERVICE AGREEMENT WITH FUSUS
RECOMMENDED MOTION:

A motion to approve a Resolution authorizing the City Manager, upon approval of the City Attorney, to execute a 30-month Service Agreement with Fusus for a total cost not to exceed $250,000 and authorizing the use of ARPA (3911) funds for the Service Agreement with Fusus.

EXECUTIVE SUMMARY:

The Public Works Department has identified the need to supplement traffic safety infrastructure projects with targeted technology to support traffic and community safety. The Public Works Department recommends the dedication of $250,000 of the $6 Million in American Rescue Plan Act (ARPA) Street Repair and Traffic Safety funds toward the funding of a 30-month Service Agreement with Fusus.

BACKGROUND:

On November 16, 2021, the City Council approved $6 Million of American Rescue Plan Act (ARPA) funds to be dedicated to Street Repair and Traffic Safety. Public Works will be funding infrastructure projects to support traffic safety but also wants to leverage technology to focus on traffic and community safety. To support real-time monitoring of the traffic system cameras, and technology that supports the gathering of analytical data related to traffic patterns and volume, Public Works plans to utilize $250,000 of the ARPA Traffic Safety funds towards a 30-month Service Agreement with Fusus. Public Works will also partner with the Police Department to utilize components of Fusus technology to support community safety issues.

Fusus is a unified platform that can bring traffic and community safety resources together for realtime monitoring and analytical data collection. Fusus can support remote viewing and data collection for traffic cameras throughout the City, thus allowing a rapid response to traffic safety concerns and analysis of traffic patterns. Furthermore, the Fusus platform is equipped with technology to assist in traffic counts, turn movement patterns, and vehicle classification traffic Page | 2
data collection to assist the City’s traffic operations and planning efforts. The platform also supports appropriate public safety planning and response, and there are additional functionalities of the Fusus system that can support community safety. The Fusus live video feed can be integrated into the City’s Traffic Operations Center so that City staff can remotely review and respond to traffic conditions in real time.

The annual cost for the Fusus Pro platform is $100,000, and the Department is requesting the approval of a 30-month Service Agreement for a total cost of $250,000. With execution of a Service Agreement prior to June 30, 2023, Fusus company is offering several additional community safety applications at no initial or ongoing cost. The Service Agreement is directly with the software developer, Fusus, and not available from any other vendor. City Council has the authority to approve this direct purchase under Salinas Municipal Code Section 12-27 and without application of the local purchasing preference pursuant to Salinas Municipal Code Section 12-

28.080.

CEQA CONSIDERATION:

Not a Project. The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).

STRATEGIC PLAN INITIATIVE:

Approving the proposed resolution will support the City Council’s Strategic Plan Goal of Infrastructure and Environmental Sustainability, Public Safety, and Effective and Culturally Responsive Government.

DEPARTMENTAL COORDINATION:

The Public Works Department will coordinate with the Legal Department and Finance Department during the purchasing process and will coordinate with the Police Department on implementation of any public safety aspects of the platform.

FISCAL AND SUSTAINABILITY IMPACT:

There is no impact to the general fund. ARPA funds dedicated to traffic safety will be used to fund the 30-month Service Agreement with Fusus. The account number is 3911.50.8180, and there is sufficient funding available.

ATTACHMENTS:

Resolution
Attachment 1: Fusus Service Agreement Proposal
Attachment 2: Fusus Quote
1 RESOLUTION NO. (N.C.S.)

RESOLUTION AUTHORIZING THE CITY MANAGER, UPON APPROVAL OF THE CITY ATTORNEY, TO EXECUTE A 30-MONTH SERVICE AGREEMENT WITH FUSUS FOR A TOTAL COST NOT TO EXCEED $250,000 AND AUTHORIZING THE USE OF ARPA (3911) FUNDS FOR THE SERVICE AGREEMENT WITH FUSUS WHEREAS, the Public Works Department has identified the need to supplement traffic safety infrastructure projects with the leveraging of technology to focus on traffic and community safety; and
WHEREAS, the Public Works Department recommends the dedication of $250,000 of the $6 Million in American Rescue Plan Act (ARPA) Street Repair and Traffic Safety funds towards a 30-month Service Agreement with Fusus to support the real-time monitoring of traffic system cameras, with technology to support the gathering of analytical data related to traffic patterns and volume; and
WHEREAS, Fusus is the software developer and this platform is not available from any other vendor, and the City Council can approve this purchase pursuant to Salinas Municipal Code Section 12-27 (exception to low-bid based competition) in contracting for equipment, materials, supplies and services and pursuant to Salinas Municipal Code 12-28.080 (exception to local purchasing preference); and
WHEREAS, the City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).

NOW, THEREFORE, BE IT RESOLVED that the Salinas City Council authorizes the City Manager, upon approval of the City Attorney, to execute a 30-month Service Agreement with Fusus for a total cost not to exceed $250,000, and authorizing the use of ARPA (3911) funds for the Service Agreement with Fusus..

PASSED AND APPROVED this 20th day of June 2023, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
2 APPROVED:
______________________________
Kimbley Craig, Mayor
ATTEST:
_________________________
Patricia M. Barajas, City Clerk

www.fūsus.com 5550 Triangle Parkway, Ste 100, Peachtree Corners, GA 30092 (844) 226-9226 May 12, 2023
Chief Roberto Filice
Salinas Police Department
312 East Alisal Street
Salinas, CA 93901
Subject: Service Agreement Proposal
Dear Chief Filice,
Fūsus is honored that the Salinas Police Department is considering our organization to support its community safety initiatives by providing a platform to view public and community video sources for incident situational awareness and investigations.

Fūsus will provide a video and data collaboration platform to expedite intelligence gathering and efficiency of response to situations as they unfold throughout the community. Further, the platform is tied to a community-facing website portal for video camera registry, providing a tool for identifying the location of cameras in proximity to incidents, as well as a means for efficient outreach to collect recorded video and image files from camera owners both public and private.

This Service Agreement Proposal and related software subscription will become effective upon signing and continue for thirty (30) months.

1. Initial Scope of Work: The following fūsus Pro Package software and associated hardware will be delivered and installed as part of this agreement.
a. fūsusONE™: Initial setup, access and training of users to include up to 500 data points and 500 public/private video feeds
b. fūsusCORE™: Installation and setup of:
i. Fifteen (15) fūsusCORE Pro™ Appliances
ii. One (1) fūsusCORE Elite AI™ Appliance
c. fūsusREGISTRY™: Creation of a custom website portal for community members to register privately owned cameras
d. fūsusVAULT™: Implementation of a CJIS compliant evidence vault for the storage of up to 5TB of videos and still images captured via the fūsusONE™ platform e. fūsusOPS™: Implementation of our smart-phone app which provides viewing of live camera feeds and setting up and transmitting the location of teams for special events and critical incident management
f. fūsusTIPS™: Implementation of our SMS service that provides text communications of pictures, audio and video directly into fūsusVault™ (Provided at no cost a $3,000 annual value if this agreement is executed and returned to Fusus by the close of business on June 30, 2023)
g. fūsusNOTIFY™: Implementation of our SMS text service that provides text notifications to community members. (Provided at no cost a $4,995 annual value if this agreement is executed and returned to Fusus by the close of business on June 30, 2023)
h. fūsusAlert™: Implementation of our iOS/Android application which provides panic alerting to fūsusONE™ along with geolocation of persons in distress and automatic docking of nearby camera assets in the fūsusONE™ platform (Provided at no www.fūsus.com 5550 Triangle Parkway, Ste 100, Peachtree Corners, GA 30092 (844) 226-9226 additional cost a $10,000 annual value if this agreement is executed and returned to Fusus by the close of business on June 30, 2023.
i. fūsusANALYTICS™: Implementation of our crime and incident heat mapping and j. analysis platform
k. fūsusCONNECT Call-Out: One (1) month of fūsus call-out to businesses within the jurisdiction to assist with camera registration and integration l. fūsusCONNECT Microsite: Development of an agency specific website landing page to assist with building camera registration and integration of community video assets m. fūsusINCIDENT™: Implementation of the Fūsus Situational Awareness system for bidirectional telestration, icon marking, floorplan room clearing, planning, and resource staging from Emergency Operation Center workstations and mobile field-based users on laptops and iOS/Android mobile devices
n. fūsusLIVELINK™: Provision of a live link system which allows 911 callers to initiate a camera stream in the event of an emergency to the Department, along with a one-tomany methodology for secure and encrypted responder-group sharing during an emergency
o. fūsusOVERWATCH: Allows users the ability to track vehicles and people from one camera to another
p. Remote Configuration of fūsus Core(s)
q. Integration of all current and future video feeds
r. Integration of Computer Aided Dispatch, AVL, drone feeds, covert cameras, and license plate readers as required
Note: fūsus™ will provide continuing data and IoT integrations at no additional charge for the life of the agreement

2. Payment and Subscription Terms:
a. Payment 1: Due Upon Contract Signing $50,000
b. Payment 2: Due Upon Training and Acceptance $50,000
c. Payment 3: Due Upon 1st Anniversary of Contract Signing $100,000 d. Payment 4 Due Upon 2
nd Anniversary of Contract Signing $50,000
Invoices for payment 3 and 4 will be sent 60 days prior to their respective due dates.

Note: Additional fūsusCORE™ appliances may be purchased for the following per unit price schedule.
a. CORE Lite: $200/each
b. CORE Lite Extended: $300/each
c. CORE Pro: $600/each
d. CORE Pro Extended: $1,000/each
e. CORE Elite: $4,000/each
f. CORE Elite AI: $5,000/each

3. Bill of Materials Included with the Service: As part of the annual subscription price, each system will include the following:
a. fūsusONE™ SaaS
b. Unlimited video alerts, access, and video download
c. fūsusCORE™ warranty and technical support for the life of the agreement www.fūsus.com 5550 Triangle Parkway, Ste 100, Peachtree Corners, GA 30092 (844) 226-9226 d. Unlimited fūsusOPS Application for Android and iOS Devices Subscription to fūsusONE™ includes all the following:
a. Unlimited Users for Your Agency to fūsusONE™ – Real-Time Crime Center in the Cloud b. Unlimited Access for Your Agency to the fūsusONE™ Dashboard c. Floorplan Integration for designated locations in fūsusONE™ d. Ongoing Integration Services with the CAD System
e. Installation and Technical Phone Support
f. Provide a Full Solution Warranty for the Life of the Agreement g. Live U.S.-Based Phone Technical Support for the Life of the Agreement

4. Technical Requirements:
a. Camera live-sharing compatibility will be assessed for each location before CORE delivery.
b. The customer will designate a primary POC for the deployment of the fūsus™ solution. c. Minimum network speed of .5 mb/s per viewed camera for live video sharing through the system.

5. Terms and Conditions:

The use of and access to fūsus™ products and services is subject to the fūsus™ Terms of Service V08.30.2022 found at https://www.fusus.com/fusus-terms-of-service.

The Termination for Convenience Clause Asserts that the customer may, at its sole discretion, terminate the agreement with 30 days of written notice to Fūsus. Services will be reimbursed on a pro-rated basis from the last day of the term through the agreement’s remainder. The cost of any unreturned or unserviceable fūsusCORE(s), as listed above in Section 2, will be deducted from the refund.

We are privileged to work with you on this project. Should you have any questions at any time, please feel free to call (765) 237-1769 or email me at jdw@fūsus.com.

Respectfully,
John Watson
Vice President of Sales
Approved (Signature): _______________________________________________ By (Print Name/Title): ______________________________________ Date __________ Salinas Police Department
Salinas PD-CA
312 East Alisal Street
Salinas, CA 93901
Roberto Filice
Chief
[email protected]
+18317587286
Reference: 20230511-184911115
Quote created: May 11, 2023
Quote expires: June 29, 2023
Quote created by: James Macedo
Public Safety Advisor
[email protected]
Products & Services
Item & Description SKU Quantity Unit Price Total
Pro Package SaaS FUSES-1-
1001
1 $100,000.00
/ year
$100,000.00 / year
Pro Package SaaS FUSES-1-
1001
1 $50,000.00 $50,000.00
Core Pro Appliance COREP-200115 $600.00 $0.00
Core Elite AI Appliance COREAI20011 $5,000.00 $0.00
Total $150,000.00
SaaS Subscription to Include 500 Data
Points/Video Streams and 5 TBs of Cloud
Storage
for 2 years SaaS Subscription to Include 500 Data
Points/Video Streams and 5 TBs of Cloud
Storage
for 6 months after 100% discount after 100% discount
Purchase terms
Questions? Contact me!
James Macedo
Public Safety Advisor
[email protected]
Fusus, Inc.
5550 Triangle Parkway
Peachtree Corners, Georgia 30092
United States of America
City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#23-408, Version: 1
National Development Council Agreement for Community and Economic Development Services Approve a Resolution authorizing the City Manager or his designee to execute an Agreement for Professional Services (Agreement) between the City of Salinas and National Development Council, (“NDC”) for a total not to exceed amount of $231,818.00 over a three-year period for community and economic development consulting services.

City of Salinas Page 1 of 1 Printed on 6/15/2023
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Page | 1

CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: JUNE 20, 2023
DEPARTMENT: COMMUNITY DEVELOPMENT
FROM: LISA BRINTON, DIRECTOR
BY: MICHAEL GOMEZ, ECONOMIC DEVELOPMENT ANALYST
TITLE: AGREEMENT FOR PROFESSIONAL SERVICES BETWEEN THE

CITY OF SALINAS AND NATIONAL DEVELOPMENT COUNCIL
RECOMMENDED MOTION:

A motion to approve a Resolution authorizing the City Manager or his designee to execute an Agreement for Professional Services (Agreement) between the City of Salinas and National Development Council, (“NDC”) for a total not to exceed amount of $231,818.00 over a three-year period for community and economic development consulting services.

EXECUTIVE SUMMARY:

Since 2016 the City has contracted with NDC to provide housing and economic advisement services.

Staff wishes to continue consulting services with NDC relating to implementation and monitoring of the Economic Development Element, revitalization efforts in Chinatown, Alisal, and Downtown Vibrancy efforts amongst other consulting services. The City has historically entered into yearly Agreements for Professional Services. Staff requests renewal for an extended term of three years at a base yearly rate of Seventy-Five Thousand Dollars ($75,000) with annual renewal increases of 3% in years two and three for a total not to exceed amount of Two Hundred and Thirty-One Thousand Eight Hundred and Eighteen Dollars ($231,818.00) during the term of the Agreement. Under this Agreement NDC will continue to provide support to City staff for up to three years, through June 30, 2026.

BACKGROUND:

NDC, is a qualified expert in providing technical assistance to government agencies by assisting underserved communities to improve economic opportunities, create housing opportunities, generate and sustaining jobs, and revitalize neighborhoods. Currently, NDC administers the City’s Grow Salinas Loan Fund and provides technical assistance to both the Salinas Marketing and Technology Grant Program and the Salinas Downtown Outdoor Dining Forgivable Loan Program. The current Agreement with NDC expires June 30, 2023.

DISCUSSION:

Staff has identified the need to continue contracting with NDC. Over the next three years, staff Page | 2
anticipates multiple large-scale projects that will require underwriting, market analysis, the identification of funding to leverage existing resources, in addition to technical assistance on various potential grant/loan programs, Market Tax Credit Program, HUD section 108 loans including brownfield grants, and gap analysis needed to support implementation of Council approved strategic plans.

During the first year of this Agreement, the City agrees to pay NDC Seventy-Five Thousand Dollars ($75,000) for services paid in monthly installments of Six Thousand Two Hundred and Fifty Dollars ($6,250) according to the rates of compensation as set forth in Exhibit B of the Agreement. On each subsequent anniversary of this Agreement, the annual rate shall increase by 3% from the previous year.

CEQA CONSIDERATION:

The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378). Because the matter does not cause a direct or foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

STRATEGIC PLAN INITIATIVE:

The proposed agreement furthers the City of Salinas Strategic Plan 2022-2025 goal of Economic Development by supporting the implementation of the Economic Development Element policies and action items such as implementation of the Economic Development Element, Chinatown Revitalization Plan, Alisal Vibrancy Plan, and the Downtown Vibrancy Plan.

DEPARTMENTAL COORDINATION:

Community Development staff coordinated with the Housing Division and Legal Department to finalize the Agreement for Professional Services.

FISCAL AND SUSTAINABILITY IMPACT:

The maximum amount of compensation to be paid over the three-year term of the Agreement (July, 1, 2023 to June 30, 2026) shall not exceed Two Hundred and Thirty-One Thousand Eight Hundred and Eighteen Dollars ($231,818). During the first year of this Agreement, the City agrees to pay NDC Seventy-Five Thousand Dollars ($75,000). The first year, July 1, 2023, to June 30, 2024, is fully funded through the General Fund in the Economic Development Division’s FY 2023-2024 Budget for Professional Services (1000.30.1355-63.5900). Funding for years two and three will be requested as part of the annual budget cycle.

ATTACHMENTS:

1. Resolution for Professional Services between the City of Salinas and NDC a) Exhibit A: Agreement for Professional Service with NDC 1 RESOLUTION NO. (N.C.S.)

A RESOLUTION AUTHORIZING EXECUTION OF AGREEMENT FOR

PROFESSIONAL SERVICES BETWEEN THE CITY OF SALINAS AND NATIONAL

DEVELOPMENT COUNCIL FOR COMMUNITY AND ECONOMIC DEVELOPMENT

CONSULTING SERVICES
WHEREAS, the City has contracted with NDC for consultant services on various housing and economic development projects since 2016 such as managing the City’s revolving loan fund, assisting with the implementation of various strategic plan goals and action items such as the Economic Development Element, Chinatown Revitalization Plan, Alisal Vibrancy Plan, and Downtown Vibrancy Plan; and
WHEREAS, the City of Salinas wishes to enter into an Agreement for Professional Services with NDC for a term of three years for consulting services in community and economic development,; and
WHEREAS, NDC, is a qualified expert in providing technical assistance to government agencies by assisting underserved communities to improve economic opportunities, create housing opportunities, generate and sustaining jobs, and revitalize neighborhoods; and WHEREAS, the City of Salinas determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378); and
NOW, THEREFORE, BE IT RESOLVED that the Salinas City Council hereby approves a Resolution authorizing the City Manager or designee to execute an Agreement for Professional Services between the City of Salinas and NDC for economic consulting services for a three-year term (July 1, 2023, to June 30, 2026) for a total compensation amount not to exceed Two Hundred and Thirty-One Thousand Eight Hundred and Eighteen Dollars ($231,818).

PASSED AND APPROVED this 20th day of June 2023, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:
________________________
Kimbley Craig, Mayor
2 ATTEST:
_________________________
Patricia M. Barajas, City Clerk
Professional Services Agreement v. April 2023
National Development Council
July 2023

AGREEMENT

FOR PROFESSIONAL SERVICES

BETWEEN

THE CITY OF SALINAS AND NATIONAL

DEVELOPMENT COUNCIL

Professional Services Agreement v. April 2023 Page 2 of 18 National Development Council
July 2023
Contents
RECITALS ..................................................................................................................................... 4 TERMS ........................................................................................................................................... 4

1. Scope of Service. ................................................................................................................. 4

2. Term; Completion Schedule. ............................................................................................... 4

3. Compensation. ..................................................................................................................... 4

4. Billing. ................................................................................................................................. 5

5. Meet & Confer. .................................................................................................................... 5

6. Additional Copies................................................................................................................. 5

7. Responsibility of Consultant................................................................................................ 5

8. Responsibility of City. ......................................................................................................... 5

9. Acceptance of Work Not a Release. .................................................................................... 6

10. Indemnification and Hold Harmless. ................................................................................... 6

11. Insurance.............................................................................................................................. 6

12. Access to Records................................................................................................................ 6

13. Non-Assignability. ............................................................................................................... 6

14. Changes to Scope of Work. ................................................................................................. 6

15. Ownership of Documents. ................................................................................................... 7

16. Termination.......................................................................................................................... 7

17. Compliance with Laws, Rules, and Regulations. ................................................................ 8

18. Exhibits Incorporated........................................................................................................... 8

19. Independent Contractor........................................................................................................ 8

20. Integration and Entire Agreement........................................................................................ 8

21. Jurisdiction and Venue......................................................................................................... 8

22. Severability .......................................................................................................................... 8

23. Notices. ................................................................................................................................ 8

24. Nondiscrimination................................................................................................................ 9

25. Conflict of Interest. .............................................................................................................. 9

26. Headings. ........................................................................................................................... 10

27. Attorneys’ Fees.................................................................................................................. 10

28. Non-Exclusive Agreement................................................................................................. 10

29. Rights and Obligations Under Agreement......................................................................... 10

30. Licenses.............................................................................................................................. 10

31. Counterparts....................................................................................................................... 10

Professional Services Agreement v. April 2023 Page 3 of 18 National Development Council
July 2023

32. Legal Representation. ........................................................................................................ 10

33. Joint Representation........................................................................................................... 10

34. Warranty of Authority........................................................................................................ 10

35. No Waiver of Rights. ......................................................................................................... 11 Exhibit A- Insurance Requirements.............................................................................................. 11 Exhibit B- Scope of Service.......................................................................................................... 15

Professional Services Agreement v. April 2023 Page 4 of 18 National Development Council
July 2023

AGREEMENT FOR PROFESSIONAL SERVICES BETWEEN

THE CITY OF SALINAS AND NATIONAL DEVELOPMENT COUNCIL
This Agreement for Professional Services (the “Agreement” and/or “Contract”) is made and entered into this 20th day of June, 2023, between the City of Salinas, a California Charter city and municipal corporation (hereinafter “City”), and National Development Council., a New York non-profit corporation, which is a tax-exempt organization under Section 501©(3) of the internal Revenue Code (hereinafter “Consultant”).

RECITALS
WHEREAS, Consultant represents that he, she, or it is specially trained, experienced, and competent to perform the special services which will be required by this Agreement; and WHEREAS, Consultant is willing to render such professional services, as hereinafter defined, on the following terms and conditions.

NOW, THEREFORE, City and Consultant agree as follows:

TERMS

1. Scope of Service. The project contemplated and the scope of Consultant’s services are described in Exhibit B, attached hereto and incorporated herein by reference.

2. Term; Completion Schedule. This Agreement shall commence on July 1, 2023 and shall terminate on June 30, 2026, unless extended in writing by either party upon (30) days written notice. This Agreement may be extended only upon mutual written consent of the parties, and may be terminated only pursuant to the terms of this Agreement.

3. Compensation. City hereby agrees to pay Consultant for services hereunder in the total amount of Seventy-Five Thousand Dollars ($75,000) over the first year paid in monthly installments of Six Thousand Two Hundred and Fifty Dollars ($6,250) according to the rates of compensation as set forth in Exhibit B. Beginning one year from the effective date of this agreement, and on each subsequent anniversary of this agreement, the annual rate shall increase by 3% from the previous year. The maximum amount of compensation to be paid shall not exceed Two Hundred and Thirty-One Thousand Eight Hundred and Eighteen Dollars ($231,818) during the term of this Agreement. The base fee amount includes all of NDC’s time, travel expenses, supplies, postage, telephone, and other similar expenses.

As an independent contractor, NDC is responsible for all taxes and other benefits of the employees of NDC and nothing contained herein shall be interpreted as creating a relationship of servant, employee, partnership, or agency between the Client and NDC. Payment by the Client for services rendered under this Agreement evidences the Client’s acceptance of such services in accordance with the terms of this Agreement.

Professional Services Agreement v. April 2023 Page 5 of 18 National Development Council
July 2023

4. Billing. Consultant shall submit to City an invoice, prepared in a form satisfactory to City. City shall make payment on each such invoice within thirty (30) days of receipt; provided, however, that if Consultant submits an invoice which is incorrect, incomplete, or not in accord with the provisions of this Agreement, City shall not be obligated to process any payment to Consultant until thirty (30) days after a correct and complying invoice has been submitted by Consultant. The City shall process undisputed portion immediately.

5. Meet & Confer. Consultant agrees to meet and confer with City or its agents or employees with regard to services as set forth herein as may be required by the City to ensure timely and adequate performance of the Agreement.

6. Additional Copies. If City requires additional copies of reports, or any other material which Consultant is required to furnish as part of the services under this Agreement, Consultant shall provide such additional copies as are requested, and City shall compensate Consultant for the actual costs related to the production of such copies by Consultant.

7. Responsibility of Consultant. By executing this Agreement, Consultant agrees that the services to be provided and work to be performed under this Agreement shall be performed in a fully competent manner. By executing this Agreement, Consultant further agrees and represents to City that the Consultant possesses, or shall arrange to secure from others, all of the necessary professional capabilities, experience, resources, and facilities necessary to provide the City the services contemplated under this Agreement and that City relies upon the professional skills of Consultant to do and perform Consultant’s work. Consultant further agrees and represents that Consultant shall follow the current, generally accepted practices in this area to the profession to make findings, render opinions, prepare factual presentations, and provide professional advice and recommendations regarding the projects for which the services are rendered under this Agreement.

8. Responsibility of City. To the extent appropriate to the projects to be completed by Consultant pursuant to this Agreement, City shall:
(A) Assist Consultant by placing at its disposal all available information pertinent to the projects, including but not limited to, previous reports and any other data relative to the projects. Nothing contained herein shall obligate City to incur any expense in connection with completion of studies or acquisition of information not otherwise in the possession of City. (B) Examine all studies, reports, sketches, drawings, specifications, proposals, and other documents presented by Consultant, and render verbally or in writing as may be appropriate, decisions pertaining thereto within a reasonable time so as not to delay the services of Consultant.
(C) Steve Carrigan, City Manager, or his designee, shall act as City’s representative with respect to the work to be performed under this Agreement. Such person shall have the complete authority to transmit instructions, receive information, interpret and define City’s policies and decisions with respect to materials, equipment, elements, and systems pertinent to

Professional Services Agreement v. April 2023 Page 6 of 18 National Development Council
July 2023
Consultant’s services. City may unilaterally change its representative upon notice to the Consultant.
(D) Give prompt written notice to Consultant whenever City observes or otherwise becomes aware of any defect in a project.

9. Acceptance of Work Not a Release. Acceptance by the City of the work to be performed under this Agreement does not operate as a release of Consultant from professional responsibility for the work performed.

10. Indemnification and Hold Harmless.

Consultant shall defend, indemnify, and hold harmless the City and its officers, officials, employees, volunteers, and agents from and against any and all liability, loss, damage, expense, costs (including without limitation costs and fees of litigation) of every nature arising out of or in connection with Consultant’s performance of work hereunder, including the performance of work of any of Consultant’s subcontractors or agents, or Consultant’s failure to comply with any of its obligations contained in the agreement, except such loss or damage which was caused by the sole negligence or willful misconduct of the City.

11. Insurance. Consultant shall procure and maintain for the duration of this Agreement insurance meeting the requirements specified in Exhibit A hereto.

12. Access to Records. Consultant shall maintain all preparatory books, records, documents, accounting ledgers, and similar materials including but not limited to calculation and survey notes relating to work performed for the City under this Agreement on file for at least three (3) years following the date of final payment to Consultant by City. Any duly authorized representative(s) of City shall have access to such records for the purpose of inspection, audit, and copying at reasonable times during Consultant’s usual and customary business hours.

Consultant shall provide proper facilities to City’s representative(s) for such access and inspection.

13. Non-Assignability. It is recognized by the parties hereto that a substantial inducement to City for entering into this Agreement was, and is, the professional reputation and competence of Consultant. This Agreement is personal to Consultant and shall not be assigned by it without express written approval of the City.

14. Changes to Scope of Work. City may at any time, and upon a minimum of ten (10) days written notice, seek to modify the scope of services to be provided for any project to be completed under this Agreement. Consultant shall, upon receipt of said notice, determine the impact on both time and compensation of such change in scope and notify City in writing. Upon agreement between City and Consultant as to the extent of said impacts to time and compensation, an amendment to this Agreement shall be prepared describing such changes.

Execution of the amendment by City and Consultant shall constitute the Consultant’s notice to proceed with the changed scope.

Professional Services Agreement v. April 2023 Page 7 of 18 National Development Council
July 2023

15. Ownership of Documents. Title to all final documents, including drawings, specifications, data, reports, summaries, correspondence, photographs, computer software (if purchased on the City’s behalf), video and audio tapes, software output, and any other materials with respect to work performed under this Agreement shall vest with City at such time as City has compensated Consultant, as provided herein, for the services rendered by Consultant in connection with which they were prepared. City agrees to hold harmless and indemnify the Consultant against all damages, claims, lawsuits, and losses of any kind including defense costs arising out of any use of said documents, drawings, and/or specifications on any other project without written authorization of the Consultant.

16. Termination.
(A) City shall have the authority to terminate this Agreement, upon ten days written notice to Consultant, as follows:
(1) If in the City’s opinion the conduct of the Consultant is such that the interest of the City may be impaired or prejudiced, or
(2) For any reason whatsoever.
(B) Upon termination, Consultant shall be entitled to payment of such amount as fairly compensates Consultant for all work satisfactorily performed up to the date of termination based upon the Consultant’s rates shown in Exhibit B and/or Section 3 of this Agreement, except that:
(1) In the event of termination by the City for Consultant’s default, City shall deduct from the amount due Consultant the total amount of additional expenses incurred by City as a result of such default. Such deduction from amounts due Consultant are made to compensate City for its actual additional costs incurred in securing satisfactory performance of the terms of this Agreement, including but not limited to, costs of engaging another consultant(s) for such purposes. In the event that such additional expenses shall exceed amounts otherwise due and payable to Consultant hereunder, Consultant shall pay City the full amount of such expense. (C) In the event that this Agreement is terminated by City for any reason, Consultant shall:
(1) Upon receipt of written notice of such termination promptly cease all services on this project, unless otherwise directed by City; and (2) Deliver to City all documents, data, reports, summaries, correspondence, photographs, computer software output, video and audio tapes, and any other materials provided to Consultant or prepared by or for Consultant or the City in connection with this Agreement. Such material is to be delivered to City in completed form; however, notwithstanding the provisions of Section 15 herein, City may condition payment for

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services rendered to the date of termination upon Consultant’s delivery to the City of such material.
(D) In the event that this Agreement is terminated by City for any reason, City is hereby expressly permitted to assume the projects and complete them by any means, including but not limited to, an agreement with another party.
(E) The rights and remedy of the City and Consultant provided under this Section are not exclusive and are in addition to any other rights and remedies provided by law or appearing in any other section of this Agreement.

17. Compliance with Laws, Rules, and Regulations. Services performed by Consultant pursuant to this Agreement shall be performed in accordance and full compliance with all applicable federal, state, and City laws and any rules or regulations promulgated thereunder.

18. Exhibits Incorporated. All exhibits referred to in this Agreement and attached to it are hereby incorporated in it by this reference. In the event there is a conflict between any of the terms of this Agreement and any of the terms of any exhibit to the Agreement, the terms of the Agreement shall control the respective duties and liabilities of the parties.

19. Independent Contractor. It is expressly understood and agreed by both parties that Consultant, while engaged in carrying out and complying with any of the terms and conditions of this Agreement, is an independent contractor and not an employee of the City. Consultant expressly warrants not to represent, at any time or in any manner, that Consultant is an employee or servant of the City.

20. Integration and Entire Agreement. This Agreement represents the entire understanding of City and Consultant as to those matters contained herein. No prior oral or written understanding shall be of any force or effect with respect to those matters contained herein. This Agreement may not be modified or altered except by amendment in writing signed by both parties.

21. Jurisdiction and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California, County of Monterey, and City of Salinas.

Jurisdiction of litigation arising from this Agreement shall be in the State of California, in the County of Monterey or in the appropriate federal court with jurisdiction over the matter.

22. Severability. If any part of this Agreement is found to be in conflict with applicable laws, such part shall be inoperative, null and void insofar as it is in conflict with said laws, but the remainder of the Agreement shall continue to be in full force and effect.

23. Notices.
(A) Written notices to the City hereunder shall, until further notice by City, be addressed to:

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July 2023
City Manager
City of Salinas
200 Lincoln Avenue
Salinas, California 93901
With a copy to:

City Attorney
City of Salinas
200 Lincoln Avenue
Salinas, California 93901
(B) Written notices to the Consultant shall, until further notice by the Consultant, be addressed to:

Daniel Marsh III, President
NDC
633 3rd Avenue 19th Floor, Suite J
New York, NY 10017
(C) The execution of any such notices by the City Manager shall be effective as to Consultant as if it were by resolution or order of the City Council, and Consultant shall not question the authority of the City Manager to execute any such notice. (D) All such notices shall either be delivered personally to the other party’s designee named above, or shall be deposited in the United States Mail, properly addressed as aforesaid, postage fully prepaid, and shall be effective the day following such deposit in the mail.

24. Nondiscrimination. During the performance of this Agreement, Consultant shall not discriminate against any employee or applicant for employment because of race, color, religion, ancestry, creed, sex, national origin, familial status, sexual orientation, age (over 40 years) or disability. Consultant shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment without regard to their race, color, religion, ancestry, creed, sex, national origin, familial status, sexual orientation, age (over 40 years) or disability.

25. Conflict of Interest. Consultant warrants and declares that it presently has no interest, and shall not acquire any interest, direct or indirect, financial or otherwise, in any manner or degree which will render the services required under the provisions of this Agreement a violation of any applicable local, state or federal law. Consultant further declares that, in the performance of this Agreement, no subcontractor or person having such an interest shall be employed. In the event that any conflict of interest should nevertheless hereinafter arise, Consultant shall promptly notify City of the existence of such conflict of interest so that City may determine whether to terminate this Agreement. Consultant further warrants its compliance with the Political Reform

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Act (Government Code section 81000 et seq.) and Salinas City Code Chapter 2A that apply to Consultant as the result of Consultant’s performance of the work or services pursuant to the terms of this Agreement.

26. Headings. The section headings appearing herein shall not be deemed to govern, limit, modify, or in any manner affect the scope, meaning or intent of the provisions of this Agreement.

27. Attorneys’ Fees. In case suit shall be brought to interpret or to enforce this Agreement, or because of the breach of any other covenant or provision herein contained, the prevailing party in such action shall be entitled to recover their reasonable attorneys’ fees in addition to such costs as may be allowed by the Court. City’s attorneys’ fees, if awarded, shall be calculated at the market rate.

28. Non-Exclusive Agreement. This Agreement is non-exclusive and both City and Consultant expressly reserves the right to contract with other entities for the same or similar services.

29. Rights and Obligations Under Agreement. By entering into this Agreement, the parties do not intend to create any obligations express or implied other than those set out herein; further, this Agreement shall not create any rights in any party not a signatory hereto.

30. Licenses. If a license of any kind, which term is intended to include evidence of registration, is required of Consultant, its representatives, agents or subcontractors by federal, state or local law, Consultant warrants that such license has been obtained, is valid and in good standing, and that any applicable bond posted in accordance with applicable laws and regulations.

31. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute a single agreement.

32. Legal Representation. Each party affirms that it has been represented, if it so chose, by legal counsel of its own choosing regarding the preparation and the negotiation of this Agreement and the matters and claims set forth herein, and that each of them has read this Agreement and is fully aware of its contents and its legal effect. Neither party is relying on any statement of the other party outside the terms set forth in this Agreement as an inducement to enter into this Agreement.

33. Joint Representation. The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any party. No presumptions or rules of interpretation based upon the identity of the party preparing or drafting the Agreement, or any part thereof, shall be applicable or invoked.

34. Warranty of Authority. Each party represents and warrants that it has the right, power, and authority to enter into this Agreement. Each party further represents and warrants that it has given any and all notices, and obtained any and all consents, powers, and authorities, necessary to permit it, and the persons entering into this Agreement for it, to enter into this Agreement.

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35. No Waiver of Rights. Waiver of a breach or default under this Agreement shall not constitute a continuing waiver or a waiver of a subsequent breach of the same or any other provision of this Agreement. The failure to provide notice of any breach of this Agreement or failure to comply with any of the terms of this Agreement shall not constitute a waiver thereof.

Failure on the part of either party to enforce any provision of this Agreement shall not be construed as a waiver of the right to compel enforcement of such provision or any other provision. A waiver by the City of any one or more of the conditions of performance under this Agreement shall not be construed as waiver(s) of any other condition of performance under this Agreement.

IN WITNESS WHEREOF, the parties hereto have made and executed this Agreement on the date first written above.

CITY OF SALINAS
____________________________
Steve Carrigan
City Manager
APPROVED AS TO FORM:
_________________________
□ Christopher A. Callihan, City Attorney, or
□ Rhonda Combs, Assistant City Attorney

CONSULTANT
___________________________________
Daniel Marsh III
President

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Exhibit A- Insurance Requirements
Insurance Requirements
Consultant shall procure and maintain for the duration of the Agreement insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder and the results of that work by the Consultant, his agents, representatives, employees, or subcontractors. With respect to General Liability and Professional Liability, coverage should be maintained for a minimum of five (5) years after Agreement completion.

MINIMUM SCOPE AND LIMIT OF INSURANCE
Coverage shall be at least as broad as:
(A)Commercial General Liability (“CGL”): Insurance Services Office Form (“ISO”) CG 00 01 covering CGL on an occurrence basis, including products and completed operations, property damage, bodily injury, and personal & advertising injury with limits no less than $1,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit. (B) Automobile Liability: ISO Form CA 0001 covering any auto, or if Consultant has no owned autos, hired and non-owned, with limits no less than $1,000,000 per accident for bodily injury and property damage.
(C)Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with a limit of no less than $1,000,000 per accident for bodily injury or disease.
(D)Professional Liability (also known as Errors and Omissions) insurance appropriate to the work being performed, with limits no less than $1,000,000 per occurrence or claim, $2,000,000 aggregate per policy period of one year.

If the Consultant maintains broader coverage and/or higher limits than the minimums shown above, the City of Salinas requires and shall be entitled to the broader coverage and/or higher limits maintained by the Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.

OTHER INSURANCE PROVISIONS
The insurance policies are to contain, or be endorsed to contain, the following provisions:

Additional Insured Status
The City of Salinas, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Consultant including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Consultant’s insurance (at least as broad as ISO Form CG 20 10, CG 11 85, or both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 forms if later revisions used).

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Primary Coverage
For any claims related to this Agreement or the project described within this Agreement, the Consultant’s insurance coverage shall be primary coverage at least as broad as ISO Form CG 20 01 04 13 as respects the City, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, or volunteers shall be excess of the Consultant’s insurance and shall not contribute with it.

Notice of Cancellation
Each insurance policy required above shall provide that coverage shall not be canceled, except with notice to the City.

Waiver of Subrogation
Consultant hereby grants to City a waiver of any right to subrogation which any insurer of said Consultant may acquire against the City by virtue of the payment of any loss under such insurance.

Consultant agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer.

The Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the City of Salinas for all work performed by the Consultant, its employees, agents, and subcontractors.

Self-Insured Retentions
Self-insured retentions must be declared by Consultant to and approved by the City. At the option of the City, Consultant shall provide coverage to reduce or eliminate such self-insured retentions as respects the City, its officers, officials, employees, and volunteers; or the consultant shall provide evidence satisfactory to the City guaranteeing payment of losses and related investigations, claim administrations, and defense expenses. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.

Acceptability of Insurers
Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the City.

Claims Made Policies
If any of the required policies provide coverage on a claims-made basis:

1. The Retroactive Date must be shown and must be before the date of this Agreement or the beginning of Agreement work.

2. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the Agreement 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 Agreement effective date, the Consultant must purchase “extended reporting” coverage for a minimum of five (5) years after completion of Agreement work.

4. A copy of the claims reporting requirements must be submitted to the City for review.

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Verification of Coverage
Consultant shall furnish the City with original certificates and amendatory endorsements or copies of the applicable insurance language effecting coverage required by this Agreement. All certificates and endorsements are to be received and approved by the City before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive the Consultant’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

Subcontractors
Consultant shall require and verify that all sub-consultants and/or subcontractors maintain insurance meeting all the requirements stated herein, and Consultant shall ensure that Entity is an additional insured on insurance required from such sub-consultants and/or subcontractors.

Special Risks or Circumstances
City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.

Maintenance of Insurance
Maintenance of insurance by Consultant as specified shall in no way be interpreted as relieving Consultant of its indemnification obligations or any responsibility whatsoever and the Consultant may carry, at its own expense, such additional insurance as it deems necessary.

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Exhibit B- Scope of Service & Compensation

NDC TECHNICAL ASSISTANCE AGREEMENT

SCOPE OF SERVICES
The Scope of Services describes the assistance available under this Technical Assistance Agreement during the specified contract period. The Client and NDC, by mutual agreement, may revise this Scope of Services from time to time. The assistance within this Scope of Services includes:

A. Assist the Client in the design, implementation, and monitoring of the Client’s Economic Development Element small business development policy and action items. This assistance provided by NDC may include, but not be limited to:

1. Developing and implementing a framework for a business retention program that would include business resources, outreach, and financial assistance/incentive programs. Evaluating other business assistance programs, which may be applicable to the Client in enhancing its business development efforts.

2. Initiate efforts with foundations and financial partners to increase the availability of flexible capital through the expansion and/or recapitalization the current Grow Salinas Fund.

3. Support collaboration between Small Business Technical Assistance Providers to avoid duplication of efforts and to maximize existing resources.

4. Developing written program policies, procedures, and guidelines regarding underwriting, loan approval, and loan write-offs for overall program (including microloan, façade improvement, CDBG, and Section 108 program).

5. Developing data collection and reporting forms consistent with federal requirements.

6. Drafting initial risk analysis and program recommendation to appropriate subcommittees and/or Council.

7. Attending subcommittee meetings, initial public hearings and Council meetings, to present program recommendation and subsequently, provide program progress update and accomplishments.

B. Assist Client and El Pajaro CDC evaluate sites and project and program needs for establishment of a commercial kitchen or other similar facility in Salinas.

C. Assist Client, as directed, with revitalization planning efforts in Chinatown, Alisal Vibrancy Area and Downtown Vibrancy efforts. Work can include evaluating consultant materials, evaluate community development opportunities and assist in creating implementation measures.

D. Assist client’s evaluation of transit-oriented development (TOD) opportunities with the Salinas Intermodal Transportation Center. Work could include evaluation of design concepts and financing strategies for project development.

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E. At the Client’s request, NDC will review and evaluate projects being considered by the Client. This assistance provided by NDC may include, but not be limited to:

1. Evaluating developer experience and capacity.

2. Documenting determination that proposed project/activity will meet local criteria and standards of public benefit as set forth in §570.209(b).

3. Financial review of the sources and uses, operating proformas, and financial statements.

4. Structuring of deals with available public sector economic development programs.

5. Review of appraisals, cost assumptions, capital budgets, operating statements, marketing data and other funding commitments.

6. Advising on tax credit equity sources, requirements, and structuring.

7. Identifying other funding sources for the range of commercial, industrial, and residential real estate and business credit deals.

8. Assisting with development issues during pre-development and development.

9. Documenting accomplishments (i.e., FTE jobs created) of the activity.

10. Advising on program regulations issues.

11. Assist with federal underwriting and documentation process for HOME and CDBG programs.

F. NDC will provide technical support or financial analysis to the Client with respect to its economic and housing development program proposals, including, but not limited to, the establishment of a commercial kitchen small business incubator. Assistance may also include the preparation of Requests for Proposals.

Federal Resources
G. NDC will provide technical assistance and advocacy in the Client’s efforts to seek funding or leverage existing resources through governmental programs including, but not limited to:

1. Community Development Block Grant (CDBG) program

2. HOME Investment Partnership program

3. HUD Section 108 loans, including Brownfields Economic Development Initiative (BEDI) grants

4. U.S. Department of Commerce Economic Development Administration (EDA)

5. U.S. Environmental Protection Agency (EPA) Brownfields Program, including Targeted Assessments, Supplemental Pilot Program, and Brownfields Revolving Loan Fund

6. U.S. Small Business Administration 7(a), 504, and Microenterprise programs

7. New Markets Tax Credit Program

8. Opportunity Zone Program

9. Federal Home Loan Bank Community Investment Program

10. Rehabilitation Tax Credits (Historic Tax Credits)

11. Low Income Housing Tax Credit (LIHTC)

12. 63-20 and 501(c)(3) bond financing for public facilities

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H. NDC will make available to up to three (3) City of Salinas employees annually access to NDC’s self-paced remote online training courses, including its Certified Economic Development Finance Professional Training Program and/or its Housing Development Finance Professional Training Program courses at no additional cost.

I. At the Client’s request, NDC will attend and/or facilitate calls and/or meetings with internal and external stakeholders related to projects or programs in which NDC is providing the advisory services described above.

J. NDC will advise on the challenges created by homelessness within the City of Salinas, as well as potential solutions.

Proposed Focus for Scope of Work – Year 1
A. Assist the Client in the design, implementation, and monitoring of the Client’s Economic Development Element small business development policy and action items. This assistance provided by NDC will include:

2. Developing written program policies, procedures, and/or guidelines regarding underwriting or eligibility evaluation, loan/grant approval, and loan write-offs or grant denials, as applicable, for overall program development & implementation (which may include small business grants, microloans, façade improvement, CDBG, and/or Section 108 program).

B. Under Item E in Exhibit A above, NDC intends to provide feasibility and gap financing analysis for at least 3 projects in Year 1 that are currently in the pipeline for consideration by the Client, including but not limited to:

1. 467/479 E. Market Street

2. 10 Simas Street

3. Chinatown EPA focused project/historic rehab project/ARPA acquisition property(s)
C. NDC will register to up to three (3) City of Salinas employees in Year 1 for NDC’s selfpaced remote online training courses, including its Certified Economic Development Finance Professional Training Program and/or its Housing Development Finance Professional Training Program courses at no additional cost.

Evaluation of contract at end of full first fiscal year may be conducted to determine the next year’s focused Scope of Work and if an Amendment is needed to be made by either party.

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Term Term periods Approx. Annual Amount
A July 1, 2023 through June
30,
2024
$75,000.00
B July 1, 2024 through June
30,
2025
$77,250.00 (Includes
3% COLA*
C July 1, 2025 through June $2,250.00)
30,
2026
$79,568.00 (Includes
3% COLA*
*3% yearly Cost of Living Adjustment increase incorporated into Annual Amounts. $2,318.00) City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#23-409, Version: 1
Agreement with Salinas Rotary Club for maintenance of the Salinas Rotary Arch Approve a Resolution authorizing the City Manager to enter into a Maintenance Agreement with the Salinas Rotary Club for maintenance of the Salinas Rotary Arch.

City of Salinas Page 1 of 1 Printed on 6/15/2023
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CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: June 20, 2023
DEPARTMENT: ADMINISTRATION
FROM: STEVEN S. CARRIGAN, CITY MANAGER
BY: CHRISTOPHER A. CALLIHAN, CITY ATTORNEY
TITLE: MAINTENANCE AGREEMENT FOR SALINAS ROTARY ARCH
RECOMMENDATION MOTION:

A motion to approve a Resolution authorizing the City Manager to enter into a Maintenance Agreement with the Salinas Rotary Club for maintenance of the Salinas Rotary Arch.

DISCUSSION:

In November 2022, the City Council accepted the Main Street Streetscape Project for maintenance and responsibility, thereby bringing the Project to completion. One of the main features of the Project is the Salinas Rotary Arch which spans Main Street on the 200 block. The Salinas Rotary Club was a key partner of the City and integral to bringing the Arch to completion. The Rotary contributed substantial funds toward the costs to design and to construct the Arch and in order to ensure their investment has offered to take on general, day-to-day maintenance of the Arch to include graffiti removal from the brick, graffiti removal from the pre-caste concrete, maintenance/reapplication of water-repellent coasting on the brick and on the pre-caste concrete.

To memorialize the Rotary’s commitment, the attached Maintenance Agreement is presented for the City Council’s consideration. The Maintenance Agreement has a six-year term with the City providing compensation to the Rotary in the amount of $5,000 per year for a total amount of $30,000. The Rotary would be responsible for the cost and expense of providing all labor, supervision, materials, supplies, equipment, and all other tools and manpower necessary to perform the maintenance services contemplated under the Maintenance Agreement. All maintenance will be subject to the City’s approval. All other maintenance of the Arch will be the City’s responsibility including adjustment of the lighting, as needed; replacement of light bulbs; periodic inspection of the structural and non-structural elements; and reapplication of coating on and related repairs of the steel.

The Arch has become a symbol of Salinas with community members often parking or standing under the Arch for photo opportunities. Continuous maintenance and care of the Arch will be Page | 2
important to ensure it remains free from vandalism and damage. With the Salinas Rotary willing to take on general, day-to-day maintenance, the City and its Public Works team can be relieved from this responsibility and can therefore be available for other needed services throughout the city.

CEQA CONSIDERATION:

The City Council’s approval of the proposed Maintenance Agreement is categorically exempt from environmental review under the California Environmental Quality Act (CEQA Guidelines section 15301).

STRATEGIC PLAN INITIATIVE:

Approval of the Maintenance Agreement supports the City Council’s goal of Infrastructure and Environmental Stability (City of Salinas Strategic Plan 2022-2025).

FISCAL AND SUSTAINABILITY IMPACT:

Approval of the Maintenance Agreement will have an impact on the General Fund in the total amount of $30,000. Sufficient funding is available to support this expenditure.

DEPARTMENTAL COORDINATION
The City Manager and the City Attorney coordinated on this Report.

ATTACHMENTS:

Resolution
Maintenance Agreement
Page | 3
RESOLUTION NO. ______ (N.C.S.)

A RESOLUTION AUTHORIZING THE CITY MANAGER TO ENTER INTO A

MAINTENANCE AGREEMENT WITH THE SALINAS ROTARY CLUB FOR

MAINTENANCE OF THE SALINAS ROTARY ARCH
BE IT RESOLVED BY THE CITY COUNCIL OF SALINAS that the City Council authorizes the City Manager to enter into a Maintenance Agreement with the Salinas Rotary Club for maintenance of the Salinas Rotary Arch in the total amount of $30,000.

PASSED AND APPROVED this 21st day of March 2023, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:
___________________________________
Kimbley Craig, Mayor
ATTEST:
________________________________
Patricia M. Barajas, City Clerk
1 MAINTENANCE AGREEMENT

SALINAS ROTARY ARCH
THIS MAINTENANCE AGREEMENT (“Agreement”) is entered into this 20th day of June, 2023, (“Agreement”) by and between the City of Salinas, a California Charter city and municipal corporation (hereinafter “City”) and the Salinas Rotary Club, a California non-profit mutual benefit corporation, (hereinafter “Rotary”).

WHEREAS, the City adopted the Downtown Vibrancy Plan in 2015 which included as one of its key implementation measures the creation of a streetscape plan for Main Street; and WHEREAS, the City approved the Main Street Master Plan in October 2017 with the intent to create an attractive and safe area along Main Street from Central Avenue to San Luis Street and to revitalize the Downtown Area; and
WHEREAS, Rotary proposed the construction of a landmark Salinas sign, to be named the Salinas Rotary Arch, (the “Arch”), as a component of the streetscape plan; and WHEREAS, the City agreed to incorporate the Arch into the Streetscape plan; and WHEREAS, the final Main Street Streetscape Project included the installation of new concrete and paver sidewalks along Main Street, the installation of new street trees, a new traffic signal system at Main Street and San Luis Street, new electrical and lighting systems throughout the 100, 200, and 300 blocks of Main Street, a new automatic landscape irrigation system, new landscaping and amenities, and the construction of the Arch across the 200 block of Main Street; and
WHEREAS, Rotary contributed substantial funds towards the costs to design and to construct the Arch and has a vested interest in ensuring the Arch is maintained; and WHEREAS, on November 15, 2022, the Salinas City Council accepted the Main Street Streetscape Project, including the Arch and all other components of the project, for maintenance and responsibility.

NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:

1. Grant of License; Non-Exclusive Right of Entry. City grants to Rotary a non-exclusive license to maintain and repair the Arch to include the following: graffiti removal from the brick, graffiti removal from the pre-cast concrete, maintenance/reapplication of water-repellant coating on the brick and pre-cast concrete (“Maintenance Services”). Rotary shall at its sole cost and expense provide all labor, supervision, supplies, materials, equipment, and all other tools and manpower necessary to perform the Maintenance Services which shall be subject to City review and approval. The City understands and acknowledges that Rotary may contract with 2 one or more contractors to perform the Maintenance Services including, but not necessarily limited to, the Salinas City Center Improvement Association (SCCIA).

Rotary and each of its contractors and agents shall have a non-exclusive right to enter into, over, and across Main Street and the City sidewalks for the limited purpose of performing the Maintenance Services. Rotary and its contractors and agents shall coordinate with City prior to the closure of Main Street or the sidewalk as may be necessary to perform the Maintenance Services.

Rotary shall not have any other responsibility to maintain or repair the Arch beyond the Maintenance Services described in this Agreement. City agrees to perform all other maintenance including, but not limited to (a) the adjustment of the lighting direction, as needed, (b) replacement of light bulbs, (c) periodic inspection by the appropriate qualified professional of the structural and non-structural elements of the Arch, (d) reapplication of high performance coating on the steel and any related repairs, and (e) all other maintenance.

2. No Lease. This Agreement (i) is not a lease and does not grant Rotary any real property rights in the Arch or any City street or other public improvements and (ii) shall not make Rotary an agent for the City.

3. Term. This Agreement shall commence upon Rotary’s execution of this Agreement (“Effective Date”) and shall continue for a period of six (6) years thereafter. This Agreement may be extended only upon the mutual written consent of the parties and may be terminated sooner by either party upon no less than thirty (30) days’ notice. Upon the expiration or the earlier termination of this Agreement, full responsibility for the Maintenance Services shall revert to City and Rotary shall have no obligations under this Agreement.

4. Compensation. For its performance of the Maintenance Services, City shall pay to Rotary annual compensation in the total amount of five thousand dollars ($5,000). City shall make the first annual compensation payment within thirty (30) days of the Effective Date and shall make successive annual compensation payments on the anniversary of the Effective Date.

Total amount of compensation to be paid by City under this Agreement shall not exceed thirty thousand dollars ($30,000).

5. Insurance. Rotary shall procure and maintain for the duration of this Agreement insurance meeting the requirements specified in Attachment A hereto covering itself and all contractors and agents performing the Maintenance Services.

6. Indemnification. Rotary shall hold harmless, defend at its own expense, and indemnify the City and its officers, employees, representatives, and agents from and against all liability, claims, damages, losses, and/or expenses including reasonable City attorney fees arising from all acts or omissions of Rotary or its officers, contractors, agents, or employees arising out of the performance of the Maintenance Services under this Agreement. In no event shall Rotary be 3 obligated to defend or indemnify the City with respect to any liability, claims, damages, losses, and/or expenses caused by the sole negligence or willful misconduct of the City, its officers, employees, representatives, agents or any third party.

7. Prevailing Wage. Rotary shall carry out and cause its contractors to carry out the maintenance services contemplated under this Agreement in conformity with all applicable laws and regulations, including without limitation, all applicable federal and state labor laws and standards. To the extent applicable to the maintenance services, Rotary and its contractors and agents shall comply with California Labor Code Section 1720 et seq. and regulations adopted pursuant thereto and shall be responsible for carrying out the requirements of such provisions.

8. Ownership. City shall own the Arch and related improvements. Nothing stated in this Agreement shall transfer any ownership rights, interests or other responsibilities of ownership in the Arch from City to Rotary.

9. Agency. In performing the services specified under this Agreement, Rotary is hereby deemed to be an independent contractor and not an agent or employee of City.

10. Non-Assignability. Except as is otherwise acknowledged in Paragraph 1 of this Agreement with respect to the contracting out of the Maintenance Services, the rights and obligations of Rotary hereunder are not assignable and cannot be delegated without written consent of City.

11. Entire Agreement. This Agreement constitutes the entire Agreement between the parties hereto and supersedes any and all prior agreements, whether oral or written, relating to the subject matter thereof. Any modification of the Agreement will be effective only if it is in writing signed by both parties hereto.

12. Validity. If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions will continue in full force without being impaired or invalidated in any way.

13. Counterparts. This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts.

14. Laws. Rotary agrees that in the performance of the Maintenance Services it will comply with all applicable State, Federal and local laws and regulations. This Agreement shall be governed by and construed in accordance with the laws of the State of California, County of Monterey, and City of Salinas.
4 15. Notices. All notices, demands, or other communications given pursuant to the terms of this Agreement hall be in writing and shall be deemed to have been given upon personal delivery or as of the second business day after mailing in the United States certified mail, return receipt requested, postage prepaid, addressed as follows or to such other address or to such other person as either party may designate:

If to City: If to Rotary:

City Manager Salinas Rotary Club
200 Lincoln Avenue Attn: President
Salinas, California 93901 P. O. Box 676
Salinas, CA 93902
With a copy to:

City Attorney Anne C. Leach, Esq
200 Lincoln Avenue Ottone & Leach LLP
Salinas, California 93901 1418 South Main Street, Suite 203 Salinas, CA 93908
IN WITNESS WHEREOF, the parties have executed this Agreement as set forth below.

CITY OF SALINAS
___________________________ ________________________________________ Steven S. Carrigan, City Manager Date
APPROVED AS TO FORM:
_____________________________ _________________________________________ Christopher A. Callihan, City Attorney Date

SALINAS ROTARY CLUB
_____________________________ _________________________________________ Date
By (Printed Name):

Its (Title):
5 ATTACHMENT “A”

INSURANCE REQUIREMENTS
Rotary shall procure and maintain for the duration of the contract, and for three years thereafter, 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 by Rotary, its officers, agents, representatives, employees, and/or subcontractors.

MINIMUM SCOPE AND LIMIT OF INSURANCE Coverage shall be at least as broad as:

1. Commercial General Liability (“CGL”): Insurance Services Office (“ISO”) Form CG 00 01 covering CGL on an occurrence basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO Form CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.

2. Automobile Liability: ISO Form CA 0001 covering Code 1 (any auto), with limits no less than $1,000,000 per accident for bodily injury and property damage. As of the Effective Date of this Agreement the Rotary does not own or operate any automobiles. The Rotary will be required to obtain this insurance coverage in the event the Rotary later owns and/or operates an autombobile(s).

3. Workers’ Compensation: as required by the State of California, with Statutory Limits, and Employers’ Liability insurance with a limit of no less than $1,000,000 per accident for bodily injury or disease. As of the Effective Date of this Agreement The Rotary does not have employees. The Rotary will be required to obtain this insurance coverage in the event the Rotary later hires employees.

4. Contractors’ Pollution Legal Liability and/or Asbestos Legal Liability and/or Errors and Omissions (if project involves environmental hazards): with limits no less than $1,000,000 per occurrence or claim, and $2,000,000 policy aggregate, on an annual basis.

If Rotary maintains broader coverage and/or higher limits than the minimums shown above, City requires and shall be entitled to the broader coverage and/or higher limits maintained by the Rotary. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.

Self-Insured Retentions
Self-insured retentions must be declared to and approved by the City. At the option of the City, either: Rotary shall cause the insurer shall to reduce or eliminate such self-insured retentions as respects the City, its officers, officials, employees, and volunteers; or Rotary shall provide a financial guarantee satisfactory to the City guaranteeing payment of losses and related investigations, claim administration, and defense expenses. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.
6 Other Insurance Provisions
The insurance policies are to contain, or be endorsed to contain, the following provisions:

1. The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of Rotary including materials, parts, or equipment furnished in connection with such work or operations and automobiles owned, leased, hired, or borrowed by or on behalf of Rotary. General liability coverage can be provided in the form of an endorsement to Rotary’s insurance (at least as broad as ISO Form CG 20 10, CG 11 85 or both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 forms if later revisions used).

2. For any claims related to this project, Rotary’s insurance coverage shall be primary insurance coverage at least as broad as ISO CG 20 01 04 13 as respects the City, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, or volunteers shall be excess of the Rotary’s insurance and shall not contribute with it.

3. Each insurance policy required by this clause shall provide that coverage shall not be canceled, except with notice to the City.

4. A copy of the claims reporting requirements must be submitted by Rotary to the City.

5. If the services involve lead-based paint or asbestos identification/remediation, Rotary’s Pollution Liability policy shall not contain lead-based paint or asbestos exclusions. If the services involve mold identification/remediation, the Rotary’s Pollution Liability policy shall not contain a mold exclusion, and the definition of Pollution shall include microbial matter, including mold.

Acceptability of Insurers
Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best rating of no less than A: VII, unless otherwise acceptable to the City.

Waiver of Subrogation
Rotary hereby agrees to waive rights of subrogation which any insurer of Rotary may acquire from Rotary by virtue of the payment of any loss. Rotary agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation. The Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the City for all work performed by the Rotary, its employees, agents and subcontractors.

Verification of Coverage
Rotary shall furnish the City with original Certificates of Insurance including an additional insured endorsement and all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to City before work begins.

However, failure to obtain the required documents prior to the work beginning shall not waive Rotarys’s obligation to provide them. The City reserves the right to require complete, certified 7 copies of all required insurance policies, including endorsements, required by these specifications, at any time.

Subcontractors
Rotary shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein, and Rotary shall ensure that City is an additional insured on insurance required from subcontractors. For CGL coverage subcontractors shall provide coverage with a form at least as broad as CG 20 38 04 13.

Maintenance of Insurance
Maintenance of insurance by Rotary as specified shall in no way be interpreted as relieving Rotary of its indemnification obligations or any responsibility whatsoever and Rotary may carry, at its own expense, such additional insurance as it deems necessary.

City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#23-418, Version: 1
Tow Service Franchise Agreements for FY 2023-24
Approve a Resolution authorizing the execution of the Salinas Police Department’s FY 2023-24 Tow Service Franchise Agreements.

City of Salinas Page 1 of 1 Printed on 6/14/2023
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CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: JUNE 20, 2023
DEPARTMENT: SALINAS POLICE DEPARTMENT
FROM: ROBERTO FILICE, CHIEF OF POLICE
BY: ALBERTO DURAN, SERGEANT

TONYA ERICKSON, POLICE SERVICES ADMINISTRATOR
TITLE: TOW FRANCHISE SERVICE AGREEMENT FOR FY 2023-24
RECOMMENDED MOTION:

A motion to approve a Resolution authorizing the execution of the Salinas Police Department’s FY 2023-23 Tow Franchise Service Agreements.

RECOMMENDATION:

Staff recommends City Council approve a Resolution authorizing the execution of the Salinas Police Department’s FY 2023-24 Tow Franchise Service Agreements.

BACKGROUND:

The City of Salinas, through the Police Department, manages a rotational tow program to provide towing services for the abatement and removal of abandoned, wrecked, dismantled or inoperative vehicles from private or public property, and to impound and provide storage of such vehicles as ordered and designated by authorized members of the Salinas Police Department. Tow companies provide service to the Salinas Police Department pursuant to a franchise issued by the City and a Tow Service Franchise Agreement entered into between the City and the tow companies. Each tow company is required to pay a franchise fee to the City during the term of the franchise, in an amount set by Resolution of the City Council pursuant to Salians Municipal Code Section 20-191.

The franchise fee is paid quarterly and is based on the number of tows generated and the City’s actual costs in managing the franchise tow program.

All tow companies towing for the Police Department are still required to tow and store recreational vehicles (RVs). They may contract with another company if they do not have the proper equipment to tow a large RV, but they are responsible for the storage, and if necessary, the disposal of an RV towed under the franchise agreement. This more evenly distributes the RV towing among all rotation tow companies.

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Tow franchise operators will receive a credit up to $1,300 for the towing and disposal of each recreational vehicle. This credit is to recognize that there are extra costs associated with storing and disposing of a recreational vehicle, and represents an increase of $300 per vehicle.

POLICE COMMUNITY ADVISORY COMMITTEE:

The Police Chief will present this item to the Police Community Advisory Committee on June 28, 2023. The Committee will have an opportunity to ask questions and provide comments related to this requested action.

CEQA CONSIDERATION:

Not a Project. The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).

STRATEGIC PLAN INITIATIVE:

Approving the proposed Resolution will support the City Council’s Strategic Plan Goal of Public Safety.

DEPARTMENTAL COORDINATION:

The Salinas Police Department has worked closely with the City Attorney’s office in the development of the draft FY 2023-2024 Tow Franchise Service Agreement.

FISCAL AND SUSTAINABILITY IMPACT:

There is a reduction in revenue received due to the $1,300 franchise fee credit for the towing of recreational vehicles.

ATTACHMENTS:

Resolution
FY 2023-24 Tow Service Franchise Agreement
RESOLUTION NO. ___________ (N.C.S.)

A RESOLUTION AUTHORIZING THE EXECUTION OF TOW SERVICE

FRANCHISE AGREEMENTS AND ESTABLISHING A FRANCHISE FEE CREDIT

FOR CERTAIN SERVICES APPLICABLE TO THE NON-EXCLUSIVE FRANCHISE

FOR POLICE TOWING
WHEREAS, the City of Salinas, through its Police Department, manages a rotational tow program to support the Police Department’s operations and enforcement of the law; and WHEREAS, tow companies provide service to the Salinas Police Department pursuant to a franchise issued by the City and a Tow Service Franchise Agreement entered into between the City and the tow companies; and
WHEREAS, each tow company is required to pay a franchise fee to the City during the term of the franchise in an amount set by Resolution of the City Council pursuant to Salinas Municipal Code section 20-191; and
WHEREAS, the franchise fee is based on the number of tows generated and the City’s actual costs in managing the franchise tow program and is paid quarterly by the franchised tow companies; and
WHEREAS, the Salinas Police Department, from time-to-time, orders the tow of an oversized vehicle including, for example, a recreational vehicle. Such vehicles require specialized equipment and services because they contain hazardous materials or substances (including, for example, human waste and refrigeration chemicals) which, if not property disposed of, can negatively affect the health, safety, and welfare of the community. Such vehicles are sometimes inoperable and incapable of being driven or otherwise moved without the assistance of a tow truck, rendering them with little to no value; and
WHEREAS, because of the condition of some oversized vehicles, and the need for them to be properly cleaned, transported, and disposed of, the franchise tow companies sometimes realize a loss of revenue as a result of assisting the Salinas Police Department with the tow and the removal of some oversized vehicles.

NOW, THEREFORE, BE IT RESOLVED the City Council authorizes the City Manager to execute the FY 2023-24 Tow Service Franchise Agreements with the franchise tow companies; and
BE IT FURTHER RESOLVED by the City Council, that to accommodate the Salinas Police Department’s need for the tow and removal of oversized vehicles and the negative financial effect on the franchise tow companies as a result of being called upon to tow an oversized vehicle, in some instances the franchise fee due and payable to the City from each franchise tow company may be reduced by up to one thousand three hundred dollars ($1,300) for each oversized vehicle towed by each company as further specified in the Tow Service Franchise Agreement; and BE IT FURTHER RESOLVED that in the event a franchise tow company’s franchise fee is fully reduced to zero as a result of having towed and removed such oversized vehicles, the franchise tow company will not be required to pay a franchisee fee, but will not receive a credit for additional tows completed beyond the value of the franchise fee.

PASSED AND APPROVED this 20
th day of June 2023, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:
_______________________________
Kimbley Craig, Mayor
ATTEST:
_________________________________
Patricia M. Barajas, City Clerk
TSFA FY 2023-24 Page 1
Salinas Police Department

TOW SERVICE FRANCHISE AGREEMENT
This Tow Service Franchise Agreement (“Agreement”) is entered into this 1st day of July 2023, by and between the City of Salinas, a California charter city and municipal corporation (“City”) and ____________________________ (“Franchisee”).

RECITALS
A. Pursuant to California Vehicle Code Section 22660 and Section 20-178 of the Salinas City Code, the City has the authority to grant a franchise to a tow service Franchisee to provide towing services for the abatement and removal of abandoned, wrecked, dismantled or inoperative vehicles (including recreational vehicles and other over-sized vehicles) or parts thereof from private or public property, and to impound and provide storage of such vehicles as ordered and designated by authorized members of the Salinas Police Department.

B. The City, for the purpose of insuring the continued protection and preservation of the public health, welfare and convenience of the citizens of Salinas, desires to award a towing franchise to Franchisee for towing services within the City.

C. Franchisee desires to provide such towing services upon the terms and conditions set forth herein.

AGREEMENT
This Tow Service Franchise Agreement (as defined in Attachment A) contains rules and regulations that a company agrees to comply with in order to receive a rotation tow listing with the Salinas Police Department. Participation in the Salinas Police Department Rotation Tow Program is voluntary and not intended to be the main source of income. A Franchisee (as defined in Attachment A), by agreeing to participate in the program is not acting as an agent for the Salinas Police Department or the City of Salinas when performing services under the Agreement.

Compliance with all of the terms and conditions of the Tow Service Franchise Agreement is mandatory for tow companies participating in the Salinas Police Department Rotation Tow Program. All participants in the Salinas Police Department Rotation Tow Program shall provide towing and storage services for public safety response calls regardless of the value or the size of the vehicle or vehicles to be towed and stored, and regardless of the nature of the public safety response call (including collision, DUI, abandoned vehicle abatement, and all other call for service by Police Department officials).

Attachments: For clarification purposes, many words and phrases used in this Agreement are defined in Attachment A. Attachment B contains a listing of tow truck (as defined in Attachment A) equipment specifications and equipment use requirements applicable to all tow franchisees.

TSFA FY 2023-24 Page 2

1. TOWING
The Salinas Chief of Police shall establish towing procedures to facilitate the distribution of calls and meet the needs of the Salinas Police Department with regards to response time (as defined in Attachment A) and availability of tow services. Within the City, Chief of Police shall determine the maximum response time, enrollment period (as defined in Attachment A), reasonable rates, and minimum number of trucks.

2. ROTATION LISTS
A. Within the City, Chief of Police may choose to maintain separate rotation tow lists for each category of towing or may choose to maintain a single rotation tow list to cover all categories of towing.

B. Regardless of the class of tow truck utilized or responding to the call, charges shall not be more than for the class of vehicle towed or serviced, except when vehicle recovery operations (as defined in Attachment A) require a larger class of tow truck.

C. A call to a Franchisee shall constitute one turn on the list after which the Franchisee shall be moved to the bottom of the list. This includes when the Franchisee fails to answer the phone, is unable to respond, is unable to perform the required service, refuses to respond to provide service, or is cancelled due to excessive response time.

If it is determined that the Franchisee is not needed and is cancelled by the Salinas Police Department, up to and including arrival at the scene, there shall be no charges and the Franchisee shall be placed back at the top of the list. 1) If the Franchisee is cancelled by the vehicle’s owner or agent prior to the Franchisee taking possession (as defined in Attachment A) of the vehicle, there shall be no charges for towing. The Franchisee shall immediately contact the Salinas Police Department and advise them of the cancellation. The Franchisee shall then be placed back at the top of the list.
2) If service, other than towing and recovery, has begun and is cancelled by the vehicle’s owner or agent, the Franchisee may charge a minimum of one-half of the regular hourly service charge, for the time expended on the call. For purposes of cancellation, service begins when physical work on the vehicle has begun, not the response. No lien shall arise for the service unless the Franchisee has presented a written statement to the vehicle’s owner or agent for the signed authorization of services to be performed.
a) The Franchisee shall not attempt to take possession of the vehicle in order to establish a lien for any non-towing services performed, or begun and subsequently cancelled, when not entitled to such lien by law. The Franchisee shall comply with Civil Code Section 3068.

TSFA FY 2023-24 Page 3
D. If two or more Franchisees are called to the same incident, distribution of the vehicles shall be at the discretion of the Salinas Police Department Incident Commander (as defined in Attachment A).

E. The Salinas Police Department Incident Commander may direct a tow Franchisee to move vehicles to help clear a roadway or for lifesaving operations. Franchisees shall provide the assistance as directed. There shall be no charge for this assistance, and the assistance provided shall not change the Franchisee’s place in the rotation.

F. A Franchisee shall have a business office and storage yard within the city limits or within a ten (10) mile radius from where any vehicle is removed.

G. Franchisees applying for a rotation listing shall have a minimum of three (3) years verifiable for-hire-towing experience, as an owner or principal, prior to the final filing date of the enrollment period in order to qualify for a Salinas Police Department rotation tow listing. This requirement may be waived by the Chief of Police where the applicant proves to the Chief of Police that it has the required experience in the industry, the financial and technical capacity to perform the work contemplated by this Agreement and has all necessary equipment. Franchisees currently on a Salinas Police Department rotation list and having less than the required three (3) years’ experience are exempt from this provision.

H. Franchisees shall not be allowed more than two (2) passes on a Police Department request for service during any calendar month, no more than three (3) passes within two consecutive calendar months, and no more than six (6) passes within six consecutive calendar months. A Franchisee who takes more than the authorized maximum number of passes during a calendar month, two consecutive calendar months, or six consecutive calendar months, will be automatically suspended from the rotation for a period of sixty (60) days. After the first thirty (30) days of suspension, the Franchisee may request a meeting with the Chief of Police to request early reinstatement which may be granted by the Chief of Police in his/her sole discretion. Notwithstanding what is otherwise provided for in this subsection, if a Franchisee passes on a Class C or a Class D tow that Franchisee will receive the next Class C or Class D call for service and will not be permitted to pass on that second call for service.

I. Franchisees must at a minimum meet the class A requirements and must meet the following qualifications to tow under each class:
1) Class A – Light Duty
a. A Light Duty Franchisee shall maintain a minimum of one tow truck, which as a manufacturer’s GVWR of at least 14,000 pounds.

Class A equipment specifications can be found in Attachment B of this Agreement.

TSFA FY 2023-24 Page 4
b. A “trailer for hire” shall not be approved for listing as a Class A tow truck.
2) Class C- Heavy Duty
a. A Heavy-Duty Franchisee shall maintain at least one three-axle tow truck with a GVWR of at least 48,000 pounds. The truck shall be equipped with air brakes and must be capable of providing and maintaining continuous air to the towed vehicle.
3) Class D- Super Heavy Duty
a. A Heavy-Duty operator shall maintain at least one three-axle tow truck with a GVWR rating of at least 52,000 pounds. The truck shall be equipped with air brakes and must be capable of providing and maintaining continuous air to the towed vehicle.
4) The qualifications for the Heavy Duty and Super Heavy-Duty Tow List do not preclude an operator from utilizing a Class-B tow truck when the GVWR is sufficient to tow the vehicle.

J. Heavy Duty and Super Heavy-Duty franchisees will respond to Heavy Duty salvage and recovery operations with the following
1) At least one (1) driver shall have five (5) verifiable years for-hire salvage and recovery experience.
a. The five (5) year for-hire salvage and recovery experience shall be determined by SPD.
2) Two (2) tow trucks which shall be one (1) Class D tow truck and one (1) Class C tow truck.

3. TOW TRUCK CLASSIFICATIONS
A. A Franchisee shall equip and maintain tow truck(s) covered under this Agreement in accordance with the provisions set forth in the California Vehicle Code, Title 13 of the California Code of Regulations, the specifications contained in this Agreement, and consistent with industry standards and practices. 1) Notwithstanding Vehicle Code Section 615, all tow trucks shall have recovery capabilities, wheel lift capabilities, and a boom meeting the specifications contained in this Agreement. For the purpose of this TSFA FY 2023-24 Page 5
Agreement, “a trailer for hire that is being used to transport a vehicle” shall not qualify as a primary tow truck for rotation tow lists. a. For purposes of this Agreement a recovery is defined as a vehicle which is overturned, down an embankment, or is otherwise not on upright on its wheels.
2) A Franchisee who has a car carrier may be exempted from the recovery, wheel lift, and boom capability requirements. However, the car carrier must be an additional unit.

B. A violation of the Gross Vehicle Weight Rating (GVWR) and safe loading requirements of a tow truck shall be cause for immediate suspension (as defined in Attachment A) and/or other disciplinary measures. This includes exceeding the tow truck’s GVWR, front axle weight rating, rear axle weight rating, maximum tire weight ratings, or not maintaining 50% of the tow truck’s unladen weight on the front axle when lifting/carrying a load.

C. To properly and safely tow and service the wide variety of vehicles being operated on the highway, a towing procedure may require the use of auxiliary equipment specifically designed for the purpose. This auxiliary equipment should be used when appropriate. A listing of service and auxiliary equipment for each classification can be found in Attachment C of this Agreement.

D. Tow truck and car carrier classifications are based on the truck chassis GVWR, and the classification system used by the American Trucking Association (ATA) and truck manufacturers. Tow truck and car carrier classifications shall meet all applicable state and/or federal standards.

3.A. Over-Sized Vehicles.

A. For purposes of this Agreement, the term “over-sized vehicle” means any vehicle or trailer or combination of vehicles or trailers in excess of twenty feet in length or seven feet in height, exclusive of any projecting lights or devices allowed under the California Vehicle Code. The terms “vehicle” or “trailer” shall be as those terms are defined in the California Vehicle Code and include any recreational vehicle as that term is defined in the Salinas Municipal Code and also includes any boat or other watercraft.

4. TOW TRUCK DRIVERS
A. The Franchisee hereby agrees that all tow truck drivers responding to calls initiated by the Salinas Police Department are qualified and competent employees of its company. The Franchisee further agrees that all its tow truck drivers are trained and proficient in the use of tow truck and related equipment, including, but not TSFA FY 2023-24 Page 6
limited to, the procedures necessary for the safe towing and recovery of the various types of vehicles serviced through Salinas Police Department rotation. Tow truck drivers shall be at least 18 years old and possess the following minimum class driver license:
1) Class A tow truck – A valid Class C license, or a valid Class A license with valid medical certificate.
2) Class C tow truck – A valid Class A license with valid medical certificate.
3) Class D tow truck – A valid Class A license with valid medical certificate.
a. The Class A (1) license must be endorsed to allow operation of special vehicle configurations and/or special cargos (refer to Attachment B).

B. Potential tow truck drivers who want to be involved with the City of Salinas rotation tow program shall complete a Salinas Police Department Tow Driver Application and shall be fingerprinted for the purpose of conducting criminal history inquiries.

1. Any operator or tow truck driver who separates from the rotation tow program, in excess of one year, shall be fingerprinted for the purpose of conducting a criminal history check regardless of prior criminal history clearances (e.g., Tow Service Franchise Agreement or Salinas PD Evidence Tow Agreement).

2. Potential new tow truck drivers shall disclose on their applications all prior criminal convictions (felony,
misdemeanor, and infraction). The failure of an applicant to disclose any previous conviction shall be cause to deny the application. An applicant who fails to disclose a previous conviction shall be ineligible to re-apply for a period of one (1) year from the date the application is denied.
2) The Salinas PD will receive subsequent arrest/conviction notifications for all operators and tow truck drivers.
3) A Franchisee shall notify the Salinas Police Department tow officer of any arrest and/or conviction of a tow truck driver, or the operator, prior to the beginning of the next work shift.
a) Failure to make notification shall be cause for disciplinary action.

TSFA FY 2023-24 Page 7
4) The Salinas Police Department tow officer shall be notified immediately by an operator upon a tow truck driver’s or manager’s separation from the rotation tow program.

C. The Franchisee shall maintain a current list of drivers and each of their qualifications and licenses.
1) The Franchisee shall provide a current list of its drivers to the Salinas Police Department upon execution of this Agreement. The Franchisee shall notify the Salinas Police Department of any change in driver status, including but not limited to, the addition of any new driver(s), the deletion of any driver(s), changes in licensing including, but not limited to, revocation or suspension, or changes in insurance for drivers. An updated list shall be provided to the Salinas Police Department within seven calendar days of any change in driver status.
2) Franchisees, shall at a minimum, maintain the following information for each employee, which records may be inspected by Salinas Police Department during normal business hours:
a) Full name
b) Date of birth
c) California driver license number
d) Copy of valid medical certificate (if required)
e) Job title/description
f) Current home address
g) Current home phone number
h) Type(s) of truck(s) driver has been trained and instructed to operate and training received by each driver.

D. All tow truck drivers and owner/operators shall be enrolled in the Pull Notice Program.
1) Upon the addition of new drivers, a Franchisee shall be granted a maximum of 30 days to enroll drivers in the Pull Notice Program. 2) Pull Notices shall be kept on file, signed, and dated by the Franchisee. 3) The Chief of Police may require a Franchisee to provide copies of Pull Notice Reports to the Chief of Police within one business day.

E. All tow truck drivers shall retain at all times in his or her possession an Identification Card issued by the City. While engaged in towing activities pursuant to this Agreement, each person shall wear such Identification Card in plain sight on his or her person and shall upon demand of any City Police Officer or other City official or person to whom towing services are being provided exhibit said TSFA FY 2023-24 Page 8
Identification Card. The Identification Card shall be issued by the City and shall at a minimum contain the name and date of birth of the tow truck driver; the name, business address, and telephone number of the towing company for which such tow truck driver is employed; and a photograph of the tow truck driver. No Identification Card issued under the provisions of this section shall be used at any time by any person other than the one to whom it was issued.

1. No Identification Card shall be altered, removed or obliterated or any entry made upon such Identification Card nor shall such Identification Card be defaced in any way. Each Identification Card shall be personal and shall not be assignable or transferable.

F. Operators shall have all tow truck drivers involved with Salinas Police Department rotation tow operations participate in a controlled substance and alcohol testing (CSAT) program. All drivers shall be enrolled by September 1, 2014.
1) Drivers requiring a Class A, Class B, or commercial Class C license (endorsed for hazardous materials transportation) shall participate in a CSAT program as defined in the Code of Federal Regulations, Title 49, Parts 40 and 382.
2) Drivers not required to possess a Class A, Class B, or commercial Class C license shall be enrolled in a CSAT program substantially similar to the requirements as outlined in Section 1) above.
3) The operator shall ensure selection pools for commercial and noncommercial licensed drivers are maintained separately. 4) A driver possessing a non-commercial driver license who returns with a positive test result shall meet the same reinstatement requirements as a driver required to possess a commercial driver license.

G. Uniforms: Salinas Police Department rotation tow truck drivers shall wear an identifiable uniform (either shirt and pants or coveralls) displaying the company’s and driver’s names while engaged in Salinas Police Department rotation tow operations.

H. Personal appearance: Salinas Police Department rotation tow truck drivers shall represent a professional appearance. An unacceptable representation would include: unbathed, excessively dirty/torn uniform, body art, visible body piercing, etc.

I. Safety Garments: Salinas Police Department rotation tow truck drivers shall wear appropriate warning garments (e.g., vests, jackets, shirts, retroreflective clothing) during daylight and hours of darkness in accordance with Code of Title 8, Section 1598 CCR. If the tow truck driver is working on a Federal-aid highway, the TSFA FY 2023-24 Page 9
operator shall comply with the guidelines contained in the Federal Code of Regulations, Title 23, Highways, Chapter 1, Federal Highway Administration, Department of Transportation, Part 634, Worker Visibility, which requires highvisibility personal protective safety clothing to be worn that meets the Performance Class 2 or 3 requirements of the ANSI/ISEA 107-2004.

J. Tow truck drivers shall perform all towing and recovery operations in the safest, fastest and most expedient manner possible.

5. RATES
A. Fees charged for response to calls originating from the Salinas Police Department shall be reasonable and not in excess of those rates charged for similar services provided in response to requests initiated by any other public agency or private person. The reasonableness of the fees charged shall be determined in the following manner:
1) The Franchisee shall submit its retail hourly rate to the Salinas Police Department at the time of the application and/or renewal of this Agreement in Attachment C. The Chief of Police shall determine the validity and reasonableness of the submitted rates or rate changes. The rates shall be approved prior to the Franchisee answering calls for service pursuant to this tow service agreement.
a) Validity shall be based upon telephone quotes, posted rates, charges to retail customers, etc. Any submitted rate in excess of a Franchisee’s retail rate (as defined in Attachment A) shall be considered invalid and shall not be accepted. A Franchisee that submits an invalid rate shall not be allowed to resubmit a new rate and shall be disqualified from Salinas Police Department rotation tow listing until the next enrollment period.
b) Reasonableness shall be determined as compared to other rates. A Franchisee who submits a rate that is determined to be excessive shall be allowed to resubmit its rates only once.
2) In an effort to remain competitive in the open market, the Franchisee may lower retail rates at any time by notifying the Salinas Police Department When a Franchisee lowers its retail rate, that retail rate becomes the new approved Salinas Police Department rate. Franchisees may only raise rates for Salinas Police Department calls during enrollment periods or upon approval after a midterm review. Franchisees may raise rates for nonSalinas Police Department calls at anytime. Rates for Salinas Police Department calls shall remain at the lowest retail rate until the next enrollment period.

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3) Any Franchisee who charges rates above its retail hourly rates or submitted rates for a Salinas Police Department call shall be in violation of this Agreement and subject to disciplinary action, including but not limited to, suspension or removal from the rotation tow program.

B. The rate for towing shall be computed from portal to portal (as defined in Attachment A). Time expended shall be charged at a rate not to exceed the hourly rate.
1) The Franchisee may charge up to a thirty-minute minimum per call. 2) The Franchisee may charge up to a one-hour minimum per call on public safety response call (as defined in Attachment A).
3) The Franchisee shall base towing charges upon the class of vehicle being towed regardless of the class of truck used, except when vehicle recovery operations require a larger class truck.

C. Rates for a service call (out of gas, lockouts, tire changes, etc.) shall be from portal to end of service, and may be at the hourly rate with up to a thirty-minute minimum.

Charges in excess of thirty minutes may be charged in no more than one-minute increments.

D. Fees for Special Operations:
1) For special operations involving Class B and C tow trucks, the Franchisee shall submit its proposed fees for vehicle recovery operations and load salvage operations (as defined in Attachment A) to the Chief of Police at the same time and under the same conditions as other rates pursuant to Section 5.A.1 herein. Fees shall be reasonable and consistent with those for similar operations. Charges in excess of thirty minutes may be charged in no more than one-minute increments.
a. Hourly rates shall be established by the Franchisee and approved by the Chief of Police in advance for the following:
(1) Auxiliary Equipment, e.g., airbags, converter gear/dolly, additional trailers, forklifts, scoop loaders, etc.
(2) Contracted Equipment, e.g., airbags, converter gear/dolly, additional trailers, forklifts, scoop loaders, etc.
(3) Contract labor.
b. The Chief of Police shall determine the reasonableness of the fees for these types of operations, based upon the average of the proposed fees submitted and a comparison to industry standards for similar operations.

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2) Franchisees shall submit a mark-up rate (percentage of the cost to the Franchisee) for retail equipment and specialized labor not otherwise listed on the application.
3) If a Franchisee performs a service for which a required rate was not submitted to, and approved by, the Chief of Police, the Franchisee shall only be entitled to charge for the actual cost of that service. Example: contract labor rate not submitted, the Franchisee may only charge for the actual rate paid for the labor.

E. The total fees charged for after hours release shall be no more than one-half the hourly rate, and shall only be allowed if there is no person on duty at the storage facility for release and a call back is required outside normal business hours.

F. Storage Fees.
1) The Franchisee shall submit its proposed storage fees, for inside and outside storage, to the Chief of Police at the same time as all other rates are required to be submitted for approval. The Chief of Police shall determine the reasonableness of the fees for inside and outside storage, based upon the average of the proposed fees submitted by those applying for rotation. 2) The Franchisee shall display in plain view at all cashiers’ stations, a sign as described in Section 3070 of the Civil Code, disclosing all storage fees and charges in force, including the maximum storage rate.
3) Vehicles stored 24 hours or less shall be charged no more than one-day storage. Each day thereafter shall be calculated by calendar day. 4) Inside storage fees shall only be charged when inside storage is requested by SPD, the registered owner, legal owner, the insurance company or when inside storage can be reasonably justified by the Franchisee.

G. The approved schedule of rates charged by the Franchisee shall be available in the tow truck, and shall be presented upon demand to the person(s) for whom the tow services were provided, or its agent, or any Salinas Police Department officer at the scene.

H. Rate requirements represent the maximums a Franchisee may charge on a Salinas Police Department call. A Franchisee is not precluded from charging less when deemed appropriate by the Franchisee. These requirements shall not be construed as requiring a charge when a Franchisee would not normally charge for such service. No Franchisee or employee shall refer to any rate as the minimum required or set by Salinas Police Department.

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I. Fees for Special Operations:
1) Fees shall be reasonable and consistent with industry standards for similar operations.
2) Franchisee who provide Super Heavy Duty recovery services may charge a minimum two (2) hour rate.
a) Time expended in excess of the two-hour minimum shall be at the hourly rate in no more than one-minute increments.
b) If a second hour is charged, the second hour shall meet the invoicing requirements pursuant to Section 22651.07(e)(7) CVC. c) If it is determined that only one truck is required, the second truck may claim time from portal to portal and the time expended on scene until the determination was made that only one truck was needed.

J. Lien Fees
1) If a vehicle has been determined to have a value exceeding four thousand ($4,000), pursuant to Section 22670 CVC, the lien shall be satisfied pursuant to Section 3071 CC (Section 3074 CC).
2) The lienholder may charge a fee for lien sale preparations not to exceed seventy dollars ($70), for a vehicle valued at four thousand dollars ($4,000) or less and not to exceed one hundred dollars ($100) for a vehicle valued at greater than four thousand dollars ($4,000) (Section 3074 CC). a) These charges may commence when the lienholder requests the names and addresses of all persons who have an interest in the vehicle from the Department of Motor Vehicles (Section 3074 CC). b) Not more than 50 percent of the allowable fee may be charged until the lien sale notifications are mailed to all interested parties and the lienholder or registration service agent has possession of the required lien processing documents (Section 3074 CC).
c) This fee shall not be made in the case of any vehicle redeemed prior to the 72 hours from the initial storage (Section 3074 CC).

6. COLLUSION
A. A Franchisee and/or applicant shall not conspire, or attempt to conspire, or commit any other act of collusion, with any other Franchisee, applicant, City officer or City employee or any other person, for the purpose of secretly, or otherwise, establishing an unfair understanding regarding rates, or conditions or performance of the TSFA FY 2023-24 Page 13
Agreement that would bring about any unfair condition which could be prejudicial or detrimental to the Salinas Police Department, the motoring public, or other Franchisee(s).
1) Examples of “collusion” include, but are not limited to: conspiracy by any Franchisee(s) to establish artificially high or low rate(s) for services performed pursuant to the Agreement, conspiracy or attempt to circumvent the midterm review process, conspiracy or attempt to obtain preference in rotational tows or in towing of specific vehicles, or any other practice that would give unfair advantage to one Franchisee over another, conspiracy or attempt to defraud members of the public.

B. A finding by the Chief of Police that any Franchisee or applicant has been involved in collusion shall be cause for denial of an application or shall nullify the Agreement. Any Franchisee or applicant found to be involved in any act, or attempted act of collusion, shall be disqualified from participation on the rotation tow list for the current term plus three years.

7. RESPONSE TO CALLS
A. The Franchisee shall respond to Salinas Police Department calls 24 hours a day, seven days a week, within 30 minutes. The Franchisee shall respond with a tow truck of the class required to tow the vehicle specified by the Salinas Police Department. The Franchisee shall advise Salinas Police Department dispatch, at the time of notification, if they are either unable to respond or unable to meet the maximum response time. If, after accepting the call, the Franchisee is unable to respond or shall be delayed in responding, the Franchisee shall immediately notify the Salinas Police Department Communications Center. The Franchisee shall not assign initial calls to other tow Franchisees. The Chief of Police may change required response times upon 30 days notice to all Franchisees. 1) A failure(s) to respond and/or repeated failure(s) to meet the maximum response time requirements shall constitute failure to comply with the terms and conditions of this Agreement. (This includes refusal to respond to abandoned vehicle calls. Justification for failure to respond to calls shall be determined by the Chief of Police or his designee.)
a. The Chief of Police may take immediate disciplinary action for any violation of the requirement to respond within the maximum response time. b. When a Franchisee shall be temporarily unavailable to provide services due to preplanned/scheduled activity, e.g., medical leave, etc., he/she shall notify the Salinas Police Department at least 24 hours prior to the date that services shall be unavailable, noting the times and dates of the unavailability. The Franchisee shall only be allowed three passes on the rotation per month based on unavailability.

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B. The Franchisee, or its employee(s) responding to a Salinas Police Department call, shall perform the towing or service required for which he/she was called. This requirement may be waived by the Salinas Police Department Incident Commander if the requested equipment is inadequate for the service to be performed. 1) Any refusal to respond or to perform the required towing or service may subject the Franchisee to disciplinary action if deemed appropriate by the Salinas Police Department.

C. A Franchisee shall not respond to a Salinas Police Department call assigned to another Franchisee unless requested to do so by the Salinas Police Department. 1) There may be times when the Franchisee assigned the initial Salinas Police Department call may require the assistance of an additional Franchisee at the scene. The Franchisee assigned the initial call may, subject to prior agreement with the Chief of Police, and with the concurrence of the Salinas Police Department Incident Commander, request a specific Franchisee to assist him/her. The request shall be routed to the additional Franchisee through the Salinas Police Department.
2) There may be times when a Franchisee, who was not called to a scene, comes upon a collision scene where a vehicle or vehicles are blocking a roadway and a Salinas Police Department officer requests its assistance in clearing the roadway. In such a case, the Franchisee may be requested to move the vehicle to a safe location, as directed by the officer, and leave it.

There shall be no charge for this assistance, and the assistance provided shall not change the Franchisee’s place in the rotation. 3) Violations of section 22513 CVC shall result in disciplinary action.

D. Only the tow truck personnel and equipment requested shall respond to a Salinas Police Department call. (e.g., tow truck driver bringing friends, family members, significant others or pets etc., is not allowed) Additional tow truck personnel and equipment shall be at the approval of the Salinas Police Department Incident Commander. This shall not preclude the Franchisee from responding to an incident to ascertain if additional assistance or equipment is required. There shall be no charge for any personnel or equipment that is not necessary to perform the required service.

E. The Franchisee will participate in the vehicle abatement program. This includes the abatement of recreational vehicles and over-sized vehicles.

F. An operator or tow truck driver shall respond with a properly equipped tow truck of the class required to tow the vehicle, perform vehicle recovery (e.g., rollover, vehicle down embankment etc.) provide service (e.g., fuel, flat tire change, etc.) TSFA FY 2023-24 Page 15
and be in possession of the appropriate class of driver license, applicable endorsements, and permits.

G. All operators shall respond to requests for the tow of recreational vehicles. If, after the operator responds to the tow location, the recreational vehicle to be towed is found to be to large for the operator’s equipment, the operator is responsible for contracting another company with the appropriate equipment to perform the tow. 1) A Heavy Duty or Super Heavy-Duty tow operator towing for another operator under this agreement must meet the
requirements of TFSA and must be approved by the Chief of Police.
2) The operator who receives the rotation request is responsible for the storage of the recreational vehicle towed under this agreement and the vehicle will be stored at the operator’s facility.
3) If a vehicle to be towed has a sewage tank that shows no signs of leakage, the vehicle will be towed to the franchisee’s storage facility. SPD will arrange for the tank to be emptied, at the city’s expense, at the franchisee’s storage facility.
4) If a vehicle shows signs of leaking sewage, the tank will be emptied, at the city’s expense, prior to being towed.

H. The failure of a franchisee to respond to a request for a tow of a recreational vehicle will constitute a pass pursuant to Section 2 of this Agreement.

I. A Franchisee who shows proof a tow and disposal of a recreational vehicle will receive a credit toward their annual franchisee fee according to a resolution approved by the City Council.

8. STORAGE FACILITY
A. The Franchisee shall maintain its own storage facility and shall be responsible for the security of vehicles and property at the place of storage. As a minimum, a fenced or enclosed area shall be provided. The Franchisee is responsible for the reasonable care, custody, and control of any property contained in towed or stored vehicles.

B. The Franchisee shall obtain approval from the Salinas Police Department prior to the removal of any property from a stored or impounded vehicle and shall provide the Salinas Police Department a receipt identifying the property, with a copy placed TSFA FY 2023-24 Page 16
in the stored vehicle. The requirement to obtain approval from the Salinas Police Department prior to the removal of property may be excused by the Chief of Police if it is determined that proper safeguards and procedures are utilized by the Franchisee.

1. This requirement shall not be waived in cases where a vehicle has been impounded for evidence or investigation.

2. Upon approval from the Salinas Police Department, the Franchisee shall release personal property from an impounded vehicle at the request of the vehicle owner or its agent.
a) There shall be no charge for property released during normal business hours. The fees charged for property released after hours shall be consistent with the after-hours vehicle release provisions.

Personal property shall not be released without specific approval of the Salinas Police Department.
b) Cargo shall be released upon demand of the carrier or pursuant to a court order.

C. The primary storage facility shall normally be at the same location as the business address. If not at the same location, there shall be no charge for any additional distance traveled to and from a secondary location. The vehicle and/or personal property shall be released at the primary storage facility or place of business (when the primary storage facility and place of business are not at the same location) upon request of the owner or a person having a legal entitlement to the vehicle and/or property.
1) Prior to the utilization of new storage facilities that were not listed on the application for rotation tow listing, the Franchisee shall obtain the Chief of Police’s approval of the new facility and furnish the address to the Chief of Police.
2) Secondary storage facilities shall be located reasonably close to the main business office.

D. The tow Franchisee shall maintain sufficient storage spaces to meet the obligations of this Agreement.

E. The Franchisee’s place of business shall have a sign that clearly identifies it to the public as a towing service. The sign shall have letters that are clearly visible to the public from the street. The sign shall be visible at night.

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1) Business hours shall be posted in plain view to the public. Employees shall be properly trained to conduct business transactions related to towing, storage and release of vehicles/property.
2) Vehicles stored by the Salinas Police Department shall not be released without Salinas Police Department approval if a vehicle storage form was issued at the time the vehicle was stored.

F. A storage yard shared by operators or any other business establishment(s) must be physically separated and secured from the other storage yard and from the other business establishment(s).

G. Prior to the utilization of a new storage yard, the operator shall obtain the approval of the Salinas Police Department.

9. INSURANCE
A. The Franchisee shall; throughout the duration of this Agreement, maintain the following minimum forms and limits of insurance covering all operations of the Franchisee, its agents and employees, performed in connection with this agreement:
1) Commercial Business Automobile Liability (as required by Section 16500.5 of the California Vehicle Code) – Bodily injury and property damage with a combined single limit of not less than one million dollars ($1,000,000.00).

These minimum standards are to include non-owned and hired auto coverage.
2) Uninsured Motorist - One million dollars ($1,000,000.00), combined single limit.
3) On-Hook Coverage - Insuring the vehicle in tow for one million dollars ($1,000,000.00).
4) Garage Liability - Includes premises and operations. Coverage for bodily injury and property damage with a combined single limit of not less than one million dollars ($1,000,000.00).
5) Garage Keepers Liability - Shall be the same minimum as on-hook coverage for vehicles in the care, custody, and control of the Franchisee in the storage yard.
6) Workers’ Compensation Insurance - Legal minimum requirement.

B. All insurance companies affording coverage to the Franchisee, with the exception of worker’s compensation, shall be required to add the City of Salinas, its officers, employees, agents, and volunteers as additional “insured’s” by endorsement under the insurance policy. Each insurer shall stipulate that its insurance policy shall TSFA FY 2023-24 Page 18
operate as primary insured for the work performed under this agreement and that no other insurance affected by the City or other named insured shall be called upon to contribute to a loss covered thereunder. The policy shall contain no special limitations on the scope of protection afforded to the City, its officers, employees, agents, or volunteers.

C. All insurance companies affording coverage to the Franchisee shall be insurance organizations authorized by the Insurance Commissioner to transact the business of insurance in the State of California.

D. All insurance companies affording coverage shall provide thirty (30) days written notice by certified mail to the City of Salinas should the policy be canceled or reduced in coverage before the expiration date. For the purposes of this notice requirement, any material change prior to expiration shall be considered cancellation.

E. Franchisee shall provide evidence of compliance with the insurance requirements listed above by providing a certificate of insurance, in a form satisfactory to the City Attorney concurrently with the submittal of this Agreement. A statement on the insurance certificate which states that the insurance company “will endeavor” to notify the certificate holder, “but failure to mail such notice shall impose no obligation or liability of any kind upon the company, its agents, or representatives” does not satisfy the requirements of subsection D herein. The Franchisee shall ensure that the above-quoted language is stricken from the certificate by the authorized representative of the insurance company. The insurance certificate shall also state the unpaid limits of the policy.

F. Franchisee shall provide substitute certificate of insurance no later than ten (10) days prior to the policy expiration date. Failure by the Franchisee to provide such a substitution and extend the policy expiration date shall be considered a default by Franchisee.

G. All policies, except workers’ compensation, shall cover on an occurrence or an accident basis, and not on a claims-made basis.

H. Maintenance of insurance by the Franchisee as specified in the agreement shall in no way be interpreted as relieving the Franchisee of any responsibility whatever and the Franchisee may carry, at its own expense, such additional insurance as it deems necessary.

10. INSPECTIONS
A. The Salinas Police Department shall refer Franchisees to a facility for annual inspection of all tow trucks at the expense of the Franchisee. The Salinas Police Department may conduct additional inspections without notice during normal business hours. The Franchisee shall not dispatch a tow truck for Salinas Police TSFA FY 2023-24 Page 19
Department rotation that has not been inspected and approved by the California Highway Patrol and has a valid inspection sticker issued by the California Highway Patrol.

1. A copy of the California Highway Patrol truck inspection form must be provided to the Salinas Police Department during the annual facility inspections.

11. BUSINESS RECORDS
A. The Franchisee shall maintain all records of tow services furnished at its place of business.
1) Invoices shall at a minimum include a description of vehicle(s), nature of service, start time, end time, location of call, and itemized costs of towing and storage.
2) Records for each call shall indicate the tow truck driver’s name and truck used.

B. The Franchisee shall also maintain business records relating to personnel, insurance, personnel taxes, payroll, applicable operating authorities, local operating authorities, lien sale actions, FCC licensing, and non-Salinas Police Department tows.

C. The Salinas Police Department may inspect all Franchisee records without notice during normal business hours.

D. Franchisees shall permit the Salinas Police Department to make copies of business records at their place of business, or to remove business records for the purpose of reproduction.
1) The Salinas Police Department shall provide a receipt for any original records removed from the place of business.

E. The Franchisee shall maintain business records for a period of two (2) years, plus the current term of this agreement, and shall make them available for inspection.

F. Failure of the Franchisee to comply with the inspection requirements shall be cause for disciplinary action if deemed appropriate by the Salinas Police Department.

12. FINANCIAL INTEREST
A. No Franchisee or applicant shall be directly involved in the towing-related business of any other Franchisee or applicant on the Salinas Police Department rotation tow list. “Directly involved” shall mean anything in common between Franchisees or applicants with regards to any of the following:

TSFA FY 2023-24 Page 20
1) Business licenses;
2) Insurance;
3) Tow truck or equipment use, rental, or ownership;
4) Employees;
5) Premises; or
6) Performance of this Agreement.

B. Storage facilities owned by a Franchisee, and shared by with another Franchisee, shall only be approved if:
1) The owner/Franchisee charges for the space exclusively on a flat monthly rate rather than a vehicle-by-vehicle basis, or combination thereof; and 2) Storage facilities shared by Franchisees shall be physically separated and secured from each other.

C. Storage facilities leased or rented by a Franchisee shall only be approved under the following conditions:
1) The rental fee for the facility is paid as a flat monthly rate, rather than a per vehicle rate or combination thereof
2) The Franchisee must be solely responsible for maintaining and operating the storage facility. This responsibility shall not be delegated to any third party by the Franchisee.

D. No Franchisee or applicant shall refer calls for service to another Franchisee or applicant in contravention of the rotational tow list.

E. The sale or transfer of controlling interest in a company shall immediately terminate an Agreement. The new owner(s) may apply for a rotation tow listing at any time during the remainder of the current Agreement term, regardless of the City’s enrollment period.

F. Any violation of this section may be cause for disciplinary action by the Salinas Police Department.

13. ANNUAL MEETINGS
A. The Chief of Police or his/her designee may conduct meetings to discuss issues concerning the tow rotation. All meetings shall be mandatory for the Franchisee or its designee wishing to remain on rotation. The Salinas Police Department shall give the Franchisee 15 days written notice (as defined in Attachment A) of these meetings. Attendance may be excused by the Chief of Police for good cause.

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14. DEMEANOR AND CONDUCT
A. While involved in the Salinas Police Department rotation tow Franchisee or related business, the Franchisee and/or its employee(s) shall refrain from any act(s) of misconduct, to include, but not limited to, any of the following:
1) Rude or discourteous behavior;
2) Lack of service, selective service, or refusal to provide service that the Franchisee is/should be capable of performing;
3) Any act of harassment or discrimination;
4) Unsafe driving practices;
5) Exhibiting any objective symptoms of alcohol and/or drug use; 6) Appearing at the scene of a Salinas Police Department rotation tow call with the odor of an alcoholic beverage emitting from his/her breath. a. The Franchisee/tow truck driver shall submit to a preliminary alcohol-screening test upon demand of the Salinas Police Department.

B. All Salinas Police Department related tow service complaints received by the Salinas Police Department against the Franchisee or its employee(s) shall be accepted and investigated in a fair and impartial manner. The Franchisee shall fully cooperate with any such investigation. Failure of the operation to cooperate may subject the Franchisee to disciplinary action including termination. As a result of the investigation, the Salinas Police Department may initiate action as deemed appropriate. The Franchisee shall be notified of the results of the investigation.

C. Should the filing of criminal charges be a possibility, the Salinas Police Department shall conduct the investigation to conclusion or assist the lead investigation agency and, if warranted, request prosecution.

D. Any violation of this section may be cause for disciplinary action.

15. COMPLIANCE WITH LAW
A. The Franchisee and its employees shall, at all times, comply with federal, state, and local laws and ordinances, which include, but are not limited to, those laws which are applicable to the Franchisee (refer to Attachment B for selected Vehicle Code and Civil Code Sections). The Franchisee shall also comply with all Federal Department of Transportation drug and alcohol testing requirements for employees and commercial drivers. Records of compliance with such testing requirements shall be available for inspection during normal business hours. Failure to comply with such federal, state and local laws may subject the Franchisee to disciplinary action.

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1) In the event of a minor traffic violation(s) by the tow truck driver(s) which is/are known by the Salinas Police Department, the Franchisee may be advised of the violation(s) by the Salinas Police Department. The Franchisee shall be granted the opportunity to take necessary steps to ensure that its driver(s) drive(s) in compliance with the law unless the conduct is deemed injurious to the public health or safety. Any subsequent traffic violation(s) may be cause for disciplinary action against the Franchisee. 2) Any traffic violation(s) may be cause for immediate disciplinary action against the Franchisee.

B. The provisions contained in Section 16, Compliance with Law, do not preclude the Salinas Police Department from taking appropriate enforcement or administrative action for any violations of the law.

C. Any conviction of the Franchisee involving a stolen or embezzled vehicle, fraud related to the towing business, stolen or embezzled property, a crime of violence, a drug related offense, a sexual offense, felony driving while under the influence of alcohol and/or a drug, misdemeanor driving while under the influence of alcohol and/or a drug while involved in a Salinas Police Department rotation tow call, or moral turpitude should be cause for denial of application or termination of the Agreement.

D. Any conviction of an employee involving a stolen or embezzled vehicle, fraud related to the towing business, stolen or embezzled property, a crime of violence, a drug related offense, a sexual offense, felony driving while under the influence of alcohol and/or a drug, misdemeanor driving while under the influence or alcohol and/or a drug while involved in a rotation tow call, or moral turpitude should be cause for the termination of the Franchisee from the list of current Salinas Police Department rotation Franchisees and termination of this Agreement.

E. Any arrest or charge for a violation by a Franchisee or employee involving any of the above crimes may be cause for suspension of the Franchisee until the case is adjudicated.

F. Salinas Police Department personnel, as well as tow operators and their employees, shall not be offered nor accept gratuities pursuant to Section 12110(a) CVC.

G. No tow operator or their employees shall accept any gratuities from a repair shop for the delivery of a vehicle, not owned by the repair shop or tow company, for the purpose of storage or repair pursuant to Section 12110(c) CVC.

H. An operator shall satisfy a court order mandating reimbursement to the vehicle or property owner for the damage or loss which occurred while the vehicle was in the operator’s custody.

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I. An operator or employee arrested/charged for a violation involving any of the crimes shall be suspended from the Salinas Police Department rotation until the case is fully adjudicated.

16. COMPLIANCE WITH AGREEMENT
A. The Franchisee agrees, as a condition of inclusion on the rotation tow list, to comply with all of the terms and conditions of this Tow Service Franchise Agreement, all of which are considered material terms and conditions. Furthermore, the Franchisee agrees that failure by the Franchisee or its employees or agents to comply with these terms and conditions shall be cause for written reprimand (as defined in Attachment A), suspension, or termination from the Salinas Police Department rotation tow list(s) and termination of this Agreement. Alleged violations of this Agreement shall be investigated by the Salinas Police Department tow officer. The Franchisee shall be notified of the Salinas Police Department’s findings within 30 days of the conclusion of the investigation.

17. DISCIPLINARY ACTION
A. The Chief of Police may take disciplinary action against Franchisees for violations investigated and confirmed or sustained.
1) The Chief of Police shall retain discretion regarding the length of any suspension imposed pursuant to the terms and conditions of this Agreement and pursuant to Ordinance.

B. Records of violations shall be retained by the Salinas Police Department for at least 36 months.

C. A violation of the equipment requirements related to safety shall be cause for immediate disciplinary action. All suspensions are at the discretion of the Chief of Police and shall remain in effect until the period of suspension is completed and the Franchisee has presented proof of correction of the safety violation.

D. A violation of the GVWR and safety loading requirements of a tow truck shall be cause for immediate suspension. This includes exceeding the tow truck’s GVWR, front axle weight rating, rear axle weight rating, maximum tire weight ratings, or not maintaining 50% of the tow truck’s unladen weight on the front axle when lifting/carrying a load.

E. A violation of overcharging shall be cause for suspension and/or other disciplinary action. The period of the suspension shall be determined by the Chief of Police.

The suspension shall remain in effect until the period of suspension is completed and the Franchisee has presented proof to the Salinas Police Department that reimbursement has been made to the aggrieved customer(s).

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F. A violation of the Biennial Inspection of Terminals (BIT) Program requirements shall be cause for suspension. The period of suspension shall be determined by the Chief of Police. The suspension shall remain in effect until the period of suspension is completed and the Franchisee has presented proof of compliance with the BIT requirements. Any unsatisfactory rating shall be cause for suspension.

G. Failure of the Franchisee to satisfy a court order mandating reimbursement to the vehicle or property owner for the damage or loss which occurred while the vehicle was in its custody shall result in a suspension. The period of the suspension shall be determined by the Chief of Police. The suspension shall remain in effect until the period of suspension is completed and the Franchisee has presented proof of the reimbursement.

H. Failure of the Franchisee to comply with the inspection requirements of this Agreement shall result in a suspension. The period of the suspension shall be determined by the Chief of Police. The suspension shall remain in effect until the period of suspension is completed and the Franchisee has complied with the inspection requirement.

I. Failure of the Franchisee to maintain the minimum insurance requirements set forth in the Agreement shall be cause for immediate suspension of the Franchisee and action to terminate the Agreement for violation of a material term of the Agreement. 1) The Franchisee shall also be subject to an additional suspension for failure to notify the Salinas Police Department in advance of the insurance policy expiration or cancellation.

J. Failure of the Franchisee or employee to comply with Section 14, Demeanor and Conduct, and/or Section 15, Compliance with Law, may be cause for suspension and/or other disciplinary action if deemed appropriate by the Chief of Police. 1) Minor traffic violations may be considered violations of the Agreement. 2) A tow truck driver, not under the immediate supervision of the Franchisee, while on-duty and driving a tow truck, who is arrested and subsequently convicted for misdemeanor driving under the influence of alcohol and/or controlled substances, shall be subject to suspension from participating as a tow truck driver under the provisions of this Agreement. The length of suspension shall be at the Chief of Police’s discretion.

K. A terminated or suspended Franchisee and the tow business he/she owned at the time of its suspension or termination (as defined in Attachment A) shall not be eligible for a rotation listing for the duration of the suspension or termination. This provision applies to the Franchisee working in any capacity within any tow business or operating any tow business, and to the tow business, even if operated under new ownership.

TSFA FY 2023-24 Page 25
L. If the Franchisee is serving a suspension, or has been removed from consideration as a rotational tow Franchisee for any period of time, he/she shall be required to execute and comply with all terms and conditions of the Agreement in effect at the time of the reinstatement. There shall be no approval of equipment that is not in compliance with the equipment specifications contained in the Agreement in effect at the time of reinstatement. Sections of this Agreement which are commonly referred to as “grandfather clauses” shall not apply to such a Franchisee who is suspended or who has been removed from consideration for any period of time.

M. Nothing herein shall be deemed to prohibit the Salinas Police Department from immediately suspending any Franchisee whose conduct, or that of its employee(s), in the discretion of the Chief of Police, is deemed to be a danger to the health or safety of others or who has engaged in conduct constituting a violation of this Agreement.

18. MIDTERM REVIEW OF THE TERMS AND CONDITIONS OF THE AGREEMENT A. The purpose of this section is to provide a process for a midterm review of the terms and conditions of the Agreement in the event that there is a legitimate and substantial change in conditions or law affecting the majority of the Franchisees within the City, or the Salinas Police Department. Examples of conditions may include, but are not limited to:
1) Substantial increase or decrease in business expenses. 2) Advances in technology in the industry related to safety issues. 3) Changes in law requiring the Salinas Police Department or the Franchisees to perform specific functions or operations in order to comply. 4) Proposed changes to the terms and conditions of the Agreement pursuant to Subsection B below.

B. A midterm review of the terms and conditions of the Agreement on a particular subject matter may only be granted by the Chief of Police. 1) A request for a midterm review of the terms and conditions of the Agreement shall be communicated to the Chief of Police in writing, from a representative(s) of the towing industry, not merely at the request of a single Franchisee. The Chief of Police may also request a midterm review if he/she feels it is in the best interests of the motoring public, the tow industry, and/or the Department.
2) Conditions indicating a need for midterm review must be substantial and must affect the entire towing industry or the Salinas Police Department. For purpose of this Agreement, the midterm review process is not intended to provide relief for a small number of Franchisees who wish to increase their rates, or change any other term or condition of the Agreement, to TSFA FY 2023-24 Page 26
compensate for financial problems brought about as a result of business decisions or conditions which affect a small percentage of the industry. 3) A request for review shall not be processed if there are 60 days or less remaining in the term of the Agreement.

B. A midterm review, when granted by the Chief of Police or his/her designee, shall not automatically authorize a change in the terms and conditions of this Agreement.

If a midterm review is announced by the Chief of Police, or his/her designee, it is the responsibility of the Chief of Police to conduct a review of the conditions which initially caused the request to be communicated and to determine if the change is justified.
1) The Chief of Police, after completing the review of all pertinent issues, may authorize the Franchisees to submit their proposed changes or he/she may notify the Franchisees of changes to be implemented and direct them to comply with those changes. If, after evaluating all pertinent information, the Chief of Police authorizes or directs a change in the terms and conditions of the Agreement, or if he/she decides that a change is not justified, he/she shall notify the towing industry representative within 14 calendar days. a) Franchisees shall resubmit their proposed changes in writing to the Chief of Police within seven calendar days of the date that the Chief of Police announces his/her decision. Failure to resubmit a written proposal within the specified time may result in the Franchisee forfeiting its ability to propose more equitable conditions or rates, or may be cause for disciplinary action or termination of the Agreement.
(1) If the proposed change affects tow rates only, Franchisees shall resubmit their proposed rates on a new application.

The new application shall contain only the information
pertinent to the rate proposals. When received by the Salinas Police Department, the new application shall be attached to the original application for the current term.
(2) The Chief of Police shall determine the reasonableness of the rate, based upon the average of the proposed rates submitted.

An additional page with the new rate(s) shall be signed and attached to the original.

19. ADVERTISING
A. The Franchisee shall not display any sign or engage in any advertisement indicating an official or unofficial connection with the Salinas Police Department.

TSFA FY 2023-24 Page 27
1) Examples include, “Official Salinas Police Department Tow,” “Approved by Salinas Police Department,” “Salinas Police Department Rotation Tow,” etc.
2) This shall not preclude the Chief of Police from implementing a system to mark and identify particular tow trucks as having passed the Salinas Police Department inspection.

B. Any violation of this section is cause for disciplinary action.

20. CANCELLATION
This Agreement may be cancelled by either party without prejudice and without cause by giving 20 days advance written notice to the other party.

21. FRANCHISE FEES.

A. Franchisee shall pay to City a franchise fee in an amount as set forth by resolution of the City Council.

B. Franchise fees shall be due and payable in full no later than the tenth (10th) day of each quarter. The franchisee shall pay the required franchise fee to the City's director of finance.

C. Any franchise fees which remain unpaid after the date specified in subsection (B) above shall be delinquent and shall result in an immediate penalty equal to 10% of the unpaid amount. The unpaid amount shall thereafter accrue interest at 10% per annum until paid.

D. In the event of the suspension or termination of a franchise, the franchisee shall forfeit any fees paid to the City. Franchisee waives any and all claims or rights to collect back from the City any amounts collected by the City pursuant to this program.

E. The payment to the City by the franchisee pursuant to this article shall be in addition to any license fee or business tax prescribed by the City for the same period.

F. By accepting this franchise, Franchisee irrevocably waives the defenses of any statute of limitation, laches, waiver or other equitable doctrine of similar import or effect in any action brought by the City to recover any franchise fee, interest or penalties due under this Agreement.

G. By accepting this franchise, Franchisee agrees that if it challenges the right of the City to collect the franchise fee provided by this Agreement, any relief requested by Franchisee and awarded to it by virtue of such challenge shall be prospective only from and after the date of the filing of the initial pleading seeking such relief in a court of competent jurisdiction. Franchisee hereby waives any and all claims or rights to collect back from the City, or obtain credit against future payment obligations, any amounts collected by the City prior to the filing of the initial pleading seeking such relief. In the event Franchisee's TSFA FY 2023-24 Page 28
challenge to any franchise fee payments should result in an initial judgment in its favor, Franchisee shall continue to make all franchise fee payments in accordance with this Agreement pending an appeal by the City. If the court of appeal, or trial court if City elects not to appeal, determines that the City is not entitled to collect any or all of the franchise fees, the City shall refund to Franchisee those portions of the franchise fee which the court deems the City was not entitled to collect which were made subsequent to the filing of the initial action by Franchisee, exclusive of interest on such amount.

H. The City shall retain the right to impose alternative forms of fees in the event that the franchise fees provided for in this Agreement do not adequately recover the actual and reasonable costs of the police department’s towing program and/or are no longer assessable due to a subsequent change in federal, state or local law.

22. JURISDICTION.

This Agreement shall be administered and interpreted under the laws of the State of California.

Jurisdiction of litigation arising from this Agreement shall be in the State of California, in the County of Monterey or in the appropriate federal court with jurisdiction over the matter.

23. SEVERABILITY.

If any part of this Agreement is found to be in conflict with applicable laws, such part shall be inoperative, null and void insofar as it is in conflict with said laws, but the remainder of the Agreement shall continue to be in full force and effect. 24 NOTICES.
(A) Written notices to the City hereunder shall, until further notice by City, be addressed to:

Salinas Police Department
312 E. Alisal St
Salinas, California 93901
With a copy to:

City Attorney
City of Salinas
200 Lincoln Avenue
Salinas, California 93901
(B) Written notices to the Contract shall, until further notice by the Contractor, be addressed to:

TSFA FY 2023-24 Page 29
[Insert Notice Contact Information]
(C) The execution of any such notices by the City Manager of the City shall be effective as to Contractor as if it were by resolution or order of the City Council, and Contractor shall not question the authority of the City Manager to execute any such notice. (D) All such notices shall either be delivered personally to the other party’s designee named above, or shall be deposited in the United States Mail, properly addressed as aforesaid, postage fully prepaid, and shall be effective the day following such deposit in the mail.

25. NONDISCRIMINATION.

During the performance of this Agreement, Contractor shall not discriminate against any employee or applicant for employment because of race, color, religion, ancestry, creed, sex, national origin, familial status, sexual orientation, age (over 40 years) or disability. Contractor shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment without regard to their race, color, religion, ancestry, creed, sex, national origin, familial status, sexual orientation, age (over 40 years) or disability.

26. CONFLICT OF INTEREST.

Contractor warrants and declares that it presently has no interest, and shall not acquire any interest, direct or indirect, financial or otherwise, in any manner or degree which will render the services required under the provisions of this Agreement a violation of any applicable local, state or federal law. Contractor further declares that, in the performance of this Agreement, no subcontractor or person having such an interest shall be employed. In the event that any conflict of interest should nevertheless hereinafter arise, Contractor shall promptly notify City of the existence of such conflict of interest so that City may determine whether to terminate this Agreement. Contractor further warrants its compliance with the Political Reform Act (Government Code section 81000 et seq.) and Salinas City Code Chapter 2A that apply to Contractor as the result of Contractor’s performance of the work or services pursuant to the terms of this Agreement.

25. HEADINGS.

The section headings appearing herein shall not be deemed to govern, limit, modify, or in any manner affect the scope, meaning or intent of the provisions of this Agreement.

26. ATTORNEY’S FEES.

In case suit shall be brought to interpret or to enforce this Agreement, or because of the breach of any other covenant or provision herein contained, the prevailing party in such action shall be entitled to recover their reasonable attorneys’ fees in addition to such costs as may be allowed by the Court. City’s attorneys’ fees, if awarded, shall be calculated at the market rate.

27. RIGHTS AND OBLIGATIONS UNDER AGREEMENT.

TSFA FY 2023-24 Page 30
By entering into this Agreement, the parties do not intend to create any obligations express or implied other than those set out herein; further, this Agreement shall not create any rights in any party not a signatory hereto.

28. LICENSES.

If a license of any kind, which term is intended to include evidence of registration, is required of Contractor, its representatives, agents or subcontractors by federal, state or local law, Contractor warrants that such license has been obtained, is valid and in good standing, and that any applicable bond posted in accordance with applicable laws and regulations.

30. COUNTERPARTS.

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute a single agreement.

31. LEGAL REPRESENTATION.

Each party affirms that it has been represented by legal counsel of its own choosing regarding the preparation and the negotiation of this Agreement and the matters and claims set forth herein, and that each of them has read this Agreement and is fully aware of its contents and its legal effect.

Neither party is relying on any statement of the other party outside the terms set forth in this Agreement as an inducement to enter into this Agreement.

32. JOINT REPRESENTATION.

The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any party. No presumptions or rules of interpretation based upon the identity of the party preparing or drafting the Agreement, or any part thereof, shall be applicable or invoked.

33. WARRANTY OF AUTHORITY.

Each party represents and warrants that it has the right, power, and authority to enter into this Agreement. Each party further represents and warrants that it has given any and all notices, and obtained any and all consents, powers, and authorities, necessary to permit it, and the persons entering into this Agreement for it, to enter into this Agreement.

TSFA FY 2023-24 Page 31

34. WAIVER OF RIGHTS.

Waiver of a breach or default under this Agreement shall not constitute a continuing waiver or a waiver of a subsequent breach of the same or any other provision of this Agreement. The failure to provide notice of any breach of this Agreement or failure to comply with any of the terms of this Agreement shall not constitute a waiver thereof. Failure on the part of either party to enforce any provision of this Agreement shall not be construed as a waiver of the right to compel enforcement of such provision or any other provision. A waiver by the City of any one or more of the conditions of performance under this Agreement shall not be construed as waiver(s) of any other condition of performance under this Agreement.

CITY OF SALINAS
_____________________________ ______________________________ Steven S. Carrigan, City Manager Date
APPROVED AS TO FORM:
______________________________
Christopher A. Callihan, City Attorney Date

FRANCHISEE
Company Name
______________________________ ______________________________ Authorized Representative Date
_____________________________
Authorized Representative Name (print)
TSFA FY 2023-24 Page 32

ATTACHMENT A

DEFINITIONS

CHIEF OF POLICE
The Chief of Police of the City of Salinas and/or his/her designee.

BASE SERVICES
Flat tires, out of gas, lockouts, and other similar roadside services.

ENROLLMENT PERIOD
The enrollment period for purposes of this Agreement shall be the period during which a Request for Proposals has been released by the City with respect to services to be provided hereunder or the date, established by the City, on which this Agreement is signed each year by tow service providers.

INCIDENT COMMANDER
The Salinas Police Department member present at the incident that has scene management responsibilities.

LOAD SALVAGE OPERATIONS
Any operation involving the recovery of a load which has been spilled, or the off-loading and reloading of a load from an overturned vehicle performed in order to upright the vehicle.

NORMAL BUSINESS HOURS
For the purpose of this agreement, “normal business hours” shall not be less than 8 a.m. to 5 p.m., Monday through Friday, except for the following holidays: New Years Day, Martin Luther King Day, Lincoln’s Birthday, President’s Day, Memorial Day, Independence Day, Labor Day,.

Columbus Day, Veterans Day, Thanksgiving Day, Day after Thanksgiving Day, Christmas Eve, and Christmas Day as recognized by the State of California and the City of Salinas.

NOTICE
All notices relating to this Agreement shall be in writing and delivered to the other party in person, via FAX, email or by US mail.

FRANCHISEE
A tow service operator that has been issued a Letter of Authorization, has signed the Tow Service Franchise Agreement, and is approved to receive Salinas Police Department referred calls. The term “Franchisee” refers to the company, its owner(s), and its manager(s) who have authority to TSFA FY 2023-24 Page 33
enter into an Agreement with the Salinas Police Department for towing services and to conduct business in accordance with the terms of this Agreement, and its employees.

PARTY OF INTEREST
Refers to the registered owner of the vehicle, or his/her agent. An agent is a party who may lawfully act on behalf of the registered or legal owner of the vehicle.

PERSONAL PROPERTY
Any item(s) that are not affixed to a vehicle, including but not limited to: papers, transportable cellular telephones, pull-out radios, portable radios, portable stereo equipment, clothes, luggage, tools, etc.

PORTAL TO PORTAL
Service shall start at the time of departure from the place of business or point of dispatch, whichever is closer to the location of the call, and shall end at the estimated time of return to the place of business or the completion of the call, if another call is pending, whichever is shorter.

Return to place of business includes a reasonable and verifiable amount of time required to place the tow truck back into service when unusual circumstances require additional time that are not part of normal operating procedures. (Examples: 1) 4x4 recovery in the mud: reasonable to charge for cleaning mud from truck and equipment, 2) burned car on car carrier: reasonable to charge for cleaning burn debris from carrier bed; 3) car towed from side of road on misty night and leaves mud track on bed of carrier: not reasonable to charge for cleaning of carrier bed.) For the purpose of this Agreement, "Portal to Portal” shall also mean “Portal to End of Service.” The Chief of Police of the Salinas Police Department and/or his/her designee

POSSESSION
Possession is deemed to arise when the vehicle is removed and is in transit, or when vehicle recovery operations or load salvage operations have begun (Section 3068.1[a] of the Civil Code [CC] and Section 22851[a][1] of the California Vehicle Code [CVC]).

PUBLIC SAFETY RESPONSE CALL
A response that results in storage of a vehicle at the direction of an officer. This does not include storage at the request of the vehicle Franchisee, registered owner, or agent.

REPRESENTATIVE
A person or group of persons appointed by the Franchisees within the City, designated to represent their interests to the Chief of Police.

RESPONSE TIME
TSFA FY 2023-24 Page 34
The period of time from a Franchisee’s notification by the Salinas Police Department Communications Center of a call to the arrival of the tow truck at the location requested.

RETAIL RATE
The usual customary retail rate charged by a Franchisee to individual retail customers. This is the competitive rate a company has posted in the office and quotes over the phone.

SUSPENSION
Removal of a Franchisee from the rotation tow list for a specified period of time. Suspensions may be effective immediately and may be for periods longer than the current term of the Agreement.

TERMINATION
Permanent removal of a tow Franchisee from the rotation tow list for the remainder of the term of the Tow Service Agreement and disqualification from any further participation in the Department’s Rotation Tow Program. Termination may be with or without cause.

TOW TRUCK
A tow truck as defined in Section 615 of the California Vehicle Code. Also includes slide back carriers and wheel lift vehicles.

TOW SERVICE AGREEMENT
A document which sets forth the terms and conditions of an Agreement between the Franchisee and the officer representing the Salinas Police Department.

VEHICLE RECOVERY OPERATION
An operation involving the process of uprighting an overturned vehicle or returning a vehicle to a normal position on the roadway which requires the use of auxiliary equipment due to the size or location of the vehicle.

WRITTEN REPRIMAND
A written notice to a Franchisee which specifies any violation(s) of the Tow Service Agreement, orders corrective action, and warns of further action(s) to be taken if corrective action is not taken.

TSFA FY 2023-24 Page 35

ATTACHMENT B
I. GENERAL EQUIPMENT SPECIFICATIONS AND USE REQUIREMENTS A. Equipment Limitations
1) All towing equipment, recovery equipment, and carrier ratings are based on structural factors only. Actual towing, carrying, and recovery capacity may be limited by the capacity of the chassis and the optional equipment selected.

B. Towing Limitations
1) GVWR and not exceed either the front axle weight ratings (FAWR) or rear axle weight ratings (RAWR).
2) The truck must meet all applicable state and/or federal standards. 3) The front axle load must be at least 50% of its normal or unladed weight after the load is lifted.
4) Any violation of this section is cause for suspension.

C. Identification Labels
1) Each piece of towing equipment shall have a label or identification tag permanently affixed to the equipment in a prominent location to identify the manufacturer, serial number, model, and rated capacity.

D. Recovery Equipment Rating
1) The basic performance rating of the recovery equipment is the weight the equipment can lift in a winching mode, when the boom is static at a 30- degree elevation with the load lines vertical and the lifting cables sharing the load equally, measured with a live load (weight or load cell). a) The structural design of the recovery equipment must have a higher load capacity than the performance rating(s).
b) Winches shall conform to or exceed the specifications set forth by the Society of Automotive Engineers (SAE) Handbook, SAE J706.

TSFA FY 2023-24 Page 36
c) All ratings for cable and chain assemblies are for the undamaged assembly condition. All cable and chain assemblies should be the same type, construction, and rating as specified by the original equipment manufacturer (OEM) for the equipment.

E. Safety Chains
1) Safety chains shall be rated at no less than the rating specified by the OEM. a) Two safety chains shall be used for vehicles being towed. The safety chains shall be securely affixed to the truck bed frame or wrecker boom, independent of the towing sling, bar or hitch, wheel lift or under lift towing equipment. The towed vehicle shall be secured to the towing equipment independent of the safety chains by either two chains or two straps.
b) Vehicles being transported on slide back carriers shall be secured by four tie-down chains or straps independent of the winch or loading cable.
c) All safety connections and attachments shall have a positive means, of sufficient strength, to ensure that the safety connection or attachment cannot become disengaged while in transit.

F. Control/Safety Labels
1) All controls shall be clearly marked to indicate proper operation, as well as any special warnings or cautions.

G. Signs
1) All tow trucks shall display signs on both sides containing the Franchisee’s company name, business address, and telephone number. The signs shall be permanently affixed and in compliance with the requirements of Section 27907 VC.

H. Wire Rope (Cable)
1) Wire rope shall be maintained in good condition. Only wire rope with swaged ends, wedge locks, or braided ends, with metal sleeves in the loops, shall be approved for use by the Salinas Police Department. Consistent with the California Code of Regulations, Title 13, Section 1305(b), wire rope is not in good condition when it is stranded, knotted, crushed, excessively rusty, kinked, badly worn, when there are 12 or more wires broken in lay length, or where there is other visible evidence of loss of strength.

TSFA FY 2023-24 Page 37

2. TOW TRUCK CLASSIFICATIONS AND EQUIPMENT SPECIFICATIONS A. Class A Tow Truck

1. Minimum Equipment Specifications
a) 14,000 pound GVWR chassis.
b) 4-ton recovery equipment rating
c) Hydraulic or mechanical winch(es).
d) 100 foot 3/8 inch 6 x 19 cable or original equipment manufacturers (OEM) specifications.
e) Tow chains, 5/16 inch alloy or OEM specifications, J/T hook assembly.
f) Safety chains, 5/16 inch alloy or OEM specifications. g) Tow sling rating 3,000 pounds, when equipped.
h) Wheel lift safety straps or equivalent mechanical device. i) All required wheel safety straps or equivalent mechanical device.

All required wheel safety straps, or equivalent wheel retention device, tie-down straps, and safety chains shall be used during towing operations.
j) Tow dolly.
k) One 3-ton snatch block.
l) Wheel lift rating – retracted 3,000 pounds
85 inch extension 3,000 pounds
 Measured from the center line of the rear axle of the towing vehicle to 10 inches behind the back face of the lifting bar.

B. Class A Car Carrier – One Car

1. Minimum Equipment Specifications
a) 14,000 pound GVWR chassis.
b) Hydraulic or mechanical winch.

TSFA FY 2023-24 Page 38
c) 50 feet 3/8 inch 6x19 cable or OEM specifications.
d) J/T hook loading bridle/chains.
e) Safety chains, 5/16 inch alloy or OEM specifications; four safety chains for the vehicle being transported.
f) All required tie-down straps and safety chains shall be used as required during towing operations.

C. Class A Car Carrier – Two Cars

1. Minimum Equipment Specifications
a) 16,001 pound GVWR chassis.
b) Hydraulic or mechanical winch.
c) 50 feet 3/8 inch 6x19 cable or OEM specifications.
d) J/T hook loading bridle/chains.
e) Safety chains, 5/16 inch alloy or OEM specifications; four safety chains for the vehicle being transported and two safety chains for the vehicle being towed.
(1) All required tie-down straps and safety chains shall be used as required during towing operations.

D. Class C tow truck
1) Minimum Equipment Specifications
a) 48,000 pound GVWR chassis.
b) Air brakes w/air hookup package.
c) 30-ton recovery equipment rating.
d) Hydraulic or mechanical winch(es).
e) 250 foot ¾ inch 6x9 cable or OEM specifications.
f) Tow chains, 5/8 inch alloy or OEM specifications.
g) Safety chains, 5/8 inch alloy or OEM specifications.

TSFA FY 2023-24 Page 39
h) Tow sling rating 20,000 pounds.
i) Two 12-ton snatch blocks.
j) Under lift rating – retracted 32,000 pounds
100 inch extension * 16,000 pounds
 Measured from the center line of the rear axle to the center of the lift forks.

3. AUXILIARY EQUIPMENT
A. Required Equipment All Classes

1. Extension -- Brake and tail lamps.

2. Fire extinguisher (Approved 4-B, C rating or better).

3. Flashlight.

4. Broom.

5. Shovel.

6. Wrecking bar (large pry bar).

7. Reflective triangles.

8. Equivalent of six 30-minute flares.

9. Covered trash can(s) with absorbent.

10. Shop rags and/or paper towels.

11. Shop to truck communications (C/B and cellular phones excluded).

B. Service and Other Equipment -- (For service calls, each tow truck shall be equipped with the following service equipment):

1. Adequate emergency supply of fuel in an approved container.

2. Booster battery or hot box starting system.

3. Hydraulic jack capable of handling passenger cars and light trucks.

TSFA FY 2023-24 Page 40

4. Metric and standard lug wrenches.

5. Rubber mallet/hub cap tool.

6. Lockout tools.

7. Motorcycle straps (Class A only).

8. Sledge hammer.

9. Tool kit may include:
a) Assorted open end wrenches; standard, ¼ inch – 7/8 inch and Metric, 6-19 mm.
b) Assorted screwdrivers; Straight blade and Phillips.
c) Crescent wrench.
d) Ball peen hammer.
e) Pliers.
f) Battery and terminal cleaning tool.
g) Mechanic’s wire.
h) Plastic electrical tape/duct tape.
i) Tire valve core tool.
j) Miscellaneous fuses.
k) Small pry bar.
l) Socket sets; ¼ inch – 1 inch and 6-19 mm.
m) Ratchet and extensions.

C. Class A

1. Required Equipment
a) One 3-ton rated snatch block.

TSFA FY 2023-24 Page 41
b) Towing sling -- J/T hook tow chain assembly, a 4”x4”x48” and a 4”x4”x60” wooden crossbeam, a pair of spacer blocks, a steering wheel clamp, a towing dolly, and safety chains.
c) Wheel lift -- Wheel safety straps or equivalent mechanical device, steering wheel clamp, towing dolly, and safety chains.
d) Car carrier -- J/T hook loading bridle, a 4”x4”x48” and a 4”x4”x60” wooden crossbeam, a pair of spacer blocks, and two pairs of safety chains.

D. Classes B and C

1. Required Equipment
a) Towing sling -- Tow chain assembly, a 4”x4”x60” and a 6”x6”x60” wooden crossbeam, a pair of spacer blocks, a steering wheel clamp, and safety chains.
b) Truck hitch -- Tow chain assembly, 4”x4”x60” and 6”x6”x60” wooden crossbeams (as necessary), aluminum tow angle(s) and safety chains.
c) Under reach -- Assortment of lift forks/adapters, safety tie-down chain(s), and safety chains.
d) Steering wheel clamp.
e) Two 12-ton rated snatch blocks.
f) Axle covers/caps.
g) Air hoses and necessary fittings to provide air to the towed vehicle.

TSFA FY 2023-24 Page 42

ATTACHMENT C

FEE SCHEDULE
Class A Class B Class C Class D

HOURLY RATE

INSIDE STORAGE

OUTSIDE STORAGE

LABOR (NONSKILLED)
SPECIAL EQUIPMENT Rate
City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#23-419, Version: 1
Appointments to the Salinas Valley Groundwater Sustainability Agency Board of Directors Approve a Resolution for the reappointment of Councilmember Anthony Rocha to serve as the City’s primary representative, and Councilmember Carla Gonzalez as alternate and the appointment of Tom Adcock as the California Public Utilities Commission (CPUC) regulated water company representative, and Brenda Granillo as alternate, to serve on the Salinas Valley Basin Groundwater Sustainability Agency (SVBGSA) Board of Directors JPA.

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CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: JUNE 20, 2023
DEPARTMENT: PUBLIC WORKS
FROM: DAVID JACOBS, DIRECTOR
BY: BRIAN FRUS, SENIOR ENGINEER
TITLE: APPOINTMENTS TO THE SALINAS VALLEY GROUNDWATER

SUSTAINABILITY AGENCY BOARD OF DIRECTORS
RECOMMENDED MOTION:

A motion to approve a Resolution for the reappointment of Councilmember Anthony Rocha to serve as the City’s primary representative, and Councilmember Carla González as alternate and the appointment of Tom Adcock as the California Public Utilities Commission (CPUC) regulated water company representative, and Brenda Granillo as alternate, to serve on the Salinas Valley Basin Groundwater Sustainability Agency (SVBGSA) Board of Directors JPA.

EXECUTIVE SUMMARY:

In 2014, the California legislature adopted, and then-Governor Brown signed into law, three bills (SB 1168, AB 1739, and SB 1319) collectively referred to as the “Sustainable Groundwater Management Act” (SGMA). The stated purpose of SGMA is to provide for the sustainable management of groundwater basins at a local level by providing local groundwater agencies with the authority, and technical and financial assistance, necessary to sustainably manage groundwater.

SGMA also required the designation of a Groundwater Sustainability Agency (GSA) for the purpose of achieving groundwater sustainability through the adoption and the implementation of Groundwater Sustainability Plans for all medium and high priority basins as designated by the California Department of Water Resources.

In accordance with the JPA Agreement and the governance model that was approved by the City Council on December 13, 2016, the City of Salinas has the responsibility for appointing a representative seat and an alternate to represent the City on the JPA Board. Councilmember Rocha was appointed to this seat with Councilmember Gonzalez as an alternate on January 10, 2023 though the term will expire June 30, 2023. The JPA Agreement also designates the City as the appointing authority for a California Public Utilities Commission (CPUC) regulated water company representative and alternate serving on the JPA Board. In August 2021, the City Council appointed Brenda Granillo from California Water Services Company (Cal Water) to serve as the Page | 2
primary and Tom Adcock from the Alisal Water Corporation (ALCO) to serve as the alternate representative on the Board. The term for the CPUC regulated representative also expires June 30, 2023.

DISCUSSION:

Representatives from Cal Water and ALCO have alternated serving the primary and alternate roles on the Board since the Board was formed in 2016. The only two CPUC-regulated water companies providing service in Salinas, only Cal Water and ALCO are eligible to serve on the Board. With the term expiring, Ms. Granillo and Mr. Adcock have agreed that Mr. Adcock would succeed to the representative position on the Board and Ms. Granillo would succeed to the position of alternate. This succession, however, requires City Council approval through formal appointment of the representative and the alternate.

CEQA CONSIDERATION:

The proposed action is not subject to environmental review under the California Environmental Quality Act (CEQA) [CEQA Guidelines Section 15378 and Section 15060(c)(2), (3)].

STRATEGIC PLAN INITIATIVE:

This topic aligns with the City Council’s goal of Effective and Culturally Responsive Government (City of Salinas Strategic Plan 2022-2025) by ensuring the city is represented in and working collaboratively on City/County-wide regional boards.

FISCAL AND SUSTAINABILITY IMPACT:

The City Council’s approval of the proposed Resolution would not have an impact on the City’s General Fund, Measure E, or Measure G.

DEPARTMENTAL COORDINATION
Staff from the Water, Waste and Energy Division in Public Works serve on advisory and technical committees and are the primary liaison to the GSA. In addition, from time-to-time issues come up which require the attention and the coordination with the Administration Department and City Attorney’s Office.

ATTACHMENTS:

Resolution
RESOLUTION NO. ________________ (N.C.S.)

A RESOLUTION FOR APPOINTMENTS TO THE SALINAS VALLEY

GROUNDWATER SUSTAINABILITY AGENCY BOARD OF DIRECTORS
WHEREAS, the City of Salinas in accordance with the Salinas Valley Basin Groundwater Sustainability Agency (SVBGSA) JPA has responsibility for appointing a representative seat and an alternate to represent the City on the JPA Board of Directors; and WHEREAS, the City is also responsible for appointing a California Public Utilities Commission (CPUC) regulated water company representative and alternate Board member to serve on the SVGSA Board; and
WHEREAS, the primary Board member representing the City of Salinas is currently Councilmember Anthony Rocha and the alternate Board member is Councilmember Carla González; and
WHEREAS, California Water Services Company (Cal Water) and Alisal Water Corporation (ALCO) are the only two water companies providing service within Salinas and are, therefore, the only two companies eligible for appointment to the Board; and WHEREAS, the representative from Cal Water (Brenda Granillo) has been serving as the CPUC regulated water company representative to the Board and Tom Adcock from ALCO as the alternate; and
WHEREAS, the afore mentioned appointments will expire on June 30, 2023 and thus must be reappointed; and
WHEREAS, the City of Salinas desires is to reappoint appoint Councilmember Anthony Rocha to serve on the JPA Board and Councilmember Carla González to serve as the alternate; and
WHEREAS, a representative from ALCO, Tom Adcock has agreed to be the successor representative to the Board and Brenda Granillo from Cal Water has agreed to be the alternate.

NOW, THEREFORE, BE IT RESOLVED by the Council of Salinas that the Board member representing the City of Salinas to be Councilmember Anthony Rocha and the alternate Board member to be Councilmember Carla González to the SVGSA Board of Directors; and NOW, THEREFORE, BE IT FURTHER RESOLVED that the representative from ALCO (Tom Adcock) be appointed as the CPUC-regulated water company representative to the SVGSA Board of Directors and that the representative from Cal Water (Brenda Granillo) be appointed as the CPUC-regulated water company alternate Board member.

PASSED AND APPROVED this 20th day of June, 2023, by the following vote:

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AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:
____________________________________
Kimbley Craig, Mayor
ATTEST:
_________________________
Patricia M. Barajas, City Clerk
City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#23-422, Version: 1
Financial Policies Amendments
Approve a Resolution approving amendment of the City of Salinas Financial Policies.

City of Salinas Page 1 of 1 Printed on 6/15/2023
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Page | 1

CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: JUNE 20, 2023
DEPARTMENT: FINANCE
FROM: MARK ROBERTS, DIRECTOR OF FINANCE
TITLE: FINANCIAL POLICIES AMENDMENTS
RECOMMENDED MOTION:

Staff recommends the City Council approve a resolution approving amendment of the City of Salinas Financial Policies as reflected in the attachments hereto.

EXECUTIVE SUMMARY:

At its regular meeting of April 26, 2022, the Council approved several amendments to the Financial Policies (“Policies”), including formalization of the Workers’ Compensation Self-Insurance Reserve and establishment of a General Liability Self-Insurance Reserve. Since the policies were amended, the information upon which the minimum target level of the Workers’ Compensation Self-Insurance Reserve is based has improved. Therefore, staff recommends updating the minimum target level standard to be reflective of the improved information.

BACKGROUND:

The minimum target levels of the self-insurance reserves correspond to the net liability for the outstanding claims estimated by the City’s actuary for the respective liability programs/funds.

When the reserve policy amendments were approved, the Workers’ Compensation report prepared by the actuary reflected the estimated liability only at the “expected” level, the actuary’s best estimate given current information. However, the actuarial reports now also provide estimates reflecting the uncertainty inherent in the claims settlement process, which is quantified by “confidence levels,” to assist the City in determining the funding level necessary to meet the cost of these claims should it be greater than the expected level. For example, an eighty percent (80%) confidence level equates to the actuary’s belief that future payments have an eighty percent chance of being less than the liabilities at the eighty percent confidence level and only a twenty percent (20%) chance of exceeding the eighty percent confidence level estimate.

Staff recommends increasing the minimum target level of the assets in the Workers’ Compensation Self-Insurance Reserve from an amount equal to the present value of estimated outstanding Workers’ Compensation Program claim losses to the present value of estimated outstanding claim losses for the program at the eighty percent (80%) confidence level.

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To ensure vigilance in keeping the Policies relevant and effective, staff also recommends amending the introductory section of the Policies to include the requirement they be reviewed at least annually and updated as necessary. Addition of a statement of purpose to the introductory section is also recommended.

CEQA CONSIDERATION:

Not a Project. The City of Salinas has determined the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).

STRATEGIC PLAN INITIATIVE:

The proposed amendments to the Financial Policies are recommended to enhance the City’s fiscal sustainability by increasing the Workers’ Compensation Self-Insurance Reserve’s minimum reserve target level and ensuring review and updating of the Policies as frequently as necessary.

Therefore, approval of the recommended resolution would achieve the Council 2022-2025 Strategic Goal of Effective Government.

FISCAL AND SUSTAINABILITY IMPACT:

If approved, the Financial Policies, as amended, will strengthen the minimum reserve target level of the City’s Workers’ Compensation Self-Insurance Reserve.

ATTACHMENTS:

Exhibit A – City of Salinas Financial Policies (Original) Exhibit B – City of Salinas Financial Policies (Draft)
Exhibit C – City of Salinas Financial Policies (Final)
Resolution
1 RESOLUTION NO. (N.C.S.)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SALINAS

AUTHORIZING CITY OF SALINAS FINANCIAL POLICIES AMENDMENTS WHEREAS, it is important the City accumulates and maintains the funding levels necessary to meet the City’s costs for the outstanding claims for its liability programs; and WHEREAS, the information in the City’s actuarial report upon which the minimum target level of the Workers’ Compensation Self-Insurance Reserve is based has improved and now includes estimates reflecting the uncertainty inherent in the claims settlement process, which is quantified by “confidence levels,” to assist the City in determining the funding level necessary to meet the cost of its Workers’ Compensation claims should it be greater than the expected level; and
WHEREAS, it is important to ensure the City’s financial policies are reviewed and updated as frequently as necessary, to ensure they remain relevant and effective; and WHEREAS, the introductory section of the Financial Policies currently requires only annual adoption; and
WHEREAS, City staff recommends amendments to the City’s Financial Policies for the purposes above.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Salinas approves amendment of the City of Salinas Financial Policies as reflected in the attachments hereto.

PASSED AND APPROVED this 20th day of June 2023, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:
______________________________
Kimbley Craig, Mayor
2 ATTEST:
_________________________
Patricia M. Barajas, City Clerk
CITY OF SALINAS Exhibit A

FINANCIAL POLICIES
Adopted by the Salinas City Council on December 10, 1991, Resolution Number 14343 (N.C.S.) and amended on June 21, 1994, Resolution Number 15193 (N.C.S.) and adopted each year with the adoption of the annual budget.

II. RESERVE POLICIES
The purpose of this policy is to ensure the City is able to withstand financial emergencies, such as those which may result from natural disasters, economic downturns, or unanticipated expenditures of a non-recurring nature, and to accumulate funds for large-scale purchases.

The City will endeavor to accumulate and maintain reserves in the categories and at the minimum target levels described below.

For the purposes of this policy, the following definitions shall apply. ▪ “General funds” in the plural, lower case form shall mean, collectively, the General Fund, Measure E Fund, and Measure G Fund.
▪ “Operating expenditures and non-capital transfers” shall be defined as all expenditures and transfers to other funds, except those of a capital nature and/or intended to fund those of a capital nature.

A. GENERAL FUNDS UNASSIGNED FUND BALANCES: an amount in each of the general funds equal to twelve percent (12%) of a single year’s budgeted operating expenditures and non-capital transfers of the respective funds. The unassigned fund balances of the general funds are determined annually as part of the preparation of the City’s financial statements.

Amounts in excess of the minimum target level may be used to increase or replenish other reserves with priority given to the General Funds Economic Contingency, General Fund Facilities Maintenance, and General Funds Infrastructure Reserves; to set aside resources for specific one-time uses; as a funding source for one-time expenditures included in the annual budget; or for needs that arise subsequent to budget adoption.

B. GENERAL FUNDS ECONOMIC CONTINGENCY RESERVES: an amount in each of the general funds equal to twelve percent (12%) of a single year’s budgeted operating expenditures and non-capital transfers of the respective funds. These reserves are intended to be used only in the event of a catastrophic event or significant downturn in the economy that cannot be mitigated with other funding sources. Formal City Council action is required to increase the balances of these reserves or to authorize the use of any portions thereof.

C. GENERAL FUND FACILITIES MAINTENANCE RESERVE: an amount equal to three times the annual amount(s) appropriated in the General Fund for the performance of major maintenance and repairs upon the City’s building assets. For the purposes of this policy, “building assets” shall be defined as all permanent or non-permanent structures constructed or installed to provide a workplace for City employees or to house City assets and/or operations.

This reserve is to be used for extraordinary emergency maintenance and repair costs that cannot be met with the annual appropriated amount and for which no other funding source is immediately available. Formal City Council action is required to increase the balance of this reserve or to authorize the use of any portion thereof.

D. GENERAL FUNDS INFRASTRUCTURE MAINTENANCE RESERVES: an amount in each of the general funds equal to five times the annual amount(s) appropriated in the respective funds for the performance of major maintenance and repairs upon the City’s infrastructure assets.

For the purposes of this policy, “infrastructure assets” shall be defined as the basic permanent physical systems of the City necessary for the transportation of people; generation, storage, or transmission of power; or transmission of communications, exclusive of the other assets defined in the Reserve Policies. This reserve is to be used for extraordinary emergency maintenance and repair costs that cannot be met with the annual appropriated amount and for which no other funding source is immediately available. Formal City Council action is required to increase the balances of these reserves or to authorize the use of any portions thereof.

E. VEHICLE REPLACEMENT RESERVE: an amount equal to between the accumulated depreciation and estimated replacement value of the vehicle assets accounted for in the Vehicle Replacement Fund (an internal service fund). For the purposes of this policy, “vehicle” shall be defined as a self-propelled vehicle with propulsion provided by an engine or motor which must be operated by one or more persons to perform the function(s) for which it is designed, or an apparatus specifically designed to be attached to and/or towed by a selfpropelled vehicle for transportation.

F. WORKERS’ COMPENSATION SELF-INSURANCE RESERVE: assets in the Workers’ Compensation Self-Insurance Fund equal to the present value of estimated outstanding Workers’ Compensation Program claim losses as calculated by the City’s actuary.

G. GENERAL LIABILITY SELF-INSURANCE RESERVE: assets in the General Liability SelfInsurance Fund equal to the present value of estimated outstanding Liability Program claim losses at the eighty percent (80%) confidence level of adequacy as calculated by the City’s actuary.

H. IRREVOCABLE SUPPLEMENTAL PENSION TRUST RESERVE: an amount equal to the total net liability of the City’s pension plans. The assets of this reserve shall be held in an irrevocable Section 115 pension trust and may be used only for payment of pension-related costs upon direction of the City Council. The balance of this reserve shall not be subject to the “Replenishment of Reserves” guidelines, and formal City Council action is required to increase the balance of this reserve or to authorize the use of any portion thereof.

I. OTHER POST-EMPLOYMENT BENEFITS RESERVE: an amount equal to the total net liability of the City’s other post-employment benefits (OPEB) plans. The assets of this reserve may be used only for payment of OPEB-related costs upon direction of the City Council. The balance of this reserve shall not be subject to the “Replenishment of Reserves” guidelines, and formal City Council action is required to increase the balance of this reserve or to authorize the use of any portion thereof.

J. DEBT SERVICE RESERVES: in each fund from which debt service is paid, the greater of an amount equal to the total reserves required by the applicable debt indentures or one year’s debt service requirement of all long-term City obligations, excluding inter-fund loans. The balances of these reserves may be augmented by proceeds of debt if permitted by the corresponding debt indentures.

K. The City will endeavor to maintain reserves in the Enterprise Funds equal to twenty-five percent of the budgets.

1. The City will endeavor to maintain a reserve in the Sewer Enterprise Fund equal to the larger of twenty-five percent of debt service on the 1998 Sewer System Revenue Bonds or twenty-five percent of the sewer operating budget. This reserve will be in addition to the debt service reserve required in the bond documents.

L. Airport Enterprise Fund Reserves

1. The Airport will endeavor to maintain an Operating Reserve equal to 25% of its operating expenditures.

2. The Airport will endeavor to maintain a Capital Reserve equal to the proceeds from the sale of surplus airport property to a real estate developer, Cabot, Cabot & Forbes (CC&F).

It is imperative that the Airport maintains this Working Capital Fund because FAA grants operate on a reimbursement basis. In addition, this fund should only be designated for unbudgeted, unplanned and unforeseen capital improvement related contingencies.

M. The City will endeavor to maintain reserves in the Maintenance Districts equal to fifty percent of the budgets.

N. Reserve requirements and balances will be reviewed annually and may be adjusted, as necessary to meet specifically identified future expenditures requiring the accumulation of funds.

O. Available General Fund, Measure E Fund, and Measure G Fund year-end balances shall be allocated to reserves, as applicable, until all minimum target reserve levels are achieved.

Replenishment of Reserves
If a reserve balance falls below its minimum target level, the City shall strive to restore it to the minimum target level through budgetary or other means. Unless otherwise noted in this policy, the following guidelines will be used to restore a reserve. ▪ If a reserve is drawn down to 75-99% of its minimum target level, it shall be restored to 100% over a 1- to 3-year period.
▪ If a reserve is drawn down to 50-74% of its minimum target level, it shall be restored to 100% over a 3- to 5-year period.
▪ If a reserve is drawn down below 50% of its minimum target level, it shall be restored to 100% over a 5- to 7-year period.

These guidelines may be suspended, in whole or part, if financial or economic circumstances are determined by the City Manager to prevent meeting any or all of the timelines.

III. BUDGET POLICIES
C. Appropriations

1. In evaluating the level of appropriations for program enhancements, or reductions, the City will apply the following principles in the priority order given:
a. Essential services, which provide for the health and safety of residents, including but not limited to police, fire, street maintenance, and sewer and storm drainage will be funded to maintain current dollar levels.
b. An amount or amounts equal to a total of not less than one percent (1%) of General Fund operating revenues will be appropriated in the General Fund annually for the performance of major maintenance and repairs upon the City’s building assets, as defined in Section II.C of the Financial Policies. Projects funded by these appropriations will be prioritized using a tiered system with health- and safety-related repairs and/or maintenance assigned the highest priority. c. An amount or amounts equal to a total of not less than one percent (1%) of General Fund, Measure E Fund, and Measure G Fund operating revenues will be appropriated in the General Fund, Measure E Fund, and/or Measure G Fund for the performance of major maintenance and repairs upon the City’s infrastructure assets, as defined in Section II.D of these Financial Policies. Projects funded by these appropriations will be prioritized using a tiered system with public health- and safety-related repairs and/or maintenance assigned the highest priority, followed by those determined to be most urgent on the bases of industry indices used, as applicable, for rating the conditions of assets.
d. Appropriations for program enhancements or reductions will be evaluated on a caseby-case basis rather than across the board. e. When reductions in personnel are necessary to reduce expenditures, they shall be consistent with the City Council's established service level priorities and, when possible, shall be accomplished through normal attrition. f. Programs, which are self-supported by special revenues or fees, shall be separately evaluated.

2. Prior to the City Council making any supplemental appropriation, the City Manager or Finance Director shall certify that funds in excess of those estimated in the budget are available for appropriation. Any such supplemental appropriations shall be made for the fiscal year by Council action up to the amount of any excess.

3. Appropriations may be reduced any time during the fiscal year by the City Council upon recommendation of the City Manager. When appropriation reductions are recommended, the City Manager shall provide specific recommendations to the Council, indicating the estimated amount of the reduction, any remedial actions taken, and recommendations as to any other steps to be taken.

4. The City Manager may transfer appropriations between departments and Department Directors may transfer appropriations between programs and accounts within their individual departments and divisions, but only the Council by minute-order may appropriate funds from reserves or fund balances.

5. Only the City Manager may authorize the use of departmental salary budget savings.

6. All appropriations, except for Capital Improvement Program appropriations, shall lapse at the end of the fiscal year to the extent that they have not been expended or encumbered.

An appropriation in the Capital Improvement Program shall continue in force until expended, revised, or cancelled.

7. The City will endeavor appropriate to a General Fund Non-Departmental operating contingency account an amount equal to one percent (1%) of the total General Fund operating budget to meet changing operational requirements during the fiscal year. The City Manager may authorize transfers from the contingency account, subject to purchasing limits.

CITY OF SALINAS Exhibit B

FINANCIAL POLICIES
Adopted by the Salinas City Council on December 10, 1991, Resolution Number 14343 (N.C.S.) and amended on June 21, 1994, Resolution Number 15193 (N.C.S.). The Financial Policies shall be reviewed at least annually and updated as necessary.

The following policies have been established to ensure the City’s at assets are safeguarded, financial statements are in conformity with generally accepted accounting principles, and finances are managed with responsible stewardship
II. RESERVE POLICIES
The purpose of this policy is to ensure the City is able to withstand financial emergencies, such as those which may result from natural disasters, economic downturns, or unanticipated expenditures of a non-recurring nature, and to accumulate funds for large-scale purchases.

The City will endeavor to accumulate and maintain reserves in the categories and at the minimum target levels described below.

F. WORKERS’ COMPENSATION SELF-INSURANCE RESERVE: assets in the Workers’ Compensation Self-Insurance Fund equal to the net present value of estimated outstanding Workers’ Compensation Program claim losses at the eighty percent (80%) confidence level of adequacy as calculated by the City’s actuary.

G. GENERAL LIABILITY SELF-INSURANCE RESERVE: assets in the General Liability SelfInsurance Fund equal to the net present value of estimated outstanding Liability Program claim losses at the eighty percent (80%) confidence level of adequacy as calculated by the City’s actuary.

K. The City will endeavor to maintain reserves in the Enterprise Funds equal to twenty-five percent of the budgets.

L. Airport Enterprise Fund Reserves

1. The Airport will endeavor to maintain an Operating Reserve equal to 25% of its operating expenditures.

2. The Airport will endeavor to maintain a Capital Reserve equal to the proceeds from the sale of surplus airport property to a real estate developer, Cabot, Cabot & Forbes (CC&F).

M. The City will endeavor to maintain reserves in the Maintenance Districts equal to fifty percent of the budgets.

N. Reserve requirements and balances will be reviewed annually and may be adjusted, as necessary to meet specifically identified future expenditures requiring the accumulation of funds.

O. Available General Fund, Measure E Fund, and Measure G Fund year-end balances shall be allocated to reserves, as applicable, until all minimum target reserve levels are achieved.

These guidelines may be suspended, in whole or part, if financial or economic circumstances are determined by the City Manager to prevent meeting any or all of the timelines.

III. BUDGET POLICIES
C. Appropriations

5. Only the City Manager may authorize the use of departmental salary budget savings.

6. All appropriations, except for Capital Improvement Program appropriations, shall lapse at the end of the fiscal year to the extent that they have not been expended or encumbered.

An appropriation in the Capital Improvement Program shall continue in force until expended, revised, or cancelled.

CITY OF SALINAS Exhibit C

The City will endeavor to accumulate and maintain reserves in the categories and at the minimum target levels described below.

K. The City will endeavor to maintain reserves in the Enterprise Funds equal to twenty-five percent of the budgets.

L. Airport Enterprise Fund Reserves

1. The Airport will endeavor to maintain an Operating Reserve equal to 25% of its operating expenditures.

2. The Airport will endeavor to maintain a Capital Reserve equal to the proceeds from the sale of surplus airport property to a real estate developer, Cabot, Cabot & Forbes (CC&F).

M. The City will endeavor to maintain reserves in the Maintenance Districts equal to fifty percent of the budgets.

N. Reserve requirements and balances will be reviewed annually and may be adjusted, as necessary to meet specifically identified future expenditures requiring the accumulation of funds.

O. Available General Fund, Measure E Fund, and Measure G Fund year-end balances shall be allocated to reserves, as applicable, until all minimum target reserve levels are achieved.

These guidelines may be suspended, in whole or part, if financial or economic circumstances are determined by the City Manager to prevent meeting any or all of the timelines.

City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#23-423, Version: 1
Investment Policy Adoption
Approve a Resolution adopting the City of Salinas Investment Policy as amended.

City of Salinas Page 1 of 1 Printed on 6/15/2023
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CITY OF SALINAS

COUNCIL STAFF REPORT
DATE: JUNE 20, 2023
DEPARTMENT: FINANCE
FROM: MARK ROBERTS, DIRECTOR OF FINANCE
TITLE: INVESTMENT POLICY ADOPTION
RECOMMENDED MOTION:

Staff recommends the City Council approve a resolution adopting the City of Salinas Investment Policy as amended.

BACKGROUND:

City of Salinas Investment Policy Section 11.C requires the City’s investment policy be reviewed at least annually and, as necessary, adopted by the City Council. Following review by staff and consultation with the City’s investment advisor, Chandler Asset Management, staff recommends amendment of the Investment Policy as reflected in the attachments to this staff report.

CEQA CONSIDERATION:

Not a Project. The City of Salinas has determined the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).

STRATEGIC PLAN INITIATIVE:

The recommended Investment Policy amendments are intended to enhance the internal controls applicable to the City’s invested assets and to allow for greater diversification of the City’s investment portfolio, which is expected to increase returns without significant additional credit or interest rate risk. Therefore, adoption of the recommended resolution would achieve the City Council 2022-2025 Strategic Goal of Effective Government.

FISCAL AND SUSTAINABILITY IMPACT:

The amended Investment Policy, if adopted, is expected to increase returns on the City’s investments without significantly increasing credit or interest rate risk.

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ATTACHMENTS:

Exhibit A – Investment Policy (Original)
Exhibit B – Investment Policy (Draft)
Exhibit C – Investment Policy (Final)
Resolution
1 RESOLUTION NO. (N.C.S.)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SALINAS ADOPTING THE CITY’S INVESTMENT POLICY
WHEREAS, City of Salinas Investment Policy Section 11.C requires the City’s Investment Policy be reviewed at least annually and, as necessary, adopted by the City Council; and
WHEREAS, following review by City staff and consultation with the City’s investment advisor, Chandler Asset Management, staff recommends amendment of various sections of the Investment Policy.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Salinas adopts the City of Salinas Investment Policy as reflected in the attachments hereto.

PASSED AND APPROVED this 20th day of June 2023, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:
______________________________
Kimbley Craig, Mayor
ATTEST:
_________________________
Patricia M. Barajas, City Clerk
Exhibit A
1 CITY OF SALINAS

ANNUAL INVESTMENT POLICY
1) PURPOSE
The purpose of this document is to establish policies and procedures to ensure effective and judicious management of the investments of the City of Salinas (“City”).

All City funds will be invested in accordance with this Investment Policy and California Government Code (“Government Code”) Sections 16429.1 et seq. and 53600 et seq. 2) SCOPE
This Investment Policy applies to all financial assets and investment activities of the City and the Successor Agency with the following exception(s):

Proceeds of debt issuance shall be invested in accordance with the City’s general investment philosophy as set forth in this policy; however, such proceeds are invested in accordance with permitted investment provisions of their specific bond indentures.

Pooling of funds: Except for cash in certain restricted and special funds, the City will consolidate cash and reserve balances from all funds to maximize investment earnings and to increase efficiencies with regard to investment pricing, safekeeping, and administration.

Investment income will be allocated to the various funds of the City based on their respective invested assets and in accordance with generally accepted accounting principles. 3) OBJECTIVES
The City has a fiduciary responsibility to maximize the productive use of all assets entrusted to its care and to invest and manage those public funds wisely and prudently. Therefore, the City shall strive to maintain the level of investment of all idle funds as near 100% as possible through projected cash flow determinations, investing in those investment vehicles deemed prudent and allowable under the laws of the State of California and the ordinances of the City of Salinas.

The objectives of the City’s investment program are, in order, safety, liquidity, and return.

2. Liquidity: The City's investment portfolio shall remain sufficiently liquid to allow the City to meet all operating requirements which may be reasonably anticipated.

3. Return: The City’s investment portfolio shall be managed with the objective of attaining a market average rate of return through budgetary and economic cycles, taking into account 2 the City’s safety constraints and liquidity requirements and state and local law, ordinances, and resolutions that restrict the placement of short-term funds. 4) PRUDENT INVESTOR STANDARD
Prudent Investor Standard: Management of the City’s investments is governed by the Prudent Investor Standard as set forth in Government Code Section 53600.3:
“…all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.” 5) PERFORMANCE EVALUATION
Investment performance is to be continually monitored and evaluated by the Director of Finance. The City’s primary portfolio performance will be measured against an objective index with similar attributes to the City’s portfolio.
6) DELEGATION OF AUTHORITY
Authority to manage the City’s investment program is derived from Government Code Section 53600 et seq. The City Council is responsible for the City’s cash management, including the administration of this Investment Policy. Pursuant to Section 46 of the Salinas City Charter and Chapter 12 of the Salinas Municipal Code, the City Council has delegated investment authority to the Director of Finance. Subject to review, the City Council may renew the delegation of authority each year.

No person may engage in an investment transaction except as provided under the terms of the policy and the procedures established by the Director of Finance.

The City may engage the services of one or more external investment managers to assist in the management of the City’s investment portfolio in a manner consistent with this Investment Policy and the City’s objectives. Such external managers may be granted discretion to purchase and sell investment securities in accordance with this Investment Policy. In accordance with the Investment Advisors Act of 1940, managers must be registered with the Securities & Exchange Commission (SEC) before they can offer their securities in the public market.
3 The Treasurer and the delegated investment officers, acting in accordance with written procedures and this Investment Policy and exercising due diligence, shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
7) ETHICS AND CONFLICTS OF INTEREST
Officers and employees involved in the investment process shall refrain from personal business activity that conflicts with proper execution of the investment program or impairs their ability to make impartial investment decisions.
8) SAFEKEEPING/CUSTODY, DELIVERY, AND COMPETITIVE TRANSACTIONS A. Third-Party Safekeeping: To protect against potential losses by collapse of individual securities dealers, and to enhance access to securities, interest payments and maturity proceeds, all securities owned by the City will be held in safekeeping by a third-party bank custodian, acting as agent for the City under the terms of a custody agreement executed by the bank and the City.

B. Delivery versus Payment: Settlement of all investment transactions will be completed on a delivery-versus-payment basis. All securities purchased or acquired shall be delivered to the City of Salinas by book entry, physical delivery, or by third party custodial agreement as required by Government Code Section 53601.

The only exception to the foregoing shall be depository accounts and securities purchases made with: (i) State of California’s Local Agency Investment Fund and other local government investment pools; (ii) non-negotiable certificates of deposit; and, (iii) money market mutual funds, since the purchased securities are not deliverable. Evidence of each these investments will be held by the City.

C. Competitive Transactions: All investment transactions will be conducted on a competitive basis which can be executed through a bidding process involving at least three separate brokers/financial institutions where applicable, or through the use of a nationally recognized trading platform.
9) DIVERSIFICATION
The City of Salinas will diversify its investments by security type and institution. It is the policy of the City of Salinas to diversify its investment portfolio. Assets shall be diversified to reduce the risk of loss resulting from over concentration of assets in a specific maturity, a specific issuer, or a specific class of securities. Diversification strategies shall be determined and revised periodically and approved by the City Manager and the City Council. In 4 establishing specific diversification strategies, the following general policies and constraints shall apply:

A. Maturities selected shall provide for stability of income and liquidity.

B. Disbursement and payroll dates shall be covered through maturity investments and marketable securities.
10) INTERNAL CONTROL
The Director of Finance shall establish a system of written internal controls to regulate the City’s investment activities, including the activities of any subordinate officials acting on behalf of the City.

The investment portfolio and all related transactions shall be reviewed and balanced to the appropriate general ledger accounts by Department of Finance Staff on a monthly basis.

An independent analysis by the City’s external auditor shall be conducted annually as part of the annual audit to review internal control, account activity, and compliance with the Government Code and with policies and procedures and reported to City Council. 11) REPORTING
A. The Director of Finance shall submit to City Council a monthly report of investment transactions.

B. The Director of Finance shall render a quarterly investment report to the City Manager and City Council.

2. For investments placed in the State of California’s Local Agency Investment Fund; in FDIC-insured or fully collateralized demand deposit accounts, savings accounts, market rate accounts, time certificates of deposits, and other types of bank deposits in financial institutions located in California; in a county investment pool; or any combination of these, the Director of Finance may provide the City Manager and City Council the most recent statement or statements received from these 5 institutions in lieu of the information required by subsection 1 regarding investments in these institutions.

3. The quarterly report also shall (a) state compliance of the portfolio to the statement of Investment Policy, or manner in which the portfolio is not in compliance; (b) include a description of any of the City's funds, investments, or programs that are under the management of contracted parties, including lending programs; and (c) include a statement denoting the ability of the City to meet its expenditure requirements for the next six months, or provide an explanation as to why sufficient money shall, or may, not be available.

C. The Investment Policy shall be reviewed at least annually and, as necessary, adopted by the City Council to ensure its consistency with the overall objectives of safety, liquidity, and return, as well as its relevance to current law and financial and economic trends. 12) QUALIFIED BROKER DEALERS
Whenever practical, a competitive bid process will be used for the purchase and sale of investments. It shall be the City’s policy to execute investment transactions only with broker/dealers and financial institutions deemed eligible by the Director of Finance or the City's Investment Advisor if applicable, will be used to place all investment purchases. 13) AUTHORIZED INVESTMENTS
All investments shall be made in accordance with Government Code Sections 16429.1 et seq. and 53600 et seq. Within the investments permitted by the Government Code, the City seeks to further restrict eligible investments to the guidelines listed below. In the event a discrepancy is found between this Investment Policy and the Government Code, the more restrictive parameters will take precedence.

Where this section specifies a percentage limitation for a particular category of investment, that percentage is applicable only at the date of purchase. Where this section does not specify a limitation on the term or remaining maturity at the time of the investment, no investment shall be made in any security, other than a security underlying a repurchase agreement authorized by this section, that at the time of the investment has a term remaining to maturity in excess of five (5) years. Any investment held at the time this Investment Policy is adopted which does not meet the new policy guidelines may be held until maturity and shall be exempt from the current policy. At the time of the investment’s maturity or liquidation, such funds shall be reinvested only as provided in the current policy.

A. United States Treasury, notes, bonds, bills, or certificates of indebtedness, or those for which the full faith and credit of the United States are pledged for the payment of principal and interest.

B. Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to 6 principal and interest by federal agencies or United States government-sponsored enterprises. No more than 40% of the City's portfolio may be invested in any one federal agency.

F. Repurchase Agreements collateralized with securities authorized under Government Code, maintained at a level of at least 102% of the market value of the repurchase agreement.

There are no limits on the dollar amount or percentage that the City may invest, provided that:
▪ securities used as collateral for repurchase agreements will be delivered to an acceptable third-party custodian;
▪ repurchase agreements are subject to a master repurchase agreement between the City and the provider of the repurchase agreement. The master repurchase agreement will be substantially in the form developed by the Securities Industry and Financial Markets Association (SIFMA);
▪ the maximum maturity does not exceed ninety-two days.

G. Reverse repurchase agreements or securities lending agreements may be utilized only when all the following conditions are met:

1. the security to be sold on reverse repurchase agreement or securities lending agreement has been owned and fully paid for by the City for a minimum of 30 days prior to sale;

2. the total of all reverse repurchase agreements and securities lending agreements on investments owned by the City does not exceed 20 percent of the market value of the portfolio;

3. the agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period 7 between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security;

4. funds obtained or funds within the pool of an equivalent amount to that obtained from selling a security to a counterparty by way of a reverse repurchase agreement or securities lending agreement shall not be used to purchase another security with a maturity longer than 92 days from the initial settlement date of the reverse repurchase agreement or securities lending agreement, unless the reverse repurchase agreement or securities lending agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security.

Investments in reverse repurchase agreements, securities lending agreements, or similar investments in which the City sells securities prior to purchase with a simultaneous agreement to repurchase the security may only be made upon prior approval of the City Council and shall only be made with primary dealers of the Federal Reserve Bank of New York or with a nationally or state-chartered bank that has or has had a significant banking relationship with the City. The City may not invest more than 20% of its portfolio in reverse repurchase agreements and must always match its maturities to the reinvestment.

H. Bankers’ acceptances, otherwise known as bills of exchange or time drafts, that are drawn on and accepted by a commercial bank. Purchases of bankers' acceptances shall not exceed 180 days’ maturity or 40% of the City’s surplus moneys that may be invested pursuant to this section. However, no more than 30% of the City’s surplus moneys may be invested in the bankers’ acceptances of any one commercial bank. Eligible bankers' acceptances are restricted to issuing financial institutions with short-term paper rated in a rating category of “A-1” or its equivalent or higher by one NRSRO or long-term debt obligations rated in a rating category of “A” or its equivalent or higher by a NRSRO.

I. Commercial paper of “prime” quality of the highest ranking or of the highest letter and number rating as provided for by a NRSRO. The entity that issues the commercial paper shall meet all the following conditions in either paragraph (1) or paragraph (2) below:

1. The entity meets the following criteria: (a) is organized and operating in the United States as a general corporation, (b) has total assets in excess of five hundred million dollars ($500,000,000), and (c) has debt other than commercial paper, if any, rated in a rating category of “A” or its equivalent or higher by a NRSRO.

2. The entity meets the following criteria: (a) is organized within the United States as a special purpose corporation, trust, or limited liability company, (b) has programwide credit enhancements, including, but not limited to, overcollateralization, letters of credit, or surety bonds. (c) has commercial paper rated “A-1” or its equivalent or higher by a NRSRO.

Eligible commercial paper shall have a maximum maturity of 270 days or less. The City may invest no more than 25% of its surplus moneys that may be invested pursuant to this 8 section in eligible commercial paper, and the City may invest no more than 10% of its total investment assets in the commercial paper and the medium-term notes of any single issuer.

Under a provision sunsetting on January 1, 2026, no more than 40% of the City’s surplus moneys may be invested in commercial paper if the City’s investment assets under management are greater than $100,000,000. The City may invest no more than 5% of its total investment assets in any single issuer.

J. Medium-term notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment under this subsection must be rated in a rating category of “A” or its equivalent or higher by a NRSRO. Purchases of mediumterm notes shall not exceed 30% of the City’s surplus moneysthat may be invested pursuant to this section, and the City may invest no more than 10% of its total investment assets in the commercial paper and the medium-term notes of any single issuer.

L. Negotiable Certificates of Deposit issued by a nationally- or state-chartered bank or a state or federal savings and loan association, a state or federal credit union, or by a federally- or state-licensed branch of a foreign bank. Amounts of negotiable certificates of deposit insured up to the FDIC limit do not require a credit rating. Any amount above the FDIC insured limit must be issued by institutions with short-term debt obligations rated in a rating category of “A-1” or its equivalent or higher by at least one NRSRO, or long-term obligations rated in a rating category of “A” or its equivalent or higher by a NRSRO.

Purchases of negotiable certificates of deposit shall not exceed 30% of the City's surplus moneys that may be invested pursuant to this section.

M. Certificates of deposit placed through a deposit placement service that meet the requirements under Government Code Section 53601.8. The full amount of each deposit placed and the interest that may accrue on each such deposit shall at all times be insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration.

Purchases of certificates of deposit placed through a deposit placement service shall not, in total, exceed 30 percent of the City’s surplus moneys that may be invested pursuant to this section.
9 N. State of California’s Local Agency Investment Fund (LAIF). Investment in LAIF may not exceed the amount permitted by LAIF.

O. Shares of beneficial interest issued by a joint powers authority organized pursuant to Government Code Section 6509.7 that invests in the securities and obligations authorized in this section. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment adviser that meets all of the following criteria:

1. The adviser is registered or exempt from registration with the Securities and Exchange Commission.

2. The adviser has not less than five years of experience investing in the securities and obligations authorized in this section.

3. The adviser has assets under management in excess of five hundred million dollars ($500,000,000)
The underlying pool of securities of which the shares are purchased must be rated in a rating category of “AAAm” or its equivalent or higher by a NRSRO.

P. Shares of beneficial interest issued by diversified management companies that are money market funds registered with the SEC under the Investment Company Act of 1940 (15 USC Sec. 80a-1, et seq.). The purchase price of shares shall not exceed 20 percent of the investment portfolio of the City. To be eligible for investment pursuant to this subdivision, these companies shall have either:

1. attained the highest-ranking letter or numerical rating provided by not less than two of the three largest NRSRO or

2. retained an investment advisor registered or exempt from registration with the SEC with not less than five years’ experience managing money market mutual funds and with assets under management in excess of $500,000,000.

Q. A mortgage pass-through security, collateralized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease-backed certificate, consumer receivable passthrough certificate, or consumer receivable-backed bond. Securities eligible for investment under this subsection shall be rated in a rating category of “AA” or its equivalent or higher by an NRSRO. Purchase of securities authorized by this subsection shall not exceed 20 % of the City’s surplus moneys that may be invested pursuant to this section. The City may invest no more than 5% of its total investment assets in the asset-backed or commercial mortgage security of any single issuer.

R. Supranational obligations. Issues must be United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank and eligible for purchase and sale 10 within the United States. The securities must be rated in a rating category of “AA” or its equivalent or higher by a NRSRO. No more than 30% of the City’s surplus moneys that may be invested pursuant to this section may be invested in this category. The City may invest no more than 10% of its total investment assets in the supranational obligations of any single issuer.
14) PROHIBITED INVESTMENTS
Any security type or structure not specifically approved by this policy is hereby specifically prohibited. Security types which are thereby prohibited include, but are not limited to, inverse floaters, derivatives, range notes, interest only strips that are derived from a pool of mortgages, or in any investment that could result in zero interest accrual if held to maturity. Under a provision sunsetting on January 1, 2026, securities backed by the US Government that could result in a zero- or negative-interest accrual if held to maturity are permitted. Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited.

Purchasing or selling securities on margin is prohibited. The use of reverse repurchase agreements, securities lending or any other form of borrowing or leverage is prohibited. The purchase of foreign currency denominated securities is prohibited. Local governments that are not Qualified Institutional Buyers (QIB) as defined by the SEC are prohibited from purchasing Private Placement Securities. The SEC defines a QIB as having at least $100,000,000 in securities owned and invested.
15) INVESTMENT OF BOND PROCEEDS
Bond proceeds shall be invested in the securities permitted by the applicable bond documents. If the bond documents are silent as to the permitted investments, bond proceeds will be invested in the securities permitted by this policy. Notwithstanding the other provisions of this policy, the percentage or dollar portfolio limitations listed in elsewhere in this policy do not apply to bond proceeds. In addition to the securities listed in this Policy, bond proceeds may be invested in a structured investment product if approved by the Director of Finance.
16) LEGISLATIVE CHANGES
Any State of California legislative action that further restricts allowable maturities, investment type or percentage allocations will be deemed to be incorporated into the City of Salinas’s investment policy and will supersede any and all applicable language. 17) INTEREST EARNINGS
All moneys earned and collected from investments authorized in this policy shall be allocated monthly to various fund accounts based on the pooled cash balance in each fund as a percentage of the entire pooled portfolio.

Exhibit A
11 Glossary
Agency: Federal agency securities and /or
Government-sponsored enterprises.

Bankers’ Acceptance (BA): A draft or bill
or exchange accepted by a bank or trust
company. The accepting institution
guarantees payment of the bill, as well as the
issuer.

Broker: A broker brings buyers and sellers
together for a commission.

California Local Government Debt: Is
bonds, notes, warrants, or other evidences of
indebtedness of any local agency within
California. California local government
debt is a permitted investment under the
California Government Code. The
Government Code does not specify
minimum credit ratings for local
government debt in which local agencies
may invest.

Certificate of Deposit (CD): A time
deposit with a specific maturity evidenced
by a certificate. Large-denomination CD’s
are typically negotiable.

Collateral: Securities, evidence of deposit
of other property which a borrower pledges
to secure repayment of a loan. Also refers to
securities pledged by a bank to secure
deposits of public monies.

Annual Comprehensive Financial Report
(ACFR): The official annual report for the
City of Salinas. It includes five combine
statements for each individual fund and
account group prepared in conformity with
GAAP. It also includes supporting
schedules necessary to demonstrate
compliance with finance-related legal and
contractual provisions, extensive
introductory material, and a detailed
Statistical Section.

Coupon: (a) The annual rate of interest that
a bond’s issuer promises to pay the
bondholder on the bond’s face value. (b) A
certificate attached to a bond evidencing
interest due on a payment date.

Dealer: A dealer, as opposed to a broker,
acts as a principal in all transactions, buying
and selling for his own account.

Debenture: A bond secured only by the
general credit of the issuer.

Delivery versus Payment: There are two
methods of delivery of securities: delivery
versus payment and delivery versus receipt.

Delivery versus payment is delivery of
securities with an exchange of money for the
securities. Delivery versus receipt is
delivery of securities with an exchange of a
signed receipt for the securities.

Derivatives: (1) Financial instruments
whose return profile is linked to, or derived
from, the movement of one or more
underlying index or security, and may
include a leveraging factor, or (2) financial
contracts based upon notional amounts
whose value is derived from an underlying
index or security (interest rates, foreign
exchange rates, equities or commodities).

Discount: The difference between the cost
price of a security and its maturity when
quoted at lower than face value. A security
selling below original offering price shortly
after sale also is considered to be at a
discount.
12 Diversification: Dividing investment funds
among a variety of securities offering
independent returns.

Federal Credit Agencies: Agencies of the
Federal government set up to supply credit
to various classes of institutions and
individuals, e.g., S&L’s, small business
firms, students, farmers, farm cooperatives,
and exporters.

Federal Deposit Insurance Corporation
(FDIC): A federal agency that insures bank
deposits, currently up to $250,000 per
deposit.

Federal Funds Rate: The rate of interest at
which Fed funds are traded. This rate is
currently pegged by the Federal Reserve
through open-market operations.

Federal Home Loan Banks (FHLB):

Government sponsored wholesale banks
(currently 12 regional banks) which lend
funds and provide correspondent banking
services to member commercial banks, thrift
institutions, credit unions and insurance
companies. The mission of the FHLB is to
liquefy the housing related assets of its
members who must purchase stock in their
district Bank.

Federal National Mortgage Association
(FNMA): FNMA, like GNMA was
chartered under the Federal National
Mortgage Association Act in 1938. FNMA
is a federal corporation working under the
auspices of the Department of Housing and
Urban Development (HUD). It is the largest
single provider of residential mortgage
funds in the United States. Fannie Mae, as
the corporation is called, is a private
stockholder-owned corporation. The
corporation’s purchases include a variety of
adjustable mortgages and second loans, in
addition to fixed-rate mortgages. FNMA’s
securities are also highly liquid and are
widely accepted. FNMA assumes and
guarantees that all security holders will
receive timely payment of principal and
interest.

Federal Open Market Committee
(FOMC): Consists of seven members of
the Federal Reserve Board and five of the
twelve Federal Reserve and Presidents. The
President of the New York Federal Reserve
Bank is a permanent member, while the
other Presidents serve on a rotating basis.

The Committee periodically meets to set
Federal Reserve guidelines regarding
purchases and sales of Government
Securities in the open market as a means of
influencing the volume of bank credit and
money.

Federal Reserve System: The central bank
of the United States created by Congress and
consisting of a seven-member Board of
Governors in Washington, D.C., 12 regional
banks and about 5,700 commercial banks
that are members of the system.

Government National Mortgage
Association (GNMA or Ginnie Mae):

Securities influencing the volume of bank
credit guaranteed by GNMA and issued by
mortgage bankers, commercial banks,
savings and loan associations, and other
institutions. Security holder is protected by
full faith and credit of the US Government.

Ginnie Mae securities are backed by the
FHA, VA or FmHA mortgages. The term
“pass-throughs” is often used to describe
Ginnie Maes.

Issuer: Any corporation, government unit
or financial institution which borrows
money through the sale of securities.

Liquidity: A liquid asset is one that can be
converted easily and rapidly into cash
13 without a substantial loss of value. In the
money market, a security is said to be liquid
if the spread between bid and asked prices is
narrow and reasonable size can be done at
those quotes.

Local Agency Investment Fund (LAIF):

A special fund in the State Treasury which
local agencies may use to deposit funds for
investment. All interest is distributed to
those agencies participating on a
proportionate share determined by the
amounts deposited and the length of time
they are deposited. Interest is paid quarterly
via direct deposit to the LAIF account. The
State keeps an amount for reasonable costs
of making the investments, not to exceed
one-quarter of one per cent of the earnings.

Local Government Investment Pool
(LGIP): The aggregate of all funds from
political subdivisions that are pooled
together for investment and reinvestment.

Market Value: The price at which a
security is trading and could presumably be
purchased or sold.

Master Repurchase Agreement: A written
contract covering all future transactions
between the parties to repurchase – reverse
repurchase agreements that establishes each
party’s rights in the transactions. A master
agreement will often specify, among other
things, the right of the buyer-lender to
liquidate the underlying securities in the
event of default by the seller-borrower.

Maturity: The date upon which the
principal or stated value of an investment
becomes due and payable.

Money Market: The market in which
short-term debt instruments (bills,
commercial paper, bankers’ acceptances,
etc.) are issued and traded.

Mutual Funds: Referred to in the
Government Code, Section 53601(l) as
“shares of beneficial interest issued by
diversified management companies.” The
Mutual Fund must be restricted by its bylaws to the same investments as the local agency by the Government Code. These
investments are Treasury issues, Federal
Agency issues, State of California and City
(within California) debt obligations, Bankers
Acceptances, Commercial Paper,
Certificates of Deposit, Negotiable
Certificates of Deposit, Repurchase
Agreements, Reverse Repurchase
Agreements, and Medium-Term Corporate
Notes. The quality rating and percentage
restrictions in each investment category
applicable to the local agency also apply to
the Mutual Fund.

Negotiable: Term used to designate a
security, the title to which is transferable by
delivery.

Offer: The price asked by a seller of
securities. (When you are buying securities,
you ask for an offer). See Asked and Bid.

Open Market Operations: Purchases and
sales of government and certain other
securities in the open market by the New
York Federal Reserve Bank as directed by
the FOMC in order to influence the volume
of money and credit in the economy.

Purchases inject reserves into the bank
system and stimulate growth of money and
credit; sales have the opposite effect. Open
market operations are the Federal Reserve’s
most important and most flexible monetary
policy tool.

Portfolio: Collection of securities held by
an investor.

Primary Dealer: A group of government
securities dealers who submit daily reports
14 of market activity and positions and monthly
financial statements to the Federal Reserve
Bank of New York and are subject to its
informal oversight. Primary dealers
included Securities & Exchange
Commission (SEC) – registered securities
broker-dealers, banks, and a few unregulated
firms.

Principal: Describes the original cost of a
security. It represents the amount of capital
or money which the investor pays for the
investment.

Prudent Person Rule: An investment
standard. In some states the law requires
that a fiduciary, such as a trustee, may invest
money only in a list of securities selected by
the custody state – the so-called legal list. In
other states the trustee may invest in a
security if it is one which would be bought
by a prudent person of discretion and
intelligence who is seeking a reasonable
income and preservation of capital.

Qualified Public Depositories: A financial
institution which does not claim exemption
from the payment of any sales or
compensating use or ad valorem taxes under
the laws of this state, which has segregated
for the benefit of the commission eligible
collateral having a value of not less than its
maximum liability and which has been
approved by the State to hold public
deposits.

Rate of Return: The yield obtainable on a
security based on its purchase price or its
current market price. This may be the
amortized yield to maturity on a bond the
current income return.

Repurchase Agreement (RP or Repo): A
holder of securities sells these securities to
an investor with an agreement to repurchase
them at a fixed price on a fixed date. The
security “buyer” in effect lends the “seller”
money for the period of the agreement, and
the terms of the agreement are structured to
compensate him for this. Dealers use RP
extensively to finance their positions.

Exception: When the Fed is said to be doing
RP, it is lending money, that is, increasing
bank services.

Safekeeping: A service to customers
rendered by banks for a fee whereby
securities and valuables of all types and
descriptions are held in the bank’s vaults for
protection.

Secondary Market: A market made for the
purchase and sale of outstanding issues
following the initial distribution.

Security: An investment instrument, other
than an insurance policy or fixed annuity,
issued by a corporation, government, or
other organization which offers evidence of
debt or equity.

Securities & Exchange Commission:

Agency created by Congress to protect
investors in securities transactions by
administering securities legislation.

SEC Rule 15C3-1: See Uniform Net
Capital Rule.

Structured Notes: Notes issued by
Government Sponsored Enterprises (FHLB,
FNMA, SLMA, etc.) and Corporations
which have imbedded options (e.g., call
features, step-up coupons, floating rate
coupons, derivative-based returns) into their
debt structure. Their market performance is
impacted by the fluctuation of interest rates,
the volatility of the imbedded options and
shifts in the shape of the yield curve.

Treasury Bills: A non-interest-bearing
discount security issued by the US Treasury
15 to finance the national debt. Most bills are
issued to mature in three months, six
months, or one year.

Treasury Notes: Medium-term couponbearing US Treasury securities issued as direct obligations of the US Government and
having initial maturities from two to ten
years.

Uniform Net Capital Rule: Securities &
Exchange Commission (SEC) requirement
that member firms as well as nonmember
broker-dealers in securities maintain a
maximum ratio of indebtedness to liquid
capital of 15 to 1; also called net capital rule
and net capital ratio. Indebtedness covers all
money owed to a firm, including margin
loans and commitments to purchase
securities, one reason new public issues are
spread among member of underwriting
syndicates. Liquid capital includes cash and
assets easily converted into cash.

Yield: The rate of annual income return on
an investment, expressed as a percentage.
(a) Income Yield is obtained by dividing the
current dollar income by the current market
price for the security. (b) Net Yield or
Yield to Maturity is the current income
yield minus any premium above par or plus
any discount from par in purchase price,
with the adjustment spread over the period
from the date of purchase to the date of
maturity of the bond.
16 CITY OF SALINAS

INVESTMENT GUIDELINES AND STRATEGY
I. GUIDELINES - Guidelines are established to direct and control activities in such a manner that previously established goals are achieved.

1. Investment Transaction. Every investment transaction must be authorized and reviewed by the Director of Finance or his/her designee.

2. Pooled Cash. Whenever practical, local agency cash is consolidated into one bank account and invested on a pooled concept basis. Interest earnings are allocated monthly according to month-end cash and investment balances for each fund.

3. Competitive Bids. Purchase and sales of securities are made on the basis of competitive offers and bids when practical.

4. Cash Forecast. The cash flow for the City is analyzed with the receipt of revenues and maturity of investments scheduled so that adequate cash will be available to meet disbursement requirements.

5. Investment Limitations. Security purchases and holdings are maintained within statutory limits imposed by the California Government Code. Current limits are:

Bankers’ Acceptances 40% Section 53601(f)
Commercial Paper 25% Section 53601(g)
Negotiable Certificates of Deposit 30% Section 53601(h) Medium Term Notes 30% Section 53601(j)
Money Market Mutual Funds 20% Section 53601(k)
Asset-Backed/Mortgage-Backed Securities 20% Section 53601(n) Federal Agency restriction 60% per Agency Section 14 of Policy Local Agency Investment Fund $50,000,000 per Section 14 of Policy CAMP no limit per Section 14 of Policy
Portfolio Maturing within one year 20% per Section 14 of Policy

6. Liquidity. The marketability of a security is considered at the time of purchase, as the security may have to be sold at a later date to meet unanticipated cash demands.

7. Diversification. The portfolio should consist of a mix of various types of securities, issuers, and maturities.
17 CITY OF SALINAS

INVESTMENT GUIDELINES AND STRATEGY
(Continued)
II. STRATEGY - Strategy refers to the ability to manage financial resources in the most advantageous manner.

1. Economic Forecasts. Economic Forecasts are obtained periodically from economists and financial experts through bankers and brokers to assist the Director of Finance or his/her designee with the formulation of an investment strategy for the local agency.

2. Implementing Investment Strategy. Investment transactions are executed which conform with anticipated interest rate trends and the current investment strategy plan.

3. Rapport. A close working relationship is maintained with large vendors of the city. The objective is to pinpoint when large disbursements will clear the city's bank account. It is essential for good cash control that such large expenditures be anticipated, estimated as to dollar amount, and communicated to the Director of Finance or his/her designee for liquidity planning purposes.

4. Preserve Portfolio Value. Field standards are developed in order to maintain earnings near the market and to preserve the value of the portfolio. 18 CITY OF SALINAS

INVESTMENT PROCEDURES

INTERNAL CONTROL - GUIDELINES

OBJECTIVES OF INTERNAL CONTROL
Internal control is the plan of organization and all the related systems established by the management's objective of ensuring, as far as practicable:
 The orderly and efficient conduct of its business, including adherence to management policies.  The safeguarding of assets.
 The prevention or detection of errors and fraud.
 The accuracy and completeness of the accounting records.  The timely preparation of reliable financial information.

LIMITATIONS OF INTERNAL CONTROL
No internal control system, however elaborate, can by itself guarantee the achievement of management's objectives. Internal control can provide only reasonable assurance that the objectives are met, because of its inherent limitations, including:
 Management's usual requirement that a control be cost-effective.  The direction of most controls at recurring, rather than unusual, types of transactions.  Human error due to misunderstanding, carelessness, fatigue, or distraction.  Potential for collusion that circumvents controls dependent on the segregation of functions.  Potential for a person responsible for exercising control abusing that responsibility; a responsible staff member could be in a position to override controls which management has set up.
19 CITY OF SALINAS

INVESTMENT PROCEDURES

INTERNAL CONTROL - GUIDELINES
(Continued)

ELEMENTS OF INTERNAL CONTROL
Elements of a system of internal control are the means by which an organization can satisfy the objectives of internal control. These elements are:

1. ORGANIZATION
Specific responsibility for the performance of duties should be assigned and lines of authority and reporting clearly identified and understood.

2. PERSONNEL
Personnel should have capabilities commensurate with their responsibilities. Personnel selection and training policies together with the quality and quantity of supervision are thus important.

3. SEGREGATION OF FUNCTIONS
Segregation of incompatible functions reduces the risk that a person is in a position both to perpetrate and conceal errors or fraud in the normal course of duty. If two parts of a transaction are handled by different people, collusion is necessary to conceal errors or fraud.

In particular, the functions that should be considered when evaluating segregation of functions are authorization, execution, recording, custody of assets, and performing reconciliations.

4. AUTHORIZATION
All transactions should be authorized by an appropriate responsible individual. The responsibilities and limits of authorization should be clearly delineated. The individual or group authorizing a specific transaction or granting general authority for transactions should be in a position commensurate with the nature and significance of the transactions. Delegation of authority to authorize transactions should be handled very carefully.

5. CONTROLS OVER AN ACCOUNTING SYSTEM
Controls over an accounting system include the procedures, both manual and computerized, carried out independently to ascertain that transactions are complete, valid, authorized, and properly recorded.
20 CITY OF SALINAS

CASH CONTROLS

PROCEDURES PERFORMED BY EXTERNAL AUDITORS WITH RESPECT TO CASH

RECEIPTS
A. City procedures and controls are reviewed. Some of the system strengths are:

1. Receipts are controlled upon receipt by proper registration devices.

2. Receipts are reconciled on a daily basis.

3. Amounts batched and deposited intact.

4. Bank reconciliations are reviewed.

5. Prompt posting of cash receipt entries in books.

6. Proper approval required for write-offs of customer accounts.

7. Checks are restrictively endorsed upon receipt or when run through cash register.

8. Adequate physical security over cash.

9. Individuals that handle cash do not post to customer account records or process billing statements.

10. Adequate supervision of Finance Department operations.

B. Significant revenues are confirmed directly with payer and compared with City books to make sure amounts are recorded properly.

C. Cash balances are substantiated by confirming all account balances recorded in books. Bank reconciliations are reviewed for propriety and recalculated by the auditor. All significant reconciling items on bank reconciliations are verified as valid reconciling items by proving to subsequent bank statements.
21 CITY OF SALINAS

SEGREGATION OF RESPONSIBILITIES OF

THE TREASURY FUNCTIONS
Function Responsibility

1. Formal Investment Policy should be:

Prepared By: Director of Finance
Approved By: City Council

2. Develop Investment Strategy Director of Finance or Registered Investment Advisor

3. Investment Strategy should be Director of Finance
approved by

4. Execution of investment transactions:

Investments other than LAIF and Deposits Director of Finance or Registered Investment Advisor
Execution of LAIF and Deposit transfers Accounting Manager

5. Timely recording of investment transactions:

Recording of investment transactions Senior Accountant
in the City's accounting records (but reviewed by Accounting Manager)

6. Verification of investment, Senior Accountant
i.e., match broker confirmation to City's records

7. Confirmation of LAIF and Bank Wires Assistant Director of Finance

8. Safeguarding of Assets and Records:

Reconciliation of City's Senior Accountant
records to bank statements and (but reviewed by Assistant safekeeping records Director of Finance)
22 CITY OF SALINAS

SEGREGATION OF RESPONSIBILITIES OF

THE TREASURY FUNCTIONS
(Continued)
Function Responsibility

8. Safeguarding of Assets and Records
(continued):

Annual review of (a) financial Director of Finance or Registered institution's financial condition, Investment Advisor
(b) safety, liquidity, and potential
yields of investment instruments.

9. No less than an annual Independent Auditors
review of investment
portfolio as prepared by
Senior Accountant and reviewed by
Director of Finance
Exhibit B
1 CITY OF SALINAS

INVESTMENT POLICY
1) PURPOSE
The purpose of this document is to establish policies and procedures to ensure effective and judicious management of the investments of the City of Salinas (“City”).

The City’s investment program will conform to this Investment Policy and all applicable federal and state legal requirements, including California Government Code (“Government Code”) Sections 16429.1 et seq. and 53600 et seq.

This Investment Policy replaces any previous investment policy or investment procedures of the City.
2) SCOPE
This Investment Policy applies to all financial assets and investment activities of the City and the Successor Agency with the following exception(s):

The objectives of the City’s investment program are, in order, safety, liquidity, and return.

1. Safety: Preservation of principal is the foremost objective of the City’s investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.
2 2. Liquidity: The City's investment portfolio shall remain sufficiently liquid to allow the City to meet all operating requirements which may be reasonably anticipated.

Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.” 5) PERFORMANCE EVALUATION
Investment performance is to be continually monitored and evaluated by the Director of Finance. The City’s primary portfolio performance will be measured against an objective index with similar attributes to the City’s portfolio.
6) DELEGATION OF AUTHORITY
Authority to manage the City’s investment program is derived from Government Code Section 53600 et seq. The City Council is responsible for the City’s cash management, including the administration of this Investment Policy. Pursuant to Section 46 of the Salinas City Charter and Chapter 12 of the Salinas Municipal Code, the City Council has delegated investment authority to the Director of Finance. Subject to review, the City Council may renew the delegation of authority each year.

No person may engage in an investment transaction except as provided under the terms of the policy and the procedures established by the Director of Finance.

The Treasurer and the delegated investment officers, acting in accordance with written procedures and this Investment Policy and exercising due diligence, shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
7) ETHICS AND CONFLICTS OF INTEREST
Officers and employees involved in the investment process shall refrain from personal business activity that conflicts with proper execution of the investment program or impairs their ability to make impartial investment decisions.
8) SAFEKEEPING/CUSTODY, DELIVERY, AND COMPETITIVE TRANSACTIONS A. Third-Party Safekeeping: To protect against potential losses by collapse of individual securities dealers, and to enhance access to securities, interest payments and maturity proceeds, all securities owned by the City will be held in safekeeping by a third-party bank custodian, acting as agent for the City under the terms of a custody agreement executed by the bank and the City.

C. Competitive Transactions: All investment transactions will be conducted on a competitive basis which can be executed through a bidding process involving at least three separate brokers/financial institutions where applicable, or through the use of a nationally recognized trading platform.
4 9) DIVERSIFICATION
The City of Salinas will diversify its investments by security type and institution. It is the policy of the City of Salinas to diversify its investment portfolio. Assets shall be diversified to reduce the risk of loss resulting from over concentration of assets in a specific maturity, a specific issuer, or a specific class of securities. Diversification strategies shall be determined and revised periodically and approved by the City Manager and the City Council. In establishing specific diversification strategies, the following general policies and constraints shall apply:

A. Maturities selected shall provide for stability of income and liquidity.

The investment portfolio and all related transactions shall be reviewed and balanced to the appropriate general ledger accounts by Department of Finance Staff on a monthly basis.

B. The Director of Finance shall render a quarterly investment report to the City Manager and City Council.

1. Except as provided in subsection 2, the quarterly report shall include the following information for each individual investment:
▪ type of investment instrument;
▪ issuer name;
▪ maturity date;
▪ par value;
▪ book value (purchase price);
▪ current market value and the source of the valuation. 5 2. For investments placed in the State of California’s Local Agency Investment Fund; in FDIC-insured or fully collateralized demand deposit accounts, savings accounts, market rate accounts, time certificates of deposits, and other types of bank deposits in financial institutions located in California; in a county investment pool; or any combination of these, the Director of Finance may provide the City Manager and City Council the most recent statement or statements received from these institutions in lieu of the information required by subsection 1 regarding investments in these institutions.

B. Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises. No more than 30% of the City's portfolio may be invested in any one federal agency. The maximum percent of agency callable securities in the portfolio will be 20%.

C. Registered state warrants or treasury notes or bonds of the State of California, including bonds payable solely out of revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. The securities must be rated in a rating category of “A” or its equivalent or higher by a nationally recognized statistical rating organization (NRSRO). No more than 30% may be invested in this category in combination with registered treasury notes or bonds of any of the other 49 states. No more than 5% of the portfolio may be invested in any single issuer.

D. Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California. The securities must be rated in a rating category of “A” or its equivalent or higher by a NRSRO. No more than 30% may be invested in this category in combination with obligations of the State of California, as well as its political subdivisions. No more than 5% of the portfolio may be invested in any single issuer.

E. Bonds, notes, warrants, or other evidences of indebtedness of a local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. The securities must be rated in a rating category of “A” or its equivalent or higher by a NRSRO. No more than 30% may be invested in this category in combination with obligations of the State of California, as well as its political subdivisions. No more than 5% of the portfolio may be invested in any single issuer.

F. Repurchase Agreements collateralized with securities authorized under Government Code, maintained at a level of at least 102% of the market value of the repurchase agreement.

There are no limits on the dollar amount or percentage that the City may invest, provided that:
▪ securities used as collateral for repurchase agreements will be delivered to an acceptable third-party custodian;
7 ▪ repurchase agreements are subject to a master repurchase agreement between the City and the provider of the repurchase agreement. The master repurchase agreement will be substantially in the form developed by the Securities Industry and Financial Markets Association (SIFMA);
▪ the maximum maturity does not exceed ninety-two days.

G. Reverse repurchase agreements or securities lending agreements may be utilized only when all the following conditions are met:

1. the security to be sold on reverse repurchase agreement or securities lending agreement has been owned and fully paid for by the City for a minimum of 30 days prior to sale;

2. the total of all reverse repurchase agreements and securities lending agreements on investments owned by the City does not exceed 20 percent of the market value of the portfolio;

3. the agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security;

H. Bankers’ acceptances, otherwise known as bills of exchange or time drafts, that are drawn on and accepted by a commercial bank. Purchases of bankers' acceptances shall not exceed 180 days’ maturity or 40% of the City’s surplus moneys that may be invested pursuant to this section. However, no more than 30% of the City’s surplus moneys may be invested in the bankers’ acceptances of any one commercial bank. Eligible bankers' acceptances are restricted to issuing financial institutions with short-term paper rated in a rating category 8 of “A-1” or its equivalent or higher by a NRSRO or long-term debt obligations rated in a rating category of “A” or its equivalent or higher by a NRSRO.

Eligible commercial paper shall have a maximum maturity of 270 days or less. The City may invest no more than 25% of its surplus moneys that may be invested pursuant to this section in eligible commercial paper, and the City may invest no more than 10% of its total investment assets in the commercial paper and the medium-term notes of any single issuer.

J. Medium-term notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment under this subsection must be rated in a rating category of “A” or its equivalent or higher by a NRSRO. Purchases of mediumterm notes shall not exceed 30% of the City’s surplus moneysthat may be invested pursuant to this section, and the City may invest no more than 5% of its total investment assets in the commercial paper and the medium-term notes of any single issuer.

K. FDIC-insured or fully collateralized demand deposit accounts, savings accounts, market rate accounts, time certificates of deposits (TCDs) and other types of bank deposits in financial institutions located in California. The amount on deposit in any financial institution shall not exceed the shareholder’s equity. To be eligible to receive City deposits, the financial institution must have received a minimum overall satisfactory rating, under the Community Redevelopment Act, for meeting the credit needs of California Communities in its most recent evaluation. Bank deposits are required to be collateralized as specified under Government Code Section 53630 et. seq. The Treasurer, at his/her discretion, may waive the collateralization requirements for any portion that is covered by federal deposit insurance. The City shall have a signed agreement with any depository accepting City funds per Government Code Section 53649. There is no limit on the percentage of the portfolio that may be invested in bank deposits. However, a maximum of 30 percent of the portfolio may be invested in TCDs. 9 L. Negotiable Certificates of Deposit issued by a nationally- or state-chartered bank or a state or federal savings and loan association, a state or federal credit union, or by a federally- or state-licensed branch of a foreign bank. Amounts of negotiable certificates of deposit insured up to the FDIC limit do not require a credit rating. Any amount above the FDIC insured limit must be issued by institutions with short-term debt obligations rated in a rating category of “A-1” or its equivalent or higher by at least one NRSRO, or long-term obligations rated in a rating category of “A” or its equivalent or higher by a NRSRO.

Purchases of negotiable certificates of deposit shall not exceed 30% of the City's surplus moneys that may be invested pursuant to this section. No more than 5% of the portfolio may be invested in any single issuer.

Purchases of certificates of deposit placed through a deposit placement service shall not, in total, exceed 30 percent of the City’s surplus moneys that may be invested pursuant to this section.

N. State of California’s Local Agency Investment Fund (LAIF). Investment in LAIF may not exceed the amount permitted by LAIF.

1. The adviser is registered or exempt from registration with the Securities and Exchange Commission.

2. The adviser has not less than five years of experience investing in the securities and obligations authorized in this section.

R. Supranational obligations. Issues must be United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank and eligible for purchase and sale within the United States. The securities must be rated in a rating category of “AA” or its equivalent or higher by a NRSRO. No more than 30% of the City’s surplus moneys that may be invested pursuant to this section may be invested in this category. The City may invest no more than 10% of its total investment assets in the supranational obligations of any single issuer.
14) PROHIBITED INVESTMENTS
Any security type or structure not specifically approved by this policy is hereby specifically prohibited. Security types which are thereby prohibited include, but are not limited to, inverse floaters, derivatives, range notes, interest only strips that are derived from a pool of mortgages, or in any investment that could result in zero interest accrual if held to maturity. Under a provision sunsetting on January 1, 2026, securities backed by the US Government that could result in a zero- or negative-interest accrual if held to maturity are permitted. Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited.

Purchasing or selling securities on margin is prohibited. The use of reverse repurchase agreements, securities lending or any other form of borrowing or leverage is prohibited. The purchase of foreign currency denominated securities is prohibited. Local governments that are not Qualified Institutional Buyers (QIB) as defined by the SEC are prohibited from purchasing Private Placement Securities. The SEC defines a QIB as having at least $100,000,000 in securities owned and invested.
11 15) INVESTMENT OF BOND PROCEEDS
Bond proceeds shall be invested in the securities permitted by the applicable bond documents. If the bond documents are silent as to the permitted investments, bond proceeds will be invested in the securities permitted by this policy. Notwithstanding the other provisions of this policy, the percentage or dollar portfolio limitations listed in elsewhere in this policy do not apply to bond proceeds. In addition to the securities listed in this Policy, bond proceeds may be invested in a structured investment product if approved by the Director of Finance.
16) LEGISLATIVE CHANGES
Any State of California legislative action that further restricts allowable maturities, investment type or percentage allocations will be deemed to be incorporated into the City of Salinas’s investment policy and will supersede any and all applicable language. 17) INTEREST EARNINGS
All moneys earned and collected from investments authorized in this policy shall be allocated monthly to various fund accounts based on the pooled cash balance in each fund as a percentage of the entire pooled portfolio.

Exhibit B
12 Glossary
Agency: Federal agency securities and /or
Government-sponsored enterprises.

Bankers’ Acceptance (BA): A draft or bill
or exchange accepted by a bank or trust
company. The accepting institution
guarantees payment of the bill, as well as the
issuer.

Broker: A broker brings buyers and sellers
together for a commission.

Certificate of Deposit (CD): A time
deposit with a specific maturity evidenced
by a certificate. Large-denomination CD’s
are typically negotiable.

Collateral: Securities, evidence of deposit
of other property which a borrower pledges
to secure repayment of a loan. Also refers to
securities pledged by a bank to secure
deposits of public monies.

Dealer: A dealer, as opposed to a broker,
acts as a principal in all transactions, buying
and selling for his own account.

Debenture: A bond secured only by the
general credit of the issuer.

Delivery versus Payment: There are two
methods of delivery of securities: delivery
versus payment and delivery versus receipt.

Discount: The difference between the cost
price of a security and its maturity when
quoted at lower than face value. A security
selling below original offering price shortly
after sale also is considered to be at a
discount.
13 Diversification: Dividing investment funds
among a variety of securities offering
independent returns.

Federal Deposit Insurance Corporation
(FDIC): A federal agency that insures bank
deposits, currently up to $250,000 per
deposit.

Federal Funds Rate: The rate of interest at
which Fed funds are traded. This rate is
currently pegged by the Federal Reserve
through open-market operations.

Federal Home Loan Banks (FHLB):

Government National Mortgage
Association (GNMA or Ginnie Mae):

Ginnie Mae securities are backed by the
FHA, VA or FmHA mortgages. The term
“pass-throughs” is often used to describe
Ginnie Maes.

Issuer: Any corporation, government unit
or financial institution which borrows
money through the sale of securities.

Liquidity: A liquid asset is one that can be
converted easily and rapidly into cash
14 without a substantial loss of value. In the
money market, a security is said to be liquid
if the spread between bid and asked prices is
narrow and reasonable size can be done at
those quotes.

Local Agency Investment Fund (LAIF):

Local Government Investment Pool
(LGIP): The aggregate of all funds from
political subdivisions that are pooled
together for investment and reinvestment.

Market Value: The price at which a
security is trading and could presumably be
purchased or sold.

Maturity: The date upon which the
principal or stated value of an investment
becomes due and payable.

Money Market: The market in which
short-term debt instruments (bills,
commercial paper, bankers’ acceptances,
etc.) are issued and traded.

Negotiable: Term used to designate a
security, the title to which is transferable by
delivery.

Offer: The price asked by a seller of
securities. (When you are buying securities,
you ask for an offer). See Asked and Bid.

Portfolio: Collection of securities held by
an investor.

Primary Dealer: A group of government
securities dealers who submit daily reports
15 of market activity and positions and monthly
financial statements to the Federal Reserve
Bank of New York and are subject to its
informal oversight. Primary dealers
included Securities & Exchange
Commission (SEC) – registered securities
broker-dealers, banks, and a few unregulated
firms.

Principal: Describes the original cost of a
security. It represents the amount of capital
or money which the investor pays for the
investment.

Rate of Return: The yield obtainable on a
security based on its purchase price or its
current market price. This may be the
amortized yield to maturity on a bond the
current income return.

Exception: When the Fed is said to be doing
RP, it is lending money, that is, increasing
bank services.

Safekeeping: A service to customers
rendered by banks for a fee whereby
securities and valuables of all types and
descriptions are held in the bank’s vaults for
protection.

Secondary Market: A market made for the
purchase and sale of outstanding issues
following the initial distribution.

Security: An investment instrument, other
than an insurance policy or fixed annuity,
issued by a corporation, government, or
other organization which offers evidence of
debt or equity.

Securities & Exchange Commission:

Agency created by Congress to protect
investors in securities transactions by
administering securities legislation.

SEC Rule 15C3-1: See Uniform Net
Capital Rule.

Treasury Bills: A non-interest-bearing
discount security issued by the US Treasury
16 to finance the national debt. Most bills are
issued to mature in three months, six
months, or one year.

Treasury Notes: Medium-term couponbearing US Treasury securities issued as direct obligations of the US Government and
having initial maturities from two to ten
years.

INVESTMENT GUIDELINES AND STRATEGY
I. GUIDELINES - Guidelines are established to direct and control activities in such a manner that previously established goals are achieved.

1. Investment Transaction. Every investment transaction must be authorized and reviewed by the Director of Finance or his/her designee.

3. Competitive Bids. Purchase and sales of securities are made on the basis of competitive offers and bids when practical.

4. Cash Forecast. The cash flow for the City is analyzed with the receipt of revenues and maturity of investments scheduled so that adequate cash will be available to meet disbursement requirements.

5. Investment Limitations. Security purchases and holdings are maintained within statutory limits imposed by the California Government Code. Current limits are:

6. Liquidity. The marketability of a security is considered at the time of purchase, as the security may have to be sold at a later date to meet unanticipated cash demands.

7. Diversification. The portfolio should consist of a mix of various types of securities, issuers, and maturities.
18 CITY OF SALINAS

INVESTMENT GUIDELINES AND STRATEGY
(Continued)
II. STRATEGY - Strategy refers to the ability to manage financial resources in the most advantageous manner.

2. Implementing Investment Strategy. Investment transactions are executed which conform with anticipated interest rate trends and the current investment strategy plan.

4. Preserve Portfolio Value. Field standards are developed in order to maintain earnings near the market and to preserve the value of the portfolio. 19 CITY OF SALINAS

INVESTMENT PROCEDURES

INTERNAL CONTROL - GUIDELINES

INVESTMENT PROCEDURES

INTERNAL CONTROL - GUIDELINES
(Continued)

ELEMENTS OF INTERNAL CONTROL
Elements of a system of internal control are the means by which an organization can satisfy the objectives of internal control. These elements are:

1. ORGANIZATION
Specific responsibility for the performance of duties should be assigned and lines of authority and reporting clearly identified and understood.

In particular, the functions that should be considered when evaluating segregation of functions are authorization, execution, recording, custody of assets, and performing reconciliations.

CASH CONTROLS

PROCEDURES PERFORMED BY EXTERNAL AUDITORS WITH RESPECT TO CASH

RECEIPTS
A. City procedures and controls are reviewed. Some of the system strengths are:

1. Receipts are controlled upon receipt by proper registration devices.

2. Receipts are reconciled on a daily basis.

3. Amounts batched and deposited intact.

4. Bank reconciliations are reviewed.

5. Prompt posting of cash receipt entries in books.

6. Proper approval required for write-offs of customer accounts.

7. Checks are restrictively endorsed upon receipt or when run through cash register.

8. Adequate physical security over cash.

9. Individuals that handle cash do not post to customer account records or process billing statements.

10. Adequate supervision of Finance Department operations.

B. Significant revenues are confirmed directly with payer and compared with City books to make sure amounts are recorded properly.

SEGREGATION OF RESPONSIBILITIES OF

THE TREASURY FUNCTIONS
Function Responsibility

1. Formal Investment Policy should be:

Prepared By: Director of Finance
Approved By: City Council

2. Develop Investment Strategy Director of Finance or Registered Investment Advisor

3. Investment Strategy should be Director of Finance
approved by

4. Execution of investment transactions:

Investments other than LAIF and Deposits Director of Finance or Registered Investment Advisor
Execution of LAIF and Deposit transfers Accounting Manager

5. Timely recording of investment transactions:

Recording of investment transactions Senior Accountant
in the City's accounting records (but reviewed by Accounting Manager)

6. Verification of investment, Senior Accountant
i.e., match broker confirmation to City's records

7. Confirmation of LAIF and Bank Wires Assistant Director of Finance

8. Safeguarding of Assets and Records:

Reconciliation of City's Senior Accountant
records to bank statements and (but reviewed by Assistant safekeeping records Director of Finance)
23 CITY OF SALINAS

SEGREGATION OF RESPONSIBILITIES OF

THE TREASURY FUNCTIONS
(Continued)
Function Responsibility

8. Safeguarding of Assets and Records
(continued):

Annual review of (a) financial Director of Finance or Registered institution's financial condition, Investment Advisor
(b) safety, liquidity, and potential
yields of investment instruments.

9. No less than an annual Independent Auditors
review of investment
portfolio as prepared by
Senior Accountant and reviewed by
Director of Finance
Exhibit C
1 CITY OF SALINAS