Agenda Packet — Salinas City Council, December 3, 2024 (part 1 of 4)

Tuesday, December 3, 2024
4:00 PM
City of Salinas
200 Lincoln Ave., Salinas, CA 93901
www.cityofsalinas.org

SALINAS ROTUNDA
City Council
Mayor Kimbley Craig
Councilmembers:

Carla Viviana González, District 1 - Tony Barrera, District 2 Jesus Valenzuela, District 3 - Orlando Osornio, District 4 Andrew Sandoval, District 5 - Anthony Rocha, District 6 Rene Mendez, City Manager
Christopher A. Callihan, City Attorney
City Clerk’s Office: (831) 758-7381
Meeting Agenda - Final
Farewell Reception 3 p.m. to 4 p.m.

December 3, 2024City Council Meeting Agenda - Final
Join us for a farewell reception in honor of Mayor Kimbley Craig, District 1 Councilmember Carla Gonzalez, District 3 Councilmember Jesus Valenzuela, District 4 Councilmember Orlando Osornio, and District 6 Councilmember Anthony Rocha at 3 p.m. in the Rotunda.

ZOOM WEBINAR PARTICIPATION
JOIN THE ZOOM WEBINAR TO PARTICIPATE LIVE AT:
https://us02web.zoom.us/j/88554289651
To participate telephonically, call any number below:
+1 669 900 9128 US (San Jose) +1 669 444 9171 US +1 253 215 8782 US (Tacoma) +1 346 248 7799 US (Houston) +1 719 359 4580 US +1 253 205 0468 US +1 689 278 1000 US +1 301 715 8592 US (Washington DC) +1 305 224 1968 US +1 309 205 3325 US +1 312 626 6799 US (Chicago) +1 360 209 5623 US +1 386 347 5053 US +1 507 473 4847 US +1 564 217 2000 US +1 646 558 8656 US (New York) +1 646 931 3860 US Webinar ID: 885 5428 9651
If prompted to enter a participant ID, press #.

PLEDGE OF ALLEGIANCE

ROLL CALL

NEW EMPLOYEE WELCOME AND INTRODUCTIONS

CITY OF CHAMPIONS
Indian Community of the Monterey Bay
Niner Empire 831

PUBLIC COMMENT PROCEDURES
If you wish to make a general public comment or comment on a specific agenda item, you are encouraged to attend the City Council meeting in person. Public comment may also be submitted via email at [email protected] and will be entered into the record.

PUBLIC COMMENT TIME RESTRICTIONS
Public comments generally are limited to two minutes per speaker; the Mayor may further limit the time for public comments depending on the agenda schedule.

GENERAL PUBLIC COMMENTS
Receive public communications on items that are not on the agenda and that are in the City of Salinas’ subject matter jurisdiction. Comments on Consent, Consideration, and

Page 2 ends

December 3, 2024City Council Meeting Agenda - Final
Closed session items should be held until the items are reached. The public may request that the legislative body consider adding an item for consideration on a future agenda. The public may comment on scheduled agenda items, including closed session items, as they are considered.

CALIFORNIA GOVERNMENT CODE §84308 - LEVINE ACT
Government Code § 84308. Parties to any proceeding involving a license, permit or other entitlement for use pending before the City Council must disclose any campaign contributions over $250 (aggregated) within the preceding 12 months made by the party, their agent, and those required to be aggregated with their contributions under Government Code § 82015.5. The disclosure must include the amount contributed and the name(s) of the contributor(s).

PUBLIC HEARINGS
ID#24-681 Republic Services Garbage and Recycling Rates FY 2024-25 and Performance Review Update
Recommendation: Approve a Resolution finding the proposed annual adjustments to Republic Services of Salinas' (Republic Services) Schedule of Service Fees and Schedule of Rates for Residential and Commercial Customers effective January 1, 2025, to be within the terms of the Collection Services Agreement; and authorizing the City Manager to accept Republic's proposal for resolution of performance issues.

ID#24-686 Energy Services Contract with ENGIE for Photovolatic (PV) Systems and Back-Up Generator at City Facilities
Recommendation: Approve a Resolution finding that the energy conservation project (the "Project") proposed by ENGIE Services U.S. is exempt from requirements of the California Environmental Quality Act (CEQA); and approving an energy conservation services agreement with ENGIE Services U.S.

ID#24-687 2024 Energy Equipment Lease
Recommendation: Approve a Resolution approving an Equipment Lease/Purchase Agreement and an Escrow and Account Control Agreement and authorizing certain actions in connection therewith relating to the financing of certain equipment for the City.

CONSENT AGENDA
All matters listed under Consent Agenda may be enacted by one motion unless a member of the Council or the public requests discussion or a separate vote.

ID#24-690 Minutes
Recommendation: Approve minutes of November 12, 2024 and November 19, 2024.

ID#24-628 Award of the Closter Park Revitalization Project No. 9350, 2018 Parks Bond Act Grant Recipient Project No. SW-27-006

Page 3 ends

December 3, 2024City Council Meeting Agenda - Final
Recommendation: Approve a Resolution approving the Plans and Specifications for the Closter Park Revitalization Project No. 9350, 2018 Parks Bond Act Grant Recipient Project No.

SW-27-006; and awarding a contract to McGuire and Hester for the Closter Park Revitalization, Project No. 9350, in an amount not to exceed $6,915,983 and authorizing the Mayor to execute the contract on behalf of the City; and authorizing the Public Works Director or his designee to approve contract change orders up to an additional 6% of the contract amount, $415,000, for construction contingencies; and approving the reallocation of $280,000 from CIP 9048 and $20,000 from CIP 9022 to CIP 9350.

ID#24-645 First Amendment for Janitorial Maintenance Services with Estrada Janitorial Services
Recommendation: Approve a Resolution authorizing the City Manager to negotiate and execute First Amendment with Pedro C Estrada DBA Estrada Janitorial Services to add additional facilities and services to the scope of work and to increase the annual compensation by $61,800 for a total annual not to exceed $798,780.

ID#24-659 Partial Acceptance of Natividad Creek Restroom Rehabilitation Project Recommendation: A motion to approve a Resolution partially accepting of the Natividad Creek Park Restroom Rehabilitation Project ("Project", CIP No. 9346) for maintenance and responsibility.

ID#24-666 Application to the California Department of Housing and Community Development for the Prohousing Incentive Program Round 3 Recommendation: Approve the City and State Housing and Community Development Department Resolution(s) authorizing the submission of a Prohousing Incentive Program (PIP) Round 3 application to the California Department of Housing and Community Development (HCD) of $1,250,000 to assist persons who are experiencing or at risk of homelessness, and/or the development, acquisition, and preservation of affordable housing for households earning up to 120% AMI, or 150% AMI in high-cost areas; and if awarded, authorizing the City Manager or designee to accept PIP Round 3 funds and execute all required Agreements and related documents necessary to implement the program; and the establishment of PIP Round 3 appropriation and budget allocation based on awarded budget and activities.

ID#24-668 Fourth Renewal with Avolve Software, Inc ProjectDox ePlan Recommendation: Approve a Resolution authorizing the City Manager to execute the Fourth renewal with Avolve Software, Inc. ProjectDox ePlan for a software subscription and increase the compensation by $101,160 for a revised not to exceed amount of $407,367 from December 12, 2024 to December 11, 2025.

ID#24-675 Agreement with Page and Turnbull, Inc. to Complete a Citywide Historic Resources Survey Update
Recommendation: Approve a Resolution authorizing the City Manager to negotiate and execute an Agreement for Professional Services (Agreement) with Page & Turnbull, Inc. for a Citywide Historic Resources Survey Update in an amount not to exceed $363,954.00 from December 3, 2024 to December 31, 2026.

ID#24-678 Payment for ShotSpotter Service

Page 4 ends

December 3, 2024City Council Meeting Agenda - Final
Recommendation: Approve a Resolution authorizing the Purchasing Agent to execute a renewal subscription with SoundThinking, Inc. for a ShotSpotter subscription and increase the compensation by $490,000 for a revised not to exceed amount of $980,000 from December 14, 2024 to December 13, 2025.

ID#24-679 Fleet Management Software Renewal
Recommendation: Approve a Resolution authorizing the City Manager to execute a software agreement with Rarestep, Inc., dba Fleetio for the City's fleet management software in an amount not to exceed $96,817.00 from January 15, 2025 to January 14, 2028, subject to the appropriation of funds.

ID#24-680 Fiscal Year 24-25 Public Art Plan Amendment
Recommendation: Approve a Resolution adopting the Fiscal Year 24-25 Public Art Plan Amendment including the increased appropriation of $15,000 from the Municipal Art Fund for a revised not to exceed $115,000; and authorizing the appropriation and expenditure of up to $30,000 from the Municipal Art Fund.

ID#24-688 November 5, 2024 Municipal Election Canvass
Recommendation: Approve a Resolution declaring the results of the November 5, 2024 Municipal Election for the office of Salinas Mayor and City Councilmembers for District 1, District 3, District 4 and District 6.

ID#24-689 Technical Adjustments for Remaining Unencumbered American Rescue Plan Act Funds
Recommendation: Approve a Resolution authorizing the City Manager to reappropriate any unencumbered ARPA project funding to the General Fund; and authorizing the City Manager to appropriate general funds to unencumbered ARPA projects in an amount not to exceed the previously approved project amount.

ID#24-691 Modification to Classification - Salary Schedule; Workforce Allocation Adjustment
Recommendation: Approve a Resolution modifying the Classification - Salary Schedule to include the new classification of Accountant Auditor and approve a workforce allocation adjustment that includes one Accountant Auditor in the Finance Department, one and one-half Senior Planners for the Community Development Department, and one Park Maintenance Worker over hire in the Library and Community Services, Parks Division.

COUNCILMEMBERS’ REPORTS, APPOINTMENTS AND FUTURE AGENDA ITEMS Receive communication from Councilmembers on reports, appointments and future agenda items. Councilmember comments are generally limited to three minutes.

ADJOURNMENT
_____________________________
Alexis Mejia, Assistant City Clerk

AGENDA MATERIAL / ADDENDUM
Any addendums will be posted within 72 hours of regular meetings or 24 hours of special

Page 5 ends

December 3, 2024City Council Meeting Agenda - Final
meetings and in accordance with Californian Government Code Section 54954.2 and 54956. City Council agenda reports and other writings distributed to the legislative body may be viewed at the Salinas City Clerk’s Office, 200 Lincoln Avenue, Salinas, and are posted on the City’s website at www.cityofsalinas.org in accordance with California Government Code section 54597.5. The City Council may take action that is different than the proposed action reflected on the agenda.

Disability-related modification or accommodation, including auxiliary aids or services, may be requested by any person with a disability who requires a modification or accommodation in order to participate in the meeting. Language interpretation may be requested as soon as possible but by no later than 5 p.m. of the last business day prior to the meeting. Requests should be referred to the City Clerk’s Office At 200 Lincoln Avenue, Salinas, 758-7381, as soon as possible but by no later than 5 p.m. of the last business day prior to the meeting. Hearing impaired or TTY/TDD text telephone users may contact the city by dialing 711 for the California Relay Service (CRS) or by telephoning any other service providers’ CRS telephone number.

PUBLIC NOTIFICATION
This agenda was posted on NOvember 27, 2024 in the Salinas Rotunda and City's website.

Meetings are streamed live at https://salinas.legistar.com/Calendar.aspx, televised live on Comcast Channel 25 and on http://www.youtube.com/thesalinaschannel at 4:00 p.m. on the date of the regularly scheduled meeting and will be broadcast throughout the day on Friday, Saturday, Monday and Wednesday following the meeting. For the most up-to-date Broadcast Schedule for The Salinas Channel on Comcast 25, please visit or subscribe to our Google Calendar located at http://tinyurl.com/SalinasChannel25. All past City Council meetings may also be viewed on the Salinas Channel on YouTube at http://www.youtube.com/thesalinaschannel.

Page 6 ends

City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-681, Version: 1
Republic Services Garbage and Recycling Rates FY 2024-25 and Performance Review Update Approve a Resolution finding the proposed annual adjustments to Republic Services of Salinas’ (Republic Services) Schedule of Service Fees and Schedule of Rates for Residential and Commercial Customers effective January 1, 2025, to be within the terms of the Collection Services Agreement; and authorizing the City Manager to accept Republic’s proposal for resolution of performance issues.

City of Salinas Printed on 11/27/2024Page 1 of 1
powered by Legistar™

Page | 1

CITY OF SALINAS

COUNCIL STAFF REPORT

DATE: DECEMBER 3, 2024
DEPARTMENT: PUBLIC WORKS
FROM: DAVID JACOBS, PUBLIC WORKS DIRECTOR
TITLE: REPUBLIC SERVICES GARBAGE & RECYCLING RATES FY 24-25

AND PERFORMANCE REVIEW UPDATE
RECOMMENDED MOTION:

A motion to approve a Resolution:
1) Finding the proposed annual adjustments to Republic Services of Salinas’ (Republic Services) Schedule of Service Fees and Schedule of Rates for Residential and Commercial Customers effective January 1, 2025, to be within the terms of the Collection Services Agreement; and
2) Authorizing the City Manager to accept Republic’s proposal for resolution of performance issues.

While not a part of the recommendation action, this report also addresses the Performance Review of Republic Services.

EXECUTIVE SUMMARY:

On May 7, 2024, and again on June 25, 2024 , the Republic Services Garbage and Recycling Rates for Fiscal Year 24/25 were presented to the City Council. On May 7, 2024, the City Council delayed action on the rates in an effort to receive updated information on the o ngoing Performance Review process. On June 25, 2025, citing ongoing concerns with Republic’s performance under the Collection Services Agreement, the City Council approved the pass-through rates, but not the 4% CPI for Republic. Republic never implemented the pass-through rate increase.

Staff has been working through the noncomplian ce issues that were brought up during the Performance Review. This report highlights the most significant of these performance issues and notes that significant progress has been made to address the deficiencies. The progress includes new vehicles and routes to reduce overweight vehicles, older trucks replacements, new drivers and customer complaint tracking.

Republic Services’ proposed rates for Solid Waste, Recycling, and Green Waste Collection Services for Fiscal Year 2024-25 reflect an increase of 4.18% (or $1.40) for the typical 32-gallon residential trash service from $33.47 to $34.87 per month. The increase consists of:
 2.33% ($0.78) (4.0% CPI increase to the collection element of the rate) for Republic Services Page | 2
CPI,
 0.94% (or $0.31) for SVSWA AB 939 fees,
 0.29% (or $0.10) for recycling processing, and
 0.63% (or $0.21) for City franchise fees.

For commercial services, the monthly rate for a customer with a 3-cubic yard bin collected once per week will increase 4.41% (or $22.97) from $521.23 to $544.20 per month1. The increase consists of:
 2.61% (or $13.61) (4.0% CPI increase to the collection element of the rate ) for Republic Services CPI,
 1.13% (or $5.91) for SVSWA AB 939 fees, and
 0.66% (or $3.45) for City franchise fees.

The City and R3 Consulting Group, Inc. have reviewed the rate s with representatives of Republic Services in accordance with the Collection Services Agreement and find them within the terms of the Collection Services Agreement.

In resolution of the performance issues, Republic has agreed to waive the rate increase for the first six months of 2024-2025 and have the increase go into effect on January 1, 2025, with no back charges to the customers. This is being done in lieu of paying the administrative fines specified in the Collection Services Agreement and outlined in the Performance Review. Republic has described the terms in a letter to the City Manager. A copy of the letter is attached to this Report.

BACKGROUND:

Since July 1, 2001, the City of Salinas has had an exclusive Collection Services A greement with Allied Waste Services, dba Republic Services of Salinas (Republic Services), for municipal solid waste, recyclables, and green waste collection services. The Collection Services Agreement has had multiple amendments and extensions up to the current Amended and Restated Franchise Agreement (October 2021) with a term expiring June 30, 20 36, with an optional extension of five years at the City’s sole discretion (Resolution No. 22208 (N.C.S.)).

The rates are made up of the following fees: franchise, AB 939, disposal, recycle, organics, construction and demolition and the collection element. The only fee that Republic Services can adjust is the collection element . The Franchise Fee is set to 15% by the City and the rest are set by either Salinas Valley Solid Waste Authority (SVSWA) or by Regen Monterey.

SVSWA takes the trash and green waste (organics) and has kept the solid waste rate ($64.75 per ton) and the organics rate ($58.25 per ton) the same as last year and increased the AB 939 by 21.65% (charged to trash service based on service level).

Republic Services takes the recyclables to Regen Monterey who have increased their processing fee by 8.8%.

1 Commercial customers continue to have the option to reduce their monthly rates by taking advantage of recycling opportunities and/or by reducing service levels for underutilized capacity.

Page | 3
The chart below provides a snapshot of the impact of the requested adjustments to the rates of a typical residential and commercial customer.

Note: The CPI increase is only applied to the Republic portion of the adjusted rates and is not applied to the SVSWA’s disposal portion. Thus, the resulting percentage increase varies for each service on the rate schedule.

Across all levels of service, the average rate increase of 4.25% for single family residential customers,

4.14% for multi-family residential customers, and 4.12% for commercial customers. Per Section 14-

01.10 of the Salinas Municipal Code and Article 4 of the Collection Services Agreement, the Council annually reviews and adopts adjustments to Republic Services corresponding approved rates. Article

4.06 of the Collection Service Agreement states “Each adjustment is to be approved by the Salinas City Council with good faith effort by May 1st of each year ...”. Republic Services submitted a request for consideration of adjustments to the Rate Schedules for fiscal year 2024-25 in accordance with the timeframe as required in the Collection Services Agreement.

The 2023-2024 rates have remained in use this year (July1, 2024 through December 2024), since the City Council has not approved the 4% CPI for Republic and Republic has not implemented the pass- through rates that were approved on June 25, 2024. This is a savings to the Salinas rate payers.

Republic has agreed to forego the first 6 months of rate increase in exchange for the City waiving all administrative charges.

Table 3
Estimated Service Cost Increases for Hauler
Base Services by Rate
Classification
Rate
Classification
Approved
FY 23/24
Rates
Proposed
FY 24/25
Rates
Percent
Change Increase

32-Gallon Garbage,
64-Gallon Recycle,
96-Gallon Organics
Residential $33.47 $34.87 4.18% $1.40
32-Gallon Garbage,
64-Gallon Recycle,
96-Gallon Organics
MFD – Curbside $33.47 $34.87 4.18% $1.40
32-Gallon Garbage,
64-Gallon Recycle,
96-Gallon Organics
MFD –
Consolidated
(Carts)
$51.97 $54.11 4.12% $2.14
3 Cubic Yard Garbage
Bin, 1 Pickup per Week
MFD-
Consolidated
(Bins)
$521.23 $544.20 4.41% $22.97
3 Cubic Yard Garbage
Bin, 1 Pickup per Week Commercial $521.23 $544.20 4.41% $22.97 2 Cubic Yard Recycle
Bin, 1 Pickup per Week Commercial $336.00 $349.80 4.11% $13.80 64-Gallon Organics
Cart, 1 Pickup per Week Commercial $70.65 $73.21 3.62% $2.56

Page | 4

Key Drivers:

As part of the negotiation process, existing programs and solid waste expenditures were considered.

The annual rate adjustment is directly linked to increased costs in tipping fees (SVSWA Landfill, ReGen MRF) and the S olid Waste Element. All these cost increases are typical of the service provided.

Collection Element
Beginning with Rate Year 202 3, the Consumer Price Index (CPI -U) adjustment shall be the sum of the weighted percentage change in the 12 -month average of each CPI-U index number between the base period, which shall be the prior preceding year ending December 31 st, and the preceding year ending December 31st as contained in the most recent release of the CPI-U. Therefore, the CPI-U rate adjustment effective July 1, 202 4, will be based on the percentage changes between the 12 -month average of the CPI-U indices from January 2023 to December 2023. Additionally, if in any Calendar year that the calculation of the CPI-U exceeds four percent (4.00%), the total adjustment for that year will be four percent (4.00%), and no rollover amount will be added the rate adjustment percentage in the following year, or any subsequent year. If the CPI -U is negative, there will be no CPI -U adjustment to the Collection Element for that year. The annual CPI-U was calculated at 5.44% and the CPI applied to the 2024-25 rate schedule is 4.00%.

SVSWA Tipping Fee
Salinas Valley Solid Waste Authority has kept their tipping fee at $64.75 per ton for the upcoming year.

SVSWA AB 939 Fees
Every year SVSWA reallocates its AB 939 non -disposal programs fee using the total tonnage landfilled over the prior three fiscal years. For FY 202 4-25 the SVSWA increase d AB 939 Non- disposal Program Fees from $ 2,428,616 to $2, 954,517. This fee increase is meant to offset the additional funding needed to comply with all CalRecycle requirements focused on waste prevention, diversion, and recovery.

Recyclable Material
Republic Services hauls the recyclable material to ReGen Monterey in Marina. The cost of the recyclables has increased from $36.75 per ton to $40.00 per ton, an increase of 8.8%

Franchise Fee
A typical component of such agreements, franchise fees represent the reasonable market value of the grant of the solid waste franchise. The City is paid a 15% franchise fee on the gross revenues for all services that Republic Services provides. The above increases for CPI, AB 939 fees, recycling and organics collection costs will also result in additional franchise fees.

Performance Review Update

The City retained R3 Consulting to conduct a performance review of the Collection Services Agreement. The performance review focused on contract compliance and included : work order response times, sustainability/compliance representatives, overweight vehicles, the age of collection vehicles, overall operations, customer service and vehicle maintenance. During the review R3 found Page | 5
4 areas of non-compliance: 1) Work Order response times; 2) Staffing; 3) Overweight Vehicles; and 4) Replacement Vehicles.

Within the Collection Services Agreement, each of the areas identified in R3’s review has an administrative charge/penalty listed for non-compliance. Republic has acted on the items in the R3 report by adding drivers, adding new routes, and transferring newer vehicles to Salinas to be in compliance with the Collection Services Agreement. To address the adminis trative fines associated with non-compliance Republic proposed to forego the first six months of the 2024-2025 rate increase.

The City has received the first 3 quarterly reports for 2024, which show that Republic is currently meeting the requirement of the Collection Services Agreement with respect to overweight vehicles.

Republic also transferred collections vehicles to Salinas in August to replace the out of compliance vehicles identified in the performance review.

The Collection Service Agreement will be monitored closer going forward. This will be achieved by the recently hired Susta inability Analyst who is working closely with Republic to help monitor the Collection Services Agreement. Republic has also recently hired a General Manager for the Salinas operation.

Customer complaints will be tracked and submitted to the City monthly. The report will include number of complaints, reason for the complaint, resolution of the complaint, and percentage of complaints resolved. The first report received by the City shows a resolution rate of more than 99%.

The progress that Republic has made over the last six months shows their commitment to the City of Salinas and the Collection Services Agreement.

Attached to the agenda item is the phase 1 performance review. Once the second phase of the performance review is complete (currently in draft form going through internal review) we will email it to the City Council members and have copies available in Public Works for review.

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). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environmen t. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or foreseeable indirect physical cha nge 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.

CALIFORNIA GOVERNMENT CODE §84308 APPLIES:

No.

Page | 6
STRATEGIC PLAN INITIATIVE:

This action supports the Council’s goal of Infrastructure and Environmental Sustainability.

DEPARTMENTAL COORDINATION:

While the rate review is largely conducted by Public Works, coordination occurs with both the Finance, City Manager’s, and Legal Departments.

FISCAL AND SUSTAINABILITY IMPACT:

This item requires no additional expenditures or appropriations . Franchise fees associate with these annual rate adjustments will generate additional General Fund revenue for the City and will be included in the upcoming Proposed FY 2024/25 Budget.

ATTACHMENTS:

1. Resolution

2. Proposed New Exhibit 1 - Schedule of Approved Rates of Franchise Agreement – Republic Services & the City of Salinas, effective 1/1/25

3. Republic letters to City Manager

4. Phase 1 Performance Review

RESOLUTION NO. ___________________ (N.C.S.)

A RESOLUTION REGARDING ADJUSTMENTS TO REPUBLIC SERVICES OF SALINAS’S SCHEDULE OF CONTRACTOR SERVICE FEES AND APPROVED

RATES FOR COMMERCIAL AND RESIDENTIAL CUSTOMERS
EFFECTIVE JANUARY 1, 2025, AND ALSO REGARDING RESOLUTION OF

PERFORMANCE ISSUES

WHEREAS, Section 14 -01.10 of the City of Salinas Code, and California Public Resources Code, Section 40059 allows the City to enter into a contract for collection, removal, and disposal of all garbage, wet garbage, rubbish or commercial rubbish; and

WHEREAS, the City of Salinas has a Collection Services Agreement with Republic Services of Salinas to provide solid waste, recycling, and green waste collection services for the City; and

WHEREAS, per the Agreement, Article 4, Contractor Compensation and Customer Rates, Republic Services may adjustment their rates on an annual basis; and

WHEREAS, City of Salinas and R3 Consulting Group, Inc. staff have reviewed the proposed adjustments to their service fees and the Proposed New Exhibit 1 – “Schedule of Approved Rates,” and accurately reflect those formulas prescribed by the Agreement and found them to be reasonable and accurate; and

WHEREAS, if found to be reasonable and accurate, Republic Services will implement the proposed Schedule of Approved Rates effective January 1, 2025; and

WHEREAS, R3 Consulting Group, Inc. has conducted a performance review of Republic Services which focused on contract compliance; and

WHEREAS, the performance review id entified areas of non -compliance including overweight vehicle, non-compliant vehicles, and staffing; and

WHEREAS, Republic has addressed these issues over the last six months and in lieu of paying administrative charges for such non -compliance, is offering to waive the first six months of rate increases to cover the administrative charges; and

WHEREAS, Republic Services has sent a letter to the City Manager outlining terms for the waiving of the first six (6) months of the 2024-25 rates in lieu of administrative charges.

NOW, THEREFORE, BE IT RESOLVED that the City Council hereby finds and determines that the above recitals and accompanying staff report are true and correct and have served as the basis, in part, for the actions of the City Council set forth below; and

BE IT FURTHER RESOLVED that the proposed New Exhibit 1- “Schedule of Approved Rates, ” attached hereto, is found and determined to be consistent and an accurate interpretation of the Franchise Agreement, and to be reasonable and accurate;

BE IT FURTHER RESOLVED that the City Manager is authorized to sign the attached letter agreeing to the terms of a proposed satisfaction of performance issues in lieu of administrative charges.

PASSED AND APPROVED this 3rd day of December 2024 by the following vote:

AYES:

NOES:

ABSENT:

APPROVED:

____________________________________
Kimbley Craig, Mayor

ATTEST:

_________________________________
Patricia M. Barajas, City Clerk
FY24/25 Rates
Rate Code Description Effective 1/1/2025
Residential Services:

Standard Weekly Residential Services: Monthly Rate
20 Gallon Garbage, 64 Gallon Recycle, 96 Gallon Yardwaste $30.20 32 Gallon Garbage, 64 Gallon Recycle, 96 Gallon Yardwaste $34.87 64 Gallon Garbage, 64 Gallon Recycle, 96 Gallon Yardwaste $47.63 96 Gallon Garbage, 64 Gallon Recycle, 96 Gallon Yardwaste $62.48 Senior Low Income - 20 Gallon Garbage, 64 Gallon Recycle, 96 Gallon Yardwaste $21.90 Senior Low Income - 32 Gallon Garbage, 64 Gallon Recycle, 96 Gallon Yardwaste $21.90 Additional Weekly Residential Services: Monthly Rate
Additional 32 Gallon Garbage $23.76
Additional 64 Gallon Garbage $35.00
Additional 96 Gallon Garbage $51.73
Backyard Service Charge (additional charge) $30.47
Backyard Service for Permanently Disabled No Charge
Additional One Time Residential Charges: Per Occurrence Extra Pickup at Same time as Regular Service, Customer Fills Container - 20 Gallon $7.28 Extra Pickup at Same time as Regular Service, Customer Fills Container - 32 Gallon $12.82 Extra Pickup at Same time as Regular Service, Customer Fills Container - 64 Gallon $23.71 Extra Pickup at Same time as Regular Service, Customer Fills Container - 96 Gallon $37.10 Each Additional Bag of Garbage (Up to 32 Gallon) - Driver required to load $11.91 Payment and Research Fee $28.78
Restart and Readjustment fee - Administrative $17.38
Residential Cart Overflow - 20 Gallon $6.33
Residential Cart Overflow - 32 Gallon $7.58
Residential Cart Overflow - 64 Gallon $10.25
Residential Cart Overflow - 96 Gallon $13.57
Additional Trip to Customer Location at Customer Request $44.69 Bulky Goods Pickup - Limit 1 Item $116.62
Bulky Goods Pickup - Each Additional Item Not Requiring an Additional Trip $38.30 4 Yard Front-Load Clean Up Container (Maximum 5 Days, No Saturday/Sunday Services) $256.90 6 Yard Front-Load Clean Up Container (Maximum 5 Days, No Saturday/Sunday Services) $336.43 8 Yard Front-Load Clean Up Container (Maximum 5 Days, No Saturday/Sunday Services) $448.41 Mandatory Return Service Charge $22.21
Note: Additional disposal fees for non-standard items (box springs, tires, televisions, etc.) in which Republic Services is charged by the designated transfer station or landfill will be passed on to the customer when it is possible to identify the customer in violation.

PROPOSED NEW EXHIBIT 1 - Schedule of Approved Rates
Franchise Agreement - Republic Services Services & The City of Salinas Commercial Services:

Standard Weekly Commercial Services: Monthly Rate
20 Gallon Garbage Cart, 1 Pickup per Week $38.85
32 Gallon Garbage Cart, 1 Pickup per Week $62.24
64 Gallon Garbage Cart, 1 Pickup per Week $79.64
96 Gallon Garbage Cart, 1 Pickup per Week $96.55
96 Gallon Garbage Cart, 2 Pickups per Week $188.11
96 Gallon Garbage Cart, 3 Pickups per Week $355.80
96 Gallon Garbage Cart, 4 Pickups per Week $465.83
96 Gallon Garbage Cart, 5 Pickups per Week $549.41
96 Gallon Garbage Cart, 6 Pickups per Week $659.22
1 Cubic Yard Garbage Bin, 1 Pickup per Week $383.36
2 Cubic Yard Garbage Bin, 1 Pickup per Week $460.30
3 Cubic Yard Garbage Bin, 1 Pickup per Week $544.20
4 Cubic Yard Garbage Bin, 1 Pickup per Week $625.05
6 Cubic Yard Garbage Bin, 1 Pickup per Week $776.13
8 Cubic Yard Garbage Bin, 1 Pickup per Week $922.84
1 Cubic Yard Garbage Bin, 2 Pickups per Week $626.92
2 Cubic Yard Garbage Bin, 2 Pickups per Week $769.76
3 Cubic Yard Garbage Bin, 2 Pickups per Week $917.88
4 Cubic Yard Garbage Bin, 2 Pickups per Week $1,064.65
6 Cubic Yard Garbage Bin, 2 Pickups per Week $1,371.68
8 Cubic Yard Garbage Bin, 2 Pickups per Week $1,652.72
1 Cubic Yard Garbage Bin, 3 Pickups per Week $895.04
2 Cubic Yard Garbage Bin, 3 Pickups per Week $1,103.87
3 Cubic Yard Garbage Bin, 3 Pickups per Week $1,344.43
4 Cubic Yard Garbage Bin, 3 Pickups per Week $1,530.65
6 Cubic Yard Garbage Bin, 3 Pickups per Week $1,969.60
8 Cubic Yard Garbage Bin, 3 Pickups per Week $2,382.59
1 Cubic Yard Garbage Bin, 4 Pickups per Week $1,163.22
2 Cubic Yard Garbage Bin, 4 Pickups per Week $1,437.96
3 Cubic Yard Garbage Bin, 4 Pickups per Week $1,717.96
4 Cubic Yard Garbage Bin, 4 Pickups per Week $1,996.69
6 Cubic Yard Garbage Bin, 4 Pickups per Week $2,567.60
8 Cubic Yard Garbage Bin, 4 Pickups per Week $3,112.42
1 Cubic Yard Garbage Bin, 5 Pickups per Week $1,431.44
2 Cubic Yard Garbage Bin, 5 Pickups per Week $1,772.05
3 Cubic Yard Garbage Bin, 5 Pickups per Week $2,134.05
4 Cubic Yard Garbage Bin, 5 Pickups per Week $2,462.59
6 Cubic Yard Garbage Bin, 5 Pickups per Week $3,165.64
8 Cubic Yard Garbage Bin, 5 Pickups per Week $3,842.36
1 Cubic Yard Garbage Bin, 6 Pickups per Week $1,699.42
2 Cubic Yard Garbage Bin, 6 Pickups per Week $2,106.18
3 Cubic Yard Garbage Bin, 6 Pickups per Week $2,518.06
4 Cubic Yard Garbage Bin, 6 Pickups per Week $2,928.84
6 Cubic Yard Garbage Bin, 6 Pickups per Week $3,763.63
8 Cubic Yard Garbage Bin, 6 Pickups per Week $4,572.28
2 Cubic Yard Front Load Compactor, 1 Pickup per Week $508.19 2 Cubic Yard Front Load Compactor, 2 Pickups per Week $924.09 2 Cubic Yard Front Load Compactor, 3 Pickups per Week $1,353.12 2 Cubic Yard Front Load Compactor, 4 Pickups per Week $1,782.21 2 Cubic Yard Front Load Compactor, 5 Pickups per Week $2,210.95 2 Cubic Yard Front Load Compactor, 6 Pickups per Week $2,640.29 3 Cubic Yard Front Load Compactor, 1 Pickup per Week $837.99 3 Cubic Yard Front Load Compactor, 2 Pickups per Week $1,505.48 3 Cubic Yard Front Load Compactor, 3 Pickups per Week $2,225.83 3 Cubic Yard Front Load Compactor, 4 Pickups per Week $2,893.31 3 Cubic Yard Front Load Compactor, 5 Pickups per Week $3,603.04 3 Cubic Yard Front Load Compactor, 6 Pickups per Week $4,280.95 4 Cubic Yard Front Load Compactor, 1 Pickup per Week $1,016.80 4 Cubic Yard Front Load Compactor, 2 Pickups per Week $1,848.13 4 Cubic Yard Front Load Compactor, 3 Pickups per Week $2,705.93 4 Cubic Yard Front Load Compactor, 4 Pickups per Week $3,563.82 4 Cubic Yard Front Load Compactor, 5 Pickups per Week $4,421.12 4 Cubic Yard Front Load Compactor, 6 Pickups per Week $5,279.34Note: Front End Compactor will be charge two time the equivalent front load service. Front-load compactors will not be provided by Republic Services. Customers will be required to purchase the compactor.

Additional Weekly Front-Load Commercial Services: Monthly Rate Dismount and Push Charge per Bin Serviced Per Week $8.83 Key Charge per Bin Serviced per Week $10.50
Enclosure Charge per Bin Serviced per Week $11.65
Gate Service Charge per Bin Serviced per Week $11.65
Long Walk per Bin Serviced per Week $27.72
Maximum Additional Weekly Charges per Bin Serviced per Week $34.84 Scout Truck (Container Truck) container pull out $51.35 Per Yard surcharge for customers pre-compacting trash. $50.93 Note: 1) Key charges are allowed when container access requires the driver to carry a key and unlock a lock to empty the container. Key charges do not apply if a customer's lock is left in the unlocked position. 2) Enclosure charges are allowed when collection requires removing a container from an enclosure and replacing it when emptied. 3) Gate service charges are allowed when collection requires opening a closed or locked gate in order to access a container. 4) Long walk charges are allowed when a container is placed further than 10 feet from where the collection vehicle has access. 5) Charges for key, enclosure, gate, and long walk service are not cumulative pickup charges. The contractor's service fees for a customer requiring one or more of the special services will be a maximum service fee (as specified in the table above) as adjusted for CPI, per pickup for any combination of the four service categories. 6) Dismount and Push Charges are allowed when container service requires the driver to dismount and push the container from a fixed position and return it to the same position after service.Additional One Time Front-Load Commercial Charges:

Overloaded Container for First Cubic Yard, No Dismount Required $48.87 Overloaded Container for Each Cubic Yard in excess of 1, No Dismount Required $39.74 Additional Pickup, 2 Cubic Yard Bin $165.87
Additional Pickup, 3 Cubic Yard Bin $214.22
Additional Pickup, 4 Cubic Yard Bin $261.94
Additional Pickup, 6 Cubic Yard Bin $355.09
Additional Pickup, 8 Cubic Yard Bin $444.43
Additional Trip to Customer Location at Customer Request $49.19 Replacement Lock and Key $46.78
Contamination (less than 4 yards of weekly service) $106.91 Contamination (4 or more yards of weekly service) $160.37 Note: Additional disposal fees for non-standard items (box springs, tires, televisions, etc.) in which Republic Services is charged by the designated transfer station or landfill will be passed on to the customer when it is possible to identify the customer in violation.

Recycle Services:

Standard Weekly Commercial Services: Monthly Rate
20 Gallon Recycle Cart, 1 Pickup per Week $29.60
32 Gallon Recycle Cart, 1 Pickup per Week $47.41
64 Gallon Recycle Cart, 1 Pickup per Week $60.54
96 Gallon Recycle Cart, 1 Pickup per Week $73.30
96 Gallon Recycle Cart, 2 Pickups per Week $142.80
96 Gallon Recycle Cart, 3 Pickups per Week $270.52
96 Gallon Recycle Cart, 4 Pickups per Week $354.13
96 Gallon Recycle Cart, 5 Pickups per Week $417.52
1 Cubic Yard Recycle Bin, 1 Pickup per Week $292.06
2 Cubic Yard Recycle Bin, 1 Pickup per Week $349.80
3 Cubic Yard Recycle Bin, 1 Pickup per Week $412.87
4 Cubic Yard Recycle Bin, 1 Pickup per Week $473.60
6 Cubic Yard Recycle Bin, 1 Pickup per Week $586.94
8 Cubic Yard Recycle Bin, 1 Pickup per Week $696.94
1 Cubic Yard Recycle Bin, 2 Pickup per Week $477.21
2 Cubic Yard Recycle Bin, 2 Pickups per Week $584.25
3 Cubic Yard Recycle Bin, 2 Pickups per Week $695.34
4 Cubic Yard Recycle Bin, 2 Pickups per Week $805.38
6 Cubic Yard Recycle Bin, 2 Pickups per Week $1,035.80
8 Cubic Yard Recycle Bin, 2 Pickups per Week $1,246.32
1 Cubic Yard Recycle Bin, 3 Pickups per Week $681.16
2 Cubic Yard Recycle Bin, 3 Pickups per Week $837.57
3 Cubic Yard Recycle Bin, 3 Pickups per Week $1,018.23
4 Cubic Yard Recycle Bin, 3 Pickups per Week $1,157.36
6 Cubic Yard Recycle Bin, 3 Pickups per Week $1,486.44
8 Cubic Yard Recycle Bin, 3 Pickups per Week $1,795.36
1 Cubic Yard Recycle Bin, 4 Pickups per Week $885.14
2 Cubic Yard Recycle Bin, 4 Pickups per Week $1,090.86
3 Cubic Yard Recycle Bin, 4 Pickups per Week $1,300.59
4 Cubic Yard Recycle Bin, 4 Pickups per Week $1,509.36
6 Cubic Yard Recycle Bin, 4 Pickups per Week $1,937.17
8 Cubic Yard Recycle Bin, 4 Pickups per Week $2,345.04
1 Cubic Yard Recycle Bin, 5 Pickups per Week $1,089.15
2 Cubic Yard Recycle Bin, 5 Pickups per Week $1,344.15
3 Cubic Yard Recycle Bin, 5 Pickups per Week $1,615.49
4 Cubic Yard Recycle Bin, 5 Pickups per Week $1,861.26
6 Cubic Yard Recycle Bin, 5 Pickups per Week $2,387.93
8 Cubic Yard Recycle Bin, 5 Pickups per Week $2,894.47
Additional Weekly Front-Load Commercial Services: Monthly Rate Dismount and Push Charge per Bin Serviced Per Week $8.83 Key Charge per Bin Serviced per Week $10.50
Enclosure Charge per Bin Serviced per Week $11.65
Gate Service Charge per Bin Serviced per Week $11.65
Long Walk per Bin Serviced per Week $27.72
Maximum Additional Weekly Charges per Bin Serviced per Week $34.84 Scout Truck (Container Truck) container pull out $51.35 Per Yard surcharge for customers pre-compacting trash. $50.93 Note: 1) Key charges are allowed when container access requires the driver to carry a key and unlock a lock to empty the container. Key charges do not apply if a customer's lock is left in the unlocked position. 2) Enclosure charges are allowed when collection requires removing a container from an enclosure and replacing it when emptied. 3) Gate service charges are allowed when collection requires opening a closed or locked gate in order to access a container. 4) Long walk charges are allowed when a container is placed further than 10 feet from where the collection vehicle has access. 5) Charges for key, enclosure, gate, and long walk service are not cumulative pickup charges. The contractor's service fees for a customer requiring one or more of the special services will be a maximum service fee (as specified in the table above) as adjusted for CPI, per pickup for any combination of the four service categories. 6) Dismount and Push Charges are allowed when container service requires the driver to dismount and push the container from a fixed position and return it to the same position after service.Additional One Time Front-Load Commercial Charges:

Overloaded Container Per Cubic Yard $41.78
Additional Pickup, 2 Cubic Yard Bin $91.94
Additional Pickup, 3 Cubic Yard Bin $103.33
Additional Pickup, 4 Cubic Yard Bin $114.09
Additional Pickup, 6 Cubic Yard Bin $133.32
Additional Pickup, 8 Cubic Yard Bin $148.74
Additional Trip to Customer Location at Customer Request $49.19 Replacement Lock and Key $46.78
Contamination (less than 4 yards of weekly service) $106.91 Contamination (4 or more yards of weekly service) $160.37 Note: Additional disposal fees for non-standard items (box springs, tires, televisions, etc.) in which Republic Services is charged by the designated transfer station or landfill will be passed on to the customer when it is possible to identify the customer in violation.

Organic Waste Services:

Standard Weekly food waste Services: Monthly Rate
32 Gallon Organics Cart, 1 Pickup per Week $54.73
32 Gallon Organics Cart, 2 Pickups per Week $109.45
32 Gallon Organics Cart, 3 Pickups per Week $164.15
32 Gallon Organics Cart, 4 Pickups per Week $218.88
32 Gallon Organics Cart, 5 Pickups per Week $273.58
64 Gallon Organics Cart, 1 Pickup per Week $73.21
64 Gallon Organics Cart, 2 Pickups per Week $146.39
64 Gallon Organics Cart, 3 Pickups per Week $219.61
64 Gallon Organics Cart, 4 Pickups per Week $292.82
64 Gallon Organics Cart, 5 Pickups per Week $366.02
96 Gallon Organics Cart, 1 Pickup per Week $96.52
96 Gallon Organics Cart, 2 Pickups per Week $188.05
96 Gallon Organics Cart, 3 Pickups per Week $355.71
96 Gallon Organics Cart, 4 Pickups per Week $465.71
96 Gallon Organics Cart, 5 Pickups per Week $549.25
1 YD, 1 Pickup per Week $382.03
1 YD, 2 Pickup per Week $624.05
1 YD, 3 Pickup per Week $890.75
1 YD, 4 Pickup per Week $1,162.96
1 YD, 5 Pickup per Week $1,431.11
2 YD, 1 Pickup per Week $457.17
2 YD, 2 Pickup per Week $763.53
2 YD, 3 Pickup per Week $1,094.40
2 YD, 4 Pickup per Week $1,437.44
2 YD, 5 Pickup per Week $1,771.40
3 YD, 1 Pickup per Week $544.00
3 YD, 2 Pickup per Week $917.49
3 YD, 3 Pickup per Week $1,343.84
3 YD, 4 Pickup per Week $1,717.17
3 YD, 5 Pickup per Week $2,133.06
Additional Weekly Front-Load food waste Services: Monthly Rate Dismount and Push Charge per Bin Serviced Per Week $8.83 Key Charge per Bin Serviced per Week $10.50
Enclosure Charge per Bin Serviced per Week $11.65
Gate Service Charge per Bin Serviced per Week $11.65
Long Walk per Bin Serviced per Week $27.72
Maximum Additional Weekly Charges per Bin Serviced per Week $34.84 Scout Truck (Container Truck) container pull out $51.35 Per Yard surcharge for customers pre-compacting trash. $50.98 Note: 1) Key charges are allowed when container access requires the driver to carry a key and unlock a lock to empty the container. Key charges do not apply if a customer's lock is left in the unlocked position. 2) Enclosure charges are allowed when collection requires removing a container from an enclosure and replacing it when emptied. 3) Gate service charges are allowed when collection requires opening a closed or locked gate in order to access a container. 4) Long walk charges are allowed when a container is placed further than 10 feet from where the collection vehicle has access. 5) Charges for key, enclosure, gate, and long walk service are not cumulative pickup charges. The contractor's service fees for a customer requiring one or more of the special services will be a maximum service fee (as specified in the table above) as adjusted for CPI, per pickup for any combination of the four service categories. 6) Dismount and Push Charges are allowed when container service requires the driver to dismount and push the container from a fixed position and return it to the same position after service.

Multi Family Services:

Standard Weekly Multi Family Services: Monthly Rate
20 Gallon Garbage Cart - Multi Family Curbside7, 1 Pickup per Week $30.20 32 Gallon Garbage Cart - Multi Family Curbside7, 1 Pickup per Week $34.87 64 Gallon Garbage Cart - Multi Family Curbside7, 1 Pickup per Week $47.63 96 Gallon Garbage Cart - Multi Family Curbside7, 1 Pickup per Week $62.48 20 Gallon Garbage Cart - Multi Family Consolidated Collection8, 1 Pickup per Week $34.23 32 Gallon Garbage Cart - Multi Family Consolidated Collection8, 1 Pickup per Week $54.11 64 Gallon Garbage Cart - Multi Family Consolidated Collection8, 1 Pickup per Week $68.88 96 Gallon Garbage Cart - Multi Family Consolidated Collection8, 1 Pickup per Week $83.23 20 Gallon Garbage Cart, 1 Pickup per Week $38.85
32 Gallon Garbage Cart, 1 Pickup per Week $62.24
64 Gallon Garbage Cart, 1 Pickup per Week $79.64
96 Gallon Garbage Cart, 1 Pickup per Week $96.55
96 Gallon Garbage Cart, 2 Pickups per Week $188.11
96 Gallon Garbage Cart, 3 Pickups per Week $355.80
96 Gallon Garbage Cart, 4 Pickups per Week $465.83
96 Gallon Garbage Cart, 5 Pickups per Week $549.41
96 Gallon Garbage Cart, 6 Pickups per Week $659.22
1 Cubic Yard Garbage Bin, 1 Pickup per Week $383.36
2 Cubic Yard Garbage Bin, 1 Pickup per Week $460.30
3 Cubic Yard Garbage Bin, 1 Pickup per Week $544.20
4 Cubic Yard Garbage Bin, 1 Pickup per Week $625.05
6 Cubic Yard Garbage Bin, 1 Pickup per Week $776.13
8 Cubic Yard Garbage Bin, 1 Pickup per Week $922.84
1 Cubic Yard Garbage Bin, 2 Pickups per Week $626.92
2 Cubic Yard Garbage Bin, 2 Pickups per Week $769.76
3 Cubic Yard Garbage Bin, 2 Pickups per Week $917.88
4 Cubic Yard Garbage Bin, 2 Pickups per Week $1,064.65
6 Cubic Yard Garbage Bin, 2 Pickups per Week $1,371.68
8 Cubic Yard Garbage Bin, 2 Pickups per Week $1,652.72
1 Cubic Yard Garbage Bin, 3 Pickups per Week $895.04
2 Cubic Yard Garbage Bin, 3 Pickups per Week $1,103.87
3 Cubic Yard Garbage Bin, 3 Pickups per Week $1,344.43
4 Cubic Yard Garbage Bin, 3 Pickups per Week $1,530.65
6 Cubic Yard Garbage Bin, 3 Pickups per Week $1,969.60
8 Cubic Yard Garbage Bin, 3 Pickups per Week $2,382.59
1 Cubic Yard Garbage Bin, 4 Pickups per Week $1,163.22
2 Cubic Yard Garbage Bin, 4 Pickups per Week $1,437.96
3 Cubic Yard Garbage Bin, 4 Pickups per Week $1,717.96
4 Cubic Yard Garbage Bin, 4 Pickups per Week $1,996.69
6 Cubic Yard Garbage Bin, 4 Pickups per Week $2,567.60
8 Cubic Yard Garbage Bin, 4 Pickups per Week $3,112.42
1 Cubic Yard Garbage Bin, 5 Pickups per Week $1,431.44
2 Cubic Yard Garbage Bin, 5 Pickups per Week $1,772.05
3 Cubic Yard Garbage Bin, 5 Pickups per Week $2,134.05
4 Cubic Yard Garbage Bin, 5 Pickups per Week $2,462.59
6 Cubic Yard Garbage Bin, 5 Pickups per Week $3,165.64
8 Cubic Yard Garbage Bin, 5 Pickups per Week $3,842.36
1 Cubic Yard Garbage Bin, 6 Pickups per Week $1,699.42
2 Cubic Yard Garbage Bin, 6 Pickups per Week $2,106.18
3 Cubic Yard Garbage Bin, 6 Pickups per Week $2,518.06
4 Cubic Yard Garbage Bin, 6 Pickups per Week $2,928.84
6 Cubic Yard Garbage Bin, 6 Pickups per Week $3,763.63
8 Cubic Yard Garbage Bin, 6 Pickups per Week $4,572.28
2 Cubic Yard Front Load Compactor, 1 Pickup per Week $508.19 2 Cubic Yard Front Load Compactor, 2 Pickups per Week $924.09 2 Cubic Yard Front Load Compactor, 3 Pickups per Week $1,353.12 2 Cubic Yard Front Load Compactor, 4 Pickups per Week $1,782.21 2 Cubic Yard Front Load Compactor, 5 Pickups per Week $2,210.95 2 Cubic Yard Front Load Compactor, 6 Pickups per Week $2,640.29 3 Cubic Yard Front Load Compactor, 1 Pickup per Week $837.99 3 Cubic Yard Front Load Compactor, 2 Pickups per Week $1,505.48 3 Cubic Yard Front Load Compactor, 3 Pickups per Week $2,225.83 3 Cubic Yard Front Load Compactor, 4 Pickups per Week $2,893.31 3 Cubic Yard Front Load Compactor, 5 Pickups per Week $3,603.04 3 Cubic Yard Front Load Compactor, 6 Pickups per Week $4,280.95 4 Cubic Yard Front Load Compactor, 1 Pickup per Week $1,016.80 4 Cubic Yard Front Load Compactor, 2 Pickups per Week $1,848.13 4 Cubic Yard Front Load Compactor, 3 Pickups per Week $2,705.93 4 Cubic Yard Front Load Compactor, 4 Pickups per Week $3,563.82 4 Cubic Yard Front Load Compactor, 5 Pickups per Week $4,421.12 4 Cubic Yard Front Load Compactor, 6 Pickups per Week $5,279.34Note: Front-load compactors will not be provided by Republic Services. Customers will be required to purchase the compactor.
7) Applies to only Multi-Family customers where individual dwelling units are serviced identically to Residential Services, where carts are serviced curbside by an automated side loader, and drivers are not required to exit the collection vehicle. The determination of Multi-Family Curbside customers is the sole discretion of the Contractor.
8) Applies to Multi-Family Customers utilizing cart-only services as of June 30, 2022, and cannot be serviced identically to Residential Services. After June 30, 2022, the application of Multi-Family Consolidated Collection rates for new customers or customers requesting service changes is the sole Additional Weekly Front-Load Multi Family Services: Monthly Rate Dismount and Push Charge per Bin Serviced Per Week $8.83 Key Charge per Bin Serviced per Week $10.50
Enclosure Charge per Bin Serviced per Week $11.65
Gate Service Charge per Bin Serviced per Week $11.65
Long Walk per Bin Serviced per Week $27.72
Maximum Additional Weekly Charges per Bin Serviced per Week $34.84 Scout Truck (Container Truck) container pull out $51.35 Per Yard surcharge for customers pre-compacting trash. $50.93 Note: 1) Key charges are allowed when container access requires the driver to carry a key and unlock a lock to empty the container. Key charges do not apply if a customer's lock is left in the unlocked position. 2) Enclosure charges are allowed when collection requires removing a container from an enclosure and replacing it when emptied. 3) Gate service charges are allowed when collection requires opening a closed or locked gate in order to access a container. 4) Long walk charges are allowed when a container is placed further than 10 feet from where the collection vehicle has access. 5) Charges for key, enclosure, gate, and long walk service are not cumulative pickup charges. The contractor's service fees for a customer requiring one or more of the special services will be a maximum service fee (as specified in the table above) as adjusted for CPI, per pickup for any combination of the four service categories. 6) Dismount and Push Charges are allowed when container service requires the driver to dismount and push the container from a fixed position and return it to the same position after service.Additional One Time Front-Load Multi Family Charges:

Overloaded Container for First Cubic Yard, No Dismount Required $49.61 Overloaded Container for Each Cubic Yard in excess of 1, No Dismount Required $39.74 Additional Pickup, 2 Cubic Yard Bin $165.87
Additional Pickup, 3 Cubic Yard Bin $214.22
Additional Pickup, 4 Cubic Yard Bin $261.94
Additional Pickup, 6 Cubic Yard Bin $355.09
Additional Pickup, 8 Cubic Yard Bin $444.43
Additional Trip to Customer Location at Customer Request $49.19 Replacement Lock and Key $46.78
Contamination (less than 4 yards of weekly service) $106.91 Contamination (4 or more yards of weekly service) $160.37 Note: Additional disposal fees for non-standard items (box springs, tires, televisions, etc.) in which Republic Services is charged by the designated transfer station or landfill will be passed on to the customer when it is possible to identify the customer in violation.

Recycle Services:

Standard Weekly Multi Family Services: Monthly Rate
20 Gallon Recycle Cart, 1 Pickup per Week $25.13
32 Gallon Recycle Cart, 1 Pickup per Week $40.26
64 Gallon Recycle Cart, 1 Pickup per Week $51.38
96 Gallon Recycle Cart, 1 Pickup per Week $62.19
96 Gallon Recycle Cart, 2 Pickups per Week $121.15
96 Gallon Recycle Cart, 3 Pickups per Week $229.58
96 Gallon Recycle Cart, 4 Pickups per Week $300.54
96 Gallon Recycle Cart, 5 Pickups per Week $354.30
1 Cubic Yard Recycle Bin, 1 Pickup per Week $248.00
2 Cubic Yard Recycle Bin, 1 Pickup per Week $296.83
3 Cubic Yard Recycle Bin, 1 Pickup per Week $350.19
4 Cubic Yard Recycle Bin, 1 Pickup per Week $401.56
6 Cubic Yard Recycle Bin, 1 Pickup per Week $497.41
8 Cubic Yard Recycle Bin, 1 Pickup per Week $590.41
1 Cubic Yard Recycle Bin, 2 Pickup per Week $405.14
2 Cubic Yard Recycle Bin, 2 Pickups per Week $495.62
3 Cubic Yard Recycle Bin, 2 Pickups per Week $589.54
4 Cubic Yard Recycle Bin, 2 Pickups per Week $682.58
6 Cubic Yard Recycle Bin, 2 Pickups per Week $877.44
8 Cubic Yard Recycle Bin, 2 Pickups per Week $1,055.40
1 Cubic Yard Recycle Bin, 3 Pickups per Week $578.24
2 Cubic Yard Recycle Bin, 3 Pickups per Week $710.44
3 Cubic Yard Recycle Bin, 3 Pickups per Week $863.26
4 Cubic Yard Recycle Bin, 3 Pickups per Week $980.77
6 Cubic Yard Recycle Bin, 3 Pickups per Week $1,259.00
8 Cubic Yard Recycle Bin, 3 Pickups per Week $1,520.08
1 Cubic Yard Recycle Bin, 4 Pickups per Week $751.37
2 Cubic Yard Recycle Bin, 4 Pickups per Week $925.24
3 Cubic Yard Recycle Bin, 4 Pickups per Week $1,102.52
4 Cubic Yard Recycle Bin, 4 Pickups per Week $1,278.97
6 Cubic Yard Recycle Bin, 4 Pickups per Week $1,640.63
8 Cubic Yard Recycle Bin, 4 Pickups per Week $1,985.32
1 Cubic Yard Recycle Bin, 5 Pickups per Week $924.53
2 Cubic Yard Recycle Bin, 5 Pickups per Week $1,140.04
3 Cubic Yard Recycle Bin, 5 Pickups per Week $1,369.44
4 Cubic Yard Recycle Bin, 5 Pickups per Week $1,577.09
6 Cubic Yard Recycle Bin, 5 Pickups per Week $2,022.28
8 Cubic Yard Recycle Bin, 5 Pickups per Week $2,450.35
Additional Weekly Front-Load Multi Family Services: Monthly Rate Dismount and Push Charge per Bin Serviced Per Week $8.83 Key Charge per Bin Serviced per Week $10.50
Enclosure Charge per Bin Serviced per Week $11.65
Gate Service Charge per Bin Serviced per Week $11.65
Long Walk per Bin Serviced per Week $27.72
Maximum Additional Weekly Charges per Bin Serviced per Week $34.84 Scout Truck (Container Truck) container pull out $51.35 Per Yard surcharge for customers pre-compacting trash. $50.93 Note: 1) Key charges are allowed when container access requires the driver to carry a key and unlock a lock to empty the container. Key charges do not apply if a customer's lock is left in the unlocked position. 2) Enclosure charges are allowed when collection requires removing a container from an enclosure and replacing it when emptied. 3) Gate service charges are allowed when collection requires opening a closed or locked gate in order to access a container. 4) Long walk charges are allowed when a container is placed further than 10 feet from where the collection vehicle has access. 5) Charges for key, enclosure, gate, and long walk service are not cumulative pickup charges. The contractor's service fees for a customer requiring one or more of the special services will be a maximum service fee (as specified in the table above) as adjusted for CPI, per pickup for any combination of the four service categories. 6) Dismount and Push Charges are allowed when container service requires the driver to dismount and push the container from a fixed position and return it to the same position after service.Additional One Time Front-Load Multi Family Charges:

Overloaded Container Per Cubic Yard $35.26
Additional Pickup, 2 Cubic Yard Bin $77.65
Additional Pickup, 3 Cubic Yard Bin $87.09
Additional Pickup, 4 Cubic Yard Bin $95.98
Additional Pickup, 6 Cubic Yard Bin $111.83
Additional Pickup, 8 Cubic Yard Bin $124.44
Additional Trip to Customer Location at Customer Request $41.81 Replacement Lock and Key $39.76
Contamination (less than 4 yards of weekly service) $90.88 Contamination (4 or more yards of weekly service) $136.32 Note: Additional disposal fees for non-standard items (box springs, tires, televisions, etc.) in which Republic Services is charged by the designated transfer station or landfill will be passed on to the customer when it is possible to identify the customer in violation.

Organic Waste Services:

Roll-Off Services:

Standard Roll-Off Services: Per Pull Service Fee
C&D Open Top Debris Boxes (10 yard, 15 yard, 20 yard, 30 yard, 40 yard) $364.85 Open Top Debris Boxes (10 yard, 15 yard, 20 yard, 30 yard, 40 yard) $364.85 Closed Top Debris Boxes (10 yard, 15 yard, 20 yard, 30 yard, 40 yard) $422.08 Roll-Off Compactors (Up to 10 Ton Legal Limit for our Trucks) $479.48 Self-Contained Roll-Off Compactors (Up to 10 Ton Legal Limit for our Trucks) $522.53 Note: 1) Service fees for Debris Boxes include five days usage. If the 5th day falls on Saturday, Sunday, or a Holiday in which Republic Services operations are closed, the Box will be picked up on the following weekday at no additional charge. 2) Roll-off compactors will not be provided by Republic Services.

Customers will be required to purchase the compactor.

Additional Roll-Off Charges Per Ton Collected: Per Ton fee C&D Per Ton Rate $143.27
Garbage Per Ton Rate $166.96
Organics Per Ton Rate $144.63
Additional One Time Roll-Off Charges: Per Occurrence
Load Leveling Charge per 15 minutes (minimum 15 minutes) $32.22 Turn-away of Scheduled Service (Includes cancellation less than 24 hours, bin blocked or not ready) $64.43 Relocation of Box on Same Property $96.67
Additional Day for a Debris Box (Not to exceed a total of 7 days) $54.63 Minimum Lift/Demurrage (trash hauled 2x a month, ryc and C&D 1x a month otherwise fee charged) $200.46 Contamination $400.93
Delivery Fee $267.29
Late Payment Fees: In accordance with National Corporate Policy and as approved by the state attorney general Republic Services will be incorporating a late payment fee equal to 1.5% of the outstanding balance or $5.00 which ever is greater.

Page 1 of 11 ends

July 26, 2024
Mr. David Jacobs
Director of Public Works
City of Salinas
200 Lincoln Avenue, Salinas, CA 93901
submitted via: [email protected]

SUBJECT: Performance Review of Republic Services – Phase 1 Report - Updated

Dear Mr. Jacobs,

R3 Consulting Group, Inc. (R3) is pleased to submit the attached Phase 1 Report of our Performance Review of Republic Services (Republic). Our Phase 1 Report covers Task 2 of our scope of work and involves a Franchise Agreement Compliance Review and Regulatory Compliance Review of Republic’s franchised services in the City. The results of our Phase 2 Performance Review tasks will be submitted in a separate document upon completion of that work.

We wish to note that Republic has been very responsive to our requests for information and has provided us with much of what we asked for in an organized manner.

We appreciate the opportunity to submit our report to the City of Salinas (City). Should you have any questions regarding our report or need additional information, please feel free to reach out directly.

Sincerely,
Ryan Calkins | Operations Director
R3 Consulting Group, Inc.
559.917.3829 | [email protected]

1512 Eureka Road, Suite 220, Roseville CA 95661 | p 916.782.7821 | f 916.782.7824 | www.r3cgi.com

Page 2 of 11 ends

Table of Contents
1 Executive Summary – Page 3
2 Introduction – Page 5
3 Background – Page 5
4 Findings and Recommendations – Page 6

4.1 Franchise Agreement Compliance Review - Areas of Non-Compliance

4.1.1 Work Order Response Time

4.1.2 Sustainability/Compliance Representative Staffing

4.1.3 Overweight Vehicles

4.1.4 Vehicle Replacement

4.1.5 Minimum Franchised Diversion Rate

4.2 Regulatory Compliance Review

4.2.1 OSHA Reportable Accidents and Injuries

4.2.2 CHP BIT Inspections
Attachments
1 Exhibit 10 Compliance Assessment Checklist
2 Republic’s Response to Phase 1 Executive Summary
3 Organizational Chart – Customer Service / Compliance Representatives 4 SB 1383 Route Review and Contamination Monitoring Document 5 Inventory of Collection Vehicles
6 Analysis of Replacement Vehicle Order Dates
7 List of Largest Commercial Accounts by Solid Waste Service Level

Page 3 of 11 ends

1 Executive Summary
Safety
[To be covered in Phase 2]
Customer Service
[To be covered in Phase 2]
Contract Compliance
We found that Republic is in compliance with many of the contractual performance requirements listed in Exhibit 10 of the Agreement (Administrative Charges and Penalties) (Attachment 1). We also found that Republic is not, or was not in compliance with the following contractual requirements for which administrative charges and penalties should apply:
1 Work Order Response Times
2 Sustainability / Compliance Representative Staffing

3. Overweight Collection Vehicles

4. Replacement of Collection Vehicles
Additional information on the above items is provided below, along with a brief summary of Republic’s response to our findings, which is provided in full as Attachment 2:

1. Work Order Response Times (a, h, i)1 - Republic is not actively reporting its response time for the following work order items:
▪ Complaints (a)
▪ Missed collections (a)
▪ Repair or replacement of damaged Containers (h)
▪ Delivery or exchange of Containers (i)
However, missed collection response time data provided by Republic for Quarters 3 and 4 of 2023 show roughly 50 instances of non-compliance with the requirement that missed accounts be collected no later than the following day. For both of those quarters, there were instances where it took Republic three (3) additional days to service a missed account. Assuming there were 50 instances of non-compliance per quarter (200 annually), administrative charges would be approximately $2,000, plus an additional $1,000 flat charge because missed collections exceed twenty (20) in 2023, for a total charge of $3,000 annually. Review of the remaining items will be conducted in Phase 2 pending performance data from Republic.

Going forward, we recommend that the City direct Republic to track and report its response times specific to each item in its quarterly reports. A calendar year accounting of that performance should also be summarized in the Annual Report, along with a calculation of any applicable administrative charges or penalties. The City should also include a requirement to track and report the response time performance of Large Item Collection service.

Republic’s Response:

Republic reported that it is happy to discuss with the City any desired changes or modifications to what is being reported.

2. Sustainability/Compliance Representatives (m) - Per the Agreement, Republic is to have at least four (4) dedicated full-time Sustainability Compliance Representatives (SCR), with those SCRs “…available as needed to meet with the City and conduct site visits to implement Recycling programs in the Service Area at least four days a week throughout the year” . In its October 27, 2023, letter to the City, Republic reported two full-time employees in that role when the contract

1 The letter references are the associated listings in Exhibit 10 – Administrative Charges and Penalties.

Page 4 of 11 ends

was signed and has since hired two additional SCR staff. One of those positions, however, is serving as Republic’s Municipal Sales Manager and is not functioning as an SCR. As such, we found that Republic is not in compliance with the required level of SCR staffing.2 If not cured within 30 days, this item is subject to administrative charges/penalties of $5,000 per month per vacant staff position.

Republic’s Response:

Republic continues to disagree with the City on this item. The total headcount that was negotiated and agreed upon was four (4) dedicated full-time employees in the sustainability and compliance department.

3. Overweight Collection Vehicles (t)3 - Overweight vehicles are a safety issue, and Republic has had ongoing problems effectively controlling overweight vehicles. Recent changes that it has implemented, however, have reduced the number of overweight vehicles significantly over the past two quarters, bringing them into compliance with the established standard in the Agreement.

While Republic has reduced the number of overweight vehicles, there are still occurrences of significantly overweight vehicles (e.g., 3,000+ lbs. (1.5 tons)). Republic needs to build upon its recent success minimizing the number of overweight vehicle occurrences and eliminating any occurrences that would be considered significantly overweight vehicles.

Republic’s Response:

Republic referenced its November 17, 2022, letter to the then City Manager that noted the ongoing struggles of the waste industry from the effects of the Covid-19 pandemic and its associated supply chain issues that created a nationwide shortage of solid waste drivers and trucks.

4. Replacement of Collection Vehicles (v) – pursuant to the franchise agreement, Republic is not allowed to operate a Collection Vehicle that is more than 10 years old. As of December 31, 2023, it had 19 Collection Vehicles; more than half its entire fleet, that were more than 10 years old.

There is an administrative penalty/charge of $500 per day per vehicle older than 10 years.

Failure to cure this non-compliance item within 90 days constitutes an “Agreement Default”. After discussing this item with Republic, R3 was provided with Republic’s vehicle replacement schedule, which provides for the replacement of all franchised vehicles that are more than 10 years old by December 2024.4 Although meeting its proposed replacement schedule will bring Republic into compliance with this item by the end of 2024, it does not meet the 90-day cure period at which “Agreement Default” applies.

Please note that although Republic is currently operating vehicles beyond the allowable ten-year period required under the Agreement, the vehicles are not considered a safety issue to the operator or the public.

Republic’s Response:

Republic referenced its November 17, 2022, letter stating that supply chain issues as a result of the pandemic have changed lead times (for vehicle acquisition once ordered). Republic also provided an updated vehicle maintenance list, vehicle replacement schedule, and corrective plan of action to address out of compliance vehicles ensuring procurement of replacement vehicles in advance of their required replacement dates.

Review of Republic’s Response
Republic has acknowledged and accepted responsibility for its non-compliance pertaining to its vehicle replacement requirements. Although supply chain issues were attributed to the delay in

2 This finding in no way takes fault with the level of effort of Republic’s Sustainability/Compliance Representatives, which appears to be reasonable.
3 This item has administrative charges/penalties of $500 per day per load after City has considered Contractor’s reason for excessive overweight vehicle occurrences.
4 Applying the $500 per day per vehicle administrative charge to 18 vehicles over 90 days = $810,000.

Page 5 of 11 ends

vehicle replacement, records indicated that late vehicle orders attributed to vehicle replacement delays. The updated vehicle maintenance list and replacement schedule show that four (4) of the vehicles were erroneously included in the original list and are designated “Scrap Vehicles” awaiting removal from Republic’s yard. The corrective action plan provided by Republic shows the procurement of all replacement vehicles and a timeline to achieve full compliance by the end of December 2024. Additionally, Republic has begun procuring new vehicles to replace those that are set to hit the 10-year mark in 2026.

Republic also provided an alternative plan of action to immediately address compliance issues if it is desired by the City. This plan includes swapping vehicles with other Republic sites within California in order to bridge the gap until replacements arrive. There are some key considerations for immediate vehicle replacement including vehicle model differences, fuel type changes, payload variations, potential route adjustments, and multiple vehicle transitions within a six-month period that could potentially effect driver morale and/or create unnecessary service disruptions.

The City must decide whether to accept Republic’s replacement schedule or require immediate compliance by utilizing compliant vehicles from other Republic sites.

In addition to the above items, Republic failed to meet the Minimum Franchised Diversion Rate for 2021, 2022, and 2023 based solely on the materials it directly diverts. However, some franchised accounts self-haul or backhaul recyclables and/or organics, and other parties collect recyclable materials from franchised accounts. Those practices are allowed per the City’s “Salinas Alternative Recycling Process” (SARP) as long as those parties do not charge for those services. We recommend that all materials that are self-hauled, backhauled, or diverted by other parties from franchised solid waste accounts be credited to Republic for the purpose of calculating its Minimum Franchised Diversion Rate.

There is a problem with obtaining SARP tonnages however as the Salinas Valley Solid Waste Authority, which administers the SARP, no longer tracks the number of tons diverted through that process. Unless or until SARP tonnage data becomes available, it is not possible to reasonably calculate Republic’s Minimum Franchised Diversion Rate.
2 Introduction
R3 Consulting Group (R3) was engaged by the City of Salinas (City) to conduct a Performance Review of the City’s franchised solid waste collection service provider, Republic Services (Republic). The City’s current Solid Waste Services Agreement (Agreement) with Republic, which began on October 1, 2021, has an initial term of approximately 15 years, expiring on June 30, 2036. As part of the Agreement, the City has the right to conduct up to three (3) Billing/Financial Audit and Performance Reviews (Performance Reviews) during the term of the Agreement.

The purpose of those Performance Reviews is to determine if:
▪ Customer billing rates have been properly calculated; ▪ Customers are billed the correct rate for the level of service each account is receiving; ▪ Republic has paid all required fees to the City; and
▪ Republic is in compliance with the diversion standards, reporting requirements, and other performance requirements of the Agreement.

For timing purposes, our Performance Review was broken into two phases. Phase 1 was divided into two parts:

1. Franchise Agreement Compliance Review; and

2. Regulatory Compliance Review.

Our Phase 1 Franchise Agreement Compliance Review focused on those aspects of Republic’s performance for which Administrative Charges and Penalties listed in Exhibit 10 of the Agreement apply.5 Our Regulatory Compliance Review included a review of Republic’s OSHA reportable accident and injury rate, and its performance under the California Highway Patrol’s BIT Program.

5 Additional review of contract compliance issues will be addressed as part of Phase 2 of R3’s review.

Page 6 of 11 ends

3 Background
Republic has served as the City's franchised hauler since the initial franchise agreement was effective on July 1, 2001. In 2010, Republic was awarded another exclusive franchise agreement to serve as the City's solid waste hauler. On October 1, 2021, Republic received another franchise agreement award as the City's sole solid waste hauler under the current Agreement.

Over the past two decades, Republic has been responsible for providing the City with solid waste hauling , education and outreach, and other related services, as detailed in the previous and current Agreements.

Performance reviews conducted under the prior Agreement identified significant issues with Republic's contract compliance. In 2018, R3, on behalf of the City, conducted a Performance Review of Republic . At the conclusion of the review, several key areas were identified where service improvement and transparency were needed. The identified areas included:
▪ Staffing
▪ Overweight Vehicles
▪ Container Replacement
▪ Post-Service Litter
▪ Financial Transparency
On March 25, 2019, the City issued a letter to Republic requiring the submittal of a Corrective Plan of Action to address the items identified above. On August 15, 2019, Republic submitted its Corrective Plan of Action to the City. Republic’s Corrective Plan of Action consisted of a cover letter, an individualized plan of action for each identified item (including timeframe and responsible party) , and a Gantt chart highlighting the proposed schedule of correction. Republic did not ultimately follow through on its commitments to correct these identified items.

The City conducted its own internal evaluation of the progress that Republic has made within the first full year of services under the new Agreement and identified the following most significant areas of non - compliance or underperformance, which do not represent the entirety of Republic’s failure to perform but are of most concern to the City:

1. Overweight vehicles

2. Staffing

3. Sustainability and Compliance Plan
On November 29, 2022, the City issued a written Notice of Assessment (NOA) to Republic regarding failure to comply and/or deliver elements contained within the Agreement. Republic took exception to the City’s interpretation of issues related to the above items. The City proposed a resolution, that Republic accepted, that included R3 conducting this Performance Review, Republic paying the City a “Community Enhancement Fee” of $458,000, and the City’s dismissal of all liquidated damage claims for 2021 and 2022 calendar years.
4 Findings and Recommendations

4.1 Franchise Compliance Review - Areas of Non-Compliance Attachment 1 provides an assessment of Republic’s compliance with the contractual requirements listed in Exhibit 10 for which administrative charges and penalties apply. As noted, we found that Republic is not or was not in compliance with the following Exhibit 10 contractual requirements, or in the case of “Work Order Response Times,” could not provide the information needed to determine compliance:

1. Work Order Response Times

2. Sustainability / Compliance Representative Staffing

3. Overweight Collection Vehicle

4. Replacement of Collection Vehicles

Page 7 of 11 ends

Each of the above items are discussed in more detail below.

4.1.1 Work Order Response Time (a, h, i)
The Agreement establishes response times within which Republic is to address each of the following work order items, with applicable administrative charges and penalties noted:

1. Complaints (a) - $100 per incident per Service Recipient

2. Missed collections (h) - in excess of twenty (20) in any Calendar Year $1,000 per Calendar Year, plus $10 per incident per day.

3. Repair or replacement of damaged Containers (i) - in excess of fifty (50) in any Calendar Year $1,000 per Calendar Year, plus $10 per incident per day.

4. Delivery or exchange of Containers (i) - $1,000 per Calendar year, plus $10 per incident per day.

In addition to the above, per Section 7.10.2 Frequency of Service: “Large Item Collection Service will be provided on the next regular Collection day if the request is received at least two (2) Work Days in advance of the next Collection day”. However, there is no administrative charge/penalty associated with that contractual requirement.

Republic is not currently reporting its response time for the above items and limited data was available at the time of our Phase 1 review. Data provided by Republic for Quarters 3 and 4 of 2023 however show roughly 50 instances of non-compliance with the requirement that missed accounts be collected no later than the following day. For both of those quarters, there were instances where it took Republic three (3) additional days to service a missed account. Assuming 50 instances of non-compliance per quarter (200 annually), administrative charges would be approximately $2,000, plus a $1,000 flat charge given that missed collections exceed twenty (20) in 2023, for a total charge of $3,000 annually. Review of the other items will be conducted in Phase 2, pending performance data from Republic.

Recommendations
Direct Republic to begin tracking its response time relative to each work order item and report its performance in its quarterly reports.6 The total number of each event should be reported, along with the number of those events that were not completed within the required time, if any. A calendar year accounting of performance should be provided in the Annual Report, along with a calculation of any administrative charges or penalties that apply.

4.1.2 Sustainability / Compliance Representative Staffing (m) Section 16.01.1 of the Agreement (Sustainability/Compliance Representative) (SCR) reads as follows:

Contractor will hire staff, including at least four dedicated full-time Sustainability/Compliance representatives, to at a minimum, conduct site visits to each commercial and MFD Waste Generator, provide contamination monitoring, prepare reports for CalRecycle and the City, make presentations to the general community, schools, HOAs, key business groups, environmental groups, Chamber of Commerce, and City Council, and provide outreach and education in support of meeting Franchise and CalRecycle Diversion requirements and to meet State mandates associated with AB 939, AB 341, AB 1826, AB 1594, SB 1016, and SB 1383, and all amendments and related subsequent legislation. The Sustainability/ Compliance Representative shall be available as needed to meet with the City and conduct site visits to implement Recycling programs in the Service Area at least four days a week throughout the year.

Attachment 3 provides a copy of Republic’s organizational chart that lists its SCR positions. Attachment 4 provides a document describing Republic’s SB 1383 Route Review and Contamination Monitoring that largely comprises what we understand to be the SCR’s major job responsibilities. What we take away from that information is that Republic is one (1) position understaffed with respect to its four required, dedicated, full-time, primarily operating in the field, SCR positions, and that the existing SCRs, appear to be largely focused on conducting SB 1383 Route Reviews, which we fully support. We do, however, recommend that the focus of future Route Reviews be on assessing the “additional diversion potential” for

6 Section 18.08 (Additional Reporting) states that: “Contractor must furnish City with any additional reports as may be reasonably required, such reports to be prepared within a reasonable time following the reporting period.”

Page 8 of 11 ends

each account and taking appropriate action to realize any such additional potential. Monitoring of recycling and organics bins for contamination should also be continued.

Recommendations
See Franchised Diversion Rate recommendation below.

4.1.3 Overweight Vehicles (t)
Republic’s overweight vehicles have been a reoccurring issue previously identified in R3’s 2018 Performance Review. In 2022, Republic reported that 1,649 (7.55%) of its loads were overweight, and in 2023, a total of 2,617 (13.48%) were overweight, exceeding the 5% contractual limit. In 2023, almost 1,000 loads were overweight by more than 3,000 pounds (1.5 tons) and 22 loads were overweight by more than 10,000 pounds (5 tons). The majority of those overweight loads were residential side loaders , which can damage the City’s residential streets, leading to increased street maintenance costs. This area of non-compliance has liquidated damages of $500 per load, after City considered Contractor’s reasons for excessive overweight vehicle occurrences.

In its 2023 1st and 2nd Quarterly Reports, Republic reported that it had implemented the following plan of action to address overweight vehicles, which is expected to produce the desired results no later than the 4th quarter of 2023:
a) Adding two commercial routes and one residential route. These new routes will reduce operational hours and allow us to balance the tonnage of our existing routes. b) Partnering with the City and Salinas Valley Recycles to implement SB 1383 programs at commercial businesses and multi-family properties. They anticipate that there will be a shift in tonnage from MSW to Organics as customers begin recycling their food waste. c) Actively recruiting new drivers and other key positions. The waste industry continues to struggle with the effects of the Covid-19 pandemic, which has created a nationwide shortage of solid waste drivers and professionals.

Changes that Republic has made have resulted in significant improvements (decreases) in the number of overweight vehicles. Table 2 below provides overweight vehicle data for each quarter of 2023 and the first quarter of 2024.

Table 2
The results for the most recent two quarters show significant improvement, with the total number of overweight vehicles less than the 5% level at which administrative charges apply. With that said, there were:
▪ Thirty-five (35) and thirty-four (34) loads, respectively, in the 4th quarter of 2023 and 1st quarter of 2024 that were more than 3,000 pounds overweight;
2024
Quarter
1 2 3 4 1
Total Loads 5,131 6,028 6,265 5,912 23,336 5328 Compliant Loads 3,824 4,746 5,459 5,693 19,722 5102 Non-Compliant Loads (1) 1,307 1,282 806 219 3,614 226 Percent Non-Compliant Loads 25% 21% 13% 4% 15% 4%
Overweight Loads (1-2,999 lbs.) 286 1,023 655 185 2,149 191 % of Total Loads 6% 17% 10% 3% 9% 4%
Overweight Loads (>3,000 lbs.) 454 357 151 34 996 35 % of Total Loads 9% 6% 2% 1% 4% 1%
Quarters Total
2023
(1) Non-Compliant Loads total does not equal the sum of Overweight Loads (1-2,999) + Overweight Loads (>3,000) for quarters 1 and 2 and Total

Page 9 of 11 ends

▪ Ten (10) and fifteen (15) loads, respectively that were more than 5,000 pounds (2.5 tons) overweight; and
▪ One (1) residential sideload load in the 4th quarter that was more than 10,000 pounds overweight (11,260 pounds (5.63 tons).

While Republic has not exceeded the 5% overweight threshold during the past two quarters, the number of loads that are more than 3,000 pounds overweight is still of concern. An effective overweight program should be able to more effectively control the amount any vehicle is overweight. The goal is to reduce both the total number of overweight loads and more importantly, minimize the number of overweight vehicle occurrences. While Republic has made great strides with respect to both objectives in the past two quarters, there is still work to be done.

Recommendations
Direct Republic to continue to report overweight vehicle information on a quarterly basis along with the percentage calculations shown in Table 2. Annual totals should be compared to historical results.

Additionally, going forward overweight loads should be classified as follows:
✓ 1-999 pounds overweight;
✓ 1,000- 1,099 pounds overweight;
✓ 2,000 – 2,999 pound overweight; and
✓ So on by 1,000-pound increments.

4.1.4 Vehicle Replacement (v)
Per Section 14.01.3 (Collection Vehicles): Contractor may not use any Collection vehicle that is more than ten (10) years old at any time during the term of the Agreement. Per Republic’s Inventory of Collection Vehicles, as of December 31, 2023, it reported a total of 36 vehicles, with 19 of those vehicles more than ten years old (2011, 2012, and 2013 model years). Administrative charges/penalties of $500 per day apply for non-compliance up to 90 days. If not cured in 90 days, that constitutes an “Agreement Default”.

In response to our review of this item with Republic, they provided a vehicle replacement schedule that plans for the replacement of all franchised vehicles that are more than 10 years old by December 2024 (Attachment 5).7 While meeting that replacement schedule will bring Republic into compliance with this item by the end of 2024, it does not meet the 90-day cure period at which “Agreement Default” applies.

Republic referenced its lack of compliance with its vehicle replacement requirement on supply chain issues. While supply chain issues may have increased the time between the vehicle purchase date and delivery date, Republic’s records shown that it failed to order many of the replacement vehicles that it needed until after the date they were needed (Attachment 6). As such, supply chain issues have no bearing on Republic’s lack of compliance.

Republic provided an updated vehicle maintenance list, vehicle replacement schedule, and corrective plan of action to address out of compliance vehicles. Four (4) of the vehicles from the original list are designated as “Scrap Vehicles” and as such, are out of operation and are set for removal from Republic’s yard. Seven (7) out of compliance vehicles are designated as “Spare Vehicles” (2 Commercial Front Loaders, 3 Residential Side Loaders, and 2 Roll-Off) and although not assigned to a regular route, are used in emergency situations and are required to be replaced in accordance with the terms of the Agreement. The remaining eight (8) out of compliance vehicles are Residential Side Loaders that were required to be replaced in 2023.

Republic has acknowledged the out of compliance vehicles referenced above and has provided the City with a corrective plan of action that is already underway. One (1) Commercial Front Loader is scheduled for replacement by the end of July 2024. All remaining out of compliance vehicles have been procured and are scheduled for replacement by the end of December 2024. Additionally, Republic is proactively

7 Applying the $500 per day per vehicle administrative charge to 18 vehicles over 90 days = $810,000.

Page 10 of 11 ends

monitoring future vehicle replacement dates and has procured replacements for vehicles set to eclipse the terms of the Agreement in 2026.

If the City would prefer immediate compliance rather than accept Republic’s replacement schedule above, they have identified vehicles at other Republic sites within California that meet the 10-year requirement. These vehicles can be utilized to bridge the gap until the new replacements arrive over the next few months. However, these replacement vehicles are different models than what the drivers f or the City currently operate and would therefore require driver training specific to those vehicles prior to operation, which could lead to route delays and/or productivity issues. Additional items of note that could affect current operations in the event of implementation of new vehicles include:
• Different style vehicles than what they are currently running. o Currently CNG vs Proposed Diesel
• Max Payloads are different due to the type of vehicles. o Drivers will need to establish new cutoff points (points at which the route separates loads) which could cause additional overweight occurrences. • Impacts to driver/employee morale.
o Changing vehicle types twice within a six (6) month period (immediately, and then again when the replacements arrive) could potentially have negative effects on the drivers.

Recommendations
Pending discussion with the City.

4.1.5 Franchised Diversion Rate (r)
Per Section 5.03.1: For Calendar Years 2021, 2022, and 2023, the minimum annual Franchised Diversion Rate requirements will be forty percent (40%) and CalRecycle Diversion Standard will be fifty-five percent (55%). Those figures increase to 50% and 65%, respectively, for Calendar Years 2024 and 2025, 55% and 70% for Calendar years 2026 and 2027, and 60% and 75% for Calendar Years 2028 and beyond.

We are unable to determine Republic’s compliance with its Minimum Franchised Diversion Rate due to the lack of tonnage data for the City’s SARP program that should be attributed to Republic for purposes of calculating that rate. With that said, we did analyze Republic’s diversion performance over the current Term of the Agreement. Table 3 below provides historical diversion rates by line of business for 2021 through 2023.

Table 3
As shown, the residential, commercial, industrial, and overall diversion rates have all increased modestly over that time span (15% overall from 2021 to 2023).

While SCRs are conducting Route Reviews, the effectiveness of those efforts at increasing diversion has been limited. If Republic is to make meaningful increases in diversion, it needs to focus SCR efforts on recovering material for those accounts that still have material quantities of recyclables and organic material in their solid waste containers.
%
% change
v
prior yr.
%
% change
v
prior yr.
%
% change
v
prior yr.
%
% change
v
prior yr.
%
% change
v
prior yr.
2021 40.95% 17.21% 12.34% 57.58% 26.42%
2022 42.13% 2.9% 18.55% 7.8% 16.03% 29.9% 51.90% -9.9% 28.53% 8.0% 2023 43.33% 2.8% 19.76% 6.5% 18.37% 14.6% 57.61% 11.0% 30.17% 5.7% Res Com Ind Bulky Total

Page 11 of 11 ends

Republic tracks solid waste, recycling, and organic waste service levels for its commercial accounts and reports that information in its Annual Report. That information can serve as the framework for efforts to increase the recovery of recyclable and organic materials that are currently disposed of. Attachment 7 provides a list of the largest commercial accounts ranked based on their solid waste service levels.

Collectively, those generators account for slightly more than 25% of total franchised solid waste service volume.

Of significant note concerning the Franchised Diversion Rate, per Republic’s 2023 Annual Report there are a total of 1,036 “covered” accounts that are not receiving organic collection service (38% of the 2,744 total covered accounts). Requiring all accounts that are not exempt from SB 1383 organic services to subscribe to those services ASAP should be a priority of Republic and the City.

Recommendations
▪ Republic should conduct a new round of commercial Route Reviews starting with those accounts listed in Attachment 7. For each account, an assessment should be made of the percentage of each account’s solid waste bin that includes recyclable material and organics (i.e., an accounting of the additional (remaining) diversion potential). Assessing recyclable and organic material contamination should continue, however the priority focus at this point should be on assessing the additional diversion potential of each commercial account Accounts should be prioritized based on the amount of their ”additional diversion potential. T hose accounts with material amounts of “additional diversion potential” should be notified that they are not in compliance with SB 1383 and provided with support to bring them into compliance. Follow- up Route Reviews should be conducted until those accounts are effectively diverting the recyclable and organic material they generate. Similar actions should be applied to all other commercial accounts. The “additional diversion potential” of each account should be added to the Attachment 7 database and updated as that potential is realized. ▪ Future contamination notice accounting and reporting should clearly specify the nature of the contamination notices (i.e., the presence of material quantities of recyclable and/or organic material in the solid waste containers, and/or contamination of recyclables and/or organics).

4.2 Regulatory Compliance Review

4.2.1 OSHA Reportable Accidents and Injuries
[To be covered in Phase 2]

4.2.2 CHP BIT Inspections
The Basic Inspection of Terminals (BIT) Program inspections have been conducted by the CHP since 1965 as a tool to determine if motor carriers are complying with Motor Carrier Safety regulations, particularly with regard to the legal requirement to maintain commercial motor vehicles according to a scheduled maintenance (preventive maintenance) program. The CHP's role is to determine whether carriers' selected maintenance schedules are adequate to prevent collisions or mechanical breakdowns involving the vehicles, and all required maintenance and driver records are prepared and retained as required by law. Republic’s 271 Rianda Street terminal received a “Satisfactory” rating for both 2022 and 2023. It is worth noting that despite Satisfactory BIT ratings for both 2022 and 2023, there were several instances during that period in which CHP Driver/Vehicle Examination Report(s) list discovered violations during individual vehicle inspections. Our understanding is that all discovered violations have since been corrected.

https://r3cgi.sharepoint.com/Shared Documents/Clients/SALINAS/124039 - Performance Review and Negotiations/Report/Salinas - Performance Review Phase 1 Report 070224 UPDATED.docx
City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-686, Version: 1
Energy Services Contract with ENGIE for Photovolatic (PV) Systems and Back-Up Generator at City Facilities
Approve a Resolution finding that the energy conservation project (the “Project”) proposed by ENGIE Services U.S. is exempt from requirements of the California Environmental Quality Act (CEQA); and approving an energy conservation services agreement with ENGIE Services U.S.

City of Salinas Printed on 11/27/2024Page 1 of 1
powered by Legistar™

Page | 1

CITY OF SALINAS

COUNCIL STAFF REPORT

DATE: DECEMBER 3, 2024
DEPARTMENT: FINANCE, PUBLIC WORKS
FROM: SELINA ANDREWS, FINANCE DIRECTOR

DAVID JACOBS, PUBLIC WORKS DIRECTOR

TITLE: ENERGY SERVICES CONTRACT WITH ENGIE FOR

PHOTOVOLATIC (PV) SYSTEMS AND BACK -UP GENERATOR

AT CITY FACILITIES

RECOMMENDED MOTION:

A motion to approve a resolution:

1. Finding that the energy conservation project (the “Project”) proposed by ENGIE Services U.S. is exempt from requirements of the California Environmental Quality Act (CEQA); and

2. Approving an energy conservation services agreement with ENGIE Services U.S.

EXECUTIVE SUMMARY:

The City worked with ENGIE Services U.S. (“ENGIE”) to assess certain City facilities , specifically the El Gabilan Library and the Police Department building, for installation and maintenance of solar photovoltaic (PV). ENGIE previously constructed and currently maintains the existing solar arrays at seven (7) sites within the City and analyzed the existing solar performance for the facilities and identified the potential for significant savings to the City, upwards of $700, 000 over a seven (7) year period in excess savings due to PG&E escalation of rates.

In addition to the solar photovoltaic (PV) systems, staff also recommends a backup generator to support City Hall be included as part of the scope. ENGIE identified a few ways to implement and maintain the solar PV systems and generator - the Tax -Exempt Equipment Leasing Program (TELP), other financing options, or the City’s existing financial resources. It is anticipated that the City would also benefit from the NEM 2.0 savings and tax credits from the Inflation Reduction Act.

The project cost is $4,774,025, with an anticipated savings of approximately $5 million over the 20-year life cycle of the project.

Page | 2
BACKGROUND:

The City is faced with an opportunity to invest in a cleaner future by installing solar PV systems at El Gabilan Library and the Police Department. The program goals are to reduce utility bills and return operating expenses back to the community, plan for future load and EV charging requirements by the state , and take advantage of the NEM 2.0 savings and tax credits from the Inflation Reduction Act.

According to NEM 2.0 policies, each kilowatt-hour (kWh) a solar customer produces is valued at the same market rate as kilowatt-hours the customer purchases from the utility. This means a solar customer can produce excess energy during the day, receive a credit for sending it to the grid, and then use that credit to pay for the energy they purchase at night.

Formally known as the “NEM Successor Tariff”, NEM 2.0 is a policy created by the California Public Utilities Commission which provides a framework for extending the capacity for solar PV projects connected to the grid in California.

In order for the City to complete certain energy projects, the City Council must make certain findings with respect to the contracts being entered into. Applicable findings required by Government Code Sections 4217.12 and 4217.13, under which the City Council must find that the Energy Service Contract and its related financing are as follows:

1. The proposed systems installation is in the best interest of the City,

2. The anticipated cost to the City for the thermal or electrical energy or conservation services provided by the energy conservation facility (the Equipment) under the Energy Services Contract will be less than the anticipated marginal cost to the City of thermal, electrical, or other energy that would have been consumed by City in the absence of the purchase of the Equipment,

3. Funds for the repayment of the financing or the cost of design, construction, and operation of the energy conservation facility (i.e. Equipment), or both, as required by the Energy Services Contract, are projected to be available from revenues resulting from sales of electricity or thermal energy from the facility or from funding that otherwise would have been used for purchase of electrical, thermal, or other energy required by the City in the absence of the energy conservation facility, or both.

On October 8, 2024, the Finance Committee recommended that the City continue to review this project and that an agreement be brought forward to Council for review and approval.

CEQA CONSIDERATION:

Not a Project. The City of Salinas has determined that the proposed action is categorically exempt from environmental review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines sections 15301 (Existing Facilities) and 15303 (New Construct ion or Conversion of Small Structures) and statutorily exempt pursuant to Public Resources Code section 21080.35.

Page | 3

CALIFORNIA GOVERNMENT CODE §84308 APPLIES:

Yes.

STRATEGIC PLAN INITIATIVE:

Taking action on this initiative meets the strategic goal of Infrastructure and Environmental Sustainability, with a focus on value of fiscal responsibility. This is setting the foundation for meeting the future electrification needs and climate resiliency.

DEPARTMENTAL COORDINATION:

This staff report was coordinated with the City Attorney’s Office, City Manager’s Office, Public Works Department, and Finance Department.

FISCAL AND SUSTAINABILITY IMPACT:

The City has solicited bids from over 20 regional and national banks for financing the improvements discussed in this staff report. Bank of America provided a bid with the lowest interest rate and the City is working with its municipal advisor, placement agent, and Bank of America to structure a tax-exempt equipment lease financing based on that low bid.

The lease financing will be structured to achieve savings net of debt service in each year. In other words, the total program savings less total program costs will be greater than the antici pated debt service in any given year. The financing is expected to have a term of 20 years (maturing in 2044) and a slightly escalating debt service (to track with slightly escalating savings each year).

Later in this agenda, s taff is bringing a separate resolution and lease agreement related to that financing for consideration.

The first debt service payment will be due in December 2025. This will be included in the FY 25- 26 operating budget and will be covered by the anticipated energy savings.

Fund

Appropriation

Appropriation
Name
Total
Appropriation
Amount for
recommendation
FY 24-25
Operating
Budget Page
Last Budget
Action (Date,
Resolution)
1100 TBD Debt Service N/A N/A N/A N/A

ATTACHMENTS:

Resolution
Attachment A: ENGIE Energy Services Contract
Attachment B: ENGIE Presentation

RESOLUTION NO. ________(N.C.S.)

A RESOLUTION AUTHORIZING THE EXECUTION OF AN AGREEMENT FOR ENERGY CONSERVATION SERVICES WITH ENGIE SERVICES U.S. INC.

PURSUANT TO GOVERNMENT CODE SECTION 4217.10 ET SEQ., MAKING

CERTAIN FINDINGS REQUIRED THEREFORE, AND AUTHORIZING RELATED

ACTIONS

WHEREAS, the City of Salinas, California ("City") is a charter city organized pursuant to the California Constitution and with authority derived directly from Article XI of the California Constitution;

WHEREAS, the City finds it to be in the best interests of the City to implement projects to promote energy efficiency and renewable energy to achieve utility budget cost reductions; WHEREAS, Government Code sections 4217.10 through 4217.18 authorize the City's governing board (the “City Council") to enter into one or more energy service contracts with any person or entity if the City Council finds that the anticipated cost to the City for thermal or electrical energy or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the City of thermal, electrical, or other energy that would have been consumed by the City in the absence of those energy service contracts ("Savings");
WHEREAS, Government Code sections 4217.10 through 4217.18 authorize the City Council to enter into one or more facility financing contracts if the City Council finds that funds for the repayment thereof are projected to be available from the Savings, representing funds that otherwise would have been used for purchase of electrical, thermal, or other energy required by the City in the absence of the energy conservation services and facilities financed by proceeds available through the facility financing contracts;
WHEREAS, Government Code sections 4217.10 through 4217.18 require that a public hearing be held, and public comment be taken, at a regularly scheduled meeting of the City Council, at which meeting the City Council may consider and adopt the findings described herein and award energy services contracts and facility financing contracts based thereon, and that notice thereof be must given at least two weeks prior to the meeting; WHEREAS, the City gave notice of its intent to conduct a public hearing and take public comment upon the subject matter of this Resolution two weeks prior to the regularly scheduled public meeting of the City Council at which the City Council has held a public hearing and taken public comment and has now considered this Resolution, all as required under Government Code sections 4217.10 through 4217.18;
WHEREAS, the City Council and City staff reviewed the qualifications presented by ENGIE Services U.S. Inc., (“ENGIE”) to provide assessment and implement improvements for energy consumption and infrastructure in order to reduce energy expenses, and found ENGIE's qualifications to appear bona fide and adequate;
WHEREAS, ENGIE assessed the feasibility of various potential energy conservation measures to reduce the City's energy consumption and expense and recommended specific energy conservation measures based thereon ("Analysis" as set forth in Exhibit A), upon which the City Council and City staff have relied;
WHEREAS, ENGIE has offered to enter into an Energy Services Contract ("Energy Services Contract ,") to provide design/build implementation of the recommended energy conservation measures for the price stated therein and a savings performance guarantee; WHEREAS, the Analysis demonstrates that the cost for energy conservation services provided under the Energy Services Contract is less than the anticipated marginal cost to the City of thermal, electrical, or other energy that would have been consumed by the City in the absence energy conservation services ("Savings");
WHEREAS, the City Council finds and determines that the project is categorically exempt from environmental review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines sections 15301 (Existing Structures) and 15303 (New Construction or Conversion of Small Structures) and statutorily exempt pursuant to Public Resources Code section 21080.35.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF SALINAS AS FOLLOWS:

Section 1. Recitals. All of the recitals herein contained are true and correct and are fully incorporated herein by this reference.

Section 2. ENGIE Agreements Findings. The City Council finds that the anticipated cost to the City for thermal or electrical energy or conservation services provided by the energy conservation facility under the Energy Services Contract will be less than the anticipated marginal cost to the City of thermal, electrical, or other energy that would have been consumed by the City in the absence of the Energy Services Contract and that it is in the best interest of the City to approve and enter into the City Agreements.

Section 3. ENGIE Agreements Approval. The forms of the Energy Services Contract by and between the City and ENGIE, in the forms on file with the City Clerk, are hereby approved, with such changes thereto, deletions therefrom and additions or modifications thereto as may be approved pursuant to Section 4 hereof.

Section 4. Execution and Delivery. Any one of the City Manager, the Finance Director, or any deputy thereof, or person duly appointed in writing to act in the stead of such officer (collectively, the “Responsible Officers”), is hereby authorized and directed for and in the name of and on behalf of the City to execute and deliver the Energy Services Contract in substantially the form presented to and considered at this meeting, with such changes therein, deletions therefrom and additions thereto as may be approved (i) by any Responsible Officer, in such person’s discretion, as being in the best interests of the City, and, (ii) as to form, by City Attorney; such approval to be conclusively evidenced by the execution and delivery thereof by the person executing the same on behalf of the City.

Section 5. Further Actions. The Responsible Officers are, and each of them acting alone is, hereby authorized and directed to take such actions and to execute such documents and certificates as may be necessary to effectuate the purposes of this resolution, including the execution and delivery of the Energy Services Contract and the Financing Agreements, and execution and delivery of any and all memorandums of agreement or understanding, assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they, or any of them, deem necessary or advisable in order to consummate the transactions and requirements as described herein.

Section 6. Ratification. All actions heretofore taken by any officer of the City with respect to the execution and delivery of Energy Services Contract, and projects described therein are hereby approved, confirmed and ratified.

Section 7. Effective Date. This Resolution shall take effect upon approval.

PASSED AND APPROVED this 3rd day of December 2024, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:

_______________________________
Kimbley Craig, Mayor

ATTEST:

_____________________________
Patricia M. Barajas, City Clerk

Year
Electricity
Produced
(kWh)
Avoided
Electric Rate
($/kWh)
Solar Electric
Savings
Solar O&M
Cost
Solar M&V
Cost
Net Solar
Project Savings
Investment Tax
Credit
Total Program
Savings
Estimated Loan
Payment
Net Program
Savings
Cumulative
Savings
A B C = A * B O M E = C - D F K = E+F+G+H+I+J L N = E+ L P 1 1,041,32 3 0.273 284,39 4$ 19,543 $ 4,053 $ 260,79 8$ - $ 260,79 8$ (253,474) $ 7,323 $ 7,323 $ 2 1,036,11 6 0.287 297,12 0$ 20,52 0$ 4,215 $ 272,385$ 1,017,21 5$ 1,289,60 0$ (265,262) $ 1,024,33 8$ 1,031,66 2$ 3 1,030,93 6 0.301 310,41 6$ 21,54 6$ 4,38 4$ 284,48 7$ - $ 284,48 7$ (277,453) $ 7,033 $ 1,038,69 5$ 4 1,025,78 1 0.316 324,30 8$ 22,623 $ 4,559 $ 297,125$ - $ 297,125$ (290,007) $ 7,118 $ 1,045,81 3$ 5 1,020,65 2 0.332 338,82 0$ 23,755 $ 4,741 $ 310,32 4$ - $ 310,32 4$ (302,879) $ 7,445 $ 1,053,25 8$ 6 1,015,54 9 0.349 353,983$ 24,942 $ 4,931 $ 324,109$ - $ 324,109$ (317,029) $ 7,080 $ 1,060,33 8$ 7 1,010,47 1 0.366 369,823$ 26,189 $ 5,128 $ 338,50 6$ - $ 338,50 6$ (331,370) $ 7,136 $ 1,067,47 4$ 8 1,005,41 9 0.384 386,373$ 27,499 $ 5,333 $ 353,54 0$ - $ 353,54 0$ (345,859) $ 7,681 $ 1,075,15 5$ 9 1,000,39 2 0.404 403,663$ 28,87 4$ 5,547 $ 369,242$ - $ 369,242$ (361,456) $ 7,787 $ 1,082,94 2$ 10 995,39 0 0.424 421,72 7$ 30,31 8$ 5,769 $ 385,641$ - $ 385,641$ (378,073) $ 7,567 $ 1,090,50 9$ 11 990,413 0.445 440,599 $ 31,833 $ 5,999 $ 402,76 6$ - $ 402,76 6$ (395,627) $ 7,139 $ 1,097,64 9$ 12 985,461 0.467 460,31 6$ 33,425 $ 6,239 $ 420,652$ - $ 420,652$ (413,032) $ 7,619 $ 1,105,26 8$ 13 980,533 0.490 480,915 $ 35,09 6$ 6,489 $ 439,33 0$ - $ 439,33 0$ (431,246) $ 8,08 4$ 1,113,35 2$ 14 975,631 0.515 502,43 6$ 36,851 $ 6,749 $ 458,83 6$ - $ 458,83 6$ (451,183) $ 7,653 $ 1,121,00 5$ 15 970,753 0.541 524,92 0$ 38,69 4$ 7,018 $ 479,20 8$ - $ 479,20 8$ (471,716) $ 7,492 $ 1,128,49 7$ 16 965,899 0.568 548,41 0$ 40,62 8$ 7,299 $ 500,483$ - $ 500,483$ (492,760) $ 7,723 $ 1,136,22 0$ 17 961,069 0.596 572,952 $ 42,66 0$ 7,591 $ 522,701$ - $ 522,701$ (515,229) $ 7,471 $ 1,143,69 1$ 18 956,26 4 0.626 598,591$ 44,793 $ 7,895 $ 545,90 4$ - $ 545,90 4$ (537,997) $ 7,907 $ 1,151,59 8$ 19 951,483 0.657 625,37 8$ 47,033 $ 8,211 $ 570,135$ - $ 570,135$ (562,977) $ 7,158 $ 1,158,75 6$ 20 946,725 0.690 653,36 4$ 49,38 4$ 8,539 $ 595,441$ - $ 595,441$ - $ 595,441$ 1,754,19 7$ 21 941,992 0.725 682,602 $ 51,853 $ 8,881 $ 621,86 8$ - $ 621,86 8$ - $ 621,86 8$ 2,376,06 5$ 22 937,282 0.761 713,149 $ 54,44 6$ 9,236 $ 649,46 7$ - $ 649,46 7$ - $ 649,46 7$ 3,025,53 2$ 23 932,595 0.799 745,062 $ 57,16 8$ 9,605 $ 678,28 8$ - $ 678,28 8$ - $ 678,28 8$ 3,703,82 0$ 24 927,932 0.839 778,403 $ 60,027 $ 9,989 $ 708,38 7$ - $ 708,38 7$ - $ 708,38 7$ 4,412,20 7$ 25 923,293 0.881 813,23 7$ 63,02 8$ 10,389 $ 739,82 0$ - $ 739,82 0$ - $ 739,82 0$ 5,152,02 7$ 25 Year Total 24,529,35 4 12,630,964$ 11,529,44 3$ 1,017,21 5$ 12,546,65 7$ (7,394,630) $ 5,152,02 7$ Exhibit A
Estimated Savings Calculations Provided by ENGIE*
*Estimated Loan Payment amounts provided by NHA Advisors, the City's Municipal Advisor Rev. Date: _______ Page 1 of 42 ESC – CA Public
V 1/27/12

DIR Project Registration # _ _ _ _ _ _
ENGIE Services Project #: CN-001338
ENGIE Services Contract # R 3566

ENERGY SERVICES CONTRACT

This ENERGY SERVICES CONTRACT (this “Contract”) is made and entered into as of December 3, 2024 (the “Contract Effective Date”) by and between ENGIE Services U.S. Inc., a Delaware corporation, with California State Contractor’s License Number 995037 (“ENGIE Services U.S.”), and City of Salinas, a California charter city and municipal corporation (“City” and together with ENGIE Services U.S. the “Parties” and each of City and ENGIE Services U.S. a “Party”).

CONTRACT RECITALS
WHEREAS, City owns and/or operates certain public facilities specifically described in Attachment A I(the “Facilities”) and City wishes to reduce the Facilities’ energy consumption and costs and improve the Facilities’ energy quality and reliability; and
WHEREAS, ENGIE Services U.S. is a full-service energy services company with the technical capabilities to provide services to City including identifying supply-side and/or demand-side energy conservation measures (“ECMs”), engineering, procurement, construction management, installation, construction and training; and WHEREAS, ENGIE Services U.S. has identified potential energy and operational savings opportunities at City’s Facilities and estimated program costs to implement the ECMs and presented an overall potential energy cost and consumption savings for implementing the ECMs; and
WHEREAS, pursuant to California Government Code §4217.12, City held a regularly scheduled public hearing on November 19, 2024, of which two weeks advance public notice was given regarding this Contract and its subject matter, and
WHEREAS, City has determined that the anticipated cost to City to implement the ECMs will be less than the anticipated cost to City for thermal, electrical, and other energy, together with anticipated operational, maintenance and other costs, that would have been consumed by City in the absence of the ECMs in compliance with California Government Code §§4217.10 through 4217.18; and
WHEREAS, City has determined that entering into this energy services contract to implement the ECMs is in the best interests of City and that California Government Code §4217.10 et seq. allows City to enter into this Contract; and
WHEREAS, by adoption of Resolution No. ________ at the above-referenced meeting, City approved this Contract and authorized its execution.

NOW, THEREFORE, City and ENGIE Services U.S. hereby agree as follows:

ARTICLE 1. DEFINITIONS
For purposes of this Contract and its Attachments, defined terms will have the following meanings:
“Abnormally Severe Weather Conditions” means typhoons, hurricanes, tornadoes, lightning storms and other climatic and weather conditions that are abnormally severe for the period of time when, and the area where, such storms or conditions occur, in each case occurring at a property, the access roads to a property, or any other location where Work or Professional Services are then being performed. The term “Abnormally Severe Weather Conditions” specifically includes rain, snow or sleet in excess of one hundred fifty percent (150%) of the median level over the preceding ten (10) year period for the local geographic area and time of year in which such rain, snow or sleet accumulates.
“Act” is defined in ARTICLE 14.
“Affiliate” means any Person that directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise; ownership of fifty percent (50%) or more of the voting securities of another Person creates a rebuttable presumption that such Person controls such other Person.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 2 of 42 ESC – CA Public
V 02/20/2024

“Applicable Law” means any statute, law, treaty, building code, rule, regulation, ordinance, code, enactment, injunction, writ, order, decision, authorization, judgment, decree, protocol, procedure or other legal or regulatory determination or restriction by a court or Governmental Authority of competent jurisdiction, as may be in effect at the time the Work or Professional Services are undertaken.
“Applicable Permits” means all permits, approvals, inspections and certifications required to be issued by any Governmental Authority in connection with the Professional Services or the building, installation and start-up of the Work as of the Contract Effective Date.
“Application for Payment” means a monthly progress payment as described in Section 8.01 or an invoice for materials stored off-site as described in Section 8.02. “Arbitral Panel” is defined in Section 19.04(ii).
“Arbitration Rules” is defined in Section 19.04(ii).
“Attachment” means the following attachments to this Contract, each of which is an “Attachment:” Attachment A City’s Facilities and Existing Equipment
Attachment B Not used
Attachment C Scope of Work
Attachment D Scope of Monitoring Installation
Attachment E M&V Services
Attachment F Maintenance Services

“Beneficial Use” means when major new equipment and systems included in the Scope of Work are properly installed, inspected, operational, and are capable of being used for their intended purpose. Criteria for Beneficial Use of equipment / systems will be established as defined in Attachment C. “Business Day” means any calendar day other than a Saturday, a Sunday or a calendar day on which banking institutions in San Francisco, California, are authorized or obligated by law or executive order to be closed. “CEQA” means the California Environmental Quality Act, codified at California Public Resource Code § 21000 et seq., and the applicable state and local guidelines promulgated thereunder. “Certificate of Beneficial Use” means the certificate, issued by ENGIE Services U.S. to City and subcontractor(s), which identifies when City took Beneficial Use of the Work or any portion thereof. A Certificate of Beneficial Use may be executed for an individual subcontract, a specific building, a portion of the Work, or the entire Work. “Certificate of Final Completion” means the certificate issued by ENGIE Services U.S. to City, in accordance with Section 6.03. A Certificate of Final Completion may be executed for an individual subcontract, a specific building, a portion of the Work, or the entire Work.
“Certificate of Substantial Completion” means the certificate issued by ENGIE Services U.S. to City, in accordance with Section 6.02. A Certificate of Substantial Completion may be executed for an individual subcontract, a specific building, a portion of the Work, or the entire Work. “Change” means any addition to, deletion from, suspension of, or other modification to the quality, function, or intent of the Work or Professional Services.
“Change in Law” means any of the following events or circumstances occurring after the Contract Effective Date:
(i) an amendment, modification, interpretation, construction, enforcement standard, supplement or other change in or repeal of an existing Applicable Law; or (ii) an enactment or making of a new Applicable Law (excluding a change in any income or franchise tax law, worker’s compensation, payroll or withholding tax law, but including any change in law imposing new or additional tariffs or import duties). “Change Order” means a written document, signed by both ENGIE Services U.S. and City, authorizing ENGIE Services U.S. to perform a Change. The Change Order modifies the Scope of Work and should identify: (i) the applicable Change; (ii) any additional compensation to be paid to ENGIE Services U.S. to perform such Change; and (iii) any extension of time to complete the Project.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 3 of 42 ESC – CA Public
V 02/20/2024

“Construction” means any and all Work to be performed that involves construction, alteration, repair, installation or removal of equipment, addition to, subtraction from, improving, moving, wrecking or demolishing any building, parking facility, excavation, or other structure or improvement, or any part thereof. “Construction Documents” means the final designs, drawings, specifications and submittals that are used for Construction, and any Change Orders affecting those documents, that describe the technical requirements for the installation of all the materials and equipment pursuant to this Contract. “Construction Period” means the period beginning with the first day of the month in which material or equipment is first installed at the Facilities and continuing until the M&V Commencement Date. “Contract” is defined in the Preamble, and includes all Attachments hereto (all of which are incorporated herein by this reference), as well as all Change Orders, amendments, restatements, supplements and other modifications hereto.
“Contract Amount” means Four Million Seven Hundred Seventy-Four Thousand Twenty-Five Dollars ($4,774,025.00), which is inclusive of the mobilization payment, as set forth in Section 8.01, but exclusive of any fees for Professional Services.
“Contract Bonds” is defined in 0.
“Contract Effective Date” is defined in the Preamble.
“City” is defined in the Preamble.
“City Persons” means City, its agents, employees, subcontractors, architects, general contractors, lease/leaseback contractors or other Persons acting on behalf of City or for whom City is responsible. “Delay” means any circumstances involving delay, disruption, hindrance or interference affecting the time of performance of the Work or the Professional Services.
“Dispute” is defined in Section 19.02.
“DOE Guidelines” is defined in Section 13.01.
“ECM” is defined in the Recitals.
“EMS” means an energy management system.
“Energy Delivery Point” means, for each Generating Facility, the point at which Utility meter energy is being delivered, as designated in the Interconnection Agreement. “Energy Usage Data” is defined in Section 2.05.
“ENGIE Services U.S.” is defined in the Preamble.
“ENGIE Services U.S. Warranty” is defined in Section 9.01. “Event of Default” is defined in ARTICLE 16.
“Excusable Event” means an act, event, occurrence, condition or cause beyond the control of ENGIE Services U.S., including, but not limited to, the following: (i) any act or failure to act of, or other Delay caused by any City Person; (ii) the failure to obtain, or delay in obtaining, any Interconnection Agreement, Applicable Permit, or approval of a Governmental Authority (including due to failure to make timely inspection), or Delays caused by Changes and/or modifications to the Scope of Work required by a Governmental Authority, other than a failure caused by the action or inaction of ENGIE Services U.S.; (iii) changes in the design, scope or schedule of the Work required by any Governmental Authority or City Person; (iv) undisclosed or unforeseen conditions encountered at the Project Location, including discovery or existence of Hazardous Substances; (v) the failure to obtain, or delay in obtaining, approval of any Governmental Authority for design and installation of any portion of the Work, including any further or subsequent approval required with respect to any Change, other than a failure caused by the action or inaction of ENGIE Services U.S.; (vi) information provided to ENGIE Services U.S. by any City Person or Utility is later found to be inaccurate or incomplete; (vii) any Change in Law; (viii) Delay caused by pending arbitration; (ix) acts of God; (x) acts of the public enemy or terrorist acts; (xi) relocation or construction of transmission facilities or the shutdown of such facilities for the purpose of necessary repairs; (xii) work by Utility; (xiii) flood, earthquake, tornado, storm, fire, explosions, lightning, landslide or similar cataclysmic occurrence; (xiv) sabotage, vandalism, riots or civil disobedience; (xv) labor disputes or strikes; (xvi) labor or material shortages; delay in manufacturing and deliveries of equipment; supply chain disruptions; material price increases that equal or exceed fifteen percent (15%) in a six Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 4 of 42 ESC – CA Public
V 02/20/2024

(6) month period; (xvii) Abnormally Severe Weather Conditions; (xviii) an annual level of direct beam solar resource availability that is less than or equal to 90% of historical averages as measured by long-term weather data (minimum 5 years) collected at the applicable Facility and/or other reliable calibrated and appropriate weather station representative of such Facility; (xix) requirement by Utility that any Generating Facility discontinue operation; (xx) any action by a Governmental Authority that prevents or inhibits the Parties from carrying out their respective obligations under this Contract (including an unstayed order of a court or administrative agency having the effect of subjecting the sales of energy output to federal or state regulation of prices and/or services); (xxi) any Utility power outage at a Facility; or (xxii) regional epidemic or global pandemic. “Facilities” is defined in the Recitals.
“Final Completion” means the stage in the progress of the Work at which the Construction Work as identified in the Scope of Work, or a designated portion thereof, has been completed and commissioned, including completion of all Punch List items, completion of all required training, and delivery to City of the final documentation (as-built drawings, operation and maintenance manuals, warranty documentation and final submittals). “Generating Facility” means each of the photovoltaic, solar powered generating facilities located at the sites listed in Attachment E, and includes all associated photovoltaic panels, mounting assemblies, inverters, converters, metering, lighting fixtures, transformers, ballasts, disconnects, combiners, switches, wires and other equipment that may be necessary to connect the Generating Facility to the applicable Energy Delivery Point. “Governmental Authority” means any federal, state, regional, town, county, city, municipal or local government agency, department or regulatory body having jurisdiction under Applicable Law over the matter in question. “Greenhouse Gas” is defined in Section 13.01.
“Hazardous Substances” means (i) any hazardous, toxic, or dangerous wastes, substances, chemicals, constituents, contaminants, pollutants, and materials and any other carcinogenic, liquids, corrosive, ignitable, radioactive, reactive, toxic, or otherwise hazardous substances or mixtures (whether solids, liquids, gases) now or at any time subject to regulation, control, remediation, or otherwise addressed under Applicable Laws; (ii) any “hazardous substance” as defined by the Resource, Conservation and Recovery Act of 1976 (42 U.S.C. §6901 et seq.), as amended, and regulations promulgated thereunder; (iii) any “hazardous, toxic or dangerous waste, substance or material” specifically defined as such in 42 U.S.C. §9601 et seq.), as amended and regulations promulgated thereunder; and (iv) any hazardous, toxic or dangerous waste, substance, or material as defined in any so-called “superfund” or “superlien” law.
“Incentive Funds” is defined in Section 8.06.
“Installation” means the setting up, construction, and placement of any equipment or materials in the manner it will be operated, in accordance with the Scope of Work and in accordance with all Applicable Laws. “Instruments of Service” is defined in Section 10.01(c). “Interconnection Agreement” means the Interconnection Agreement to be entered into between City and the Utility with respect to the Generating Facilities.
“Interconnection Facilities” is defined in Section 18.02. “Interest” means interest calculated at the lesser of (i) the prime rate plus two percent (2%) or (ii) the maximum rate permitted by Applicable Law. The “prime rate” will be the “Prime Rate” of interest per annum for domestic banks as published in The Wall Street Journal in the “Money Rates” section. “Losses” is defined in Section 11.01.
“M&V Commencement Date” means the first day of the month immediately following the later of (i) ENGIE Services U.S.’s receipt of the fully signed Certificate of Final Completion, and (ii) ENGIE Services U.S.’s receipt of the full Contract Amount.
“M&V Services” (if any) are defined in Attachment E.
“Maintenance Services” (if any) are defined in Attachment F. “Measurement Period” means each one-year period following the M&V Commencement Date. “NEC” means the National Electric Code.
“Notice to Proceed” is defined in Section 2.04.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 5 of 42 ESC – CA Public
V 02/20/2024

“Party” and “Parties” are defined in the Preamble.
“Person” means any natural person, corporation, general partnership, limited partnership, limited liability company, proprietorship, other business organization, trust, union, association or Governmental Authority. “Professional Services” means professional services (such as Maintenance Services and M&V Services, if any) provided by ENGIE Services U.S. to City under this Contract. “Project” means the entirety of Work to be performed by ENGIE Services U.S. pursuant to the Scope of Work, and any Change Orders.
“Project Location” means the area or areas where the Project materials and equipment and any other energy related equipment, as described in the Scope of Work, are installed, and the general area where the Work is performed.
“Punch List” means, with respect to any portion of the Work, a list of minor corrective items which need to be completed or corrected in order to complete such portion of the Work, but do not impair City’s ability to beneficially operate and utilize such portion of the Work.
“Retained Items” is defined in Section 10.02.
“Retention” is defined in Section 8.03.
“Schedule of Values” is defined in Section 8.01.
“Scope of Work” means the Work set forth in Attachments C and D, as modified by any Change Order. “Substantial Completion” means the stage in the progress of the Work at which the Work, or a designated portion thereof, is sufficiently complete, in conformance with the Scope of Work, the Construction Documents and any Change Orders, so that City can take Beneficial Use thereof. “Surety” means the surety supplying the Contract Bonds, which must be an “admitted surety insurer,” as defined by California Code of Civil Procedure §995.120, authorized to do business in the State of California, and reasonably satisfactory to City.
“Utility” is defined in Section 18.02.
“Work” means the Work to be done by ENGIE Services U.S. pursuant to the Scope of Work, subject to any Change Orders.

ARTICLE 2. TERM; PERFORMANCE OF THE WORK
Section 2.01 Contract Term. The term of this Contract commences on the Contract Effective Date and ends on the last day on which Professional Services are provided, which end date shall be memorialized in writing acknowledged by City and ENGIE Services U.S., unless terminated earlier as provided in this Contract.

Section 2.02 Performance of Work. The Work and Professional Services to be performed hereunder will be provided in accordance with the terms of this Contract and the applicable standard of care. ENGIE Services U.S. will perform its obligations under this Contract (i) using the degree of skill and care that is required by current, good and sound professional procedures and practices, and (ii) in conformance with (x) generally accepted professional standards prevailing at the time the Work is performed, (y) the covenants, terms and conditions of this Contract, and (z) applicable laws, codes, rules and regulations, including, without limitation, the applicable provisions of the California Building Code.

ENGIE Services U.S. represents and warrants that it is fully experienced in projects of the nature and scope of the Work and Professional Services, and that it is properly qualified, licensed and equipped to supply and perform the Work and Professional Services. The Work completed herein will be subject to City’s general right of inspection and supervision to secure the satisfactory completion thereof in accordance with this Contract.

Section 2.03 Scope of Work.
(a) The Scope of Work may not exceed that set forth in Attachments C and D, except pursuant to a Change Order. (b) The Professional Services may not exceed those set forth in Attachments E, F and G, except pursuant to a Change Order.

Section 2.04 Notice to Proceed. Within ten (10) Business Days after City has closed the financing referenced in Section 2.07, City will issue to ENGIE Services U.S. a written Notice to Proceed (“Notice to Proceed”).

ENGIE Services U.S. will begin Work within thirty (30) calendar days after ENGIE Services U.S.’s receipt of the Notice to Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 6 of 42 ESC – CA Public
V 02/20/2024

Proceed. If City fails to issue the Notice to Proceed within twenty (20) calendar days after the financing has closed, ENGIE Services U.S. will be entitled to an equitable extension of time and/or an equitable adjustment in the Contract Amount as a result of such delay.

Section 2.05 Project Schedule. After receipt of the Notice to Proceed, ENGIE Services U.S. will develop, with input from City, a master project schedule using Microsoft Project®. City will have ten (10) Business Days following receipt of the project schedule to provide input. ENGIE Services U.S. will establish a weekly construction meeting at which time the Work of the previous week will be reviewed and a two-week look ahead will be coordinated. The project schedule will be updated monthly.

Section 2.06 City’s Energy and Operational Records and Data. If ENGIE Services U.S. requests, City will provide to ENGIE Services U.S., within thirty (30) calendar days after such request, City’s Energy Usage Data for the twelve (12) months preceding the Contract Effective Date, and will make commercially reasonable efforts to provide the Energy Usage Data for the thirty-six (36) months preceding the Contract Effective Date. “Energy Usage Data” means all of City’s records and complete data concerning energy usage, energy-related maintenance, and other related costs for the Facilities, and including, without limitation, utility records; occupancy information; descriptions of any past, present or anticipated changes in a building’s structure or its heating, cooling, lighting or other systems or energy requirements; descriptions of all energy consuming or saving equipment used in the Facilities; applicable building drawings, specifications, existing AutoCAD files, operation and maintenance manuals, and as-builts; bills and records relating to operation and maintenance of systems and equipment within the Facilities, and a description of operation and management procedures currently utilized. City agrees that ENGIE Services U.S. may rely on the foregoing data as being accurate in all respects. If ENGIE Services U.S. requests, City will also provide to ENGIE Services U.S., within thirty (30) calendar days after such request, any prior energy audits of the Facilities, and copies of City’s financial statements and records related to energy usage and operational costs for said time period at the Facilities, and will authorize its agents and employees to provide and freely discuss such records and to make themselves available for consultations and discussions with authorized representatives, employees, subcontractors, and agents of ENGIE Services U.S.

Section 2.07 Finance Contingency. It is acknowledged and agreed by the Parties that the continued existence of this Contract is expressly contingent upon City closing financing that will allow it to make the payments to ENGIE Services U.S. required by this Contract. City will have thirty (30) calendar days after the Contract Effective Date to close such financing. If the financing is not closed within this time, for any reason, either Party may by written notice to the other Party declare this Contract to be null and void; and the Contract will be null and void as of the other Party’s receipt of this notice; provided that City may not declare this Contract to be null and void after it has issued the Notice to Proceed. It is acknowledged and agreed that ENGIE Services U.S. will have no obligation to commence performance of the Work unless and until the financing has been closed.

Section 2.08 Proof of Financial Arrangements. Prior to the commencement of the Work, City will provide ENGIE Services U.S. proof that financial arrangements have been made to fulfill City’s obligations under this Contract.

City’s requirement to furnish such proof to ENGIE Services U.S. is a condition precedent to commencement of the Work.

After commencement of the Work, ENGIE Services U.S. may request such proof if (i) City fails to make payments to ENGIE Services U.S. as this Contract requires; (ii) a Change in the Work materially changes the Contract Amount; or (iii) ENGIE Services U.S. has other reasonable concerns regarding City’s ability to fulfill its payment obligations under this Contract when due. City will furnish such proof as a condition precedent to commencement or continuation of the Work or the portion of the Work affected by a material change. After City furnishes any such proof, City will not materially vary such financial arrangements without prior consent of ENGIE Services U.S. If City fails to provide ENGIE Services U.S. with such proof within ten (10) Business Days of receiving a demand from ENGIE Services U.S., ENGIE Services U.S. will be entitled to suspend its performance under this Contract until such proof is received.

ARTICLE 3. PROJECT IMPLEMENTATION - GENERAL
Section 3.01 Registrations, Permits and Approvals.
(a) Prior to issuing the Notice to Proceed, City must register the Project with the California Department of Industrial Relations, using Form PWC-100.
(b) ENGIE Services U.S. is responsible for obtaining (but not paying for) all Applicable Permits required under this Contract. City will cooperate fully with and assist ENGIE Services U.S. in obtaining Applicable Permits. (c) City is responsible for paying for all permit fees (including expedited plan check fees), inspections, and certifications costs, including any additional work that may be required by the Authority(ies) Having Jurisdiction as part of the permitting process.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 7 of 42 ESC – CA Public
V 02/20/2024

(d) City is responsible for hiring and paying for all inspectors, site testing (including geotechnical observations) and laboratory testing.
(e) City is responsible for paying for all utility interconnection(s) costs, including any additional work that may be required by the Utility(ies) as part of the Interconnection Agreement(s). (f) City is responsible for obtaining and paying for any annual operating permits and approvals or exemptions required by CEQA, as applicable.

Section 3.02 Coordination. City will be responsible for coordinating the activities of ENGIE Services U.S. and ENGIE Services U.S.’s subcontractors and suppliers with those of City Persons.

Section 3.03 Project Meetings/Status Updates. During the course of the Work, ENGIE Services U.S. will periodically meet with City to report on the general status and progress of the Work.

Section 3.04 Project Location Access. City hereby grants to ENGIE Services U.S., without cost to ENGIE Services U.S., all rights of ingress and egress at the Project Location, necessary for ENGIE Services U.S. to perform the Work and provide all services contemplated by this Contract. ENGIE Services U.S. will provide forty-eight-hour advance notice to City for access to any City Facilities. All persons entering the Project Location, including City and its employees and agents, must follow ENGIE Services U.S.’s safety procedures. ENGIE Services U.S. may (but is not required to) make transportation available to City and City’s employees and agents between and within Project Locations, which if offered will be deemed part of the Scope of Work and included in the Contract Amount.

Section 3.05 Consents; Cooperation. Whenever a Party’s consent, approval, satisfaction, or determination will be required or permitted under this Contract, and this Contract does not expressly state that the Party may act in its sole discretion, such consent, approval, satisfaction, or determination will not be unreasonably withheld, qualified, conditioned, or delayed, whether or not such a “reasonableness” standard is expressly stated in this Contract. Whenever a Party’s cooperation is required for the other Party to carry out its obligations hereunder, each Party agrees that it will act in good faith and reasonably in so cooperating with the other Party or its designated representatives or assignees or subcontractors. Each Party will furnish decisions, information, and approvals required by this Contract in a timely manner so as not to delay the other Party’s performance under this Contract.

Section 3.06 Independent Contractor. The Parties hereto agree that ENGIE Services U.S., and any agents and employees of ENGIE Services U.S., its subcontractors and/or consultants, is acting in an independent capacity in the performance of this Contract, and not as a public official, officer, employee, consultant, or agent of City for purposes of conflict of interest laws or any other Applicable Law.

ARTICLE 4. FINAL DESIGN PHASE – CONSTRUCTION DOCUMENTS / EQUIPMENT PROCUREMENT Section 4.01 General Provisions.
(a) After receipt of the Notice to Proceed, ENGIE Services U.S. will proceed with the preparation of any necessary designs, drawings, and specifications related to the Scope of Work. (b) After completion of the design phase and approval of the final plans and specifications by City, ENGIE Services U.S. will order the equipment identified in the Scope of Work, and any other necessary materials and supplies in order to meet the project schedule.
(c) City will designate a single-point representative with whom ENGIE Services U.S. may consult on a reasonable, regular basis and who is authorized to act on City’s behalf with respect to the Project design. City’s representative will render decisions in a timely manner with regard to any documents submitted by ENGIE Services U.S. and to other requests made by ENGIE Services U.S. in order to avoid delay in the orderly and sequential progress of ENGIE Services U.S.’s design services. (d) Within ten (10) Business Days after ENGIE Services U.S.’s request, City will:
(i) furnish all surveys or other information in City’s possession that describe the physical characteristics, legal limitations, and utility locations in and around the Project Location; (ii) disclose any prior environmental review documentation and all information in its possession concerning subsurface conditions, including without limitation the existence of any known Hazardous Substances, in or around the general area of the Project Location; Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 8 of 42 ESC – CA Public
V 02/20/2024

(iii) supply ENGIE Services U.S. with all relevant information in City’s possession, including any as- built drawings and photographs, of prior construction undertaken at the Project Location; (iv) obtain any and all easements, zoning variances, planning approvals, including any resolution of any environmental impact issues, and any other legal authorization regarding utilization of the Project Location for the execution of the Work; and
(v) obtain any and all title reports for those Project Locations reasonably requested by ENGIE Services U.S.
(e) All information furnished pursuant to this Section 4.01 will be supplied at City’s expense, and ENGIE Services U.S. will be entitled to rely upon the accuracy and completeness of all information provided. If ENGIE Services U.S. is adversely affected by any failure to provide, or delay in providing, the information specified in Section

4.01(d), ENGIE Services U.S. will be entitled to an equitable extension of time and/or an equitable adjustment in the Contract Amount.
(f) If any information disclosed under this Section 4.01 gives rise to a Change to the Work or an Excusable Event, ENGIE Services U.S. will notify City. The Parties will meet and confer with respect to those Changes, and ENGIE Services U.S. will be entitled to an equitable extension of time and/or an equitable adjustment in the Contract Amount. If the Parties, however, are unable to agree on whether City’s disclosed information gives rise to a Change to the Work or an Excusable Event, those disputes are to be resolved in accordance with ARTICLE

19. (g) ENGIE Services U.S. contemplates that it will not encounter any Hazardous Substances at the Project Location, except as has been disclosed as a pre-existing condition by City prior to the Contract Effective Date. However, any disclosure of Hazardous Substances that will affect the performance of the Work after the Contract Effective Date will constitute a valid basis for a Change Order.

Section 4.02 Review of Construction Documents. ENGIE Services U.S. will prepare and submit all drawings and specifications to City for review. City will review the documents and provide any comments in writing to ENGIE Services U.S. within ten (10) Business Days after receipt of the documents. ENGIE Services U.S. will incorporate appropriate City comments into the applicable drawings and specifications. ENGIE Services U.S. reserves the right to issue the drawings and specifications in phases to allow Construction to be performed in phases. If City fails to provide written comments within the ten (10) Business Day period, City will be deemed to have no comments regarding the documents.

Section 4.03 Permits. The respective obligations of the Parties in obtaining inspections and permits are as specified in Section 3.01. City will agree to any nonmaterial changes to the designs, drawings, and specifications required by any Governmental Authority. The Contract Amount must be increased by any additional cost incurred by ENGIE Services U.S. due to a Change required by a Governmental Authority and the time required to complete the Work must be increased by the number of additional days required to complete the Work because of a Change imposed by a Governmental Authority.

Section 4.04 Changes During Final Design Phase. If during the design phase any City Person requests Changes and/or modifications to the Work and/or an Excusable Event occurs, ENGIE Services U.S. will be entitled to an equitable extension of time and/or an equitable adjustment in the Contract Amount. Valid bases for additional compensation and/or time extension include, but are not limited to: (i) any City Person requests changes and/or modifications to the Project Scope of Work during the Project design phase; (ii) any City Person causes delays during ENGIE Services U.S.’s design work; (iii) the discovery of subsurface or other site conditions that were not reasonably anticipated or disclosed as of the Contract Effective Date; (iv) the discovery of Hazardous Substances at or impacting the Project Location; (v) changes to the Scope of Work required to obtain Applicable Permits; (vi) damage to any equipment or other Work installed by ENGIE Services U.S. caused by the act or omission of any City Person; (vii) changes and/or modifications to Scope of Work ordered by any Governmental Authority; and (viii) any other condition that would not reasonably have been anticipated by ENGIE Services U.S., that modifies and/or changes the Scope of Work, that increases the agreed-upon Contract Amount or increases the time needed to complete the Work.

ARTICLE 5. CONSTRUCTION PHASE
Section 5.01 General Provisions. Upon securing the requisite Applicable Permits pursuant to Section 3.01, and completion of Construction Documents, ENGIE Services U.S. will commence the construction of the Project in accordance with the Construction Documents. The construction will be performed in accordance with all Applicable Laws and Applicable Permits, by ENGIE Services U.S. and/or one or more licensed subcontractors qualified to perform the Work.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 9 of 42 ESC – CA Public
V 02/20/2024

Section 5.02 ENGIE Services U.S.’s Responsibilities during Construction Phase. (a) As an independent contractor to City, ENGIE Services U.S. will provide, or cause to be provided by its subcontractor(s), all labor, materials, equipment, tools, transportation, and other facilities and services necessary for the proper execution, construction, and completion of the Work. ENGIE Services U.S. will purchase in advance all necessary materials and supplies for the construction of the Project in order to assure the prompt and timely delivery of the completed Work pursuant to the project schedule. ENGIE Services U.S. will also be responsible for all means, methods, techniques, sequences, and procedures required by the Construction Documents.
(b) ENGIE Services U.S. will make commercially reasonable efforts to coordinate construction activities and perform the Work to minimize disruption to City’s operations at the Project Location. ENGIE Services U.S. will provide at least fifteen (15) calendar days’ written notice to City of any planned power outages that will be necessary for the construction. ENGIE Services U.S. will cooperate with City in scheduling such outages, and City agrees to provide its reasonable approval of any scheduled outage. (c) ENGIE Services U.S. will initiate and maintain a safety program in connection with its Construction of the Project. ENGIE Services U.S. will take reasonable precautions for the safety of, and will provide reasonable protection to prevent damage, injury, or loss to: (i) employees of ENGIE Services U.S. and subcontractors performing Work under this Contract; (ii) ENGIE Services U.S.’s property and other materials to be incorporated into the Project, under the care, custody, and control of ENGIE Services U.S. or its subcontractors; and (iii) other property at or adjacent to the Project Location not designated for removal, relocation, or replacement during the course of construction. ENGIE Services U.S. will not be responsible for City’s employees’ safety unless ENGIE Services U.S.’s negligence in the performance of its Work is the proximate cause of the employee’s injury.
(d) ENGIE Services U.S. will provide notice to City of scheduled test(s) of installed equipment, if any, and City and/or its designees will have the right to be present at any or all such tests conducted by ENGIE Services U.S., any subcontractor, and/or manufacturers of the equipment. (e) Pursuant to California Labor Code §6705, if the Work is a public work involving an estimated expenditure in excess of $25,000 and includes the excavation of any trench or trenches five (5) feet or more in depth, ENGIE Services U.S. will, in advance of excavation, submit to City and/or a registered civil or structural engineer, employed by City, to whom authority to accept has been delegated, a detailed plan showing the design of shoring, bracing, sloping, or other provisions to be made for worker protection from the hazard of caving ground during the excavation of such trench or trenches, which provisions will be no less effective than the current and applicable CAL-OSHA Construction Safety Orders. No excavation of such trench or trenches may be commenced until this detailed plan has been accepted by City or by the person to whom authority to accept has been delegated by City. Pursuant to California Labor Code §6705, nothing in this Section 5.02(e) imposes tort liability on City or any of its employees.
(f) Pursuant to California Public Contract Code §7104, if the Work is a public work involving digging trenches or other excavations that extend deeper than four (4) feet below the surface of the ground:
(i) ENGIE Services U.S. will promptly, and before the following conditions are disturbed, notify City, in writing, of any:
1) Material that ENGIE Services U.S. believes may be material that is hazardous waste, as defined in California Health and Safety Code §25117, that is required to be removed to a Class I, Class II, or Class III disposal site in accordance with provisions of existing law; 2) Subsurface or latent physical conditions at the site differing from those indicated by information about the site made available to ENGIE Services U.S. before the Contract Effective Date;
3) Unknown physical conditions at the site of any unusual nature, different materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for in this Contract.
(ii) City will promptly investigate the conditions and, if it finds that the conditions do materially so differ or do involve hazardous waste, and cause a decrease or increase in ENGIE Services U.S.’s cost of, or the time required for, performance of any part of the Work will issue a Change Order under the procedures described in this Contract.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 10 of 42 ESC – CA Public
V 02/20/2024

(iii) If a dispute arises between City and ENGIE Services U.S., whether the conditions materially differ, or involve hazardous waste, or cause a decrease or increase in ENGIE Services U.S.’s cost of, or time required for, performance of any part of the Work, ENGIE Services U.S. will not be excused from any scheduled completion date provided for by this Contract but will proceed with all Work to be performed under this Contract. ENGIE Services U.S. will retain any and all rights provided either by contract or by law which pertain to the resolution of disputes and protests between the Parties.

Section 5.03 City’s Responsibilities during Construction Phase. (a) City will designate a single-point representative authorized to act on City’s behalf with respect to Project construction and/or equipment installation. City may from time to time change the designated representative and will provide written notice to ENGIE Services U.S. of such change. Any independent review of the construction will be undertaken at City’s sole expense, and will be performed in a timely manner so as to not unreasonably delay the orderly progress of ENGIE Services U.S.’s Work. (b) City will provide a temporary staging area for ENGIE Services U.S., or its subcontractors, to use during the construction phase to store and assemble equipment for completion of the Work, if needed. City will provide sufficient space at the Facilities for the performance of the Work and the storage, installation, and operation of any equipment and materials and will take reasonable steps to protect any such equipment and materials from harm, theft and misuse. City will provide access to the Facilities, including parking permits and identification tags, for ENGIE Services U.S. and subcontractors to perform the Work during regular business hours, or such other reasonable hours as may be requested by ENGIE Services U.S. and acceptable to City. City will also provide a readily available security escort to unlock and lock doors. City will not unreasonably restrict ENGIE Services U.S.’s access to Facilities to make emergency repairs or corrections as ENGIE Services U.S. may determine are needed.
(c) City will maintain the portion of the Project Location that is not directly affected by ENGIE Services U.S.’s Work.

City will keep the designated Project Location and staging area for the Project free of obstructions, waste, and materials within the control of City.
(d) City will obtain any required environmental clearance from, and any inspections, including special inspections, or permits required by, any federal, state, and local jurisdictions, including but not limited to any clearances required under CEQA, prior to scheduled construction start date. (e) City will prepare the Project Location for construction, including, but not limited to, clearance of all above and below ground obstructions, such as vegetation, buildings, appurtenances, and utilities. Subsurface conditions and obstacles (buried pipe, utilities, etc.) that are not otherwise previously and accurately documented by City and such documentation made available to ENGIE Services U.S. are the responsibility of City. If ENGIE Services U.S. encounters such unforeseen conditions in the performance of the Work, ENGIE Services U.S. will be entitled to an equitable extension of time and/or an equitable adjustment in the Contract Amount. (f) City will remove any Hazardous Substances either known to City prior to the commencement of the Work or encountered by ENGIE Services U.S. during the construction of the Project, if necessary in order for the Work to progress safely, that were not knowingly released or brought to the site by ENGIE Services U.S. ENGIE Services U.S. will respond to the discovery of Hazardous Substances at or around the Project Location during the course of ENGIE Services U.S.’s construction in accordance with Section 5.06. (g) City will coordinate the Work to be performed by ENGIE Services U.S. with its own operations and with any other construction project that is ongoing at or around the Project Location, with the exception that ENGIE Services U.S. will coordinate the Interconnection Facilities work, if any, which will be performed by the local utility.
(h) City will, and will cause City Persons to, allow ENGIE Services U.S. and its subcontractors access to and reasonable use of necessary quantities of City’s water and other utilities, including electrical power, as needed for the construction of the Work, at no cost to ENGIE Services U.S. (i) City will, and will cause City Persons to, provide ENGIE Services U.S. and/or its subcontractors with reasonable access to the Project Location to perform the Work, including without limitation and at no extra cost to ENGIE Services U.S., access to perform Work on Saturdays, Sundays, legal holidays, and non-regular working hours. (j) City will also do the following:

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 11 of 42 ESC – CA Public
V 02/20/2024

(i) Attend the regularly scheduled progress meetings. Participate as needed regarding scheduling of the Work.
(ii) When requested by ENGIE Services U.S., participate in the job inspection walk-through with ENGIE Services U.S. to determine Substantial Completion or Beneficial Use of major equipment, and will sign the Certificate(s) of Substantial Completion. (iii) Perform a final walk-through of the Project and, upon receipt of the operation and maintenance manuals and as-built drawings, sign the Certificate of Final Completion for the related Work. (iv) Upon the completion of the entire Scope of Work listed in Attachment C, including training, if any, and submission of close-out documents, sign a Certificate of Final Completion for the entire Project.

Section 5.04 Changes.
(a) Change Orders Generally. Changes and/or modifications to the Scope of Work will be authorized by a written Change Order. The Change Order should state the change and/or modification to the Scope of Work, any additional compensation to be paid, and any applicable extension of time. ENGIE Services U.S. may, at its election, suspend performance of that portion of the Work affected by any proposed Change until a written Change Order with respect to the Changed or modified Work has been signed by both City and ENGIE Services U.S. ENGIE Services U.S. will use its reasonable efforts to continue other portions of the Work not affected or impacted by such proposed Change until such time as the applicable Change Order is resolved. In addition, if any City Person requests a proposal from ENGIE Services U.S. for a Change and City subsequently elects to not proceed with such Change, City agrees that a Change Order will be issued to reimburse ENGIE Services U.S. for any costs reasonably incurred for estimating services, design services, and/or preparation of the proposal requested by such City Person.
(b) Change Orders Requiring Additional Compensation. If during construction any City Person requests changes and/or modifications to the Work, and/or there are Excusable Events, City will pay the extra costs caused by such modifications and/or changes and/or Excusable Event and ENGIE Services U.S. will be entitled to additional compensation for the following reasons, that include, but are not limited to: (i) any City Person requests changes and/or modifications to the Scope of Work during the construction phase of the Project; (ii) any City Person causes delays during ENGIE Services U.S.’s construction work; (iii) discovery of subsurface or other site conditions that were not reasonably anticipated or disclosed prior to the commencement of the Work; (iv) discovery of Hazardous Substances at or impacting the Project Location; (v) changes and/or modifications to the Scope of Work required to obtain required permits and approvals as required by any Governmental Authority; (vi) damage to any equipment or other Work installed by ENGIE Services U.S. caused by the act or omission of any City Person; (vii) changes and/or modifications to Scope of Work ordered by any Governmental Authority; and (viii) any other condition that would not reasonably have been anticipated by ENGIE Services U.S., that modifies and/or changes the Scope of Work or the Contract Amount. (c) Change Orders Requiring Additional Time. If during construction any City Person requests changes and/or modifications to the Scope of Work and/or an Excusable Event occurs, the Parties agree that an equitable extension of time to complete the Work may be necessary. Prior to any extension of time, ENGIE Services U.S. will use commercially reasonable efforts to make up such delays, including authorizing overtime payments; provided that City has issued a Change Order authorizing any such overtime payment and has specifically agreed to pay all costs, including administrative charges and expenses, associated therewith. (d) Method for Adjustment. An increase or decrease in the Contract Amount and/or time resulting from a Change in the Work and/or Excusable Event must be determined by one or more of the following methods:
(i) unit prices set forth in this Contract or as subsequently agreed; (ii) a mutually accepted, itemized lump sum; or
(iii) costs calculated on a basis agreed upon by City and ENGIE Services U.S. plus a fee (either a lump sum or a fee based on a percentage of cost) to which the Parties agree. (e) Disagreements. If there is a disagreement between City and ENGIE Services U.S. as to whether ENGIE Services U.S. is entitled to an equitable extension of time and/or an equitable adjustment in the Contract Amount, those disputes are to be resolved in accordance with the provisions of ARTICLE 19. Pending the resolution of any such dispute, ENGIE Services U.S. may suspend Work.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 12 of 42 ESC – CA Public
V 02/20/2024

Section 5.05 Minor Changes to Scope of Work. ENGIE Services U.S. has the authority to make minor changes that do not change the total Contract Amount and are consistent with the intent of the Construction Documents, with prior notice to City. ENGIE Services U.S. will either promptly inform City, in writing, of any minor changes made during the implementation of the Project, or make available to City at the site a set of as-built drawings that will be kept current to show those minor changes.

Section 5.06 Hazardous Substances.
(a) ENGIE Services U.S. will promptly provide written notice to City if ENGIE Services U.S. observes any Hazardous Substance, as defined herein, at or around the Facilities during the course of construction or installation of any equipment which have not been addressed as part of the Scope of Work. ENGIE Services U.S. will have no obligation to investigate the Facilities for the presence of Hazardous Substances prior to commencement of the Work unless otherwise specified in the Scope of Work. City will be solely responsible for investigating Hazardous Substances and determining the appropriate removal and remediation measures with respect to the Hazardous Substances. City will comply with all Applicable Laws with respect to the identification, removal and proper disposal of any Hazardous Substances known or discovered at or around the Facilities, and in such connection will execute all generator manifests with respect thereto. ENGIE Services U.S. will comply with all Applicable Laws in connection with the use, handling, and disposal of any Hazardous Substances in the performance of its Work. In connection with the foregoing, City will provide ENGIE Services U.S., within ten (10) Business Days after the Contract Effective Date, a written statement that represents and warrants (i) whether or not, to its knowledge, there are Hazardous Substances either on or within the walls, ceiling or other structural components, or otherwise located in the Project Location, including, but not limited to, asbestos-containing materials; (ii) whether or not, to its knowledge, conditions or situations exist at the Facilities which are subject to special precautions or equipment required by federal, state, or local health or safety regulations; and (iii) whether or not, to its knowledge, there are unsafe working conditions at the Facilities. (b) City will indemnify, defend, and hold ENGIE Services U.S. harmless from and against any and all Losses that in any way result from, or arise under, such City owned or generated Hazardous Substances, except for liabilities to the extent due to the negligence or willful misconduct of ENGIE Services U.S., or its subcontractors, agents or representatives, in the handling, disturbance or release of Hazardous Substances. This indemnification will survive any termination of this Contract.

Section 5.07 Pre-Existing Conditions. Certain pre-existing conditions may be present within the Facilities that (i) are non-compliant with applicable codes, (ii) may become non-compliant with applicable codes upon completion of ENGIE Services U.S.’s Work, (iii) may cause ENGIE Services U.S.’s completed Work to be non-compliant with applicable codes, (iv) may prevent City from realizing the full benefits of ENGIE Services U.S.’s Work, (v) may present a safety or equipment hazard, or (vi) are otherwise outside the scope of ENGIE Services U.S.’s Work. Regardless of whether or not such conditions may have been readily identifiable prior to the commencement of Work, ENGIE Services U.S. will not be responsible for repairing such pre-existing conditions unless such responsibility is expressly provided for in the Scope of Work or an approved Change Order. ENGIE Services U.S., in its sole discretion, may determine whether it will bring said pre-existing conditions into compliance by agreeing to execute a Change Order with City for additional compensation and, if appropriate, an extension of time.

ARTICLE 6. PROJECT COMPLETION
Section 6.01 Occupancy or Use of Work. City may take occupancy or use of any completed or partially completed portion of the Work at any stage, whether or not such portion is Substantially Complete, provided that such occupancy or use is authorized by Governmental Authority and, provided further, that City assumes responsibility for the security of, insurance coverage for, maintenance, utilities for, and damage to or destruction of such portion of the Work. If Substantial Completion of a portion of the Construction Work is not yet achieved, occupancy or use of such portion of the Work will not commence until City’s insurance company has consented to such occupancy or use. When occupancy or use of a portion of the Work occurs before Substantial Completion of such portion, City and ENGIE Services U.S. will accept in writing the responsibilities assigned to each of them for title to materials and equipment, payments and Retention with respect to such portion.

Section 6.02 Substantial Completion. When ENGIE Services U.S. considers the Work, or any portion thereof, to be Substantially Complete, ENGIE Services U.S. will supply to City a written Certificate of Substantial Completion with respect to such portion of the Work, including a Punch List of items and the time for their completion or correction. City will within ten (10) Business Days of receipt of the Certificate of Substantial Completion, review such portion of the Work for the sole purpose of determining that it is Substantially Complete, and sign and return the Certificate of Substantial Completion to ENGIE Services U.S. acknowledging and agreeing: (i) that such portion of the Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 13 of 42 ESC – CA Public
V 02/20/2024

Work is Substantially Complete; (ii) the date of such Substantial Completion; (iii) that from the date of Substantial Completion City will assume responsibility for the security of, insurance coverage for, maintenance, utilities for, and damage to or destruction of such portion of the Work. City agrees that approval of a Certificate of Substantial Completion will not be unreasonably withheld, delayed or conditioned.

Section 6.03 Final Completion. When ENGIE Services U.S. considers the entirety of the Work to be Finally Complete, ENGIE Services U.S. will notify City that the Work is fully complete and ready for final inspection. City will inspect the Work to verify the status of Final Completion within ten (10) Business Days after its receipt of ENGIE Services U.S.’s certification that the Work is complete. If City does not verify the Final Completion of the Work within this period, the Work will be deemed fully completed. When City agrees that the Work is fully completed, ENGIE Services U.S. will issue a Certificate of Final Completion, which City must sign. City agrees that its signing of the Certificate of Final Completion will not be unreasonably withheld, delayed or conditioned. At that time, City will pay ENGIE Services U.S. any remaining Contract Amount due and any outstanding Retention being withheld by City, in accordance with Section 8.03. City may give ENGIE Services U.S. written notice of acceptance of the Work and will promptly record a notice of completion or notice of acceptance in the office of the county recorder in accordance with California Civil Code §9204.

Section 6.04 Transfer of Title; Risk of Loss. Title to all or a portion of the Project equipment, supplies and other components of the Construction Work will pass to City upon the earlier of (i) the date payment for such Project equipment, supplies or components is made by City or (ii) the date any such items are incorporated into the Project Location. ENGIE Services U.S. will retain care, custody and control and risk of loss of such Project equipment, supplies and components until the earlier of Beneficial Use or Substantial Completion. Transfer of title to City will in no way affect City’s and ENGIE Services U.S.’s rights and obligations as set forth in other provisions of this Contract. Except as provided in this Section 6.04, after the date of Substantial Completion, ENGIE Services U.S. will have no further obligations or liabilities to City arising out of or relating to this Contract, except for the obligation to complete any Punch List items, the obligation to perform any warranty service under Section 9.01, and obligations which, pursuant to their terms, survive the termination of this Contract.

ARTICLE 7. SUBCONTRACTORS
Section 7.01 Authority to Subcontract. ENGIE Services U.S. may delegate its duties and performance under this Contract, and has the right to enter into agreements with any subcontractors and other service or material providers as ENGIE Services U.S. may select in its discretion to perform the Work. ENGIE Services U.S. will not be required to enter into any subcontracts with parties whom ENGIE Services U.S. has not selected or subcontractors whom ENGIE Services U.S. has objection to using.

Section 7.02 Prompt Payment of Subcontractors. ENGIE Services U.S. will promptly pay, when due, all amounts payable for labor and materials furnished in the performance of this Contract and will endeavor to prevent any lien or other claim under any provision of Applicable Law from arising against any City property, against ENGIE Services U.S.’s rights to payments hereunder, or against City.

Section 7.03 Relationship. Nothing in this Contract constitutes or will be deemed to constitute a contractual relationship between any of ENGIE Services U.S.’s subcontractors and City, or any obligation on the part of City to pay any sums to any of ENGIE Services U.S.’s subcontractors.

Section 7.04 Prevailing Wages. To the extent required by California Labor Code §1771 or other Applicable Law, all employees of ENGIE Services U.S. and ENGIE Services U.S.’s subcontractors performing Work at the Project Location will be paid the per diem prevailing wages for the employee’s job classification in the locality in which the Work is performed. In accordance with California Labor Code §§1773 and 1773.2, City will obtain from the Director of Industrial Relations the general prevailing rate of per diem wages and the general prevailing rate for holiday and overtime work, in the locality in which the Work is to be performed, for each craft, classification or type of worker needed to execute the Work at the Project Location, and will cause copies of such determinations to be kept on file at its principal office and posted at each Project Location. City will promptly notify ENGIE Services U.S. of any changes to any such prevailing wage determination.

ARTICLE 8. PAYMENTS
Section 8.01 Monthly Progress Payments. Promptly after the Contract Effective Date, ENGIE Services U.S. will invoice City for a mobilization payment in the amount of twenty percent (20%) of the Contract Amount. This amount must be paid to ENGIE Services U.S. within thirty (30) calendar days after City’s receipt of an invoice therefor. In addition, as the Work progresses, ENGIE Services U.S. will submit to City its applications for monthly payments based on the progress made on the Project through the date on which ENGIE Services U.S. submits such Application for Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 14 of 42 ESC – CA Public
V 02/20/2024

Payment. Within twenty-one (21) calendar days from the Contract Effective Date, ENGIE Services U.S. will prepare and submit to City a schedule of values apportioned to the various divisions or phases of the Work (“Schedule of Values”).

Each line item contained in the Schedule of Values will be assigned a value such that the total of all items equals the Contract Amount. All Applications for Payment will be in accordance with the Schedule of Values.

Section 8.02 Materials Stored Off-Site. In addition to the monthly progress payments specified in Section

8.01, ENGIE Services U.S. may invoice City for materials purchased in advance and not stored at the Project Location.

Each such Application for Payment will be accompanied by proof of off-site material purchases, evidence that the materials have been delivered to a warehouse reasonably acceptable to City and evidence of appropriate insurance coverage. ENGIE Services U.S. will furnish to City written consent from the Surety approving the advance payment for materials stored off site. City will pre-pay one hundred percent (100%) of ENGIE Services U.S.’s Application for Payment for the materials delivered, less Retention as indicated in Section 8.03. ENGIE Services U.S. will protect stored materials from damage. Damaged materials, even though paid for, will not be incorporated into the Work.

Section 8.03 Retention. City, or its designee, must approve and pay each Application for Payment, less a retention amount (“Retention”) of five percent (5%) in accordance with California Public Contract Code §7201, within thirty (30) calendar days after its receipt of the Application for Payment; provided, however, that there is to be no Retention with respect to the mobilization payment. A failure to approve and pay an Application for Payment in a timely manner is a material default by City under this Contract. City may make progress payments in full without Retention at any time after fifty percent (50%) of the Work has been completed, as permitted pursuant to California Public Contract Code §9203. Upon Substantial Completion, the Retention must be reduced to two percent (2%) of the Contract Amount, and ENGIE Services U.S. may invoice and City will pay this amount. City will pay ENGIE Services U.S. the remaining two percent (2%) Retention amount upon achieving Final Completion. In lieu of Retention being held by City, ENGIE Services U.S. may request that securities be substituted or Retention be held in an escrow account pursuant to California Public Contract Code §22300.

Section 8.04 Final Payment. The final Application for Payment may be submitted after Final Completion.

The final payment amount must also include payment to ENGIE Services U.S. for any remaining Retention withheld by City.

Section 8.05 Disputed Invoices/Late Payments. City may in good faith dispute any Application for Payment, or part thereof, within fifteen (15) calendar days after the date the Application for Payment was received by City. If City disputes all or a portion of any Application for Payment, City will pay the undisputed portion when due and provide ENGIE Services U.S. a written notice and explanation of the basis for the dispute and the amount of the Application for Payment being withheld related to the dispute. City will be deemed to have waived and released any dispute known to it with respect to an Application for Payment if such notice and written explanation is not provided within fifteen (15) calendar days after the date the Application for Payment was received by City. If any amount disputed by City is finally determined to be due to ENGIE Services U.S., either by agreement between the Parties or as a result of dispute resolution pursuant to ARTICLE 19 below, it will be paid to ENGIE Services U.S. within ten (10) Business Days after such final determination, plus Interest from the date billed or claimed until such amount is paid. . Late payments will accrue Interest from the due date until paid.

Section 8.06 Rebate Programs. ENGIE Services U.S. makes no guarantee that City will receive funding from any energy efficiency rebate, incentive, and/or loan program(s), including the Inflation Reduction Act (collectively, “Incentive Funds), or any portion thereof; ENGIE Services U.S. expressly disclaims any liability for City’s failure to receive any portion of the Incentive Funds, and City acknowledges and agrees that ENGIE Services U.S. will have no liability for any failure to receive all or any portion of the Incentive Funds. Procurement, or lack thereof, of the Incentive Funds will not alter the Contract Amount of this Contract or the payment timeline associated with payment of the Contract Amount.

ARTICLE 9. WARRANTY / LIMITATION OF LIABILITY
EXCEPT FOR THE WARRANTIES PROVIDED IN THIS ARTICLE 9, ENGIE SERVICES U.S. MAKES NO WARRANTIES

IN CONNECTION WITH THE WORK PROVIDED UNDER THIS CONTRACT, WHETHER EXPRESS OR IMPLIED IN

LAW, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY IMPLIED WARRANTIES AGAINST INTELLECTUAL PROPERT Y INFRINGEMENT. CITY WILL HAVE NO REMEDIES AGAINST EITHER ENGIE SERVICES U.S. OR ANY ENGIE SERVICES U.S. SUBCONTRACTOR

OR VENDOR FOR ANY DEFECTIVE MATERIALS OR EQUIPMENT INSTALLED, EXCEPT FOR THE REPAIR OR

REPLACEMENT OF SUCH MATERIALS OR EQUIPMENT IN ACCO RDANCE WITH THE WARRANTIES INDICATED BELOW. SPECIFICALLY, NEITHER ENGIE SERVICES U.S., NOR ENGIE SERVICES U.S.’s SUBCONTRACTORS OR Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 15 of 42 ESC – CA Public
V 02/20/2024

VENDORS, WILL BE LIABLE TO CITY FOR LOSS OF PROFITS OR FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY.

Section 9.01 ENGIE Services U.S. warrants to City that material and equipment furnished under this Contract will be of good quality and new, unless otherwise specifically required or permitted by this Contract. ENGIE Services U.S. further warrants that its workmanship provided hereunder, including its subcontractors’ workmanship, will be free of material defects for a period of one (1) year from the date of Substantial Completion as indicated on the executed Certificate of Substantial Completion, or the date of Beneficial Use as indicated on the executed Certificate of Beneficial Use (“ENGIE Services U.S. Warranty”). Notwithstanding the preceding sentence, the date the ENGIE Services U.S. Warranty commences with respect to a specific piece or pieces of equipment may be further defined in Attachment C.

Section 9.02 Equipment and material warranties that exceed the ENGIE Services U.S. Warranty period will be provided directly by the equipment and/or material manufacturers and such warranties will be assigned directly to City, after the one (1) year period. During the ENGIE Services U.S. Warranty period, ENGIE Services U.S. will be City’s agent in working with the equipment and material manufacturers in resolving any equipment or material warranty issues.

If any material defects are discovered within the ENGIE Services U.S. Warranty period, ENGIE Services U.S., or ENGIE Services U.S.’s subcontractors, will correct its defects, and/or ENGIE Services U.S. will work with the equipment or material manufacturer as City’s agent to facilitate the manufacturer’s correction of the equipment or material defect. Such warranty services will be performed in a timely manner and at the reasonable convenience of City. If a warranty issue arises on any equipment or material installed after the ENGIE Services U.S. Warranty period, and the equipment or material has a warranty period that exceeds one (1) year, City will contact the manufacturer directly to resolve such warranty issues and City acknowledges that the manufacturer will have sole responsibility for such issues.

Section 9.03 The warranties in this ARTICLE 9 expressly exclude any remedy for damage or defect caused by improper or inadequate maintenance of the installed equipment by service providers other than ENGIE Services U.S. or its subcontractors, corrosion, erosion, deterioration, abuse, modifications or repairs not performed by an authorized ENGIE Services U.S. subcontractor, improper use or operation, or normal wear and tear under normal usage. ENGIE Services U.S. shall not be responsible for the cost of correcting a breach of warranty or defect to the extent that the manufacturer of the equipment that is the subject of a warranty hereunder does not honor its equipment warranty as a result of its termination of operations, insolvency, liquidation, bankruptcy or similar occurrence. Unless otherwise specified, all warranties hereunder, including without limitation those for defects, whether latent or patent, in design, engineering, or construction, will terminate one (1) year from the date of Substantial Completion or Beneficial Use; and thereafter, ENGIE Services U.S. will have no liability for breach of any warranty or for any latent or patent defect of any kind pursuant to California Code of Civil Procedure §§337.1 and 337.15.

ARTICLE 10. OWNERSHIP OF CERTAIN PROPERTY AND EXISTING EQUIPMENT Section 10.01 Ownership of Certain Proprietary Property Rights. (a) Ownership: Except as expressly provided in this Contract, City will not acquire, by virtue of this Contract, any rights or interest in any formulas, patterns, devices, software, inventions or processes, copyrights, patents, trade secrets, other intellectual property rights, or similar items of property which are or may be used in connection with the Work. ENGIE Services U.S. will own all inventions, improvements, technical data, models, processes, methods, and information and all other work products developed or used in connection with the Work, including all intellectual property rights therein.
(b) License: Solely in connection with the Facilities, ENGIE Services U.S. grants to City a limited, perpetual, royalty- free, non-transferrable license for any ENGIE Services U.S. intellectual property rights necessary for City to operate, maintain, and repair any modifications or additions to Facilities, or equipment delivered, as a part of the Work.
(c) Ownership and Use of Instruments of Service. All data, reports, proposals, plans, specifications, flow sheets, drawings, and other products of the Work (the “Instruments of Service”) furnished directly or indirectly, in writing or otherwise, to City by ENGIE Services U.S. under this Contract will remain ENGIE Services U.S.’s property and may be used by City only for the Work. ENGIE Services U.S. will be deemed the author and owner of such Instruments of Service and will retain all common law, statutory and other reserved rights, including copyrights.

The Instruments of Service may not be used by City or any City Person for future additions or alterations to the Project or for other projects, without the prior written agreement of ENGIE Services U.S. Any unauthorized use of the Instruments of Service will be at City’s sole risk and without liability to ENGIE Services U.S. If City uses the Instruments of Service for implementation purposes, including additions to or completion of the Project, without the written permission of ENGIE Services U.S., City agrees to waive and release, and indemnify and Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 16 of 42 ESC – CA Public
V 02/20/2024

hold harmless, ENGIE Services U.S., its subcontractors, and their directors, employees, subcontractors, and agents from any and all Losses associated with or resulting from such use.

Section 10.02 Ownership of any Existing Equipment. Ownership of any equipment and materials presently existing at the Facilities on the Contract Effective Date will remain the property of City even if such equipment or materials are replaced or their operation made unnecessary by work performed by ENGIE Services U.S. If applicable, ENGIE Services U.S. will advise City in writing of all equipment and materials that will be replaced at the Facilities and City will, within five (5) Business Days of ENGIE Services U.S.’s notice, designate in writing to ENGIE Services U.S. which replaced equipment and materials should not be disposed of off-site by ENGIE Services U.S. (the “Retained Items”). City will be responsible for and designate the location and storage for the Retained Items. ENGIE Services U.S. will be responsible for the disposal of replaced equipment and materials, except for the Retained Items. ENGIE Services U.S. will use commercially reasonable efforts to remove the Retained Items in such a manner as to avoid damage thereto, or if it is unreasonable to avoid damage altogether, to minimize the damage done. ENGIE Services U.S. will not be responsible for the removal and/or disposal of any Hazardous Substances except as required by the Scope of Work.

ARTICLE 11. INDEMNIFICATION / LIMITATION ON LIABILITY
Section 11.01 Indemnification. To the fullest extent permitted by Applicable Laws, each Party will indemnify, hold harmless, release and defend the other Party, its officers, employees, and agents from and against any and all actions, claims, demands, damages, disabilities, fines, penalties, losses, costs, expenses (including consultants’ and attorneys’ fees and other defense expenses) and liabilities of any nature (“Losses”) that may be asserted by any person or entity, to the extent arising out of that Party’s performance or activities hereunder, including the performance or activities of other persons employed or utilized by that Party in the performance of this Contract, excepting liabilities to the extent due to the negligence or willful misconduct of the indemnified party. This indemnification obligation will continue to bind the Parties after the termination of this Contract.

Section 11.02 Waiver of Consequential Damages and Limitation of Liability. The liability of a defaulting Party will be limited to direct, actual damages. Neither Party shall be liable to the other Party for any special, indirect, incidental or consequential damages whatsoever, whether in contract, tort (including negligence) or strict liability, including, but not limited to, operational losses in the performance of business such as lost profits or revenues or any increase in operating expense. Additionally, each Party waives any claims for negligence against the other Party to the fullest extent permitted by Applicable Law.

ARTICLE 12. INSURANCE / BONDS
Section 12.01 ENGIE Services U.S. Insurance. ENGIE Services U.S. will maintain, or cause to be maintained, for the duration of this Contract, the insurance coverage outlined in (a) through (f) below, and all such other insurance as required by Applicable Law. Evidence of coverage will be provided to City via an insurance certificate. (a) Workers’ Compensation/Employers Liability for states in which ENGIE Services U.S. is not a qualified self- insured. Limits as follows:
* Workers’ Compensation: Statutory
* Employers Liability: Bodily Injury by accident $1,000,000 each accident Bodily Injury by disease $1,000,000 each employee
Bodily Injury by disease $1,000,000 policy limit
(b) Commercial General Liability insurance with limits of:
* $2,000,000 each occurrence for Bodily Injury and Property Damage * $4,000,000 General Aggregate - other than Products/Completed Operations * $2,000,000 Products/Completed Operations Aggregate
* $2,000,000 Personal and Advertising Injury
* $ 100,000 Damage to premises rented to ENGIE Services U.S.

Coverage to be written on an occurrence form. Coverage to be at least as broad as ISO form CG 0001 (04/13) or its equivalent forms, without endorsements that limit the policy terms with respect to:
(1) provisions for severability of interest or (2) explosion, collapse, underground hazard. (c) Auto Liability insurance for owned, hired and non-owned vehicles with limits of $1,000,000 per accident.

Coverage to be written on an occurrence form.
(d) Professional Liability insurance with limits of:

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 17 of 42 ESC – CA Public
V 02/20/2024

* $1,000,000 per occurrence
* $1,000,000 aggregate

Coverage to be written on a claims-made form.
(e) Umbrella/Excess Liability Insurance. Limits as follows:
* $1,000,000 each occurrence
* $1,000,000 aggregate

Coverage terms and limits to apply excess of the per occurrence and/or aggregate limits provided for Commercial General Liability and Professional Liability written on a claims made form. Coverage terms and limits also to apply in excess of those required for Employers Liability and Auto Liability written on an occurrence form.
(f) Policy Endorsements.
*
* The insurance provided for Commercial General Liability and Auto Liability above will:
(i) include City as an additional insured with respect to Work performed under this Contract, but only to the extent of the indemnity obligations contained in this Contract, and
(ii) provide that the insurance is primary coverage with respect to all insureds, but only to the extent of the indemnity obligations contained in this Contract.

Section 12.02 Performance and Payment Bonds. Prior to commencing Work under this Contract, ENGIE Services U.S. will furnish a performance bond, in an amount equal to one hundred percent (100%) of the Contract Amount, and a payment bond to guarantee payment of all claims for labor and materials furnished, in an amount equal to one hundred percent (100%) of the Contract Amount (collectively, the “Contract Bonds”). The Contract Bonds shall be maintained in full force and effect until Final Completion; provided that upon the achievement of Substantial Completion, the value of the Contract Bonds shall be reduced to the value of the Retainage being withheld by City. The Contract Bonds are not being furnished to cover the performance of any Professional Services, including any energy guaranty or guaranteed savings under this Contract, nor to cover any equipment and/or material manufacturer’s warranty or other third-party warranty being assigned to City. City agrees that upon Final Completion and expiration of the ENGIE Services U.S. Warranty period set forth in Article 9 herein, the Contract Bonds shall be returned to ENGIE Services U.S., and all obligations arising thereunder are terminated and the surety company that issued the bond is forever discharged from any and all liabilities of whatever nature arising in connection with the Contract Bonds.

ARTICLE 13. DOE GUIDELINES; ENERGY POLICY ACT
Section 13.01 As authorized by §1605(b) of the Energy Policy Act of 1992 (Pub. L. No. 102-486) the U.S.

Department of Energy has issued, and may issue in the future, guidelines for the voluntary reporting of Greenhouse Gas emissions (“DOE Guidelines”). “Greenhouse Gases” means those gases and other particles as defined in the DOE Guidelines. City hereby assigns and transfers to ENGIE Services U.S., and its Affiliates and assigns, any Greenhouse Gas emission reduction credits that result from the Work.

ARTICLE 14. MUNICIPAL ADVISOR / TAX ADVISOR
Section 14.01 THE PARTIES ACKNOWLEDGE AND AGREE THAT ENGIE SERVICES U.S. IS NOT A

MUNICIPAL ADVISOR AND CANNOT GIVE ADVICE TO CITY WITH RESPECT TO MUNICIPAL SECURITIES OR

MUNICIPAL FINANCIAL PRODUCTS ABSENT CITY BEING REPRESENTED BY, AND RELYING UPON THE ADVICE OF, AN INDEPENDENT REGISTERED MUNICIPAL ADVISOR. ENGIE SERVICES U.S. IS NOT SUBJECT TO A FIDUCIARY DUTY WITH REGARD TO CITY OR THE PROVISION OF INFORMATION TO CITY. CITY WILL CONSULT

WITH AN INDEPENDENT REGISTERED MUNICIPAL ADVISOR ABOUT THE FINANCING OPTION APPROPRIATE FOR CITY’S SITUATION.

Section 14.02 The Parties acknowledge and agree that ENGIE Services U.S. is not a tax advisor and cannot give advice to City with respect to the Inflation Reduction Act and any funds the City may be eligible for thereunder. City must consult its own tax and legal advisors with regard thereto.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 18 of 42 ESC – CA Public
V 02/20/2024

ARTICLE 15. TRADE SECRETS
If any materials or information provided by ENGIE Services U.S. to City under this Contract are designated by ENGIE Services U.S. as a “trade secret” or otherwise exempt from disclosure under the Public Records Act (California Government Code §6250 et seq., the “Act”) and if a third party makes a request for disclosure of the materials under the Act, as soon as practical (but not later than five (5) calendar days) after receipt of such request, City will notify ENGIE Services U.S. of such request and advise ENGIE Services U.S. whether City believes that there is a reasonable possibility that the materials may not be exempt from disclosure. Within ten (10) calendar days after a third party’s request for disclosure of materials under the Act, ENGIE Services U.S. will (i) authorize City to release the documents or information sought; or (ii) if ENGIE Services U.S. reasonably believes that the information is exempt from disclosure, advise City not to release the materials.

ARTICLE 16. EVENTS OF DEFAULT
Section 16.01 Events of Default by ENGIE Services U.S. Each of the following events or conditions will constitute an “Event of Default” by ENGIE Services U.S.:
(i) any substantial failure by ENGIE Services U.S. to perform or comply with this Contract, including a material breach of any covenant contained herein, and such failure continues for thirty (30) calendar days after notice to ENGIE Services U.S. demanding that such failure to perform be cured; provided that (y) such failure to perform will not be deemed a default hereunder if it is excused by a provision of this Contract, and (z) if such cure cannot be effected in thirty (30) calendar days, ENGIE Services U.S. will be deemed to have cured the default upon the commencement of a cure within thirty (30) calendar days and diligent subsequent completion thereof; or
(ii) any representation or warranty furnished by ENGIE Services U.S. in this Contract which was false or misleading in any material respect when made.

Section 16.02 Events of Default by City. Each of the following events or conditions will constitute an “Event of Default” by City:
(i) any substantial failure by City to perform or comply with this Contract, including a material breach of any covenant contained herein, and such failure continues for thirty (30) calendar days after notice to City demanding that such failure to perform be cured; provided that (y) such failure to perform will not be deemed a default hereunder if it is excused by a provision of this Contract; and (z) if such cure cannot be effected in thirty (30) calendar days, City will be deemed to have cured the default upon the commencement of a cure within thirty (30) calendar days and diligent subsequent completion thereof; or
(ii) any representation or warranty furnished by City in this Contract which was false or misleading in any material respect when made; or
(iii) any failure by City to pay any amount to ENGIE Services U.S. which is not paid within ten (10) calendar days after written notice from ENGIE Services U.S. that the amount is past due.

ARTICLE 17. REMEDIES UPON DEFAULT
Section 17.01 Termination for Cause. If there is an Event of Default by either Party under this Contract, unless such Event of Default has been cured within the applicable time periods for a cure set forth in ARTICLE 16, the non-defaulting Party may terminate this Contract by providing three (3) Business Days’ written notice to the defaulting Party in the case of a monetary default and ten (10) Business Days’ written notice to the defaulting Party in the case of a non-monetary default. Upon termination of this Contract, each Party will promptly return to the other all papers, materials, and property of the other held by such Party in connection with this Contract. Each Party will also assist the other in the orderly termination of this Contract and the transfer of all aspects hereof, tangible and intangible, as may be necessary for the orderly, non-disrupted business continuation of each Party. If this Contract is so terminated, ENGIE Services U.S. will be entitled to payment for Work satisfactorily performed, earned profit and overhead, and costs incurred in accordance with this Contract up to the date of termination.

Section 17.02 Remedies Upon Default by ENGIE Services U.S. If an Event of Default by ENGIE Services U.S. occurs, City will be entitled to obtain any available legal or equitable remedies through arbitration proceedings instituted pursuant to ARTICLE 19, including, without limitation, terminating this Contract, or recovering amounts due and unpaid by ENGIE Services U.S. and/or damages, which will include City’s reasonable, actual, direct out-of-pocket losses Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 19 of 42 ESC – CA Public
V 02/20/2024

incurred by reason of such Event of Default and any cost of funding; loss of anticipated payment obligations; and any payment or delivery required to have been made on or before the date of the Event of Default and not made, including interest on any sums due, and losses and costs incurred as a result of terminating this Contract and all costs and expenses reasonably incurred in exercising the foregoing remedies.

Section 17.03 Remedies upon Default by City. If an Event of Default by City occurs, ENGIE Services U.S. will be entitled to obtain any available legal or equitable remedies through arbitration proceedings instituted pursuant to ARTICLE 19 including, without limitation, terminating this Contract or recovering amounts due and unpaid by City, and/or damages which will include ENGIE Services U.S.’s reasonable, actual, direct out-of-pocket losses incurred by reason of such Event of Default and any cost of funding; loss of anticipated payment obligations; and any payment or delivery required to have been made on or before the date of the Event of Default and not made, including Interest on any sums due, and losses and costs incurred as a result of terminating this Contract and all costs and expenses reasonably incurred in exercising the foregoing remedies.

ARTICLE 18. CONDITIONS BEYOND CONTROL OF THE PARTIES
Section 18.01 Excusable Events. If any Party is delayed in, or prevented from, performing or carrying out its obligations under this Contract by reason of any Excusable Event, such circumstance will not constitute an Event of Default, and such Party will be excused from performance hereunder and will not be liable to the other Party for or on account of any loss, damage, injury or expense resulting from, or arising out of, such delay or prevention.

Notwithstanding the foregoing, no Party will be excused from any payment obligations under this Contract as a result of an Excusable Event.

Section 18.02 Utility Work. City expressly understands and agrees that Excusable Events may occur due to Interconnection Facilities work that may need to be performed by the local electric utility (“Utility”) in order for ENGIE Services U.S. to fully implement the Project. “Interconnection Facilities” means any distribution or transmission lines and other facilities that may be required to connect equipment supplied under this Contract to an electrical distribution/transmission system owned and maintained by the Utility. Any Interconnection Facilities work that may be required will be performed by the Utility under the Interconnection Agreement.

ARTICLE 19. GOVERNING LAW AND RESOLUTION OF DISPUTES
Section 19.01 Governing Law. This Contract is governed by and must be interpreted under the laws of the State where the Work is performed, without regard to the jurisdiction’s choice of law rules.

Section 19.02 Initial Dispute Resolution. If a dispute arises out of or relates to this Contract, the transaction contemplated by this Contract, or the breach of this Contract (a “Dispute”), either Party may initiate the dispute resolution process set forth in this ARTICLE 19 by giving notice to the other Party. The Parties will endeavor to settle the Dispute as follows:
(i) Field Representatives’ Meeting: Within fifteen (15) Business Days after notice of the Dispute, ENGIE Services U.S.’s senior project management personnel will meet with City’s project representative in a good faith attempt to resolve the Dispute. (ii) Management Representatives’ Meeting: If ENGIE Services U.S.’s and City’s project representatives fail to meet, or if they are unable to resolve the Dispute, senior executives for ENGIE Services U.S. and for City, neither of whom have had day-to-day management responsibilities for the Project, will meet, within thirty (30) calendar days after notice of the Dispute, in an attempt to resolve the Dispute and any other identified disputes or any unresolved issues that may lead to a dispute. If the senior executives of ENGIE Services U.S. and City are unable to resolve a Dispute or if a senior management conference is not held within the time provided herein, either Party may submit the Dispute to mediation in accordance with Section 19.03.

Section 19.03 Mediation. If the Dispute is not settled pursuant to Section 19.02, the Parties will endeavor to settle the Dispute by mediation under the Commercial Mediation Procedures of the American Arbitration Association.

Mediation is a condition precedent to arbitration or the institution of legal or equitable proceedings by either Party. Once one Party files a request for mediation with the other Party and with the American Arbitration Association, the Parties agree to conclude the mediation within sixty (60) calendar days after filing the request. Either Party may terminate the mediation at any time after the first session, but the decision to terminate must be delivered in person in writing by the Party’s representative to the other Party’s representative and the mediator. If the Dispute is not resolved by mediation within sixty (60) calendar days after the date of filing of the request for mediation, then the exclusive means to resolve the Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 20 of 42 ESC – CA Public
V 02/20/2024

Dispute is final and binding arbitration, as described in Section 19.04. Either Party may initiate arbitration proceedings by notice to the other Party and the American Arbitration Association.

Section 19.04 Arbitration Proceedings. The following provisions apply to all arbitration proceedings pursuant to this ARTICLE 19:
(i) The place of arbitration will be the American Arbitration Association office closest to where the Work was performed.
(ii) One arbitrator (or three arbitrators if the monetary value of the Dispute is more than $2,000,000) (the “Arbitral Panel”) will conduct the arbitral proceedings in accordance with the Commercial Arbitration Rules and Mediation Procedures (Excluding the Procedures for Large, Complex Commercial Disputes) of the American Arbitration Association currently in effect (“Arbitration Rules”). To the extent of any conflicts between the Arbitration Rules and the provisions of this Contract, the provisions of this Contract prevail.
(iii) The Parties will submit true copies of all documents considered relevant with their respective statement of claim or defense, and any counterclaim or reply. In the discretion of the Arbitral Panel, the production of additional documents that are relevant and material to the determination of the Dispute may be required.
(iv) The Arbitral Panel does not have the power to award, and may not award, any punitive, indirect or consequential damages (however denominated). All arbitration fees and costs are to be shared equally by the parties, regardless of which Party prevails. Each Party will pay its own costs of legal representation and witness expenses.
(v) The award must be in the form of a reasoned award.
(vi) The Dispute will be resolved as quickly as possible. The Arbitral Panel will endeavor to issue the arbitration award within six (6) months after the date on which the arbitration proceedings were commenced.
(vii) The award will be final and binding and subject to confirmation and enforcement proceedings in any court of competent jurisdiction.

Section 19.05 Multiparty Proceeding. Either Party may join third parties whose joinder would facilitate complete resolution of the Dispute and matters arising from the resolution of the Dispute.

Section 19.06 Lien Rights. Nothing in this ARTICLE 19 limits any rights or remedies not expressly waived by ENGIE Services U.S. that ENGIE Services U.S. may have under any lien laws or stop notice laws.

ARTICLE 20. REPRESENTATIONS AND WARRANTIES
Section 20.01 Each Party warrants and represents to the other that:
(i) it has all requisite power and authority to enter into this Contract, to perform its obligations hereunder and to consummate the transactions contemplated hereby; (ii) the execution, delivery, and performance of this Contract have been duly authorized by its governing body, or are in accordance with its organizational documents, and this Contract has been duly executed and delivered for it by the signatories so authorized, and constitutes its legal, valid, and binding obligation;
(iii) the execution, delivery, and performance of this Contract will not breach or violate, or constitute a default under, its organizational documents or any contract, lease or instrument to which it is a party or by which it or its properties may be bound or affected; and (iv) it has not received any notice, nor to the best of its knowledge is there pending or threatened any notice, of any violation of any Applicable Laws, awards or permits which would materially and adversely affect its ability to perform hereunder.

ARTICLE 21. NOTICE
Any notice required or permitted hereunder will be deemed sufficient if given in writing and delivered (i) personally, (ii) by email, (iii) sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) delivered to a nationally Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 21 of 42 ESC – CA Public
V 02/20/2024

recognized express mail service, charges prepaid, receipt obtained, to the address shown below or to such other persons or addresses as are specified by similar notice.

TO ENGIE SERVICES U.S.: ENGIE Services U.S. Inc.
500 12th Street, Suite 300
Oakland, CA 94607
Tel:

Attention: Carrie Dixon, Project Manager
Email: [email protected]

With a COPY TO: Legal Department
ENGIE Services U.S. Inc.
35 North Lake Avenue, Suite 900
Pasadena, CA 91101-1892
Attention: Contract Analyst Senior
Tel: 626-377-4948

TO City: City of Salinas
200 Lincoln
Salinas, CA 93901
Attention:

Tel:

Email:

With a COPY TO: Office of _____________
_____________________
Street Address
City, State, Zip
Attention:

Tel:

Email:

ARTICLE 22. CONSTRUCTION OF CONTRACT
This Contract is the result of arms-length negotiations between two sophisticated parties and ambiguities or uncertainties in it will not be construed for or against either Party, but will be construed in a manner that most accurately reflects the intent of the Parties as of the Contract Effective Date. Each of the Parties acknowledges and agrees that neither Party has provided the other with any legal, accounting, regulatory, financial, or tax advice with respect to any of the transactions contemplated hereby, and each Party has consulted its own legal, accounting, regulatory, financial and tax advisors to the extent it has deemed appropriate.

ARTICLE 23. CHOICE OF LAW

THE INTERPRETATION, VALIDITY AND ENFORCEMENT OF THIS CONTRACT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

ARTICLE 24. BINDING EFFECT
Except as otherwise provided herein, the terms and provisions of this Contract will apply to, be binding upon, and inure to the benefit of the Parties hereto and their respective heirs, legal representatives, successors, and permitted assigns.

ARTICLE 25. NO WAIVER
The failure of ENGIE Services U.S. or City to insist upon the strict performance of this Contract will not constitute or be construed as a waiver or relinquishment of either Party’s right to thereafter enforce the same in accordance with this Contract in the event of a continuing or subsequent default on the part of ENGIE Services U.S. or City.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 22 of 42 ESC – CA Public
V 02/20/2024

ARTICLE 26. SEVERABILITY
If any clause or provision of this Contract or any part thereof becomes or is declared by a court of competent jurisdiction invalid, illegal, void, or unenforceable, this Contract will continue in full force and effect without said provisions; provided that no such severability will be effective if it materially changes the benefits or obligations of either Party hereunder.

ARTICLE 27. HEADINGS
Headings and subtitles used throughout this Contract are for the purpose of convenience only, and no heading or subtitle will modify or be used to interpret the text of any section.

ARTICLE 28. COUNTERPARTS; INTEGRATION
This Contract may be executed in counterparts (and by different Parties hereto in different counterparts), each of which will constitute an original, but all of which when taken together will constitute a single contract. This Contract constitutes the entire contract among the Parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Contract cannot be amended, modified, or terminated except by a written instrument, executed by both Parties hereto. Delivery of an executed counterpart of a signature page of this Contract by email will be effective as delivery of a manually executed counterpart of this Contract.

[the Parties’ signatures appear on the following page]
Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 23 of 42 ESC – CA Public
V 02/20/2024

IN WITNESS WHEREOF, and intending to be legally bound, the Parties hereto subscribe their names to this Contract by their duly authorized officers as of the Contract Effective Date.

ENGIE SERVICES U.S.: CITY:

ENGIE Services U.S. Inc. City of Salinas

By: _________________________________ By: __________________________________ Name: Name:

Title: Title:

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 24 of 42 ESC – CA Public
V 02/20/2024

ATTACHMENT A

FACILITIES

The following Facilities are included under the Scope of Work as listed below:

Facility Address
El Gabilan Library 1400 N. Main St, Salinas, CA 93906
Police Department 312 E. Alisal St., Salinas, CA 93901
Salinas City Hall 200 Lincoln Ave., Salinas, CA 93901

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 25 of 42 ESC – CA Public
V 02/20/2024

ATTACHMENT C

SCOPE OF WORK

California State Contractor’s License Number 995037
California Public Works Contractor Registration Number 1000001498

Energy Conservation Measures to Be Implemented

ECM
#

Description
1 Solar Generating Facilities
2 Emergency Generator

ECM 1: SOLAR GENERATING FACILITIES

The table below lists the locations for the solar photovoltaic (PV) installations and the structure types:

Solar Generating Facilities to be Installed

Facility Est. kWdc Solar PV Structure
El Gabilan Library 92.6 Roof
Police Department 617 Canopy

General Scope of Work:

1. Prepare and submit design drawings to City of Salinas for approval and to the local utility for interconnection permits.

2. If the AHJ deems it necessary, ENGIE U.S. will obtain the proper geotechnical reports to submit an application to the California Geological Survey (CGS) with a change order.

3. Provide geotechnical evaluations necessary for design requirements.

4. Provide utility interconnection drawings and management services.

5. Provide and coordinate installation of the NGOM and NEM metering.

6. Procure materials and equipment necessary for construction.

7. Provide all project management and construction management necessary for a full and complete installation.

8. Provide labor, supervision and coordination with the City of Salinas for the installation of photovoltaic (PV) modules and supporting structures, electrical distribution and control systems.

9. Provide and install PV modules and all necessary mounting hardware for each system.

10. Provide and install inverters and all necessary electrical equipment and conduits to connect to the electrical switchgear or meter. Electrical shutdowns are anticipated at each site. Time of shutdown will be coordinated with the City of Salinas and may include weeknights and weekends. Shutdowns will not be scheduled during regular working hours.

11. Provide and install solar canopy and roof mounted structures to offset electrical consumption at the two (2) locations in the table above.
a. Canopy: The canopy structure design will include a painted canopy structure that has a seven (7) degree tilt and is thirteen feet, six inches (13’6”) clear of grade level on the low side and a pier depth of ten (10) feet deep. The canopy structure design assumes no de-watering, bending, shoring, or casing.

The paint color shall be selected by the City of Salinas and may be any color other than white. No galvanized coating is included in this Scope of Work.
b. Roof: The rooftop solar arrays shall be attached to the existing standing seam roof using standing seam clamps. The solar panels will be installed flush to the roof matching the orientation and tilt of the roof surface. Rapid shutdown devices will be installed on the solar array per electrical code requirements.
i. Provide coordination with roof warranty holder for inspection. The City will provide the Contractor with the warranty agent’s contact information. . ii. Include all required incidental work, such as pull tests, blocking, lashing, sealing, fire stopping, waterproofing, roof repair, commissioning and testing.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 26 of 42 ESC – CA Public
V 02/20/2024

iii. Include any other electrical, roof attachment or PV support structure work as might reasonably be implied as required, even though not specifically mention herein or shown on the drawings. iv. Penetrations should be minimized within code requirements. All penetrations shall be waterproofed. Work shall be performed by an experienced and licensed roofer, who regularly engages in waterproofing or roof penetrations for the type of roof.

12. DC wiring and AC wiring within the solar canopies and roof mount structures shall be copper wire. Aluminum wire will be used from each system's AC combiner to the main point of contact at the site’s electrical switchgear.

13. Provide and install twenty-nine (29) new LED lighting fixtures (RAB PRT42N or equivalent) for canopies located in parking lots (one for each 27’ bay).

14. Provide as-built drawings and Operations and Maintenance manuals in electronic format upon project completion.

15. Start-up, test, and commission the systems in accordance with design plans and applicable industry standards.

16. Secure the Project Location and provide traffic redirection during rifling operations, and during the move-in and move-out of large equipment. City of Salinas will assist with the foregoing site logistics by coordinating access and scheduling with ENGIE Services U.S.

PG&E Mitigation:

ENGIE Services U.S. submitted the City of Salinas solar PV interconnection applications to PG&E. Upon PG&E engineering review, it was identified that the two (2) sites listed below, passed through PG&E engineering review, but with mitigations, ENGIE Services U.S, will be responsible for any coordination, and City of Salinas will be responsible for any fees associated with PG&E with the following upgrades that have been identified to date:

1. Police Dept. – The following PG&E upgrades are needed with estimated cost of $6,000 per supplemental engineering review report
a. Change CB 1101/2 phase pickup to 720A and 1st reclose time to 10s. b. Change Bank #4 LTC forward Vbase from 116V to 117.5V

2. Library - Supplemental Engineering study results indicated transformer upgrades would be needed only if the solar PV system exceeds 82kW. No mitigation is expected for this site.

ENGIE Services U.S. will not be able to achieve permit to operate the solar PV until these PG&E mitigations have been completed on these sites.

PV Layouts

Schematic engineering layouts are included in Appendix 2. These schematic engineering layouts and the electrical routing related to them are subject to change due to field conditions and upon completion of final engineering.

Exclusions
 There is no demo work of parking lot pole lighting required for this project.  There is no landscaping work required for this project.  No Trees will need to be removed.
 No Fencing is required for this project.
 Casings for the piers as a result of caving.
 Security Cameras.
 Grading of the area. Solar shall be mounted on existing terrain.  Rock drilling or boring through rocky soil conditions.  Blasting and/or large rock removal, dewatering, or caving of soils.  There are no provisions for contaminated soil mitigation  Provision of, modifications to, or additions to fire life safety systems, including but not limited to fire alarm systems, fire sprinklers, and alarm speaker systems.
 No allowance has been made for screening, Bird spikes, or other mitigations to eliminate nesting or occupation of wildlife on or within major equipment. Wildlife debris cleanup is excluded.  Scope of Work assumes that existing roof structures can take on the added structural load of the PV systems, no upgrades or repairs of any kind are included.
 Remediation and/or removal of hazardous materials, hazardous wastes, or spoils are not included.

ECM 2: EMERGENCY GENERATORS

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 27 of 42 ESC – CA Public
V 02/20/2024

The table below lists the locations and details of the emergency generators to be installed:

Facility Replacement/New Generator Model # kW ATS Model # ATS Size (amps) City Hall - Generator Replacement SG200 200 RTSN800 800

Scope of Work

ENGIE Services U.S. shall provide an electrical installation, design, methods, and procedures based on the National Fire Protection Association (NFPA) 70, City of Salinas Permitting Guidelines, and National Electric Code unless identified elsewhere, and ensure that the generator complies with the air quality standards of the Monterey Bay Air Resources District (MBARD).

ENGIE Services U.S. shall perform the following at each site, to provide emergency power to the loads as described:

City Hall Generator

1. Provide and install (1) 200kW Natural Gas Generator NEMA 3R with control panel.

2. Provide, install, and program (1) New Automatic Transfer Switch (ATS) NEMA 3R.

3. Provide and install new 800A Breaker in Main Electric Switchboard to feed new ATS.

4. Provide and install raceway and conductors from the new ATS Switchboard to new ATS Support Panelboard located in adjacent Mechanical Room.

5. Provide and install raceway and conductors from generator to ATS.

6. Reroute existing critical load branch circuit to new Generator Support Panelboard. Provide and install new raceway and conductors. Generator Support Panelboard will have increased backed up ampacity from 175A to approximately 800A to serve additional critical loads that can be added in the future.

7. Install new gas line along the parking garage roof of the South end from the utility service at the SE corner to the new generator location.

8. Install concrete pads for generator andATS with (8) protective bollards total.

Loads to be backed up by generator at each site

Facility Point of Tie In Areas of Building Loads
City Hall Critical Load Panel Branch
Circuit
Sublevel IT & 1st Floor Select Areas fed by
Panels: A, B, D, E, E2, E3, ECP1, MCC2, MCCE
IT and select lights,
plugs and HVAC

ENGIE Services U.S. shall complete the following:

1. Provide engineering services to develop drawings that include all detailed electrical, mechanical and equipment drawings (e.g., for equipment pads) to be used for permitting and to support as-built documentation.

2. ENGIE Services U.S will replace the existing failed ATS and install new permanent emergency generator.

3. Provide and perform all testing, commissioning, start up, acceptance testing, commissioning, training and O&M manuals as needed on all systems provided under this Scope of Work.

4. AII equipment shall meet any NEC, NEMA or IP enclosure requirements.

5. Sequence construction activities to maintain electrical service to each building with minimal interruption to the building occupants. Salinas will assist ENGIE Services U.S. in scheduling required shutdowns and provide trained faculty personnel to assist in the shutdown and restarting of building systems. No temporary power supply has been included in the scope.

6. Final completion shall include testing, commissioning and documentation in accordance with ENGIE Services U.S. approved practices.

7. Locate, identify, and protect existing utilities, conduits, piping. substructures, etc., ensuring that no damage is inflicted upon existing infrastructure.

8. Underground locating will be performed for the generator pad location prior to hand trenching the conduit stub ups and laying out the concrete pad forms.

9. Off-haul and properly dispose of wall mounted ATS and associated equipment that are being replaced by the new generator and ATS identified above.

10. Properly and adequately cover/secure all open trenches and holes.

11. Repair damage to surfaces caused by boring, including buckled or sunken pavement.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 28 of 42 ESC – CA Public
V 02/20/2024

12. Perform electrical interconnection of emergency generator to the main switchboard to ensure that, upon a power outage, the generator system provides power to the backup loads. The transition will be automatic, however there will be a brief interruption of service.

13. Support and help coordinate MBARD inspections.

14. Schedule electrical service outage required to interconnect the ATS to the Main Service Load Center when necessary. Scheduling shall be set to minimize disruption to the facility and made with at least 2 weeks prior notification to Salinas.

15. Repair all pavement, concrete, landscaping or other site conditions damaged by installation activities.

16. Provide traffic control at construction site.

17. ENGIE Services U.S. will pay for and procure the necessary AHJ and MBARD permits.

18. Aluminum wire will be used for branch circuit feeders.

19. Provisions for spare breakers will be provided in the Generator Support Panelboard for the City to use to add the 1st floor critical loads to the new Generator Support Panelboard.

Exclusions:

1. Rewiring circuits from 1st floor subpanels feeding West Wing/Admin/Fire to the new Generator Support Panelboard.

2. Blasting and/or large rock removal, dewatering, or caving of soils.

3. Unforeseen costs for sub-grade construction.

4. Metering or monitoring equipment (utility or Salinas-owned), computers, modems, and fiber cable or third party monitoring costs.

5. Any costs associated with temporary. part-time, or full-time site security.

6. Temporary generator power during change out period or other.

7. Hazardous materials abatement and/or disposal, or any work in or around areas that have been determined to contain hazardous materials such as asbestos, load, PCBs, and/or similar materials.

8. Environmental cleanup of slab area or soils from previous oil or gas leaks

9. Electrical work shall not be performed on live electrical equipment.

10. Utility upgrades including but not limited to transformer replacements, service upgrades, and substation upgrades.

11. ENGIE Services U.S. has not verified the gas line pressure and assumes the utility line at the SE corner of the garage is of adequate size to accommodate the additional generator fuel needs.

12. Security Cameras.

13. Asphalt patching or Restriping.

14. Landscaping in areas not directly affected by the ENGIE Services U.S. work.

15. Repair or replacement of damaged or inoperable existing equipment that is not specifically being replaced under the Scope of Work. When such items are discovered, ENGIE Services U.S. will immediately notify a Salinas representative.

16. With respect to new equipment connecting to the Facility's existing electrical distribution system, ENGIE Services U.S. will not be responsible for the electrical integrity of the existing electrical system, e.g., the condition and proper termination of current-carrying, grounded, and grounding conductors, bus taps, protective elements, the proper protection of existing wire through knockouts, or missing components. Salinas is responsible for providing and maintaining the facility’s electrical distribution system that meets the latest NEC and guidelines adopted by the authority having jurisdiction.

17. Painting of conduits, generator enclosures or other surfaces, unless specified above.

18. The generator is identified to be located on the South End of the building between the existing metal buildings. It is assumed clearances are adequate for installation of the generator in this location and that no additional walls, mechanical screens or fencing will be required..

19. The generator comes with a sound deadening enclosure. No additional sound deadening material or walls are included in this installation.

20. It is assumed there are no underground obstacles in the generator location. Relocating equipment due to underground storage tanks or utility lines in the selected generator location may result in a change order.

21. The generator and balance of systems equipment's location is based on input from Salinas during site walks.

Any changes in equipment location may result in a change order.

General Project Exclusions and Clarifications Applicable to AII Scopes:
 ENGIE Services U.S. will be responsible for obtaining and paying for any required Building, Mechanical, and Electrical Permits.
 City of Salinas AHJ permitting fees are included.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 29 of 42 ESC – CA Public
V 02/20/2024

 ADA, Fire Life Safety, and other work required as a result of AHJ submission is excluded, except as noted above.
 ENGIE Services U.S. has assumed Construction will be allowed to proceed smoothly and in a continuous flow.

No allowance has been made to demobilize and remobilize resources due to schedule interruptions.  Remediation and/or removal and disposal of Hazardous Substances, including asbestos containing materials, to be by the City of Salinas. If ENGIE Services U.S. encounters material suspected to be hazardous, ENGIE Services U.S. will notify City of Salinas representative and stop further work in the area until the material is removed.
 CEQA or other environmental studies, if required, will be the responsibility of the City of Salinas,  Public Hearings, if required, will be the responsibility of the City of Salinas.  ENGIE Services U,S. will require the assistance of the City of Salinas personnel to secure the Project Location and to provide traffic redirection during rigging operations, and during the move-in and move-out of large equipment,
 No allowance has been made for structural upgrades to existing structures, except as specifically set forth in this Scope of Work.
 No allowance has been made for screening of new or existing equipment, except as specifically set forth in this Scope of Work.
 ENGIE Servies U.S. standard construction means and methods will be used.  City of Salinas will provide access to the Facilities, laydown areas at the work sites, and a reasonable number of parking spaces for ENGIE Services U.S. and ENGIE Services U.S.’s subcontractor vehicles in parking lots at the Facilities.
 Work will be performed during normal work hours; no overtime hours are included in the Contract Price except as noted above.
 The Scope of Work assures that, unless specifically identified otherwise, all existing systems are functioning properly and are up to current codes. ENGIE Services U.S. will not be responsible for repairs or upgrades to existing systems that are not functioning properly or compliant with current codes. No allowances have been made to bring existing systems up to code.
 No allowance has been made to repair or replace damaged or inoperable existing equipment that is not specifically being replaced under the Scope of Work. When such items are discovered, ENGIE Services U.S. will immediately notify City of Salinas representative.  No allowance has been made for underground obstructions or unsuitable soil conditions encountered during trenching or other excavation.
 The PV shade structure is not weather tight and will not provide shelter from rain.  Installing water hose bibs for washing the panels are excluded.  Parking lot repairs are excluded, except to the extent of damage caused by ENGIE Services U.S. or its subcontractors.
 Repair or replacement of existing housekeeping pads, concrete pads, or base repair of existing walkway lighting are excluded, except as specifically set forth in this Scope of Work.  Painting, unless specified, is excluded.
 Where this Scope of Work includes pulling new wiring for lighting fixtures from an existing lighting panel, a grounding conductor must be included in the lighting circuits. City of Salinas is responsible for providing an existing or new grounding conductor terminal bar at the lighting panel that is properly connected to the Facility grounding electrode system in compliance with the latest NEC adopted by the authority having jurisdiction.  With respect to Projects with new equipment connecting to the Facility’s existing electrical distribution system, ENGIE Services U.S. will not be responsible for the electrical integrity of the existing electrical system, e.g., the condition and proper termination of current-carrying, grounded, and grounding conductors, bus taps, protective elements, the proper protection of existing wire through knockouts, or missing components. City of Salinas is responsible for providing and maintaining the facility’s electrical distribution system that meet the latest NEC and guidelines adopted by the authority having jurisdiction.  ENGIE Services U.S. will not be responsible for existing damaged pipes, valves, and related parts and components.
 Depth of piers for canopy and ground mount installations are assumed to be 10 feet below grade. No allowances have been made should soils report indicate that depth of piers should be deeper due to soil quality and/or seismic concerns, or additional seismic concerns requires deeper footings.

ENGIE Services U.S. Beneficial Use and Warranty criteria for specific pieces of equipment:

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 30 of 42 ESC – CA Public
V 02/20/2024

1. SOLAR GENERATING FACILITIES - The ENGIE Services U.S. Warranty commences immediately when the Generating Facility is capable of generating expected energy and the Utility is ready to issue the permission-to- operate letter
a. Solar Module Warranty - solar modules will be provided with a 25-year manufacturer production warranty.
b. Solar Inverter Warranty - inverters will be provided with a 10-year manufacturer parts and serving warranty.

2. GENERATORS - The ENGIE Services U.S. Warranty commences immediately upon Substantial Completion.

ENGIE Servies U.S. will provide written notice to the City of Salinas of the date the ENGIE Services U.S.

Warranty commences.
a. Generac Generator Warranty - generator will be provided with a two (2) year standard manufacturer warranty from the date of purchase.

Substantial & Final Completion Forms per Scope of Work:

The table below provides the number of substantial and final completion forms that will be used to document beneficial use and final completion of each Scope of Work.

ECM Scope of Work Location Total Qnty of
Substantial
Completions
Total Qnty of
Final Completions
1 Solar Generating Facilities 2 Sites 2, one per system 1, for entire ECM
2 Emergency Generator 1 Sites 1, one per system 1, for entire ECM

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 31 of 42 ESC – CA Public
V 02/20/2024

ATTACHMENT D

MONITORING INSTALLATION SCOPE OF WORK

Overview of DAS Network Installation and Equipment Requirements

ENGIE Services U.S. will provide a revenue-grade billing, data acquisition system (DAS). This will provide readily available access to various internal and external information collected on the distributive generation (i.e., solar PV) plant.

ENGIE Services U.S. DAS Monitoring Installation:

 Supply and install hardware specific to the DAS system.  Supply and install, terminate, label, and test all Data Point of Connection (DPOC) communication cabling from each DAS node to the predetermined and respective DPOC(s).  Supply, install, and configure a Modbus based digital Net Energy Meter (NEM).  Connect the data portion of digital NEM(s) to their respective DPOC(s).  Supply, install, and configure a Modbus based digital Net Generation Output Meter (NGOM).  Perform the physical installation, labeling, testing and certification testing of each data circuit from the digital NEM(s) to their respective DPOC(s).
 Provide basic web portal training to designated City/Facility maintenance staff to view solar data and reports.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 32 of 42 ESC – CA Public
V 02/20/2024

ATTACHMENT E

M&V SERVICES

EQUIPMENT AND FACILITIES COVERED

ENGIE Services U.S. will perform measurement and verification services (“M&V Services”) as set forth in this Attachment E with respect to City’s property at the following Project Locations:

Site Name Site Address City County State Zip
Code
El Gabilan Library 1400 N Main St. Salinas Monterey CA 93906 Police Dept 312 E Alisal St. Salinas Monterey CA 93901

I. Definitions:

Capitalized terms used in this Attachment E and not defined in the Contract, have the meanings set forth below:

“Accumulated Savings” means, as of any date of determination, the cumulative total of Excess Savings.

“Actual Energy Rate” means, for any Measurement Period, utility rates calculated by ENGIE Services U.S. using actual utility billing information supplied by City for that Measurement Period.

“Annual M&V Fee” means a fee payable annually in advance by City to ENGIE Services U.S., in consideration of the provision of up to five (5) years of M&V Services. The Annual M&V Fee for the first Measurement Period will be four thousand fifty-three dollars and zero cents ($4,053.00). The Annual M&V Fee will be increased annually thereafter at the rate of four percent (4%) per annum, each increase to be effective on the first day of the corresponding Measurement Period.

“Assessment Work” means work required to assess the effect on EC Savings for any significant changes to the Facilities (including, but not limited to, building additions, new buildings, and new or changed HVAC equipment).

“Base Energy Rate” means the dollars per energy unit for each building and/or each ECM, set forth in this Attachment E, Section (III), and used by ENGIE Services U.S. to calculate the EC Savings.

“Baseline” means the energy use established by ENGIE Services U.S. from time to time for each building in the Facilities, taking into consideration Energy Use Factors for such buildings.

“EC Savings” means the savings in units of dollars ($) calculated by ENGIE Services U.S. in the manner set forth in this Attachment E, Section (III), achieved through the reduction in consumption or demand through implementation of the Work.

“Energy Rate Factors” means factors identified by ENGIE Services U.S. which may affect utility rates from the local utility companies.

“Energy Savings Report” is defined in this Attachment E, Section (II)(D).

“Energy Savings Term” means the period beginning on the first day of the Construction Period and ending on the earlier of: (i) the day immediately preceding the fifth (5th) anniversary of the M&V Commencement Date; (ii) the termination of the Contract; (iii) the termination by City of the M&V Services in accordance with this Attachment E, Section (II)(G); or (iv) the failure by City to pay the Annual M&V Fee in accordance with this Attachment E, Section (II)(H)(i).

“Energy Unit Savings” means the savings in units of energy, power, water, etc., calculated by ENGIE Services U.S. in the manner set forth in this Attachment E, Section (III), achieved through the reduction in consumption or demand through implementation of the Work.

“Energy Use Factors” means factors identified by ENGIE Services U.S. which may affect the Baselines or energy use for the Facilities, including but not limited to: hours and levels of occupancy; adjustments in labor force; building use and operational procedures; temperature, humidification, and ventilation levels; installed lighting and scheduled use; building Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 33 of 42 ESC – CA Public
V 02/20/2024

construction and size; general level of repair and efficiency of heating and air conditioning equipment and other energy- using equipment; and amount of heating and air conditioning and other energy-using equipment; quality, quantity, and timeliness of maintenance and repairs to the Generating Facilities or building electrical distribution system; inability to procure replacement parts/components; inability to submit claims under manufacturer warranty, including by reason of manufacturer insolvency; damage or defects no longer covered or excluded under manufacturer warranty; soiling in excess of predicted soiling based on industry-standard modeling; material reduction in energy consumption at a Project Location which significantly limits the Generating Facilities ability to offset Project Location electric consumption; non- operation or shutdown of the Generating Facilities by City or a third party other than ENGIE Services U.S.; damage to the Generating Facilities not caused by ENGIE Services U.S.; and any reduction in annual solar irradiation at a nearby NOAA weather station of more than 10% below the 30-year average.

“Energy Use Savings” means, for any Measurement Period, those savings, having units of dollars ($), achieved for such Measurement Period through reductions in energy use, energy demand, water use, and the use of other commodities.

“Excess Savings” means the excess of EC Savings over Guaranteed Savings, calculated in the manner set forth in this Attachment E, Section (II)(I)(iv).

“Guarantee Payment” means, for any Measurement Period, either: (i) a cash payment by ENGIE Services U.S. to City in an amount equal to the Guarantee Shortfall for that Measurement Period pursuant to this Attachment E, Section (II)(A)(ii); or (ii) additional energy services or energy saving retrofits requested by City with an agreed value equal to the Guarantee Shortfall for that Measurement Period pursuant to this Attachment E, Section (II)(A)(iii).

“Guarantee Shortfall” means an amount calculated in accordance with this Attachment E, Section (II)(I)(v).

“Guaranteed Savings” means, for any Measurement Period, the dollar amount set forth below for such Measurement Period, as the same may be adjusted from time to time by ENGIE Services U.S. for changes in Energy Rate Factors, Energy Use Factors and consequential revisions to the relevant Baseline:

Measurement
Period Guaranteed Savings
1 $270,174
2 $282,264
3 $294,896
4 $308,092
5 $321,879

“IPMVP” means the International Performance Measurement and Verification Protocol prepared by Efficiency Valuation Organization.

“Projected Energy Savings” means those Energy Unit Savings, which ENGIE Services U.S. anticipates will be realized from the installation and continued operation of the Work, as set forth in this Attachment E, Section (III).

“Savings Guarantee” is defined in this Attachment E, Section (II)(A)(i).

II. Terms and Conditions
A. Guaranteed Savings.
i. Savings Guarantee. In consideration of the payment of the Annual M&V Fee, and upon the terms and subject to the conditions set forth herein, ENGIE Services U.S. warrants that City will realize total EC Savings during the Energy Savings Term of not less than the total Guaranteed Savings (the “Savings Guarantee”), as the same may be adjusted from time to time for changes in Energy Rate Factors, Energy Use Factors and consequential revisions to the relevant Baseline. ii. Guarantee Payment. For any Measurement Period in which there is a Guarantee Shortfall, ENGIE Services U.S. will pay to City, within thirty (30) calendar days after the acceptance by City of the Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 34 of 42 ESC – CA Public
V 02/20/2024

Energy Savings Report for such Measurement Period, the Guarantee Payment for that Measurement Period.
iii. Services or Retrofits in Lieu of Guarantee Payment. If in the judgment of City, City would benefit from additional energy services or energy saving retrofits, City and ENGIE Services U.S. may mutually agree that ENGIE Services U.S. will provide such services or retrofits in lieu of the Guarantee Payment for such Measurement Period. For the purposes of this Contract, such services or retrofits will have a deemed value equal to the Guarantee Shortfall for that Measurement Period. iv. Excess Savings. For any Measurement Period in which there are Excess Savings, City will repay to ENGIE Services U.S., to the extent of such Excess Savings, any Guarantee Payments previously paid by ENGIE Services U.S. to City and not previously repaid to ENGIE Services U.S. by City, and the Excess Savings for such Measurement Period will be reduced by the amount of such repayment. If ENGIE Services U.S. has provided services or retrofits in lieu of the Guarantee Payment for a prior Measurement Period, such that the Guarantee Payment for such Measurement Period cannot be repaid by City, then in lieu of such repayment Excess Savings will be increased by the deemed value of such services or retrofits.
v. Excusable Events. If ENGIE Services U.S. is delayed in, or prevented from, accurately calculating the actual EC Savings for any day of any Measurement Period by reason of any Excusable Event, such circumstance will not constitute a default, and ENGIE Services U.S. will be excused from performing the M&V Services while such event is continuing. During such event, Projected Energy Savings for the month(s) in which such event is continuing will be used in lieu of actual data; provided that if three (3) or more years of post M&V Commencement Date data are available for such month(s), the historical average of such data for such month(s) will be used in lieu of Projected Energy Savings.

B. Changes in Energy Use Factors.
i. Adjustments to Baselines. City will notify ENGIE Services U.S. in writing within ten (10) Business Days of any change in any Energy Use Factor. In addition, data collected by ENGIE Services U.S. during or before the Energy Savings Term may indicate a change in the energy use pattern at the Facilities or any portion thereof and require a change to one or more Baselines. ENGIE Services U.S. will determine the effect that any such change will have on EC Savings and present to City a written analysis of the effects of such changes. ENGIE Services U.S. will also make corresponding revisions to the Baselines and/or EC Savings that it deems appropriate in its reasonable discretion. ii. Adjustments to Guaranteed Savings. If a change in any Energy Rate Factor or Energy Use Factor results in a reduction of EC Savings, then the Guaranteed Savings for the corresponding Measurement Period(s) will be decreased by the same amount. ENGIE Services U.S. will notify City, in writing, of all such changes.
iii. Changes to Facilities. City or ENGIE Services U.S. may from time to time propose to make changes to the Facilities for the express purpose of increasing EC Savings or addressing events beyond its control. It is agreed that these changes will only be made with the written consent of both Parties, which will not be unreasonably withheld. The Baseline will not be adjusted to reflect any changes agreed to under this Attachment E, Section (II)(B)(iii). iv. Baseline Adjustment. If ENGIE Services U.S. proposes changes to the Facilities that would not unreasonably interfere with the conduct of City’s business or cause City to incur additional costs, and City does not consent to the changes, then ENGIE Services U.S. will adjust the Baselines upward by the amount of savings projected from the changes.
v. Projected Energy Savings. During the Energy Savings Term, when the ultimate effect of the Work on EC Savings cannot be accurately determined due to pending construction or changes to the Scope of Work, Projected Energy Savings for the Facilities will be used until the effect of the changes can be determined by ENGIE Services U.S.
vi. Assessment Work. ENGIE Services U.S. has the right to charge City for Assessment Work, which will be billed at current ENGIE Services U.S. engineering rates and will be paid by City within thirty (30) calendar days after receiving ENGIE Services U.S.’s invoice. Before initiating Assessment Work, ENGIE Services U.S. will notify City in writing of the intent and estimated cost associated with the Assessment Work. City will, within forty-five (45) calendar days, give ENGIE Services U.S. written permission to proceed or, alternatively at no charge to ENGIE Services U.S., to stipulate that the Projected Energy Savings for the portion of the Facility in question be used for the purpose of meeting the Savings Guarantee for such Measurement Period and thereafter. If ENGIE Services U.S. does not receive written notice within forty-five (45) calendar days, the Projected Energy Savings for the portion of the Facility in question will be used until such time as City approves the Assessment Work.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 35 of 42 ESC – CA Public
V 02/20/2024

vii. Changes in Energy Use Factors. If City fails to notify ENGIE Services U.S. of changes in Energy Use Factors or fails to supply ENGIE Services U.S. in a timely manner with information that is requested by ENGIE Services U.S. for the calculation of EC Savings, the Energy Unit Savings for the relevant Measurement Period will be deemed equal to the corresponding Projected Energy Savings for such period. If information for the relevant Measurement Period is supplied at a later date, the Energy Unit Savings will be modified only if and to the extent that the calculated savings for such period exceed the Projected Energy Savings for such period.
viii. Change Order – Savings Effect. ENGIE Services U.S. will calculate the energy impact of any Change Orders.
ix. Changes in Savings Calculations. Any changes made by ENGIE Services U.S. to the savings calculations will be presented to City in advance. City will have thirty (30) calendar days to challenge or question the changes in writing.
x. Inspection of Facilities. City agrees that ENGIE Services U.S. will have the right, with or without prior notice, to inspect the Facilities to determine if City has consistently complied with its obligations as set forth above. If any inspection discloses that City has failed, on or prior to the date of such inspection, to be in compliance with any of its obligations, then the Guaranteed Savings will be assumed to have been achieved for the portion of the Energy Savings Term during which such failure will have existed. xi. Interference. City may not cause, and will take all commercially reasonable steps to prevent any third party from causing, any overshadowing, shading or other interference with the solar insolation that falls on the Generating Facility. Upon discovering, or otherwise becoming aware of, any actual or potential overshadowing, shading or other interference with insolation, City will promptly notify ENGIE Services U.S. If an unforeseeable overshadowing or shading condition not caused by ENGIE Services U.S. or its subcontractors exists and continues for five (5) Business Days or more, City agrees that the Guaranteed Savings for such Generating Facility will be reduced based upon such shading condition, and ENGIE Services U.S. may present City with a proposed reduction to the Guaranteed Savings reflecting such overshadowing, shading or other interference.

C. City Maintenance. Beginning at Beneficial Use or Substantial Completion for any portion of the Work, City will maintain such portion of the Work and upon Final Completion will maintain the Project, in accordance with the maintenance schedules and procedures recommended by ENGIE Services U.S. and by the manufacturers of the relevant equipment, such maintenance to include maintaining all landscaping (including tree trimming) in and around the Generating Facilities. City acknowledges that the Generating Facilities may be located near playgrounds, baseball fields, or softball fields; City agrees that damage to or shading of the Generating Facilities resulting from vehicles, balls, toys, or clothing, or otherwise caused by City Persons or third parties is the responsibility of City and any loss in energy production caused thereby will result in a reduction in the Guaranteed Savings.

D. Energy Savings Report. Annually during the Energy Savings Term, ENGIE Services U.S. will submit to City an energy savings report containing a precise calculation of the EC Savings during the applicable Measurement Period (an “Energy Savings Report”). ENGIE Services U.S. will use its best efforts to submit such Energy Savings Report within ninety (90) calendar days after receipt of all needed information for a Measurement Period, unless additional information is needed to accurately calculate the EC Savings, in which case City will be notified of such a situation within the ninety (90) calendar-day period.

E. On-Site Measurements. City irrevocably grants to ENGIE Services U.S. the right, during the Energy Savings Term, to monitor EC Savings and energy management performance by conducting on-site measurements, including, but not limited to, reading meters and installing and observing on-site monitoring equipment. ENGIE Services U.S. will not exercise such right in a manner that unreasonably interferes with the business of City as conducted at the Facilities as of the date hereof. City will cooperate fully with the exercise of such right by ENGIE Services U.S. pursuant to this Attachment E, Section (II)(E). City will further cooperate with ENGIE Services U.S.’s performance of the M&V Services by providing utility information, changes in Energy Use Factors, and/or additional information as reasonably requested by ENGIE Services U.S.

F. Internet Communication Path. ENGIE Services U.S. will install cellular modems for the purpose of solar data monitoring to send data to our remote secure server.

G. Termination of Guaranteed Savings. If (i) City notifies ENGIE Services U.S. in writing of its intent to terminate the M&V Services, (ii) the Contract is terminated by ENGIE Services U.S. for default by City or by City for any reason permitted by the Contract, (iii) ENGIE Services U.S. is no longer the provider of the Maintenance Services set forth in Attachment F, or (iv) City fails to maintain the Project in accordance with this Attachment E, Section (II)(C), or is in default of any of its Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 36 of 42 ESC – CA Public
V 02/20/2024

other obligations under this Attachment E, the obligation of ENGIE Services U.S. to prepare and deliver the Energy Savings Report and to make a Guarantee Payment will also be terminated. If such termination occurs on a date other than the last day of a Measurement Period, ENGIE Services U.S. will have no obligation to make a Guarantee Payment or prepare and deliver an Energy Savings Report for such Measurement Period.

H. Annual M&V Fee.
i. Invoicing and Payment. The Annual M&V Fee for the first Measurement Period will be invoiced by ENGIE Services U.S. to City in a lump sum on the M&V Commencement Date. All subsequent Annual M&V Fees will be invoiced by ENGIE Services U.S. on the first day of the corresponding Measurement Period. City, or its designee, will pay ENGIE Services U.S. such Annual M&V Fee, without any retention amount withheld, within thirty (30) calendar days after its receipt of the corresponding invoice.

Unless City gives ENGIE Services U.S. prior written notice of its intent to terminate the M&V Services, any failure to timely pay the Annual M&V Fee in accordance with this Attachment E, Section (II)(H) will be a material default by City under the Contract, and ENGIE Services U.S., in addition to any other legal, contractual and equitable remedies available to it, will have no obligation thereafter to perform M&V Services or to make Guarantee Payments.
ii. Any amount not paid when due will, from and after the due date, bear Interest. Accrued and unpaid Interest on past due amounts (including Interest on past due Interest) will be due and payable upon demand.
iii. Not Refundable. The Annual M&V Fee is not refundable for any reason.

I. Calculations.
i. Calculation of Accumulated Savings. Accumulated Savings will be increased, for any Measurement Period, by the amount of Excess Savings during such Measurement Period, and will be decreased, for any Measurement Period, by the difference, to the extent positive, between (i) the Guaranteed Savings for such Measurement Period minus (ii) the EC Savings for such Measurement Period. For the avoidance of doubt, Accumulated Savings will not be reduced below zero. ii. Calculation of EC Savings. EC Savings for any Measurement Period will be equal to the sum, for such Measurement Period, of (i) the Energy Use Savings, plus (ii) the Stipulated Non-Energy Savings, in each case as adjusted for changes in Energy Use Factors during such Measurement Period. EC Savings achieved during the Construction Period will be included in the EC Savings for the first Measurement Period.
iii. Calculation of Energy Use Savings. Energy Use Savings will be calculated by ENGIE Services U.S. as the product of (i) the Energy Unit Savings multiplied by (ii) the greater of (a) the applicable Base Energy Rate or (b) the applicable Actual Energy Rate.
iv. Calculation of Excess Savings. From and after the M&V Commencement Date, Excess Savings will be calculated by ENGIE Services U.S. as the difference, to the extent positive, between (i) the EC Savings for the relevant Measurement Period minus (ii) the Guaranteed Savings for such Measurement Period. During the Construction Period, Excess Savings will be calculated by ENGIE Services U.S. in the manner set forth in this Attachment E, Section (III). For the avoidance of doubt, Excess Savings will not be reduced below zero.
v. Calculation of Guarantee Shortfall. The Guarantee Shortfall, for any Measurement Period, will be calculated by ENGIE Services U.S. as the difference, to the extent positive, between (i) the Guaranteed Savings for such Measurement Period minus (ii) the sum of (a) EC Savings for such Measurement Period plus (b) Accumulated Savings then outstanding.

III. Methodologies and Calculations

The following details the methodologies and calculations to be used in determining the Energy Unit Savings under this Contract.

Table E-1: Measurement and Verification Methods
ECM ECM Description M&V Method
Electric Usage Electric Demand
ECM-1 Photovoltaic (PV) Systems Option B N/A

1. M&V Option B: Energy savings performance of Scope of Work are measured and verified at the end-use site.

Option B techniques are designed for projects where long-term continuous measurement of performance is desired and Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 37 of 42 ESC – CA Public
V 02/20/2024

warranted. Under Option B, while some parameter may be stipulated or measured once then stipulated, some individual loads are continuously monitored to determine performance; and this measured performance is compared with an equipment-use Baseline to determine the Energy Unit Savings.

a. ENGIE Services U.S. will supply a one-time report to City detailing any initial measurements taken to establish usage Baselines or other parameters. Ongoing post-retrofit measurements will be compared to the Baselines, and the quantified Energy Unit Savings will be calculated and presented in ongoing reports. During the Construction Period, the Energy Unit Savings will be calculated by adding the savings measured for the whole months between Substantial Completion or Beneficial Use of the EC Measure and the M&V Commencement Date.

b. Scope of Work
No baseline measurements are necessary because pre-retrofit PV production is zero. Kilowatt-hours produced by the PV system will be measured using automated metering. Measured interval production kilowatt-hours will be compared against production shown on the monthly utility bills and any differences will be reconciled. Projected kWh production is shown on Table E-2 below, and is projected to degrade by 0.5% per year.

Table E-2: First Year Solar PV Production
Location
Projected Annual
Production
(kWh)
El Gabilan Library 122,579
Salinas Police Department 866,677
Total 989,256

c. Assumptions: Once Work is Substantially Complete, these savings will be measured and verified monthly for the Energy Savings Term.

d. Baselines and Projected Savings: EC Savings will be determined by multiplying the Energy Unit savings by the applicable Base Energy Rate.EC Savings will be calculated and presented in ongoing reports. During the Construction Period, the EC Savings will be calculated by adding the production measured for the period between Substantial Completion of the ECM and the M&V Commencement Date.

2. Base Energy Rates: EC Savings will be calculated using the Base Energy Rates or Actual Energy Rates for that meter, whichever results in greater EC Savings. Actual Energy Rates will be calculated at the end of each Measurement Period using utility billing information for that Measurement Period and using the same methodology as was employed to determine the base energy rate in the Recommendations.

The Base Energy Rates listed here are to be increased each Measurement Period on a cumulative basis by five percent (5%) beginning on the first anniversary of the M&V Commencement Date and continuing on the first day of each Measurement Period thereafter.

Table E-3: Base Energy Rates
Location Electricity Rate
($/kWh)
El Gabilan Library 0.3269
Salinas Police Department 0.2655

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 38 of 42 ESC – CA Public
V 02/20/2024

ATTACHMENT F

MAINTENANCE SERVICES

EQUIPMENT AND FACILITIES COVERED

ENGIE Services U.S. will perform preventive maintenance services (“Maintenance Services”) as set forth in this Attachment F with respect to Generating Facilities being constructed on City’s property at the following Project Locations:

Site Name Site Address City County State Zip
Code
El Gabilan Library 1400 N Main St. Salinas Monterey CA 93906 Police Dept 312 E Alisal St. Salinas Monterey CA 93901

I. Fees

“Annual Maintenance Fee” means a fee payable annually in advance by City to ENGIE Services U.S., in consideration of the provision of up to five (5) years of Maintenance Services. The Annual Maintenance Fee for the first Measurement Period will be Nineteen Thousand Five Hundred Forty-Three Dollars ($19,543.00). The Annual Maintenance Fee will be increased annually thereafter at the rate of five percent (5%) per annum, each increase to be effective on the first day of the corresponding Measurement Period.

II. Term

So long as City pays to ENGIE Services U.S. the Annual Maintenance Fee, ENGIE Services U.S. will provide the Maintenance Services, as described herein, up to five (5) years from the M&V Commencement Date on an annualized basis.

III. Invoicing; Reporting

The Annual Maintenance Fee for the first Measurement Period will be invoiced by ENGIE Services U.S. to City in a lump sum on the M&V Commencement Date. All subsequent Annual Maintenance Fees will be invoiced by ENGIE Services U.S. on the first day of the corresponding Measurement Period. City, or its designee, will pay ENGIE Services U.S. such Annual Maintenance Fee, without any retention amount withheld, within thirty (30) calendar days after its receipt of the corresponding invoice. Any failure to timely pay the Annual Maintenance Fee in accordance with this Attachment F will be a material default by City, and ENGIE Services U.S., in addition to any other legal, contractual and equitable remedies available to it, will have no obligation thereafter to provide Maintenance Services.

Any amount not paid when due will, from and after the due date, bear Interest. Accrued and unpaid Interest on past due amounts (including Interest on past due Interest) will be due and payable upon demand.

The Annual Maintenance Fee is not refundable for any reason.

Upon completion of any maintenance or repair work, ENGIE Services U.S. will update service logs detailing the work performed, location and any notes relevant to safe and efficient operations. These service logs will be compiled and submitted to City on a quarterly basis.

If ENGIE Services U.S. is no longer the provider of Maintenance Services, City’s new provider will maintain similar service logs. ENGIE Services U.S. will have reasonable access to inspect service logs to determine that adequate Maintenance Services are being performed.

IV. Preventive Maintenance Services Provided

ENGIE Services U.S. will provide the following Maintenance Services during the term:

a. Inspection: Inspect PV modules, combiner boxes, inverters and PV service roof penetrations and support structure on an annual basis.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 39 of 42 ESC – CA Public
V 02/20/2024

b. Testing: Perform voltage testing, amperage testing, and infrared scans of inverters, combiner boxes, disconnects and switchgear on an annual basis.

c. Monitoring: Monitor system performance on a daily basis.

d. Cleaning:
i. Remove dust, dirt, and debris from outside cabinets of combiner boxes, inverters, transformers, and disconnect switches on an annual basis.
ii. Wash PV modules and remove accumulated dust and debris on an semiannual basis.

V. Repair Services
If a Generating Facility is damaged and requires safe-off, repair, demolition and/or reconstruction, or otherwise requires repair outside of warranty or outside of the Maintenance Services described in Section 3.01, Customer must contact the ENGIE Services U.S. PV Operations & Maintenance Manager and submit a request for quotation. ENGIE Services U.S. will inspect the damage and provide a written quotation and complete scope of work to Customer to restore the Generating Facility to normal operational condition. Before proceeding with repairs, ENGIE Services U.S. and Customer must execute a Work Order, on ENGIE Services U.S.’s form, a sample of which is attached hereto as Exhibit F-1, for the agreed scope of work and quotation amount. Quotations for repair work are calculated on a time and materials basis.

Standard Business Hours are M-F, 7am to 5pm. Non-business Hours & Saturdays equals 1.5x Rates. Sundays & Holidays equals 2.0x Rates.

Labor Category Straight
Time
Hourly Rate – PV Electrical Journeyman Technician1 $/hr. County Labor Rate
Hourly Rate – PV Electrical Apprentice Technician1 $/hr. County Labor Rate
Hourly Rate – Senior PV Tech/Commissioning2 $/hr. $175.00 Hourly Rate – Engineering2 $/hr. $ 185.00
Hourly Rate – Administrative2 $/hr. $ 108.00
Hourly Rate – Project Management2 $/hr. $230.00
Mileage $/Mi $1.00
Material mark-up % % 15.00
Lift rental fee $ Current
Market Price
1Trade Hourly rate will be adjusted based on the current year of the local prevailing wage determination plus Burden, requirement for either travel or subsistence and lodging, and markup for services being requested. 2Escalated according to an inflation rate to the year in which service will occur.

VI. Warranty Services
The ENGIE Services U.S. PV Operations & Maintenance Manager will also be City’s point of contact for all issues related to the ENGIE Services U.S. Warranty set forth in Section 9.01 of the Contract. City should refer to Section 9.02 of the Contract for services provided by ENGIE Services U.S. to City in relation to manufacturer’s warranties. The terms and conditions of the relevant manufacturer’s warranties can be found in the operation and maintenance manuals delivered to City at Final Completion.

VII. Services and Equipment to Be Covered by City
ENGIE Services U.S.’s obligations under this Attachment F are expressly conditioned upon City’s payment of the Annual Maintenance Fee and providing and being responsible for the following, without cost to ENGIE Services U.S.:

a. Making the Generating Facilities described herein available to ENGIE Services U.S. as of the Contract Effective Date.
b. Operating and maintaining security systems associated with the Generating Facilities. c. Maintaining all landscaping in and around Generating Facilities including tree trimming.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 40 of 42 ESC – CA Public
V 02/20/2024

d. Allowing ENGIE Services U.S. and its personnel access as necessary to the Generating Facilities, and any related areas that may be reasonably necessary for performance of the Maintenance Services, including reasonable work, parking, and equipment staging areas.
e. Allowing ENGIE Services U.S. and its personnel to access electrical power and other utilities then existing at the Generating Facilities as necessary for ENGIE Services U.S. to satisfy its obligations under the Contract. f. Remediating, pursuant to Applicable Law, any known Hazardous Substances encountered by ENGIE Services U.S. during the performance of the Maintenance Services which Hazardous Substances were not deposited by ENGIE Services U.S., including any backfill with clean soil as may be reasonably required. g. Insuring the Generating Facilities against loss due to acts of God and the public enemy; flood, earthquake, tornado, storm, fire; civil disobedience, sabotage, and vandalism. h. Timely reporting of, and permitting timely repair of, Generating Facilities damaged by City Persons or third parties, including damage resulting from parking lot, playground or ballfield activities. Cost of repairs is the responsibility of City.

ENGIE Services U.S. will have no obligation to provide the Maintenance Services to the extent such provision of Maintenance Services is materially adversely affected by City’s failure to satisfy the conditions set forth in this Attachment F.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 41 of 42 ESC – CA Public
V 02/20/2024

EXHIBIT F-1

FORM OF WORK ORDER

Work Order #__

This Work Order (“Work Order”) dated _________ (“Work Order Effective Date”) is issued pursuant to and is subject to the terms and conditions of the Energy Services Agreement (“Agreement”) by and between ENGIE Services U.S. Inc. (“ENGIE Services U.S.”) and ______________ (“Customer”) dated ___________. The terms and conditions of the Agreement are hereby incorporated into and made a part of this Work Order for all purposes.

Project Name:

Scope of Work:

Electrical and Structural Repairs:

Exclusions: [edit, as needed]
 Premium Time or Over Time
 Work on Nights or Weekends
 Cutting, Patching or Painting
 Permitting
 Plan Revisions
 Review/Edit/Writing of Specifications
 Geotechnical Reports/Inspections
 PLA/PSA Agreements
 Irrigation System Inspection/Repairs
 Landscape Repair/Tire Track Removal
 Landscape Maintenance
 Infestations

Cost Estimate: [insert]

Pricing assumes State prevailing wages for on-site labor. Quote valid for 30 days.

Payment to ENGIE Services U.S. is not contingent on Customer’s receipt of any insurance proceeds and will be invoiced by ENGIE Services U.S. to Customer in a lump sum upon the completion of the work under this Work Order.

Acceptance and Notice to Proceed
By signing below, Customer agrees to the terms and conditions set forth in this Work Order and authorizes ENGIE Services U.S. to proceed with the scope of work set forth herein.

The Parties may execute this Work Order in counterparts, each counterpart constituting an original, and all counterparts, collectively, constituting only one Work Order. The signatures of each Party need not appear on the same counterpart, and in the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature will create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

Energy Services Contract
City and ENGIE Services U.S.

Rev. Date: _______ Page 42 of 42 ESC – CA Public
V 02/20/2024

IN WITNESS WHEREOF, and intending to be legally bound, the Parties hereto subscribe their names to this Work Order by their duly authorized officers as of the Work Order Effective Date.

CUSTOMER: ENGIE:

City of Salinas ENGIE Services U.S. Inc.

By:

Name:

Name
:

Title:

City of Salinas – Investing in a Cleaner
Future
December 3, 2024

1. 2.

3. 4.
2 3
Exceeded guaranteed
production
*Guarantee term ended
after Year 5
Excess savings of
nearly $700k back to the
general fund

4  Reduce utility bills and return operating expenses back into the community  Plan for future load and EV charging requirements by the state  Take advantage of NEM 2.0 savings and tax credits from the Inflation Reduction Act 5 City of Salinas - Energy Savings Program
Milestone Date Achieved?
ENGIE submitted NEM 2.0 Applications April 14, 2023 X
City signed Interconnection Agreements August 19, 2024 X Project Development and Review August - October X
Finance Subcommittee Meeting October 8, 2024 X
Post Public Hearing per Govt Code 4217 November 5, 2024 X Council Approval of Implementation Contract and Financing Today 6 Site Solar PV Backup
Generator
El Gabilan Library X -
Police Department X -
City Hall - X

7 ENGIE SERVICES, U.S. IS NOT A MUNICIPAL ADVISOR AND CANNOT GIVE ADVICE WITH RESPECT TO MUNICIPAL SECURITIES OR MUNICIPAL FINANCIAL PRODUCTS. THIS INFORMATION IS PROVIDED

FOR EDUCATIONAL PURPOSES ABOUT POSSIBLE FINANCING OPTIONS AND IS NOT THE PROVISION OF ADVICE, OR A RECOMMENDATION TO PURSUE, ANY PARTICULAR FINANCING OPTION. CONSULT

WITH YOUR MUNICIPAL ADVISOR OR FINANCIAL ADVISOR ABOUT THE FINANCING OPTION APPROPRIATE FOR YOUR SITUATION. ENGIE SERVICES, U.S. CAN PROVIDE INFORMATION

TO YOUR MUNICIPAL ADVISOR OR FINANCIAL ADVISOR ABOUT THE HYPOTHETICAL ASSUMPTIONS AND EDUCATIONAL SCENARIOS USED IN THESE MATERIALS.

Notes:
- Project Cost: $4,774,025
- Estimated Debt Service Schedule
from Bank of America
- 4.255% for 20-year term
Net Savings:
- ~$5 million
Year
Net Solar Project
Savings
Investment
Tax Credit
Total Program
Savings
Estimated Loan
Payment
Net Program
Savings
Cumulative
Savings
1 260,798$ -$ 260,798$ (253,474)$ 7,323$ 7,323$ 2 272,385$ 1,017,215$ 1,289,600$ (265,262)$ 1,024,338$ 1,031,662$ 3 284,487$ -$ 284,487$ (277,453)$ 7,033$ 1,038,695$ 4 297,125$ -$ 297,125$ (290,007)$ 7,118$ 1,045,813$ 5 310,324$ -$ 310,324$ (302,879)$ 7,445$ 1,053,258$ 6 324,109$ -$ 324,109$ (317,029)$ 7,080$ 1,060,338$ 7 338,506$ -$ 338,506$ (331,370)$ 7,136$ 1,067,474$ 8 353,540$ -$ 353,540$ (345,859)$ 7,681$ 1,075,155$ 9 369,242$ -$ 369,242$ (361,456)$ 7,787$ 1,082,942$ 10 385,641$ -$ 385,641$ (378,073)$ 7,567$ 1,090,509$ 11 402,766$ -$ 402,766$ (395,627)$ 7,139$ 1,097,649$ 12 420,652$ -$ 420,652$ (413,032)$ 7,619$ 1,105,268$ 13 439,330$ -$ 439,330$ (431,246)$ 8,084$ 1,113,352$ 14 458,836$ -$ 458,836$ (451,183)$ 7,653$ 1,121,005$ 15 479,208$ -$ 479,208$ (471,716)$ 7,492$ 1,128,497$ 16 500,483$ -$ 500,483$ (492,760)$ 7,723$ 1,136,220$ 17 522,701$ -$ 522,701$ (515,229)$ 7,471$ 1,143,691$ 18 545,904$ -$ 545,904$ (537,997)$ 7,907$ 1,151,598$ 19 570,135$ -$ 570,135$ (562,977)$ 7,158$ 1,158,756$ 20 595,441$ -$ 595,441$ -$ 595,441$ 1,754,197$ 21 621,868$ -$ 621,868$ -$ 621,868$ 2,376,065$ 22 649,467$ -$ 649,467$ -$ 649,467$ 3,025,532$ 23 678,288$ -$ 678,288$ -$ 678,288$ 3,703,820$ 24 708,387$ -$ 708,387$ -$ 708,387$ 4,412,207$ 25 739,820$ -$ 739,820$ -$ 739,820$ 5,152,027$ 25 Year Total 11,529,443$ 1,017,215$ 12,546,657$ (7,394,630)$ 5,152,027$ Amar Tiwari
Program Development Manager
[email protected]
(415) 264-2642
Dave Baldwin, PE
Director, Energy Management
[email protected]
(408) 218-9824
9 10

11 City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-687, Version: 1
2024 Energy Equipment Lease
Approve a Resolution approving an Equipment Lease/Purchase Agreement and an Escrow and Account Control Agreement and authorizing certain actions in connection therewith relating to the financing of certain equipment for the City.

City of Salinas Printed on 11/27/2024Page 1 of 1
powered by Legistar™

Page | 1

CITY OF SALINAS

COUNCIL STAFF REPORT

DATE: DECEMBER 3, 2024
DEPARTMENT: FINANCE, CITY ATTORNEY, PUBLIC WORKS
FROM: SELINA ANDREWS, FINANCE DIRECTOR
CHRISTOPHER A. CALLIHAN, CITY ATTORNEY

DAVID JACOBS, PUBLIC WORKS DIRECTOR

TITLE: 2024 ENERGY EQUIPMENT LEASE

RECOMMENDED MOTION:

A motion to a pprove a resolution approving an Equipment Lease/Purchase Agreement and an Escrow and Account Control Agreement and authorizing certain actions in connection therewith relating to the financing of certain equipment for the City.

EXECUTIVE SUMMARY:

The City worked with ENGIE to assess certain City facilities for installation and maintenance of solar photovoltaic (“PV”) systems at the El Gabilan Library and the Police Department , as well as a backup generator to support City Hall. The cost of the solar PV systems and backup generator is $4,774,025, and the City plans to finance these improvements with a tax-exempt equipment lease. The City requested interest rate from banks for a 20-year tax-exempt equipment lease (“2024 Lease), and the proposal from Banc of America Public Capital Corp (“BAPCC”) was the most advantageous to the City . City staff propose s to enter into a n Equipment Lease /Purchase Agreement with BAPCC and an Escrow and Account Control Agreement with Wilmington Trust (collectively, the “Fi nancing Agreements”) . City Council approval of the resolution and the Financing Agreements will authorize City staff to sign the documents and take other necessary actions. Staff expect to execute the Financing Agreements and close the 2024 Lease before the end of December.

BACKGROUND:

The City worked with ENGIE to assess certain City facilities for installation and maintenance of solar photovoltaic ( “PV”) systems within El Gabilan Library and the Police Department. In addition to the solar PV systems, staff also recommends a backup generator to support City Hall be included as part of the scope. It is anticipated that the City would also benefit from the NEM

2.0 savings and Investment Tax Credit (“ITC”) from the Inflation Reduction Act (“IRA”).

The total cost of these projects is $4,774,025 and the projects are expected to result in over $5 million savings over the life of the project approximately 25 years) after application of an Inflation Reduction Act Investment Tax Credit (“IRA ITC”, discussed further below). City Council Page | 2
reviewed ENGIE’s Energy Services Contract earlier this meeting and consideration of this agenda item related to the Financing Agreements is contingent upon approval of the contract with ENGIE.

To finance the $ 4.8 million cost of these improvements, the City engaged NHA Advisors LLC (“NHA”) as municipal financial advisor and Stifel as the placement agent. Due to the relatively small size of the tax-exempt municipal equipment lease and the equipment lease structure, NHA, Stifel, and City staff decided to utilize a private placement process (direct loan with a bank), rather than a public offering (bond issued to investors). Stifel contacted 22 active banks for this type of financing vehicle, requesting interest rates for a 20 -year tax-exempt equipment lease. Five banks responded with interest rates ranging from 4.255% to 5.570%. The proposal from BAPCC was the most advantageous to the City due to the following reasons:

 Lowest interest rate.
 BAPCC will provide all the lease documents – the City will not need to engage special counsel to prepare the documents.
 A tax opinion is not required.
 No bank fees are associated with the loan.
 City will not need to pay for escrow agent services through Wilmington Trust as escrow agent.
 City can use its IRA ITC to prepay a portion of the loan during the first 3 years, at a 100.5% premium.

The 2024 Lease will have a 20 -year term, maturing June 1, 2044. BAPCC has provided a fixed

4.255% interest rate for the 2024 Lease. This interest rate is also locked through closing of the 2024 Lease, removing the risk that interest rates rise in the next few weeks before the 2024 Lease closes and funds. The 2024 Lease is expected be sized to $4,735,000, which will cover the project cost and the costs of issuing the 2024 Lease. The resolution requests authorization for staff to enter into the agreement subject to the final lease amount being less than a not -to-exceed amount of $4,900,000 and the interest rate being less than a not-to-exceed amount of 4.30%. These amounts are intentionally set slightly higher than the actual expected amounts to provide a little contingency in case of any unforeseen delays.

The 2024 Lease has annual debt service escalating at approximately 4.5% per year over the next 20 years . This escalation follows the annual escalation of ENGIE’s projected energy savings during that same period and achieves approximately $7,500 in net energy savings each year over the next 20 years (before applying the IRA ITC credit). Once the loan is paid off, the savings are projected to increase in years 21 -25 to an average of about $665,000 per year . The graph below shows the project ed net energy savings from the ENGIE project over the next 25 years (orange bars) and the debt service on the 2024 Lease through final maturity in 2044 (dark blue line). The amount by which the orange bars are higher than the blue line equals the net energy savings the City is projected to achieve through the ENGIE project.

The project is expected to be eligible for the IRA ITC in an amount of approximately $1,017,000.

The IRA ITC is available in the form of a refundable tax credit at the conclusion of the project (once permission to operate has been granted by PG&E). All eligible projects nationwide can receive this IRA ITC, without regard to volume cap limitations. The current financing plan is for Page | 3
the City to prepay a portion of the 2024 Lease with the IRA ITC once the City receives the credit.

BAPCC’s term sheet allows for an extraordinary optional prepayment provision for partial prepayment of the 2024 Lease using the IRA ITC during the first 3 years, at a 100.5% premium.

The dark red line in the chart below represent s the debt service on the 2024 Lease assuming the IRA ITC is used to partially prepay the 2024 Lease . While the City is not required to use the $1.017M IRA ITC to prepay a portion of the lease, doing so will increase total savings over the 25-year project life by approximately $1.77M to bring the total savings over the 25 -year period over the $5 million estimate previously mentioned.

For the City to enter into the 2024 Lease, City Council will need to adopt the attached resolution approving the Financing Agreements and authorizing City staff to execute the Financing Agreements and take other necessary actions.

Discussion of Lease Documents:

Equipment Lease/Purchase Agreement: The Equipment Lease/Purchase Agreement (“ELPA”) outlines the terms governing the 2024 Lease. The ELPA will identify the location of the energy improvements (solar and generator ) and that the security for the 2024 Lease is a lien on the equipment. This lien will be in place until the 2024 Lease matures in June 2044, or is otherwise prepaid in accordance with the lease terms. The ELPA also contains the payment details, $0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
Fiscal Year
Net Energy Savings (Before Debt Service)
2024 Lease Debt Service (No IRA Prepayment)
2024 Lease Debt Service (With IRA Prepayment)
Page | 4
prepayment provisions, and other covenants of the City. A detailed payment schedule for the 2024 Lease can be found in Exhibit B of the ELPA.

Escrow and Account Control Agreement: The Escrow and Account Control Agreement (“Escrow Agreement”) is among BAPCC, the City of Salinas, and Wilmington Trust, National Association (“Wilmington Trust”). The Escrow Agreement identifies the various covenants between the City and Wilmington Trust as the Escrow Agent. Wilmington Trust will hold the proceeds of the 2024 Lease starting on the closing/funding day and will distribute them to pay for ENGIE project costs as requested from time to time by the City.

CEQA CONSIDERATION:

Not a Project. The City of Salinas has determined that the proposed action is categotically exempt from environmental review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15301 (Existing Facilities) and 15303 (New Construction or Conversion of Small Structures) and statutorily exempt pursuant to Public Resources Code section 21080.35.

CALIFORNIA GOVERNMENT CODE §84308 APPLIES:

Yes.

STRATEGIC PLAN INITIATIVE:

This project meets the strategic goal of Infrastructure and Environmental Sustainability and Effective and Culturally Responsive Government.

DEPARTMENTAL COORDINATION:

This staff report was coordinated with the City Attorney’s Office, City Manager’s Office, Public Works Department, and the Finance Department.

FISCAL AND SUSTAINABILITY IMPACT:

The 2024 Lease will have no financial impact on the FY 2024 -25 budget cycle. The 2024 Lease has ascending annual debt service payments, with just over $ 253,000 due in fiscal year 2025-26, ascending just under $563,000 due in fiscal year 2043 -44 (final maturity of the 2024 Lease) . As mentioned earlier, this structure achieves uniform net energy cost savings of approximately $7,500 per year over the next 20 years before the application of the IRA ITC to prepay a portion of t he lease.

The costs associated with issuing the 2024 Lease will be paid out of the proceeds of the 2024 Lease (no direct budgetary impact).

The first debt service payment will be due in December 2025. This will be included in the FY 25- 26 operating budget.

Page | 5
Fund

Appropriation

Appropriation
Name
Total
Appropriation
Amount for
recommendation
FY 24-25
Operating
Budget Page
Last Budget
Action (Date,
Resolution)*
1100 TBD Debt Service N/A N/A N/A N/A

ATTACHMENTS:

1. Resolution

2. Exhibit A – Government Code Section 5852.1 Disclosure

3. Exhibit B – Savings Analysis

4. Exhibit C – BAPCC Term Sheet

5. Exhibit D – Equipment Lease/Purchase Agreement

6. Exhibit E – Escrow and Account Control Agreement

7. Exhibit F – Estimated Debt Service Schedule

RESOLUTION NO. ________(N.C.S.)

A RESOLUTION AUTHORIZING THE EXECUTION OF A FINANCING

AGREEMENT WITH BANC OF AMERICA PUBLIC CAPITAL CORP TO

PROVIDE FINANCING FOR AN ENERGY SERVICES CONTRACT WITH ENGIE SERVICES U.S. INC., MAKING CERTAIN FINDINGS REQUIRED THEREFORE,

AND AUTHORIZING RELATED ACTIONS

WHEREAS, the City finds it to be in the best interests of the City to implement projects to promote energy efficiency and renewable energy to achieve utility budget cost reductions; WHEREAS, Government Code sections 4217.10 through 4217.18 authorize the City's governing board (the “City Council") to enter into one or more energy service contracts with any person or entity if the City Council finds that the anticipated cost to the City for thermal or electrical energy or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the City of thermal, electrical, or other energy that would have been consumed by the City in the absence of those energy service contracts ("Savings");
WHEREAS, Government Code sections 4217.10 through 4217.18 authorize the City Council to enter into one or more facility financing contracts if the City Council finds that funds for the repayment thereof are projected to be available from the Savings, representing funds that otherwise would have been used for purchase of electrical, thermal, or other energy required by the City in the absence of the energy conservation services and facilities financed by proceeds available through the facility financing contracts;
WHEREAS, the City gave notice of its intent to conduct a public hearing and take public comment upon the subject matter of this Resolution two weeks prior to the regularly scheduled public meeting of the City Council at which the City Council has held a public hearing and taken public comment and has now considered a corresponding r esolution, all as required under Government Code sections 4217.10 through 4217.18;
WHEREAS, ENGIE has offered to enter into an Energy Services Contract ("Energy Services Contract,") to provide design/build implementation of the recommended energy conservation measures for the price stated therein and a savings performance guarantee; WHEREAS, the City Council has approved the execution of the Energy Services Contract with ENGIE at its meeting on December 3, 2024; WHEREAS, the City desires to finance the cost of the improvements under the Energy Services Contract to align the cost of the improvements with the benefit derived over the anticipated useful life of the improvements;
WHEREAS, Banc of America Public Capital Corp or its affiliate has offered to enter into an Equipment Lease/Purchase Agreement ("Equipment Lease/Purchase Agreement ,") between the City as Lessee, and Banc of America Public Capital Corp or its affiliate, as Lessor; WHEREAS, Banc of America Public Capital Corp or its affiliate has offered to enter into an Escrow and Account Control Agreement ("Escrow Agreement," and, together with the Equipment Lease/Purchase Agreement , the "Financing Agreements"), with City and Wilmington Trust, National Association, as escrow agent, under terms that are beneficial to the City;
WHEREAS, the feasibility of various potential energy conservation measures to reduce the City’s energy consumption and expense was completed (“Analysis”). The Analysis made certain conclusions about the cost to the City for energy conservation services and the potential savings to be realized therefrom and recommended specific conservation measures upon which the City Council and City staff have relied;
WHEREAS, the Analysis indicates that funds for the repayment of lease payments under the Equipment Lease/Purchase Agreement are anticipated to be available from the Savings, representing funds that otherwise would have been used for purchase of electrical, thermal, or other energy required by the City in the absence of the energy conservation services provided under the Energy Services Contract;
WHEREAS, in accordance with Government Code Section 5852.1, the City Council has obtained and disclosed the information set forth in Exhibit A hereto; WHEREAS, the City Council finds and determines that this project is categorically exempt from environmental review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines sec tions 15301 (Existing Facilities) and 15303 (New Construction or Conversion of Small Structures) and statuto rily exempt pursuant to Public Resources Code section 21080.35.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL, AS FOLLOWS:

Section 1. Recitals. All of the recitals herein contained are true and correct and are fully incorporated herein by this reference.

Section 2. Equipment Lease/Purchase Agreement Findings. The City Council finds that funds for the repayment of rental payments under the Equipment Lease/Purchase Agreement are projected to be available from the Savings, representing funds that otherwise would have been used for purchase of electrical, thermal, or other energy required by the City in the absence of the energy conservation services, and that it is in the best interest of the City to approve and enter into the Financing Agreements.

Section 3. Financing Agreements Approval. The forms of the Financing Agreements, in the forms on file with the City Clerk, are hereby approved, with such changes thereto, deletions therefrom and additions or modifications thereto as may be approved pursuant to Section 4 hereof; provided that the par amount of the Financing Agreements shall not exceed $4,900,000 and the initial, tax exempt interest rate shall not exceed 4.30% (exclusive of adjustments to the rate upon an event of default or event of taxability).

Section 4. Execution and Delivery. Any one of the City Manager, the Finance Director, or any deputy thereof, or person duly appointed in writing to act in the stead of such officer (collectively, the “Responsible Officers”), is hereby authorized and directed for and in the name of and on behalf of the City to execute and deliver the Financing Agreements , each in substantially the form presented to and considered at this meeting, with such changes there in, deletions therefrom and additions thereto as may be approved (i) by any Responsible Officer, in such person’s discretion, as being in the best interests of the City, (ii) as to form, by City Attorney; such approval to be conclusively evidenced by the e xecution and delivery thereof by the person executing the same on behalf of the City.

Section 5. Further Actions. The Responsible Officers are, and each of them acting alone is, hereby authorized and directed to take such actions and to execute such documents and certificates as may be necessary to effectuate the purposes of this resolution, including the execution and delivery of the Financing Agreements, and execution and delivery of any and all memorandums of agreement or understanding, assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they, or any of them, deem necessary or advisable in order to consummate the transactions and requirements as described herein.

Section 6. No General Liability. Nothing contained in this Resolution, the Financing Agreements nor any other instrument shall be construed with respect to the Lessee as incurring a pecuniary liability or charge upon the general credit of the Lessee or against its taxing power, nor shall the breach of any agreement contained in this Resolution, the Financing Agreements, or any other instrument or document executed in connection therewith impose any pecuniary liability upon the Lessee or any charge upon its general credit or against its taxing power, except to the extent that the Rental Payments payable under the Agreement are l imited obligations of the Lessee, subject to annual appropriation, as provided in the Agreement.

Section 7. Ratification. All actions heretofore taken by any officer of the City with respect to the execution and delivery of the Financing Agreements, and the financing of the equipment and projects described therein are hereby approved, confirmed and ratified.

Section 8. Effective Date. This Resolution shall take effect upon approval.

PASSED AND APPROVED this 3rd day of December by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED:

________________________________
Kimbley Craig, Mayor

ATTEST:

_________________________________
Patricia M. Barajas, City Clerk

Attachment: Exhibit A (Government Code section 5852.1 Disclosure)

The City Clerk of the City of Salinas, California does hereby certify that the foregoing Resolution was introduced and duly passed and adopted by the City Council at a regularly scheduled meeting thereof held on this date, by the forgoing vote.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City, California on this date.

___________________________________
Patricia M. Barajas, City Clerk

EXHIBIT A

GOVERNMENT CODE SECTION 5852.1

DISCLOSURE

The following information consists of estimates that have been provided by NHA Advisors, the City’s Municipal Advisor, as required by Section 5821.1 of the California Government Code, which has been provided to the City in good faith:

(A) True interest cost of the Equipment Lease/Purchase Agreement (“Lease”):

4.255%

(B) Finance charge of the Lease (sum of all costs of issuance and fees/charges paid to third parties): $65,000

(D) Total payment amount through maturity: $7,394,631

Year
Electricity
Produced
(kWh)
Avoided
Electric Rate
($/kWh)
Solar Electric
Savings
Solar O&M
Cost
Solar M&V
Cost
Net Solar
Project Savings
Investment Tax
Credit
Total Program
Savings
Estimated Loan
Payment
Net Program
Savings
Cumulative
Savings
A B C = A * B O M E = C - D F K = E+F+G+H+I+J L N = E+ L P 1 1,041,32 3 0.273 284,39 4$ 19,543$ 4,053$ 260,798$ -$ 260,798$ (253,474)$ 7,323$ 7,323$ 2 1,036,11 6 0.287 297,12 0$ 20,520$ 4,215$ 272,385$ 1,017,215$ 1,289,600$ (265,262)$ 1,024,338$ 1,031,662$ 3 1,030,93 6 0.301 310,41 6$ 21,546$ 4,384$ 284,487$ -$ 284,487$ (277,453)$ 7,033$ 1,038,695$ 4 1,025,78 1 0.316 324,30 8$ 22,623$ 4,559$ 297,125$ -$ 297,125$ (290,007)$ 7,118$ 1,045,813$ 5 1,020,65 2 0.332 338,82 0$ 23,755$ 4,741$ 310,324$ -$ 310,324$ (302,879)$ 7,445$ 1,053,258$ 6 1,015,54 9 0.349 353,983$ 24,942 $ 4,931 $ 324,109$ - $ 324,109$ (317,029)$ 7,080$ 1,060,338$ 7 1,010,47 1 0.366 369,823$ 26,189 $ 5,128 $ 338,50 6$ -$ 338,506$ (331,370)$ 7,136$ 1,067,474$ 8 1,005,41 9 0.384 386,373$ 27,499 $ 5,333 $ 353,54 0$ -$ 353,540$ (345,859)$ 7,681$ 1,075,155$ 9 1,000,39 2 0.404 403,663$ 28,87 4$ 5,547$ 369,242$ -$ 369,242$ (361,456)$ 7,787$ 1,082,942$ 10 995,39 0 0.424 421,72 7$ 30,318$ 5,769$ 385,641$ -$ 385,641$ (378,073)$ 7,567$ 1,090,509$ 11 990,413 0.445 440,599 $ 31,833 $ 5,999 $ 402,76 6$ -$ 402,766$ (395,627)$ 7,139$ 1,097,649$ 12 985,461 0.467 460,31 6$ 33,425$ 6,239$ 420,652$ -$ 420,652$ (413,032)$ 7,619$ 1,105,268$ 13 980,533 0.490 480,915 $ 35,09 6$ 6,489$ 439,330$ -$ 439,330$ (431,246)$ 8,084$ 1,113,352$ 14 975,631 0.515 502,43 6$ 36,851$ 6,749$ 458,836$ -$ 458,836$ (451,183)$ 7,653$ 1,121,005$ 15 970,753 0.541 524,92 0$ 38,694$ 7,018$ 479,208$ -$ 479,208$ (471,716)$ 7,492$ 1,128,497$ 16 965,899 0.568 548,41 0$ 40,628$ 7,299$ 500,483$ -$ 500,483$ (492,760)$ 7,723$ 1,136,220$ 17 961,069 0.596 572,952 $ 42,66 0$ 7,591$ 522,701$ -$ 522,701$ (515,229)$ 7,471$ 1,143,691$ 18 956,26 4 0.626 598,591$ 44,793 $ 7,895 $ 545,90 4$ -$ 545,904$ (537,997)$ 7,907$ 1,151,598$ 19 951,483 0.657 625,37 8$ 47,033$ 8,211$ 570,135$ -$ 570,135$ (562,977)$ 7,158$ 1,158,756$ 20 946,725 0.690 653,36 4$ 49,384$ 8,539$ 595,441$ -$ 595,441$ -$ 595,441$ 1,754,197$ 21 941,992 0.725 682,602 $ 51,853 $ 8,881 $ 621,86 8$ -$ 621,868$ -$ 621,868$ 2,376,065$ 22 937,282 0.761 713,149 $ 54,44 6$ 9,236$ 649,467$ -$ 649,467$ -$ 649,467$ 3,025,532$ 23 932,595 0.799 745,062 $ 57,16 8$ 9,605$ 678,288$ -$ 678,288$ -$ 678,288$ 3,703,820$ 24 927,932 0.839 778,403 $ 60,027 $ 9,989 $ 708,38 7$ -$ 708,387$ -$ 708,387$ 4,412,207$ 25 923,293 0.881 813,23 7$ 63,028$ 10,389 $ 739,820$ -$ 739,820$ -$ 739,820$ 5,152,027$ 25 Year Total 24,529,35 4 12,630,964$ 11,529,443$ 1,017,215$ 12,546,657$ (7,394,630)$ 5,152,027$ Exhibit B
Estimated Savings Calculations Provided by ENGIE*
*Estimated Loan Payment amounts provided by NHA Advisors, the City's Municipal Advisor

Michael C. Brunsman
Senior Vice President
Energy Services
Global Leasing
312 Walnut Street, Suite 2200
Cincinnati, OH 45202
T 513-929-5102 M 513-484-0049
[email protected]

October 30, 2024

VIA ELECTRONIC MAIL

City of Salinas
200 Lincoln Avenue
Salinas, CA 93901

Cc: Craig Hill, Christian Sprunger, & Matt DeFilippis, NHA Advisors Vince Lazalde & Julius Rees, Stifel
Brad Koster & Tina Wilson, BofA Global Leasing – Energy Services

Re: City of Salinas, approximately $4,741,000 total project cost, Non-Bank Qualified Tax-Exempt Equipment Financing, Annual Appropriations Structure

Banc of America Public Capital Corp and its affiliates (“BAPCC") is pleased to submit to City of Salinas (the “City”) the Non-Bank Qualified Tax-Exempt Financing proposal (the Proposed Transaction”) as described in the attached Summary of Terms and Conditions (the "Term Sheet"). Please review the Term Sheet and contact me if you have any questions.

This letter and the Term Sheet (collectively, the “ Proposal” or the “ Proposal Letter”) include only a brief description of the principal terms of the Pr oposed Transaction, and are intended for discussion purposes only. Please understand that this Proposal is not a commitment or offer to purchase, and does not create any obligation for BAPCC. BAPCC will not be responsible or liable for any damages, consequential or otherwise, that may be incurred or alleged by any person or entity as a result of this Proposal Letter. BAPCC will notify you in writing of its decision to proceed with the Proposed Transaction after completing its review and analysis.

This Proposa l must be accepted on or before November 8 , 2024 in order for the BAPCC to proceed with its consideration of the Proposed Transaction. To accept this Proposal, please sign the enclosed copy of this Proposal Letter and return it to my attention at the following email address:
[email protected].

Thank you for allowing us the opportunity to prepare this Proposal for City of Salinas.

Sincerely yours,

Banc of America Public Capital Corp

Michael C. Brunsman

By: Michael C. Brunsman
Title: Senior Vice President

The undersigned, by its authorized representative below, accepts the Proposal contingent upon proper approval at a meeting of its Governing Board. The undersigned agrees to furnish BAPCC , its successors and assigns, any information relating to the business or financial condition of the City or its affiliates, and authorizes the BAPCC, Bank of America, N.A. and their affiliates to disclose to, discuss with and distribute such information ( and any information they may already have) to any other affiliates or proposed assignees or successors of BAPCC.

City of Salinas

By: _____

Title: _____

Date: _____

“Bank of America” is the marketing name used by certain Global Banking and Global Markets businesses of Bank of America Corporation. Lending, leasing, equipment finance and other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Banc of America Public Capital Corp, a wholly-owned subsidiary of Bank of America, National Association, is not a municipal advisor and is not subject to the fiduciary duty established in Section 15B(c)(1) of the Securities Exchange Act of 1934, as amended, with respect to any municipal financial product or issuance of municipal securities. The information provided in this document is not intended to be and should not be construed as “advice” within the meaning of Section 15B of the Securities Exchange Act of 1934 and the municipal advisor rules of the SEC. © 2022 Bank of America Corporation. All rights reserved.

City of Salinas
200 Lincoln Avenue
Salinas, CA 93901

Cc: Craig Hill, Christian Sprunger, & Matt DeFilippis, NHA Advisors Vince Lazalde & Julius Rees, Stifel
Brad Koster & Tina Wilson, BofA Global Leasing – Energy Services

RE: City of Salinas Financing Proposal

Banc of America Public Capital Corp is pleased to submit the following financing proposal for the City of Salinas solar and backup generation project with Engie. No municipal financial products or municipal securities have been included in the following proposal.

I. Lessee City of Salinas

II. Lessor Information
Lessor Name: Banc of America Public Capital Corp (“BAPCC”) Address: 312 Walnut Street, Suite 2200
Cincinnati, OH 45202
Contact: Michael Brunsman
Telephone: 513-929-5102
Email: [email protected]

Background: BAPCC offers unique financing features and qualifications that can be leveraged on behalf of the City to complete this private placement transaction at a low interest cost and in a smooth and efficient manner. These features and qualifications include:

1. Taxable & Tax-Exempt Private Placement Experience: BAPCC is a leading provider of private placement capital to the state government, municipal local government, K -12, housing authority, and higher education tax -exempt markets. Our teams are highly experienced in documenti ng and closing tax -exempt and taxable private placement transactions in California, such as the subject of this bid.

2. Energy Services Focus: BAPCC’s Energy Services group is a leading provider of financial solutions for energy efficiency, renewable energy, and energy generation equipment and assets; and as such we have experience in working with energy services companies. Bank of America is committed to improving the environment and has increased its current Environmental Business Initiative to $1 tril lion. Since 2007, the Bank’s Environmental Business Initiative has deployed more than $158 billion in financing to low-carbon and sustainable business activities across the globe.

3. Financial Strength: Information regarding Bank of America’s financial condition can be found in the Annual Report on our website, www.bankofamerica.com.

III. Lease Structure
Purpose Finance the solar and backup generation project designed and installed by Engie under a performance contract with City of Salinas (the “City” or “Lessee”).

Structure This transaction will be structured as a Non -Bank Qualified Tax -Exempt Equipment Lease/Purchase Agreement (the “Agreement”) between the Lessee and the Lessor.

The obligation to make Rental Payments under the Agreement shall be an annual appropriation obligation of the Lessee payable from any lawfully available funds.

Regardless of the status of installation or performance of the Equipment, the Lessee’s obligation to make payments commence on that certain date as set forth in the Agreement. Legal title to the Equipment shall be vested in the Lessee. The Agreement will be a net financial contract of the Lessee, and all expenses (including, but not limited to, insurance, maintenance, and taxes) will be for the account of the Lessee.

Security Lessor’s s ecurity interest in the Equipment will be evidenced by filing a UCC -1 Financing Statement (Personal Property) with respect to Equipment. Prior to closing, Lessee will be required to provide legal descriptions (as applicable) for the property locations at which the Equipment will be installed in order to enable the Lessor to record fixture filings in the appropriate recording offices.

Proceeds Approximately $4,741,000

Term 20 years

Payments Payments similar to those shown on the attached amortization schedule.

Prepayment Beginning with the first payment date in payment year 3 and on each paym ent date through payment year 10, City will have the option to prepay its obligations under the Agreement in whole only with a prepayment premium of 102% of the outstanding principal balance.

Beginning with the first payment date in payment year 11 and on each payment date through maturity, City will have the option to prepay its obligations under the Agreement in whole only with a prepayment premium of 10 1% of the outstanding principal balance.

One-Time
Extraordinary
Partial
Prepayment
City anticipates an IRA tax credit and/or other grant proceeds amounting to up to approximately $1.03 million that if received the City would like the option to use for a one-time partial prepayment of the Agreement. At any time within three years from the Commencement Date, Lessor will allow this one-time partial prepayment with a prepayment premium of 100.5%.

Termination The financing will be subject to annual appropriations (see Structure section above).

Interest Rate 20 years) 4.255%, locked through December 31, 2024

The calculation for the Interest Rate for each option above is:

20-year option)

14-Year SOFR SWAP Rate* X 79% + Applicable Spread Below:

Average Schedule Indicative
Life Swap Index Interest
Term Rate* x 79% Spread Rate
14 3.88% 3.07% 1.190% 4.255%

*Rates as of October 30, 2024 on Refinitiv page USDSROIS=

Index Succession: In the event the SOFR swap index ceases (a) to be determined and made available through the applicable Refinitiv screen page (or comparable source selected by Lessor), (b) to be a representative index for approximating movements in Lessor’s costs of funding fixed-rate transactions, or (c) to be the generally accepted swap index in the marketplace, Lessor may in its discretion use another replacement swap index applicable to U.S. Dollar collateralized funding that is generally accepted in the commercial credit marketplace as a comparable substitute for the index.

Rate Expiry If this Proposal is signed and returned to Lessor on or prior to November 8, 2024, Lessor will hold the Interest Rate through December 31, 2024.

If closing of the transaction occurs after such rate lock expiration, the respective Interest Rate for the transaction is subject to repricing at the discretion of Lessor seven (7) business days prior to the scheduled closing date in accordance with the selected option formula above. In no event will the respective SOFR SWAP Rate(s) used to reset the Interest Rate be less than the SOFR SWAP Rate(s) in the pricing grid above.

IF LESSEE ASKS LESSOR TO LOCK THE RESPECTIVE INTEREST RATE ABOVE FOR

FUNDING, LESSEE AGREES NOT TO SEEK FUNDING FOR THE PROJECT WITH

ANOTHER LENDER FOR A PERIOD OF SIX MONTHS AS A MEANS TO CIRCUMVENT THE RATE THAT LESSEE HAS ASKED LESSOR TO HOLD.

PLEASE NOTE THAT THE PRICING AND INTEREST RATE ABOVE ARE BASED ON THE AVERAGE LIFE OF THE ATTACHED DRAFT AMORTIZATION SCHEDULES. TO

THE EXTEXT THAT THE AVERAGE LIFE OF THE FINAL SELECTED AMORTIZATION

SCHEDULE CHANGES FROM THE ATTACHED, THE RESPECTIVE INTEREST RATE

ABOVE IS SUBJECT TO MODIFCATION BY LESSOR TO ACCOUNT FOR ANY LENGTHENING OF THE AVERAGE LIFE OF THE FINAL SCHEDULE.

Closing Costs Lessor does not charge any closing costs or fees. The Lessee will be responsible for paying its costs, including delivery of a validity and tax opinion from the Lessee’s Bond Counsel and any CDIAC Reporting Fee.

Escrow Account
Terms
At closing, proceeds from the Agreement will be deposited into an Escrow Account established pursuant to an Escrow and Account Control Agreement (the “Escrow”) by and among the City, the Lessor and the Escrow Agent. The Escrow Agent will be selected by the City, subject to the Lessor’s approval. The Lessor has an arrangement with Wilmington Trust, under which escrow agen t services for these types of transactions are provided at no charge to City. During the installation period, the City will requisition funds in the manner outlined in the Escrow. No funds will be disbursed without the written approval of the City and approval of the Lessor. The City will direct the investments in the Escrow Account and all interest earnings will accrue to the City’s benefit.

Documents Documents shall be prepared by the Lessor’s Counsel and will include all documents, certificates and opinions as are reasonably necessary to evidence and carry out the transaction. All documents must be acceptable to all parties.

Payment &
Performance
Bonds
The Lessor requires to be listed as dual obligee on the payment and performance bonds provided by Engie. No draws from Escrow will be permitted until such bonds are in place.

Credit Approval

This proposal is an indication of interest in the transaction, and not a commitment to provide financing by the Lessor. Consummation of this transaction is subject to credit approval by the Lessor and execution and delivery of documentation acceptable to all parties. All fundings are subject to no material adverse change in the financial condition of the City from the time of credit approval.

Closing Date On or before December 31, 2024. Sample amortization utilizes a closing date of December 5, 2024.

Assignment The Lessor shall be entitled to assign its right, title and interest or any part thereof in the Agreement and Equipment, on a private placement basis to qualified purchasers. In addition, the Lessor shall be entitled to assign its right, title and interest or any part thereof in the Agreement to a trustee for the purpose of issuing certificates of participation or other forms of certificates evidencing an undivided interest in such Agreement, provided such certificates are sold only on a private placement basis (and not pursuant to any “public offering”) to a purchaser(s) who represent that (I) such purchaser has sufficient knowledge and experience in financial and business matters to be able to evaluate the risks and merits of the investment (ii) such purchaser understands neither the Agreement or certificates will be registered under the Securities Act of 1933, (iii) such purchaser is either an “accredited investor” within the meaning of Regulation D under the Securities Act of 1933, or a qualified institu tional buyer within the meaning of Rule 144A, and (iv) that it is the intention of such purchaser to acquire such certificates (A) for investment for its own account or (B) for resale in a transaction exempt from registration under the Securities Act of 19 33. At any time, the Lessor may sell, assign or encumber all or any part of its right title and interest in the Agreement; however, in no event shall the Lessor assign this Agreement as a public offer of participation. The City consents to a private placement transaction within the meaning of applicable federal securities laws.

City’s
Responsibilities

All responsibilities imposed by the ownership or possession of the Equipment including, but not limited to, taxes, insurance and equipment maintenance, shall be borne by the City.

USA Patriot Act
Compliance

All financial institutions are required by Federal Law to obtain, verify and record information that identifies each customer who opens an account with us. When you open an account with us, we will ask you for your name, address and other information that will allow us to identify you, such as documents evidencing legal status and formation, taxpayer identification number and date of birth (if applicable).

Market
Disruption
Notwithstanding anything contained herein to the contrary, in the event any material change shall occur in the financial markets after the date of this Proposal Letter, including but not limited to any governmental action or other event which materially adversely affects the extension of credit by banks, leasing companies or other lending institutions, the Lessor may modify the indicative pricing described above.

III. Other Information

Capitalized terms used but not defined herein shall have the meani ng given such terms in the transaction documents (i.e. the Agreement, Facility Lease, Site Lease, the Escrow).

This proposal letter and the Term Sheet include only a brief description of the principal terms of the Proposed Transaction and do not purport t o summarize all of the conditions, covenants, representations, warranties and other provisions that would be contained in definitive documentation for the transaction contemplated hereby. The Lessor will not be responsible or liable for any damages, consequential or otherwise, that may be incurred or alleged by any person or entity, including the City or Engie as a result of this Proposal Letter.

Thank you for the opportunity to provide this proposal. If you have any questions or would like to discuss this proposal in further detail, please let us know.

Sincerely yours,

Banc of America Public Capital Corp

Michael C. Brunsman
By: Michael C. Brunsman
Title: Senior Vice President

STANDARD DISCLOSURES AND DISCLAIMERS
The transaction described in this document is an arm’s length, commercial transaction between you and Banc of America Public Capital Corp ( “BAPCC”) in which: (i) BAP CC is acting solely as a principal ( i.e., as a lender or assignee) and for its own interest; (ii) BAPCC is not acting as a municipal advisor or financial advisor to you; (iii) BAPCC has no fiducia ry duty pursuant to Section 15B of the Securities Exchange A ct of 1934 to you with respect to this transaction and the discussions, undertakings and procedures leading thereto (irrespective of whether BAPCC or any of its affiliates has provided other services or is currently providing other services to you on other matters); (iv) the only obligations BAPCC has to you with respect to this transaction are set forth in the definitive transaction agreements between us; and (v) BAPCC is not recommending that you take an action with respect to the transaction described in this document, and before taking any action with respect to the this transaction, you should discuss the information contained herein with your own legal, accounting, tax, financial and other advisors, as you deem appropriate. If you would like a municip al advisor in this transaction that has legal fiduciary duties to you, you are free to engage a municipal advisor to serve in that capacity.

STATEMENT FOR PROPOSALS SUBMITTED UNDER RFPS
This proposal is submitted in response to your Request for Proposal. The contents of this proposal and any subsequent discussions between us, including any and all information, recommendations, opinions, indicative pricing, quotations and analysis with respect to any municipal financial product or issuance of municipal securities, are provided to you in reliance upon the exemption provided for responses to requests for proposals or qualifications under the municipal advisor rules (the “Rules”) of the Securities and Exchange Commission (240 CFR 15Ba1-1 et seq.).

The Staff of the SEC’s Office of Municipal Securities has issued guidance which provides that, in order for a request for proposals to be consistent with this exemption, it must (a) identify a particular objective, (b) be open for not more than a reasonable period of time (up to six months being generally considered as reasonable), and (c) involve a competitive process (such as by being provided to at least three reasonably competitive market participants) or by being publicly posted to your official website. In submitting this proposal, we have relied upon your compliance with this guidance.

In submitting this proposal, we are not undertaking to act as a “municipal advisor” to you or any other person within the meaning of the Rules. In connection with this proposal and the transactions described herein, we are not subject to, and we hereby disclaim, any fiduciary duty to you or to any other person. We understand that you will consult with and rely on the advice of your own municipal, financial, tax, legal and other advisors as and to the extent you deem necessary in connection with your evaluation of this proposal and the transactions described herein.

@BCL@B016ADE4
9007975

EQUIPMENT LEASE/PURCHASE AGREEMENT
(ESCROW ACCOUNT)
This Equipment Lease/Purchase Agreement (this “Agreement”) dated as of [December 19, 2024], and entered into by and between Banc of America Public Capital Corp, a Kansas corporation (together with its successors, assigns and transferees, and as more particularly defined herein, “Lessor”), and City of Salinas , a California charter city and municipal organization existing under the laws of the State of California (“Lessee”).

WITNESSETH:

WHEREAS, Lessee desires to lease and acquire from Lessor certain Equipment (as such term is defined herein), subject to the terms and conditions hereof; and, WHEREAS, Lessee is authorized under the constitution and laws of the State (as such term is defined herein) to enter into this Agreement for the purposes set forth herein; NOW, THEREFORE, for good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, and in consideration of the premises hereinafter contained, the parti es hereby agree as follows:

ARTICLE I
Section 1.01. Definitions. The following terms will have the meanings indicated below unless the context clearly requires otherwise:
“Acquisition Amount” means $ [4,735,000]. The Acquisition Amount is the amount represented by Lessee to be sufficient, together with other funds of Lessee (if any) that are legally available for the purpose of acquiring and installing the Equipment. “Acquisition Period” means the period ending five (5) business days prior to June 19, 2026.
“Agreement” means this Equipment Lease/Purchase Agreement, including the exhibits hereto, together with any amendments and modifications to this Agreement pursuant to Section 13.04.
“Casualty Value” means the amount that is shown for each Rental Pay ment Date under the column titled “Casualty Value” on the Payment Schedule. “Code” means the Internal Revenue Code of 1986, as amended. Each reference to a Section of the Code herein shall be deemed to include the relevant United States Treasury Regulations proposed or in effect thereunder.
“Collateral” has the meaning set forth in Section 6.02. -2-
“Commencement Date” means the date when Lessee’s obligation to pay rent commences hereunder, which shall be the date on which the Acquisition Amount is deposited with the Escrow Agent.
“Contract Rate” means the rate identified as such in the Payment Schedule. “Disbursement Request” means the disbursement request attached to the Escrow Agreement as Schedule 1 and made a part thereof.
“ENGIE Contract” means [certain E nergy Services Contract dated as of _______, 2024, between Lessee and ENGIE, , among Lessee, Lessor and ENGIE]. “Equipment” means the equipment, fixtures and other goods and property listed in the Equipment Schedule and all replacements, repairs, restorations, modifications and improvements thereof or thereto made pursuant to Article V or Section 8.01. Whenever reference is made in this Agreement to Equipment, such reference shall be deemed to include all such replacements, repairs, restorations, modifications and improvements of or to such Equipment. “Equipment Costs” means the total cost of the Equipment, including related soft costs such as freight, installation and taxes and other capitalizable costs, and other costs incurred in connection with the acquisition, installation and/or financing of the Equipment. “Equipment Schedule” means the Equipment Schedule attached hereto as Exhibit A and made a part hereof (including any duly authorized and executed amendments thereto). “Escrow Account” means the account established and held by the Escrow Agent pursuant to the Escrow Agreement.
“Escrow Agent” means the Escrow Agent identified in the Escrow Agreement, and its successors and assigns.
“Escrow Agreement” means the Escrow and Account Control Agreement in form and substance acceptable to and executed by Lessee, Lessor and the Escrow Agent, pursuant to which the Escrow Account is established and administered.
“Event of Default” means an Event of Default described in Section 12.01. “Event of Non-appropriation” means the failure of Lessee’s governing body to appropriate or otherwise make available funds to pay Rental Payments under this Agreement following the Original Term or then current Renewal Term sufficient for the contin ued performance of this Agreement by Lessee.
“Lease Term” means the Original Term and all Renewal Terms. “Lessee” means the entity referred to as Lessee in the first paragraph of this Agreement. -3-
“Lessor” means (a) the entity referred to as Lessor in the first paragraph of this Agreement and its successors or (b) any assignee or transferee of any right, title or interest of Lessor in and to this Agreement pursuant to Section 11.01 hereof, including the right, title and interest of Lessor in and to the Equipment, the Rental Payments and other amounts due hereunder, the Escrow Agreement and Escrow Account and other Collateral, but does not include any entity solely by reason of that entity retaining or assuming any obligation of Lessor to perform hereunder. “Lien” means any lien (statutory or otherwise), security interest, mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, preference, priority or other security or pre ferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction). “Material Adverse Change” means any change in Lessee’s creditworthiness that could have a material adverse effect on (i) the financial condition or operations of Lessee, or (ii) Lessee’s ability to perform its obligations under this Agreement. “Original Term” means the period from the Commencement Date until the end of the fiscal year of Lessee in effect at such Commencement Date.
“Outstanding Balance” means the am ount that is shown for each Rental Payment Date under the column titled “Outstanding Balance” on the Payment Schedule. “Payment Schedule” means the Payment Schedule attached hereto as Exhibit B and made a part hereof.
“Prepayment Price” means the amount that is shown for each Rental Payment Date under the column titled “Prepayment Price” on the Payment Schedule. “Principal Portion” means the amount that is shown for each Rental Payment Date under the column titled “Principal Portion” on the Payment Schedule. “Project Grant” means a grant, subsidy, or other incentive that the Lessee receives for the Equipment.
“Related Documents” means this Agreement and the Escrow Agreement, each as may be amended and supplemented.
“Renewal Terms” means the consecutive renewal terms of this Agreement, the first of which commences immediately after the end of the Original Term and each having a duration and a term coextensive with each successive fiscal year of Lessee; provided that the final such Renewal Term shall commence on the first day of the last such fiscal year and end on the first business day after the last scheduled Rental Payment Date.
-4-
“Rental Payment Date” means each date on which Lessee is required to make a Rental Payment under this Agreement as specified in the Payment Schedule. “Rental Payments” means the basic rental payments payable by Lessee on the Rental Payment Dates and in the amounts as specified in the Payment Schedule, consisting of a principal component and an interest component , and in all cases sufficient to repay such principal component and interest thereon at the applicable Contract Rate (or Taxable Rate if then in effect). “Scheduled Term” means the Original Term and all scheduled Renewal Terms, with a final Renewal Term ending on June 30, 2044, as set forth in Exhibit B attached hereto. “SEC” means the U.S. Securities and Exchange Commission. “State” means the State of California.
“Taxable Rate” means, for each day that the interest component of Rental Payments is taxable for Federal income tax purposes, an interest rate equal to the Contract Rate plus a rate sufficient such that the total interest to be paid on any Re ntal Payment Date would, after such interest was reduced by the amount of any Federal, state or local income tax (including any interest, penalties or additions to tax) actually imposed thereon, equal the amount of interest otherwise due to Lessor.
“Vendor” means the manufacturer, installer or supplier of the Equipment or any other person as well as the agents or dealers of the manufacturer, installer or supplier with whom Lessee arranged Lessee’s acquisition, installation, maintenance and/or servici ng of the Equipment , and includes, without limitation, ENGIE Services U.S. Inc. (“ENGIE”). “Vendor Agreement” means any contract entered into by Lessee and any Vendor for the acquisition, installation, maintenance and/or servicing of the Equipment , and inc ludes, without limitation, the ENGIE Contract.

ARTICLE II
Section 2.01. Representations and Covenants of Lessee. Lessee represents, covenants and warrants for the benefit of Lessor on the date hereof as follows:
(a) Lessee is a political subdivision of the State within the meaning of Section 103(c) of the Code, duly organized and existing under the constitution and laws of the State , with full power and authority to enter into the Related Documents and the transactions contemplated thereby and to perform all of its obligations thereunder. (b) Lessee has duly authorized the execution and delivery of the Related Documents by proper action of its governing body at a meeting duly called, regularly convened and attended throughout by the requisite quorum of t he members thereof, or by other appropriate official approval, and all requirements have been met and procedures have occurred in order to ensure the validity and enforceability of the Related Documents. -5-
(c) No event or condition that constitutes, or with the giving of notice or the lapse of time or both would constitute, an Event of Default exists at the date hereof. No Event of Non-appropriation has occurred or is threatened with respect to this Agreement. (d) Lessee will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a city of the State. (e) Lessee has complied with such procurement and public bidding requirements as may be applicable to the Rela ted Documents and the acquisition and installation by Lessee of the Equipment.
(f) During the Lease Term, the Equipment will be used by Lessee only for the purpose of performing essential governmental or proprietary functions of Lessee consistent with the permissible scope of Lessee’s authority. Lessee does not intend to sell or otherwise dispose of the Equipment or any interest therein prior to the last Rental Payment (including all Renewal Terms) scheduled to be paid hereunder. (g) Lessee has kept, and throughout the Lease Term shall keep, its books and records in accordance with generally accepted accounting principles and practices consistently applied, and shall deliver to Lessor (i) annual audited financial statements (including (1) a balance sheet, (2) statement of revenues, expenses and changes in fund balances for budget and actual, (3) statement of cash flows, and (4) footnotes, schedules and attachments to the financial statements) no later than each April 1 after the end of its fiscal year, (ii) such other financial statements and information as Lessor may reasonably request, and (iii) upon Lessor’s request, its annual budget for any prior or current fiscal year or for the following fiscal year when approved but not later than thirty (30) days prior to the end of its current fiscal year. The financial statements described in this subsection (g)(i) shall be accompanied by an unqualified opinion of Lessee’s independent auditor. Credit information relating to Lessee may be disseminated among Less or and any of its affiliates and any of their respective successors and assigns.
(h) Lessee has an immediate need for the Equipment and expects to make immediate use of the Equipment. Lessee’s need for the Equipment is not temporary and Lessee does not e xpect the need for any item of the Equipment to diminish during the Scheduled Term.
(i) The payment of the Rental Payments or any portion thereof is not (under the terms of this Agreement or any underlying arrangement) directly or indirectly (x) secured by any interest in property used or to be used in any activity carried on by any person other than a state or local governmental unit or payments in respect of such property; or (y) on a present value basis, derived from payments (whether or not to Lessee) in respect of property, or borrowed money, used or to be used in any activity carried on by any person other than a state or local governmental unit. The Equipment will not be used, directly or indirectly, in any activity carried on by any person other than a state or local governmental unit. No portion of the Acquisition Amount will be used, directly or indirectly, to make or -6-
finance loans to any person other than Lessee. Lessee has not entered into any management or other service contract with respect to the use and operation of the Equipment. (j) There is no pending litigation, tax claim, proceeding or dispute that may adversely affect Lessee’s financial condition or impairs its ability to perform its obligations under the Related Documents. Lessee will, at its expense, maintain its legal existence and do any further act and execute, acknowledge, deliver, file, register and record any further documents Lessor may reasonably request in order to protect Lessor’s first priority security interest in the Equipment and the Escrow Account and Lessor’s rights and benefits under the Related Documents.
(k) Lessee is the fee owner of the real estate where the Equipment is and will be located (the “Real Property”) and has good and marketable title thereto, and there exists no mortgage, pledge, Lien, security interest, charge or other encumbrance of any nature whatsoever on or with respect to such Real Property. In the event any lien, encumbrance, restriction, asserted encumbrance, claim, dispute or other issue exists or arises with respect to the Lessee’s legal title to or valid and marketable, beneficial use and enjoyment of the Real Property or impairs or adversely impacts Lessor’s right, title or interest in the Equipment or any of Lessor’s rights or remedies under this Agreement with respect to the Equipment (each of the foregoing referred to as a “Real Property Issue”), Lessee will take all steps necessary to promptly quiet, resolve and/or eliminate such Real Property Issue to the satisfaction of Lessor and en sure that Lessee and Lessor have adequate access to and use of (including beneficial use and enjoyment of) the Real Property for all purposes of the Equipment contemplated herein and Lessee shall ensure that its fee interest in the Real Property and Lessor’s right, title or interest in the Equipment and rights or remedies under this Agreement with respect to the Equipment remain free and clear of Real Property Issues.
(l) No lease, rental agreement, lease-purchase agreement, payment agreement or contract for purchase to which Lessee has been a party at any time has been terminated by Lessee as a result of insufficient funds being appropriated in any fiscal year. No event has occurred which would constitute an event of default under any debt, revenue bond o r obligation which Lessee has issued during the past ten (10) years. (m) Lessee represents to Lessor that it has adopted a debt policy in compliance with SB 1029 and Section 8855 of the Government Code of California et seq. and covenants that it shall com ply with Section 8855 of the Government Code of California et seq. as amended (the “CDIAC Act”) throughout the Lease Term, including (i) preparing, submitting and filing the report of the proposed debt issuance relating to this Agreement by the method requ ired by the California Debt and Investment Advisory Commission (“CDIAC”), (ii) preparing, submitting and filing the report of final sale (and accompanying documents) relating to this Agreement by the method required by CDIAC, (iii) submitting an annual rep ort relating to the report of final sale for this Agreement by the method required by CDIAC, and (iv) paying all fees charged by CDIAC or the CDIAC Act relating to this Agreement, including, but not limited to the fee in an amount equal to one -fortieth of one percent of the Acquisition Amount or as otherwise prescribed by the CDIAC Act. -7-
(n) As of the date of execution and delivery of this Agreement, Lessee has not granted any Lien on the Collateral that would be senior in priority to, or pari passu with, the first priority Lien on the Collateral granted to Lessor under Section 6.02 of this Agreement.
(o) The street addresses and legal descriptions affixed to the UCC -1 financing statements and fixture filings filed and recorded pursuant to Section 3.04(vi), Section 6.01 and/or Section 6.02 hereof are true, accurate and complete street addresses and legal descriptions of all the properties on which the Equipment is located or to be installed. In the event any street address, legal description, other inform ation, UCC -1 financing statement or fixture filing (or continuations or amendments thereof) filed or recorded with respect to the Lessor’s interests in the Equipment or any of the real property on which the Equipment is located or to be installed reflects any incorrect or incomplete real property legal description, equipment description or other information, Lessee shall take all steps necessary at its expense (with the Lessor’s prior written approval) to promptly correct any errors or deficiencies with res pect to such legal descriptions, street address, other information, UCC -1 financing statements and/or fixture filings and to protect Lessor’s interests in the Equipment.
(p) Lessee will pay all Equipment Costs and costs of issuance in excess of the Acquisition Amount available therefor out of its own funds. Lessor shall not have any responsibility to pay amounts for any Equipment Costs or costs of issuance with respect to the Related Documents or the Equipment that individually or collectively excee d the Acquisition Amount.
(q) Lessee has complied with California Government Code Section 4217.10 et seq. and other applicable law pertaining to the authorization of this Agreement and the financing and acquisition by the Lessee of the Equipment. (r) To the extent applicable, as determined by Lessee in its sole discretion, Lessee has complied with the requirements of California Government Code Section 5852.1 et seq. in connection with this Agreement and the Equipment. (s) In connection with the Lessee’s compliance with any continuing disclosure undertakings (each, a “Continuing Disclosure Agreement” ) entered into by the Lessee pursuant to SEC Rule 15c2-12 promulgated pursuant to the Securities and Exchange Act of 1934, as amended (the “Rule”), the Lessee may be required to file with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system, or its successor ( “EMMA”), notice of its incurrence of its obligations under the Related Documents and notice of any accommodation, waiver, amendment, modification of terms or other similar events reflecting financial difficulties in connection with the Related Documents, in each case including posting a full copy thereof or a description of the material terms thereof (each such posting, an “EMMA Posting”). Except to the extent required by applicable law, including the Rule, the Lessee shall not file or submit or permit the filing or submission of any EMMA Posting that includes the following unredacted confidential information about the Lessor or its affiliates and the Escrow Agent in any -8-
portion of such EMMA Posting: address, account information and logos of the Lessor or its affiliates and the Escrow Agent; e -mail addresses, telephone numbers, fax numbers, names and signatures of officers, e mployees and signatories of the Lessor or its affiliates and the Escrow Agent; and the form of Disbursement Request that is attached to the Escrow Agreement.

The Lessee acknowledges and agrees that the Lessor and its affiliates are not responsible for th e Lessee’s or any other entity’s (including, but not limited to, any broker -dealer’s) compliance or noncompliance (or any claims, losses or liabilities arising therefrom) with the Rule, any Continuing Disclosure Agreement or any applicable securities or other laws, including but not limited to those relating to the Rule.

ARTICLE III
Section 3.01. Lease of Equipment. Subject to the terms and conditions of this Agreement, Lessor agrees to provide the Acquisition Amount to acquire the Equipment. Lessor hereby demises, leases and transfers to Lessee, and Lessee hereby acquires, rents and leases from Lessor, the Equipment. The Lease Term may be continued, solely at the option of Lessee, at the end of the Original Term or any Renewal Term for the next succeeding Renewal Term up to the maximum Scheduled Term as set forth in the Payment Schedule. At the end of the Original Term and at the end of each Renewal Term until the maximum Scheduled Term has been completed, Lessee shall be deemed to have exercised it s option to continue this Agreement for the next Renewal Term unless Lessee shall have terminated this Agreement pursuant to Section 3.03 or Section 10.01 of this Agreement. The terms and conditions during any Renewal Term shall be the same as the terms a nd conditions during the Original Term, except that the Rental Payments shall be as provided in the Payment Schedule.

Section 3.02. Continuation of Lease Term. Lessee intends, subject to Section 3.03 hereof, to continue the Lease Term through the Origina l Term and all Renewal Terms and to pay the Rental Payments due hereunder. Lessee affirms that sufficient funds are legally available to pay all Rental Payments when due during the current fiscal year, and Lessee reasonably believes that an amount suffici ent to make all Rental Payments during the entire Scheduled Term can be obtained from legally available funds of Lessee. Lessee further intends to do all things lawfully within its power to obtain and maintain funds sufficient and available to discharge i ts obligation to make Rental Payments due hereunder, including making provision for such payments to the extent necessary in each budget or appropriation request submitted and adopted in accordance with applicable provisions of law. Notwithstanding the foregoing, the decision whether or not to budget and appropriate funds or to extend the Lease Term for any Renewal Term is within the sole discretion of the governing body of Lessee.

Section 3.03. Non-appropriation. Lessee is obligated only to pay such Rental Payments as may lawfully be made during Lessee’s then current fiscal year from funds budgeted and appropriated for that purpose. Should Lessee fail to budget, appropriate or otherwise make available funds to pay Rental Payments following the then curr ent Original Term or Renewal Term, this Agreement shall be deemed terminated at the end of the then current Original Term or Renewal Term. Lessee agrees to deliver notice to Lessor of such termination promptly after any -9-
decision to non -appropriate is made , but failure to give such notice shall not extend the term beyond such Original Term or Renewal Term. If this Agreement is terminated in accordance with this Section 3.03, Lessee agrees to cease use of the Equipment and peaceably remove and deliver to Lessor, at Lessee’s sole expense (from legally available funds), the Equipment to Lessor at the location(s) to be specified by Lessor.

Section 3.04. Conditions to Lessor’s Performance. (a) As a prerequisite to the performance by Lessor of any of its obliga tions under this Agreement, Lessee shall deliver to Lessor , in form and substance satisfactory to Lessor, the following:
(i) An Escrow Agreement substantially in the form attached hereto as Exhibit I, satisfactory to Lessor and executed by Lessee and the Escrow Agent and a Vendor Agreement satisfactory to Lessor and executed by Lessee and the Vendor; (ii) A certified copy of a resolution, ordinance or other official action of Lessee’s governing body, substantially in the form attached hereto as Exhibit C-1, authorizing the execution and delivery of this Agreement and the Escrow Agreement and performance by Lessee of its obligations under this Agreement and the Escrow Agreement; (iii) A Certificate completed and executed by the Clerk or Secretary or other comparable officer of Lessee, substantially in the form attached hereto as Exhibit C-2, completed to the satisfaction of Lessor;
(iv) Opinion of general counsel to Lessee, which in the aggregate opine on the matters set forth in the form attached hereto as Exhibit D and which are otherwise satisfactory to Lessor;
(v) Evidence of insurance as required by Section 7.02 hereof; (vi) All do cuments, including financing statements, affidavits, notices and similar instruments which Lessor deems necessary or appropriate at that time pursuant to Section 6.02 hereof;
(vii) A waiver or waivers of interest in the Equipment from any mortgagee or any other party having an interest in the real estate on which the Equipment will be located and/or landlord of the real estate on which the Equipment will be located and amendments and agreements releasing liens and encumbrances, if any, on the real property where the Equipment is and will be located;
(viii) Reserved;
(ix) A copy of the Form 8038-G, fully completed and executed by Lessee; (x) In the event that Lessee is to be reimbursed for expenditures that it has paid more than sixty (60) days prior to the Commencement Date, evidence of the adoption of a reimbursement resolution or other official action covering the reimbursement from tax -10-
exempt proceeds of expenditures incurred not more than sixty (60) days prior to the date of such resolution;
(xi) Copies of invoices (and proofs of payment of such invoices, if Lessee seeks reimbursement) and bills of sale (if title to Equipment has passed to Lessee), to the extent required by Section 5.01(b) hereof;
(xii) Wire instructions for payments to be made to Vendors and Form W-9 from each such Vendor;
(xiii) A certified copy of any Surety Bond satisfying the conditions set forth in Section 7.04 hereof, or, at Lessor’s sole discretion, such Surety Bonds may be provided after the Commencement Date, provided however, that no “Disbursement Request” pursuant to the Escrow Agreement (other than for costs of issuance) shall be authorized by Lessor until such Surety Bonds satisfying the conditions set forth in Section 7.04 have been delivered to Lessor; and
(xiv) Such other items reasonably required by Lessor.
(b) In addition to satisfaction of the conditions set forth in subsection (a) of this Section 3.04, the performance by Lessor of any of its obligations under the Related Documents shall be subject to: (i) no Material Adverse Change having occurred since the date of this Agreement, (ii) no Event of Default having occurred and then be continuing and (iii) no Event of Non-appropriation having occurred or being threatened with respect to this Agreement. (c) Subject to satisfaction of the foregoing, Lessor will deposit the Acquisition Amount with the Escrow Agent to be held and disbursed pursuant to the Escrow Agreement.

Section 3.05. Evidence of Filing Form 8038 -G. As soon as it is available, Lessee shall provide to Lessor evidence that it, or its paid preparer, has filed the Form 8038 -G for this Agreement with the Internal Revenue Service by delivering to Lessor proof of mailing such Form 8038-G. Notwithstanding anything to the contrary in this Agreement, it shall not be an Event of Default hereunder if Lessee does not provide to Lessor evidence that it (or its paid preparer) filed the Form 8038-G for this Agreement with the Internal Revenue Service.

ARTICLE IV
Section 4.01. Rental Payments. Subject to Section 3.03 of this Agreement, Lessee shall promptly pay Rental Payments, in lawful money of the United States of America, to Lessor on the Rental Payment Dates and in such amounts as provided in the Payment Schedule. If any Rental Payment or other amount payable hereunder is not paid within ten (10) days of its due date, Lessee shall pay an administrative late charge of five percent (5%) of the amoun t not timely paid or the maximum amount permitted by law, whichever is less. Lessee shall not permit the Federal Government to guarantee any Rental Payments under this Agreement. Rental Payments consist of principal and interest components as more fully detailed on the Payment Schedule, the interest on which begins to accrue as of the Commencement Date.
-11-
Section 4.02. Interest and Principal Components . A portion of each Rental Payment is paid as, and represents payment of, interest, and the balance o f each Rental Payment is paid as, and represents payment of, principal as more fully detailed on the Payment Schedule.

Section 4.03. Rental Payments to Constitute a Current Expense of Lessee . Lessor and Lessee understand and intend that the obligation of Lessee to pay Rental Payments shall constitute a current expense of Lessee payable solely from its general fund or other funds that are legally available for that purpose and shall not in any way be construed to be a debt of Lessee in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by Lessee, nor shall anything contained herein constitute a pledge of the general tax revenues, funds or moneys of Lessee.

Section 4.04. Rental Payments to be Unconditional. Except as provided in Section 3.03 of this Agreement, the obligations of Lessee to make Rental Payments and to perform and observe the other covenants and agreements contained in this Agreement shall be absolute and unconditional in all events without abatement, diminution, deduction, set -off or defense, for any reason, including without limitation any failure of the Equipment, disputes with the Lessor or the Vendor of any Equipment, any defects, malfunctions, breakdowns or infirmities in the Equipment or any accident, condemnation or unforeseen circumstances, or failure of any Vendor to deliver any Equipment or otherwise perform any of its obligations for whatever reason, including bankruptcy, insolvency, reorganization or any simi lar event with respect to any Vendor or under any Vendor Agreement, or the failure or inability (for whatever reason) of Lessee to receive (or delay in receipt of) all or any portion of any grant, subsidy, or other incentive , including but not limited to any refundable tax credit under Section 6417 of the Internal Revenue Code of 1986, as amended by the Inflation Reduction Act of 2022 (Pub. L. No. 117-169), any amounts described or derived from California Assembly Bill AB 841, any federal, state, local, private or other incentives or rebates or any substantially similar (to any of the foregoing) provision of federal, state, local or foreign tax or other law (including regulations or other guidance from any taxing or other authority).

Section 4.05. Tax Covenants. Lessee agrees that it will not take any action that would cause the interest component of Rental Payments to be or to become ineligible for the exclusion from gross income of the owner or owners thereof for Federal income tax purposes, nor will it o mit to take or cause to be taken, in a timely manner, any action, which omission would cause the interest component of Rental Payments to be or to become ineligible for the exclusion from gross income of the owner or owners thereof for Federal income tax purposes. In connection with the foregoing, Lessee hereby agrees that (a) so long as any Rental Payments remain unpaid, moneys on deposit in the Escrow Account shall not be used in a manner that will cause this Agreement to be classified as an “arbitrage b ond” within the meaning of Section 148(a) of the Code; and (b) Lessee shall rebate, from funds legally available for the purpose, an amount equal to excess earnings on the Escrow Account to the Federal Government if required by, and in accordance with, Section 148(f) of the Code, and make the determinations and maintain the records required by the Code.

Section 4.06. Event of Taxability. Upon the occurrence of an Event of Taxability, the interest component of Rental Payments and any charge on Rental Payme nts or other amounts payable based on the Contract Rate shall have accrued and be payable at the Taxable Rate -12-
retroactive to the date as of which the interest component is determined by the Internal Revenue Service to be includible in the gross income of the owner or owners thereof for Federal income tax purposes (which retroactive date shall be the earliest date as of which the interest component of any Rental Payment is deemed includible in the gross income of the owner or owners thereof for Federal income tax purposes, which may be earlier than the date of delivery of such determination by the Internal Revenue Service), and Lessee will pay such additional amount as will result in the owner receiving the interest component at the Taxable Rate.

For purposes of this Section, “Event of Taxability” means the circumstance of the interest component of any Rental Payment paid or payable pursuant to this Agreement becoming includible for Federal income tax purposes in an owner’s gross income as a consequence of any act, omission or event whatsoever, including but not limited to the matters described in the immediately succeeding sentence, and regardless of whether the same was within or beyond the control of Lessee. An Event of Taxability shall be presumed to have occurred upon (a) the receipt by Lessor or Lessee of an original or a copy of an Internal Revenue Service Technical Advice Memorandum or Statutory Notice of Deficiency or other written correspondence which legally holds that the interest component of any Rental Payment is includable in the gross income of the owner thereof; (b) the issuance of any public or private ruling of the Internal Revenue Service that the interest component of any Rental Payment is includable in the gross income of the owner thereof; or (c) receipt by Lessor or Lessee of a written opinion of a nationally recognized firm of attorneys experienced in matters pertaining to the tax-exempt status of interest on obligations issued by states and their political subdivisions, selected by Lessor and acceptable to Lessee, to the effect that the interest component of any Rental Payment has become includable in the gross income of the owner thereof for Federal income tax purposes. For all purposes of this definition, an Event of Taxability shall be deemed to occur on the date as of which the interest component of any Rental Payment is deemed includable in the gross income of the owner thereof for Federal income tax purposes.

Section 4.07. Mandatory Prepayment. (a) Any funds not applied to Equipment Costs and remaining in the Escrow Account on the earliest of (i) the expiration of the Acquisition Period, (ii) the date on which Lessee delivers to the Lessor the executed Disbursement Request to effect the final disbursement to pay (or reimburse) Equipment Costs from the Escrow Account or (iii) a termination of the Escrow Account as provided in the Escrow Agreement shall be applied by Lessor on each successive Rental Payment Date thereafter to pay all or a portion of the Rental Payment due and owing in the succeeding twelve (12) months and any remaining amounts shall be applied by Lessor as prepayment to the applicable unpaid Principal Portion of Rental Payments owing hereunder in the inverse order of the Rental Payment Dates at a price of 100% of such prepaid Principal Portion plus accrued interest thereon to the prepayment date. (b) In connection with any partial prepayment of Rental Payments, Lessor shall prepare a new Payment Schedule and deliver the same to the Lessee, which shall be bindi ng, absent manifest error.

ARTICLE V
Section 5.01. Acquisition, Delivery, Installation and Acceptance of Equipment. (a) Lessee shall order the Equipment to be acquired and financed hereunder, cause the Equipment to be -13-
delivered and installed at the location specified in the Equipment Schedule and pay any and all delivery and installation costs and other Equipment Costs in connection therewith. Lessee shall conduct such inspection and testing of the Equipment as it deems appropriate in order to unconditionally accept such Equipment. When the Equipment has been delivered and installed, including any component of Equipment, Lessee shall promptly accept such Equipment and evidence said acceptance by executing and delivering Disbursement Requests to the Lessor pursuant to the Escrow Agreement for the purpose of effecting disbursements from the Escrow Account to pay (or reimburse) Equipment Costs for the Equipment so acquired and installed. In connection with the execution and delivery by Lessee to Lessor of the final Disbursement Request, Lessee shall deliver to Lessor a “Final Acceptance Certificate” in the form attached hereto as Exhibit E.
(b) Lessee shall deliver to Lessor together with each Disbursement Request copies of invoices (and proof of payme nt of such invoices if Lessee seeks reimbursement for prior expenditures) and bills of sale or other evidence of title transfer to Lessee relating to each item of Equipment accepted by Lessee as evidenced by such Disbursement Request. Once approved, Lessor shall deliver such Disbursement Request to the Escrow Agent for disbursement from the Escrow Account in accordance with the Escrow Agreement.

Section 5.02. Quiet Enjoyment of Equipment. So long as no Event of Default and no Event of Non-appropriation exists hereunder, neither Lessor nor any entity claiming by, through or under Lessor, shall interfere with Lessee’s quiet use and enjoyment of the Equipment during the Lease Term.

Section 5.03. Location; Inspection . Once installed, no item of the Equipmen t will be moved or relocated from the location specified for it in the Equipment Schedule without Lessor’s prior written consent, which consent shall not be unreasonably withheld. Lessor shall have the right at all reasonable times during regular business hours to enter into and upon the property where the Equipment is located for the purpose of inspecting the Equipment.

Section 5.04. Use and Maintenance of the Equipment. Lessee shall not install, use, operate or maintain the Equipment (or cause the Equipment to be installed, used, operated or maintained) improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated hereby. Lessee shall provide all permits and licenses, if any, necessary for the installation and operation of the Equipment. In addition, Lessee agrees to comply in all respects with all applicable laws, regulations and rulings of any legislative, executive, administrative, or judicial body, including, without limitation, all anti -money laundering la ws and regulations; provided that Lessee may contest in good faith the validity or application of any such law, regulation or ruling in any reasonable manner that does not, in the opinion of Lessor, adversely affect the interest of Lessor in and to the Equipment or its interest or rights hereunder.

Lessee agrees that it shall (a) maintain, preserve, and keep the Equipment in good repair and working order, in a condition comparable to that recommended by the manufacturer; (b) proceed promptly, at its expense , to protect its rights and exercise its remedies under any warranty then in effect with respect to the Equipment; and (c) replace or rebuild any component of the Equipment that becomes permanently unfit for normal use or inoperable during the Lease -14-
Term (herein, the “Inoperable Component”) in order to keep the Equipment as a whole in good repair and working order during the Lease Term. Lessee shall promptly notify Lessor in writing when any component of the Equipment is reasonably expected within forty -five (45) days to become an Inoperable Component. Lessee shall promptly replace or rebuild the Inoperable Component with a similar component of comparable or improved make and model that has at least the equivalent value and utility of the Inoperable Compon ent, a remaining useful life of no less than the remaining Scheduled Term and such replacement or rebuilt component shall be in good operating condition. Lessor shall have no responsibility to maintain, repair or make improvements or additions to the Equi pment. In all cases, Lessee agrees to pay any costs necessary for the manufacturer to re -certify the Equipment as eligible for manufacturer’s maintenance upon the return of the Equipment to Lessor as provided for in Sections 3.03 and 12.02(b) of this Agreement.

Lessee shall not alter any item of Equipment or install any accessory, equipment or device on an item of Equipment if that would impair any applicable warranty, the originally intended function or the value of that Equipment. All repairs, parts, ac cessories, equipment and devices furnished, affixed to or installed on any Equipment, excluding temporary replacements, shall thereupon become subject to the security interest of Lessor.

ARTICLE VI
Section 6.01. Title to the Equipment . During the Lease Term, so long as Lessee is not in default under Article XII hereof and an Event of Non-appropriation has not occurred, all right, title and interest in and to each item of the Equipment shall be vested in Lessee immediately upon its acceptance of each item of Equipment, subject to the terms and conditions hereof. Lessee shall at all times protect and defend, at its own cost and expense, its title, and Lessor’s first priority security interest, in and to the Equipment (and Lessor’s other Collateral as defined in Section 6.02 hereof) from and against all claims, Liens and legal processes of its creditors, and keep all Equipment (and such other Collateral) free and clear of all such claims, Liens and processes. Lessee will, at its expense, do any further act and execute, acknowledge, deliver, file, register and record any further documents the Lessor may reasonably request in order to protect Lessor’s first priority security interest in the Collateral. Upon the occurrence of an Event of Default or upon termination of this Agreement pursuant to Section 3.03 hereof, full and unencumbered legal title to the Equipment shall, at Lessor’s option, pass to Lessor, and Lessee shall have no further interest therein. In addition, upon the occurrence of such an Event of Default or such termination, Lessee shall execute and deliver to Lessor such documents as Lessor may request to evidence the passage of such legal title to Lessor and the termination of Lessee’s interest therein, and upon request by Les sor shall deliver possession of the Equipment to Lessor in accordance with Section 3.03 or 12.02 of this Agreement, as applicable. Upon payment of all amounts due and owing hereunder by Lessee in accordance with Section 10.01 hereof, Lessor’s security interest or other interest in the Equipment shall terminate, and Lessor shall execute and deliver to Lessee such documents as Lessee may reasonably request to evidence the termination of Lessor’s security interest in the Equipment.

Section 6.02. Security Interest. As additional security for the payment and performance of all of Lessee’s obligations hereunder, Lessee hereby grants to Lessor a first priority security interest constituting a first Lien on (a) the Equipment, together with all replacements, repai rs, restorations, modifications and improvements thereof or thereto and all accessories, equipment, -15-
parts and appurtenances appertaining or attached to any of the Equipment, and all substitutions, renewals, or replacements of and additions, improvements, a ccessions and accumulations to any and all of such Equipment, together with all the rents, issues, income, profits, proceeds and avails therefrom, (b) moneys and investments held from time to time in the Escrow Account, (c) all accounts, chattel paper, dep osit accounts, documents, instruments, general intangibles and investment property (including any securities accounts and security entitlements relating thereto) evidenced by or arising out of or otherwise relating to the foregoing collateral described in clauses (a) and (b) above, as such terms are defined in Article 9 of the California Commercial Code, and (d) any and all proceeds of any and all of the foregoing, including, without limitation, insurance proceeds (collectively, the “Collateral”). Lessee authorizes Lessor to file (and Lessee agrees to execute, if applicable) such notices of assignment, chattel mortgages, financing statements and other documents, in form satisfactory to Lessor, which Lessor deems necessary or appropriate to establish and maintain Lessor’s security interest in the Collateral, including, without limitation, such financing statements with respect to personal property and fixtures under Article 9 of the California Commercial Code and treating such Article 9 as applicable to entit ies such as Lessee.

Section 6.03. Personal Property, No Encumbrances. Lessee agrees that the Equipment is deemed to be and will remain personal property, and will not be deemed to be affixed to or a part of the real estate on which it may be situated, no twithstanding that the Equipment or any part thereof may be or hereafter become in any manner physically affixed or attached to real estate or any building thereon. Lessee shall not create, incur, assume or permit to exist any mortgage, pledge, Lien, security interest, charge or other encumbrance of any nature whatsoever on any of the real estate where the Equipment is or will be located or enter into any agreement to sell or assign or enter into any sale/leaseback arrangement of such real estate without the prior written consent of Lessor; provided, that if Lessor or its assigns is furnished with a waiver of interest in the Equipment acceptable to Lessor or its assigns in their respective discretion from any party taking an interest in any such real estate prior to such interest taking effect, such consent shall not be unreasonably withheld.

ARTICLE VII
Section 7.01. Liens, Taxes, Other Governmental Charges and Utility Charges . Lessee shall keep the Equipment free of all levies, Liens, and encumbrances ex cept those created by this Agreement. The parties to this Agreement contemplate that the Equipment will be used for a governmental or proprietary purpose of Lessee and that the Equipment will therefore be exempt from all property taxes. If the lease, sal e, purchase, operation, use, possession or acquisition of any Equipment is nevertheless determined to be subject to taxation, Lessee shall pay when due all sales and other taxes, special assessments, governmental and other charges of any kind that are at any time lawfully assessed or levied against or with respect to the Equipment, the Rental Payments or any part of either thereof, or which become due during the Lease Term, whether assessed against Lessee or Lessor. Lessee shall pay all utility and other charges incurred in the operation, use and maintenance of the Equipment. Lessee shall pay such taxes, assessments or charges as the same may become due; provided that, with respect to any such taxes, assessments or charges that may lawfully be paid in installments over a period of years, Lessee shall be obligated to pay only such installments as accrue during the Lease Term. Lessor will not claim ownership of the Equipment -16-
under this Agreement for the purposes of any tax credits, benefits or deductions wit h respect to such Equipment. Lessee shall pay the fee charged by the California Debt and Investment Advisory Commission with respect to this Agreement pursuant to Section 8856 (or any successor provision) of the California Government Code.

Section 7.02. Insurance. Lessee shall during the Lease Term maintain or cause to be maintained (a) casualty insurance naming Lessor and its assigns as loss payee and insuring the Equipment against loss or damage by fire and all other risks covered by the standard exten ded coverage endorsement then in use in the State, and any other risks reasonably required by Lessor, in an amount at least equal to the greater of (i) the then applicable Outstanding Balance or (ii) the replacement cost of the Equipment; (b) liability insurance naming Lessor and its assigns as additional insured that protects Lessor from liability with limits of at least $5,000,000 per occurrence for bodily injury and property damage coverage (such liability insurance coverage may be in a combination of primary general liability and/or excess liability umbrella coverage), and in all events under clauses (a) and (b) above issued in form and amount satisfactory to Lessor and by an insurance company that is authorized to do business in the State and having a financial strength rating by A.M. Best Company of “A -” or better ; and (c) worker’s compensation coverage as required by the laws of the State. Notwithstanding the foregoing, Lessee may self-insure against the risks described in clauses (a) and/or (b) through a government pooling arrangement, self-funded loss reserves, risk retention program or other self-insurance program, in each case with Lessor’s prior written consent (which Lessor may grant, withho ld or deny in its sole discretion) and provided that Lessee has delivered to Lessor such information as Lessor may request with respect to the adequacy of such self -insurance to cover the risks proposed to be self -insured and otherwise in form and substance acceptable to Lessor. In the event Lessee is permitted, at Lessor’s sole discretion, to self -insure as provided in this Section 7.02, Lessee shall provide to Lessor a self-insurance letter in form and substance satisfactory to Lessor, in Lessor’s sole d iscretion.

Lessee shall furnish to Lessor evidence of such insurance or self -insurance coverage throughout the Lease Term. Lessee shall not cancel or modify such insurance or self -insurance coverage in any way that would affect the interests of Lessor wi thout first giving written notice thereof to Lessor at least thirty (30) days in advance of such cancellation or modification.

Section 7.03. Risk of Loss. Whether or not covered by insurance or self-insurance, Lessee hereby assumes all risk of loss of, o r damage to and liability related to injury or damage to any persons or property arising from the Equipment from any cause whatsoever, and no such loss of or damage to or liability arising from the Equipment shall relieve Lessee of the obligation to make the Rental Payments or to perform any other obligation under this Agreement. Whether or not covered by insurance or self -insurance, Lessee hereby agrees to reimburse Lessor (to the fullest extent permitted by applicable law, but only from legally available funds) for any and all liabilities, obligations, losses, costs, claims, taxes or damages suffered or incurred by Lessor, regardless of the cause thereof and all expenses incurred in connection therewith (including, without limitation, counsel fees and expenses, and penalties connected therewith imposed on interest received) arising out of or as a result of (a) entering into this Agreement or any of the transactions contemplated hereby, (b) the ordering, acquisition, ownership use, operation, condition, pur chase, delivery, acceptance, rejection, storage or return of any item of the Equipment, (c) any accident in connection with the operation, use, condition, possession, storage or return of any item of the Equipment resulting in damage to property or injury to or death to any person, and/or (d) the breach -17-
of any covenant of Lessee under or in connection with this Agreement or any material misrepresentation provided by Lessee under or in connection with this Agreement. The provisions of this Section 7.03 shall continue in full force and effect notwithstanding the full payment of all obligations under this Agreement or the termination of the Lease Term for any reason.

Section 7.04. Surety Bonds ; Lessee to Pursue Remedies Against Contractors and Sub-Contractors and Their Sureties. Lessee shall secure from each Vendor directly employed by Lessee in connection with the acquisition, construction, installation, improvement or equipping of the Equipment, a payment and performance bond (“Surety Bond”) executed by a surety company authorized to do business in the State, having a financial strength rating by A.M. Best Company of “A-” or better, and otherwise satisfactory to Lessor and naming Lessor as a co-obligee in a sum equal to the entire amount to become payable under each Vendor Agreement. Each bond shall be conditioned on the completion of the work in accordance with the plans and specifications for the Equipment and upon payment of all claims of subcontractors and suppliers. Lessee shall cause the surety company to add Lessor as a co -obligee on each Surety Bond, and shall deliver a certified copy of each Surety Bond to Lessor promptly upon receipt thereof by Lessee. Any proceeds from a Surety Bond shall be applied in accordance with such Surety Bond to the paym ent and performance of the Vendor’s obligations in accordance with the related Vendor Agreement and, if for whatever reason such proceeds are not so applied, first to amounts due Lessor under this Agreement, and any remaining amounts shall be payable to Lessee.

In the event of a material default by any Vendor under any Vendor Agreement in connection with the acquisition, construction, maintenance and/or servicing of the Equipment or in the event of a material breach of warranty with respect to any material workmanship or performance guaranty with respect to the Equipment, Lessee will promptly proceed to exhaust its remedies against the Vendor in default. Lessee shall advise Lessor of the steps it intends to take in connection with any such default. Any amo unts received by Lessee in respect of damages, refunds, adjustments or otherwise in connection with the foregoing shall be paid to Lessor and applied against Lessee’s obligations hereunder.

Section 7.05. Advances. In the event Lessee shall fail to keep the Equipment in good repair and working order or shall fail to maintain any insurance required by Section 7.02 hereof, Lessor may, but shall be under no obligation to, maintain and repair the Equipment or obtain and maintain any such insurance coverages, a s the case may be, and pay the cost thereof. All amounts so advanced by Lessor shall constitute additional rent for the then current Original Term or Renewal Term and Lessee covenants and agrees to pay such amounts so advanced by Lessor with interest thereon from the due date until paid at a rate equal to the Contract Rate (or the Taxable Rate if then in effect) plus five percent (5%) per annum or the maximum amount permitted by law, whichever is less.

ARTICLE VIII
Section 8.01. Damage, Destruction and Condemnation. If, prior to the termination of the Lease Term, (a) the Equipment or any portion thereof is destroyed, in whole or in part, or is damaged by fire or other casualty or (b) title to, or the temporary use of, the Equipment or any part thereof sha ll be taken under the exercise or threat of the power of eminent domain by any -18-
governmental body or by any person, firm or corporation acting pursuant to governmental authority, (i) Lessee and Lessor will cause the Net Proceeds of any insurance claim or condemnation award or sale under threat of condemnation to be applied to the prompt replacement, repair, restoration, modification or improvement of the Equipment or such part thereof and any balance of the Net Proceeds remaining after such work has been completed shall be paid to Lessee or (ii) Lessee shall exercise its option to prepay the obligations hereunder in accordance with Section 10.01(a)(ii) hereof.

If Lessee elects to replace any item of the Equipment (the “Replaced Equipment”) pursuant to this Section 8.01, the replacement equipment (the “Replacement Equipment”) shall be new or of a quality, type, utility and condition at least as good as the Replaced Equipment, shall be of equal or greater value than the Replaced Equipment and shall provide at le ast the same level of energy and/or operational savings expected in the aggregate from the Replaced Equipment prior to such casualty, destruction or condemnation and shall have an expected remaining useful life at least through the Scheduled Term. Lessee shall grant to Lessor a first priority security interest in any such Replacement Equipment. Lessee shall represent, warrant and covenant to Lessor that each item of Replacement Equipment is free and clear of all claims, Liens, security interests and encumbrances, excepting only those Liens created by or through Lessor, and shall provide to Lessor any and all documents as Lessor may reasonably request in connection with the replacement, including, but not limited to, documentation in form and substance sati sfactory to Lessor evidencing Lessor’s security interest in the Replacement Equipment. Lessor and Lessee hereby acknowledge and agree that any Replacement Equipment acquired pursuant to this paragraph shall constitute “Equipment” for purposes of this Agreement. Lessee shall complete the documentation of Replacement Equipment on or before the next Rental Payment Date after the occurrence of a casualty event, or be required to exercise its option to prepay the obligations hereunder with respect to the damaged Equipment in accordance with Section 10.01(a)(ii) hereof.

For purposes of this Article VIII, the term “Net Proceeds” shall mean the amount remaining from the gross proceeds of any insurance claim or condemnation award or sale under threat of condemnatio n after deducting all expenses, including attorneys’ fees, incurred in the collection thereof.

Section 8.02. Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in full the cost of any repair, restoration, modification or improvement referred to in Section 8.01, Lessee shall either (a) complete such replacement, repair, restoration, modification or improvement and pay any costs thereof in excess of the amount of the Net Proceeds, or (b) pay or cause to be paid to Lessor the amount of the then applicable Casualty Value plus all other amounts then owing hereunder, and, upon such payment, the Lease Term shall terminate an d Lessor’s security interest in the Equipment shall terminate as provided in Section 6.01 hereof. The amount of the Net Proceeds remaining, if any, after completing such repair, restoration, modification or improvement or after paying such Casualty Value plus all other amounts then owing hereunder shall be retained by Lessee. If Lessee shall make any payments pursuant to this Section 8.02, Lessee shall not be entitled to any reimbursement therefor from Lessor nor shall Lessee be entitled to any diminution of the amounts payable under Article IV. -19-

ARTICLE IX
Section 9.01. Disclaimer of Warranties . Lessor makes no warranty or representation, either express or implied, as to the value, design, condition, merchantability or fitness for particular purpose or fitness for use of any of the Equipment, or any other warranty or representation, express or implied, with respect thereto and, as to Lessor, Lessee’s acquisition of the Equipment shall be on an “as is” basis. In no event shall Lessor be liable for any inc idental, indirect, special or consequential damage in connection with or arising out of this Agreement, the Equipment or the existence, furnishing, functioning or Lessee’s use of any item, product or service provided for in this Agreement.

Section 9.02. Vendor Agreements; Warranties . Lessee covenants that it shall not in any material respect amend, modify, rescind or alter any Vendor Agreement without the prior written consent of Lessor. Lessor hereby irrevocably appoints Lessee its agent and attorney-in-fact during the Lease Term, so long as Lessee shall not be in default under this Agreement and so long as no Event of Non-appropriation has occurred, to assert from time to time whatever claims and rights (including without limitation warranties) relatin g to the Equipment that Lessor may have against a Vendor. Lessee’s sole remedy for the breach of such warranty, indemnification or representation shall be against the applicable Vendor of the Equipment, and not against Lessor. Any such matter shall not have any effect whatsoever on the rights and obligations of Lessor under this Agreement, including the right to receive full and timely Rental Payments and other payments hereunder.

Lessee expressly acknowledges that Lessor makes, and has made, no representations or warranties whatsoever as to the existence or the availability of such warranties relating to any of the Equipment.

ARTICLE X
Section 10.01. Prepayment; Payment in Full or in Part.
(a) Prepayment. Lessee shall have the option to prepay or sa tisfy some or all of its obligations hereunder, at the following times and upon the following terms:
(i) Optional Prepayment in Whole. From and after the date specified (if any) in the Payment Schedule (the “Prepayment Option Commencement Date”), on the Rental Payment Dates specified in the Payment Schedule, upon not less than thirty (30) days prior written notice, and upon payment in full of the sum of all Rental Payments then due plus the then applicable Prepayment Price, which shall include a prepayment premium on the unpaid Outstanding Balance as set forth in the Payment Schedule plus all other amounts then owing hereunder; or
(ii) Casualty or Condemnation Prepayment. In the event of substantial damage to or destruction or condemnation of substantially all of the Equipment, on the day specified in Lessee’s notice to Lessor of its exercise of the prepayment option (which shall be the earlier of the next Rental Payment Date or sixty (60) days after the casualty event) upon payment in full to Lessor of (A) in the event such prepayment occurs on a Rental Payment Date, the sum of (i) all Rental Payments then due plus (ii) the then applicable -20-
Casualty Value plus (iii) all other amounts then owing hereunder OR, (B) in the event such prepayment occurs on a date other than a Rental Payment Date, the sum of (i) the applicable Casualty Value shown on the Payment Schedule for the Rental Payment Date immediately preceding the applicable date of such prepayment (or if the date of such prepayment occurs prior to the first Rental Payment Date, the earliest Casualty Value shown on the Payment Schedule) plus (ii) accrued interest at the Contract Rate (or the Taxable Rate if then in effect) on the Outstanding Balance as of the Rental Payment Date immediately pr eceding the applicable date of such prepayment from such Rental Payment Date (or if the date of such prepayment occurs prior to the first Rental Payment Date, the Commencement Date) to the date of such prepayment plus (iii) all other amounts then owing hereunder; or (iii) Extraordinary Prepayment in Part. Prior to December 1, 2027, on any Rental Payment Date following the Lessee’s receipt of the Project Grant, upon not less than thirty (30) days prior written notice, the Lessee may exercise a one -time extraordinary prepayment up to a total amount of $1,017,000 which shall be ap plied by Lessor to the applicable unpaid Principal Portion of Rental Payments owing hereunder (in the inverse order of the Rental Payment Dates or, at the option of the Lessee, on a pro rata basis) at a price of 100.5% of such prepaid Principal Portion plu s accrued interest thereon to the prepayment date. In connection with any partial prepayment of Rental Payments, Lessor shall prepare a new Payment Schedule and deliver the same to the Lessee, which shall be binding, absent manifest error.
(b) Payment in Full. Lessor’s security interests in and to the Equipment will be terminated and Lessee will own such Equipment free and clear of Lessor’s security interest in such Equipment after either (i) payment of either (A) the applicable Prepayment Price and all other amounts then owing hereunder in accordance with Section 10.01(a)(i) of this Agreement or (B) the applicable Casualty Value and all other amounts then owing hereunder in accordance with Section 10.01(a)(ii) of this Agreement or (ii) upon the expiratio n of the Scheduled Term and payment in full of all Rental Payments then due and all other amounts then owing hereunder in accordance with this Agreement. Notwithstanding anything herein to the contrary, no portion of Lessor’s security interests in and to t he Equipment or other Collateral will be terminated due to any partial prepayment pursuant to Section 10.01(a)(iii) of this Agreement.

ARTICLE XI
Section 11.01. Assignment by Lessor . (a) Lessor’s right, title and interest in and to this Agreement, the Rental Payments and any other amounts payable by Lessee hereunder, the Escrow Agreement, its security interest in the Collateral (collectively, the “Assigned Rights”), may be assigned and reassigned by Lessor at any time, in whole or in part, to one or more assignees or sub-assignees without the necessity of obtaining the consent of Lessee; provided, that any such assignment, transfer or conveyance (i) shall be made only to investors each of whom Lessor reasonably believes is a “qualified institutional buyer” as defined in Rule 144A(a)(1) promulgated under the Securities Act of 1933, as amended, or an “accredited investor” as defined in Section 501(a)(1), (2), (3) or (7) of Regulation D promulgated under the Securities Act of 1933, as amended, and in either case is purchasing the Assigned Rights (or any interest therein) for its own account with no present intention to resel l or distribute such Assigned Rights (or interest -21-
therein), subject to each investor’s right at any time to dispose of the Assigned Rights (or any interest therein) as it determines to be in its best interests, (ii) shall not result in more than 35 owners of the Assigned Rights or the creation of any interest in the Assigned Rights in an aggregate principal component that is less than $100,000 and (iii) shall not require Lessee to make Rental Payments, to send notices or otherwise to deal with respect to matters arising hereunder or under the Escrow Agreement with or to more than one Lease Servicer (as such term is defined below), and any trust agreement, participation agreement or custodial agreement under which multiple ownership interests in the Assigned Rights are created shall provide the method by which the owners of such interests shall establish the rights and duties of a single entity, trustee, owner, servicer or other fiduciary or agent acting on behalf of all of the assignees (herein referred to as the “Lease Servicer”) to act on their behalf with respect to the Assigned Rights, including with respect to the exercise of rights and remedies of Lessor on behalf of such owners upon the occurrence of an Event of Default or an Event of Non-appropriation under this Agreement. Lessor and Lessee hereby acknowledge and agree that the restrictions and limitations on transfer as provided in this Section 11.01 shall apply to the first and subsequent assignees and sub-assignees of any of the Assigned Rights (or any interest therein). (b) Unless to an affiliate controlling, controlled by or under common control with Lessor, no assignment, transfer or conveyance permitted by this Section 11.01 shall be effective as against Lessee until Lessee shall have received a written notice of assignment that discloses the name and address of each such assignee; provided, that if such assignment is made to a bank or trust company as trustee or paying agent for owners of certificates of participation, participation interests, t rust certificates or partnership interests with respect to the Rental Payments payable under this Agreement, it shall thereafter be sufficient that Lessee receives notice of the name and address of the bank, trust company or other entity that acts as the L ease Servicer. Notices of assignment provided pursuant to this Section 11.01(b) shall contain a confirmation of compliance with the transfer requirements imposed by Section 11.01(a) hereof. During the Lease Term, Lessee shall keep, or cause to be kept, a complete and accurate record of all such assignments in form necessary to comply with Section 149 of the Code. Lessee shall retain all such notices as a register of all assignees and shall make all payments to the assignee or assignees or Lease Servicer last designated in such register. Lessee shall not have the right to and shall not assert against any assignee any claim, counterclaim or other right Lessee may have against Lessor or the Vendor.

Assignments in part may include without limitation assignment of all of Lessor’s security interest in and to the Equipment and all rights in, to and under this Agreement related to such Equipment, and all of Lessor’s security interest in and to the Collateral, or all rights in, to and under the Escrow Agreement.
(c) If Lessor notifies Lessee of its intent to assign this Agreement, Lessee agrees that it shall execute and deliver to Lessor a Notice and Acknowledgement of Assignment substantially in the form of Exhibit H attached hereto within five (5) business da ys after its receipt of such request.

Section 11.02. Assignment and Subleasing by Lessee . None of Lessee’s right, title, and interest in, to and under this Agreement or any portion of the Equipment, the Escrow Agreement, the Escrow Account or any of the other Collateral may be assigned, encumbered -22-
or subleased by Lessee for any reason, and any purported assignment, encumbrance or sublease without Lessor’s prior written consent shall be null and void.

ARTICLE XII
Section 12.01. Events of Default Defined . Any of the following events shall constitute an “Event of Default” under this Agreement:
(a) Failure by Lessee to (i) pay any Rental Payment or other payment required to be paid under this Agreement within ten (10) days after the date when due as specifi ed herein, (ii) maintain insurance as required herein, or (iii) observe and perform any covenant, condition or agreement on its part to be observed or performed under Section 6.01 or 6.02 hereof;
(b) Failure by Lessee to observe and perform any covenant, condition or agreement contained in this Agreement on its part to be observed or performed, other than as referred to in subsection (a) above, for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied is given to Lessee by Lessor, unless Lessor shall agree in writing to an extension of such time prior to its expiration; provided that, if the failure stated in the notice cannot be corrected within the applicable period, Lessor will not unreasonably withh old its consent to an extension of such time if corrective action is instituted by Lessee within the applicable period and diligently pursued until the default is corrected;
(c) Any statement, representation or warranty made by Lessee in or pursuant to this Agreement or its execution, delivery or performance shall prove to have been false, incorrect, misleading, or breached in any material respect on the date when made; (d) Any default occurs under any other agreement for borrowing money, lease financing of property or otherwise receiving credit under which Lessee is an obligor, if such default (i) arises under any other agreement for borrowing money, lease financing of property or provision of credit provided by Lessor or any affiliate of Lessor, or (ii) arises under any obligation under which there is outstanding, owing or committed an aggregated amount in excess of $100,000.00;
(e) Lessee shall (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of Lessee, or of a ll or a substantial part of the assets of Lessee, (ii) be unable, fail or admit in writing its inability generally to pay its debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) have an order for relief entered against it under applicable Federal bankruptcy law, or (v) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or taking advantage of any insolvency law or any answer admitting the material allegations of a petition filed against Lessee in any bankruptcy, liquidation, readjustment, reorganization, moratorium or insolvency proceeding; or -23-
(f) An order, judgment or decree shall be entered by any court of competent jurisdiction, approving a petition or appointing a receiver, trustee, custodian or liquidator for Lessee or of all or a substantial part of the assets of Lessee, in each case without its application, approval or consent, and such order, judgment or decree shall continue unstayed and in effect for any period of thirty (30) consecutive days.

Section 12.02. Remedies on Default . Whenever any Event of Default exists, Lessor shall have the right, at its sole option without any further demand or notice, to take one or any combination of the following remedial steps:
(a) By written notice to Lessee, Lessor may declare all Rental Payments payable by Lessee and other amounts payable by Lessee hereunder to the end of the then current Original Term or Renewal Term to be immediately due and payable; (b) With or without terminating the Lease Term, Lessor may enter the premises where the Equipment is located and retake possession of such Equipment or require Lessee at Lessee’s expense to promptly return any or all of such Equipment to the possession of Lessor at such place within the United States as Lessor shall specify, and sell or lease such Equipment or, for the account of Lessee, sublease such Equipment, continuing to hold Lessee liable, but solely from legally available funds, for the difference between (i) the Rental Payments payable by Lessee and other amounts hereunder that are payable by Lessee to the end of the then current Original Term or Renewal Term, as the case may be, and (ii) the net proceeds of any such sale, leasing or su bleasing (after deducting all expenses of Lessor in exercising its remedies hereunder, including without limitation all expenses of taking possession, storing, reconditioning and selling or leasing such Equipment and all brokerage, auctioneer’s and attorne y’s fees), subject, however, to the provisions of Section 3.03 of this Agreement. The exercise of any such remedies respecting any such Event of Default shall not relieve Lessee of any other liabilities hereunder or with respect to the Equipment;
(c) Lessor may terminate the Escrow Agreement and apply any proceeds in the Escrow Account to the Rental Payments scheduled to be paid hereunder; and/or (d) Lessor may take whatever action at law or in equity as may appear necessary or desirable to enforce its rights under this Agreement or the Escrow Agreement or as a secured party in any or all of the Equipment or the Escrow Account.

Section 12.03. No Remedy Exclusive . No remedy herein conferred upon or reserved to Lessor is intended to be exclusive and ever y such remedy shall be cumulative and shall be in addition to every other remedy given hereunder now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle Lessor to exercise any remedy reserved to it in this Article XII it shall not be necessary to give any notice other than such notice as may be required in this Article XII. -24-

ARTICLE XIII
Section 13.01. Notices. All notices, certificates or other communications under this Agreement shall be sufficiently given and shall be deemed given when delivered or mailed by registered mail, postage prepaid, or delivered by overnight courier, or sent by facsimile transmission (with electronic confirmation) to the parties hereto at the addresses immediately after the signatures to this Agreement (or at such other address as either party hereto shall designate in writing to the other for notices to such party) and to any assignee at its address as it appears on the registration books maintained by Lessee.

Section 13.02. Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon Lessor and Lessee and their respective successors and assigns.

Section 13.03. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

Section 13.04. Amendments, Changes and Modifications . This Agreement may only be amended by Lessor and Lessee in writing.

Section 13.05. Execution in Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument; provided, that only Counterpart No. 1 of this Agreement shall constitute chattel paper for purposes of the applicable Uniform Commercial Code.

Section 13.06. Applicable Law; Venue; Waiver of Jury Trial . This Agreement shall be governed by and construed in accordance with the laws of the State. The parties hereto conse nt and submit to the jurisdiction of the State and venue in any state or Federal court of such State for the purposes of any suit, action or other proceeding arising in connection with this Agreement, and each party expressly waives any objections that it may have to the venue of such courts. The parties hereto expressly waive any right to trial by jury in any action brought on or with respect to this Agreement. If the waiver of jury trial contained herein is unenforceable for any reason, then the parties hereto agree that the court shall, and is hereby directed to, make a general reference pursuant to California Code of Civil Procedure Section 638 to a referee to hear and determine all of the issues in such action or proceeding (whether of fact or of law) and to report a statement of decision.

Section 13.07. Captions. The captions or headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement.

Section 13.08. No Advisory or Fiduciary Relationship . In connection with all aspects of each transaction contemplated by this Agreement (including in connection with any amendment, waiver or other modification hereof or of any other related document), the Lessee ack nowledges and agrees that: (a) (i) the transactions regarding this Agreement provided by the Lessor and any affiliate thereof are arm’s -length commercial transactions between the Lessee, on the one hand, -25-
and the Lessor and its affiliates, on the other han d, (ii) the Lessee has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the Lessee is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated by this Agreement and by the other related documents; (b) (i) the Lessor and its affiliates each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will n ot be acting as an advisor, agent or fiduciary, for the Lessee, or any other person and (ii) neither the Lessor nor any of its affiliates has any obligation to the Lessee with respect to the transactions contemplated by this Agreement except those obligations expressly set forth herein and in the other related documents; and (c) the Lessor and its affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Lessee, and neither the Lessor nor any of its affi liates has any obligation to disclose any of such interests to the Lessee. To the fullest extent permitted by law, the Lessee, hereby waives and releases any claims that it may have against the Lessor or any of its affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transactions contemplated by this Agreement.

Section 13.09. Entire Agreement. The parties agree that this Agreement constitutes the final and entire agreement between the parties superseding all conflicting terms or provisions of any prior proposals, term sheets, solicitation documents, requests for proposals, award notices, approval letters or any other agreements or understandings between the parties.

Section 13.10. Electronic Signatures . The Related Documents may be executed and delivered by facsimile signature or other electronic or digital means (including, without limitation, Adobe’s Portable Document Format (“PDF”)). Any such signature shall be of the same force and effect as an original signature, it being the express intent of the parties to create a valid and legally enforceable contract between them. The exchange and delivery of the Related Documents and the related signature pages via facsimile or as an attachment to electronic mail (including in PDF) shall constitute effective execution and delivery by the parties and may be used by the parties for all purposes. Notwithstanding the foregoing, at the request of either party, the parties hereto agree to exchange inked original replacement signature pages as soon thereafter as reasonably practicable. [Remainder of Page Intentionally Left Blank]
[Signature Page Follows]

[Signature Page of Equipment Lease/Purchase Agreement]
IN WITNESS WHEREOF, Lessor and Lessee have caused this Equipment Lease/Purchase Agreement to be executed in their names by their duly authorized representatives as of th e date first above written.

LESSOR: LESSEE:

BANC OF AMERICA PUBLIC CAPITAL CORP CITY OF SALINAS
11333 McCormick Road
Hunt Valley II
M/C MD5-032-07-05
Hunt Valley, MD 21031
Attention: Contract Administration
Fax No.: (443) 541-3057
200 Lincoln Avenue
Salinas, CA 93901
Attention: Finance Director
Telephone: (831) 758-7420
Fax No.: (831) 758-7937
Email: [email protected]
By: ________________________________
Name: __________________________
Title: ___________________________
By: ________________________________
Name: __________________________
Title: ___________________________

By: _________________________________
Name: Christopher A. Callihan
Title: City Attorney

Counterpart No. _____ of _____ manually executed and serially numbered counterparts.

To the extent that this Agreement constitutes chattel paper (as defined in the applicable Uniform Commercial Code), no security interest or ownership herein may be created through the transfer or possession of any Counterpart other than Counterpart No. 1.

LIST OF EXHIBITS
EXHIBIT A — Form of Equipment Schedule
EXHIBIT B — Form of Payment Schedule
EXHIBIT C-1 — Form of Authorizing Resolution
EXHIBIT C-2 — Form of Incumbency and Authorization Certificate EXHIBIT D — Form of Opinion of Lessee’s Counsel
EXHIBIT E — Form of Final Acceptance Certificate
EXHIBIT F — Form of Self-Insurance Certificate
EXHIBIT G — Reserved
EXHIBIT H — Form of Notice and Acknowledgement of Assignment EXHIBIT I — Form of Escrow and Account Control Agreement

EXHIBIT A

EQUIPMENT SCHEDULE
Location of Equipment:

Facility Address Equipment Type
El Gabilan Library 1400 N. Main St, Salinas, CA 93906 Solar Generating Facilities Police Department 312 E. Alisal St., Salinas, CA 93901 Solar Generating Facilities Salinas City Hall 200 Lincoln Ave., Salinas, CA 93901 Emergency Generator

Equipment Description (Scope of Work):

ECM 1: SOLAR GENERATING FACILITIES

The table below lists the locations for the solar photovoltaic (PV) installations and the structure types:

Solar Generating Facilities to be Installed

Facility Est. kWdc Solar PV
Structure
El Gabilan
Library

92.6 Roof
Police
Department
617 Canopy

ECM 2: EMERGENCY GENERATORS

The table below lists the locations and details of the emergency generators to be installed:

Facility Replacement/New Generator Model # kW ATS Model # ATS Size (amps) City Hall -
Generator
Replacement SG200 200 RTSN800 800

EXHIBIT B

PAYMENT SCHEDULE

RENTAL

PAYMENT
DATE
RENTAL

PAYMENT
AMOUNT

INTEREST

PORTION

PRINCIPAL

PORTION

OUTSTANDING

BALANCE

PREPAYMENT
PRICE
(including
prepayment
premium, if any)

CASUALTY
PRICE
(including
casualty
premium, if any)

Contract Rate. The Contract Rate is 4.255% per annum.

Prepayment Option Commencement Date. For purposes of Section 10.01 of the Agreement, the Prepayment Option Commencement Date is _______________.

[Signature Page to Payment Schedule]
LESSOR: LESSEE:

BANC OF AMERICA PUBLIC CAPITAL CORP CITY OF SALINAS
By: ________________________________
Name: __________________________
Title: ___________________________
By: ________________________________
Name: __________________________
Title: ___________________________

EXHIBIT C-1

FORM OF AUTHORIZING RESOLUTION

A RESOLUTION OF THE GOV ERNING BODY OF THE CITY OF SALINAS

AUTHORIZING THE EXEC UTION AND DELIVERY O F AN EQUIPMENT

LEASE/PURCHASE AGREEMENT WITH RESPEC T TO THE ACQUISITION ,

FINANCING AND LEASING OF CERTAIN E QUIPMENT FOR THE PUB LIC BENEFIT WITHIN THE TERMS PR OVIDED HEREIN ; AUTHORIZING THE

EXECUTION AND DELIVE RY OF DOCUMENTS REQU IRED IN
CONNECTION THEREWITH ; AND AUTHORIZING THE TAKING OF ALL

OTHER ACTIONS NECESS ARY TO THE CONSUMMAT ION OF THE
TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION.

WHEREAS, the City of Salinas (the “Lessee”), a city duly organized and existing as a political subdivision, municipal corporation or similar public entity of the State of California, is authorized by the laws of the State of California to acquire, finance and lease personal property for the benefit of the Lessee and its inhabitants and to enter into contracts with respect thereto; and WHEREAS, the Lessee desires to acquire, finance a nd lease certain equipment with a cost not to exceed $ __________ constituting personal property necessary for the Lessee to perform essential governmental functions (the “Equipment”); and WHEREAS, in order to acquire such Equipment, the Lessee proposes to enter into that certain Equipment Lease/Purchase Agreement (the “Agreement”) with Banc of America Public Capital Corp (or one of its affiliates), as lessor, (the “Lessor”), the form of which has been presented to the governing body of the Lessee at this meeting; and WHEREAS, the governing body of the Lessee deems it for the benefit of the Lessee and for the efficient and effective administration thereof to enter into the Agreement and the other documentation relating to the acquisition, financing and leasi ng of the Equipment to be therein described on the terms and conditions therein and herein provided; NOW, THEREFORE, Be It And It Is Hereby Resolved by the governing body of the Lessee as follows:

Section 1. Findings and Determinations. It is hereby foun d and determined that the terms of the Agreement, in the form presented to the governing body of Lessee at this meeting, are in the best interests of the Lessee for the acquisition, financing and leasing of the Equipment.

Section 2. Approval of Documents. The form, terms and provisions of the Agreement are hereby approved in substantially the forms presented at this meeting, with such insertions, omissions and changes as shall be approved by the __________________ [insert title of officials] of the Lessee or other members of the governing body of the Lessee executing (in writing or electronically) the same, the execution of such documents being conclusive evidence of such approval; and the _________________________ of the Lessee is hereby authorized and di rected

C-1-2
to execute (in writing or electronically) , and the ________________ of the Lessee is hereby authorized and directed to attest, the Agreement and any related Exhibits attached thereto and to deliver the Agreement (including such Exhibits) to the resp ective parties thereto, and the ________________________ of the Lessee is hereby authorized to affix the seal of the Lessee to such documents.

Section 3. Other Actions Authorized . The officers and employees of the Lessee shall take all action necessary or reasonably required by the parties to the Agreement to carry out, give effect to and consummate the transactions contemplated thereby (including the execution (in writing or electronically) and delivery of a Final Acceptance Certificate, an Escrow Agreement, Disbursement Requests and any tax certificate and agreement, as contemplated in the Agreement) and to take all action necessary in conformity therewith, including, without limitation, the execution (in writing or electronically) and delivery of any closing and other documents required to be delivered in connection with the Agreement.

Section 4. No General Liability. Nothing contained in this Resolution, the Agreement, the Escrow Agreement nor any other instrument shall be construed with respect to the Lessee as incurring a pecuniary liability or charge upon the general credit of the Lessee or against its taxing power, nor shall the breach of any agreement contained in this Resolution, the Agreement, the Escrow Agreement or any other instrument or document executed in connection therewith impose any pecuniary liability upon the Lessee or any charge upon its general credit or against its taxing power, except to the extent that the Rental Pay ments payable under the Agreement are limited obligations of the Lessee, subject to annual appropriation, as provided in the Agreement.

Section 5. Appointment of Authorized Lessee Representatives . The ___________ _____________________ and _______________ ___________ of the Lessee are each hereby designated to act as authorized representatives of the Lessee for purposes of the Agreement and the Escrow Agreement until such time as the governing body of the Lessee shall designate any other or different author ized representative for purposes of the Agreement or the Escrow Agreement.

Section 6. Severability. If any section, paragraph, clause or provision of this Resolution shall for any reason be held to be invalid or unenforceable, the invalidity or unenforce ability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Resolution.

Section 7. Repealer. All bylaws, orders and resolutions or parts thereof, inconsistent herewith, are hereby repealed to the exten t only of such inconsistency with respect to this Resolution. This repealer shall not be construed as reviving any bylaw, order, resolution or ordinance or part thereof.

Section 8. Effective Date . This Resolution shall be effective immediately upon its approval and adoption.

C-1-3
ADOPTED AND APPROVED by the governing body of the Lessee this ________ day of _________.

CITY OF SALINAS, as Lessee
[SEAL]
By: ____________________________________
Printed Name: ________________________
Title: _______________________________
Attest:

By: _________________________________
Printed Name: _____________________
Title: ____________________________

C-1-4
The undersigned, a duly elected or appointed and acting City Clerk of the Lessee identified in the above Resolution No. ___ (the “Resolution”), hereby certifies that the Resolution is a full, true and correct copy of such Resolution as adopted by the governing body of the Lessee on ____________, 20__. The Resolution is in full force and effect on the date hereof and has not been amended, modified or otherwise changed by the governing body of the Lessee since the date of adoption of the Resolution.

Dated this ____ day of ____________, 20__.
_______________________________________
Name: _________________________________
Title: City Clerk

EXHIBIT C-2

FORM OF INCUMBENCY AND AUTHORIZATION CERTIFICATE
The undersigned, a duly elected or appointed and acting City Clerk of the City of Salinas (“Lessee”) certifies as follows:

A. The following listed persons are duly elected or appointed and acting officials of Lessee (the “Officials”) in the capacity set forth opposite their respective names below and the facsimile signatures below are true and correct as of the date hereof; B. The Officials are duly authorized, on behalf of Lessee, to negotiate, execute, in writing or electronically, and deliver the Equipment Lease/Purchase Agreement dated as of ________, 2024 by and between Lessee and Banc of America Public Capital Corp (“Lessor”), the Escrow and Account Control Agreement dated as of ________, 2024 by and among Lessor, Lessee and Wilmington Trust, National Association, as Escrow Agent, all documents related th ereto and delivered in connection therewith, and any future modification(s) or amendments thereof (collectively, the “Operative Agreements”), and the Operative Agreements each are the binding and authorized agreements of Lessee, enforceable in all respects in accordance with their respective terms.

NAME OF OFFICIAL TITLE SIGNATURE
_____________________ _____________________ _____________________ _____________________ _____________________ _____________________ _____________________ _____________________ _____________________ Dated: ________, 2024 By: ____________________________________ Name: ______________________________
Title: City Clerk
(The signer of this Certificate cannot be listed above as authorized to execute the Operative Agreements.)

EXHIBIT D

FORM OF OPINION OF COUNSEL TO LESSEE
(TO BE TYPED ON LETTERHEAD OF COUNSEL)
[Closing Date]
Banc of America Public Capital Corp
11333 McCormick Road
M/C MD5-032-07-05
Hunt Valley, MD 21031
Attn: Contract Administration
Re: Equipment Lease/Purchase Agreement,
dated as of ________, 2024, by and between
Banc of America Public Capital Corp, as Lessor,
and the City of Salinas, as Lessee

Ladies and Gentlemen:

As legal counsel to the City of Salinas (“Lessee”), I have examined (a) an executed counterpart of that certain Equipment Lease/Purchase Agreement, da ted as of ________, 2024, and Exhibits thereto by and between Banc of America Public Capital Corp (“Lessor”) and Lessee (the “Agreement”), which, among other things, provides for the lease of certain property (the “Equipment”) and a certain Escrow and Account Control Agreement dated as of ________, 2024 by and among Lessor, Lessee, and Wilmington Trust, National Association as Escrow Agent (the “Escrow Agreement”), (b) an executed counterpart of the ordinances or resolutions of Lessee with respect to authorization of the transaction contemplated by the Agreement, the Escrow Agreement and documents related thereto, and (c) such other opinions, documents and matters of law as I have deemed necessary in connection with the followi ng opinions. The Agreement, the Escrow Agreement, and the documents relating thereto are herein collectively referred to as the “Transaction Documents”.

Based on the foregoing, I am of the following opinions:

1. Lessee is a city, duly organized and existing under the laws of the State, and is a political subdivision of the State within the meaning of Section 103(c) of the Internal Revenue Code of 1986, as amended (the “ Code”) and the obligations of Lessee under the Agreement will constitute an obligation of Lessee within the meaning of Section 103(a) of the Code, notwithstanding Section 103(b) of the Code.

2. Lessee has the requisite power and authority to lease and acquire the Equipment and to execute and deliver the Transaction Documents and to perform its obligations under the Transaction Documents.

D-2

3. The Transaction Documents have been duly authorized, approved, executed and delivered by and on behalf of Lessee and the Transaction Documents are legal, valid and binding obligations of Lessee, enforceable against Lessee in accordance with their respective terms, except to the extent limited by state and federal law affecting creditor’s remedies and by bankruptcy, reorganization, moratorium or other laws of general application relating to or affecting the enforcement of creditors’ rights.

4. The authoriza tion, approval, execution and delivery of the Transaction Documents and all other proceedings of Lessee relating to the transactions contemplated thereby have been performed in accordance with all open meeting laws, procurement and public bidding laws and all other applicable State or Federal laws.

5. There is no proceeding pending or threatened in any court or before any governmental authority or arbitration board or tribunal that, if adversely determined, would adversely affect the transactions contempla ted by the Transaction Documents or the security interest of Lessor or its assigns, as the case may be, in the Equipment, the Escrow Account or other Collateral thereunder.

All capitalized terms herein shall have the same meanings as in the Transaction Documents unless otherwise provided herein. Lessor and its successors and assigns are entitled to rely on this opinion.

Sincerely,

EXHIBIT E

FORM OF FINAL ACCEPTANCE CERTIFICATE
Banc of America Public Capital Corp
11333 McCormick Road
M/C MD5-032-07-05
Hunt Valley, MD 21031
Attn: Contract Administration
Re: Equipment Lease/Purchase Agreement,
dated as of ________, 2024, by and between
Banc of America Public Capital Corp, as Lessor,
and the City of Salinas, as Lessee

Ladies and Gentlemen:

In accordance with the above -referenced Equipment Lease/Purchase Agreement (the “Agreement”), the undersigned Lessee hereby certifies and represents to, and agrees with Lessor as follows:

1. All of the Equipment has been delivered, i nstalled and unconditionally accepted on the date hereof.

2. Lessee has conducted such inspection and/or testing of the Equipment as it deems necessary and appropriate and hereby acknowledges that it accepts the Equipment for all purposes.

3. Lessee is currently maintaining the insurance coverage required by Section 7.02 of the Agreement.

4. Lessee hereby reaffirms that the representations, warranties and covenants contained in the Agreement are true and correct as of the date hereof.

5. No event or co ndition that constitutes, or with notice or lapse of time, or both, would constitute, an Event of Default exists at the date hereof.

6. No Material Adverse Change has occurred since the date of the execution and delivery of the Agreement.

7. No Event of Non-appropriation has occurred or been threatened.

Capitalized terms used, but not defined, in this Final Acceptance Certificate shall have the same meanings as when such terms are used in the Agreement.

E-2
Date: ____________________
LESSEE:

CITY OF SALINAS
By: ____________________________________
Name: ______________________________
Title: _______________________________
(SEAL)

EXHIBIT F

FORM OF SELF INSURANCE CERTIFICATE
Banc of America Public Capital Corp
11333 McCormick Road
M/C MD5-032-07-05
Hunt Valley, MD 21031
Attn: Contract Administration
Re: Equipment Lease/Purchase Agreement,
dated as of ________, 2024 (the “Agreement”)
by and between Banc of America Public Capital Corp, as Lessor, and the City of Salinas, as Lessee

In connection with the above -referenced Agreement, the City of Salinas (the “Lessee”) hereby warrants and represents to Banc of America Public Capital Corp the following information.

The terms capitalized herein but not defined herein shall have the meanings assigned to them in the Agreement.

1. The Lessee is self -insured for damage or destruction to the Equipment. The dollar amount limit for property damage to the Equipment under such self -insurance program is $_________________. [The Lessee maintains an umbrella insurance policy for claims in excess of Lessee’s self-insurance limits for property damage to the Equipment which policy has a dollar limit for property damage to the Equipment under such policy of $__________________.]

2. The Lessee is self-insured for liability for injury or death of any person or damage or loss of property arising out of or relating to the condition or operation of the Equipment. The dollar limit for such liability claims under the Lessee’s self -insurance program is $_________________. [The Lessee maintains an umbrella insurance policy for claims in excess of Lessee’s self -insurance limits for liability which policy has a dollar limit for liabilities for injury and death to persons as well as damage or loss of property arising out of or relating to the condition or operation of the Equipment in the amount of $_________________.]
[3]. The Lessee maintains a self -insurance fund. Monies in the self -insurance fund [are/are not] subject to annual appropriation. The total amount maintained in the self -insurance fund to cover Lessee’s self -insurance liabilities is $_________________. [Amounts paid from the Lessee’s self-insurance fund are subject to a dollar per claim of $__________________.] [3]. The Lessee does not maintain a self-insurance fund. The Lessee obtains funds to pay claims for which it has self -insured from the following sources:

F-2
_____________________________. Amounts payable for claims from such sources are limited as follows: _________________________________________

4. Attached hereto are copies of certificates of insurance with respect to policies maintained by Lessee.

LESSEE:

CITY OF SALINAS
By: ____________________________________
Name: ______________________________
Title: _______________________________

EXHIBIT G

RESERVED

EXHIBIT H

FORM OF NOTICE AND ACKNOWLEDGEMENT OF ASSIGNMENT
Dated ____________________
Banc of America Public Capital Corp (“Assignor”) hereby gives notice that it has assigned and sold to _________________________ (“Assignee”) all of Assignor’s right, title and interest in, to and under the Equipment Lease/Purchase Agreement dated as of ________, 2024 (the “Agreement”), by and between Assignor and the City of Salinas (“Lessee”), together with all exhibits, schedules, addenda and attachments related thereto, and all certifications and other documents delivered in connection therewith, the Ren tal Payments and other amounts due under the Agreement, all of Assignor’s right, title and interest in the Equipment (as defined in the Agreement), and all of Assignor’s right, title and interest in, to and under the Escrow and Account Control Agreement dated as of ________, 2024 (the “Escrow Agreement”) by and among Lessee, Assignor and Wilmington Trust, National Association, as Escrow Agent, together with the Escrow Account and other Collateral (collectively, the “Assigned Property”). Each capitalized term used but not defined herein has the meaning set forth in the Agreement.

1. Lessee hereby acknowledges the effect of the assignment of the Assigned Property and absolutely and unconditionally agrees to deliver to Assignee all Rental Payments and other amounts coming due under the Agreement in accordance with the terms thereof on and after the date of this Acknowledgment.

2. Lessee hereby agrees that: (i) Assignee shall have all the rights of Lessor under the Agreement and all related documents, includi ng, but not limited to, the rights to issue or receive all notices and reports, to give all consents or agreements to modifications thereto, to receive title to the Equipment in accordance with the terms of the Agreement, to declare a default and to exercise all rights and remedies thereunder in connection with the occurrence of an Event of Non-appropriation or an Event of Default ; and (ii) [except as provided in Section 3.03 of the Agreement,] the obligations of Lessee to make Rental Payments and to perfor m and observe the other covenants and agreements contained in the Agreement shall be absolute and unconditional in all events without abatement, diminution, deduction, set-off or defense.

3. Lessee agrees that, as of the date of this Notice and Acknowledgment of Assignment (this “Acknowledgement”), the following information about the Agreement is true, accurate and complete:

Number of Rental Payments Remaining ________________
Amount of Each Rental Payment $_______________
Total Amount of Rental Payments
Remaining $_______________
Frequency of Rental Payments ________________
Next Rental Payment Due ________________
Funds Remaining in Escrow Account $_______________

H-2

4. The Agreement remains in full force and effect, has not been amended, no Event of Default (or event which with the passage of time or the giving of notice or both would constitute an Event of Default) has occurred thereunder and no Event of Non-appropriation has occurred or is threatened with respect thereto.

5. Assignor hereby acknowledges the transfer restrictions imposed by Section 11.01 of the Agreement and confirms that the assignment to Assignee has been made in accordance with the provisions of that Section.

6. Any inquiries of Lessee related to the Agreement and any requests for disbursements from the Escrow Account, if applicable, and all Rental Payments and other amounts coming due pursuant to the Agreement on and after the date of this Acknowledgment should be remitted to Assignee at the following address (or such other address as provided to Lessee in writing from time to time by Assignee):
______________________________
______________________________
______________________________
ACKNOWLEDGED AND AGREED:

LESSEE: CITY OF SALINAS
By: _________________________________
Name: ___________________________
Title: ____________________________
ASSIGNOR: BANC OF AMERICA PUBLIC CAPITAL CORP
By: _________________________________
Name: ___________________________
Title: ____________________________

EXHIBIT I

ESCROW AND ACCOUNT CONTROL AGREEMENT
See Item #4 in Transcript

@BCL@A014A2F3
9007975

EXHIBIT E
[FORM OF] ESCROW AND ACCOUNT CONTROL AGREEMENT
This Escrow and Account Control Agreement (this “Agreement”), dated as of [December 19, 2024,] by and among Banc of America Public Capital Corp, a Kansas corporation (together with its successors and assigns, hereinafter referred to as “Lessor”), City of Salinas, a California charter city and municipal corporation existing under the laws of the State of California (hereinafter referred to as “Lessee”) and Wilmington Trust , National Association, a national banking association organized under the laws of the United States of America (hereinafter referred to as “Escrow Agent”).

Reference is made to tha t certain Equipment Lease/Purchase Agreement dated as of December 19, 2024 between Lessor and Lessee (hereinafter referred to as the “Lease”), covering the acquisition and lease of certain Equipment described therein (the “Equipment”). It is a requirement of the Lease that the Acquisition Amount ($4,735,000) be deposited into a segregated escrow account under terms satisfactory to Lessor, for the purpose of fully funding the Lease, and providing a mechanism for the application of such amounts to the purchase of and payment for the Equipment.

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Creation of Escrow Account. (a) There is hereby created an escrow fund to be known as the “City of Salinas Escrow Account” (the “Escrow Account”) to be held by the Escrow Agent for the purposes stated herein, for the benefit of Lessor and Lessee, to be held, disbursed and returned in accordance with the terms hereof. (b) Lessee may, from time to time, provide written instructions for Escrow Agent to use any available cash in the Escrow Account to purchase any money market fund o r liquid deposit investment vehicle that Escrow Agent from time to time makes available to the parties hereto .

Such written instructions shall be provided via delivery to Escrow Agent of a signed and completed Escrow Account Investment Selection Form (suc h form available from Escrow Agent upon request). All funds invested by Escrow Agent at the direction of Lessee in such short -term investments (as more particularly described in Escrow Agent ’s Escrow Account Investment Selection Form) shall be deemed to be part of the Escrow Account and subject to all the terms and conditions of this Agreement . The Escrow Agent is hereby authorized and directed to sell or redeem any such investments as it deems necessary to make any payments or distributions required under this Agreement. The Lessee acknowledges that neither the Escrow Agent nor the Lessor is providing investment supervision, recommendations, or advice. If any cash is received for the Escrow Account after the cut-off time for the designated short-term investment vehicle, the Escrow Agent shall hold such cash uninvested until the next Business Day. “Business Day” means a day other than a Saturday, Sunday or legal holiday, on which banking institutions are not closed in Chicago, Illinois, Salinas, California or New York, New York . In the absence of written instructions from Lessee (on Escrow Agent ’s Escrow Account Investment Selection Form) designating a short-term investment of cash in the Escrow Account, cash in the Escrow Account -2-
shall remain uninvested and it shall not be collateralized. Escrow Agent shall have no obligation to pay interest on cash in respect of any period during which it remains uninvested . Lessee shall be solely responsible for ascertaining that all proposed investments and reinve stments are Qualified Investments and that they comply with federal, state and local laws, regulations and ordinances governing investment of such funds and for providing appropriate notice to the Escrow Agent for the reinvestment of any maturing investmen t. Accordingly, neither the Escrow Agent nor Lessor shall be responsible for any liability, cost, expense, loss or claim of any kind, directly or indirectly arising out of or related to the investment or reinvestment of all or any portion of the moneys on deposit in the Escrow Account, and Lessee agrees to and does hereby release the Escrow Agent and Lessor from any such liability, cost, expenses, loss or claim . Interest on the Escrow Account shall become part of the Escrow Account, and gains and losses on the investment of the moneys on deposit in the Escrow Account shall be borne by the Lessee. The Escrow Agent shall have no discretion whatsoever with respect to the management, disposition or investment of the Escrow Account . The Escrow Agent shall not be responsible for any market decline in the value of the Escrow Account and has no obligation to notify Lessor and Lessee of any such decline or take any action with respect to the Escrow Account, except upon specific written instructions stated herein. For purposes of this Agreement, “Qualified Investments” means any investments which meet the requirements of California Government Code Sections 53600 et seq. (c) Unless the Escrow Account is earlier terminated in accordance with the provisions of paragraph (d) below, amounts in the Escrow Account shall be disbursed by the Escrow Agent in payment of amounts described in Section 2 hereof upon receipt of written instruction(s) from Lessor, as is more fully described in Section 2 hereof. If the amounts in the Escrow Account are insufficient to pay such amounts, Lessee shall provide any balance of the funds needed to complete the acquisition of the Equipment . Any moneys remaining in the Escrow Account on or after the earlier of (i) the expiration of the Acqu isition Period or (ii) the date on which Lessee executes a Final Acceptance Certificate shall be applied as provided in Section 4 hereof. (d) The Escrow Account shall be terminated at the earliest of (i) the final distribution of amounts in the Escrow Account, (ii) the date on which Lessee executes a Final Acceptance Certificate or (iii) written notice given by Lessor of the occurrence of an Event of Default under the Lease or termination of the Lease due to an Event of Non-appropriation. Notwithstanding the foregoing, this Agreement shall not terminate nor shall the Escrow Account be closed until all funds deposited hereunder have been disbursed.
(e) The Escrow Agent may act in reliance upon any writing or instrument or signature which it, in good fai th, believes to be genuine and may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument . The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner of execution, or validity of any instrument nor as to the identity, authority, or right of any person executing the same; and its duties hereunder shall be limited to the receipt of such moneys, instruments or other documents received by it as the Escrow Agent, and for the disposition of the same in accordance herewith .

Notwithstanding and without limiting the generality of the foregoing, concurrent with the execution of this Agreement, Lessee and Lessor, respectively, shall deliver to the Escrow Agent an authorized signers form in the form of Exhibit A-1 (Lessee) and Exhibit A-2 (Lessor) attached hereto. Notwithstanding the foregoing sentence, the Escrow Agent is authorized to comply with -3-
and rely upon any notices, instructions or other communications believed by it to have been sent or given by the parties or by a person or persons authorized by the parties . The Escrow Agent specifically allows for receiving direction by written or electronic transmission from an authorized representative with the following caveat, to the extent permitted by law, Lessee and Lessor agree to indemnify and hold harmless the Escrow Agent against any and all claims, losses, damages, liabilities, judgments, costs and expenses (including reasonable attorneys ’ fees) (collectively, “Losses”) incurred or sustained by the Escrow Agent as a result of or in connection with the Escrow Agent’s reliance upon and compliance with instructions or directions given by written or electronic transmission given by each, respectively, provided, however, that such Losses have not arisen from the gross negligence or willful misconduct of the Escrow Agent, with regards to the execution of the instructions or directions in question, it being understood that forbearance on the part of the Escrow Agent to verify or confirm that the person giving the instructions or directions, is, in fact, an authorized person shall not be deemed to constitute gross negligence or willful misconduct.

In the event conflicting instructions as to the disposition of all or any portion of the Escrow Account are at any time given by Lessor and Lessee, the Escrow Agent shall abide by the instructions or entitlement orders given by Lessor without consent of the Lessee. (f) Unless the Escrow Agent is guilty of gross negligence or willful mi sconduct with regard to its duties hereunder, Lessee agrees to and does hereby release and indemnify the Escrow Agent and its directors, officers, employees and agents and hold it harmless from any and all claims, liabilities, losses, actions, suits or proceedings at law or in equity, or any other expense, fees or charges of any character or nature, which it may incur or with which it may be threatened by reason of its acting as Escrow Agent under this Agreement; and in connection therewith, does to the extent permitted by law indemnify the Escrow Agent against any and all expenses; including reasonable attorneys’ fees and the cost of defending any action, suit or proceeding or resisting any claim.
(g) If Lessee and Lessor shall be in disagreement about the interpretation of the Lease, or about the rights and obligations, or the propriety of any action contemplated by the Escrow Agent hereunder, the Escrow Agent may, but shall not be required to, file an appropriate civil action including an interpleader action to resolve the disagreement . The Escrow Agent shall be reimbursed by Lessee for all costs, including reasonable attorneys ’ fees, in connection with such civil action, and shall be fully protected in suspending all or part of its activities under this Agreement until a final judgment in such action is received. (h) The Escrow Agent may consult with counsel of its own choice and shall have full and complete authorization and protection with the opinion of such counsel. The Escrow Agent shall otherwise not be liable for any mistakes of fact or errors of judgment, or for any acts or omissions of any kind unless caused by its willful misconduct. The Escrow Agent may act through attorneys or agents and shall not be responsible for the acts or omissions of any such attorney or agent appointed with due care.
(i) The compensation fee for Escrow Agent’s services under this Agreement is $0.00.

Lessee shall reimburse the Escrow Agent for all reasonable costs and expenses, including those of -4-
the Escrow Agent ’s attorneys, agents and employees incurred for non -routine administration of the Escrow Account , execution of the directions provided by the Lessee and Lessor and the performance of the Escrow Agent’s powers and duties hereunder in connection with any Event of Default under the Lease, any termination of the Lease due to an Event of Non-appropriation or in connection with any dispute between Lessor and Lessee concerning the Escrow Account. The terms of this paragraph shall survive termination of this Agreem ent and/or the earlier resignation or removal of the Escrow Agent.
(j) The Escrow Agent or any successor may at any time resign by giving mailed notice to Lessee and Lessor of its intention to resign and of the proposed date of resignation (the “Effective Date”), which shall be a date not less than 60 days after such notice is delivered to an express carrier, charges prepaid, unless an earlier resignation date and the appointment of a successor shall have been approved by the Lessee and Lessor. After the Effective Date, the Escrow Agent shall be under no further obligation except to hold the Escrow Account in accordance with the terms of this Agreement, pending receipt of written instructions from Lessor regarding further disposition of the Escrow Account.
(k) The Escrow Agent shall have no responsibilities, obligations or duties other than those expressly set forth in this Agreement and no implied duties responsibilities or obligations shall be read into this Agreement. The Escrow Agent shall neither be responsible for, nor chargeable with, knowledge of the terms and conditions of any other agreement, instrument, or document other than this Agreement, whether or not an original or a copy of such agreement has been provided to the Escrow Agent.
(l) The permissive rights of the Escrow Agent to do things enumerated in this Agreement shall not be construed as a duty and, with respect to such permissive rights, the Escrow Agent shall not be answerable for other than its gross negligence or willful misconduct. (m) Nothing in this Agreement shall require the Escrow Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties or in the exercise of any of its rights or powers hereunder.
(n) In no eve nt shall the Escrow Agent be responsible or liable for special, indirect, punitive, incidental or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. (o) In the event that any of the funds in the Escrow Account shall be attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or decree shall be made or entered by any court order affecting the funds in the Escrow Account, the Escrow Agent is hereby expressly authorized to respond as it deems appropriate or to comply with all writs, orders or decrees so entered or issued, or which it is advised by legal counsel of its own choosing is binding upon it, whether with or without jurisdiction. To the extent permitted by law, the Escrow Agent shall inform the Lessor and Lessee in writing about any such attachment, garnishment, levy, court order, judgment or decree within ten (10) business days of its receipt of any such attachment, garnishment, levy, court order, -5-
judgment or decree. In the event that the Escrow Agent obeys or complies with any such writ, order or decree, it shall not be liable to any of the other parties to this Agreement or to any other person, firm or corporation, should, by reason of such compliance notwithstanding, such writ, order or decree be subsequently reversed, modified, annulled, set aside or vacated.

Section 2. Acquisition and Installation of Equipment.
(a) Acquisition Contracts. Lessee will arrange for, supervise and provide for, or cause to be supervised and provided for, the acquisition of the Equipment, with moneys available in the Escrow Account. Lessee represents the estimated costs of the Equipment are within the funds estimated to be available therefor, and Lessor makes no warranty or representation with respect thereto. Lessor shall have no liabili ty under any of the acquisition or construction contracts .

Lessee shall obtain all necessary permits and approvals, if any, for the acquisition, equipping and installation of the Equipment, and the operation and maintenance thereof . Escrow Agent shall have no duty to inquire as to the performance or nonperformance of any provision of any other agreement, instrument, or document other than this Agreement or monitor or enforce Lessee ’s compliance with the foregoing covenant.
(b) Authorized Escrow Account D isbursements. It is agreed as between Lessee and Lessor that disbursements from the Escrow Account shall be made for the purpose of paying (including the reimbursement to Lessee for advances from its own funds to accomplish the purposes hereinafter described) the cost of acquiring the Equipment. (c) Requisition Procedure. No disbursement from the Escrow Account shall be made unless and until Lessor has approved in writing such requisition. Prior to disbursement from the Escrow Account there shall be filed with the Escrow Agent a requisition for such payment in the form of Disbursement Request attached hereto as Schedule 1, stating each amount to be paid and the name of the person, firm or corporation to whom payment thereof is due. All disbursements shall be made by wire transfer. The Escrow Agent is authorized to obtain and rely on confirmation of such Disbursement Request and payment instructions by telephone call -back to the person or persons designated for verifying such requests on Exhibit A-2 (such person verifying the request shall be different than the person initiating the request). The Lessor and Lessee hereby confirm that any call-back performed by Escrow Agent to verify a disbursement instruction pursuant to a Disbursement Request submitted pursuant to this Section 2(c) before release, shall be made to Lessor only and Escrow Agent shall have no obligation to call-back Lessee.

Each such Disbursement Request shall be signed by an authorized representative of Lessee (an “Authorized Representative”) and by Lessor, and shall be subject to the following conditions, which Escrow Agent shall conclusively presume have been satisfied at such time as a requisition executed by Lessee and Lessor is delivered to it:

1. Delivery to Lessor of an executed Disbursement Request in the form attached hereto as Schedule 1;

2. Delivery to Lessor of copies of invoices (and proofs of payment of such invoices, if Lessee seeks reimbursement) and bills of sale therefor or other evidence of title -6-
transfer, and release by Vendor of any security interest, therefor as required by Section 3.04 of the Lease and any additional documentation reasonably requested by Lessor; and

3. The disbursement shall occur during the Acquisition Period.

Lessee and Lessor agree that their execution of the form attached hereto as Schedule 1 and delivery of the executed form to Escrow Agent confirms that all of the requirements and conditions with respect to disbursements set forth in this Section 2 have been satisfied.

Section 3. Deposit to Escrow Account. Upon satisfaction of the conditions specified in Section 3.04 of the Lease, Lessor will cause the Acquisition Amount to be deposited in the Escrow Account. Lessee agrees to pay any costs with respect to the Equipment in excess of amounts available therefor in the Escrow Account. The Escrow Agent shall not be liable for any amount in excess of the Acquisition Amount.

Section 4. Excess Proceeds in Escrow Account . Upon receipt of written instructions from Lessor including a repr esentation that one of the following conditions has been satisfied (upon which representation Escrow Agent shall conclusively rely), any funds remaining in the Escrow Account on or after the earliest of (a) the expiration of the Acquisition Period, (b) the date on which Lessee executes a Final Acceptance Certificate, or (c) upon a termination of the Escrow Account as provided in this Agreement, shall be distributed by the Escrow Agent to the Lessor in order for the Lessor to apply such funds to amounts owed by Lessee under the Lease in accordance with Section 4.07 of the Lease.

Section 5. Security Interest. The Escrow Agent and Lessee acknowledge and agree that the Escrow Account and all proceeds thereof are being held by Escrow Agent for disbursement or return as set forth herein. Lessee hereby grants to Lessor a first priority perfected security interest in the Escrow Account, and all proceeds thereof, and all investments made with any amounts in the Escrow Account. If the Escrow Account, or any part th ereof, is converted to investments as set forth in this Agreement, such investments shall be made in the name of Escrow Agent and the Escrow Agent hereby agrees to hold such investments as bailee for Lessor so that Lessor is deemed to have possession of such investments for the purpose of perfecting its security interest.

Section 6. Control of Escrow Account. In order to perfect Lessor’s security interest by means of control in (i) the Escrow Account established hereunder, (ii) all securities entitlements, investment property and other financial assets now or hereafter credited to the Escrow Account, (iii) all of Lessee ’s rights in respect of the Escrow Account, such securities entitlements, investment property and other financial assets, and (iv) all products, proceeds and revenues of and from any of the foregoing personal property (collectively, the “Collateral”), Lessor, Lessee and Escrow Agent further agree as follows:
(a) All terms used in this Section 6 which are defined in the California Commercial Code (the “Commercial Code”) but are not otherwise defined herein shall have the meanings assigned to such terms in the Commercial Code, as in effect on the date of this Agreement.
-7-
(b) Escrow Agent will comply with all entitlement orders originated by Lessor with respect to the Collateral, or any portion of the Collateral, without further consent by Lessee.
(c) Provided that account investments shall be held in the name of the Escrow Agent, Escrow Agent hereby represents and warrants (i) that the records of Escrow Agent show that Lessee is the sole owner of the Collateral, (ii) that Escrow Agent has not been served with any notice of levy or received any notice of any security interest in or other claim to the Collateral, or any portion of the Collateral, other than Lessor’s claim pursuant to this Agreement, and (iii) that Escrow Agent is not presently obligated to accept any entitlement order from any person with respect to the Collateral, except for entitlement orders that Escrow Age nt is obligated to accept from Lessor under this Agreement and entitlement orders that Escrow Agent, subject to the provisions of paragraph (e) below, is obligated to accept from Lessee.
(d) Without the prior written consent of Lessor, Escrow Agent will n ot enter into any agreement by which Escrow Agent agrees to comply with any entitlement order of any person other than Lessor or, subject to the provisions of paragraph (e) below, Lessee, with respect to any portion or all of the Collateral . Escrow Agent shall promptly notify Lessor if any person requests Escrow Agent to enter into any such agreement or otherwise asserts or seeks to assert a Lien, encumbrance or adverse claim against any portion or all of the Collateral.
(e) Except as otherwise provided i n this paragraph (e) and subject to Section 1(b) hereof, Lessee may effect sales, trades, transfers and exchanges of Collateral within the Escrow Account, but will not, without the prior written consent of Lessor, withdraw any Collateral from the Escrow Ac count. Escrow Agent acknowledges that Lessor reserves the right, by delivery of written notice to Escrow Agent, to prohibit Lessee from effecting any withdrawals (including withdrawals of ordinary cash dividends and interest income), sales, trades, transfers or exchanges of any Collateral held in the Escrow Account. Further, Escrow Agent hereby agrees to comply with any and all written instructions delivered by Lessor to Escrow Agent (once it has had a reasonable opportunity to comply therewith) and has no obligation to, and will not, investigate the reason for any action taken by Lessor, the amount of any obligations of Lessee to Lessor, the validity of any of Lessor ’s claims against or agreements with Lessee, the existence of any defaults under such agreements, or any other matter.
(f) Lessee hereby irrevocably authorizes Escrow Agent to comply with all instructions and entitlement orders delivered by Lessor to Escrow Agent. (g) Escrow Agent will not attempt to assert control, and does not claim and will not accept any security or other interest in, any part of the Collateral, and Escrow Agent will not exercise, enforce or attempt to enforce any right of setoff against the Collateral, or otherwise charge or deduct from the Collateral any amount whatsoever. -8-
(h) Escrow Agent and Lessee hereby agree that any property held in the Escrow Account shall be treated as a financial asset under such section of the Commercial Code as corresponds with Section 8-102 of the Uniform Commercial Code, notwithstanding an y contrary provision of any other agreement to which Escrow Agent may be a party. (i) Escrow Agent is hereby authorized and instructed, and hereby agrees, to send to Lessor at its address set forth in Section 8 below, concurrently with the sending thereof to Lessee, duplicate copies of any and all monthly Escrow Account statements or reports issued or sent to Lessee with respect to the Escrow Account.

Section 7. Information Required Under USA Patriot Act. The parties acknowledge that in order to help the United States government fight the funding of terrorism and money laundering activities, pursuant to Federal regulations that became effective on October 1, 2003 (Section 326 of the USA Patriot Act) all financial institutions are required to obtain, verify, record and update information that identifies each person establishing a relationship or opening an account . The parties to this Agreement agree that they will provide to the Escrow Agent such information as it may request, from time to time, in o rder for the Escrow Agent to satisfy the requirements of the USA Patriot Act, including but not limited to the name, address, tax identification number and other information that will allow it to identify the individual or entity who is establishing the relationship or opening the account and may also ask for formation documents such as articles of incorporation or other identifying documents to be provided.

Section 8. Miscellaneous. Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Lease. This Agreement may not be amended except in writing signed by all parties hereto. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original instrument and each shall have the force and effect of an original and all of which together constitute, and shall be deemed to constitute, one and the same instrument. Notices hereunder shall be made in writing and shall be deemed to have been duly given when personally delivered or when deposited in the mail, first class postage prepaid, or delivered to an express carrier, charges prepaid, or sent by facsimile with electronic confirmation, addressed to each party at its address below.

Notices and other communications hereunder may be delivered or furnished by electronic mail provided that any formal notice shall be attached to an email message in PDF format and provided further that any notice or other communication sent to an e-mail address shall be deemed received upon and only upon the sender’s receipt of affirmative acknowledgement or receipt from the intended recipient . For purposes hereof no acknowledgement of receipt generated on an automated basis shall be deemed sufficient for any purpose hereunder or admissible as evidence of receipt.

If a court of competent jurisdiction declares any provision hereof invalid, it will be ineffective only to the extent of such invalidity, so that the remainder of the provision and Agreement will continue in full force and effect.
-9-
This Agreement and the exhibits hereto set forth the entire agreement and understanding of the parties related to this transaction and supersede all prior agreements and understandings, oral or written.

If to Lessor: Banc of America Public Capital Corp
11333 McCormick Road
Mail Code: MD5-032-07-05
Hunt Valley, MD 21031
Attn: Contract Administration
Fax: (443) 541-3057
If to Lessee: City of Salinas
200 Lincoln Avenue
Salinas, CA 93901
Attention: Finance Director
Telephone: (831) 758-7420
Fax No.: (831) 758-7937
Email: [email protected]
If to Escrow Agent: Wilmington Trust, National Association 650 Town Center Drive, Suite 800
Costa Mesa, CA 92626
Attention: Chris Johnson
Telephone: (714) 384-4152
Fax: (714) 384-4151
Email: [email protected]
Section 9. Lessee and Lessor understand and agree that they are required to provide the Escrow Agent with a properly completed and signed Tax Certification (as defined below) and that the Escrow Agent may not perform its duties hereunder without having bee n provided with such Tax Certification. As used herein “Tax Certification” shall mean an IRS form W-9 or W -8 as described above . The Escrow Agent will comply with any U.S . tax withholding or backup withholding and reporting requirements that are required by law . With respect to earnings allocable to a foreign person, the Escrow Agent will withhold U.S . tax as required by law and report such earnings and taxes withheld, if any, for the benefit of such foreign person on IRS Form 1042-S (or any other requir ed form), unless such earnings and withheld taxes are exempt from reporting under Treasury Regulation Section 1.1461-1(c)(2)(ii) or under other applicable law.

With respect to earnings allocable to a United States person, the Escrow Agent will report such income, if required, on IRS Form 1099 or any other form required by law . The IRS Forms 1099 and/or 1042-S shall show the Escrow Agent as payor and Lessee as payee. Escrow Agent shall recognize Lessee as the designated party for regulatory reporting purposes.

Lessee and Lessor agree that they are not relieved of their respective obligations, if any, to prepare and file information reports under Code Section 6041, and the Treasury regulations thereunder, with respect to amounts of imputed interest income, as determined pursuant to Code -10-
Sections 483 or 1272. The Escrow Agent shall not be responsible for determining or reporting such imputed interest.

Section 10. This Agreement shall be governed by and construed in accordance with the laws of the State of California and the parties hereto consent to jurisdiction in the State of California and venue in any state or Federal court located in the State of California, and each party expressly waives any objections that it may have to the venue of such courts. THE PARTIES

HERETO EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT. If the waiver of jury trial contained herein is unenforceable for any reason, then the parties hereto agree that the court shall, and is hereby directed to, make a general reference pursuant to California Code of Civil Procedure Section 638 to a referee to hear and determine all of the issues in such action or proceeding (whether of fact or of law) and to report a statement of decision.

Section 11. Any bank or corporation into which the Escrow Agent may be merged or with which it may be consolidated, or any bank or corporation to whom the Escrow Agent may transfer a substantial amount of its escrow business, shall be the successor to the Escrow Agent without the execution or filing of any paper or any further act on the part of any of the parties, anything herein to the contrary notwithstanding . Any bank or corporation into which the Lessor may be merged or with which it may be consolidated, or any bank or corporation to whom the Lessor may transfer a substantial amount of its business, shall be the successor to the Lessor without the execution or filing of any paper or any further act on the part of any of the parties, anything herein to the contrary notwithstanding.

Section 12. This Agreement may be amended, modified, and/or supplemented only by an instrument in writing executed by all parties hereto.

Section 13. No party hereto shall assign its rights hereunder until its assignee has submitted to the Escrow Agent (i) Patriot Act disclosure materials and the Escrow Agent has determined that on the basis of such materials it may accept such assi gnee as a customer and (ii) assignee has delivered an IRS Form W-8 or W-9, as appropriate, to the Escrow Agent which the Escrow Agent has determined to have been properly signed and completed.

Section 14. Escrow Agent will treat information related to this Agreement as confidential but, unless prohibited by law, Lessee and Lessor authorize the transfer or disclosure of any information relating to the Agreement to and between the subsidiaries, officers, affiliates and other representatives and advisors of Escrow Agent and third parties selected by any of them, wherever situated, for confidential use in the ordinary course of business, and further acknowledge that Escrow Agent and any such subsidiary, officer, affiliate or third party may transfer or disclose any such information as required by any law, court, regulator or legal process.

Lessor will treat information related to this Agreement as confidential but, unless prohibited by law, Escrow Agent and Lessee authorize the transfer or disclosure of any information relating to the Agreement to and between the subsidiaries, officers, affiliates, other representatives and advisors of Lessor and debt and equity sources and third parties selected by any of them, and to their prospective assignees wherever si tuated, for confidential use in the ordinary course of -11-
business, and further acknowledge that Lessor and any such subsidiary, officer, affiliate, debt and equity source or third party or prospective assignee may transfer or disclose any such information as required by any law, court, regulator or legal process . For the avoidance of doubt, nothing herein prohibits any individual from communicating or disclosing information regarding suspected violations of laws, rules, or regulations to a governmental, regulatory, or self-regulatory authority without any notification to any person.

Lessee will treat the terms of this Agreement as confidential except on a “need to know” basis to persons within or outside Lessee ’s organization (including affiliates of such par ty), such as attorneys, accountants, bankers, financial advisors, auditors and other consultants of such party and its affiliates, except as required by any law, court, regulator or legal process and except pursuant to the express prior written consent of the other parties, which consent shall not be unreasonably withheld.

Section 15. This Agreement may be executed and delivered by facsimile signature or other electronic or digital means (including, without limitation, Adobe’s Portable Document Format ( “PDF”)). Any such signature shall be of the same force and effect as an original signature, it being the express intent of the parties to create a valid and legally enforceable contract between them. The exchange and delivery of this Agreement and the related signature pages via facsimile or as an attachment to electronic mail (including in PDF) shall constitute effective execution and delivery by the parties and may be used by the parties for all purposes.

Notwithstanding the foregoing, at the request of either party, the parties hereto agree to exchange inked original replacement signature pages as soon thereafter as reasonably practicable. [SIGNATURE PAGES TO FOLLOW]

[Signature Page to Escrow and Account Control Agreement] IN WITNESS WHEREOF, the parties have executed this Escrow and Account Control Agreement as of the date first above written.

BANC OF AMERICA PUBLIC CAPITAL CORP,
as Lessor
CITY OF SALINAS, as Lessee
By: ________________________________
Name: ___________________________
Title: ____________________________
By: ________________________________
Name: ___________________________
Title: ____________________________

WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Escrow Agent
APPROVED AS TO FORM:

By: ________________________________
Name: ___________________________
Title: ____________________________
NAME: CHRISTOPHER A. CALLIHAN
TITLE: CITY ATTORNEY

SCHEDULE 1

TO THE ESCROW AND ACCOUNT CONTROL AGREEMENT

FORM OF DISBURSEMENT REQUEST
Re: Equipment Lease/Purchase Agreement dated as of ________, 2024 by and between Banc of America Public Capital Corp, as Lessor, and the City of Salinas, as Lessee (the “Lease”) (Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Lease.)
In accordance with the terms of the Escrow and Account Control Agreement, dated as of ________, 2024 (the “Escrow and Account Control Agreement”) by and among Banc of America Public Capital Corp (“Lessor”), the City of Salinas (“Lessee”) and Wilmington Trust, National Association (the “Escrow Agent”), the undersigned hereby requests the Escrow Agent pay the following persons the following amounts from the Escrow Account created under the Escrow and Account Control Agreement for the following purposes:

DISBURSEMENT AMOUNTS:

Payee’s Name and Address
(if disbursement via wire,
must include wire transfer
instructions)

INVOICE NUMBER DOLLAR AMOUNT PURPOSE

<Payee’s Name>
<Payee Address 1>
<Payee Address 2>
<Payee Address 3>

<*Payee Address and Payee Bank
information is required.>

Schedule I-2
<Payee’s Name>
<Payee Address 1>
<Payee Address 2>
<Payee Address 3>

<*Payee Address and Payee Bank
information is required.>

<*Payee Address and Payee Bank
information is required..>

<invoice list OR
“see attached” with
a spreadsheet>
< invoice amount> <general description of
equipment; ex “police cruiser”>
Lessee hereby represents, covenants and warrants for the benefit of Lessor on the date hereof as follows:
(i) Each obligation specified in the table herein titled as “Disbursement Amounts” (a) has been incurred by Lessee in the stat ed amount, (b) the same is a proper charge against the Escrow Account for Equipment Costs relating to the Equipment identified above and has not been paid (or has been paid by Lessee and Lessee requests reimbursement thereof), and (c) has not been paid (or has been paid by Lessee and Lessee requests reimbursement thereof), and the Equipment relating to such obligation has been delivered, installed and accepted by Lessee . [For COI Disbursement only: Each obligation specified in the table herein titled as “Disbursement Amounts” (a) has been incurred by Lessee in the stated amount, and (b) the same is a proper charge for costs of delivery of the Lease identified above and has not been paid (or has been paid by Lessee and Lessee requests reimbursement thereof, in which event Lessee further certifies that the requested reimbursement is not with respect to any amount previously paid).]
(ii) For each item of Equipment relating to an obligation specified in the table herein titled as “Disbursement Amounts” (a) Lessee has conducted such inspection and

Schedule I-3
testing of the Equipment as it deems necessary and appropriate in order to determine the Equipment’s capability and functionality in order to accept such Equipment, (b) such Equipment has been delivered, installed, is o perating in a manner consistent with the manufacturer’s intended use and has been inspected and finally accepted for all purposes by Lessee and title thereto has transferred to Lessee and any security interest of Vendor therein has been released and (c) th e date on which Equipment acceptance occurred is __________, 20__. Attached hereto is a copy of the original invoice, and certification from Vendor as to title transfer and release by Vendor of any security interest with respect to such obligation.
(iii) The undersigned, as Authorized Representative, has no notice of any vendor’s, mechanic’s or other Liens or rights to Liens, chattel mortgages, conditional sales contracts or security interest which should be satisfied or discharged before such payment is made.
(iv) This requisition contains no item representing payment on account, or any retained percentages which Lessee is, at the date hereof, entitled to retain (except to the extent such amounts represent a reimbursement to Lessee). (v) The Equipment is insured in accordance with the Lease. (vi) No Event of Default, and no event which with notice or lapse of time, or both, would become an Event of Default, under the Lease has occurred and is continuing at the date hereof . No Event of Non -appropriation has occurred or is threatened with respect to the Lease.
(vii) The disbursement shall occur during the Acquisition Period. (viii) The representations, warranties and covenants of Lessee set forth in the Lease are true and correct as of the date hereof.
(ix) No Material Adverse Change has occurred since the date of the execution and delivery of the Lease.
(x) The information in this Disbursement Request regarding each Payee, including their respective name, address and wiring instructions (collectively , the “Payee Information”), is true and correct, such Payee Information has been verified and confirmed by Lessee and the Lessor can rely on Lessee’s verification and confirmation of the accuracy of such Payee Information. Lessee hereby acknowledges and a grees that any call -back performed by Lessor to verify the disbursement instructions pursuant to this Disbursement Request shall be made to Lessee only and Lessor shall have no obligation to call-back any Payee listed above.

[Signature Page to Disbursement Request]
Dated: ________________

CITY OF SALINAS
By: ____________________________________
Name: ______________________________
Title: _______________________________
Disbursement of funds from the Escrow
Account in accordance with the foregoing
Disbursement Request hereby is authorized

BANC OF AMERICA PUBLIC CAPITAL CORP
as Lessor under the Lease
By:

Name:

Title:

[AN “EXHIBIT A-1” MUST BE COMPLETED A ND EXECUTED AT TIME OF EXECUTION OF THE AGREEMENT]
EXHIBIT A-1

FORM OF INCUMBENCY AND AUTHORIZATION CERTIFICATE
The undersigned, a duly elected or appointed and acting City Clerk of the City of Salinas (“Lessee”) certifies as follows:

A. The following listed persons are duly elected or appointed and acting officials of Lessee (the “Officials”) in the capacity set forth opposite their respective names below and the facsimile signatures below are true and correct as of the date hereof; B. The Officials are duly authorized, on behalf of Lessee, to negotiate, execute, in writing or electronically, and deliver the Equip ment Lease/Purchase Agreement dated as of ________, 2024 by and between Lessee and Banc of America Public Capital Corp (“Lessor”), the Escrow and Account Control Agreement dated as of ________, 2024 by and among Lessor, Lessee and Wilmington Trust, National Association, as Escrow Agent, all documents related thereto and delivered in connection therewith, and any future modification(s) or amendments thereof (collectively, the “Operative Agreements”), and the Operative Agreements each are the binding and authorized agreements of Lessee, enforceable in all respects in accordance with their respective terms.

NAME OF OFFICIAL TITLE SIGNATURE
________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ Dated: ________, 2024
By: ____________________________________
Name: ______________________________
Title: _______________________________
(The signer of this Certificate cannot be listed above as authorized to execute the Operative Agreements.)

[AN “EXHIBIT A-2” MUST BE COMPLETED AND EXECUTED AT TIME OF EXECUTION OF THE AGREEMENT] EXHIBIT A-2
ESCROW AND ACCOUNT CONTROL AGREEMENT DATED AS OF ________, 2024 BY AND AMONG BANC

OF AMERICA PUBLIC CAPITAL CORP, AS LESSOR, THE CITY OF SALINAS, AS LESSEE AND

WILMINGTON TRUST, NATIONAL ASSOCIATION, AS ESCROW AGENT CERTIFICATE OF AUTHORIZED REPRESENTATIVES – [LESSOR]
Name: Candy Tam Name: Nancy Nusenko
Title: Authorized Agent Title: Authorized Agent
Phone: 415-765-7492 Phone: 443-541-3646
Facsimile: 415-633-0183 Facsimile: 443-541-3057
E-mail: [email protected] E-mail: [email protected] Signature: Signature:

Fund Transfer / Disbursement Authority Level: Fund Transfer / Disbursement Authority Level:

Initiate Initiate
Verify transactions initiated by others Verify transactions initiated by others Name: Nancy K. Hepner Name: Arlene Sobieck
Title: Authorized Agent Title: Authorized Agent
Phone: 443-541-3645 Phone: 443-541-3643
Facsimile: 804-553-2407 Facsimile: 443-541-3057
E-mail: [email protected] E-mail: [email protected] Signature: Signature:

Fund Transfer / Disbursement Authority Level: Fund Transfer / Disbursement Authority Level:

Initiate Initiate
Verify transactions initiated by others Verify transactions initiated by others The Escrow Agent is authorized to comply with and rely upon any notices, instructions or other communications believed by it to have been sent or given by the person or persons identified above including without limitation, to initiate and verify funds transfers as indicated.

BANC OF AMERICA PUBLIC CAPITAL CORP
By:

Name:

Title:

Date: ________, 2024
City of Salinas
2024 Equipment Lease
Photovoltaic & Generator Equipment
**Estimated Debt Service**
Net Debt Service Schedule
Date Principal Cou pon Interest Total P+I CIF Net New D/S 06/01/2025 - - 90,663.41 90,663.41 (90,663.41) -
06/01/2026 52,000.00 4.255% 201,474.26 253,474.26 - 253,474.26 06/01/2027 66,000.00 4.255% 199,261.66 265,261.66 - 265,261.66 06/01/2028 80,000.00 4.255% 196,453.36 276,453.36 - 276,453.36 06/01/2029 97,000.00 4.255% 193,049.36 290,049.36 - 290,049.36 06/01/2030 114,000.00 4.255% 188,922.00 302,922.00 - 302,922.00 06/01/2031 133,000.00 4.255% 184,071.30 317,071.30 - 317,071.30 06/01/2032 153,000.00 4.255% 178,412.16 331,412.16 - 331,412.16 06/01/2033 174,000.00 4.255% 171,902.00 345,902.00 - 345,902.00 06/01/2034 197,000.00 4.255% 164,498.30 361,498.30 - 361,498.30 06/01/2035 222,000.00 4.255% 156,115.96 378,115.96 - 378,115.96 06/01/2036 249,000.00 4.255% 146,669.86 395,669.86 - 395,669.86 06/01/2037 277,000.00 4.255% 136,074.90 413,074.90 - 413,074.90 06/01/2038 308,000.00 4.255% 124,288.56 432,288.56 - 432,288.56 06/01/2039 340,000.00 4.255% 111,183.16 451,183.16 - 451,183.16 06/01/2040 375,000.00 4.255% 96,716.16 471,716.16 - 471,716.16 06/01/2041 412,000.00 4.255% 80,759.90 492,759.90 - 492,759.90 06/01/2042 452,000.00 4.255% 63,229.30 515,229.30 - 515,229.30 06/01/2043 494,000.00 4.255% 43,996.70 537,996.70 - 537,996.70 06/01/2044 540,000.00 4.255% 22,977.00 562,977.00 - 562,977.00 Total $4,735,000.00 - $2,750,719.31 $7,485,719.31 (90,663.41) $7,395,055.90 11/20/2024 | 8:55 AM
NHA Advisors LLC
Financial & Policy Strategies. Delivered.

City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#24-690, Version: 1
Minutes
Approve minutes of November 12, 2024 and November 19, 2024.

City of Salinas Printed on 11/27/2024Page 1 of 1
powered by Legistar™
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
City of Salinas
Meeting Minutes - Unofficial
City Council
Mayor Kimbley Craig
Councilmembers:

PLEDGE OF ALLEGIANCE

ROLL CALL
Councilmembre Osornio arrived after Roll Call at 4:18 p.m.

Councilmember Tony Barrera
Councilmember Carla Viviana Gonzalez
Councilmember Orlando Osornio
Councilmember Anthony Rocha
Councilmember Jose Andrew Sandoval
Councilmember Jesus Valenzuela
Mayor Kimbley Craig

Present: 7 -

NEW EMPLOYEE WELCOME AND INTRODUCTIONS
The City Council introduced and welcomed new employees for the month of October.

GENERAL PUBLIC COMMENTS
Received public from members of the public in attendance and on Zoom.

CALIFORNIA GOVERNMENT CODE §84308 - LEVINE ACT
No disclosures reported.

PUBLIC HEARINGS
ID#24-590 Fifth Substantial Amendment to United States Department of Housing and Urban Development FY 2019-2020 Annual Action Plan
Received report from Planning Manager Vincent Montgomery regarding the Fifth Substantial Amendment (Amendment) to the FY 2019-2020 AAP proposing the reallocation of additional funds in the amount of $208,400 of Community Development Block Grant (CDBG) CARES Act (-CV) to the Economic Development Technical Assistance activity. Additionally, the Amendment will consolidate and reconcile all the

Page 1 ends

Salinas City CouncilDecember 3, 2024

Salinas City Council
December 3, 2024