Upland City Council
April 11, 2022

U P L A N D C I T Y C O U N C I L

A N D C I T Y O F U P L A N D F I N A N C I N G A U T H O R I T Y

A G E N D A
A pril 1 1 , 2 0 2 2
C ity C ou n ci l C h a mbe r

B I L L V E L T O, M A Y O R

S H A N N A N M A U S T, M A Y O R P R O T E M

J A N I C E E L L I O T T, C O U N C I L M E M B E R
C A R L O S A . G A R C I A , C O U N C I L M E M B E R

R U D Y Z U N I G A , C O U N C I L M E M B E R

M I C H A E L B L A Y , C I T Y M A N A G E R
S T E P H E N P . D E I T S C H , C I T Y A T T O R N E Y

D I S R U P T I O N O F M E E T I N G S
I n d ivid uals wh o d em onstrate d isru p tive cond uct d urin g C ity C ou ncil m eetin g s th at p revent th e C ity C oun cil from cond ucting its m eeting in an ord erly m ann er are g u ilty of a m isd em ean or as stated in P C 40 3, d isru p tin g a p ub lic m eeting , and are sub ject to rem oval from th e ch am b er or arrest.

1.C A L L T O O R D E R A N D R O L L C A L L

2.A D D I T I O N S -D E L E T I O N S T O A G E N D A

3.O R A L C O M M U N I C A T I O N S
T his is a tim e for an y citizen to c om m en t on it em l is ted on th e cl osed session ag end a on ly. A n yon e wish in g to ad d ress t he leg is lat ive b od y is req u est ed to sub m it a sp eaker card t o th e C ity C l erk at or p rior to sp eaking . T h e sp eakers are req u ested to keep th eir com m en ts to n o m ore t h an th ree (3 ) m inu tes. Th e use of visu al aid s w ill b e in clud ed in the tim e lim it.

4.C L O S E D S E S S I O N N o ne
* * * * * * * * * * * *
7:00 P M

5.I N V O C A T I O N
Rab b i S tep h en E p stein , Tem p le S h olom

6.P L E D G E O F A L L E G I A N C E

7.P R E S E N T A T I O N S
P roclam ation d eclaring A p ril 2 9, 2 02 2 as N ational A rb or D ay, accep ted b y O p eration s S up ervisor/C ity A rb orist B rett L ance P roclam ation D eclaring A p ril 2 02 2 as N ational D on ate L ife M on th , accep ted b y O n e L eg acy A m b assad or E than L ach er

8.C I T Y A T T O R N E Y

9.O R A L C O M M U N I C A T I O N S
T his i s a t im e for an y ci ti zen t o com m ent on an y it em li st ed or n ot li st ed on th e ag end a. A nyon e wi sh in g to ad d res s the leg islat ive b od y i s req u es ted t o su b m it a sp eaker card t o th e C i ty C lerk at or p rior to s p eaki n g . T h e sp eakers are req u ested t o keep th eir com m en ts to no m ore t h an three (3) m in u t es. S p eakers will b e g iven fi ve (5 ) m inu tes d u ri n g p ub lic h eari ng s. T h e use of visu al ai d s will b e i n c lu d ed in th e t im e li m i t. P ub li c com m ents an d q u est ion s for t h e p urp ose of h earing curren t m at ters of con cern in ou r com m u n i ty an d to p rovid e c it izen s a m eth od for th e p ub li c to h ear th ose con cerns in an op en ven u e is encourag ed .

H owever, u n d er t he p rovisions of t he B rown A ct , th e C ity C ou n c il is p rohib ited from d iscu ssion of it em s n ot listed on t he ag end a, and th erefore, th e C ity C oun cil, C ity M an ag er, or C it y A tt orn ey w il l t ake com m u n i cat ion s un d er ad visem en t for consid eration an d ap p rop riate resp on s e or d i sc u s si on at a later tim e.

10.C O N S E N T C A L E N D A R
A ll m at ters list ed u n d er th e C onsent C al en d ar are c on s id ered t o b e rou ti ne and will b e en act ed b y on e roll call vot e. T h ere w i ll b e no sep arat e d is cu ss ion of these i tem s u n l ess m em b ers of t h e l eg i sl ati ve b od y req uest sp ecific item s b e rem oved from th e C on sen t C alen d ar for sep arate action.

A .A P P R O V A L O F M I N U T E S
A p p rove th e Reg u lar M eet in g M in u t es of M arch 28 , 20 22 . (S t aff Person :

Keri J oh nson)
B.R E S I G N A T I O N F R O M PA R K S, A RT S, R E C R E A T I O N , A N D C O M M U N I T Y

S E R V I C E S A D V I S O R Y C O M M I TT E E
A ccep t th e resig nation of D ylan W hi te from th e Parks, A rt s, Recreation , and C om m un it y S ervice A d vi sory C om m ittee an d instruct th e C ity C l erk to p ost th e vacan cy p u rs uan t to G overn m en t C od e S ect ion 54 97 4. (S taff Person: Keri J ohn son )
C .N OT I C E O F C O M P L E T I O N F O R P R O J E C T N O. 91 22 , 1 3 T H S T R E E T

PA V E M E N T R E H A B I L I TA T I O N A N D W A T E R M A I N R E P L A C E M E N T

P R O J E C T
A ccep t th e work; au th orize th e C ity M anag er or his/h er d esig nee to record th e N ot ice of C om p l eti on ; an d to red uce t he Fait h fu l Perform an ce B on d to 10 % for P roject N o. 9 12 2, 1 3th S treet Pavem ent Rehab ilitation an d Water M ain Rep lacem en t P roject. (S taff Person : B rad en Yu)

D.P U R C H A S E O R D E R I N C R E A S E F O R M E T R O N -F A R N I E R , L LC A p p rove a p u rch ase ord er in crease w it h M et ron -Farn ier, L LC for th e p u rchase of rep l acem ent w ater m eter reg isters an d d at a soft w are m eter read in g servi ces in t he am ou n t of $2 70 ,00 0 for a t otal p u rc h as e ord er am ou nt of $5 40 ,00 0. (S taff Person : B rad en Yu) E .A C C E P TA N C E O F B O A R D O F S U P E R V I S O R S D I S C R E T I O N A R Y F U N D

A L LO C A T I O N F R O M S U P E R V I S O R H A G M A N A ccep t $3 57 ,28 8 in fu n d i n g from t h e C oun ty of S an B ern ard in o th rou g h S u p ervisor H ag m an 's allocat ion of th e B oard of S u p ervi sors D iscretionary F u nd - D istrict S p ecific P ri ori ti es P rog ram to s u p p ort techn olog y in frastructu re an d m od ernization services, an d p urch ase of law enforcem ent eq u ip m en t; an d au th ori ze th e C ity M anag er t o execu te th e ag reem en t. (S taff Person : S tep h en Parker)
F.M E T H O D O F S A L E F O R S P E C I A L TA X B O N D S F O R C O M M U N I T Y F A C I L I T I E S D I S T R I C T N O. 20 15 -1 (S Y C A M O R E H I L L S ), I M P R O V E M E N T A R E A N O. 2, S E R I E S 2 02 2
Th e C ity C ou n ci l, for i tself an d actin g as th e leg islative b od y of C om m un ity Facilities D istrict N o. 20 15 -1 (S ycam ore H il ls ) ad op t a Res olu ti on to authorize a p rivate p lacem ent w ith Western A lliance B an k for the D istrict's S p ecial Tax B ond s, S eri es 20 22 (I m p rovem en t A rea N o. 2 ), and ap p rove certain d oc u m en t s an d t ake certai n ot her act ion s in conn ection th erewith . (S taff Person: S tep hen Parker)

11.P U B L I C H E A R I N G S
A .C O N S I D E R A U T H O R I Z I N G E X E C U T I O N A N D D E L I V E RY O F A S I T E

L E A S E , A L E A S E A G R E E M E N T A N D OT H E R R E L A T E D D O C U M E N T S I N

C O N N E C T I O N W I T H T H E L E A S E F I N A N C I N G A R R A N G E M E N T Th e C ity C oun ci l an d th e C ity of U p l an d F in ancin g A ut horit y w il l c on d u c t a p u b lic h eari ng t o con sid er au th ori zi n g th e execut ion an d d elivery of a site lease, leas e ag reem en t , an d oth er related d oc u m en t s in conn ect ion with th e lease fin ancin g arran g em ent. (S taff Person: S tep hen Parker) Recom m end ation:1 )S taff P resen tation
2 )H old P u b lic H earing
3 )C lose P ub lic H earin g

4 )Th e C i ty C ou n c il ad op t a Resolut ion en titled “Resolution of the C i ty C oun cil of th e C it y of Up lan d , C alifornia au th orizing execut ion an d d el ivery of a site lease, a l ease ag reem ent , and oth er related
d ocum ents in con nection w it h en terin g in to a lease ob lig ation throug h a lease finan cing arrang em en t w ith th e C it y of U p lan d an d F in an c in g A u th ori ty an d certain other action s relatin g thereto.”

5 )Th e C i ty of U p land F i n an ci n g A ut horit y ad op t a Resolution en t it led “Resolu ti on of th e B oard of D irectors of t he C ity of U p l and F inan cing A u th ority, authorizin g execu ti on an d d el ivery of a site l ease, a lease ag reem en t, an d oth er relat ed d ocu m en ts in con nection with th e lease fin ancin g arran g em ent w ith th e C ity, an d certain oth er actions relating th ereto.”

12.C O U N C I L C O M M I T T E E R E P O R T S
A .S P E C I A L F I N A N C E C O M M I TT E E M E E T I N G , M A R C H 3 0, 2 02 2

Th e C om m it tee C hairp erson will rep ort on th e m eeti n g . T h i s i s an in form ation item only.

13.B U S I N E S S I T E M S
A .D I S C U S S I O N O F P R O P O S E D C A N D I D A T E S TO F I L L U N S C H E D U L E D

V A C A N C Y O N T H E S A N A N TO N I O W A T E R C O M PA N Y B O A R D & W E S T

E N D C O N S O L I D A T E D W A T E R C O M PA N Y B O A R D O F D I R E C TO R S D iscu ss p rop os ed can d id ates t o fill th e u nsch ed u led vacan cy to t he S an A n ton io W ater C om p any B oard of D i rec tors and for th e Wes t E nd C on solid ated Wat er C om p an y B oard of D irect ors . (S taff Person: B rad en Yu)

14.C O U N C I L C O M M U N I C A T I O N S

15.C I T Y M A N A G E R

16.A D J O U R N M E N T
T he n ext reg u larly sch ed u led C ity C oun cil m eeting is M on d ay, A p ril 25 , 20 22 N O T E : I f yo u cha l l e ng e t h e p u b l i c h e a ri ng (s ) o r t he re l a t e d e nvi ro nm e n t a l d e t e rm i na t i o ns i n co u rt , yo u m a y b e l i m i t e d t o ra i s i n g o nl y t h o s e i s s ue s yo u o r s o m e o n e e l s e ra i s e d a t t h e p ub l i c h e a ri ng d e s cri b e d i n t h i s no t i ce , o r i n w ri t t e n co rre s p o nd e nce d e l i ve re d t o t he C i t y o f U p l a nd , a t , o r p ri o r t o , t he p ub l i c he a ri n g .

A l l A g e n d a i t e m s a n d b a ck-u p m a t e ri a l s a re a va i l a b l e f o r p u b l i c re vi e w a t t h e U p l a nd P ub l i c L i b ra ry, d o w n s t a i rs re f e re n ce d e s k a t 4 5 0 N o rt h E ucl i d A ve nue , t h e C i t y C l e rk's O f f i ce a t 460 N o rt h E ucl i d A ve nue a nd t h e C i t y w e b s i t e a t w w w.u p l a nd ca .g o v.

I n co m p l i a n ce w i t h t h e A m e ri ca n s w i t h D i s a b i l i t i e s A ct , i f yo u n e e d s p e ci a l a s s i s t a nce t o p a rt i ci p a t e i n t hi s m e e t i n g , p l e a s e co n t a ct t h e C i t y C l e rk's O f f i ce , 931-4 1 2 0 . N o t i f i ca t i o n 48 h o u rs p ri o r t o t h e m e e t i n g w i l l e n a b l e t he C i t y t o m a ke re a s o n a b l e a rra n g e m e n t s t o e n s ure a cce s s i b i l i t y t o t h i s me e t i ng . [2 8 C F R 3 5 .1 0 2 -35.104 A D A T i t l e I I ] P O S T I N G S T A T E M E N T : O n A p ri l 6, 2022 a t ru e a n d co rre ct co p y o f t hi s a g e nd a w a s p o s t e d o n t he b ul l e t i n b o a rd s a t 450 N . E ucl i d A ve nue (U p l a n d P ub l i c L i b ra ry) a n d 4 6 0 N . E u cl i d Ave n u e (U p l a nd C i t y H a l l ) a n d t he C i t y w e b s i t e a t w w w.up l a n d ca .g o v.

S T A F F R E P O R T
I T E M N O . 10.B .

D A T E :A p ril 1 1, 2 02 2
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : K E R I J O H N S O N , C I T Y C L E R K S U B J E C T :R E S I G N A T I O N F R O M PA R K S, A RT S, R E C R E A T I O N , A N D

C O M M U N I T Y S E R V I C E S A D V I S O RY C O M M I TT E E

R E C O M M E N D E D A C T I O N
I t i s recom m en d ed th at th e C i ty C oun cil acc ep t th e resig nation of D yl an W h ite from t he Parks, A rts, Recreat ion , an d C om m u n i ty S ervice A d visory C om m i tt ee an d instruct th e C it y C lerk to p ost the vacancy p u rsuan t to G overn m en t C od e S ection 54 97 4.

G O A L S T A T E M E N T
Th e p rop osed act ion su p p ort s th e C i ty's g oal to p rovi d e op p ortu nities for t h e cit izenry to p articip ate i n local g overn m en t throug h servic e on vari ous com m ittees, com m i ss ion s, an d b oard s.

B A C K G R O U N D
Th e Parks , A rts, Rec reat ion , an d C om m un it y S ervices A d vis ory C om m ittee ("th e C om m ittee") w as est ab lished i n 20 21 t o act in ad vi sory c ap ac it y i n m atters p ert ain in g to p arklan d s , trails, recreation al p rog ram s, you th an d sen ior services, cu lt ural arts p rog ram s , an d sp eci al events th rou g h out th e C ity.

E ach C ou ncilm em b er nom in ates two m em b ers to serve on th e C om m ittee.

I S S U E S /A N A L Y S I S
Th e C it y C l erk's O ffice rec eived n ot ifi cat ion of C om m ittee M em b er W h it e's resig nat ion on M arch 28 , 20 22 . H e w as ap p ointed on J u ly 1 2, 2 02 1, an d was nom in ated b y C oun cilm em b er Z u nig a. T he term for this ap p ointm en t will exp ire in D ecem b er 2 02 2.

Th is res ig nat ion creates an u nsch ed u led vacan cy, and G overn m en t C od e S ec ti on 54 97 4 req uires th at vacancies b e p osted for 10 w orking d ays b efore new ap p ointm en ts can b e m ad e.

P u rsuan t t o Res olu ti on 66 08 , C ou n ci lm em b er Z u n i g a m ay nom in ate a m em b er, su b ject to ratification b y a m ajority of the C oun cil.

F I S C A L I M P A C T S
Th ere are no fiscal im p acts associated with th is action .

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
No Attachments Available

S T A F F R E P O R T
I T E M N O . 10.C .

D A T E :A p ril 1 1, 2 02 2
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : B R A D E N Y U, P U B L I C W O R K S D I R E C TO R

B O B C R I TC H F I E L D, E N G I N E E R I N G M A N A G E R S U B J E C T :N OT I C E O F C O M P L E T I O N F O R P R O J E C T N O. 91 22 , 13 T H S T R E E T

PA V E M E N T R E H A B I L I TA T I O N A N D W A T E R M A I N R E P L A C E M E N T

P R O J E C T

R E C O M M E N D E D A C T I O N
I t i s recom m en d ed th at th e C i ty C oun cil acc ep t th e w ork; aut horize th e C it y M an ag er or his/h er d esig nee to rec ord t h e N oti ce of C om p letion; and t o red u ce th e Fai th fu l Perform an ce B on d to 1 0% for P rojec t N o. 9 12 2, 1 3th S t reet Pavem en t Reh ab ilitation an d W ater M ain Rep lacem ent P roject.

G O A L S T A T E M E N T
Th e p rop osed ac ti on su p p ort s the C ity's ob jecti ve t o m ain tai n an d im p rove t he C i ty's p ub lic road w ay, w ater, and sewer facilities.

B A C K G R O U N D
O n A p ri l 2 6, 20 21 , th e C it y C ou n ci l award ed t h e 1 3t h S t reet Pavem en t Rehab il it ati on an d Water M ain Rep lacem en t P rojec t to H ard y & H arp er, I n c. and au th orized u p t o $2,2 00 ,00 0 (in clud in g c on t in g en ci es) for th e work. Th e p roject c on s is ted of con st ru ct in g a n ew p otab le w ater m ain an d service laterals, fire hyd ran t up g rad es, sew er m an hole rehab ilitation, reconstruction of asp hal t con crete p avem ent, rep lac em en t of d eteriorated /d isp laced con crete cu rb s, g u tters, sid ew alks, d rivew ay ap p roach es, cu rb ram p s, and sp an d rels; traffic sig n al up g rad es at C am p us Avenu e; and , rep lacem en t of ob literated p avem ent m arkin g s.

I S S U E S /A N A L Y S I S
Th e con tract or has sin ce s ati sfac toril y c om p let ed th e req u i red i m p rovem ent s. Th e C it y can now accep t t he w ork, fil e t h e N otice of C om p letion, and red u ce th e Fai th fu l Perform an c e B on d to 10 %. Th e C ity w il l retai n the L ab or M at eri als B on d for s ix (6 ) m on t h s an d release it th ereafter, p rovid ed no lien s or stop n otices are filed ag ainst the p roject.

F I S C A L I M P A C T S
Th e fin al con st ru ct ion cost of $1,9 67 ,95 6.6 5 is with in th e orig in al aut horized ap p rop riation am ou nt of $2 ,20 0,0 00 .00 , th erefore no ad d itional ap p rop riation is n ecessary.

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
NO C for 13th Street
Project Photos

Recording requested by
and when recorded mail to:

City of Upland, City Clerk’s Office
460 N. Euclid Avenue
Upland, CA 91786

(Space above this line for Recorder’s use)
This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383
Notice of Completion
Pursuant to Civil Code Section 3093, NOTICE is hereby given that:

The undersigned is the owner of the interest or estate stated below in the property hereinafter described. The full name and address of owner is City of Upland, 460 North Euclid Avenue, Upland, California 91786.

Assessors Parcel Numbers N/A, in and to the hereinafter described property.

The work was completed on that certain work known as Project No. 9122, 13th Street Pavement Rehabilitation and Water Main Replacement Project for the undersigned City of Upland, a Municipal Corporation, on the 31st day of December, 2021.

The City accepted the job on the 11th day of April, 2022.

The Contractor on said job was Hardy & Harper, Inc. of Lake Forest, California.

The improvement(s) consisted of installation of a new potable water main (between Euclid Ave. & 5th Ave.) water service laterals, fire hydrant upgrades, reconstruction of asphalt concrete pavement; replacement of concrete curbs, gutters, sidewalks, driveway approaches, and ADA curb ramps; replacement of brick sewer manholes and manhole adjustments; and re-striping; and the location of the improvements occurred on 13th Street, from Euclid Avenue to Campus Avenue, in Upland, California.

The surety was Fidelity and Deposit Company of Maryland.

All communications relating to the contract should bear the number above mentioned.

I hereby certify under penalty of perjury that the foregoing is true and correct.

Executed this 11th day of April, 2022 at Upland, California.

City of Upland, a Municipal Corporation

Michael Blay, City Manager

Project Highlight (Recently Completed)
•13th Street Reconstruction –Euclid to Campus
13th Street
Foothill Blvd.

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13th Street Cost Summary
•City Council auth. Const. Amount:$2,200,000
•Contract Amount:$2,007,000
•Change Orders to Date:-$39,043.35 (-1.9%)
•Final Construction Cost:$1,967,956.65

13th Street Constructed Improvements
New UPS system to Traffic Signal at
13th & Campus
Replaced old brick sewer manholes
with new concrete manholes

13th St. Constructed Improvements (cont.)
New 8” dia. CML&C Steel Water Main New concrete curb & gutter, sidewalks, driveway approaches, and ADA ramps

13th St. Constructed Improvements (cont.)
Cold Milling old asphalt pavement Base Paving new asphalt

13th St. Constructed Improvements (cont.)
ARHM Cap Paving New Striping

13th St. Before / After Construction
13th Street at 2nd Avenue, view to the East

13th St. Before & After Construction (cont.)
13th Street at Winston Court, view to the West

13th St. Before / After Construction (cont.)
13th St. at 3rd Ave. (Typ. New ADA Ramp)

S T A F F R E P O R T
I T E M N O . 10.D .

D A T E :A p ril 11 , 20 22
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : B R A D E N Y U, P U B L I C W O R K S D I R E C TO R

J O H N R O B L E S, A C T I N G U T I L I T I E S M A N A G E R S U B J E C T :P U R C H A S E O R D E R I N C R E A S E F O R M E T R O N -FA R N I E R , L LC

R E C O M M E N D E D A C T I O N
I t is recom m end ed that th e C ity C oun cil ap p rove a p u rchase ord er increase w ith M etron- Farn ier, L LC for t h e p u rc has e of rep lacem en t w ater m et er reg is ters and d ata softw are m eter read in g services in th e am ou nt of $2 70 ,00 0 for a total p urch ase ord er am ou nt of $5 40 ,00 0.

G O A L S T A T E M E N T
Th e p rop osed act ion su p p ort s t h e C it y's g oal to m ain tai n asset p rotection an d m anag em en t th at en su res th e in frastructu re is effectively renewed , rep laced , an d m ain tained .

B A C K G R O U N D
Th e p rocess the C ity of U p land h as and is cu rrently usin g to collect w ater consum p tion d ata for w ater b illing p urp ose is for a m eter read er to walkin g th rou g h the neig h b orhood on ce every two m ont hs an d to read th e w ater m eter, jott in g d ow n th e nu m b ers on a not ep ad . T his in form ation is then com p iled and analyzed b ack at the C ity’s offices.

Th e n ew es t w ater m eterin g tec h n olog y el im in ates t h e p h ysi cal vi si t to th e m eter b y wirelessly transm ittin g d ata from eac h m eter every few second s over a d i st an c e of ½ to 5 m i les away.

Th e C it y h as b een tran s it ion in g ou r m eter reg is ters t o an A d van ced M etering I n frastructu re (A M I ), wh ich u ses cellu lar netw orks to ob tain m eter d ata w irelessly.

B ased on fiel d ob s ervat ion and recom m en d at ion s of l ocal ad joining ag encies, t he C i ty h as transition ed to M etron -Farn ier's A M I system . O n O ctob er 25 , 20 21 , th e C ity C oun cil ap p roved

a p u rc has e ord er w it h M etron -Farn ier, L LC for th e p urch ase of rep lacem en t wat er m eter reg isters an d d ata software m eter read ing services in the am oun t of $27 0,0 00 .00 .

I S S U E S /A N A L Y S I S
Th e i n s tal lat ion an d op erati on of t h e n ew w ater m et er reg i st ers has b een a su ccess. Th e new reg isters have p rovid ed th e C ity with 1 00 % sig nal reliab ility w it h no d ead sp ots and C ity staff has also in st alled t he n ew reg is ters at a rate of ap p roxim atel y 6 0 p er d ay w h i ch w as q u icker th an an ticip at ed . W i th the p urch ase ord er alm ost exp en d ed , staff estim at es t hat an in crease in th e p u rc h as e for an ad d i ti on al $27 0,0 00 w il l p ay for ap p roxi m at ely 1 ,00 0 ad d ition al reg isters, wh ic h w ould allow st aff t o contin ue t o i ns tal l at t h e sam e p ace for t h e rem ain d er of th e year.

F I S C A L I M P A C T S
Th e C it y C ou ncil ad op t ed the F i sc al Year 2 02 1-2 2 b u d g et, wh ich con tai n s su fficien t fun d s for th is p u rchase as shown b elow.
64 0-6 20 3-5 25 8 $40 ,00 0 an nu al cellular m ain ten ance/m on itoring 64 0-6 20 3-5 23 3 $80 0,0 00 m eters and cellu lar end p oints

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
No Attachments Available

S T A F F R E P O R T
I T E M N O . 10.E .

D A T E :A p ril 1 1, 2 02 2
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : S T E P H E N PA R K E R , A S S I S TA N T C I T Y M A N A G E R

R I C H A R D J E G A N A T H A N , I N F O R M A T I O N T E C H N O LO G Y M A N A G E R S U B J E C T :A C C E P TA N C E O F B O A R D O F S U P E R V I S O R S D I S C R E T I O N A RY

F U N D A L LO C A T I O N F R O M S U P E R V I S O R H A G M A N

R E C O M M E N D E D A C T I O N
I t is recom m en d ed th at th e C i ty C ou ncil acc ep t $35 7,2 88 in fu n d in g from th e C oun ty of S an B ernard ino t hroug h S u p ervisor H ag m an 's allocation of th e B oard of S u p ervis ors D iscretion ary F u nd - D istrict S p ec ifi c P riorities P rog ram to s up p ort tech nolog y in fras truc tu re an d m od ern ization s ervi ces , an d p u rc h as e of law en forcem en t eq ui p m ent ; an d aut horize the C ity M an ag er to execute th e ag reem en t.

G O A L S T A T E M E N T
Th e p rop osed act ion su p p ort s t h e C it y’s g oal of s eekin g al ternat e fun d ing sou rces for C ity p u rchases.

B A C K G R O U N D
L ate in 20 21 , S an B ernard i no C oun ty S up ervisor C u rt H ag m an reac h ed ou t to t he cities he rep resents i n th e C ou n t y req u est in g p rojects t h at wou ld b en efit t he com m u nity t h at h e could fun d w it h h is al loc ati on from the S u p ervis ors D iscretionary F u n d - D is tric t S p ecifi c P riorities P rog ram .

I n Feb ru ary 2 0 2 2 , C i ty M an ag er B lay p rovi d ed a l is t of op t ion s to the S u p ervis or's office, in clud in g th ose focused on recreation, cap it al p roject an d in form ation tec hn olog y, am on g oth ers.

Th e C i ty's I n form at ion Tech nolog y D i vis ion an d t he Pol ic e D ep artm en t h ave su p p ort ed certain techn olog y i m p rovem ent s that h ave not b een ab le to b e i nc lu d ed in recen t years d u e to b u d g et constrain ts.

I S S U E S /A N A L Y S I S
S u p ervisor H ag m an revi ew ed the req ues t li st p rovid ed to h im , an d h as ag reed to fu n d the follow in g p rojects:

1. C loud M ig rat ion of F in an c e and Perm itting s oftware to all ow un in terru p t ed b i ll p ay an d p erm it ap p lications. ($2 20 ,00 0).

2. P u rchase of a sc an n er t o as si st Police D ep artm en t w it h traffic col li si on an d crim e scene in vestig ations. ($2 8,6 39 )

3. P u rchase of a b ackup g en erator for th e d atacen ters. ($50 ,00 0)

4. P u rchase of U A V d rones for em erg ency p olice resp on ses. ($5 8,6 49 )

Th e p rop os ed p roject s w ill help t h e C i ty of U p land to p rovid e b u s in ess c ont in ui ty and im p rove p olice resp on se d urin g em erg encies.

F I S C A L I M P A C T S
I n crease t h e b u d g et in F u n d 2 17 t o acc ou n t for th e sp en d in g of the g ran t fun d s totalin g $3 57 ,28 8. T he fu nd in g exp ires on D ecem b er 31 , 20 22 .

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
San Bernardino County Contract

Standard Contract Page 1 of 25

THE INFORMATION IN THIS BOX IS NOT A PART OF THE CONTRACT AND IS FOR COUNTY USE ONLY

Board of Supervisors

Department Contract Representative Sofia Almeida
Telephone Number 387-4378

Contractor City of Upland
Contractor Representative Michael Blay, City Manager
Telephone Number 909-931-4106
Contract Term 04/26/2022-12/31/2022
Original Contract Amount Not-to-Exceed $357,288
Amendment Amount
Total Contract Amount Not-to-Exceed $357,288
Cost Center 1024001000

IT IS HEREBY AGREED AS FOLLOWS:

WHEREAS, it is the policy of the Board of Supervisors (Board) to work with community partners through services provided by San Bernardino County (County) and contractual agreements to identify programs, projects, and initiatives, that support the mission of the County, and to provide services to citizens that promote health, safety, economic well-being, education, recreation, and other public services that enhance quality of life, and meet the needs of the County’s citizens; and

WHEREAS, under Government Code sections 26224 and 26227 the Board may contract with certain entities to provide certain services to County residents; and,

WHEREAS, on September 21, 2021 (Item No. 18), the Board approved the Board of Supervisors Discretionary Fund – District Specific Priorities Program (Priorities Program) and allocated $4 million to each of the five supervisorial districts; and

WHEREAS, on November 16, 2021 (Item No. 33), the Board approved an additional allocation of $7 million to each of the five supervisorial districts under the Priorities Program; and

WHEREAS, San Bernardino County (County) desires to assist with the funding of technology and infrastructure improvements at the City of Upland (Contractor), for a total of $357,288; and Contract Number

SAP Number

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WHEREAS, the County would like the Contractor to purchase equipment and provide these technology upgrade services and finds Contractor qualified to purchase equipment and provide these services; and WHEREAS, providing funding to Contractor serves the public purpose of providing for the law enforcement, public welfare, and social service needs of residents; and WHEREAS, the County residents of the City of Upland will be served by the services provided by Contractor; and
WHEREAS, the County desires that such services be provided by Contractor and Contractor agrees to perform these services as set forth below.

NOW, THEREFORE, the County and Contractor mutually agree to the following terms and conditions:

A. PURPOSE OF CONTRACT
This Contract is made for the purpose of providing funding to support technology infrastructure and modernization services, and purchase of law enforcement equipment at the City of Upland. All programs are aimed at meeting the public welfare, law enforcement, and social service needs of the residents of the City of Upland and surrounding communities and will assist in keeping Contractor services ongoing in the event of an emergency.

B. CONTRACTOR RESPONSIBILITIES AND SCOPE OF SERVICES
B.1 Funding arising out of this Contract will be used for a Scope of Services to provide financial support to Contractor for the following:

1. Cloud Migration of Contractor’s financial server to allow for uninterrupted bill pay and permit application (Not-to-Exceed $220,000).

2. Purchase of a Leica BLK360 Scanner to assist Contractor’s Police Department with traffic collision and crime scene investigations (Not-to-Exceed $28,639).

3. Purchase of a backup generator for City Hall and Police Department datacenter (Not-to-Exceed $50,000).

4. Purchase of UAV drones for emergency police response (Not-to-Exceed $58,649).

B.2 Contractor shall allow the County, its officers, agents and employees the privilege and right to on-site inspection of the equipment purchased under the Scope of Services for the duration of this Contract. Contractor will ensure that its employees or agents furnish any information that in the judgment of the County, may be relevant to a question of compliance with contractual conditions, or the effectiveness, legality, and achievements of the program.

B.3 Contractor shall provide the County all documentation regarding the Scope of Services covered by this Contract that the County requests from Contractor within 10 days of County’s request unless a different time is agreed to by the County.

B.4 Contractor shall provide the County with documentation supporting completion of the project within 60 days of project completion.

C. GENERAL CONTRACT REQUIREMENTS
C.1 Recitals
The recitals set forth above are true and correct and incorporated herein by this reference.

C.2 Contract Amendments
Contractor agrees any alterations, variations, modifications, or waivers of the provisions of the Contract, shall be valid only when reduced to writing, executed and attached to the original Contract and approved by the person(s) authorized to do so on behalf of Contractor and County.

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C.3 Contract Assignability
Without the prior written consent of the County, the Contract is not assignable by Contractor either in whole or in part. Any attempt by Contractor to assign any performance of the terms of this Contract shall be null and void and shall constitute a material breach of this Contract.

C.4 Contract Exclusivity
This is not an exclusive Contract. The County reserves the right to enter into a contract with other contractors for the same or similar services. The County does not guarantee or represent that the Contractor will be permitted to perform any minimum amount of work, or receive compensation other than on a per order basis, under the terms of this Contract.

C.5 Attorney’s Fees and Costs
If any legal action is instituted to enforce any party’s rights hereunder, each party shall bear its own costs and attorney fees, regardless of who is the prevailing party. This paragraph shall not apply to those costs and attorney fees directly arising from a third-party legal action against a party hereto and payable under Indemnification and Insurance Requirements.

C.6 Background Checks for Contractor Personnel
Contractor shall ensure that its personnel (a) are authorized to work in the jurisdiction in which they are assigned to perform Services; (d) do not use legal or illegal substances in any manner which will impact their ability to provide Services to the County; and (c) are not otherwise disqualified from performing the Services under applicable law. If requested by the County and not in violation of applicable law, Contractor shall conduct a background check, at Contractor’s sole expense, on all its personnel providing Services. If requested by the County, Contractor shall provide the results of the background check of each individual to the County. Such background check shall be in the form generally used by Contractor in its initial hiring of employees o r contracting for contractors or, as applicable, during the employment-screening process but must, at a minimum, have been performed within the preceding 12-month period. Contractor personnel who do not meet the County’s hiring criteria, in County’s sole discretion, shall not be assigned to work on County property or Services, and County shall have the right, at its sole option, to refuse access to any Contract personnel to any County facility.

C.7 Change of Address
Contractor shall notify the County in writing, of any change in mailing address within ten (10) business days of the change.

C.8 Choice of Law
This Contract shall be governed by and construed according to the laws of the State of California.

C. 9 Compliance with County Policy
In performing the Services and while at any County facilities, Contractor personnel (including subcontractors) shall (a) conduct themselves in a businesslike manner; (b) comply with the policies, procedures, and rules of the County regarding health and saf ety, and personal, professional and ethical conduct; (c) comply with the finance, accounting, banking, Internet, security, and/or other applicable standards, policies, practices, processes, procedures, and controls of the County; and (d) abide by all laws applicable to the County facilities and the provision of the Services, and all amendments and modifications to each of the documents listed in subsections (b), (c), and (d) (collectively, “County Policies”). County Policies, and additions or modifications thereto, may be communicated orally or in writing to Contractor or Contractor personnel or may be made available to Contractor or Contractor personnel by conspicuous posting at a County facility, electronic posting, or other means generally used by County to disseminate such information to its employees or contractors. Contractor shall be responsible for the promulgation and distribution of County Policies to Contractor personnel to the extent necessary and appropriate.

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County shall have the right to require Contractor’s employees, agents, representatives and subcontractors to exhibit identification credentials issued by County in order to exercise any right of access under this Contract.

C.10 Confidentiality
Contractor shall protect from unauthorized use or disclosure names and other identifying information concerning persons receiving Services pursuant to this Contract, except for statistical information not identifying any participant. Contractor shall not use or disclose any identifying information for any other purpose other than carrying out the Contractor's obligations under this Contract, except as may be otherwise required by law. This provision will remain in force even after the termination of the Contract.

C.11 Primary Point of Contact
Contractor will designate an individual to serve as the primary point of contact for the Contract.

Contractor or designee must respond to County inquiries within two (2) business days. Contractor shall not change the primary contact without written acknowledgement to the County. Contractor will also designate a back-up point of contact in the event the primary contact is not available.

C.12 County Internship Initiative
Contractor agrees to be contacted by the County to solicit its participation in an internship initiative known as GenerationGo! Career Pathways, involving the potential placement and hiring of interns by Contractor’s business. Contractor is encouraged, and agrees to make good faith efforts, to utilize the County’s program to aid the County’s Vision for a skilled workforce and jobs that create countywide prosperity, and its goal to Create, Maintain and Grow Jobs and Economic Value in the County. The County’s objective with its internship initiative is to focus on training, education, employment and support services to develop a more highly-educated and trained workforce. When participating in the County’s internship initiative, the Contractor remains an independent contractor and shall not be construed as agents, officers, or employees of the County. More information about the County’s GenerationGo! Career Pathways Program can be located at http://wp.sbcounty.gov/workforce/career-pathways/ .

C.13 County Representative
The Fourth District Supervisor or his/her designee shall represent the County in all matters pertaining to the services to be rendered under this Contract, including termination and assignment of this Contract, and shall be the final authority in all matters pertaining to the Services/Scope of Work by Contractor. If this contract was initially approved by the San Bernardino County Board of Supervisors, then the Board of Supervisors must approve all amendments to this Contract.

C.14 Damage to County Property
Contractor shall repair, or cause to be repaired, at its own cost, all damages to County vehicles, facilities, buildings or grounds caused by the willful or negligent acts of Contractor or its employees or agents. Such repairs shall be made immediately after Contractor becomes aware of such damage, but in no event later than thirty (30) days after the occurrence.

If the Contractor fails to make timely repairs, the County may make any necessary repairs. The Contractor, as determined by the County, shall repay all costs incurred by the County for such repairs, by cash payment upon demand, or County may deduct such costs from any amounts due to the Contractor from the County, as determined at the County’s sole discretion.

C. 15 Debarment and Suspension
Contractor certifies that neither it nor its principals or subcontracts is presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation in this transaction by any federal department or agency. (See the following United States General Services Administration’s System for Award Management website https://www.sam.gov) .

Contractor further certifies that if it or any of its subcontractors are business entities that mu st be

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registered with the California Secretary of State, they are registered and in good standing with the Secretary of State.

C.16 Drug and Alcohol Free Workplace
In recognition of individual rights to work in a safe, healthful and productive work place, as a material condition of this Contract, the Contractor agrees that the Contractor and the Contractor’s employees, while performing service for the County, on County property, or while using County equipment:

C.16.1 Shall not be in any way impaired because of being under the influence of alcohol or an illegal or controlled substance.

C.16.2 Shall not possess an open container of alcohol or consume alcohol or possess or be under the influence of an illegal or controlled substance.

C.16.3 Shall not sell, offer, or provide alcohol or an illegal or controlled substance to another person, except where Contractor or Contractor’s employee who, as part of the performance of normal job duties and responsibilities, prescribes or administers medically prescribed drugs.

The Contractor shall inform all employees that are performing service for the County on County property, or using County equipment, of the County’s objective of a safe, healthful and productive work place and the prohibition of drug or alcohol use or impairment from same while performing such service for the County.

The County may terminate for default or breach of this Contract and any other Contract the Contractor has with the County, if the Contractor or Contractor’s employees are determined by the County not to be in compliance with above.

C.17 Duration of Terms
This Contract, and all of its terms and conditions, shall be binding upon and shall inure to the benefit of the heirs, executors, administrators, successors, and assigns of the respective parties, provided no such assignment is in violation of the provisions of this Contract.

C.18 Employment Discrimination
During the term of the Contract, Contractor shall not discriminate against any employee or applicant for employment because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, sexual orientation, age, or military and veteran status.

Contractor shall comply with Executive Orders 11246, 11375, 11625, 12138, 12432, 12250, 13672, Title VI and Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act and other applicable Federal, State and County laws and regulations and policies relating to equal employment and contracting opportunities, including laws and regulations hereafter enacted.

C.19 Environmental Requirements
In accordance with County Policy 11-08, the County prefers to acquire and use products with higher levels of post-consumer recycled content. Environmentally preferable goods and materials must perform satisfactorily and be available at a reasonable price. The County requires Contractor to use recycled paper for any printed or photocopied material created as a result of this Contract. Contractor is also required to use both sides of paper sheets for reports submitted to the County whenever practicable.

To assist the county in meeting the reporting requirements of the California Integrate d Waste Management Act of 1989 (AB 939), Contractor must be able to annually report the County’s environmentally preferable purchases. Contractor must also be able to report on environmentally

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preferable goods and materials used in the provision of their service to the County, utilizing a County approved form.

C.20 Improper Influence
Contractor shall make all reasonable efforts to ensure that no County officer or employee, whose position in the County enables him/her to influence any award of the Contract or any competing offer, shall have any direct or indirect financial interest resulting from the award of the Contract or shall have any relationship to the Contractor or officer or employee of the Contractor.

C.21 Improper Consideration
Contractor shall not offer (either directly or through an intermediary) any improper consideration such as, but not limited to cash, discounts, service, the provision of travel or entertainment, or any items of value to any officer, employee or agent of the County in an attempt to secure favorable treatment regarding this Contract.

The County, by written notice, may immediately terminate this Contract if it determines that any improper consideration as described in the preceding paragraph was offered to any officer, employee or agent of the County with respect to the proposal and award process. This prohibition shall apply to any amendment, extension or evaluation process once a contract has been awarded.

Contractor shall immediately report any attempt by a County officer, employee or agent to solicit (either directly or through an intermediary) improper consideration from Contractor. The report shall be made to the supervisor or manager charged with supervision of the employee or the County Administrative Office. In the event of a termination under this provision, the County is entitled to pursue any available legal remedies.

C.22 Informal Dispute Resolution
In the event the County determines that service is unsatisfactory, or in the event of any other dispute, claim, question or disagreement arising from or relating to this Contract or breach thereof, the parties hereto shall use their best efforts to settle the dispute, claim, question or disagreement.

To this effect, they shall consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to both parties.

C.23 Legality and Severability
The parties’ actions under the Contract shall comply with all applicable laws, rules, regulations, court orders and governmental agency orders. The provisions of this Contract are specifically made severable. If a provision of the Contract is terminated or held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall remain in full effect.

C.24 Licenses, Permits and/or Certifications
Contractor shall ensure that it has all necessary licenses, permits and/or certifications required by the laws of Federal, State, County, and municipal laws, ordinances, rules and regulations. The Contractor shall maintain these licenses, permits and/or certifications in effect for the duration of this Contract. Contractor will notify County immediately of loss or suspension of any such licenses, permits and/or certifications. Failure to maintain a required license, permit and/or certification may result in immediate termination of this Contract.

C.25 Material Misstatement/Misrepresentation
If during the course of the administration of this Contract, the County determines that Contractor has made a material misstatement or misrepresentation or that mater ially inaccurate information has been provided to the County, this Contract may be immediately terminated. If this Contract is terminated according to this provision, the County is entitled to pursue any available legal remedies.

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C.26 Mutual Covenants
The parties to this Contract mutually covenant to perform all of their obligations hereunder, to exercise all discretion and rights granted hereunder, and to give all consents in a reasonable manner consistent with the standards of “good faith” and “fair dealing”.

C.27 Nondisclosure
Contractor shall hold as confidential and use reasonable care to prevent unauthorized access by, storage, disclosure, publication, dissemination to and/or use by third parties of, confidential information that is either: (1) provided by the County to Contractor or an agent of Contractor or otherwise made available to Contractor or Contractor’s agent in connection with this Contract; or, (2) acquired, obtained, or learned by Contractor or an agent of Contractor in the performance of this Contract. For purposes of this provision, confidential information means any data, files, software, information or materials in oral, electronic, tangible or intangible form and however stored, compiled or memorialize and includes, but is not limited to, technology infrastructure, architecture, financial data, trade secrets, equipment specifications, user lists, passwords, research data, and technology data.

C.28 Notice of Delays
Except as otherwise provided herein, when either party has knowledge that any actual or potential situation is delaying or threatens to delay the timely performance of this contract, that party shall, within twenty-four (24) hours, give notice thereof, including all relevant information with respect thereto, to the other party.

C.29 Ownership of Documents
All documents, data, products, graphics, computer programs and reports prepared by Contractor pursuant to the Contract shall be considered property of the County upon payment for services (and products, if applicable). All such items shall be delivered to County at the completion of work under the Contract, subject to the requirements of Section IV–Term of the Contract. Unless otherwise directed by County, Contractor may retain copies of such items.

C.30 RESERVED.

C.31 Air, Water Pollution Control, Safety and Health
Contractor shall comply with all air pollution control, water pollution, safety and health ordinances and statutes, which apply to the work performed pursuant to this Contract.

C.32 Records
Contractor shall maintain all records and books pertaining to the delivery of services under this Contract and demonstrate accountability for contract performance. All records shall be complete and current and comply with all Contract requirements. Failure to maintain acceptable records shall be considered grounds for withholding of payments for invoices submitted and/or termination of the Contract.

All records relating to the Contractor’s personnel, consultants, subcontractors, Services/Scope of Work and expenses pertaining to this Contract shall be kept in a generally acceptable accounting format. Records should include primary source documents. Fiscal records shall be kept in accordance with Generally Accepted Accounting Principles and must account for all funds, tangible assets, revenue and expenditures. Fiscal records must comply with the appropriate Office of Management and Budget (OMB) Circulars, which state the administrative requirements, cost principles and other standards for accountancy.

C.33 Relationship of the Parties
Nothing contained in this Contract shall be construed as creating a joint venture, partnership, or employment arrangement between the Parties hereto, nor shall either Party have the right, power

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or authority to create an obligation or duty, expressed or implied, on behalf of the other Party hereto.

C.34 Release of Information
No news releases, advertisements, public announcements or photographs arising out of the Contract or Contractor’s relationship with County may be made or used without prior written approval of the County.

C.35 Representation of the County
In the performance of this Contract, Contractor, its agents and employees, shall act in an independent capacity and not as officers, employees, or agents of the San Bernardino County.

C.36 Strict Performance
Failure by a party to insist upon the strict performance of any of the provisions of this Contract by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party’s right to insist and demand strict compliance by the other party with the terms of this Contract thereafter.

C.37 Subcontracting
Contractor shall obtain County’s written consent, which County may withhold in its sole discretion, before entering into Contracts with or otherwise engaging any subcontractors who may supply any part of the Services to County. At County’s request, Contractor shall provide information regarding the subcontractor’s qualifications and a listing of a subcontractor’s key personnel including, if requested by the County, resumes of proposed subcontractor personnel. Contractor shall remain directly responsible to County for its subcontractors and shall indemnify County for the actions or omissions of its subcontractors under the terms and conditions specified in Section G. All approved subcontractors shall be subject to the provisions of this Contract applicable to Contractor Personnel.

For any subcontractor, Contractor shall:

37.1 Be responsible for subcontractor compliance with the Contract and the subcontract terms and conditions; and

37.2 Ensure that the subcontractor follows County’s reporting formats and procedures as specified by County.

37.3 Include in the subcontractor’s subcontract substantially similar terms as are provided in Sections B. Contractor Responsibilities and C. General Contract Requirements.

Upon expiration or termination of this Contract for any reason, County will have the right to enter into direct Contracts with any of the Subcontractors. Contractor agrees that its arrangements with Subcontractors will not prohibit or restrict such Subcontractors from entering into direct Contracts with County.

C. 38 Subpoena
In the event that a subpoena or other legal process commenced by a third party in any way concerning the Goods or Services provided under this Contract is served upon Contractor or County, such party agrees to notify the other party in the most expeditious fashion possible following receipt of such subpoena or other legal process. Contractor and County further agree to cooperate with the other party in any lawful effort by such other party to contest the legal validity of such subpoena or other legal process commenced by a third party as may be reasonably required and at the expense of the party to whom the legal process is directed, except as otherwise provided herein in connection with defense obligations by Contractor for County.

C.39 Termination for Convenience
The County and the Contractor each reserve the right to terminate the Contract, for any reason, with a thirty (30) day written notice of termination. Such termination may include all or part of the

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services described herein. Upon such termination, payment will be made to the Contractor for services rendered and expenses reasonably incurred prior to the effective date of termination.

Upon receipt of termination notice Contractor shall promptly discontinue services unless the notice directs otherwise. Contractor shall deliver promptly to County and transfer title (if necessary) all completed work, and work in progress, including drafts, documents, plans, forms, data, products, graphics, computer programs and reports.

County may immediately terminate this Contract upon the termination, suspension, discontinuation or substantial reduction in County funding for the Contract activity or if for any reason the timely completion of the scope of work described in Section A or B under this Contract is rendered improbable, infeasible or impossible.

Upon Contract termination, Contractor shall immediately transfer to County all County Funds on hand at the time of expiration and any accounts receivable attributable to the use of County Funds.

C.40 Time of the Essence
Time is of the essence in performance of this Contract and of each of its provisions.

C.41 Venue
The parties acknowledge and agree that this Contract was entered into and intended to be performed in San Bernardino County, California. The parties agree that the venue of any action or claim brought by any party to this Contract will be the Superior Court of California, San Bernardino County, San Bernardino District. Each party hereby waives any law or rule of the court, which would allow them to request or demand a change of venue. If any action or claim concerning this Contract is brought by any third party and filed in another venue, the parties hereto agree to use their best efforts to obtain a change of venue to the Superior Court of California, San Bernardino County, San Bernardino District.

C.42 Conflict of Interest
Contractor shall make all reasonable efforts to ensure that no conflict of interest exists between its officers, employees, or subcontractors and the County. Contractor shall make a reasonable effort to prevent employees, Contractor, or members of governing bodies from using their positions for purposes that are, or give the appearance of being motivated by a desire for private gain for themselves or others such as those with whom they have family business, or other ties.

Officers, employees, and agents of cities, counties, districts, and other local agencies are subject to applicable conflict of interest codes and state law. In the event the County determines a conflict of interest situation exists, any increase in costs, associated with the conflict of interest situation, may be disallowed by the County and such conflict may constitute grounds for termination of the Contract. This provision shall not be construed to prohibit employment of persons with whom Contractor’s officers, employees, or agents have family, business, or other ties so long as the employment of such persons does not result in increased costs over those associated with the employment of any other equally qualified applicant.

C.43 Former County Administrative Officials
Contractor agrees to provide, or has already provided information on former San Bernardino County administrative officials (as defined below) who are employed by or represent Contractor.

The information provided includes a list of former County administrative officials who terminated County employment within the last five years and who are now officers, principals, partners, associates or members of the business. The information also includes the employment with or representation of Contractor. For purposes of this provision, “County administrative official” is defined as a member of the Board of Supervisors or such officer’s staff, County Executive Officer or member of such officer’s staff, County department or group head, assistant department or group head, or any employee in the Exempt Group, Management Unit or Safety Management Unit.

C.44 Disclosure of Criminal and Civil Procedures

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The County reserves the right to request the information described herein from the Contractor.

Failure to provide the information may result in a termination of the Contract. The County also reserves the right to obtain the requested information by way of a background check performed by an investigative firm. The Contractor also may be requested to provide information to clarify initial responses. Negative information discovered may result in Contract termination.

Contractor is required to disclose whether the firm, or any of its partners, principals, members, associates or key employees (as that term is defined herein), within the last ten years, has been indicted on or had charges brought against it or them (if still pending) or convicted of any crime or offense arising directly or indirectly from the conduct of the firm’s business, or whether the firm, or any of its partners, principals, members, associates or key employees, has within the last ten years, been indicted on or had charges brought against it or them (if still pending) or convicted of any crime or offense involving financial misconduct or fraud. If the response is affirmative, the Contractor will be asked to describe any such indictments or charges (and the status thereof), convictions and the surrounding circumstances in detail.

In addition, the Contractor is required to disclose whether the firm, or any of its partners, principals, members, associates or key employees, within the last ten years, has been the subject of legal proceedings as defined herein arising directly from the provision of services by the firm or those individuals. “Legal proceedings” means any civil actions filed in a court of competent jurisdiction, or any matters filed by an administrative or regulatory body with jurisdiction over the firm or the individuals. If the response is affirmative, the Contractor will be asked to describe any such legal proceedings (and the status and disposition thereof) and the surrounding circumstances in detail.

For purposes of this provision “key employees” includes any individuals providing direct service to the County. “Key employees” do not include clerical personnel providing service at the firm’s offices or locations.

C.45 Copyright
County shall have a royalty-free, non-exclusive and irrevocable license to publish, disclose, copy, translate, and otherwise use, copyright or patent, now and hereafter, all reports, studies, information, data, statistics, forms, designs, plans, procedures, systems, and any other materials or properties developed under this Contract including those covered by copyright, and reserves the right to authorize others to use or reproduce such material. All such materials d eveloped under the terms of this Contract shall acknowledge the San Bernardino County as the funding agency and Contractor as the creator of the publication. No such materials, or properties produced in whole or in part under this Contract shall be subject to private use, copyright or patent right by Contractor in the United States or in any other country without the express written consent of County. Copies of all educational and training materials, curricula, audio/visual aids, printer material, and periodicals, assembled pursuant to this Contract must be filed with the County prior to publication.

C.46 Artwork, Proofs and Negatives
All artwork, proofs, and/or negatives in either print or digital format for anything produced under the terms of this Contract are the property of the County. These items must be returned to the County within ten (10) days, upon written notification to the Contractor. In the event of a failure to return the documents, the County is entitled to pursue any available legal remedies. In addition, the Contractor will be barred from all future solicitations, for a period of at least six (6) months.

C.47 Iran Contracting Act
IRAN CONTRACTING ACT OF 2010, Public Contract Code sections 2200 et seq. (Applicable for all Contracts of one million dollars ($1,000,000) or more). In accordance with Public Contract Code section 2204(a), the Contractor certifies that at the time the Contract is signed, the Contractor signing the Contract is not identified on a list created pursuant to subdivision (b) of Public Contract Code section 2203 as a person (as defined in Public Contract Code section 2202(e)) engaging in investment activities in Iran described in subdivision (a) of Public Contract

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Code section 2202.5, or as a person described in subdivision (b) of Public Contract Code section 2202.5, as applicable.

Contractors are cautioned that making a false certification may subject the Contractor to civil penalties, termination of existing contract, and ineligibility to bid on a contract for a period of three (3) years in accordance with Public Contract Code section 2205.

C.48 Prevailing Wage Laws
By its execution of this Contract, Contractor certifies that it is aware of the requirements of California Labor Code Sections 1720 et seq. and 1770 et seq. as well as California Code of Regulations, Title 8, Section 16000 et seq. (“Prevailing Wage Laws”), which require the payment of prevailing wage rates and the performance of other requirements on certain “public works” and “maintenance” projects. Section 1720 of the California Labor Code states in part: “For purposes of this paragraph, ‘construction’ includes work performed during the design, site assessment, feasibility study, and other preconstruction phases of construction including, but not limited to, inspection and land surveying work…” If the Services/Scope of Work are being performed as part of an applicable “public works” or “maintenance” project, as defined by the Prevailing Wage Laws, and if the total compensation is $1,000 or more, Contractor agrees to fully comply with such Prevailing Wage Laws. Contractor shall make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the Services availa ble to interested parties upon request, and shall post copies at the Contractor’s principal place of business and at the project site. Contractor will also adhere to any other applicable requirements, including but not limited to, those regarding the employment of apprentices, travel and subsistence pay, retention and inspection of payroll records, workers compensation and forfeiture of penalties prescribed in the Labor Code for violations. Contractor shall defend, indemnify and hold the County, its elected officials, officers, employees and agents free and harmless from any claims, liabilities, costs, penalties or interest arising out of any failure or alleged failure to comply with Prevailing Wage Laws. See Attachment A, which is attached and incorporated by reference, for additional information regarding Prevailing Wage Laws. Contractor shall comply with all applicable terms and conditions in Attachment A. The applicable general prevailing wage determinations are on file with the County and are available to any interested party on request.

Contractor shall post a copy of the applicable prevailing wage determinations at the job site.

D. TERM OF CONTRACT
The services to be provided by Contractor shall commence on April 26, 2022 and shall be completed by December 31, 2022 but may be terminated earlier in accordance with provisions of this Contract.

The County Chief Executive Officer may extend the term of the Contract, in writing, to allow Contractor to complete all requirements in the Contract under the following conditions:
a. In aggregate all extensions do not exceed twelve (12) calendar months; b. Are specifically requested by Contractor;
c. Will not change the project goals or scope of services; d. Are in the best interests of County and Contractor in performing the scope of services under this Contract; and
e. Do not alter the amount of compensation under this Contract.

E. RESERVED.

F. FISCAL PROVISIONS
F.1 The maximum amount of payment under this Contract shall not exceed $357,288 and shall be subject to availability of other funds to the County. The consideration to be paid to Contractor, as

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provided herein, shall be in full payment for all Contractor’s services and expenses incurred in the performance hereof, including travel and per diem.

F.2 Any costs in excess of the amount available in this section shall be the sole responsibility of Contractor. This condition however, does not preclude County from providing additional funding at its sole discretion. For the purpose of this Contract, County shall disburse compensation and monitor the Contractor’s performance in satisfying the scope of work obligations under the terms of this Contract.

Disbursement of funds to Contractor shall be made in one lump sum. Upon review/approval by County, County shall make payment to Contractor within thirty (30) working days after receipt of Contractor’s invoice or the resolution of any billing dispute. Contractor shall email County the Contractor’s invoice requesting one lump sum payment. The invoice(s) shall reflect the Entity Payable To Name and Address, Invoice Date, Invoice Number, Project Name, Contract Number, County-Issued Purchase Order (if applicable), the text “Final Invoice”, amount due, in a format acceptable to the County for services performed under this Contract. Contractor shall email invoice to County Administrative Office-Finance and Administration (County Finance) and shall include in the Subject Line: BOS – ENTITY NAME – PROJECT NAME – CONTRACT NUMBER – PO # [PURCHASE ORDER NUMBER]” (i.e. BOS-SAN BERNARDINO COUNTY-EDUCATION PROGRAM — 21-NNN – PO 4100NNNNNN).

Contractor shall submit a final expenditure report documented with “audit ready” supportive evidence of each expenditure and proof of payment until all funds have been justified 60 days after project completion. Documentation shall be submitted electronically, and Contractor shall supply hard copies upon request by County. Supportive evidence shall include, but is not limited to, copy of County’s approval email to Contractor, quotes, copy(ies) of purchase order, packing slips, a copy of the invoice submitted by Contractor requesting one lump sum payment from County, invoices paid by the Contractor for this project, proof of payment, etc., to County Finance. Email to County Finance shall include in the Subject Line: BOS – ENTITY NAME – PROJECT NAME – CONTRACT NUMBER – PO # [PURCHASE ORDER NUMBER]”-SUPPORTIVE DOCUMENTS.

F.3 Contractor shall accept all payments from County via electronic funds transfer (EFT) directly deposited into the Contractor’s designated checking or other bank account. Contractor shall promptly comply with directions and accurately complete forms provided by County required to process EFT payments.

F.4 County is exempt from Federal excise taxes and no payment shall be made for any personal property taxes levied on Contractor or on any taxes levied on employee wages. The County shall only pay for any State or local sales or use taxes on the services rendered or equipment and/or parts supplied to the County pursuant to the Contract.

F.5 Costs for services under the terms of this Contract shall be incurred during the contract period except as approved by County. Contractor shall not use current year funds to pay prior or future year obligations.

F.6 Funds made available under this Contract shall not supplant any federal, state or any governmental funds intended for services of the same nature as this Contra ct. Contractor shall not claim reimbursement or payment from County for, or apply sums received from County with respect to that portion of its obligations that have been paid by another source of revenue.

Contractor agrees that it will not use funds received pursuant to this Contract, either directly or indirectly, as a contribution or compensation for purposes of obtaining funds from another revenue source without prior written approval of the County.

F.7 Contractor shall adhere to the County’s Travel Management Policy (8-02 and 08-02SP1) when travel is pursuant to this Contract and for which reimbursement is sought from the County. In

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addition, Contractor is encouraged to utilize local transportation services, including but not limited to, the Ontario International Airport.

F.8 Contractor understands and agrees that any and all legal fees or costs associated with lawsuits concerning this Contract against the County shall be the Contractor’s sole expense and shall not be charged as a cost under this Contract.

F.9 If the Contractor does not use the County funds provided under this Contract to pay appropriate costs associated with the Scope of Services by the termination date of this Contract, the Contractor shall return the County funds, or any unused portion thereof, to the County in accordance with any directions issued by County staff, within 60 days of written demand for the return of the County funds.

G. INDEMNIFICATION AND INSURANCE REQUIREMENTS
G.1 Indemnification
The Contractor agrees to indemnify, defend (with counsel reasonably approved by County) and hold harmless the County and its authorized officers, employees, agents and volunteers from any and all claims, actions, losses, damages and/or liability arising out of this Contract from any cause whatsoever, including the acts, errors or omissions of any person and for any costs or expenses incurred by the County on account of any claim except where such indemnification is prohibited by law. This indemnification provision shall apply regardless of the existence or degree of fault of indemnities. The Contractor indemnification obligation applies to the County’s “active” as well as “passive” negligence but does not apply to the County’s “sole negligence” or “willful misconduct” within the meaning of Civil Code section 2782.

G.2 Additional Insured
All policies, except for Worker’s Compensation, Errors and Omissions and Professional Liability policies shall contain additional endorsements naming the County and its officers, employees, agents and volunteers as additional named insured with respect to liabilities arising out of the performance of services hereunder. The additional insured endorsements shall not limit the scope of coverage for the County to vicarious liability but shall allow coverage for the County to the full extent provided by the policy. Such additional insured coverage shall be at least as broad as Additional Insured (Form B) endorsement form ISO, CG 2010.11 85.

G.3 Waiver of Subrogation Rights
The Contractor shall require the carriers of required coverages to waive all rights of subrogation against the County, its officers, employees, agents, volunteers, contractors and subcontractors.

All general or auto liability insurance coverage provided shall not prohibit the Contractor and Contractor’s employees or agents from waiving the right of subrogation prior to a loss or claim.

The Contractor hereby waives all rights of subrogation against the County.

G.4 Policies Primary and Non-Contributory
All policies required herein are to be primary and non-contributory with any insurance or self- insurance programs carried or administered by the County.

G.5 Severability of Interests
The Contractor agrees to ensure that coverage provided to meet these requirements is applicable separately to each insured and there will be no cross liability exclusions that preclude coverage for suits between the Contractor and the County or between the County and any other insured or additional insured under the policy.

G.6 Proof of Coverage
The Contractor shall furnish Certificates of Insurance to the County Department administering the Contract evidencing the insurance coverage at the time the Contract is executed, additional endorsements, as required shall be provided prior to the commencement of performance of

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services hereunder, which certificates shall provide that such insurance shall not be terminated or expire without thirty (30) days written notice to the Department, and Contractor shall maintain such insurance from the time Contractor commences performance of services hereunder until the completion of such services. Within fifteen (15) days of the commencement of this contract, the Contractor shall furnish a copy of the Declaration page for all applicable policies and will provide complete certified copies of the policies and endorsements immediately upon request.

G.7 Acceptability of Insurance Carrier
Unless otherwise approved by Risk Management, insurance shall be written by insurers authorized to do business in the State of California and with a minimum “Best” Insurance Guide rating of “A- VII”.

G.8 Deductibles and Self-Insured Retention
Any and all deductibles or self-insured retentions in excess of $10,000 shall be declared to and approved by Risk Management.

G.9 Failure to Procure Coverage
In the event that any policy of insurance required under this contract does not comply with the requirements, is not procured, or is canceled and not replaced, the County has the right but not the obligation or duty to cancel the contract or obtain insurance if it deems necessary and any premiums paid by the County will be promptly reimbursed by the Contractor or County payments to the Contractor will be reduced to pay for County purchased insurance.

G.10 Insurance Review
Insurance requirements are subject to periodic review by the County. The Director of Risk Management or designee is authorized, but not required, to reduce, waive or suspend any insurance requirements whenever Risk Management determines that any of the required insurance is not available, is unreasonably priced, or is not needed to protect the interests of the County. In addition, if the Department of Risk Management determines t hat heretofore unreasonably priced or unavailable types of insurance coverage or coverage limits become reasonably priced or available, the Director of Risk Management or designee is authorized, but not required, to change the above insurance requirements to require additional types of insurance coverage or higher coverage limits, provided that any such change is reasonable in light of past claims against the County, inflation, or any other item reasonably related to the County’s risk.

Any change requiring additional types of insurance coverage or higher coverage limits must be made by amendment to this contract. Contractor agrees to execute any such amendment within thirty (30) days of receipt.

Any failure, actual or alleged, on the part of the County to monitor or enforce compliance with any of the insurance and indemnification requirements will not be deemed as a waiver of any rights on the part of the County.

G.11 The Contractor agrees to provide insurance set forth in accordance with the requirements herein.

If the Contractor uses existing coverage to comply with these requirements and that coverage does not meet the specified requirements, the Contractor agrees to amend, supplement or endorse the existing coverage to do so.

Without in anyway affecting the indemnity herein provided and in addition thereto, the Contractor shall secure and maintain throughout the contract term the following types of insurance with limits as shown:

G.11.1 Workers’ Compensation/Employer’s Liability – A program of Workers’ Compensation insurance or a state-approved, self-insurance program in an amount and form to meet all applicable requirements of the Labor Code of the State of California, including Employer’s Liability with $250,000 limits covering all persons including volunteers

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providing services on behalf of the Contractor and all risks to such persons under this contract.

If Contractor has no employees, it may certify or warrant to the County that it does not currently have any employees or individuals who are defined as “employees” under the Labor Code and the requirement for Workers’ Compensation coverage will be waived by the County’s Director of Risk Management.

With respect to Contractors that are non-profit corporations organized under California or Federal law, volunteers for such entities are required to be covered by Workers’ Compensation insurance.

G.11.2 Commercial/General Liability Insurance – The Contractor shall carry General Liability Insurance covering all operations performed by or on behalf of the Contractor providing coverage for bodily injury and property damage with a combined single limit of not less than one million dollars ($1,000,000), per occurrence. The policy coverage shall include:
a. Premises operations and mobile equipment.
b. Products and completed operations.
c. Broad form property damage (including completed operations). d. Explosion, collapse and underground hazards.
e. Personal injury.
f. Contractual liability.
g. $2,000,000 general aggregate limit.

G.11.3 Automobile Liability Insurance – Primary insurance coverage shall be written on ISO Business Auto coverage form for all owned, hired and non-owned automobiles or symbol 1 (any auto). The policy shall have a combined single limit of not less than one million dollars ($1,000,000) for bodily injury and property damage, per occurrence.

If the Contractor is transporting one or more non-employee passengers in performance of contract services, the automobile liability policy shall have a combined single limit of two million dollars ($2,000,000) for bodily injury and property damage per occurrence.

If the Contractor owns no autos, a non-owned auto endorsement to the General Liability policy described above is acceptable.

G.11.4 Umbrella Liability Insurance – An umbrella (over primary) or excess policy may be used to comply with limits or other primary coverage requirements. When used, the umbrella policy shall apply to bodily injury/property damage, personal injury/advertising injury and shall include a “dropdown” provision providing primary coverage for any liability not covered by the primary policy. The coverage shall also apply to automobile liability.

H. RIGHT TO MONITOR AND AUDIT
H.1 The County, State and Federal government shall have absolute right to review and audit all records, books, papers, documents, corporate minutes, and other pertinent items as requested, and shall have absolute right to monitor the performance of Contractor in the delivery of services provided under this Contract. Contractor shall give full cooperation, in any auditing or monitoring conducted. Contractor shall cooperate with the County in the implementation, monitoring, and evaluation of this Contract and comply with any and all reporting requirements established by the County.

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H.2 All records pertaining to services delivered and all fiscal, statistical and management books and records shall be available for examination and audit by County representatives for a period of three years after final payment under this Contract or until all pending County, State and Federal audits are completed, whichever is later.

I. CORRECTION OF PERFORMANCE DEFICIENCIES
I.1 Failure by Contractor to comply with any of the provisions, covenants, requirements or conditions of this Contract shall be a material breach of this Contract.

I.2 In the event of a non-cured breach, County may, at its sole discretion and in addition to any other remedies available at law, in equity, or otherwise specified in this Contract:
a. Afford Contractor thereafter a time period within which to cure the breach, which period shall be established at the sole discretion of County; and/or b. Discontinue reimbursement to Contractor for and during the period in which Contractor is in breach, which reimbursement shall not be entitled to later recovery; and/or c. Withhold funds pending duration of the breach; and/or d. Offset against any monies billed by Contractor but yet unpaid by County those monies disallowed pursuant to Item “b” of this paragraph; and/or e. Terminate this Contract immediately and be relieved of the payment of any consideration to Contractor. In the event of such termination, the County may proceed wit h the work in any manner deemed proper by the County. The cost to the County shall be deducted from any sum due to the Contractor under this Contract and the balance, if any, shall be paid by the Contractor upon demand.

J. NOTICES
All written notices provided for in this Contract or which either party desires to give to the other shall be deemed fully given, when made in writing and either served personally, or by facsimile, or deposited in the United States mail, postage prepaid, and addressed to the other party as follows:

San Bernardino County
CAO – Finance and Administration
385 N. Arrowhead Ave., Fourth Floor
San Bernardino, CA 92415
Attn: BOS Finance Analyst
City of Upland.
460 N. Euclid Avenue
Upland, CA 91786
Attn: Michael Blay

Notice shall be deemed communicated two (2) County working days from the time of mailing if mailed as provided in this paragraph.

K. ENTIRE AGREEMENT
This Contract, including all Exhibits and other attachments, which are attached hereto and incorporated by reference, and other documents incorporated herein, represents the final, complete and exclusive agreement between the parties hereto. Any prior agreement, promises, negotiations or representations relating to the subject matter of this Contract not expressly set forth herein are of no force or effect. This Contract is executed without reliance upon any promise, warranty or representation by any party or any representative of any party other than those expressly contained herein. Each party has carefully read this Contract and signs the same of its own free will.

L. CONTRACT EXECUTION
This Contract may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and such counterparts shall together constitute one and the same Contract.

The parties shall be entitled to sign and transmit an electronic signature of this Contract (whether by facsimile, PDF or other email transmission), which signature shall be binding on the party whose name is contained therein. Each party providing an electronic signature agrees to promptly execute and deliver to the other party an original signed Contract upon request.

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IN WITNESS WHEREOF, the San Bernardino County and the Contractor have each caused this Contract to be subscribed by its respective duly authorized officers, on its behalf.

FOR COUNTY USE ONLY
Approved as to Legal Form Reviewed for Contract Compliance Reviewed/Approved by Department

Julie Surber, Principal Assistant County
Counsel

Date Date Date

SAN BERNARDINO COUNTY City of Upland
(Print or type name of corporation, company, contractor, etc.)

By

Curt Hagman, Chairman, Board of Supervisors (Authorized signature - sign in blue ink) Dated:

Name

SIGNED AND CERTIFIED THAT A COPY OF THIS (Print or type name of person signing contract)

DOCUMENT HAS BEEN DELIVERED TO THE
CHAIRMAN OF THE BOARD Title
Lynna Monell
Clerk of the Board of Supervisors
of the San Bernardino County
(Print or Type)
By Dated:

Deputy

Address

460 N. Euclid Avenue

Upland, CA 91786

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ATTACHMENT A

PREVAILING WAGE REQUIREMENTS
A. All or a portion of the Scope of Work in the Contract requires the payment of prevailing wages and compliance with the following requirements:

1. Determination of Prevailing Rates:

Pursuant to Labor Code sections 1770, et seq., the County has obtained from the Director of the Department of Industrial Relations (DIR) pursuant to the California Labor Code, the general prevailing rates of per diem wages and the prevailing rates for holiday and overtime work in the locality in which the Scope of Work is to be performed. Copies of said rates are on file with the County, will be made available for inspection during regular business hours, may be included elsewhere in the specifications for the Scope of Work, and are also available online at www.dir.ca.gov . The wage rate for any classification not listed, but which may be required to execute the Scope of Work, shall be commensurate and in accord with specified rates for similar or comparable classifications for those performing similar or comparable duties. In accordance with Labor Code section 1773.2, the Contractor shall post, at appropriate and conspicuous locations on the job site, a schedule show ing all applicable prevailing wage rates and shall comply with the requirements of Labor Code sections 1773, et seq.

2. Payment of Prevailing Rates
Each worker of the Contractor, or any subcontractor, engaged in the Scope of Work, shall be paid not less than the general prevailing wage rate, regardless of any contractual relationship which may be alleged to exist between the Contractor or any subcontractor, and such worker.

3. Prevailing Rate Penalty
The Contractor shall, as a penalty, forfeit two hundred dollars ($200.00) to the County for each calendar day or portion thereof, for each worker paid less than the prevailing rates as determined by the Director of the DIR for such work or craft in which such worker is employed by the Contractor or by any subcontract or in connection with the Scope of Work. Pursuant to California Labor Code section 1775, the difference between such prevailing wage rates and the amount paid to each worker for each calendar day, or portion thereof, for which each worker was paid less than the prevailing wage rate, shall be paid to each worker by the Contractor.

4. Ineligible Contractors:

Pursuant to the provisions of Labor Code section 1777.1, the Labor Commissioner publishes and distributes a list of contractors ineligible to perform work as a contractor or subcontractor on a public works project. This list of debarred contractors is available from the DIR website at http://www.dir.ca.gov/Public-Works/PublicWorks.html .

Any contract entered into between a contractor and a debarred subcontractor is void as a matter of law. A debarred subcontractor may not receive any public money for performing work as a subcontractor on a public works contract, and any public money that m ay have been paid to a debarred subcontractor by a contractor on the project shall be returned to the County. The Contractor shall be responsible for the payment of wages to workers as a debarred subcontractor who has been allowed to work on the Scope of Work.

5. Payroll Records:
a. Pursuant to California Labor Code section 1776, the Contractor and each subcontractor, shall keep accurate certified payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker or other employee employed by them in connection with the Scope of Work.

The payroll records enumerated herein shall be verified by a written declar ation made under penalty of perjury that the information contained in the payroll record is true and correct and that the Contractor or subcontractor has complied with the requirements of the California Labor Code sections 1771, 1811, and 1815 for any Scope of Work performed by his or her employees. The payroll records shall be available for inspection at all reasonable hours at the principal office of the Contractor on the following basis:
i. A certified copy of an employee's payroll record shall be made ava ilable for inspection or furnished to such employee or his/her authorized representative on request; ii. A certified copy of all payroll records shall be made available for inspection or furnished upon request to the County, the Division of Labor Standards Enf orcement of the DIR; iii. A certified copy of payroll records shall be made available upon request to the public for inspection or copies thereof made; provided, however, that a request by the public shall be made through either the County or the Division of Labor Standards Enforcement. If the requested payroll records have not been previously provided to the County or the Division of Labor Standards Enforcement, the requesting party shall, prior to being provided the records, reimburse the cost of preparation by

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the Contractor, subcontractor and the entity through which the request was made; the public shall not be given access to such records at the principal office of the Contractor; iv. The Contractor shall file a certified copy of the payroll records with the entity that requested such records within ten (10) days after receipt of a written request; and v. Copies provided to the public, by the County or the Division of Labor Standards Enforcement shall be marked or obliterated in such a manner as to prevent disclosure of an individual's name, address and social security number. The name and address of the Contractor or any subcontractor, performing a part of the Scope of Work shall not be marked or obliterated. The Contractor shall inform the County of the location of payroll records, including the street address, city and county and shall, within five (5) working days, provide a notice of a change of location and address. b. The Contractor shall have ten (10) days from receipt of the written notice specifying in what respects the Contractor must comply with the above requirements. In the event Contractor does not comply with the requirements of this section within the ten (10) day period, the Contractor shall, as a penalty to the County, forfeit one-hundred dollars ($100.00) for each calendar day, or portion thereof, for each worker, until strict compliance is effectuated. Upon the request of the Division of Labor Standards Enforcement, such penalty shall be withheld from any portion of the payments then due or to become due to the Contractor.

6. Limits on Hours of Work:

Pursuant to California Labor Code section 1810, eight (8) hours of labor shall constitute a legal day's work.

Pursuant to California Labor Code section 1811, the time of service of any worker employed a t any time by the Contractor or by a subcontractor, upon the Scope of Work or upon any part of the Scope of Work, is limited and restricted to eight (8) hours during any one calendar day and forty (40) hours during any one calendar week, except as provided for under Labor Code section 1815. Notwithstanding the foregoing provisions, work performed by employees of Contractor or any subcontractor, in excess of eight (8) hours per day and forty (40) hours during any one week, shall be permitted upon compensation for all hours worked in excess of eight (8) hours per day at not less than one and one-half (1½) times the basic rate of pay.

7. Penalty for Excess Hours:

The Contractor shall pay to the County a penalty of twenty-five dollars ($25.00) for each worker employed on the Scope of Work by the Contractor or any subcontractor, for each calendar day during which such worker is required or permitted to work more than eight (8) hours in any calendar day and forty (40) hours in any one calendar week, in violation of the provisions of the California Labor Code, unless compensation to the worker so employed by the Contractor is not less than one and one-half (1½) times the basic rate of pay for all hours worked in excess of eight (8) hours per day.

8. Senate Bill 854 (Chapter 28, Statutes of 2014) and Senate Bill 96 (Chapter 28, Statutes of 2017) Requirements:
a. Contractor shall comply with Senate Bill 854 and Senate Bill 96. The requirements include, but are not limited to, the following:
i. No contractor or subcontractor may be listed on a bid proposal for a public works project unless registered with the DIR pursuant to Labor Code section 1725.5, with limited exceptions from this requirements for bid purposes only as allowed under Labor Code section 1771.1(a). ii. No contractor or subcontractor may be awarded a contract for public work or perform work on a public works project unless registered with the DIR pursuant to Labor Code section 1725.5. iii. This project is subject to compliance monitoring and enforcement by the DIR. iv. As required by the DIR, Contractor is required to post job site notices, as prescribed by regulation, regarding compliance monitoring and enforcement by the DIR. v. Contractors and all subcontractors must submit certified payroll records online to the Labor Commissioner for all public works projects.
1) The certified payroll must be submitted at least monthly to the Labor Commissioner. 2) The County reserves the right to require Contractor and all subcontractors to submit certified payroll records more frequently than monthly to the Labor Commissioner. 3) The certified payroll records must be in a format prescribed by the Labor Commissioner. vi. Registration with the DIR and the submission of certified payroll records to the Labor Commissioner are not required if the public works project is $25,000 or less when the project is for construction, alteration, demolition, installation or repair work, or if the public works project is $15,000 or less when the project is for maintenance work.

b. Labor Code section 1725.5 states the following:
“A contractor shall be registered pursuant to this section to be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of

Revised 06/16/2021 Page 20 of 25
any public work contract that is subject to the requirements of this chapter. For the purposes of this section, “contractor” includes a subcontractor as defined by Section 1722.1. (a) To qualify for registration under this section, a contractor shall do all of the foll owing:
(1) (A) Register with the Department of Industrial Relations in the manner prescribed by the department and pay an initial nonrefundable application fee of four hundred dollars ($400) to qualify for registration under this section and an annual renewal fee on or before July 1 of each year thereafter. The annual renewal fee shall be in a uniform amount set by the Director of Industrial Relations, and the initial registration and renewal fees may be adjusted no more than annually by the director to support the costs specified in Section 1771.3.
(B) Beginning June 1, 2019, a contractor may register or renew according to this subdivision in annual increments up to three years from the date of registration. Contractors who wish to do so will be required to prepay the applicable nonrefundable application or renewal fees to qualify for the number of years for which they wish to preregister.
(2) Provide evidence, disclosures, or releases as are necessary to establish all of the following:
(A) Workers' compensation coverage that meets the requirements of Division 4 (commencing with Section 3200) and includes sufficient coverage for any worker whom the contractor employs to perform work that is subject to prevailing wage requirements other than a contractor who is separately registered under this section. Coverage may be evidenced by a current and valid certificate of workers' compensation insurance or certification of self-insurance required under Section 7125 of the Business and Professions Code. (B) If applicable, the contractor is licensed in accordance with Chapter 9 (commencing with Section 7000) of the Business and Professions Code.
(C) The contractor does not have any delinquent liability to an employee or the state for any assessment of back wages or related damages, interest, fines, or penalties pursuant to any final judgment, order, or determination by a court or any federal, state, or local administrative agency, including a confirmed arbitration award. However, for purposes of this paragraph, the contractor shall not be disqualified for any judgment, order, or determination that is under appeal, provided that the contractor has secured the payment of any amount eventually found due through a bond or other appropriate means. (D) The contractor is not currently debarred under Section 1777.1 or under any other federal or state law providing for the debarment of contractors from public works. (E) The contractor has not bid on a public works contract, been listed in a bid proposal, or engaged in the performance of a contract for public works without being lawfully registered in accordance with this section, within the preceding 12 months or since the effective date of the requirements set forth in subdivision (e), whichever is earlier. If a contractor is found to be in violation of the requirements of this paragraph, the period of disqualification shall be waived if both of the following are true:
(i) The contractor has not previously been found to be in violation of the requirements of this paragraph within the preceding 12 months.
(ii) The contractor pays an additional nonrefundable penalty registration fee of two thousand dollars ($2,000).
(b) Fees received pursuant to this section shall be de posited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section. (c) A contractor who fails to pay the renewal fee required under paragraph (1) of subdivision (a) on or befo re the expiration of any prior period of registration shall be prohibited from bidding on or engaging in the performance of any contract for public work until once again registered pursuant to this section. If the failure to pay the renewal fee was inadvertent, the contractor may renew its registration retroactively by paying an additional nonrefundable penalty renewal fee equal to the amount of the renewal fee within 90 days of the due date of the renewal fee.
(d) If, after a body awarding a contract accepts the contractor's bid or awards the contract, the work covered by the bid or contract is determined to be a public work to which Section 1771 applies, either as the result of a determination by the director pursuant to Section 1773.5 or a court decision, the requirements of this section shall not apply, subject to the following requirements:
(1) The body that awarded the contract failed, in the bid specification or in the contract documents, to identify as a public work that portion of the work that the d etermination or decision subsequently classifies as a public work.
(2) Within 20 days following service of notice on the awarding body of a determination by the Director of Industrial Relations pursuant to Section 1773.5 or a decision by a court that the c ontract was for public work as defined in this chapter, the contractor and any subcontractors are registered under this section or are replaced by a contractor or subcontractors who are registered under this section.

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(3) The requirements of this section shall apply prospectively only to any subsequent bid, bid proposal, contract, or work performed after the awarding body is served with notice of the determination or decision referred to in paragraph (2).
(e) The requirements of this section shall apply to any bid proposal submitted on or after March 1, 2015, to any contract for public work, as defined in this chapter, executed on or after April 1, 2015, and to any work performed under a contract for public work on or after January 1, 2018, regardless of when the contract for public work was executed.
(f) This section does not apply to work performed on a public works project of twenty-five thousand dollars ($25,000) or less when the project is for construction, alteration, demolition, installation, or repair work or to work performed on a public works project of fifteen thousand dollars ($15,000) or less when the project is for maintenance work.”

c. Labor Code section 1771.1 states the following:
“(a) A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded.
(b) Notice of the requirement described in subdivision (a) shall be included in all bid invitations and public works contracts, and a bid shall not be accepted nor any contract or subcontract entered into without proof of the contractor or subcontractor's current registration to perform public work pursuant to Section 1725.5. (c) An inadvertent error in listing a subcontractor who is not registered pursuant to Section 1725.5 in a bid proposal shall not be grounds for filing a bid protest or grounds for considering the bid nonresponsive, provided that any of the following apply:
(1) The subcontractor is registered prior to the bid opening. (2) Within 24 hours after the bid opening, the subcontractor is registered and has paid the penalty registration fee specified in subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.5. (3) The subcontractor is replaced by another registered subcontractor pursuant to Section 4107 of the Public Contract Code.
(d) Failure by a subcontractor to be registered to perform public work as required by subdivision (a) shall be grounds under Section 4107 of the Public Contract Code for the contractor, with the consent of the awarding authority, to substitute a subcontractor who is registered to perform public work pursuant to Section 1725.5 in place of the unregistered subcontractor. (e) The department shall maintain on its Internet Web site a list of contractors who are currently registered to perform public work pursuant to Section 1725.5.
(f) A contract entered into with any contractor or subcontractor in violation of subdivision (a) shall be subject to cancellation, provided that a contract for public work shall not be unlawful, void, or voidable solely due to the failure of the awarding body, contractor, or any subcontractor to comply with the requirements of Section 1725.5 or this section.
(g) If the Labor Comm issioner or his or her designee determines that a contractor or subcontractor engaged in the performance of any public work contract without having been registered in accordance with this section, the contractor or subcontractor shall forfeit, as a civil p enalty to the state, one hundred dollars ($100) for each day of work performed in violation of the registration requirement, not to exceed an aggregate penalty of eight thousand dollars ($8,000) in addition to any penalty registration fee assessed pursuant to clause (ii) of subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.5. (h)(1) In addition to, or in lieu of, any other penalty or sanction authorized pursuant to this chapter, a higher tiered public works contractor or subcontractor who is found to have entered into a subcontract with an unregistered lower tier subcontractor to perform any public work in violation of the requirements of Section 1725.5 or this section shall be subject to forfeiture, as a civil penalty to the state, of one hundred dollars ($100) for each day the unregistered lower tier subcontractor performs work in violation of the registration requirement, not to exceed an aggregate penalty of ten thousand dollars ($10,000). (2) The Labor Commissioner shall use the same standards specified in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1775 when determining the severity of the violation and what penalty to assess, and may waive the penalty for a first time violation that was unintentional and did not hi nder the Labor Commissioner’s ability to monitor and enforce compliance with the requirements of this chapter. (3) A higher tiered public works contractor or subcontractor shall not be liable for penalties assessed pursuant to paragraph (1) if the lower tier subcontractor’s performance is in violation of the requirements of Section 1725.5 due to the revocation of a previously approved registration.

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(4) A subcontractor shall not be liable for any penalties assessed against a higher tiered public works contractor or subcontractor pursuant to paragraph (1). A higher tiered public works contractor or subcontractor may not require a lower tiered subcontractor to indemnity or otherwise be liable for any penalties pursuant to paragraph (1).
(i) The Labor Commissioner or his or her designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741, upon determination of penalties pursuant to subdivision (g) and subparagraph (B) of paragraph (1) of subdivision (h). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770), shall apply. (j)(1) Where a contractor or subcontractor engages in the performance of any public work contract w ithout having been registered in violation of the requirements of Section 1725.5 or this section, the Labor Commissioner shall issue and serve a stop order prohibiting the use of the unregistered contractor or the unregistered subcontractor on all public works until the unregistered contractor or unregistered subcontractor is registered. The stop order shall not apply to work by registered contractors or subcontractors on the public work.
(2) A stop order may be personally served upon the contractor or subcontractor by either of the following methods:
(A) Manual delivery of the order to the contractor or subcontractor personally. (B) Leaving signed copies of the order with the person who is apparently in charge at the site of the public work and by thereafter mailing copies of the order by first class mail, postage prepaid to the contractor or subcontractor at one of the following:
(i) The address of the contractor or subcontractor on file with either the Secretary of State or the Contractors’ State License Board.
(ii) If the contractor or subcontractor has no address on file with the Secretary of State or the Contractors’ State License Board, the address of the site of the public work. (3) The stop order shall be effective immediately upon service and shall be subject to appeal by the party contracting with the unregistered contractor or subcontractor, by the unregistered contractor or subcontractor, or both. The appeal, hearing, and any further review of the hearing decision shall be governed by the procedures, time limits, and other requirements specified in subdivision (a) of Section 238.1.
(4) Any employee of an unregistered contractor or subcontractor who is affected by a work stoppage ordered by the commissioner pursuant to this subdivision shall be pai d at his or her regular hourly prevailing wage rate by that employer for any hours the employee would have worked but for the work stoppage, not to exceed 10 days.
(k) Failure of a contractor or subcontractor, owner, director, officer, or managing agent of the contractor or subcontractor to observe a stop order issued and served upon him or her pursuant to subdivision (j) is guilty of a misdemeanor punishable by imprisonment in county jail not exceeding 60 days or by a fine not exceeding ten thousand dollars ($10,000), or both.
(l) This section shall apply to any bid proposal submitted on or after March 1, 2015, and any contract for public work entered into on or after April 1, 2015. This section shall also apply to the performance of any public work, as defined in this chapter, on or after January 1, 2018, regardless of when the contract for public work was entered.
(m) Penalties received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section. (n) This section shall not apply to work performed on a public works project of twenty-five thousand dollars ($25,000) or less when the project is for construction, alteration, demolition, installation, or repair work or to work performed on a public works project of fifteen thousand dollars ($15,000) or less when the project is for maintenance work.”

d. Labor Code section 1771.4 states the following:
“a) All of the following are applicable to all public works projects that are otherwise subject to the requirements of this chapter:
(1) The call for bids and contract documents shall specify that the project is subject to compliance monitoring and enforcement by the Department of Industrial Relati ons. (2) The awarding body shall post or require the prime contractor to post job site notices, as prescribed by regulation.
(3) Each contractor and subcontractor shall furnish the records specified in Section 1776 directly to the Labor Commissioner, in the following manner:

Revised 06/16/2021 Page 23 of 25
(A) At least monthly or more frequently if specified in the contract with the awarding body. (B) In a format prescribed by the Labor Commissioner.
(4) If the contractor or subcontractor is not registered pursuant to Section 1725.5 and i s performing work on a project for which registration is not required because of subdivision (f) of Section 1725.5, the unregistered contractor or subcontractor is not required to furnish the records specified in Section 1776 directly to the Labor Commissioner but shall retain the records specified in Section 1776 for at least three years after completion of the work.
(5) The department shall undertake those activities it deems necessary to monitor and enforce compliance with prevailing wage requirements.
(b) The Labor Commissioner may exempt a public works project from compliance with all or part of the requirements of subdivision (a) if either of the following occurs:
(1) The awarding body has enforced an approved labor compliance program, as defined in Section 1771.5, on all public works projects under its authority, except those deemed exempt pursuant to subdivision (a) of Section 1771.5, continuously since December 31, 2011.
(2) The awarding body has entered into a collective bargaining agreement that bi nds all contractors performing work on the project and that includes a mechanism for resolving disputes about the payment of wages.
(c) The requirements of paragraph (1) of subdivision (a) shall only apply to contracts for public works projects awarded on or after January 1, 2015.
(d) The requirements of paragraph (3) of subdivision (a) shall apply to all contracts for public work, whether new or ongoing, on or after January 1, 2016.”

B. STATE PUBLIC WORKS APPRENTICESHIP REQUIREMENTS

1. State Public Works Apprenticeship Requirements:
a. The Contractor is responsible for compliance with Labor Code section 1777.5 and the California Code of Regulations, title 8, sections 230 – 230.2 for all apprenticeable occupations (denoted with “#” symbol next to craft name in DIR Prevailing Wage Determination), whether employed by the Contractor, subcontractor, vendor or consultant. Included in these requirements is (1) the Contractor’s requirement to provide notification (i.e. DAS-140) to the appropriate apprenticeship committees; (2) pay training fund contributions for each apprenticeable hour employed on the Contract; and (3) utilize apprentices in a minimum ratio of not less than one apprentice hour for each five journeyman hours by completion of Contract work (unless an exception is granted in accordance with Labor Code section 1777.5) or request for the dispatch of apprentices.
b. Any apprentices employed to perform any of the Scope of Work shall be paid the standard wage to apprentices under the regulations of the craft or t rade for which such apprentice is employed, and such individual shall be employed only for the work of the craft or trade to which such individual is registered.

Only apprentices, as defined in California Labor Code section 3077, who are in training under apprenticeship standards and written apprenticeship agreements under California Labor Code sections 3070 et seq. are eligible to be employed for the Scope of Work. The employment and training of each apprentice shall be in accordance with the provisions of the apprenticeship standards and apprentice agreements under which such apprentice is training.

2. Compliance with California Labor Code section 1777.5 requires all public works contractors to:
a. Submit Contract Award Information (DAS-140):
i. Although there are a few exemptions (identified below), all Contractors, regardless of union affiliation, must submit contract award information when performing on a California public works project.
ii. The DAS-140 is a notification “announcement” of the Contractor’s participation on a public works project—it is not a request for the dispatch of an apprentice. iii. Contractors shall submit the contract award information (you ma y use form DAS 140) within 10 days of the execution of the prime contract or subcontract, but in no event later than the first day in which the Contractor has workers employed on the public work. iv. Contractors who are already approved to train apprentices (i .e. check “Box 1” on the DAS-140) shall only be required to submit the form to their approved program. v. Contractors who are NOT approved to train apprentices (i.e. those that check either “Box 2” or “Box 3” on the DAS-140) shall submit the DAS-140 TO EACH of the apprenticeship program sponsors in the area of your public works project. For a listing of apprenticeship programs see

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http://www.dir.ca.gov/Databases/das/pwaddrstart.asp .
b. Employ Registered Apprentices
i. Labor Code section 1777.5 requires that a contractor performing work in an “apprenticeable” craft must employ one (1) hour of apprentice work for every five (5) hours performed by a journeyman.

This ratio shall be met prior to the Contractor’s completion of work on the project. “Apprenticeable” crafts are denoted with a pound symbol “#” in front of the craft name on the prevailing wage determination.
ii. All Contractors who do not fall within an exemption category (see below) must request for dispatch of an apprentice from an apprenticeship program (for each apprenticeable craft or trade) by giving the program actual notice of at least 72 hours (business days only) before the date on which apprentices are required.
iii. Contractors may use the “DAS-142” form for making a request for the dispatch of an apprentice. iv. Contractors who are participating in an approved apprenticeship training program and who did not receive sufficient number of apprentices from their initial request must request dispatc h of apprentices from ALL OTHER apprenticeship committees in the project area in order to fulfill this requirement.
v. Contractor should maintain and submit proof (when requested) of its DAS -142 submittal to the apprenticeship committees (e.g. fax transmittal confirmation). A Contractor has met its requirement to employ apprentices only after it has successfully made a dispatch request to all apprenticeship programs in the project area.
vi. Only “registered” apprentices may be paid the prevailing apprentice rates and must, at all times work under the supervision of a Journeyman (Cal. Code Regs., tit 8, § 230.1). c. Make Training Fund Contributions
i. Contractors performing in apprenticeable crafts on public works projects, must make training fund contributions in the amount established in the prevailing wage rate publication for journeymen and apprentices.
ii. Contractors may use the “CAC-2” form for submittal of their training fund contributions. iii. Contractors who do not submit their training fund contributions to an approved apprenticeship training program must submit their contributions to the California Apprenticeship Council (CAC), PO Box 420603, San Francisco, CA 94142-0603.
iv. Training fund contributions to the CAC are due and payable on the 15th day of the month for work performed during the preceding month.
v. The “training” contribution amount identified on the prevailing wage determination shall not be paid to the worker, unless the worker falls within one of the exemption categories listed below.

3. Exemptions to Apprenticeship Requirements:
a. The following are exempt from having to comply with California apprenticeship requirements. These types of contractors do not need to submit a DAS-140, DAS-142, make training fund contributions, or utilize apprentices:
i. When the Contractor holds a sole proprietor license (“Owner-Operator”) and no workers were employed by the Contractor. In other words, the contractor performed the entire work from st art to finish and worked alone.
ii. Contractors performing in non-apprenticeable crafts. “Apprenticeable” crafts are denoted with a pound symbol “#” in front of the craft name on the prevailing wage determination. iii. When the Contractor has a direct contract with the Public Agency that is under $30,000. iv. When the project is 100% federally-funded and the funding of the project does not contain any city, county, and/or state monies (unless the project is administered by a state agency in which case the apprenticeship requirements apply).
v. When the project is a private project not covered by the definition of public works as found in Labor Code section 1720.

4. Exemption from Apprenticeship Rations:
a. The Joint Apprenticeship Committee shall have the discretion to grant a c ertificate, which shall be subject to the approval of the Administrator of Apprenticeship, exempting the Contractor from the 1 -to-5 ratio set forth in this Section when it finds that any one of the following conditions are met :
i. Unemployment for the previous three-month period in such area exceeds an average of fifteen percent (15%); or
ii. The number of apprentices in training in such area exceeds a ratio of 1 -to-5 in relation to journeymen; or

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iii. The Apprenticeable Craft or Trade is replacing at least one -thirtieth (1/30) of its journeymen annually through apprenticeship training, either on a statewide basis or on a local basis; or iv. If assignment of an apprentice to any work performed under the Contract Documents would create a condition which would jeopardize such apprentice's life or the life, safety or property of fellow employees or the public at large, or if the specific task to which the apprentice is to be assigned is of such a nature that training cannot be provided by a journeyman. b. When such exemptions from the 1-to-5 ratio between apprentices and journeymen are granted to an organization which represents contractors in a specific trade on a local or statewide basis, the member contractors will not be required to submit individual applications for approval t o local Joint Apprenticeship Committees, provided they are already covered by the local apprenticeship standards .

5. Contractor’s Compliance:
a. The responsibility of compliance with this Section for all Apprenticeable Trades or Crafts is solely and exclusively that of the Contractor. All decisions of the Joint Apprenticeship Committee(s) under this Section are subject to the provisions of California Labor Code section 3081 and penalties are pursuant to Labor Code section 1777.7 and the determination of the Labor Commissioner.

S T A F F R E P O R T
I T E M N O . 10.F .

D A T E :A p ril 1 1, 2 02 2
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : S T E P H E N PA R K E R , C PA , A S S I S TA N T C I T Y M A N A G E R

LO N D A B O C K-H E L M S, C PA , F I N A N C E O F F I C E R

D O U G A N D E R S O N , C O N S U LTA N T
S U B J E C T :M E T H O D O F S A L E F O R S P E C I A L TA X B O N D S F O R C O M M U N I T Y F A C I L I T I E S D I S T R I C T N O. 2 01 5-1 (S Y C A M O R E H I L L S ), I M P R O V E M E N T A R E A N O. 2 , S E R I E S 20 22

R E C O M M E N D E D A C T I O N
I t is recom m en d ed that th e C it y C oun cil, for i ts elf and act in g as th e leg is lat ive b od y of C om m u nity Facilities D istrict N o. 2 01 5-1 (Sycam ore H ills) ad op t a Resolution to au th orize a p rivate p l acem ent w it h Western A ll ian ce B an k for th e D istrict's S p ec ial Tax B on d s , S eries 20 22 (I m p rovem en t A rea N o. 2), an d ap p rove certai n d ocum ents an d t ake certai n oth er action s in conn ection th erewith .

G O A L S T A T E M E N T
Th e p rop osed action sup p orts th e C ity’s g oal of p rovid in g soun d fiscal steward ship an d p rovid in g d ec en t h ou si n g , a su it ab l e li vin g en vironm ent , and exp an d ed econ om ic op p ortun ities for citizens.

B A C K G R O U N D
C om m u nity Facil it ies D is tric t N o. 20 15 -1 (th e “D is tric t”) w as form ed an d estab lish ed b y the C ity on N ovem b er 2 3, 2 01 5 foll ow in g a p u b l ic h eari ng b y th e C it y C oun cil, as leg islative b od y of t h e D i st ri ct , an d a lan d own er el ect ion w hi ch aut horized t he incurren ce of b ond ed in d eb ted ness an d ap p roved the levy of sp ecial taxes.

I n J u ly of 2 01 9, th e C it y, ac ti n g on b ehal f of th e D ist rict , issued $5,3 15 ,00 0 of S eries A b on d s, an d $3,8 45 ,00 0 of (taxab le) S eri es B b on d s for I m p rovem en t A rea N o. 1 of the D istrict. I m p rovem ent A rea N o. 2 of t he D is tric t is au th ori zed to issu e b ond s in an ag g reg ate p rin cip al am ou nt not to exceed $14 ,00 0,0 00 .

O n M arch 1 4, 2 02 2, th e C it y C ou ncil, ac ti n g as leg is lat ive b od y of C om m u n it y Facilities D istrict N o. 2 01 5-1 (Syc am ore H ills) ap p roved th e i ss u an ce of S p ecial Tax B on d s , S eri es 2 02 2 (I m p rovem en t A rea N o. 2) (th e “20 22 B on d s”) b y ad op ti on of Resol u t ion N o. 66 40 . T he 2 02 2 B on d s were ant ic ip ated to b e s old via a p u b l ic offeri ng b y th e U n d erw ri ter, H illt op S ecu rities.

Recen t ch an g es in the b on d m arket now favor a p rivat e p l acem ent transaction , wh ic h will have lower d eb t servic e cos ts th an a p u b li c offerin g an d wi ll result in low er an nu al sp ecial taxes for th e affected h om eown ers.

I S S U E S /A N A L Y S I S
I m p rovem en t A rea 2 of th e C ity of U p lan d C F D N o. 20 15 -1 is com p ris ed of 1 76 t otal un it s, of w hich 8 3 un it s are 2 & 3 st ory tow nh om es an d 93 u n i ts are d et ach ed town hom es on clu ster lots known as M on tara at Sycam ore H il ls . A s of Feb ruary 2 3, 2 02 2, 83 l ots w ere ow n ed b y in d ivid ual h om eown ers, an d the rem ain in g 93 lots w ere ow n ed b y th e b ui ld er, K B H om e C oastal I n c.

B ased on recen t chan g es i n t he b ond m arket , in clud in g h i g h er i nt eres t rates for p u b lic d eb t offering s, th e U n d erwrit er for the 20 22 B on d s (H il lt op S ecu rities) has recom m en d ed ch ang in g th e m eth od of sale for t h e 2 02 2 B ond to a p rivat e p lacem ent stru cture. Western A llian ce B an k (th e “P u rchaser”) wou ld b e the sole p urch aser of th e 20 22 B on d s, and has p rovid ed a Term S h eet with interest rates t hat are loc ked th rou g h th e an ti ci p at ed closing d at e (A p ril 2 1, 20 22 ).

Th e (locked ) i nt eres t rates p rovid ed b y t h e P u rchaser are 4.0 4% for t he t ax-exem p t S eri es A b on d s, an d 5 .17 % for th e taxab le S eries B b ond s, resu ltin g in an overall Tru e I n terest C ost (“T I C ”) of 4 .34 % for the 2 02 2 B ond s. T he corresp ond in g T I C for a p ub lic sale of the 2 02 2 B on d s is cu rrently estim ated to b e 4 .52 %, and d u e to risin g interest rates w ould m ost likely b e even hig h er s in ce t h e rates from a p ub lic sale wou ld not b e fi nal ized u n t il th e d ay t h at the actual sale occurs.

For th e p rivate p lacem ent of th e 2 02 2 B on d s , H i ll top S ecu ri ti es w il l fu n ct ion as a P lacem en t A g ent p u rsuan t t o a P lac em en t A g en t A g reem ent , th e form of wh ic h i s attach ed h eret o. T he Term S h eet from th e P urch aser i s also att ach ed , an d d et ail s th e in terest rate loc k in form ation and oth er term s of the p rivate p lacem en t.

F I S C A L I M P A C T S
Th e p rop osed 20 22 B ond s will b e lim ited ob li g at ion s of th e C ity p ayab le solely from the sp ecial taxes c oll ect ed in I m p rovem en t A rea N o. 2 of th e D i st ri ct , an d wi ll n ot b e a d eb t of the C ity’s G en eral F u nd . A ll c ost s of is su an c e on t he 2 02 2 B on d s will b e p ai d from n et b on d p roceed s.

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
Resolution Approving P rivate Placement
Term S heet - Upland C F D 2015-1
Placement Agent Agreement
Resolution 6640 Approving Issuance of Bonds

RESOLUTION NO. ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF UPLAND,

CALIFORNIA, ACTING AS LEGISLATIVE BODY OF COMMUNITY
FACILITIES DISTRICT NO. 2015-1 (SYCAMORE HILLS) OF THE

CITY OF UPLAND, TO AUTHORIZE A PRIVATE PLACEMENT WITH
WESTERN ALLIANCE BANK FOR THE DISTRICT’S SPECIAL TAX
BONDS, SERIES 2022 (IMPROVEMENT AREA NO. 2), AND

APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER

ACTIONS IN CONNECTION THEREWITH
WHEREAS, on March 14, 2022, the City Council of the City of Upland, acting as legislative body of the Community Facilities District No. 2015-1 (Sycamore Hills) of the City of Upland, County of San Bernardino, State of California (the “District”), adopted Resolution No. 6640 approving the issuance by the District of not to exceed $11,000,000 principal amount of Community Facilities District No. 2015-1 (Sycamore Hills) of the City of Upland, County of San Bernardino, State of California, Special Tax Bonds, Series 2022 (Improvement Area No. 2) (the “Bonds”) and approved the form of the Indenture and Continuing Disclosure Agreement for the Bonds and authorized necessary actions in connection therewith; and
WHEREAS, the Bonds were initially contemplated to be sold to the public; and WHEREAS, in accordance with Government Code Section 53360.4, the legislative body of the District determines that a negotiated sale of the Bonds to Western Alliance Business Trust or a wholly owned affiliate of Western Alliance Bank (the “Bank”), in accordance with the terms contained in the term sheet provided by the Bank for the Bonds, will result in a lower overall cost to the District than a public sale; and WHEREAS, it is in the best interest of the City and the District that the Bonds be sold in a private placement directly to Bank, as the sole bondholder; and WHEREAS, in order to effect the issuance of the Bonds to the Bank, the City Council, as the legislative body of the District, desires to approve the form of a Placement Agent Agreement with Hilltop Securities Inc., as placement agent, as well as the Term Sheet from the Bank.

NOW, THEREFORE, the City Council of the City of Upland, Acting as the Legislative Body of the Community Facilities District No. 2015-1 (Sycamore Hills) of the City of Upland, County of San Bernardino, State of California, hereby finds, determines and resolves as follows:

Section 1. The above recitals, and each of them, are true and correct.

Section 2. This resolution shall supplement Resolution No. 6640.

Section 3. The form of the Placement Agent Agreement by and between the District and the Hilltop Securities Inc. presented at this meeting, on file with the City Clerk and incorporated herein by reference (the “Placement Agent Agreement”), is hereby approved, and any one of the (the “Mayor”), or in the absence of the Mayor, the Mayor Pro Tem of the City of Upland (the “Mayor Pro Tem”), or by the City Manager of

Resolution No.

the City of Upland (the “City Manager”), or in the absence of the City Manager, the Assistant City Manager of the City of Upland (the “Assistant City Manager”, and collectively with the Mayor, the Mayor Pro Tem, and the City Manager, the “Authorized Officers”), is hereby authorized to execute the Placement Agent Agreement in substantially the form hereby approved, with such additions thereto and changes therein as may be approved by such Authorized Officer upon consultation with Bond Counsel.

Section 4. The legislative body of the District hereby finds and determines, pursuant to Section 53360.4 of the Act, that the sale of the Bonds to the Bank, will result in a lower overall cost than a public sale.

Section 5. The Term Sheet of the Bank presented at this meeting, on file with the City Clerk and incorporated herein by reference, is hereby approved, and any one of the Authorized Officers is hereby authorized and directed to execute a final Commitment Letter with the Bank with not to exceed interest rates as specified in the Term Sheet, with such additions thereto and changes therein as may be approved by such officer upon consultation with Bond Counsel, with such approval to be conclusively evidenced by the execution and delivery of the final Commitment Letter.

Section 6. All actions heretofore taken by the Mayor, the Mayor Pro Tem, the City Manager, the Assistant City Manager, the Development Services Director, the Finance Officer, the Public Works Director, and other officers and agents of the City of Upland and the District with respect to the issuance and sale of the Bonds, or in connection with or related to any of the agreements or documents referenced herein are hereby approved, confirmed, and ratified. The Mayor, each of the Authorized Officers, the Development Services Director, the Finance Officer, the Public Works Director, and other officers and staff of the City of Upland and the District responsible for the fiscal affairs of the District are hereby authorized and directed to take any actions, and execute and deliver any and all documents as are necessary to accomplish the issuance, sale and delivery of the Bonds in accordance with the provisions of this Resolution and Resolution No. 6640. Any document authorized herein to be signed by the City Clerk may be signed by a duly appointed deputy clerk.

Section 7. This Resolution shall take effect immediately upon its adoption.

Section 8. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original resolutions.

PASSED, APPROVED and ADOPTED this 11th day of April, 2022.

______________________________________
Bill Velto, Mayor

Resolution No.

I, Keri Johnson, City Clerk of the City of Upland, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City Council held on the 11th day of April, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAINED:

ATTEST:

Keri Johnson, City Clerk

1 COMMUNITY FACILITIES DISTRICT NO. 2015-1
(SYCAMORE HILLS) OF THE CITY OF UPLAND,

COUNTY OF SAN BERNARDINO, STATE OF
CALIFORNIA, SPECIAL TAX BONDS, SERIES 2022A
(IMPROVEMENT AREA NO. 2)
(THE “TAX-EXEMPT BONDS”)
COMMUNITY FACILITIES DISTRICT NO. 2015-1
(SYCAMORE HILLS) OF THE CITY OF UPLAND,

COUNTY OF SAN BERNARDINO, STATE OF

CALIFORNIA, SPECIAL TAX BONDS, TAXABLE
SERIES 2022B (IMPROVEMENT AREA NO. 2)
(THE “TAXABLE BONDS” AND TOGETHER WITH
THE TAX-EXEMPT BONDS, THE “BONDS”)

PROPOSED LENDING PARAMETERS
These proposed lending parameters are an expression of interest based on the mutual understanding of the financing request and terms and conditions, all of which are pending the Purchaser’s consideration, analysis and final credit approval. Any final financing commitments are subject to approval by appropriate administrative authorities of the Purchaser and other analysis we deem appropriate, with the results of such review and analysis being satisfactory to us in our sole discretion. The Purchaser is not obligated to provide this financing until such time as you are notified in writing by the Purchaser of the Purchaser’s commitment and you have executed mutually acceptable loan documents. No action, verbal remarks, or any other communication shall obligate the Purchaser to provide this financing until the Purchaser has issued a final, written commitment. The terms and conditions outlined below are not intended to be all- inclusive but rather set forth a framework for further discussions and are subject to change or addition.

Borrower: Community Facilities District No. 2015-1 (Sycamore Hills) of the City of Upland, County of San Bernardino, State of California (the “Borrower” or the “District”)
City of Upland: City of Upland (the “City”)
City Council: City Council of the City of Upland (the “City Council”) Improvement Area: Improvement Area No. 2 of the District (“Improvement Area No. 2”) Purchaser: Western Alliance Business Trust, a Delaware statutory trust (the “Purchaser”)
Tax Status: Tax-Exempt Bonds.

Interest on the Tax-Exempt Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income tax.

Taxable Bonds.

Interest on the Taxable Bonds shall be included with gross income for federal income tax purposes and is exempt from State of California personal income tax.

2 Purpose: Tax-Exempt Bonds.

Proceeds from the Tax-Exempt Bonds are to be used to:
1) finance certain public facility improvements to be deposited in an improvement fund (the “Improvement Fund”);
2) fund a portion of the reserve account (the “Reserve Account”) at the reserve requirement of the Bonds; and
3) pay the costs associated with issuance of the Tax-Exempt Bonds.

Taxable Bonds.

Proceeds from the Taxable Bonds are to be used to:
1) finance certain development impact fees to be deposited in an Improvement Fund;
2) fund a portion of the Reserve Account at the reserve requirement of the Bonds; and
3) pay the costs associated with issuance of the Taxable Bonds.

Principal Amount: Not to exceed $9,500,000
Tax-Exempt Bonds.
$5,000,000
Taxable Bonds.
$4,500,000
Final Maturity Dates: Tax-Exempt Bonds.

September 1, 2052.

Taxable Bonds.

September 1, 2038.

Interest Payment Dates: Semi-annual interest payments on each March 1 and September 1 commencing September 1, 2022, computed on the basis of a 360-day year consisting of twelve 30-day months (the “Interest Payment Dates”).

Principal Payment Dates: Tax-Exempt Bonds.

Annual principal payments on the Tax-Exempt Bonds on each September 1 commencing September 1, 2039 through September 1, 2052.

Taxable Bonds.

Annual principal payments on Taxable Bonds on each September 1 commencing September 1, 2022 through September 1, 2038.

3 Interest Rate Pricing: The Bonds will be purchased at par at a fixed rate of interest through the Final Maturity Dates based on the following formulas:

Tax-Exempt Bonds.
77% of the sum of the 20-Year USD Swap Rate plus 2.90% (tax- exempt fixed rate).

The interest rate on the Tax-Exempt Bonds is 4.04%. The interest rate will be held through April 22, 2022. See Appendix A herein.

Taxable Bonds.

Sum of the 10-Year USD Swap Rate plus 2.70% (taxable fixed rate).

The interest rate on the Taxable Bonds is 5.17%. The interest rate will be held through April 22, 2022. See Appendix A herein.

Security/Structure: The Bonds will be payable solely from, and secured by, a first pledge of Net Taxes and moneys on deposit in the Special Tax Fund (and the designated accounts therein but excluding the Administrative Expenses Account) established and held under the Indenture. Net Taxes consist of a portion of the Special Taxes levied on the taxable property in Improvement Area No. 2 pursuant to the Rate and Method. The Indenture defines “Net Taxes” as Gross Taxes minus amounts set aside to pay Administrative Expenses not to exceed the Administrative Expenses Priority Amount. The term “Gross Taxes” means (i) the amount of all Special Taxes received by Improvement Area No. 2, together with (ii) the proceeds collected from the sale of property pursuant to the foreclosure provisions of the Indenture for the delinquency of such Special Taxes remaining after the payment of all costs related to such foreclosure actions. The Administrative Expenses Priority Amount is equal to $20,000 per Bond Year.

Reserve Requirement: In connection with the issuance of the Bonds, there shall be established a Reserve Account (the “Reserve Account”) in an amount equal to 100% of the maximum annual debt service on the outstanding Bonds (the “Reserve Requirement”).

Additional Debt: For the sole purpose of refunding all or a portion of the Bonds or any parity bonds then outstanding, the District may at any time after the issuance and delivery of the Bonds issue parity bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expenses Account therein and any Subaccounts of the Reserve Account not designated in the Indenture for the benefit of the Bonds or parity bonds) and secured by a lien and charge upon such amounts equal to the lien and charge securing the outstanding Bonds and any other parity bonds theretofore issued under the Indenture or any supplemental indenture.

4 Redemption
Provisions:

Optional Redemption.

The Bonds maturing on or after September 1, 2032 shall be subject to optional redemption prior to maturity and may be redeemed, at the option of the District, from any source of funds on any date on or after September 1, 2031 in whole, or in part, from such maturities as are selected by the District and by lot within a maturity, at a redemption price equal to 100% of the principal amount to be redeemed, without premium, together with accrued interest to the date of redemption.

Mandatory Sinking Fund Redemption.

The Tax-Exempt Bonds will be subject to mandatory sinking payment redemption, in part, on September 1, 2039 and each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, and from sinking fund payments to be determined by the date of execution and delivery of the Tax-Exempt Bonds.

The Taxable Bonds will be subject to mandatory sinking payment redemption, in part, on September 1, 2022 and each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, and from sinking fund payments to be determined by the date of execution and delivery of the Taxable Bonds.

Special Mandatory Redemption from Prepayments.

The Bonds are subject to extraordinary redemption as a whole, or in part proportionately between the Tax-Exempt Bonds and the Taxable Bonds as described further below, and on a pro rata basis among maturities of each such Series in integral multiples of $5,000, as nearly as possible, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account, plus any amounts authorized to be transferred from the Reserve Account pursuant to the Indenture, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:

Redemption Date Redemption Price
September 1, 2021 through March 1, 2029 103%
September 1, 2029 and March 1, 2030 102%
September 1, 2030 and March 1, 2031 101%
September 1, 2031 and any Interest
Payment Date thereafter
100%

5 Foreclosure Covenant: The District covenants in the Indenture for the benefit of the Purchaser that it will: (i) commence judicial foreclosure proceedings against any parcel with either (A) at least four (4) consecutive installments of delinquent Special Taxes or (B) delinquent Special Taxes in excess of $10,000 on any one parcel, in each instance by the December 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the December 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied for such Fiscal Year, and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided, however, that the District may elect to defer foreclosure proceedings on any parcel so long as the amount on deposit in the Reserve Account is at least equal to the Reserve Requirement, and such delinquencies will not cause moneys in the Reserve Account to be withdrawn on the next succeeding Interest Payment Date. In no event shall such foreclosure actions exceed the time periods specified in Section 53356.1 of the Mello-Roos Act.

Events of Default: Events of Default shall include those that are deemed standard and customary for transactions of this nature all of which shall be subject to satisfactory review by the Purchaser and the Purchaser’s Counsel.

Representations/
Warranties/Covenants:

Legal documentation will contain customary affirmative and negative covenants as well as usual representations and warranties for like situated borrowers acceptable to the Purchaser and the Purchaser’s Counsel.

Legal Opinion(s): Opinions of Bond Counsel, among other things, as to 1) Interest on the Tax-Exempt Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income tax;
2) Interest on the Taxable Bonds is exempt from State of California personal income tax;
3) the validity and enforceability of the Bonds and the pledge of the net special taxes being duly and validly authorized under the law; 4) the Bonds being exempt from registration pursuant to the Securities Act of 1933, as amended (the “1933 Act”), and the Trustee agreement being exempt from qualification as to an indenture pursuant to the Trust Indenture Act of 1939, as amended; and
5) such other opinions as the Purchaser may require.

An opinion of the Counsel to the City shall also be provided in form and substance satisfactory to the Purchaser and the Purchaser’s Counsel.

6 Conditions Precedent: Prior to the purchase of the Bonds, the following conditions precedent shall have occurred, all of which shall be in form and substance satisfactory to the Purchaser and the Purchaser’s Counsel:
1) satisfactory review by the Purchaser’s Counsel of any outstanding agreements entered into by the Borrower which may impact the security for the Bonds or the obligations of the Borrower with respect to repayment the Bonds;
2) any authorizing resolution(s) of the Borrower as required for the issuance and repayment of the Bonds;
3) opinions as required by the Purchaser and the Purchaser’s Counsel;
4) properly executed bond documents in form and substance satisfactory to the Purchaser and the Purchaser’s counsel evidencing or supporting the repayment of the Bonds; and 5) additional conditions precedent that the Purchaser and the Purchaser’s Counsel consider customary and reasonably
appropriate for the proposed purchase of the Bonds.

Loan Treatment: The Purchaser will book the Bonds as loans, and, therefore, the Bonds will be purchased under the following conditions:
1) the Bonds shall not be registered or otherwise qualified for sale under the “Blue Sky” laws;
2) the Purchaser will hold the Tax-Exempt Bonds and the Taxable Bonds each as a single debt instrument registered in the name of “WESTERN ALLIANCE BUSINESS TRUST, a Delaware statutory Trust”;
3) no CUSIP numbers will be obtained for the Bonds pursuant to Municipal Securities Rulemaking Board Rule G-34(a)(i)(F) (See “Assignment and Participation” herein);
4) no official statement or similar offering document has been prepared in connection with the private placement of the Bonds; 5) the Bonds will be in certificated form, will not settle through the DTC or any similar repository and will not be in book entry form; and
6) the Purchaser will sign a letter of representations in a form acceptable to Purchaser’s Counsel.

Origination Fee: None

7 Other Fees Due at Closing: The Borrower shall be obligated to pay all delivery costs, including legal fees of the Purchaser’s Counsel and the CDIAC reporting fee.

The Purchaser’s Counsel fee shall be capped at $10,000 for the Bonds.

Bond Counsel: Richards, Watson & Gershon, A Professional Corporation / Los Angeles, California
Placement Agent: Hilltop Securities, Incorporated / Cardiff, California Municipal Advisor: Urban Futures, Inc. / Tustin, California Trustee: U.S. Bank Trust Company, National Association / Los Angeles, California (the “Trustee”)
Purchaser’s Counsel: Stradling Yocca Carlson & Rauth, a Professional Corporation / Newport Beach, California (the “Purchaser’s Counsel”)
Estimated Closing Date: Thursday, April 21, 2022
No Fiduciary Relationship: Inasmuch as the Bonds represent a negotiated transaction, the Borrower understands, and hereby confirms, that the Purchaser is not acting as a fiduciary of the Borrower, but rather is acting solely in its capacity as a Purchaser, for its own account. The Borrower will acknowledge and agree that:
1) the transaction contemplated herein is an arm’s length commercial transaction between the Borrower and the
Purchaser and its affiliates;
2) in connection with such transaction, the Purchaser and its affiliates are acting solely as a principal and not as an advisor including, without limitation, a “Municipal Advisor” as such term is defined in Section 15B of the Securities and Exchange Act of 1934, as amended, and the related final rules (the “Municipal Advisor Rules”);
3) the Purchaser and its affiliates are relying on the bank exemption in the Municipal Advisor Rules;
4) the Purchaser and its affiliates have not provided any advice or assumed any advisory or fiduciary responsibility in favor of the Borrower with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto;
5) the Purchaser and its affiliates have financial and other interests that differ from those of the Borrower; and
6) the Borrower has consulted with its own financial, legal, accounting, tax and other advisors, as applicable, to the extent it deemed appropriate.

8 Reporting Requirements: Annual Reporting Requirements.

Within nine (9) months of the end of each fiscal year, the Purchaser shall receive from the Borrower the following:
1) a copy of the City’s audited financial statements;
2) a table presenting the number of parcels, secured assessed values (land and structure values) and value to lien ratios within Improvement Area No. 2 of the District for the current fiscal year; 3) a table listing the total amount of special taxes levied and total delinquencies within Improvement Area No. 2 of the District in the current fiscal year and all prior fiscal years with delinquencies;
4) a statement as to any parcel in Improvement Area No. 2 of the District for which the delinquent Special Taxes represent more than 10% of the aggregate special tax levy: including, the identity of the parcel, the identity of the owner(s) of the parcel, and the aggregate amount of delinquent property and Special Taxes within Improvement Area No. 2 of the District, including accrued penalties and interest; and
5) a statement as to the status of any judicial foreclosure proceedings within Improvement Area No. 2 of the District, including such proceedings initiated by the Borrower as a result of the delinquency in the payment of special taxes.

The District shall furnish notice to the Purchaser of any occurrence of an event described in subsection (b)(5)(i)(C) of the Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (17 CFR Part 240, §240.15c2-12) in a timely manner but not in excess of ten business days after the occurrence of such event.

Assignment/Participation: The Purchaser’s intent is to book the Bonds as loans and hold the Bonds to maturity or to the redemption dates; however, the Purchaser retains the right to assign or participate out in whole its interest in the Bonds and will request the Borrower to agree to such assignment or participation. The Purchaser acknowledges and agrees that the Bonds may only be transferred to a “Qualified Institutional Buyer” or an “Accredited Investor” within the meaning of the Securities Act of 1933, as amended.

Defined Terms: All capitalized terms used herein and not defined shall have the meanings given them in the Bond Indenture, dated as of April 1, 2022 (the “Indenture”), by and between the District and the Trustee.

Appendix A-1

APPENDIX A

NOT TO EXCEED AGGREGATE COMMITMENT:$5,500,000.00
ESTIMATED FUNDING DATE:Thursday, April 21, 2022
20 YEAR MID USD INTEREST RATE SWAP RATE(1)2.346%
BANK SPREAD 2.90%
TAXABLE INTEREST RATE(1)5.25%
TAX-EXEMPT MULTIPLIER(2)77%
TAX-EXEMPT INTEREST RATE(3)4.04%
BLOOMBERG FINANCE L.P. SCREEN SHOT OF USD SEMI-ANNUAL 30/360 SWAP RATES AS OF FRIDAY, APRIL 1, 2022, 13:53:43 EDT Western Alliance Bank and its affiliate Western Alliance Business Trust (the “Purchaser”) are pleased to provide to the Communities Facilities District No. 2015-1 (Sycamore Hills) of the City of Upland, County of San Bernardino, State of California (the “District”) the following interest rate lock for the Special Tax Bonds, Series 2022A (Improvement Area No. 2) (the “Tax-Exempt Bonds”) , subject to the Purchaser's credit approval, additional due diligence and receipt and approval of all relevant documentation, for the purchase of the Tax-Exempt Bonds.

COMMUNITY FACILITIES DISTRICT NO. 2015-1 (SYCAMORE HILLS)

OF THE CITY OF UPLAND, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA SPECIAL TAX BONDS, SERIES 2022A (IMPROVEMENT AREA NO. 2) INTEREST RATE LOCK CALCULATION AS OF FRIDAY, APRIL 1, 2022 (2) Based on a federal corporate tax rate of 21% and California income tax rate of 2%. (3) The interest rate is rounded to the nearest one hundredth and will expire if the Tax-Exempt Bonds are not funded by Friday, April 22, 2022. (1) Bloomberg Finance L.P. - 20 Year MID USD Semi-Annual 30/360 as of Friday, April 1, 2022, 13:53:43 EDT, rounded to the nearest one hundredth percentage. See below for Screen Shot.

Appendix A-2

NOT TO EXCEED AGGREGATE COMMITMENT:$4,500,000.00
ESTIMATED FUNDING DATE:Thursday, April 21, 2022
10 YEAR MID USD INTEREST RATE SWAP RATE(1)2.422%
BANK SPREAD 2.75%
TAXABLE INTEREST RATE(2)5.17%
BLOOMBERG FINANCE L.P. SCREEN SHOT OF USD SEMI-ANNUAL 30/360 SWAP RATES AS OF FRIDAY, APRIL 1, 2022, 13:53:43 EDT COMMUNITY FACILITIES DISTRICT NO. 2015-1 (SYCAMORE HILLS)

OF THE CITY OF UPLAND, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA SPECIAL TAX BONDS, TAXABLE SERIES 2022B (IMPROVEMENT AREA NO. 2) INTEREST RATE LOCK CALCULATION AS OF FRIDAY, APRIL 1, 2022 (2) The interest rate is rounded to the nearest one hundredth and will expire if the Taxable Bonds are not funded by Friday, April 22, 2022.

Western Alliance Bank and its affiliate Western Alliance Business Trust (the “Purchaser”) are pleased to provide to the Communities Facilities District No. 2015-1 (Sycamore Hills) of the City of Upland, County of San Bernardino, State of California (the “District”) the following interest rate lock for the Special Tax Bonds, Taxable Series 2022B (Improvement Area No. 2) (the "Taxable Bonds") , subject to the Purchaser's credit approval, additional due diligence and receipt and approval of all relevant documentation, for the purchase of the Taxable Bonds. (1) Bloomberg Finance L.P. - 10 Year Tenor MID USD Semi-Annual 30/360 Swap Rate as of Friday, April 1, 2022, 13:53:43 EDT, rounded to the nearest one hundredth percentage. See below for Screen Shot.

PLACEMENT AGENT AGREEMENT

March 31, 2022
Community Facilities District No. 2015-1 (Sycamore Hills) of the City of Upland, County of San Bernardino, State of California
Upland, California

Re: Placement Agent Agreement
Special Tax Bonds, Series 2022A and Taxable Series 2022B (Improvement Area No. 2)

Ladies and Gentlemen:

This letter confirms the agreement (the “Agreement”) between Hilltop Securities Inc. (“HilltopSecurities” or “we” or “us”) and the City of Upland (the “Issuer” or “you”). You desire to engage HilltopSecurities as a placement agent in connection with the placement of your Special Tax Bonds, Series 2022A and Taxable Series 2022B (Improvement Area No. 2) (the “Securities”). Pursuant to MSRB Rule 15c2-12(d), the Securities will be issued in authorized denominations of $5,000 or more with, as currently contemplated, gross proceeds of approximately $8,405,502.22 for the purpose of reimbursing KB Coastal for certain public and private infrastructure improvements and fees pursuant to Resolution No 6640 authorizing documents adopted on March 14, 2022 (the “Resolution”). As a placement agent, HilltopSecurities will have duties, roles and responsibilities that are different from those of a municipal advi sor. You are directed to consider the MSRB Rule G-17 disclosures relevant to placement agent activity.

Engagement. The Issuer engages HilltopSecurities to act as its exclusive representative to assist you on a best efforts basis in placing the Securities (the “Transaction”). You acknowledge and agree that our engagement hereunder is not an agreement by HilltopSecurities or any of its affiliates to underwrite, place or purchase the Securities or otherwise provide any financing to you. We accept this engagement upon the terms and conditions set forth in this Agreement. Sale and delivery of the Securities by the Issuer and purchase by the purchasers will occur on the day of closing (“Closing Date”).

Fees. For our services, you agree to pay us $50,000 payable by wire transfer of immediately available funds on the Closing Date. For avoidance of doubt, the Placement Agent Fee shall be contingent upon the closing of the Transaction.

Disclosure and Due Diligence. The Issuer will prepare and provide to the Placement Agent the following:
 A term sheet and/or other documents including financials, budgets, estimated debt service requirements and coverage, historical tax collections by relevant classification, litigation and regulatory materials, material contracts, Issuer demographic information, underlying credit ratings and other information the Issuer deems material to investors, (the “Information Package”).  The draft Resolution and other legal documents to be used in connection with the Transaction (together with all supplements, modifications, and additions thereto prior to the Closing Date, which together with the Information Package are referred to as the “Placement Materials”).  The Issuer will make available to each Purchaser and the Placement Agent such documents and other information which the Purchaser or the Placement Agent reasonably deem appropriate, will

provide access to its officers, directors, employees, accountants, counsel and other representatives, and will provide each Purchaser and the Placement Agent the opportunity to ask questions and receive answers from knowledgeable individuals.
 The Issuer will cause its counsel to allow the Placement Agent to rely on any opinion provided to the Issuer, and will allow the Placement Agent to rely on any representations made to the Purchaser by the Issuer.

Representations, Warranties and Agreements of the Issuer. You represent and warrant to, and agree with us, that:
 The Issuer is duly organized and validly existing under the laws of the State of California (the “State”) with the power to adopt the Resolution, perform the agreements on its part contained therein and in the documents approved thereby and cause the issuance of the Securities.  The Issuer: (i) has duly authorized and approved the execution and delivery of this Agreement; (ii) will adopt and on the Closing Date will have duly adopted the Resolution; (iii) will duly authorize and approve the Placement Materials and the use and distribution of the Placement Materials to prospective Purchasers; and (iv) will duly authorize and approve the execution and delivery of all financing or operative documents, including the Securities, to which the Issuer is a party relating to the issuance and security for the Securities, as such documents are amended and supplemented to the Closing Date, including but not limited to any trust indenture, loan agreement, or security instrument (the “Financing Documents”), and the performance of its obligations and the consummation by it of all other transactions contemplated thereby.  On the Closing Date, the Financing Documents will have been duly authorized, executed, and delivered by the Issuer, and, assuming due authorization, execution and delivery by the other parties thereto, as applicable, constitute legal, valid and binding agreements of the Issuer enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles if sought and by the limitations on legal remedies imposed on actions against the Issuer in the State of California.
 The Issuer is not, and on the Closing Date will not be, in breach of or default under any applicable law or administrative regulation of the State or any department, division, agency or instrumentality thereof, or of the United States, or any applicable judgment or decree or any loan agreement, note, Resolution, certificate, agreement or other instrument to which the Issuer is a party or is otherwise subject, which breach or default would materially and adversely affect the Issuer or its ability to perform its duties and obligations under the Financing Documents, and the execution and delivery of the Financing Documents, the adoption of the Resolution and the issuance of the Securities and compliance with the provisions of each will not conflict with or constitute a breach of or default under any applicable law or administrative regulation of the State or under any certificate, agreement or other instrument to which the Issuer is a party or is otherwise subject, which breach or default would materially and adversely affect the Issuer or its ability to perform its duties under the Financing Documents and the Securities.
 No action, suit, proceeding or investigation at law or in equity before or by any court, governmental agency, public board or body is, and on the Closing Date will not be, pending or, to the knowledge of the Issuer, threatened: (i) in any way affecting the existence of the Issuer or the titles of the members of the authorizing body of the Issuer to their respective offices, (ii) seeking to prohibit,

restrain or enjoin the issuance, sale or delivery of the Securities or the collection or payment by the Issuer of any amounts pledged or to be pledged as security to pay the principal of and interest on Securities, (iii) in any way contesting or affecting the validity or enforceability of, or the power or authority of the Issuer to issue, adopt or to enter into (as applicable), the Securities, the Resolution or the Financing Documents, (iv) contesting in any way the completeness, truth, or accuracy of the Placement Materials, (v) except as disclosed in the Placement Materials, wherein an unfavorable decision, ruling or finding would materially adversely affect the financial position or condition of the Issuer or would result in any material adverse change in the ability of the Issuer to pledge or apply the security or source of payment of, or to pay debt service on the Securities, or (vi) contesting the status of the interest on the Securities as excludable from gross income for federal income tax purposes or as exempt from any applicable state tax.
 Regarding information provided by the Issuer to the Purchaser and the Placement Agent, (i) the Issuer represents and warrants that all information made available to the Purchaser and the Placement Agent by the Issuer or contained in the Information Package, when provided will at all times thereafter during the period of the engagement of the Placement Agent hereunder, be true and accurate in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances under which such statements are made.

Documents to be Delivered at Closing. On the Closing Date, the Issuer will deliver or cause to be delivered to the Placement Agent:
 The Opinion of Bond Counsel to the Issuer, dated the Closi ng Date relating to the validity of the Securities, and if the Securities are tax-exempt, the tax-exempt status of the Securities, together with a reliance letter from such counsel, dated the Closing Date and addressed to Hilltop Securities Inc.
 An Investor Letter, in the form attached to this Agreement as Appendix A, executed by each Purchaser and addressed to the Issuer and the Placement Agent; and  A certificate of the Issuer, dated the Closing Date, in the form attached to this Agreement as Appendix B.
 Such additional legal opinions, certificates, proceedings, instruments and other documents as the Placement Agent or its counsel, if any, and Bond Counsel may reasonably request to evidence compliance by the Issuer with legal requirements, the truth and accuracy, as of the Closing Date, of the representations of the Issuer, and the due performance or satisfaction by the Issuer at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Issuer.

Regulatory Disclosures. You acknowledge that you have retained us solely to provide the services to you as set forth in this agreement. As placement agent, HilltopSecurities may provide advice concerning the structure, timing, terms, and other similar matters concerning the Transaction. You acknowledge and agree that: (i) the primary role of HilltopSecurities as a placement agent, is to place securities to investors in an arms-length commercial transaction and that HilltopSecurities has financial and other interests that differ from your interests; (ii) HilltopSecurities is not acting as a municipal advisor, financial advisor or fiduciary to you or any other person or entity and has not assumed any advisory or fiduciary responsibility to you with respect to the transaction contemplated herein and the discussions, undertakings and proceedings leading thereto (irrespective of whether HilltopSecurities has provided other services or is currently providing other services to you on other matters); (iii) the only obligations HilltopSecurities has to you with

respect to the transaction contemplated hereby expressly are set forth in this agreement; and (iv) you have consulted your own legal, accounting, tax, financial and other advisors, as applicable, to the extent deemed appropriate in connection with the transaction contemplated herein.

Termination. You or we may terminate our engagement under this agreement, with or without cause, upon ten days’ written notice to the other party provided that the provisions the section entitled Fees and the obligations thereunder shall not be affected by such termination.

Survival of Certain Representations and Obligations. The respective agreements, covenants, representations, warranties and other statements of the Issuer and its officers set forth in or made pursuant to this Agreement shall survive delivery of and payment for the Securities and shall remain in full force and effect, regardless of any investigation, or statements as to the results thereof, made by or on behalf of the Placement Agent.

Section Headings. Section headings contained herein are for convenience of reference only and are not part of this agreement.

Amendment. This agreement may be amended only by a written instrument executed by each of the Parties. The terms of this agreement may be waived only by a written instrument executed by the party waiving compliance.

Entire Agreement. This Agreement embodies the entire agreement and understanding between you and us and supersedes all prior agreements and understandings relating to the subject matter of this Agreement.

No Assignment. This agreement has been made by the Issuer and Hilltop Securities Inc., and no other person shall acquire or have any right under or by virtue of this agreement.

Governing Law. This agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this agreement or the negotiation, execution or performance of this agreement, will be governed by and construed in accordance with the laws of California.

Consent to Jurisdiction; Service of Process. The parties each hereby (i) submits to the jurisdiction of any state or federal court sitting in the State of California for the Resolution of any claim or dispute with respect to or arising out of or relating to this agreement or the relationship between the parties; (ii) agrees that all claims with respect to such actions or proceedings may be heard and determined in such court; (iii) waives the defense of an inconvenient forum; (iv) agrees not to commence any action or proceeding relating to this agreement other than in a state or federal court sitting in the State of California; and (v) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each party hereto irrevocably consents to service of process in the manner provided for in the section entitled Notices. Nothing in this agreement will affect the right of any party to this agreement to serve process in any other manner permitted by law.

Effectiveness. This agreement shall become effective upon its execution by duly authorized officials of all parties hereto and shall be valid and enforceable from and after the time of such execution.

Severability. In the event any provision of this agreement shall be held invalid or unenfo rceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. You and we will endeavor in good faith negotiations to replace the invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid or unenforceable provisions.

Counterparts. This agreement may be executed in several counterparts (including counterparts exchanged by email in PDF format), each of which shall be an original and all of which shall constitute but one and the same instrument.

Notices. Any notice required or permitted to be given under this agreement shall be given in writing and shall be effective from the date sent by registered or certified mail, by hand, facsimile or overnight courier to the addresses set forth on the first page of this agreement with a copy sent to the General Counsel of such Party.

Sincerely,

_________________________________
Robin Thomas, Managing Director
Hilltop Securities Inc.

Acknowledgment and Approval of Engagement

___________________________________
Michael Blaylock, City of Upland

Date: _____________________________

A-1

APPENDIX A

FORM OF INVESTOR LETTER

[Address to Issuer and Placement Agent]

Re: [Name of securities]
Ladies and Gentlemen:

The undersigned (the “Investor”) hereby acknowledges that it is purchasing $[_________] aggregate principal amount of [name of securities] (the “Securities”) pursuant to a [Resolution][Indenture] (the [“Resolution”][“Indenture’]) of the [name of authorizing body], adopted [date].

In connection with the sale of the Securities to the Investor, the Investor hereby makes the following representations upon which you may rely:
 The Investor has the authority and is duly authorized to purchase the Securities and to execute this letter and any other instrument and document required to be executed by the Investor in connection with the purchase of the Securities .
 [use if no CUSIP will be assigned The Investor (i) is a bank, any entity directly or indirectly controlled by the bank or under common control with the bank, other than a broker, dealer or municipal securities dealer registered under the Securities Exchange Act of 1934, or a consortium of such entities; and (ii) has the present intent to hold the Securities to maturity or earlier redemption or mandatory tender.]
 [Optional to reflect Issuer preference to limit distribution The Investor is (i) a “qualified institutional buyer” as that term is defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or (ii) an “accredited investor” who is an institution as that term is defined in Rule 501(a)(1),(2),(3), or (7) under the Securities Act.]  The Investor is a bank, savings and loan association, insurance company, or registered investment company, investment adviser registered either with the Commission under Section 203 of the Investment Advisers Act of 1940 or with a state securities commission (or any agency or office performing like functions), or any other person or entity with total assets of at least $50 million; is exercising independent judgment in evaluating:(A) the recommendations of the Placement Agent, if any; (B) the quality of execution of the Investor’s transactions by the Placement Agent; and has timely access to material information that is available publicly through established industry sources as defined in Municipal Securities Rulemaking Board Rule G-47(b)(i) and (ii).  The Investor is not purchasing the Securities for more than one account or with a view to distributing the Securities, as required for municipal securities under SEC Rule 15c-2-12(d).  The Investor understands that the Securities are not, and are not intended to be, registered under the Securities Act and that such registration is not legally required as of the date hereof, and further understands that the Securities (i) are not being registered or otherwise qualified for sale under the “Blue Sky” laws and regulations of any state; (ii) will not be listed in any stock or other securities exchange; (iii) will not carry a rating from any rating agency; and (iv) will be delivered in a form that may not be readily marketable.

A-2

 The Investor acknowledges that it has either been supplied with or been given access to information, including which it has requested from the Issuer and to which a reasonable investor would attach significance in making investment decisions, and the Investor has had the opportunity to ask questions and receive answers from knowledgeable individuals, including its own counsel, concerning the Issuer and the Securities and the security therefor so that, as a reasonable investor, the Investor has been able to make a decision to purchase the Securities. The Investor has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its prospective investment in the Securities.  The Investor has made its own inquiry and analysis with respect to the Securities and the security therefor, and other material factors affecting the security and payment of the Securities. The Investor is aware that there are certain economic and regulatory variables and risks that could adversely affect the security for the Securities. The Investor has reviewed the documents executed in conjunction with the issuance of Securities, including, without limitation, the Resolution.  The Investor acknowledges that the sale of the Securities to the Investor is made in reliance upon the certifications, representations, and warranties herein by the addressees hereto.  The interpretation of the provisions hereof shall be governed and construed in accordance with [State] law without regard to principles of conflicts of laws.

All representations of the Investor contained in this letter shall survive the execution and delivery of the Securities to the Investor as representations of fact existing as of the date of execution and delivery of this Investor Letter.

Date: _________ __, 20__ Very truly yours,
Investor:____________________________
By: ________________________________
Name:______________________________
Title:_______________________________

B-1

APPENDIX B

FORM OF ISSUER CLOSING CERTIFICATE

Pursuant to the Placement Agent Agreement, dated [date of Agreement] between [name of Issuer] and [name of the Placement Agent] (the “Agreement”), as [title] of the Issuer duly authorized to execute this Certificate on behalf of the Issuer, I hereby certify:
 The representations and warranties of the Issuer contained in the Agreement are true and correct as if made on the date hereof;
 The Issuer has complied with and fully satisfied all of its agreements with and obligations to the Placement Agent under this Agreement; and
 As of its date and the date hereof, the information contained in the Placement Materials is complete, true, and accurate and such information does not contain any untrue statement of a material fact or state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

[Name]
[Title]
[Date]

Annex A-1

[ANNEX A]

CERTAIN DISCLOSURES

The Placement Agent hereby further provides the Issuer with certain disclosures relating to the Securities, as required by the Municipal Securities Rulemaking Board (MSRB) Rule G-17 as set forth in MSRB Notice 2012-25 (May 7, 2012).

The Placement Agent intends to serve as a placement agent, and not as a financial advisor or municipal advisor in connection with the issuance of the Securities. As part of our services as the Placement Agent we may provide advice concerning the structure, timing, terms, and other similar matters concerning the issuance of the Securities.

Concerning our role as the Placement Agent:
 Municipal Securities Rulemaking Board Rule G-17 requires us to deal fairly at all times with both municipal issuers and investors;
 our primary role in this transaction is to facilitate the sale and purchase of your Securities between you and one or more investors for which we will receive compensation;  unlike a municipal advisor, we do not have a fiduciary duty to you under the federal securities laws and are, therefore, not required by federal law to act in your best interests without regard to our own financial or other interests;
 we have a duty to use our commercially reasonable efforts to arrange the purchase of the Securities from you by investors at a fair and reasonable price, but must balance that duty with our duty to arrange the sale to investors at prices that are fair and reasonable; and  we will review the Placement Materials for your Securities in accordance with, and as part of, our responsibilities to investors under the federal securities laws, as applied to the facts and circumstances of the transaction.

Concerning our Compensation as Placement Agent:
 We will be compensated pursuant to the terms set forth in this Agreement;  a portion of our compensation may be based in whole or in part upon the principal amount of the Securities sold in the Placement; and
 while this form of compensation is customary in the municipal securities market, it presents a conflict of interest because the Placement Agent may have an incentive to recommend to you a transaction that is unnecessary or to recommend that the size of the transaction be larger than is necessary.

S T A F F R E P O R T
I T E M N O . 11.A .

D A T E :A p ril 1 1, 2 02 2
T O :M A YO R A N D C I T Y C O U N C I L A N D B O A R D O F D I R E C TO R S O F T H E

C I T Y O F U P L A N D F I N A N C I N G A U T H O R I T Y F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : S T E P H E N PA R K E R , A S S I S TA N T C I T Y M A N A G E R S U B J E C T :C O N S I D E R A U T H O R I Z I N G E X E C U T I O N A N D D E L I V E R Y O F A S I T E

L E A S E , A L E A S E A G R E E M E N T A N D OT H E R R E L A T E D D O C U M E N T S

I N C O N N E C T I O N W I T H T H E L E A S E F I N A N C I N G A R R A N G E M E N T

R E C O M M E N D E D A C T I O N
I t is rec om m en d ed that t he C i ty C oun cil (th e “C ity C ou ncil”) of the C i ty of U p lan d (th e “C ity”) and t he B oard of D irect ors (t h e “B oard of D irect ors ”) of t he C i ty of U p lan d F i n an ci n g A u th ority (th e “A u th ori ty”) ap p rove an d au th orize th e execu ti on an d d el ivery of a sit e l ease, a lease ag reem en t and ot her relat ed d oc um ent s in c on n ect ion wi th t h e leas e fi n an ci n g arrang em en t b etw een the C ity and th e A u th ority b y:

1. C on d u ctin g a p ub lic h earing of th e C ity reg ard ing th e lease reven ue ob lig ation ;

2. A d op tin g a Resolu tion ent it led “Res olu ti on of th e C it y C oun cil of t h e C i ty of Up lan d , C alifornia au th ori zi n g execu tion an d d el ivery of a sit e l ease, a leas e ag reem en t, an d oth er rel ated d ocu m en ts in c on n ect ion w it h en t eri n g in to a l ease ob lig at ion t h rou g h a lease fin ancin g arran g em en t with th e C i ty of U p lan d an d F inan cing A u th ori ty an d certain oth er actions relating th ereto”; and

3. A d op tin g a Resol u t ion en ti tl ed “Resol u t ion of th e B oard of D irect ors of th e C ity of Up lan d F inan cing A uthority, au th orizing execution an d d elivery of a site lease, a lease ag reem en t, an d oth er relat ed d ocum ents i n con nection wi th the l ease fin ancin g arrang em en t with th e C ity, an d certain oth er actions relating th ereto.”

G O A L S T A T E M E N T
Th e p rop os ed act ion sup p orts th e C it y C oun cil’s g oal t o m anag e the C it y's resou rc es in a fiscally resp onsib le an d tran sp aren t m atter.

B A C K G R O U N D
At it s m eeting of D ecem b er 13 , 2 0 2 1 , t he C i ty C oun cil ad op ted S taff’s rec om m end ed B L A S T strateg y for red u c in g the C i ty’s u n fu n d ed accrued l iab il it y (“U A L”) with C al P E R S an d thereb y g en erate sig n ifican t an nu al savin g s to t he C it y. Th e st rat eg y i n c lu d es is su in g W ater Reven ue B on d s to free up res erves wh ich can b e used to p u rch ase G eneral F u nd L ease Revenu e B ond s.

Th e Water Reven ue B ond s were sold an d p roceed s d elivered on M arch 28 , 20 22 . Water F un d reserves w il l b e u sed t o p u rc h as e t he i n t ern al p rop os ed lease reven ue ob lig ation p ayab l e from th e C i ty’s G en eral F un d p u rsu an t t o t he C it y’s in vest m en t p olicy. T he p roceed s of th e lease reven ue ob lig ation w ill b e u s ed to red u ce th e C it y’s un fun d ed ac cru ed l iab il it y w i th C al P E R S and attrib u tab le to th e G eneral F un d of the C ity.

I n ord er t o accom p lish t hi s ob jec ti ve, th e A ut horit y w i ll ent er in to a S ite L ease (th e “S ite L ease”) as les see an d th e C it y as lessor, of certai n p rop erty own ed in fee b y t he C i ty, an d con cu rrently en t er i nt o a L eas e A g reem en t (th e “L ease A g reem en t ”), th e A u th ority b ein g L essor and th e C it y b eing Les see, wh ich w il l req u ire t hat th e C it y m ake leas e p aym ents su fficien t to p ay th e leas e ob l ig ati on . T h e p rop ert y to b e su b ject m att er of the S ite L ease an d th e L ease A g reem en t wi ll b e t h e C ity own ed p rop ert ies at t he U p l an d C i vic C en ter, wh ich in clud es C ity H all, M ain Lib rary, C arn eg ie L ib rary and associated com m on areas and p arkin g lots. S uch p rop erties are valued at $21 ,99 0,0 00 .

I S S U E S /A N A L Y S I S
I f ap p roved , t h e A u th ority wi ll en ter in to an A ssig nm ent A g reem ent (th e “A ssig n m en t A g reem ent”) wi th t h e W ater an d S ew er E n t erp ri se F un d s, wh ich w il l assig n t h e lease p aym ents to th e Water an d S ew er F un d s and p rovid e notes (the “N ote”) as evid en ce thereof.

Th e resolu tions w ill ap p rove th e follow in g d ocu m en ts:

S ite and Facilities L ease b y an d b etween t h e C it y of U p l an d , as L ess or, an d th e C i ty of Up lan d F in ancin g A uthority, as Lessee;
L ease A g reem en t b y an d b etween t h e C it y of Up lan d F i n an ci n g A u th ori ty, as S u b lessor, and th e C ity of U p land , as S ub lessee;
A ssig n m en t A g reem ent am on g th e C it y of U p land F in an c in g A uthority, t he C i ty of Up lan d Water and S ewer F u nd s, an d the C ity of Up lan d ; P rom issory N ote b y the C ity of Up lan d F in ancin g A uthority to the Water F u nd ; P rom issory N ote b y the C ity of Up lan d F in ancin g A uthority to the S ew er F un d ; an d Th e C it y Res olu ti on ap p roves th e investm ent b y t h e Wat er an d S ewer F un d s i n the N otes. ($1 5,7 50 ,00 0 Water F u nd in vestm en t an d $5,0 00 ,00 0 S ew er F un d investm ent).

Th e C ity will record all of th e d ocum ents u p on th e d elivery of th e notes.

F I S C A L I M P A C T S
A s p art of the ap p roval, the C ity w ill d eterm ine that:

1. Th e u nallocated reserves of t he C ity’s W ater an d S ewer F u n d s m ay b e u sed t o p u rch ase the lease ob lig at ion , as th e p urch ase of th e l ease ob l ig ati on b y t he Wat er an d S ewer F u n d s w ill con stitute an i n ves tm en t of such fu n d s , in t hat t h e investm ent wi ll b e th e p urch ase of an ob lig ation of a local ag ency as d es crib ed i n S ect ion 53 60 1(a) of th e C alifornia G overn m en t C od e;

2. T he lease ob lig ation is for a term p erm itted u nd er the C ity’s I nvestm ent Policy; an d

3. T he p urch ase of th e lease ob l ig ati on w i ll n ot int erfere w it h t h e c ash flow need s of t h e Water and S ewer F u nd s for th e term of the investm ent.

Th e C ity will m ake an ad d itional d iscretionary p aym en t to C al P E R S totallin g $2 0.5 m illion, and net of b orrowing cos ts , save ap p roxim atel y $1 5 m illion in U A L in terest cos ts as a resu lt of th is fin ancin g .

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
City Resolution
Authority Resolution
Site and Facilities Lease
L ease Agreement
Assignment Agreement
Promissory Note to the Water Fund
Promissory Note to the S ewer Fund

RESOLUTION NO.

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF UPLAND,

CALIFORNIA AUTHORIZING EXECUTION AND DELIVERY OF A SITE

LEASE, A LEASE AGREEMENT, AND OTHER RELATED DOCUMENTS

IN CONNECTION WITH ENTERING INTO A LEASE OBLIGATION

THROUGH A LEASE FINANCING ARRANGEMENT WITH THE CITY OF

UPLAND FINANCING AUTHORITY AND CERTAIN OTHER ACTIONS

RELATING THERETO
WHEREAS, the City Council (the “City Council”) of the City of Upland (the “City”) hereby determines that it is in the best interests of the City to refinance a portion General Fund’s share of the City’s unfunded accrued liability (“UAL”) with California Public Employees’ Retirement System (the “Project”), through a lease financing arrangement (the “Lease Obligation”) with the City of Upland Financing Authority (the “Authority”) secured by a lien on that certain parcels of property which is comprised of property located in the City and described in Exhibit “A” to the Lease Agreement described below; and
WHEREAS, in order to accomplish the Project, the Authority will enter into a Site Lease (the ”Site Lease”) as lessee and the City as lessor, of certain property owned in fee by the City, and concurrently enter into a Lease Agreement (the “Lease Agreement”), the Authority being Lessor and the City being Lessee, which will require that the City make lease payments thereunder sufficient to pay the Lease Obligation; and
WHEREAS, the Authority will enter into and Assignment Agreement (the “Assignment Agreement”) with the Investing Funds, described below, which will assign the lease payments to the Investing Funds and provide notes (the “Notes”) as evidence thereof; and
WHEREAS, this City Council has determined that the financing will be purchased as investments of the Water and Sewer Funds (together, the “Investing Funds”) and that it is in the best interest of the City to proceed; and WHEREAS, The City has determined that the unallocated reserves of the City’s Investing Funds may be used to purchase the Lease Obligation, as the purchase of the Lease Obligation by the Investing Fund will constitute an investment of such funds, in that the investment will be the purchase of an obligation of a local agency as described in Section 53601(a) of the California Government Code, the Lease Obligation is for a term permitted under the City’s Investment Policy, and the purchase of the Lease Obligation will not interfere with the cash flow needs of the Investing Funds for the term of the investment. With respect to the City’s prudent investment requirement, the City Council ensures that it fully intends to honor the covenants and obligations under the Lease Obligation; and WHEREAS, the City Council has conducted a noticed public hearing pursuant to Section 6586.5 of the California Government Code and published notice was given in accordance with the terms of the Government Code.

NOW, THEREFORE, The City Council of the City of Upland hereby finds, determines and resolves as follows:

Resolution No.

Section 1 Findings and Determinations.
(a) The City Council finds and determines that it is in the prudent management of the fiscal affairs of the City that the proceeds to shall be used for the Project; and (b) The fair rental value of the Leased Premises exceeds the present value of Lease Payments to be made under the Lease Agreement.

Section 2. Approval of Financing. The City hereby approves the Project subject to the terms and conditions of this Resolution.

Section 3. Approval of Financing Documents. The City Council hereby approves each of the following documents in substantially the respective forms on file with the City Clerk, together with such additions thereto and changes therein as Special Counsel shall deem necessary, desirable or appropriate, the execution of which by the Mayor, City Manager or Finance Officer shall be conclusive evidence of the approval of any such additions and changes:
(1) the Site Lease; and
(2) the Lease Agreement.

The Mayor, the City Manager, the Assistant City Manager, or the City Finance Officer (each, an “Authorized Officer”) are hereby authorized and directed to execute, and each Authorized Officers and the City Clerk is hereby authorized and directed to attest and affix the seal of the City to the final form of each of the foregoing documents and agreements for and in the name and on behalf of the City. The City Council hereby authorizes the delivery and performance of each of the foregoing documents and agreements.

This City Council consents to the delivery by the Authority of the Assignment Agreement and the Notes to the Investing Funds.

Section 4. Financing Terms; Investment. The financing terms presented to the City by the Authority are approved as follows: maximum principal amount of financing is $20,750,000 ; the interest rate with respect to the financing is equal

1.92%. The maximum term for the financing is 15 years. The Investing Funds are hereby authorized to purchase the Lease Obligation represented by the Notes.

This City Council finds that the purchase of the financing by the Investing Funds complies with the City’s investment policy for the Investing Funds and that the City will take measures to ensure that the investment by the Authority will be repaid through the General Fund budget and appropriation process during the next fiscal years.

Section 5. Requisitions. Authorized Officers, or any one of them, are hereby authorized and directed to execute one or more requisitions authorizing the payment of costs of issuing the Lease Obligations from the proceeds of payment by the Authority under the Site Lease.

Resolution No.

Section 6. Other Acts. The Authorized Officers and the other officers and staff members of the City are hereby authorized and directed, jointly and severally, to do any and all things, to execute and deliver any and all documents, which in consultation with the staff and Special Counsel they may deem necessary or advisable in order to consummate the Project, or otherwise to effectuate the purposes of this Resolution, and any such actions previously taken by such officers are hereby ratified and confirmed.

Section 7. Effective Date. This Resolution is and shall be effective from the date of its adoption.

PASSED, APPROVED AND ADOPTED this 11th day of April, 2022.

___________________________
Bill Velto, Mayor

I, Keri Johnson, City Clerk of the City of Upland, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City Council held on the 11th day of April, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAINED:

___________________________
Keri Johnson, City Clerk

RESOLUTION NO. ____

RESOLUTION OF THE BOARD OF DIRECTORS OF THE CITY OF

UPLAND FINANCING AUTHORITY, AUTHORIZING EXECUTION AND

DELIVERY OF A SITE LEASE, A LEASE AGREEMENT, AND OTHER

RELATED DOCUMENTS IN CONNECTION WITH THE LEASE

FINANCING ARRANGEMENT WITH THE CITY, AND CERTAIN OTHER

ACTIONS RELATING THERETO
WHEREAS, the Board of Directors (the “Board”) of the City of Upland Financing Authority (the “Authority”) hereby determines that it is in the best interests of the City of Upland (the “City”) to refinance a portion General Fund’s share of the City’s unfunded accrued liability (“UAL”) with California Public Employees’ Retirement System (the “Project”), through a lease financing arrangement (the “Lease Obligation”) with the Authority and the City which is secured by a lien on that certain property located in the City of Upland and described as Exhibit “A” to the Lease Agreement described below (the “Leased Premises”); and
WHEREAS, in order to accomplish the Project, the Authority will enter into a Site Lease (the ”Site Lease”) as lessee and the City as lessor, of certain property owned in fee by the City, and concurrently enter into a Lease Agreement (the “Lease Agreement”), the Authority being Lessor and the City being Lessee, which will require that the City make lease payments thereunder sufficient to pay the Lease Obligation; and
WHEREAS, the Authority will enter into an Assignment Agreement (the “Assignment Agreement”) with the Investing Funds, described below, which will assign the lease payments to the Investing Funds and provide notes (the “Notes”) as evidence thereof; and
WHEREAS, this Board has determined that the financing will be purchased as investments of the Water and Sewer Funds (together, the “Investing Funds”) and that it is in the best interest of the Authority to proceed.

NOW, THEREFORE, The Board of Directors of the City of Upland Financing Authority hereby finds, determines and resolves as follows:

Section 1. Findings and Determinations.
(a) Pursuant to the Act, the Board hereby finds and determines that the Lease Obligation will result in savings in effective interest rates, bond underwriting costs and thereby result in significant public benefits within the contemplation of Section 6586 of the Act.
(b) The Board finds and determines that the above recitals are true and correct and that the fair rental value of Leased Premises exceeds the present value of Lease Payments to be made under the Lease Agreement.

Section 2. Approval of Financing. The Board hereby approves the purchase of the financing by the Authority and approves the financing of the Project subject to the terms and conditions of this Resolution.

Section 3. Approval of Financing Documents. The Board hereby approves each of the following documents in substantially the respective forms on file with the Secretary, together with such additions thereto and changes therein as Special Counsel shall deem necessary, desirable or appropriate, the execution of which by the Chairman, Executive Director, Assistant Executive Director or Treasurer (each, an “Authorized Officer”) shall be conclusive evidence of the approval of any such additions and changes:
(1) the Site Lease;
(2) the Lease Agreement; and
(3) the Assignment Agreement;
(4) the Note to the Water Fund; and
(5) the Note to the Sewer Fund.

The Authorized Officers are each hereby authorized and directed to execute, and the Secretary is hereby authorized and directed to attest and affix the seal of the Authority to the final form of each of the foregoing documents and agreements for and in the name and on behalf of the Authority. The Board hereby authorizes the delivery and performance of each of the foregoing documents and agreements.

Section 4. Financing Terms. The financing terms presented to the Authority are approved as follows: maximum principal amount of financing is $20,750,000 ; maximum interest rate with respect to the financing is 1.92% for the lease payments.

The maximum term for the financing is 15 years.

Section 5. Requisitions. The Authorized Officers, or any one of them, are hereby authorized and directed to execute one or more requisitions authorizing the payment of costs of issuing the Lease Obligations from the proceeds of payment by the Authority under the Site Lease and the Lease Agreement.

Section 6. Other Acts. The Authorized Officers and the other officers and staff members of the Authority are hereby authorized and directed, jointly and severally, to do any and all things, to execute and deliver any and all documents, which in consultation with the staff and Special Counsel they may deem necessary or advisable in order to consummate the Project, or otherwise to effectuate the purposes of this Resolution, and any such actions previously taken by such officers are hereby ratified and confirmed.

Section 7. Effective Date. This Resolution shall take effect immediately upon its adoption.

PASSED, APPROVED AND ADOPTED this 11th day of April, 2022.

______________________________
Bill Velto, Chairperson

I, Keri Johnson, Secretary of the City of Upland Financing Authority, do hereby certify that the foregoing Resolution was adopted by the City of Upland Financing Authority, at a special meeting held on the 11th day of April, 2022, by the following roll call vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

______________________________
Keri Johnson, Secretary

46708.00807\34721031.3

RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:

Best Best & Krieger LLP
Attention: Kim Byrens, Esq.
3390 University Avenue, 5th Floor
Riverside, CA 92501

THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.

SITE AND FACILITY LEASE
by and between

CITY OF UPLAND
as Lessor
and

CITY OF UPLAND FINANCING AUTHORITY,
as Lessee
April 1, 2022

46708.00807\34721031.3

SITE AND FACILITY LEASE
THIS SITE AND FACILITY LEASE (this “Site and Facility Lease”), dated April 1, 2022, is by and between the CITY OF UPLAND, a general law city and municipal corporation, duly organized and existing under and by virtue of the laws of the State of California (the “City”), as lessor, and the CITY OF UPLAND FINANCING AUTHORITY, a public agency existing under the laws of the State of California (the “Authority”), as lessee; W I T N E S S E T H :

WHEREAS, pursuant to this Site and Facility Lease, the City proposes to lease those certain parcels of real property situated in the City of Upland, San Bernardino County, State of California, more particularly described in Exhibit A attached hereto and made a part hereof (the “Site”), and those certain improvements thereon, more particularly described in Exhibit B hereto (the “Facility” and, with the Site, the “Property”), to the Authority, all for the purpose of enabling the City to refinance a portion General Fund’s share of the City’s unfunded accrued liability with California Public Employees’ Retirement System (the “Project”), as defined in the Lease Agreement; and
WHEREAS, the Authority proposes to lease the Property back to the City pursuant to that certain Lease Agreement, dated April 1, 2022, a memorandum of which is recorded concurrently herewith (the “Lease Agreement”); and
WHEREAS, the City possesses statutory authority to lease the Property and its governing body has duly authorized the execution and delivery of the Lease Agreement and this Site and Facility Lease.

NOW THEREFORE, for and in consideration of the premises and covenants and conditions hereinafter contained, the parties agree as follows:

Section 1. Definitions. Capitalized terms used, but not otherwise defined, in this Site and Facility Lease shall have the meanings ascribed to them in the Lease Agreement.

Section 2. Site and Facility Lease. The City hereby leases to the Authority and the Authority hereby leases from the City, on the terms and conditions hereinafter set forth, the Property.

Section 3. Term. The term of this Site and Facility Lease shall commence on the Closing Date, and shall end on October 1, 2037 unless such term is extended or sooner terminated as hereinafter provided. If, on October 1, 2037 the aggregate amount of Lease Payments (as defined in and as payable under the Lease Agreement) shall not have been paid by reason of abatement, default or otherwise, or provision shall not have been made for their payment in accordance with the Lease Agreement, then the term of this Site and Facility Lease shall be extended until such Lease Payments shall be fully paid or provision made for such payment, but in no event later than October 1, 2037. If, prior to October 1, 2037 all Lease Payments shall be fully paid or provision made for such payment in accordance with the Lease Agreement, the term of this Site and Facility Lease shall end.

46708.00807\34721031.3

2 Section 4. Advance Rental Payment. The City agrees to lease the Property to the Authority in consideration of the payment by the Authority of an advance rental payment of $20,750,000.

Section 5. Purpose. The Authority shall use the Property solely for the purpose of leasing the Property to the City pursuant to the Lease Agreement and for such purposes as may be incidental thereto; provided, however, that in the event of default by the City under the Lease Agreement, the Authority and its assigns may exercise the remedies provided in the Lease Agreement.

Section 6. City’s Interest in the Property. The City covenants that it is the owner in fee of the Property.

Section 7. Assignments and Subleases. Unless the City shall be in default under the Lease Agreement, the Authority may not assign its rights under this Site and Facility Lease or sublet the Property, except as provided in the Lease Agreement. If the City is in default under the Lease Agreement, the Authority (including its successors and assigns under the Lease Agreement) may fully and freely assign and sublease the Property or any portion thereof, this Site and Facility Lease and the Lease Agreement.

Section 8. Right of Entry. The City reserves the right for any of its duly authorized representatives to enter upon the Property at any reasonable time to inspect the same or to make any repairs, improvements or changes necessary for the preservation thereof.

Section 9. Termination. The Authority agrees, upon the termination of this Site and Facility Lease, to quit and surrender the Property in the same good order and condition as the same were in at the time of commencement of the term hereunder, reasonable wear and tear excepted, and agrees that any permanent improvements and structures existing upon the Site at the time of the termination of this Site and Facility Lease shall remain thereon and title thereto shall vest in the City.

Section 10. Default. In the event the Authority shall be in default in the performance of any obligation on its part to be performed under the terms of this Site and Facility Lease, which default continues for thirty (30) days following notice and demand for correction thereof to the Authority, the City may exercise any and all remedies granted by law, except that no merger of this Site and Facility Lease and of the Lease Agreement shall be deemed to occur as a result thereof and the City shall have no right to terminate this Site and Facility Lease as a remedy for such default. Notwithstanding the foregoing, so long as the Lease Agreement remains in effect, the City will continue to pay the Lease Payments to the Authority.

In the event of the occurrence of an Event of Default under the Lease Agreement, the Authority may (a) exercise the remedies provided in the Lease Agreement, (b) use the Property for any lawful purpose, subject to any applicable legal limitations or restrictions, and (c) exercise all options provided herein.

Section 11. Quiet Enjoyment. The Authority, at all times during the term of this Site and Facility Lease, shall peaceably and quietly have, hold and enjoy all of the Property subject to the provisions of the Lease Agreement.

46708.00807\34721031.3

3 Section 12. Waiver of Personal Liability. All liabilities under this Site and Facility Lease on the part of the Authority are solely liabilities of the Authority and the City hereby releases each and every director, officer, employee and agent of the Authority of and from any personal or individual liability under this Site and Facility Lease. No director, officer, employee or agent of the Authority shall at any time or under any circumstances be individually or personally liable under this Site and Facility Lease for anything done or omitted to be done by the Authority hereunder.

Section 13. Taxes. All assessments of any kind or character and all taxes, including possessory interest taxes, levied or assessed upon the Property or the Authority’s interest in the Property created by this Site and Facility Lease (including both land and improvements) will be paid by the City in accordance with the Lease Agreement.

Section 14. Eminent Domain. In the event the whole or any part of the Property is taken by eminent domain proceedings, the interest of the Authority shall be recognized and is hereby determined to be the amount of the then unpaid principal component of the Lease Payments, any then unpaid interest component of the Lease Payments and any premium due with respect to the prepayment of Lease Payments to the date such amounts are remitted to the Authority or its assignee, and, subject to the provisions of the Lease Agreement, the balance of the award, if any, shall be paid to the City. The City hereby waives, to the extent permitted by law, any and all rights that it has or may hereafter have to acquire the interest of the Authority in and to the Property through the eminent domain powers of the City. However, the City hereby agrees, to the extent permitted by law, that the compensation to be paid in any condemnation proceedings brought by or on behalf of the City with respect to the Property shall be in an amount not less than the total unpaid principal component of Lease Payments, the interest component of Lease Payments accrued to the date of payment of all Lease Payments and any premium due with respect to the prepayment of Lease Payments under the Lease Agreement.

Section 15. Use of the Proceeds. The City and the Authority hereby agree that the lease to the Authority of the City’s right and interest in the Property pursuant to Section 2 serves the public purposes of the City.

Section 16. Partial Invalidity. If any one or more of the terms, provisions, covenants or conditions of this Site and Facility Lease shall, to any extent, be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding, order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Site and Facility Lease shall be affected thereby, and each provision of this Site and Facility Lease shall be valid and enforceable to the fullest extent permitted by law.

Section 17. Notices. All notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder by either party to the other shall be in writing and shall be sufficiently given and served upon the other party if delivered personally or if mailed by United States registered mail, return receipt requested, postage prepaid, at the addresses set forth in the Lease Agreement, or to such other addresses as the respective parties may from time to time designate by notice in writing.

46708.00807\34721031.3

4 Section 18. Binding Effect. This Site and Facility Lease shall inure to the benefit of and shall be binding upon the City and the Authority and their respective successors and assigns. The Assignee is hereby made a third party beneficiary hereunder with all rights of a third party beneficiary.

Section 19. Amendment. This Site and Facility Lease may not be amended except as permitted under the Lease Agreement.

Section 20. Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Site and Facility Lease.

Section 21. Applicable Law. This Site and Facility Lease shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and performed in California.

Section 22. No Merger. Neither this Site and Facility Lease, the Lease Agreement nor any provisions hereof or thereof shall be construed to effect a merger of the title of the City to the Property under this Site and Facility Lease and the City’s leasehold interest therein under the Lease Agreement.

Section 23. Execution in Counterparts. This Site and Facility Lease may be executed in any number of counterparts, each of which shall be deemed to be an original but all together shall constitute but one and the same instrument.

(Signature page follows)

46708.00807\34721031.3

S-1

IN WITNESS WHEREOF, the City and the Authority have caused this Site and Facility Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written.

CITY OF UPLAND
By
Michael Blay
City Manager
Attest:

Londa Bock-Helms
Finance Officer

CITY OF UPLAND FINANCING

AUTHORITY
By
Michael Blay
Executive Director

Attest:

Londa Bock-Helms
Treasurer

-Signature Page-
Site and Facility Lease

46708.00807\34721031.3

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA )
)
COUNTY OF ________________ )
On ___________________, before me, _____________________________, a Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature _____________________________ (Seal)

46708.00807\34721031.3

A-1

EXHIBIT A

DESCRIPTION OF THE SITE

THE LAND REFERRED TO HEREIN BELOW IS SITUATED UPLAND, IN THE

COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

THAT PORTION OF PARCEL 2 OF PARCEL MAP NO. 17791, IN THE CITY OF

UPLAND, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 214, PAGES 89 AND 90 OF PARCEL MAPS, RECORDS OF SAID COUNTY.

EXCEPTING THEREFROM A PORTION OF LAND DESCRIBED IN THE
QUITCLAIM DEED RECORDED JULY 21, 2017 AS INSTRUMENT NO. 2017-0296833 OF OFFICIAL RECORDS.

APN: 1046-381-12-0-000

46708.00807\34721031.3

B-1

EXHIBIT B

DESCRIPTION OF THE FACILITY
 City Hall
 Main Library
 Carnegie Library

46708.00807\34817203.5

LEASE AGREEMENT
by and between

CITY OF UPLAND FINANCING AUTHORITY,
as Sublessor
and

CITY OF UPLAND,
as Sublessee
Dated April 1, 2022

46708.00807\34817203.5

TABLE OF CONTENTS

Page

i

ARTICLE I DEFINITIONS; RULES OF INTERPRETATION ............................................ 1 Section 1.01. Definitions ........................................................................................................ 1 Section 1.02. Interpretation. ................................................................................................... 3 ARTICLE II COVENANTS, REPRESENTATIONS AND WARRANTIES ........................ 4 Section 2.01. Covenants, Representations and Warranties of the City .................................. 4 Section 2.02. Covenants, Representations and Warranties of the Authority .......................... 5 ARTICLE III DEPOSIT AND APPLICATION OF FUNDS ................................................... 6 Section 3.01. Deposit of and Application of Funds ................................................................ 6 ARTICLE IV LEASE OF PROPERTY; LEASE PAYMENTS ............................................... 6 Section 4.01. Sublease of Property by the Authority Back to the City. ................................. 6 Section 4.02. Term ................................................................................................................. 6 Section 4.03. Lease Payments. ............................................................................................... 7 Section 4.04. Quiet Enjoyment ............................................................................................... 9 Section 4.05. Title................................................................................................................... 9 Section 4.06. Release of Excess Property .............................................................................. 9 Section 4.07. Substitution of Property .................................................................................. 10 ARTICLE V MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS ........ 11 Section 5.01. Maintenance, Utilities, Taxes and Assessments ............................................. 11 Section 5.02. Modification of Property ................................................................................ 12 Section 5.03. Public Liability Insurance............................................................................... 12 Section 5.04. Casualty Insurance .......................................................................................... 12 Section 5.05. Rental Interruption Insurance ......................................................................... 12 Section 5.06. Worker’s Compensation Insurance ................................................................ 13 Section 5.07. Recordation Hereof ........................................................................................ 13 Section 5.08. Insurance Net Proceeds; Form of Policies...................................................... 13 Section 5.09. Installation of City’s Personal Property ......................................................... 13 Section 5.10. Liens ............................................................................................................... 14 Section 5.11. Advances ........................................................................................................ 14 Section 5.12. Environmental Covenants. ............................................................................. 14 ARTICLE VI EMINENT DOMAIN; USE OF NET PROCEEDS ......................................... 15 Section 6.01. Eminent Domain ............................................................................................. 15 Section 6.02. Application of Net Proceeds. .......................................................................... 15 Section 6.03. Abatement of Lease Payments in the Event of Damage or Destruction ........ 17 ARTICLE VII OTHER COVENANTS OF THE CITY ........................................................... 17 Section 7.01. Disclaimer of Warranties ................................................................................ 17 Section 7.02. Access to the Property; Grant and Conveyance of Right of Entry ................. 18 Section 7.03. Release and Indemnification Covenants ........................................................ 18 Section 7.04. Assignment by the Authority.......................................................................... 18

46708.00807\34817203.5

ii

Section 7.05. Assignment Agreement and Subleasing by the City ...................................... 19 Section 7.06. Amendment of Lease Agreement ................................................................... 19 Section 7.07. Records and Accounts .................................................................................... 19 Section 7.08. Observance of Laws and Regulations ............................................................ 19 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES ................................................... 20 Section 8.01. Events of Default Defined .............................................................................. 20 Section 8.02. Remedies on Default ...................................................................................... 21 Section 8.03. No Remedy Exclusive .................................................................................... 22 Section 8.04. Agreement to Pay Attorneys’ Fees and Expenses .......................................... 22 Section 8.05. No Additional Waiver Implied by One Waiver ............................................. 23 Section 8.06. Judicial Reference. ......................................................................................... 23 ARTICLE IX PREPAYMENT OF LEASE PAYMENTS ...................................................... 24 Section 9.01. Security Deposit ............................................................................................. 24 Section 9.02. Optional Prepayment. ..................................................................................... 25 Section 9.03. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain ........................................................................................................... 25 ARTICLE X MISCELLANEOUS ......................................................................................... 25 Section 10.01. Notices .......................................................................................................... 25 Section 10.02. Binding Effect .............................................................................................. 26 Section 10.03. Severability ................................................................................................... 26 Section 10.04. Net-net-net Lease .......................................................................................... 26 Section 10.05. Further Assurances and Corrective Instruments........................................... 26 Section 10.06. Execution in Counterparts ............................................................................ 26 Section 10.07. Applicable Law ............................................................................................ 26 Section 10.08. Captions ........................................................................................................ 26

EXHIBIT A - DESCRIPTION OF THE SITE ......................................................................... A-1 EXHIBIT B - DESCRIPTION OF THE FACILITY ................................................................B-1 EXHIBIT C - SCHEDULE OF LEASE PAYMENTS..............................................................C-1 EXHIBIT D - MEMORANDUM OF LEASE AGREEMENT ................................................ D-1

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1 LEASE AGREEMENT
THIS LEASE AGREEMENT (this “Lease Agreement”), dated April 1, 2022, is by and between the CITY OF UPLAND FINANCING AUTHORITY, a public agency existing under the laws of the State of California, as lessor (the “Authority”), and the CITY OF UPLAND, a general law city and municipal law corporation, duly organized and existing under and by virtue of the laws of the State of California, as lessee (the “City”); W I T N E S S E T H :

WHEREAS, pursuant to that certain Site and Facility Lease, dated April 1, 2022 (the “Site and Facility Lease”), the City has leased those certain parcels of real property situated in the City of Upland, San Bernardino County, State of California, more particularly described in Exhibit “A” attached hereto and made a part hereof (the “Site”), and those certain improvements thereon, more particularly described in Exhibit “B” hereto (the “Facility” and, with the “Site”, the “Property”), to the Authority, all for the purpose of enabling the City to refinance a portion of the General Fund’s share of the City’s unfunded accrued liability (“UAL”) with California Public Employees’ Retirement System (the “Project”); and
WHEREAS, the Authority proposes to lease the Property back to the City pursuant to this Lease Agreement; and
WHEREAS, in consideration of the right of possession of, and the continued quiet use and enjoyment of, the Property during each Rental Period under this Lease Agreement, the City agrees to make certain Lease Payments (as hereinafter defined); and WHEREAS, the City and the Authority have agreed to enter into this Lease Agreement providing for Lease Payments with an aggregate principal component in the amount of $20,750,000 for the purpose of implementing the financing transactions described above; and WHEREAS, the City and the Authority agree to mutually cooperate now and hereafter, to the extent possible, in order to sustain the intent of this Lease Agreement and the bargain of both parties hereto.

AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and the covenants hereinafter contained, the parties hereto hereby formally covenant, agree and bind themselves as follows:

ARTICLE I

DEFINITIONS; RULES OF INTERPRETATION
Section 1.01. Definitions. All terms defined in this Section 1.01 have the meanings herein specified for all purposes of this Lease Agreement.

46708.00807\34817203.5

2 “Additional Payments” means the amounts specified as such in Section 4.03(b) of this Lease Agreement.
“Authority” means the City of Upland Financing Authority. “Bond Counsel” means (a) Best Best & Krieger LLP, or (b) any other attorney or firm of attorneys of nationally recognized expertise with respect to legal matters relating to obligations the interest on which is excludable from gross income under Section 103 of the Tax Code. “Business Day” means a day other than a Saturday, Sunday or legal holiday, on which banking institutions are not closed in the State.
“City” means the City of Upland, California, a municipal corporation and general law city organized and existing under the laws of the State.
“City Representative” means the Mayor, the City Manager, Assistant City Manager, the Finance Officer, or the designee of any such official, or any other person authorized by resolution delivered to the Authority to act on behalf of the City under or with respect to the Site and Facility Lease and this Lease Agreement.
“Closing Date” means the date this Lease Agreement or a memorandum thereof is recorded in the office of the County Recorder of the County of San Bernardino. “Contract” means any indenture, trust agreement, contract, agreement (other than this Lease Agreement), other contractual restriction, lease, mortgage or instrument. “Default Rate” means 4.00%.
“Event of Default” means any of the events of default as defined in Section 8.01. “Facility” means those certain existing facilities more particularly described in Exhibit “B” to the Site and Facility Lease and in Exhibit “B” to this Lease Agreement. “Federal Securities” means any direct general non-callable obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), or obligations the timely payment of principal of and interest on which are directly guaranteed by the United States of America. “Fiscal Year” means each twelve-month period during the Term of this Lease Agreement commencing on July 1 in any calendar year and ending on June 30 in the next succeeding calendar year, or any other twelve-month period selected by the City as its fiscal year period. “Lease Agreement” means this Lease Agreement, dated April 1, 2022, between the Authority and the City.
“Lease Payment Date” means October 1 and April 1 in each year, commencing October 1, 2022, and continuing to and including the date on which the Lease Payments are paid in full.

46708.00807\34817203.5

3 “Lease Payments” means all payments required to be paid by the City under Section 4.04, including any prepayment thereof under Sections 9.02 or 9.03. “Net Proceeds” means any insurance or eminent domain award (including any proceeds of sale to a governmental entity under threat of the exercise of eminent domain powers), paid with respect to the Property, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof.
“Permitted Encumbrances” means, as of any time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may permit to remain unpaid under Article V of this Lease Agreement; (b) the Site and Facility Lease and this Le ase Agreement; (c) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (d) the exceptions disclosed in the title insurance policy issued with respect to the Property as of the Closing Date; and (e) any easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record and which the City certifies in writing will not materially impair the use of t he Property for its intended purposes.
“Project” means the Project as described in the recitals of this Lease Agreement. “Property” means, collectively, the Site and the Facility. “Purchaser” means, collectively, the Sewer Fund and the Water Fund, of the City of Upland..
“Rental Period” means each period during the Term of the Lease commencing on and including October 1 in each year and extending to and including the next succeeding October 1.

The first Rental Period begins on the Closing Date and ends on October 1, 2037. “Site” means that certain real property more particularly described in Exhibit “A” to the Site and Facility Lease and in Exhibit “A” to this Lease Agreement. “Site and Facility Lease” means the Site and Facility Lease, dated as of April 1, 2022, by and between the City, as lessor, and the Authority, as lessee, together with any duly authorized and executed amendments thereto.
“State” means the State of California.
“Term of this Lease Agreement” or “Term” means the time during which this Lease Agreement is in effect, as provided in Section 4.02.

Section 1.02. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and include the neuter, masculine or feminine gender, as appropriate.

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4 (b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof.
(c) All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Lease Agreement; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Lease Agreement as a whole and not to any particular Article, Section or subdivision hereof.

ARTICLE II

COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 2.01. Covenants, Representations and Warranties of the City. The City makes the following covenants, representations and warranties to the Authority as of the date of the execution and delivery of this Lease Agreement:
(a) Due Organization and Existence. The City is a municipal corporation and general law city, duly organized and existing under and by virtue of the laws of the State, has full legal right, power and authority under the laws of the State to enter into the Site and Facility Lease and this Lease Agreement and to carry out and consummate all transactions on its part contemplated hereby and thereby, and by proper action the City has duly authorized the execution and delivery by the City of the Site and Facility Lease and this Lease Agreement.
(b) Due Execution. The representative of the City executing the Site and Facility Lease and this Lease Agreement has been fully authorized to execute the same by a resolution duly adopted by the City Council of the City. (c) Valid, Binding and Enforceable Obligations. The Site and Facility Lease and this Lease Agreement have been duly authorized, executed and delivered by the City and constitute the legal, valid and binding agreements of the City enforceable against the City in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of the Site and Facility Lease and this Lease Agreement, the consummation of the transactions therein and herein contemplated and the fulfillment of or compliance with the terms and conditions thereof and hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the City is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by the

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5 Site and Facility Lease or this Lease Agreement or the financial condition, assets, properties or operations of the City.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the City or of the voters of the City, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of the Site and Facility Lease and this Lease Agreement, or the consummation of any transaction therein and herein contemplated, except as have been obtained or made and as are in full force and effect. (f) Sufficient Funds. The City reasonably believes that sufficient funds can be obtained to make all Lease Payments and all other amounts required to be paid pursuant to this Lease Agreement.
(g) No Defaults. The City has never non-appropriated or defaulted under any of its payment or performance obligations or covenants, either under any financing lease of the same general nature as this Lease Agreement, or under any of its bonds, notes, or other debt obligations.
(h) Fee Title. The City is the owner in fee of title to the Property. No lien or encumbrance on the Property materially impairs the City’s use of the Property for the purposes for which it is, or may reasonably be expected to be, held. (i) Use of the Property, Essentiality. During the term of this Lease Agreement, the Property will be used by the City only for the purpose of performing one or more governmental or proprietary functions of the City consistent with the permissible scope of the City’s authority. The Property is essential to the City’s efficient and economic operations and the lease thereof for use by the City is in the best interest of the City. (j) Flooding Risk. The Property is not located in a flood hazard area and has never been subject to material damage from flooding.
(k) Value of Property. The value of the Property (real property replacement cost) is not less than $21,944,300 .

Section 2.02. Covenants, Representations and Warranties of the Authority. The Authority makes the following covenants, representations and warranties to the City as of the date of the execution and delivery of this Lease Agreement:
(a) the Authority has been duly organized and is validly existing as a corporation under the laws of the State of California with full corporate power to enter into and undertake its duties and obligations hereunder and has sufficient knowledge and experience in financial and business matters, including purchase and ownership of tax- exempt municipal obligations, to be able to evaluate the economic risks and merits of the investment represented by the Lease;

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6 (b) the execution, delivery and performance of this Lease Agreement and the Site and Facility Lease have been duly authorized by all necessary corporate actions on the part of the Authority and do not require any further approvals or consents; (c) the execution, delivery and performance of this Lease Agreement and the Site and Facility Lease do not and will not result in any breach of or constitute a default under any indenture, mortgage, contract, agreement or instrument to which the Authority is a party by which it or its property is bound;
(d) there is no pending or, to the knowledge of the Authority, threatened action or proceeding before any court or administrative agency which will materially adversely affect the ability of the Authority to perform its obligations under this Lease Agreement and the Site and Facility Lease; and
(e) the Authority will not mortgage or encumber the Property or the Lease Agreement or assign this Lease Agreement or its rights to receive Lease Payments hereunder, except as expressly permitted herein or in the Site and Facility Lease.

ARTICLE III

DEPOSIT AND APPLICATION OF FUNDS
Section 3.01. Deposit of and Application of Funds. On the Closing Date, the Authority shall cause the amount of $20,750,000 to be used to fund the Project.

ARTICLE IV

LEASE OF PROPERTY; LEASE PAYMENTS
Section 4.01. Sublease of Property by the Authority Back to the City. (a) The Authority hereby subleases the Property to the City, and the City hereby subleases the Property from the Authority, upon the terms and conditions set forth in this Lease Agreement.
(b) The leasing of the Property by the City to the Authority pursuant to the Site and Facility Lease shall not affect or result in a merger of the City’s subleasehold estate pursuant to this Lease Agreement and its fee estate as lessor under the Site and Facility Lease.

Section 4.02. Term. The Term of this Lease Agreement commences on the Closing Date and ends on October 1, 2037, or the date on which all of the Lease Payments have been paid in full. If on October 1, 2037, the Lease Payments payable hereunder shall have been abated at any time and for any reason and not otherwise paid from rental interruption insurance or other sources, or the City shall have defaulted in its payment of Lease Payments here under or any Event of Default has occurred and continues without cure by the City, then the term of this Lease Agreement shall be extended for the actual period of abatement or for so long as the default remains uncured, as necessary to accommodate the final payment of all Lease Payments due hereunder, not to exceed

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7 ten (10) years. The provisions of this Section 4.02 are subject to the provisions of Section 6.01 relating to the taking in eminent domain of the Property or any portion thereof.

Section 4.03. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Sections 6.01 and 6.03 and the provisions of Article IX, the City agrees to pay to the Authority, its successors and assigns, the Lease Payments (denominated into components of principal and interest) in the respective amounts specified in Exhibit “C” attached hereto (including any supplements thereto) and by this reference incorporated herein, to be due and payable in immediately available funds on each of the respective Lease Payment Dates specified in Exhibit “C.” The Lease Payments payable in any Rental Period with respect to the Property shall be for the use of the Property during such Rental Period. The interest components of the Lease Payments have been calculated based on an interest rate of 1.92% per annum, on the basis of a 360-day year of twelve 30-day months; provided, however, has occurred and continues without cure by the City, then the rate shall be the Default Rate. The City understands that the Authority has assigned its right to receive the Lease Payments to the Purchaser and that the Purchaser will send an invoice to the City in advance of each Lease Payment Date. (b) Additional Payments. In addition to the Lease Payments set forth herein, the City agrees to pay as Additional Payments all of the following:
(i) all taxes and assessments of any nature whatsoever, including but not limited to excise taxes, ad valorem taxes, ad valorem and specific lien special assessments and gross receipts taxes, if any, levied upon the Property or upon any interest of the Authority therein or in this Lease Agreement; provided, however, the City may, at the City’s expense and in its name, in good faith contest any such taxes and assessments and, in the event of such contest, may permit such taxes and assessments to remain unpaid during the period of such contest and appeal therefrom unless the Authority shall notify the City that, in the opinion of Bond Counsel, by nonpayment of any such items, the interest of the Authority in the Property will be materially endangered or the Property, or any portion thereof, will be subject to loss or forfeiture, in which event the City shall promptly pay such taxes and assessments or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority; (ii) insurance premiums, if any, on all insurance required under the provisions of Article V hereof; and
(iii) any other reasonable fees, costs or expenses incurred by the Authority in connection with the execution, performance or enforcement of this Lease Agreement or any of the transactions contemplated hereby or related to the Property, including, without limitation, any amounts which may become due; provided, however, the City shall not be responsible for any costs incurred by the Authority associated with any assignment of this Lease Agreement.

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8 Amounts constituting Additional Payments payable hereunder shall be paid by the City directly to the person or persons to whom such amounts shall be payable. The City shall pay all such amounts when due or at such later time as such amounts may be paid without penalty or, in any other case, within thirty (30) days after notice in writing from the Authority to the City stating the amount of Additional Payments then due and payable and the purpose thereof. (c) Effect of Prepayment. If the City prepays all Lease Payments in full under Sections 9.02 or 9.03, the City’s obligations under this Section will thereupon cease and terminate. If the City prepays the Lease Payments in part but not in whole under Section

9.03, the principal components of the remaining Lease Payments will be reduced on a pro rata basis; and the interest component of each remaining Lease Payment will be reduced on a pro rata basis.
(d) Rate on Overdue Payments. If the City fails to make any of the payments required in this Section 4.03, the payment in default will continue as an obligation of the City until the amount in default has been fully paid, and the City agrees to pay the same with interest thereon, from the date of default to the date of payment at the rate of 12% per annum or any lesser maximum legal rate.
(e) Fair Rental Value. The Lease Payments coming due and payable during each Rental Period constitute the total rental for the Property for such Rental Period, and will be paid by the City in each Rental Period for and in consideration of the right of the use and occupancy of, and the continued quiet use and enjoyment of the Property during each Rental Period. The parties hereto have agreed and determined that the total Lease Payments due during each Rental Period are not in excess of the fair rental value of the Property during such Rental Periods. In making this determination, consideration has been given to the estimated fair market value of the Property, the estimated replacement cost of the Property, the uses and purposes which may be served by the Property and the benefits therefrom which will accrue to the City and the general public. (f) Source of Payments; Budget and Appropriation. The Lease Payments are payable from any source of legally available funds of the City, subject to the provisions of Sections 6.01, 6.03 and 9.01. The City covenants to take such action as may be necessary to include all Lease Payments in each of its annual budgets during the Term of this Lease Agreement and to make the necessary annual appropriations for all such Lease Payments.

The covenants on the part of the City herein contained constitute duties imposed by law and it is the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease Agreement agreed to be carried out and performed by the City. (g) Allocation of Lease Payments. All Lease Payments received shall be applied first to the interest components of the Lease Payments due hereunder, then to the principal components of the Lease Payments due hereunder, but no such application of any payments that are less than the total rental due and owing shall be deemed a waiver of any default hereunder.

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9 (h) No Offsets. Notwithstanding any dispute between the Authority and the City, the City shall make all Lease Payments when due without deduction or offset of any kind and shall not withhold any Lease Payments pending the final resolution of such dispute.
(i) Payments under this Lease Agreement. The Authority hereby directs the City, and the City hereby agrees, to pay to the Purchaser (or to its assignees as directed pursuant to Section 7.04 hereof) all payments payable by the City under this Section 4.03 and all amounts payable by the City under Article IX.

Section 4.04. Quiet Enjoyment. Throughout the Term of this Lease Agreement, the Authority will provide the City with quiet use and enjoyment of the Property and the City will peaceably and quietly have and hold and enjoy the Property, without suit, trouble or hindrance from the Authority, except as expressly set forth in this Lease Agreement. The Authority will, at the request of the City and at the City’s cost, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Authority may lawfully do so.

Notwithstanding the foregoing, the Authority has the right to inspect the Property as provided in Sections 5.12(c) and 7.02.

Section 4.05. Title. At all times during the Term of this Lease Agreement, the City shall hold title to the Property, including all additions which comprise fixtures, repairs, replacements or modifications thereto, subject to Permitted Encumbrances and subject to the provisions of Section

7.02. Upon the termination of this Lease Agreement (other than under Section 8.02(b) hereof), all right, title and interest of the Authority in and to the Property shall be transferred to and vested in the City. Upon the payment in full of all Lease Payments allocable to the Property, or upon the deposit by the City of security for such Lease Payments as provided in Section 9.01, all right, title and interest of the Authority in and to the Property shall be transferred to and vested in the City.

The Authority agrees to take any and all steps and execute and record any and all documents reasonably required by the City to consummate any such transfer.

Section 4.06. Release of Excess Property. The City may, at any time and from time to time, release any portion of the Property (the “Released Property”) from this Lease Agreement, with the prior written consent of the Authority, which consent shall be at the Authority’s sole discretion, and upon satisfaction of all of the following requirements which are conditions precedent to such release:
(a) The City shall certify to the Authority that no Event of Default has occurred and is continuing, and no event giving rise to an abatement of Lease Payments under Section 6.03 has occurred or is continuing with respect to the Property to be remaining following release of the Released Property;
(b) The City shall file with the Authority, and cause to be recorded in the office of the San Bernardino County Recorder, an amendment to this Lease Agreement which deletes the Released Property from the description of the Property;

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10 (c) The City shall file with the Authority a written certificate of the City stating the City’s determination that the estimated fair rental value, for each remaining Rental Period and in the aggregate, of the Property remaining after release of the Released Property is at least equal to the remaining Lease Payments for each remaining Rental Period and in the aggregate; and
(d) The City shall file with the Authority such other information, documents and instruments as the Authority shall reasonably request, including (if requested by the Authority) evidence of the insurable value of the Property to be remaining following release of the Released Property, indicating that such value is in excess of the then unpaid principal component of the Lease Payments and such endorsements to the title policy delivered on the Closing Date.

Upon the satisfaction of all such conditions precedent, the Term of this Lease Agreement will thereupon end as to the Released Property. The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release. The Authority and the City shall execute, deliver and cause to be recorded all documents required to discharge this Lease Agreement of record against the Released Property.

Section 4.07. Substitution of Property.

The City may at any time and from time to time, with the prior written consent of the Authority, substitute other real property (the “Substitute Property”) for the Property, or any portion thereof (the “Former Property”), provided that the City satisfies all of the following requirements which are conditions precedent to such substitution:
(a) No Event of Default shall have occurred and be continuing and no event giving rise to an abatement of Lease Payments under Section 6.03 hereof shall have occurred and be continuing with respect to the Substitute Property; (b) The City shall file with the Authority, and cause to be recorded in the office of the San Bernardino County Recorder sufficient memorialization of, an amendment of the Lease Agreement which adds to Exhibit “B” thereto a description of such Substitute Property and deletes therefrom the description of such Former Property; (c) The City shall certify in writing to the Authority that such Substitute Property serves the municipal purposes of the City and constitutes property which the City is permitted to lease under the Laws of the State of California, and has been determined to be essential to the proper, efficient and economic operation of the City and to serve an essential governmental function of the City;
(d) The Substitute Property shall not cause the City to violate any of its covenants, representations and warranties made in this Lease Agreement; (e) The City shall file with the Authority an appraisal or other written documentation which establishes that the fair market value and the fair rental value of the Substitute Property are at least equal to the present value of the remaining Lease Payments in the aggregate and for each remaining Rental Period, respectively, and that the useful life

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11 of the Substitute Property at least equals the lesser of (i) the useful life of the Former Property; or (ii) the final Lease Payment Date of the Lease Payments allocable thereto; and (f) In the event of damage or destruction of the Leased Property from earthquake or other uninsured peril, the City shall substitute under this Lease Agreement other unencumbered real property of a value and useful life not less than the outstanding principal component of the Lease Payments and the remaining term of this Lease Agreement.

Upon the satisfaction of all such conditions precedent, the term of the Lease Agreement shall thereupon end as to the Former Property and shall thereupon commence as to the Substitute Property, and all references to the Former Property shall apply with full force and effect to the Substitute Property. The City shall not be entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such substitution. The Authority and the City shall execute, deliver and cause to be recorded all documents required to discharge the Lease Agreement of record against the Former Property.

ARTICLE V

MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS
Section 5.01. Maintenance, Utilities, Taxes and Assessments. Throughout the Term of this Lease Agreement, as part of the consideration for the rental of the Property, all improvement, repair and maintenance of the Property are the sole responsibility of the City, and the City will pay for or otherwise arrange for the payment of all utility services supplied to the Property, which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Property resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof. In exchange for the Lease Payments herein provided, the Authority agrees to provide only the Property, as hereinbefore more specifically set forth. The City waives the benefits of subsections 1 and 2 of Section 1932, Section 1933(4) and Sections 1941 and 1942 of the California Civil Code, but such waiver does not limit any of the rights of the City under the terms of this Lease Agreement.

The City will pay or cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the City affecting the Property or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City is obligated to pay only such installments as are required to be paid during the Term of this Lease Agreement as and when the same become due.

The City may, at the City’s expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority shall notify the City that, in its reasonable opinion, by nonpayment of any such items the interest of the Authority in the Property will be materially endangered or the Property or any part thereof will be subject to loss or forfeiture, in which event

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12 the City will promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority.

The City shall promptly notify the Authority of any tax, assessment, utility or other charge it elects to contest.

Section 5.02. Modification of Property. The City has the right, at its own expense, to make additions, modifications and improvements to the Property or any portion thereof. All additions, modifications and improvements to the Property will thereafter comprise part of the Property and become subject to the provisions of this Lease Agreement. Such additions, modifications and improvements may not in any way damage the Property, or cause the Property to be used for purposes other than those authorized under the provisions of state and federal law; and the Property, upon completion of any additions, modifications and improvements made thereto under this Section, must be of a value which is not substantially less than the value thereof immediately prior to the making of such additions, modifications and improvements.

Section 5.03. Public Liability Insurance. The City shall maintain or cause to be maintained throughout the Term of this Lease Agreement a standard comprehensive general liability insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents, employees and assigns. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Property. Such policy or policies must provide coverage with limits of at least $1,000,000 per occurrence, $3,000,000 in the aggregate, for bodily injury and property damage coverage, and excess liability umbrella coverage of at least $5,000,000, and in all events in form and amount (including any deductibles) satisfactory to the Authority. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City (including, with Authority’s prior written consent, a self-insurance program), and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance. The City will apply the proceeds of such liability insurance toward extinguishment or satisfaction of the liability with respect to which such proceeds have been paid.

Section 5.04. Casualty Insurance. The City will procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease Agreement, casualty insurance against loss or damage to all buildings situated on the Property and owned by the City, in an amount at least equal to the greater of the replacement value of the insured buildings and the aggregate principal amount of the Lease Payments outstanding, with a lender’s loss payable endorsement.

Such insurance must, as nearly as practicable, cover loss or damage by all “special form” perils.

Such insurance shall be subject to a deductible of not to exceed $250,000. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City (including, with the Purchaser’s prior written consent, a self-insurance program), and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance. The City will apply the Net Proceeds of such insurance as provided in Section 6.02.

Section 5.05. Rental Interruption Insurance. The City will procure and maintain, or cause to be procured and maintained, throughout the Term of this Lease Agreement, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of the Property

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13 and the improvements situated thereon as a result of any of the hazards covered in the insurance required by Section 5.04, in an amount at least equal to the maximum Lease Payments coming due and payable during any future twenty-four (24) month period. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance; provided that such rental interruption insurance shall not be self-insured by the City. The City will apply the Net Proceeds of such insurance towards the payment of the Lease Payments allocable to the insured improvements as the same becom e due and payable.

Section 5.06. Worker’s Compensation Insurance. If required by applicable California law, the City shall carry worker’s compensation insurance covering all employees on, in, near or about the Property and, upon request, shall furnish to the Authority certificates evidencing such coverage throughout the Term of this Lease Agreement. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City (including a self - insurance program), and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance.

Section 5.07. Recordation Hereof. On or before the Closing Date, the City shall, at its expense, cause this Lease Agreement, the Site and Facility Lease and the Assignment Agreement, or a memorandum hereof or thereof in form and substance approved by Bond Counsel, to be recorded in the office of the San Bernardino County Recorder with respect to the Property.

Section 5.08. Insurance Net Proceeds; Form of Policies. All insurance policies (or riders) required by this Article V and provided by third party insurance carriers shall be taken out and maintained with responsible insurance companies organized under the laws of one of the states of the United States and qualified to do business in the State, and shall contain a provision that the insurer shall not cancel or revise coverage thereunder without giving written notice to the insured parties at least ten days before the cancellation or revision becomes effective. Each insurance policy or rider required by Sections 5.03, 5.04 and 5.05 and provided by third party insurance carriers shall name the City and the Authority as insured parties and the Authority as loss payee and shall include a lender’s loss payable endorsement for the benefit of the Authority. In the case of coverage pursuant to Section 5.03, the Authority shall be added as an additional insured. Prior to the Closing Date, the City will deposit with the Authority policies (and riders and endorsements, if applicable) evidencing any such insurance procured by it, or a certificate or certificates of the respective insurers stating that such insurance is in full force and effect. Before the expiration of any such policy (or rider), the City will furnish to the Authority evidence that the policy has been renewed or replaced by another policy conforming to the provisions of this Article V unless such insurance is no longer obtainable, in which event the City shall notify the Authority of such fact.

Section 5.09. Installation of City’s Personal Property. The City may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon the Property. All such items shall remain the sole property of the City, in which the Authority has no interest, and may be modified or removed by the City at any time. The City must repair and restore any and all damage to the Property resulting from the installation, modification or removal of any such items. Nothing in this Lease Agreement prevents the City from purchasing or leasing items to be installed under this

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14 Section under a lease or conditional sale agreement, or subject to a vendor’s lien or security agreement, as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest may attach to any part of the Property.

Section 5.10. Liens. The City will not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Property, other than as herein contemplated and except for such encumbrances as the City certifies in writing to the Authority do not materially and adversely affect the leasehold estate in the Property hereunder and for which the Authority provides its prior written approval, which approval shall be at Authority’s sole discretion. Except as expressly provided in this Article V, the City will promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same shall arise at any time. The City will reimburse the Authority for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.

Section 5.11. Advances. If the City fails to perform any of its obligations under this Article V, the Authority may take such action as may be necessary to cure such failure, including the advancement of money, and the City shall be obligated to repay all such advances as additional rental hereunder, with interest at the rate set forth in Section 4.03(d).

Section 5.12. Environmental Covenants.
(a) Compliance with Laws; No Hazardous Substances. The City will comply with all Applicable Environmental Laws with respect to the Property and will not use, store, generate, treat, transport, or dispose of any Hazardous Substance thereon or in a manner that would cause any Hazardous Substance to later flow, migrate, leak, leach, or otherwise come to rest on or in the Property.
(b) Notification of Authority. The City will transmit copies of all notices, orders, or statements received from any governmental entity concerning violations or asserted violations of Applicable Environmental Laws with respect to the Property and any operations conducted thereon or any conditions existing thereon to the Authority, and the City will notify the Authority in writing immediately of any release, discharge, spill, or deposit of any Hazardous Substance that has occurred or is occurring that in any way affects or threatens to affect the Property, or the people, structures, or other property thereon, provided that no such notification shall create any liability or obli gation on the part of the Authority.
(c) Access for Inspection. The City will permit the Authority, its agents, or any experts designated by the Authority to have full access to the Property during reasonable business hours for purposes of such independent investigation of compliance with all Applicable Environmental Laws, provided that the Authority has no obligation to do so, or any liability for any failure to do so, or any liability should it do so.

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15 ARTICLE VI

EMINENT DOMAIN; USE OF NET PROCEEDS
Section 6.01. Eminent Domain. If all of the Property shall be taken permanently under the power of eminent domain or sold to a governmental entity threatening to exercise the power of eminent domain, the Term of this Lease Agreement shall cease as of the day possession shall be so taken. If less than all of the Property shall be taken permanently, or if all of the Property or any part thereof shall be taken temporarily under the power of eminent domain, (a) this Lease Agreement shall continue in full force and effect and shall not be te rminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (b) there shall be a partial abatement of Lease Payments in an amount equal to the application of the Net Proceeds of any eminent domain award to the prepayment of the Lease Payments hereunder, in an amount to be agreed upon by the City and the Authority such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portion of the Property.

Section 6.02. Application of Net Proceeds.
(a) From Insurance Award.
(i) Any Net Proceeds of insurance against damage to or destruction of any part of the Property collected by the City in the event of any such damage or destruction shall be deposited by the City promptly upon receipt thereof in a special fund with the Authority designated as the “Insurance and Condemnation Fund.” (ii) Within ninety (90) days following the date of such deposit, the City shall determine and notify the Authority in writing of its determination either (A) that the replacement, repair, restoration, modification or improvement of the Property is not economically feasible or in the best interest of the City and the Net Proceeds, together with other moneys available therefor, are sufficient to cause the prepayment of the principal components of all unpaid Lease Payments pursuant to Section 9.03 hereof, or (B) that all or a portion of such Net Proceeds are to be applied to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Property and the fair rental value of the Property following such repair, restoration, replacement, modification or improvement will at least equal the unpaid principal component of the Lease Payments.
(iii) In the event the City’s determination is as set forth in clause (A) of subparagraph (ii) above, such Net Proceeds shall be promptly applied to the prepayment of Lease Payments and other amounts pursuant to Section 9.03 of this Lease Agreement; provided, however, that in the event of damage or destruction of the Property in full, such Net Proceeds may be so applied only if sufficient, together with other moneys available therefor, to cause the prepayment of the principal components of all unpaid Lease Payments, all accrued and unpaid interest, prepayment premiums described in Section 9.02, and all other costs related to such prepayments pursuant to Section 9.03 of this Lease Agreement and otherwise such

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16 Net Proceeds shall be applied to the prompt replacement, repair, restoration, modification or improvement of the Property; provided further, however, that in the event of damage or destruction of the Property in part, such Net Proceeds may be applied to the prepayment of Lease Payments only if the resulting Lease Payments following such prepayment from Net Proceeds represent fair consideration for the remaining portions of the Property and otherwise such Net Proceeds shall be applied to the prompt replacement, repair, restoration, modification or improvement of the Property, evidenced by a certificate signed by a City Representative.
(iv) In the event the City’s determination is as set forth in clause (B) of subparagraph (ii) above, such Net Proceeds shall be applied to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Property by the City, and until the Property has been restored to its prior condition, the City shall not place any lien or encumbrance on the Property that is senior to this Lease Agreement without the prior written consent of the Authority, at its sole discretion.
(b) From Eminent Domain Award. If all or any part of the Property shall be taken by eminent domain proceedings (or sold to a government threatening to exercise the power of eminent domain) the Net Proceeds therefrom shall be deposited by the City in the Insurance and Condemnation Fund and shall be applied and disbursed as follows:
(i) If the City has given written notice to the Authority of its determination that (A) such eminent domain proceedings have not materially affected the operation of the Property or the ability of the City to meet any of its obligations with respect to the Property under this Lease Agreement, and (B) such proceeds are not needed for repair or rehabilitation of the Property, the City shall so certify to the Authority and the Authority, and the City shall credit such proceeds towards the prepayment of the Lease Payments pursuant to Section 9.03 of this Lease Agreement.
(ii) If the City has given written notice to the Authority and the Authority of its determination that (A) such eminent domain proceedings have not materially affected the operation of the Property or the ability of the City to meet any of its obligations with respect to the Property under this Lease Agreement, and (B) such proceeds are needed for repair, rehabilitation or replacement of the Property, the City shall so certify to the Authority, and the City shall apply such amounts for such repair or rehabilitation.
(iii) If (A) less than all of the Property shall have been taken in such eminent domain proceedings or sold to a government threatening the use of eminent domain powers, and if the City has given written notice to the Authority of its determination that such eminent domain proceedings have materially affected the operation of the Property or the ability of the City to meet any of its obligations with respect to the Property under the Lease Agreement or (B) all of the Property shall have been taken in such eminent domain proceedings, then the City shall

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17 credit such proceeds towards the prepayment of the Lease Payments pursuant to Section 9.03 of this Lease Agreement.
(iv) In making any determination under this Section 6.02(b), the City may, but shall not be required to, obtain at its expense, the report of an independent engineer or other independent professional consultant, a copy of which shall be filed with the Authority. Any such determination by the City shall be final. (c) From Title Insurance. The Net Proceeds from a title insurance award shall be deposited by the City in the Insurance and Condemnation Fund and credited towards the prepayment of Lease Payments required to be paid pursuant to Section 9.03 of this Lease Agreement.

Section 6.03. Abatement of Lease Payments in the Event of Damage or Destruction.

Lease Payments shall be abated during any period in which, by reason of damage or destruction, there is substantial interference with the use and occupancy by the City of the Property or any portion thereof to the extent to be agreed upon by the City and the Authority. The parties agree that the amounts of the Lease Payments under such circumstances shall not be less than the amounts of the unpaid Lease Payments as are then set forth in Exhibit “C,” unless such unpaid amounts are determined to be greater than the fair rental value of the portions of the Property not damaged or destroyed, based upon an appropriate method of valuation, in which event the Lease Payments shall be abated such that they represent said fair rental value. Such abatement shall continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction as evidenced by a certificate of a City Representative to the Authority. In the event of any such damage or destruction, this Lease Agreement shall continue in full force and effect and the City waives any right to terminate this Lease Agreement by virtue of any such damage and destruction. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this Section 6.03 to the extent that (a) the proceeds of rental interruption insurance or (b) amounts in the Insurance and Condemnation Fund are available to pay Lease Payments which would otherwise be abated under this Section 6.03, it being hereby declared that such proceeds and amounts constitute special funds for the payment of the Lease Payments.

ARTICLE VII

OTHER COVENANTS OF THE CITY
Section 7.01. Disclaimer of Warranties. THE AUTHORITY MAKES NO

AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS

TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY

PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF

THE PROPERTY OR ANY PORTION THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE PROPERTY OR ANY PORTION THEREOF. THE

CITY ACKNOWLEDGES THAT THE CITY LEASES THE PROPERTY AS-IS, IT BEING

AGREED THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. In no event is the Authority liable for incidental, indirect, special or consequential damages,

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18 in connection with or arising out of this Lease Agreement for the existence, furnishing, functioning or use of the Property by the City.

Section 7.02. Access to the Property; Grant and Conveyance of Right of Entry. The City agrees that the Authority, and the Authority’s successors or assigns, has the right at all reasonable times, following at least forty-eight (48) hours written notice provided to the City, to enter upon and to examine and inspect (to the extent permitted by law and public policy) the Property or any part thereof. The City further agrees that the Authority, and the Authority’s successors or assigns shall have such rights of access to the Property or any component thereof, following at least 48 hours written notice provided to the City, as may be reasonably necessary to cause the proper maintenance of the Property if the City fails to perform its obligations hereunder.

Neither the Authority nor any of its assigns has any obligation to cause such proper maintenance.

The City further grants, conveys and confirms to the Authority, for the use, benefit and enjoyment of the Authority, its successors in interest to the Property, including the Authority, and its sublessees, and their respective employees, invitees, agents, independent contractors, patrons, customers, guests and members of the public visiting the Property, a right of entry which shall be irrevocable for the Term of this Lease Agreement over, across and under the property of the City adjacent to the Property to and from the Property for the purpose of: (a) ingress, egress, passage or access to and from the Property by pedestrian or vehicular traffic; (b) installation, maintenance and replacement of utility wires, cables, conduits and pipes; and (c) other purposes and uses necessary or desirable for access to and from and for operation and maintenance of the Property.

Section 7.03. Release and Indemnification Covenants. To the extent permitted by law, the City hereby indemnifies the Authority, and its directors, officers, agents, employees, successors and assigns against all claims, losses and damages, including legal fees and expenses, arising out of (a) the use, maintenance, condition or management of, or from any work or thing done on the Property by the City or the City’s employees, agents, contractors, invitees or licensees, (b) any breach or default on the part of the City in the performance of any of its obligations under this Lease Agreement, (c) any negligence or willful misconduct of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Property, (d) any intentional misconduct or negligence of any sublessee of the City with respect to the Property, (e) the acquisition, construction, improvement and equipping of the Property, (f) the clean-up of any Hazardous Substances or toxic wastes from the Property, or (g) any claim alleging violation of any Applicable Environmental Laws, or the authorization of payment of the costs thereof. No indemnification is made under this Section 7.03 or elsewhere in this Lease Agreement for willful misconduct or gross negligence under this Lease Agreement by the Authority, or its respective officers, agents, employees, successors or assigns. The indemnification hereunder shall continue in full force and effect notwithstanding the full payment of all obligations under this Lease Agreement or the termination of the Term of this Lease Agreement for any reason. The City and the Authority each agree to promptly give notice to each other and the Authority of any claim or liability hereby indemnified against following learning thereof.

Section 7.04. Assignment by the Authority. The Authority may assign its rights, title and interests herein to the Purchaser. The Purchaser and the Authority will not undertake to sell or otherwise transfer the assigned rights hereunder or any note repres enting the payments due

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19 hereunder without the prior written consent of the City. The City shall pay all Lease Payments hereunder to the Authority, as provided in Section 4.03(h) hereof.

Section 7.05. Assignment Agreement and Subleasing by the City. This Lease Agreement may not be assigned, mortgaged, pledged or transferred by the City. The City may sublease the Property, or any portion thereof, with the prior written consent of the Authority, at the Authority’s sole discretion, subject to all of the following conditions:
(a) This Lease Agreement and the obligation of the City to make Lease Payments hereunder shall remain obligations of the City, and any sublease shall be subject and subordinate to this Lease Agreement.
(b) The City shall, within thirty (30) days after the delivery thereof, furnish or cause to be furnished to the Authority a true and complete copy of such sublease. (c) No such sublease by the City may cause the Property to be used for a purpose other than as may be authorized under the provisions of the laws of the State. (d) The City shall furnish the Authority with a written opinion of Bond Counsel stating that such sublease does not cause the interest components of the Lease Payments to become includable in gross income for purposes of federal income taxation or to become subject to personal income taxation by the State.
(e) Any such sublease shall be subject and subordinate in all respects to the Site and Facility Lease and this Lease Agreement.

Notwithstanding the foregoing, in connection with any sublease entered into for financing purposes, the principal component of the then remaining Lease Payments plus the principal component of the sublease payments shall not exceed the fair market value of the Property.

Section 7.06. Amendment of Lease Agreement. This Lease Agreement may be amended in writing by the parties hereto.

Section 7.07. Records and Accounts. The City covenants and agrees that it shall keep proper books of record and accounts of its operations, in which complete and correct entries shall be made of all transactions relating to the City. Said books and records shall at all reasonable times be subject to the inspection of the Authority upon seventy-two (72) hours’ prior notice.

Section 7.08. Observance of Laws and Regulations. The City will well and truly keep, observe and perform or cause to be kept, observed and performed all valid and lawful obligations or regulations now or hereafter imposed on it by contract, or prescribed by any law of the United States, or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every right, privilege or franchise now owned or hereafter acquired and enjoyed by the City, including the City’s right to exist and carry on business as a municipal corporation, to the end that such rights, privileges and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired.

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20 ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES
Section 8.01. Events of Default Defined. Any one or more of the following events constitutes an Event of Default hereunder:
(a) Failure by the City to pay any Lease Payment or other payment required to be paid hereunder at the time specified herein.
(b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed hereunder, other than as referred to in the preceding clause (a) of this Section, for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority. However, if in the reasonable opinion of the City the failure stated in the notice can be corrected, but not within such 30-day period, the Authority shall not unreasonably withhold their consent to an extension of such time (for a period not to exceed sixty (60) days) if corrective action is instituted by the City within such 30-day period and diligently pursued until the default is corrected.
(c) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar federal or State act now existing or which may hereafter be enacted. (d) Any statement, representation or warranty made by the City in or pursuant to this Lease Agreement or its execution, delivery or performance shall have been false, incorrect, misleading or breached in any material respect on the date when made. (e) Any default occurs under any other agreement for borrowing money, lease financing of property or otherwise receiving credit under which the City 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 the Authority or any affiliate of the Authority, or (ii) arises under any obligation under which there is outstanding, owing or committed an aggregated amount in excess of $2,000,000.
(f) Any default by the City to observe any covenant, condition or agreement on its part to be observed or performed under the Site and Facility Lease. (g) Any court of competent jurisdiction shall find or rule that the Site and Facility Lease or this Lease Agreement is not valid or binding against the City. (h) Any Material Adverse Effect shall exist.

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21 Section 8.02. Remedies on Default. Whenever any Event of Default has happened and is continuing, the Authority may exercise any and all remedies available under law or granted under this Lease Agreement; provided, however, that notwithstanding anything herein to the contrary, there shall be no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable.

Each and every covenant hereof to be kept and performed by the City is expressly made a condition and upon the breach thereof the Authority may exercise any and all rights granted hereunder; provided, that no termination of this Lease Agreement shall be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. Upon the occurrence and during the continuance of any Event of Default, the Authority may exercise any one or more of the following remedies:
(a) Default Rate. So long as an Event of Default has occurred and is continuing, the Lease Payments shall bear a rate of interest at the Default Rate. (b) Enforcement of Payments Without Termination. If the Authority does not elect to terminate this Lease Agreement in the manner hereinafter provided for in subparagraph (c) hereof, the City agrees to and shall remain liable for the payment of all Lease Payments and the performance of all conditions herein contained and shall reimburse the Authority for any deficiency arising out of the re-leasing of the Property, or, if the Authority is unable to re-lease the Property, then for the full amount of all Lease Payments to the end of the Term of this Lease Agreement, but said Lease Payments and/or deficiency shall be payable only at the same time and in the same manner as hereinabove provided for the payment of Lease Payments hereunder, notwithstanding such entry or re-entry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Property or the exercise of any other remedy by the Authority. The City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the City to enter upon and re-lease the Property upon the occurrence and continuation of an Event of Default and to remove all personal property whatsoever situated upon the Property, to place such property in storage or other suitable place in San Bernardino County for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re-leasing of the Property and the removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. The City agrees that the terms of this Lease Agreement constitute full and sufficient notice of the right of the Authority to re-lease the Property in the event of such re-entry without effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority in effecting such re-leasing shall constitute a surrender or termination of this Lease Agreement irrespective of the term for which such re-leasing is made or the terms and conditions of such re-leasing, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease Agreement shall vest in the Authority to be effected in the sole and exclusive manner hereinafter provided for in subparagraph (c) hereof. The City agrees to surrender and quit possession of the Property upon demand of the Authority for the purpose of enabling the Property to be re-let under this paragraph. Any rental obtained by the Authority in excess of the sum of Lease Payments plus costs and expenses incurred by the Authority for its services in re-leasing the Property shall be paid to the City.

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22 (c) Termination of Lease. If an Event of Default occurs and is continuing hereunder, the Authority at its option may terminate this Lease Agreement and re-lease all or any portion of the Property, subject to the Site and Facility Lease. If the Authority terminates this Lease Agreement at its option and in the manner hereinafter provided due to a default by the City (and notwithstanding any re-entry upon the Property by the Authority in any manner whatsoever or the re-leasing of the Property), the City nevertheless agrees to pay to the Authority all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of payment of Lease Payments and Additional Payments. Any surplus received by the Authority from such re-leasing shall be applied by the Authority to Lease Payments due under this Lease Agreement. Neither notice to pay rent or to deliver up possession of the premises given under law nor any proceeding in unlawful detainer taken by the Authority shall of itself operate to terminate this Lease Agreement, and no termination of this Lease Agreement on account of default by the City shall be or become effective by operation of law, or otherwise, unless and until the Authority shall have given written notice to the City of the election on the part of the Authority to terminate this Lease Agreement. The City covenants and agrees that no surrender of the Property, or of the remainder of the Term hereof or any termination of this Lease Agreement shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice.
(d) Proceedings at Law or In Equity. If an Event of Default occurs and continues hereunder, the Authority may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due hereunder or to enforce any other of its rights hereunder. (e) Remedies under the Site and Facility Lease. If an Event of Default occurs and continues hereunder, the Authority may exercise its rights under the Site and Facility Lease.

Section 8.03. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in this Article VIII it shall not be necessary to give any notice, other than such notice as may be required in this Article VIII or by law.

Section 8.04. Agreement to Pay Attorneys’ Fees and Expenses. If either party to this Lease Agreement defaults under any of the provisions hereof and the nondefaulting party should employ attorneys (including in-house legal counsel) or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys (including allocable