Victorville City Council
January 21, 2025

FOR CASH ACCOUNT: 000 11100 FOR: All Except Stale CHECK # CHECK DATE TYPE VENDOR NAME UNCLEARED CLEARED BATCH CLEAR DATE 797949 12/18/2024 PRINTED 020042 ANGEL ROCK AND SAND 36.98 797950 12/18/2024 PRINTED 015662 BALLARD, JAMES ANDREW AND 4,272.02 797951 12/18/2024 PRINTED 025164 THE BANK OF NEW YORK MELL 2,098.80 797952 12/18/2024 PRINTED 023224 BDO USA, P.C. 14,638.25 797953 12/18/2024 PRINTED 000294 BEAR VALLEY PARTY RENTALS 4,848.63 797954 12/18/2024 PRINTED 012423 BLUEBEAM, INC. 2,340.00 797955 12/18/2024 PRINTED 016358 BLUE DIAMOND MATERIALS 2,504.95 797956 12/18/2024 PRINTED 000380 BURRTEC WASTE INDUSTRIES 3,068.79 797957 12/18/2024 PRINTED 000380 BURRTEC WASTE INDUSTRIES 103,577.24 797958 12/18/2024 PRINTED 000380 BURRTEC WASTE INDUSTRIES 4,157.11 797959 12/18/2024 PRINTED 023100 CALIFORNIA BEST TITLE CO 527.54 797960 12/18/2024 PRINTED 023528 CALIFORNIA ICE COMPANY, I 14,593.75 797961 12/18/2024 PRINTED 005835 CALIFORNIA PARK & RECREAT 1,251.08 797962 12/18/2024 PRINTED 001613 CARLIN, FELIX 131.81 797963 12/18/2024 PRINTED 020193 CARTER, ROBERT 69.32 797964 12/18/2024 PRINTED 021268 CASAS REALTY CORP 120.00 797965 12/18/2024 PRINTED 000618 CDW GOVERNMENT, INC. 643.63 797966 12/18/2024 PRINTED 023017 CELAYA, RAFAEL VELASQUEZ 128.03 797967 12/18/2024 PRINTED 014052 CHRISTENSEN BROTHERS GENE 93.50 797968 12/18/2024 PRINTED 023497 CHRISTIAN, JAMES 36.69 797969 12/18/2024 PRINTED 002212 CITY CLERKS ASSOCIATION O 250.00 797970 12/18/2024 PRINTED 023169 CLEAR WATER ESCROW 52.51 797971 12/18/2024 PRINTED 022689 CONSOLIDATED WASH INDUSTR 365.04 797972 12/18/2024 PRINTED 021496 DG INVESTMENT INTERMEDIAT 13,175.00 797973 12/18/2024 PRINTED 014721 CORE & MAIN LP 19,364.30 797974 12/18/2024 PRINTED 018141 CR&R INCORPORATED 515.11 797975 12/18/2024 PRINTED 999976 DR HORTON 19,587.74 797976 12/18/2024 PRINTED 014737 DITCH WITCH WEST 1,495.30 797977 12/18/2024 PRINTED 020623 DIVERSIFIED GLASS, INC. 7,164.00 797978 12/18/2024 PRINTED 018020 DIXON PEST CONTROL, INC. 668.41 797979 12/18/2024 PRINTED 023162 DOYLE, DENNY 934.88 797980 12/18/2024 PRINTED 021663 DUDEK 11,490.82 797981 12/18/2024 PRINTED 014122 EUROFINS EATON ANALYTICAL 1,535.00 797982 12/18/2024 PRINTED 002607 FAUST MEDIA SERVICES, LLC 511.97 797983 12/18/2024 PRINTED 023248 FIRST AMERICAN TITLE CO 284.97 797984 12/18/2024 PRINTED 022312 GALLEGOS, ANTHONY 22.00 797985 12/18/2024 PRINTED 022788 GANNETT MEDIA CORP 438.76 797986 12/18/2024 PRINTED 023182 GARCIA, SERGIO 62.29 797987 12/18/2024 PRINTED 023125 GLENOAKS ESCROW 41.03 797988 12/18/2024 PRINTED 023318 GUTIERREZ, NATHAN 135.15 797989 12/18/2024 PRINTED 023277 HARRIS, ERNEST 29.46 797990 12/18/2024 PRINTED 021441 HENRY SCHEIN, INC. 1,516.72 797991 12/18/2024 PRINTED 001155 HESPERIA HOSE SUPPLY 893.04 797992 12/18/2024 PRINTED 004021 HIGH DESERT LASER GRAPHIC 723.19 797993 12/18/2024 PRINTED 023529 HUNTOON, TANNER 922.50 797994 12/18/2024 PRINTED 022573 HYDROTEK INDUSTRIES 350.00 797995 12/18/2024 PRINTED 011942 IEDC 770.00 797996 12/18/2024 PRINTED 001253 IIMC 235.00 797997 12/18/2024 PRINTED 023031 INTEGRATED SUPPLY NETWORK 747.81 797998 12/18/2024 PRINTED 020667 CONDON, JOSEPH 21,080.00 797999 12/18/2024 PRINTED 022898 JENSEN HUGHES, INC. 59,032.24 798000 12/18/2024 PRINTED 023148 JUN GU LIVING TRUST 79.94

CITY OF VICTORVILLE

AP CHECK RECONCILIATION REGISTER
Report generated: 01/09/2025 12:02
User: calonzo
Program ID: apchkrcn

FOR CASH ACCOUNT: 000 11100 FOR: All Except Stale CHECK # CHECK DATE TYPE VENDOR NAME UNCLEARED CLEARED BATCH CLEAR DATE 798001 12/18/2024 PRINTED 999983 KELLOGG, CHANDA 135.00 798002 12/18/2024 PRINTED 022917 K2 CALIBRATIONS, LLC 130.00 798003 12/18/2024 PRINTED 010135 KAT EQUIPMENT LEASING INC 2,464.00 798004 12/18/2024 PRINTED 023574 KEYVANIAN, ASDGHIK 793.28 798005 12/18/2024 PRINTED 004807 KONE, INC. 361.38 798006 12/18/2024 PRINTED 021569 LACEY, MICHAEL P. 800.00 798007 12/18/2024 PRINTED 021978 LAW OFFICE OF PETER KIEL 33,863.41 798008 12/18/2024 PRINTED 019724 LGI HOMES 205,680.00 798009 12/18/2024 PRINTED 010660 LOVELAND'S AUTOMOTIVE SER 3,489.21 798010 12/18/2024 PRINTED 022008 LPA, INC. 47,979.56 798011 12/18/2024 PRINTED 004292 LU'S LIGHTHOUSE 3,701.24 798012 12/18/2024 PRINTED 012126 MARIN, LESYENIA G. 16.50 798013 12/18/2024 PRINTED 023222 MARIPOSA LANDSCAPES, INC. 19,100.00 798014 12/18/2024 PRINTED 023524 MCKENDRY, STEVE 2,740.00 798015 12/18/2024 PRINTED 023584 CEDARS-SINAI MEDICAL CARE 4,500.00 798016 12/18/2024 PRINTED 023227 MEDINA, ROBERT GAMINO 10.28 798017 12/18/2024 PRINTED 001592 MOBILE OCCUPATIONAL SERVI 285.00 798018 12/18/2024 PRINTED 023015 MONET CONSTRUCTION, INC. 624,818.31 798019 12/18/2024 PRINTED 016208 MOTOROLA SOLUTIONS, INC 17,775.95 798020 12/18/2024 PRINTED 022353 MUNIZ, EFRAIN 35.00 798021 12/18/2024 PRINTED 001644 NACA 25.00 798022 12/18/2024 PRINTED 001648 NAPA AUTO PARTS 1,643.39 798023 12/18/2024 PRINTED 022688 NATIONAL CNG & FLEET SERV 2,937.00 798024 12/18/2024 PRINTED 021961 NATIONAL COMMUNITY RENAIS 125,000.00 798025 12/18/2024 PRINTED 017475 NETA NETWORKS, INC. 429.98 798026 12/18/2024 PRINTED 023467 NEW HORIZON FOODS, LLC 4,458.21 798027 12/18/2024 PRINTED 023333 NEXT LEVEL EQUITY MANAGEM 87.86 798028 12/18/2024 PRINTED 021150 ODP BUSINESS SOLUTIONS, L 285.98 798029 12/18/2024 PRINTED 010657 PACIFIC PRODUCTS & SERVIC 459.07 798030 12/18/2024 PRINTED 009123 PATTON SALES CORP. 77.65 798031 12/18/2024 PRINTED 023481 PAVE-TECH INC. 1,274,813.82 798032 12/18/2024 PRINTED 021906 PLAYAWAY PRODUCTS LLC 534.15 798033 12/18/2024 PRINTED 022183 HINRICHS, DARREN 342.52 798034 12/18/2024 PRINTED 021481 VELASCO,JOSEPH 20.00 798035 12/18/2024 PRINTED 023264 QUADIENT FINANCE USA, INC 10.62 798036 12/18/2024 PRINTED 014355 QUINN COMPANY 1,043.17 798037 12/18/2024 PRINTED 004299 RAMIREZ, MONIQUE 95.60 798038 12/18/2024 PRINTED 023324 SAU, WENDY 38.18 798039 12/18/2024 PRINTED 002037 SAN BERNARDINO COUNTY 6,468.16 798040 12/18/2024 PRINTED 018884 FIRST STREET PARENT, INC. 232.76 798041 12/18/2024 PRINTED 002188 SOUTHERN CALIFORNIA EDISO 265,150.52 798042 12/18/2024 PRINTED 002188 SOUTHERN CALIFORNIA EDISO 52,906.06 798043 12/18/2024 PRINTED 002236 STATE WATER RESOURCES CON 2,436.00 798044 12/18/2024 PRINTED 002236 STATE WATER RESOURCES CON 90.00 798045 12/18/2024 PRINTED 020345 HOWMEDICA OSTEONICS CORP 67,777.47 798046 12/18/2024 PRINTED 007823 SUNBELT SOLOMON SERVICES, 6,633.75 798047 12/18/2024 PRINTED 002204 SOUTHWEST GAS CORPORATION 3,034.00 798048 12/18/2024 PRINTED 023525 TECNO DISPLAY, INC. 7,608.52 798049 12/18/2024 PRINTED 017116 TORRES, SCOTT 2,008.55 798050 12/18/2024 PRINTED 006279 TURF STAR, INC. 1,247.47 798051 12/18/2024 PRINTED 023298 UNLIMITED ENVIRONMENTAL, 3,639.12 798052 12/18/2024 PRINTED 021480 SHADE STRUCTURES, INC. 91,513.99

CITY OF VICTORVILLE

AP CHECK RECONCILIATION REGISTER
Report generated: 01/09/2025 12:02
User: calonzo
Program ID: apchkrcn

FOR CASH ACCOUNT: 000 11100 FOR: All Except Stale CHECK # CHECK DATE TYPE VENDOR NAME UNCLEARED CLEARED BATCH CLEAR DATE 798053 12/18/2024 PRINTED 022706 RED BARN MEDIA, INC. 1,530.10 798054 12/18/2024 PRINTED 002879 VICTOR VALLEY TRANSIT AUT 55.00 798055 12/18/2024 PRINTED 023332 WARD, MARK 46.23 798056 12/18/2024 PRINTED 016092 BRAYFIELD, ZACHARY SCOTT 355.00 798057 12/18/2024 PRINTED 023300 BADAWI & ASSOCIATES 56,227.50 798058 12/18/2024 PRINTED 016183 CAPTURE TECHNOLOGIES INC 3,697.99 798059 12/18/2024 PRINTED 005601 ELECNOR BELCO ELECTRIC, I 796,911.70 798060 12/18/2024 PRINTED 023466 ESPINO FAMILY ENTERPRISES 450.00 798061 12/18/2024 PRINTED 008527 ZOLL MEDICAL CORPORATION 18,312.00 798062 12/18/2024 PRINTED 023580 ALTON, LARON D. 120.00 798063 12/18/2024 PRINTED 008160 BERMUDEZ, IGNACIO 14.46 798064 12/18/2024 PRINTED 023583 CHARLES SIMPSON TRUST 11/ 28.82 798065 12/18/2024 PRINTED 023579 CORTEZ, MARIA 15.13 798066 12/18/2024 PRINTED 023576 HOLMEN, DENNIS L 55.78 798067 12/18/2024 PRINTED 023577 KAHIN, DIALLO A 160.00 798068 12/18/2024 PRINTED 021461 LEE, THEODORE 21.30 798069 12/18/2024 PRINTED 021461 LEE, THEODORE 25.13 798070 12/18/2024 PRINTED 023582 MHP BUILDERS INC 432.63 798071 12/18/2024 PRINTED 003667 NGUYEN, RONALD 12.12 798072 12/18/2024 PRINTED 023578 OPEN DOOR PROPERTY TRUST 77.38 798073 12/18/2024 PRINTED 023581 ZHAO, YAN SHU 26.82 798074 12/19/2024 PRINTED 014355 QUINN COMPANY 109,969.57 798075 01/08/2025 PRINTED 999973 AGAPE CHRISTIAN WORSHIP C 315.00 798076 01/08/2025 PRINTED 999973 AGAPE CHRISTIAN WORSHIP C 200.00 798077 01/08/2025 PRINTED 030174 AGILITY FUEL SYSTEMS 114.14 798078 01/08/2025 PRINTED 024821 VJL WASTE MANAGEMENT SERV 1,199.99 798079 01/08/2025 PRINTED 024821 ALPHA OMEGA SEPTIC SERVIC 15,630.28 798080 01/08/2025 PRINTED 005384 AMERON POLE PRODUCTS 11,943.50 798081 01/08/2025 PRINTED 006416 ANTONY ANIMAL HOSPITAL 160.00 798082 01/08/2025 PRINTED 017968 AVCOM SERVICES, INC. 1,643.00 798083 01/08/2025 PRINTED 023067 BEAR VALLEY ANIMAL HOSPIT 400.00 798084 01/08/2025 PRINTED 023591 BEAR VALLEY ROAD & 2ND AV 95.20 798085 01/08/2025 PRINTED 017353 BOUND TREE MEDICAL, LLC 2,610.62 798086 01/08/2025 PRINTED 000380 BURRTEC WASTE INDUSTRIES 128.11 798087 01/08/2025 PRINTED 000618 CDW GOVERNMENT, INC. 978.86 798088 01/08/2025 PRINTED 000155 CENTURY LINK 454.23 798089 01/08/2025 PRINTED 014359 CIVILTEC ENGINEERING, INC 1,738.75 798090 01/08/2025 PRINTED 014721 CORE & MAIN LP 3,306.52 798091 01/08/2025 PRINTED 023070 C. WELLS PIPELINE MATERIA 2,901.45 798092 01/08/2025 PRINTED 006348 DAILY JOURNAL CORPORATION 2,506.76 798093 01/08/2025 PRINTED 010314 DAVID EVANS AND ASSOCIATE 18,199.50 798094 01/08/2025 PRINTED 020623 DIVERSIFIED GLASS, INC. 10,620.00 798095 01/08/2025 PRINTED 018020 DIXON PEST CONTROL, INC. 1,267.00 798096 01/08/2025 PRINTED 019925 DOCU SIGN, INC. 13,185.90 798097 01/08/2025 PRINTED 023306 EASI FILE, LLC 291.72 798098 01/08/2025 PRINTED 023337 GUARDIAN SAFETY & SUPPLY, 4,550.73 798099 01/08/2025 PRINTED 023593 GARDENA, INC. 717.00 798100 01/08/2025 PRINTED 014122 EUROFINS EATON ANALYTICAL 890.00 798101 01/08/2025 PRINTED 013384 LASTAND, INC. 145.00 798102 01/08/2025 PRINTED 022788 GANNETT MEDIA CORP 2,697.44 798103 01/08/2025 PRINTED 011371 GARDA CL NORTHWEST, INC. 3,301.33 798104 01/08/2025 PRINTED 015593 GEOCON WEST, INC. 94,537.50

CITY OF VICTORVILLE

AP CHECK RECONCILIATION REGISTER
Report generated: 01/09/2025 12:02
User: calonzo
Program ID: apchkrcn

FOR CASH ACCOUNT: 000 11100 FOR: All Except Stale CHECK # CHECK DATE TYPE VENDOR NAME UNCLEARED CLEARED BATCH CLEAR DATE 798105 01/08/2025 PRINTED 001155 HESPERIA HOSE SUPPLY 1,280.74 798106 01/08/2025 PRINTED 000833 HINDERLITER, DELLAMAS & A 630.00 798107 01/08/2025 PRINTED 023031 INTEGRATED SUPPLY NETWORK 369.76 798108 01/08/2025 PRINTED 003103 J & L UPHOLSTERY 349.13 798109 01/08/2025 PRINTED 020667 CONDON, JOSEPH 18,383.31 798110 01/08/2025 PRINTED 010135 KAT EQUIPMENT LEASING INC 968.00 798111 01/08/2025 PRINTED 001416 LAWSON PRODUCTS, INC. 304.68 798112 01/08/2025 PRINTED 022774 LIEBERT CASSIDY WHITMORE 5,880.50 798113 01/08/2025 PRINTED 000361 MARK BROWN & ASSOCIATES, 218.50 798114 01/08/2025 PRINTED 015830 MDG ASSOCIATES, INC 262.00 798115 01/08/2025 PRINTED 023372 MEESTER, DONNA 139.61 798116 01/08/2025 PRINTED 021161 CAR WASH PARTNERS, LLC. 376.00 798117 01/08/2025 PRINTED 001592 MOBILE OCCUPATIONAL SERVI 75.00 798118 01/08/2025 PRINTED 016208 MOTOROLA SOLUTIONS, INC 17,152.18 798119 01/08/2025 PRINTED 023527 MOYA, MANUEL HENRY JR. 35.00 798120 01/08/2025 PRINTED 001648 NAPA AUTO PARTS 2,583.35 798121 01/08/2025 PRINTED 020815 NEXTERA ENERGY CAPITAL HO 250,560.00 798122 01/08/2025 PRINTED 018400 O'CONNELL, CORMAC 250.00 798123 01/08/2025 PRINTED 022866 ONECREDITSOURCE.COM 9.02 798124 01/08/2025 PRINTED 015663 PADILLA & ASSOCIATES, INC 3,331.06 798125 01/08/2025 PRINTED 021481 VELASCO,JOSEPH 3,363.40 798126 01/08/2025 PRINTED 022511 PUMP CHECK, INC. 1,613.00 798127 01/08/2025 PRINTED 017036 RIVERS & LANDS CONSERVANC 1,440.40 798128 01/08/2025 PRINTED 003150 ROBERTSON'S 5,548.23 798129 01/08/2025 PRINTED 002746 ROTO ROOTER PLUMBERS 991.00 798130 01/08/2025 PRINTED 002037 SAN BERNARDINO COUNTY 20.00 798131 01/08/2025 PRINTED 002071 SAN BERNARDINO CO SOLID W 3,769.02 798132 01/08/2025 PRINTED 011090 SIERRAS, LUIS 422.00 798133 01/08/2025 PRINTED 023543 SKUTCHI DESIGNS, INC. 12,794.58 798134 01/08/2025 PRINTED 002188 SOUTHERN CALIFORNIA EDISO 95,561.28 798135 01/08/2025 PRINTED 002188 SOUTHERN CALIFORNIA EDISO 10,548.36 798136 01/08/2025 PRINTED 024609 STAPLES BUSINESS ADVANTAG 2,742.63 798137 01/08/2025 PRINTED 002236 STATE WATER RESOURCES CON 76,463.00 798138 01/08/2025 PRINTED 020345 HOWMEDICA OSTEONICS CORP 105,687.12 798139 01/08/2025 PRINTED 002269 SUNLAND FORD 1,847.94 798140 01/08/2025 PRINTED 002204 SOUTHWEST GAS CORPORATION 379,192.56 798141 01/08/2025 PRINTED 022094 TELEFLEX LIFE SCIENCES LI 2,990.63 798142 01/08/2025 PRINTED 021687 TITANS COMPLIANCE TESTING 1,000.00 798143 01/08/2025 PRINTED 015430 TRI-PACIFIC SUPPLY, INC. 508.68 798144 01/08/2025 PRINTED 022706 RED BARN MEDIA, INC. 1,645.80 798145 01/08/2025 PRINTED 005896 VICTOR VALLEY HAND CAR WA 66.75 798146 01/08/2025 PRINTED 006411 CITY OF VICTORVILLE 1,122.36 798147 01/08/2025 PRINTED 006411 CITY OF VICTORVILLE 264.45 798148 01/08/2025 PRINTED 002480 VICTOR VALLEY COLLEGE FOU 8,000.00 798149 01/08/2025 PRINTED 002486 VICTOR VALLEY UNION HIGH 8,000.00 798150 01/08/2025 PRINTED 029510 WEST END MATERIAL SUPPLY 1,573.06 798151 01/08/2025 PRINTED 018995 AIR EXCHANGE, INC. 164.22 798152 01/08/2025 PRINTED 017444 GLADWELL GOVERNMENTAL SER 700.00 464 CHECKS CASH ACCOUNT TOTAL 10,043,336.26 .00 Item Number: 10
City Council / Board of Directors
Consent Calendar
Meeting of: January 21, 2025
Submitted By:

Jennifer Thompson, City Clerk

Subject:

Minutes of the November 19 and December 17, 2024, Regular City Council Meetings and November 26 and December 10, 2024, Special City Council Meetings Recommendation:

That the Honorable City Council approve the minutes of the Regular City Council Meetings held on November 19 and December 17, 2024, and the Special City Council Meetings held on November 26 and December 10, 2024.

Fiscal Impact:

There is no fiscal impact as a result of this action.

Attachments: A. Minutes of the November 19, 2024, Regular City Council Meeting B. Minutes of the November 26, 2024, Special City Council Meeting C. Minutes of the December 10, 2024, Special City Council Meeting D. Minutes of the December 17, 2024, Regular City Council Meeting Attachment A

City Council Chambers
14343 Civic Drive
Victorville, CA
www.victorvilleca.gov

VICTORVILLE CITY COUNCIL

VICTORVILLE LIBRARY BOARD OF TRUSTEES

SOUTHERN CALIFORNIA LOGISTICS AIRPORT AUTHORITY

SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY

THE CITY AS HOUSING ASSETS SUCCESSOR

JOINT POWERS FINANCING AUTHORITY

VICTORVILLE WATER DISTRICT

Regular Meeting Minutes
Tuesday, November 19, 2024
6:00 p.m. Regular Session

6:00 p.m. Regular Session

Call to Order

Roll Call

Present: Council Member Gomez, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Absent: None

Also Present:

City Manager Keith C. Metzler, Deputy City Manager Sophie Smith, Deputy City Manager Jenele Davidson, Deputy City Manager Scott Webb, Deputy City Manager Tony Camargo,
City Clerk Jennifer Thompson, City Attorney Andre de
Bortnowsky

Invocation: Pastor Carlo Mendoza with Sunrise Church

Pledge of Allegiance: Police Captain Randy German

Special Presentations

Presentation of Donation to Recreation Assistance Program from Kiwanis Club of Victorville

Mayor Becerra accepts the Kiwanis Club of Victorville Donation

City Clerk Presents Agenda/Revisions to Agenda

City Clerk Thompson announced three revisions

Revision to agenda item 2: Exhibit B to Resolution No. 24-102 CFD report, Appendix A:

Rate & Method of apportionment (RMA) add: “Accessory Dwelling Unit” or (ADU) definition and revises the definition of “Residual Unit” or “R/U”. The former appendix A had no definition for Accessory Dwelling Unit or Residential Unit. Revised Exhibit C to Resolution No. 24-102 Rate & Method of Apportionment, Section A. Definitions added:
“Accessory Dwelling Unit” or “ADU”. Revised definition of “Residential Unit or “R/U”.

Revision to agenda item 6: Revising Page No. 25 of attachment A. Slide No. 25 is being replaced in its entirety with the revised slide.

Revision to agenda item 18: Revising the 6
th paragraph under the discussion section of
the staff report to update the cost limitation from $0 to $1,305,000. The Gaskell West 2 LLC PPA contract price was expected to be less than alternative market prices and VMUS purchased all its available generation. Pursuant to the methodology for calculating the cost limitation for Compliance Period 4, established above, the cost limitation for compliance Period 4 is determined to be $1,305,000.

Conflict of Interest Declarations

There were no conflicts of interest reported.

Introduction to Public Comments

City Clerk Thompson provided an opening statement regarding public comments.

Public Comments

The following people spoke:

Erica Brewer spoke on general items

PUBLIC HEARING(S)

1. Proposed Updated Electric and Natural Gas Service Rules, Regulations and Rate Schedules

Recommendation:

Staff recommends the Honorable City Council:
(1) Open and conduct a public hearing for the purpose of receiving testimony for or against adoption of proposed Resolution No. 24- 095 and Resolution No. 24- 096;
(2) Close the public hearing for or against adoption of proposed Resolution No. 24-095 and Resolution No. 24-096;
(3) Adopt Resolution No. 24- 095 amending and revising the Electric Service Rules and Regulations for electric services provided to customers of the Victorville Municipal Utili ty Services (”VMUS”) pursuant to Chapter 10.10 of the Victorville Municipal Code;
(4) Adopt Resolution No. 24- 096 amending and revising the Natural Gas Service Rules and Regulations for gas services provided to customers of VMUS pursuant to Chapter 10.11 of the Victorville Municipal Code

Questions ensued

The Chair opened the Public Hearing

There were no speakers

The Chair closed the Public Hearing

Motion was made to approve staff recommendations

Moved: Mayor Becerra
Seconded: Council Member Irving

Motion passed 4-1

Ayes: Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra
Noes: Council Member Gomez

2. Public Hearing on the Formation of Community Facilities District No. 2024 -01 to provide Municipal Services

Recommendation:

Staff recommends the Honorable City Council:
(1) Open and conduct the public hearing for the purpose of receiving public testimony and property owner protests regarding the formation of the proposed CFD 2024-01 for Municipal Services;
(2) Close the public hearing;
(3) Adopt Resolution No. 24- 102 forming Community Facilities District No. 2024 - 01 of the City of Victorville (Municipal Services) (“CFD 2024- 01”), authorizing the levy of special taxes therein, and calling an election; (4) Tabulate the ballots for the Formation of Community Facilities District No. 2024-01;
(5) Adopt Resolution No. 24- 103, certifying the results of a special election in the Community Facilities District No. 2024 -01 of the City of Victorville (Municipal Services) (“CFD 2024-01”);
(6) Introduce Ordinance No. 2453, for adoption and first reading by title only; and (7) Waive further reading in full of proposed Ordinance No. 2453.

Presentation given by Heidi Schoeppe from Webb Municipal Finance, LLC

Questions ensued

The Chair opened the Public Hearing

There were no speakers

The Chair closed the Public Hearing

Motion was made to approve staff recommendations for point 3

Moved: Council Member Irving
Seconded: Mayor Becerra

Comments ensued

Motion failed 2-3

Ayes: Council Member Irving, Mayor Becerra
Noes: Council Member Gomez, Council Member Jones, Mayor Pro Tem Harriman

CONSENT CALENDAR

3. Payroll Demand Schedule No. 3A

Recommendation:

That the City Council and Board of Directors ratify Payroll Demand Schedule No. 3A for Payroll Period August 30, 2024, through September 13, 2024, in the amount of $2,401,803.43 covering Check Nos. 34303 through 34315, including Vendor checks. Also included are Advice Nos. 318669 and 318671 through 319229, per adopted budget for Fiscal Year 2024- 2025 (period covering July 1, 2024, through June 30, 2025).

4. VMUS Annual Operating Result Report for FY 2024

Recommendation:

That the Honorable City Council review and file this report.

5. 2023 Power Source Disclosure ("PSD") Program Annual Report and Power Content Label ("PCL")

Recommendation:

That the Honorable City Council adopt Resolution No. 24- 094, approving and attesting to the veracity of the 2023 Power Source Disclosure Program Annual Report and Power Content Label submitted to the California Energy Commission.

6. Engineering Report for the First Quarter of Fiscal Year 2025

Recommendation:

That the Honorable City Council review and file this quarterly report.

7. Wellness Center Quarterly Report

Recommendation:

That the Honorable City Council review and file the attached Wellness Center Quarterly Report.

8. Code Compliance Department FY24/25 First Quarter Code Compliance Division and Animal Services Division Activity Reports

Recommendation:

That the honorable City Council review and file.

9. Minutes of the October 15 and November 5, 2024, Regular City Council Meetings

Recommendation:

That the Honorable City Council approve the minutes of the Regular City Council Meetings held on October 15 and November 5, 2024.

10. Commercial Demand Schedule No. 9

Recommendation:

That the City Council and Board of Directors ratify Commercial Demand Schedule No. 9 in the amount of $19,403,488.58, covering Electronic Fund Transfers No. 341466 through 341714 and Warrant No. 797261 through 797441 for 10/17/2024 through 10/30/2024 and Wire Transfers dated 10/23/2024, per the adopted budget for Fiscal Year 2024- 2025 for the period covering July 1, 2024 through June 30, 2025.

11. Reduction of Securities for Tract Map No.16507

Recommendation:

That the Honorable City Council approve the full release of the Water, Sewer, Drainage and Street Public Improvement Faithful Performance Securities for Tract Map No. 16507.

12. Reduction of Securities for Tract Map No. 20560

Recommendation:

That the Honorable City Council approve the 60 percent release in Water, Drainage, Street, and Traffic Signal Faithful Performance Securities for Tract Map No. 20560.

13. Reduction of Securities for Tract Map No. 17090

Recommendation:

That the Honorable City Council:
(1) Approve an 80 percent release in Water, Sewer, Drainage and Street Faithful Performance Securities for Tract Map No. 17090; and
(2) Accept the completed Water, Sewer, Drainage, and Street Improvements.

Motion was made to approve staff recommendations for items 3 through 13

Moved: Council Member Jones
Seconded: Council Member Irving

Motion passed 5-0

Ayes: Council Member Gomez, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

WRITTEN COMMUNICATIONS

14. Budget Amendment for Strike Team Deployment – Thompson Fire

Recommendation:

That the City Council adopt Resolution No. 24 -093 to amend the Fiscal Year 2024-25 budget appropriating additional revenue in the amount of $18,056.61 and expenses in the amount of $19,548.13 for the strike team deployment to the Thompson Fire.

Questions ensued

Motion was made to approve staff recommendation

Moved: Council Member Jones
Seconded: Mayor Pro Tem Harriman

Motion passed 5-0

Ayes: Council Member Gomez, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

15. Roof Replacement Contract Award for the Animal Care and Adoption Center

Recommendation:

That the Honorable City Council award a contract to Ranger Roofing in the amount of $144,100.00 for the Roof Replacement at the Animal Care and Adoption Center through Project No. CC25-028.

Questions ensued

Motion was made to approve staff recommendation

Moved: Council Member Jones
Seconded: Mayor Becerra

Motion passed 5-0

Ayes: Council Member Gomez, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

16. City Hall Security Camera Expansion – Award of Construction Agreement

Recommendation:

That the Honorable City Council:
(1) Find the proposed project categorically exempt from the California Environmental Quality Act (CEQA) under CEQA Guideline Section 15301; and (2) Award a Construction Agreement to Veterans Communication Services, Inc. in the amount not to exceed $314,107.03 for the purchase and installation of additional security cameras at City Hall, Project No. CC25-022.

Questions ensued

Motion was made to approve staff recommendations

Moved: Mayor Becerra
Seconded: Council Member Irving

Motion passed 5-0

Ayes: Council Member Gomez, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

17. Council Policy No. CP -24-03 (CP -24-03) – Victorville Municipal Utility Services Electric Financial Management Policy

Recommendation:

That the Honorable City Council review and adopt CP -24-03, the Victorville Municipal Utility Services Electric Financial Management Policy.

Questions ensued

Motion was made to approve staff recommendation

Moved: Council Member Irving
Seconded: Mayor Pro Tem Harriman

Motion passed 5-0

Ayes: Council Member Gomez, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Recess called at 7:13 p.m.

Recess concluded at 7:19 p.m.

18. Updated VMUS Renewable Energy Resources Procurement Plan

Recommendation:

That the Honorable City Council adopt Resolution No. 24- 097 the Renewable Energy Resources Procurement Plan, Compliance Period 4 (2021- 2024) (Attachment B) and authorizing certain other actions in connection therewith.

Motion was made to approve staff recommendation

Moved: Mayor Becerra
Seconded: Council Member Irving

Motion passed 5-0

Ayes: Council Member Gomez, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

19. Approval of a North American Energy Standards Board Base Contract and Special Provisions (“NAESB”) for the Sale and Purchase of Natural Gas with BP Energy Company

Recommendation:

Staff recommends the Honorable City Council:
(1) Approve the North American Energy Standards Board Base Contract and Special Provisions (“NAESB”) with BP Energy Company for natural gas supply and related services and authorize the City Manager to execute the agreement; (2) Allow the City Manager and/or his/her designee to execute transaction confirmations under the NAESB contracts for procurement of firm gas supply not to exceed $3.65 million total estimated cost and for terms not to exceed 24 months;

Questions ensued

Motion was made to approve staff recommendations

Moved: Council Member Irving
Seconded: Mayor Pro Tem Harriman

Motion passed 4-1

Ayes: Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra
Noes: Council Member Gomez

20. Acceptance of California Department of Justice 2024 -25 Tobacco Grant Program funding

Recommendation:

That the Honorable City Council adopt Resolution Nos. 24- 100 and 24- 101, thereby:
(1) Accepting the 2024 -25 Tobacco Grant Program grant with the California Department of Justice providing the City with $111,120.00 to aid in implementation and enforcement efforts associated with annual inspections of tobacco retailers in the City;
(2) Authorizing the City Manager to finalize all documents needed to execute the grant contract;
(3) Authorizing the City Manager to make any necessary amendments to the contract as deemed necessary; and
(4) Amending the annual budget for fiscal year 2024- 2025 to reflect an additional appropriation in the amount of $54,340.00.

Questions ensued

Motion was made to approve staff recommendations

Moved: Council Member Jones
Seconded: Mayor Pro Tem Harriman

Comments ensued

Motion passed 5-0

Ayes: Council Member Gomez, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

21. Resolution No. 24 -087 Rescinding Certain Previously Adopted City Council Policies which have become Outdated, Superseded, and/or Inconsistent with Current Law and consideration of proposed Council Policy CP-24-04

Questions ensued

Recommendation:

That Your Honorable City Council:
(1) Adopt Resolution No. 24-
087 Rescinding Certain Previously Adopted City
Council Policies which have become Outdated, Superseded, and/or Inconsistent with Current Law, and
(2) Approve Council Policy CP-24-04 regarding City Council Policies

Questions ensued

Motion was made to approve staff recommendations

Moved: Council Member Jones
Seconded: Mayor Pro Tem Harriman

Motion passed 4-1

Ayes: Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra
Noes: Council Member Gomez

22. Acceptance of California Department of Housing and Community Development Encampment Resolution Fund Round 3 (ERF- 3) grant funding for homelessness services and an associated amendment to an existing Professional Services Agreement with Symba Center to include ERF- 3 funding for program -specific services

Presentation given by City Planner Alex Jauregui

Recommendation:

That the Honorable City Council adopt Resolution Nos. 24- 098 and 24- 099, thereby:
(1) Accepting the ERF- 3 Grant with the California Department of Housing and Community Development (HCD) and providing the City with $6,365,069.60 for enhanced street outreach, street medicine, housing navigation, emergency housing, interim housing, rapid rehousing (RRH), and permanent housing; (2) Authorizing the City Manager to finalize all documents needed to execute the ERF-3 contract and administer the overall project;
(3) Authorizing the City Manager to make any necessary amendments to the contract as deemed necessary;
(4) Amending the annual budget for fiscal year 2024- 2025 to reflect an additional appropriation in the amount of $6,365,069.60; and
(5) Amending the Professional Services Agreement with Symba Center, increasing Symba Center’s compensation in the amount of $1,417,420.00 to provide ERF- 3 enhanced case management, street medicine, housing navigation, and RRH, with any non-substantive changes, if necessary, as agreed upon by the City Manager and City Attorney.

Questions ensued

Motion was made to approve staff recommendations

Moved: Mayor Becerra
Seconded: Council Member Irving

Motion passed 5-0

Ayes: Council Member Gomez, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

23. Southwest Region High-Speed Rail Integration Project

Recommendation:

That Your Honorable City Council approve a support letter for the High Desert Corridor (HDC) Southwest Region High -Desert Speed Rail Integration Project (Integration Project) grant request from the Federal Railroad Administration Federal State Partnership program.

Questions ensued

Motion was made to approve staff recommendation

Moved: Council Member Jones
Seconded: Mayor Pro Tem Harriman

Comments ensued

Motion passed 5-0

Ayes: Council Member Gomez, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

24. Possible cancellation of the December 3, 2024, regular City Council meeting

Recommendation:

Any action is at the discretion of Your Honorable City Council.

Questions ensued

Motion was made to cancel the December 3, 2024, regular City Council meeting

Moved: Council Member Jones
Seconded: Council Member Irving

Comments ensued

Motion passed 4-1

Ayes: Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra
Noes: Council Member Gomez

25. Discussion and possible action to create a committee and appoint committee members which would include two Council Members, one executive staff member and Chief Clemmer to further discuss a potential firework policy

Recommendation:

Any action is at the discretion of Your Honorable City Council.

Questions ensued

No action was taken

26. Discussion and possible action to place a recurring item on the agenda to decide whether the Council wishes to adjust its compensation

Recommendation:

Any action is at the discretion of Your Honorable City Council.

Questions ensued

Motion was made to direct staff to place a recurring item on the agenda during the budget cycle of every even year for the Council to consider and decide whether it wishes to adjust its compensation in keeping with the current laws

Moved: Council Member Jones
Seconded: Mayor Becerra

Comments ensued

Motion passed 4-1

Ayes: Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra
Noes: Council Member Gomez

27. Discussion and possible action to remove Michael Krause from the Measure P Oversight Committee

Recommendation:

Any action is at the discretion of Your Honorable City Council.

Questions ensued

Motion was made to call the question

Moved: Mayor Becerra
Seconded: Mayor Pro Tem Harriman

Motion failed 1-3

Ayes: Mayor Becerra
Noes: Council Member Gomez, Council Member Irving, Council Member Jones Recused: Mayor Pro Tem Harriman

No action was taken

28. City Manager Reports

City Manager Keith C. Metzler announced the
Shred-Fest and Compost
Giveaway held on November 2nd was a success. The event had 327 participants with 7.4 tons of shredded paper collected, diverting 15,000 pounds from the landfill. Additionally, 3,400 pounds of free compost was distributed to residents during the event . He announced c onstruction is due to commence on the Eucalyptus Street drainage improvements, scheduled to start on November 25 th, and be completed by the end of December. Keith C. Metzler also announced the Kiwanis Club of Victorville will be hosting their 77th Annual Victorville Children’s Christmas Parade on Saturday December 7 th at 10:00 a.m. Additionally, on Saturday, December 7th, from 4:00 p.m. to 7:00 p.m. , the Annual Festival of Lights and Tree Lighting Event will be held at Victorville City Hall.

29. Discussion and Possible Action Regarding Upcoming Agenda Items

Motion was made to suspend the rules to reconsider agenda item 2, expressly to consider the CFD, with options to remove the catch-up feature and look at a flat rate CPI with a 3 % option, a 4% option, and a 5% option; one of those options being fixed and using explicit language that the item comes back to the Council to review annually for any needed action.

Moved: Council Member Jones
Seconded: Mayor Pro Tem Harriman

Motion passed 4-1

Ayes: Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra
Noes: Council Member Gomez

Motion was made for discussion and possible action, at the soonest possible time, to reconsider agenda item 2, to remove the catch- up feature and look at having a flat rate CPI , plus a 3% option, a 4% option, a 5% option, with one of those options being fixed and that the item comes back to the Council to review annually for any needed action.

Questions ensued

Moved: Council Member Jones
Seconded: Mayor Pro Tem Harriman

Motion was withdrawn by Council Member Jones, therefore also withdrawing the prior motion to suspend the rules based off of the narrow language in the motion.

Motion was made to suspend the rules to reconsider agenda item 2

Moved: Mayor Becerra
Seconded: Mayor Pro Tem Harriman

Motion failed 3-2

Ayes: Council Member Irving, Mayor Pro Tem Harriman, Mayor Becerra Noes: Council Member Gomez, Council Member Jones

Motion was made to suspend the rules to reconsider agenda item 2

Moved: Council Member Gomez
Seconded: Mayor Becerra

No vote was taken as this motion was a duplicate of the previous failed motion.

30. Reports from Council Members

None

Adjournment

Mayor Becerra adjourned the meeting at 8:52 p.m.

Attest:

_____________________ _________________________ Elizabeth Becerra, Mayor Jennifer Thompson, City Clerk

Attachment B

City Council Chambers
14343 Civic Drive
Victorville, CA
www.victorvilleca.gov

VICTORVILLE CITY COUNCIL

VICTORVILLE LIBRARY BOARD OF TRUSTEES

SOUTHERN CALIFORNIA LOGISTICS AIRPORT AUTHORITY

SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY

THE CITY AS HOUSING ASSETS SUCCESSOR

JOINT POWERS FINANCING AUTHORITY

VICTORVILLE WATER DISTRICT

Special Meeting Minutes
Tuesday, November 26, 2024
6:00 p.m. Special Session

6:00 p.m. Special Session

Call to Order

Roll Call

Present: Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Absent: Council Member Gomez

Also Present:

City Manager Keith C. Metzler, Deputy City Manager Sophie Smith, Deputy City Manager Jenele Davidson, Deputy City Manager Scott Webb, Deputy City Manager Tony Camargo,
City Clerk Jennifer Thompson, City Attorney Andre de
Bortnowsky

Invocation: Mayor Becerra

Pledge of Allegiance: Police Captain Randy German

City Clerk Presents Agenda/Revisions to Agenda

Agenda presented with no revisions reported.

Conflict of Interest Declarations

There were no conflicts of interest reported.

Public Comments

None

WRITTEN COMMUNICATIONS

1. Runway 17/35 Reconstruction Phase V, Project CC24-126, Amendment One

Recommendation:

That the Southern California Logistics Airport Authority Board of Directors:
(1) Adopt Resolution No. SCLAA 24- 007 increasing budgeted Airport Operations expenses of $211,530.17; and
(2) Approve Amendment One to the Construction Contract with Pave- Tech Inc., for
Runway 17/35 Reconstruction Phase V, Project CC24-126, increasing the total not to exceed compensation by $211,530.17 to $5,145,079.44.

Questions ensued

Motion was made to approve staff recommendations

Moved: Mayor Becerra
Seconded: Council Member Irving

Comments ensued

Motion passed 4-0

Ayes: Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Absent: Council Member Gomez

2. Motion to Suspend the Rules in accordance with the City Council Policy and Procedure Manual, Chapter 5, Section II, Subsection M related to a failed motion from the November 19, 2024, City Council Meeting regarding the consideration of the formation of a City-Wide Community Facilities District

Questions ensued

Motion was made to suspend the rules with the understanding that the Council will consider alternatives to the way it was originally presented in the last meeting.

Moved: Council Member Jones
Seconded: Mayor Pro Tem Harriman

Comments ensued

Motion passed 4-0

Ayes: Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Absent: Council Member Gomez

3. Motion to agendize the Formation of Community Facilities District No. 2024-01 to provide Municipal Services to the Regular City Council Meeting of December 17, 2024

Questions ensued

Motion was made to agendize the Formation of Community Facilities District No. 2024-01 to provide Municipal Services to the Regular City Council Meeting of December 17, 2024

Moved: Mayor Becerra
Seconded: Mayor Pro Tem Harriman

Comments ensued

Motion passed 4-0

Ayes: Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Absent: Council Member Gomez

Adjournment

Mayor Becerra adjourned the meeting at 6:28 p.m.

Attest:

_____________________ _________________________ Elizabeth Becerra, Mayor Jennifer Thompson, City Clerk

Attachment C

City Council Chambers
14343 Civic Drive
Victorville, CA
www.victorvilleca.gov

VICTORVILLE CITY COUNCIL

VICTORVILLE LIBRARY BOARD OF TRUSTEES

SOUTHERN CALIFORNIA LOGISTICS AIRPORT AUTHORITY

SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY

THE CITY AS HOUSING ASSETS SUCCESSOR

JOINT POWERS FINANCING AUTHORITY

VICTORVILLE WATER DISTRICT

Special Meeting Minutes
Tuesday, December 10, 2024
6:00 p.m. Special Session

6:00 p.m. Special Session

Call to Order

Roll Call

Present: Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Absent: Council Member Gomez

Also Present:

City Manager Keith C. Metzler, Deputy City Manager Sophie Smith, Deputy City Manager Jenele Davidson, Deputy City Manager Scott Webb, Deputy City Manager Tony Camargo,
City Clerk Jennifer Thompson, City Attorney Andre de
Bortnowsky

Invocation: Pastor Josh Gerbracht from First Assembly of God

Pledge of Allegiance: Police Captain Randy German

Special Presentations

Council Member Gomez was recognized for her eight years of service.

City Clerk Presents Agenda/Revisions to Agenda

Agenda presented with no revisions reported.

Conflict of Interest Declarations

There were no conflicts of interest reported.

Introduction to Public Comments

City Clerk Thompson provided an opening statement regarding public comments.

Public Comments

The following people spoke:

Dara Smith spoke on agenda item 2

WRITTEN COMMUNICATIONS

1. November 5, 2024, General Municipal Election Results

Recommendation:

That the City Council adopt Resolution No. 24- 104 declaring the results of the November 5, 2024, General Municipal Election.

Motion was made to approve staff recommendation

Moved: Council Member Jones
Seconded: Mayor Pro Tem Harriman

Comments ensued

Motion passed 4-0

Ayes: Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Absent: Council Member Gomez

2. Administer the Oath of Office to the following Newly Elected Council Members:

Tiffany Gaudin – District 1
Elizabeth “Liz” Becerra – District 3
Leslie Irving – District 5

City Clerk Thompson administered the Oath of Office to Tiffany Gaudin

Deputy City Manager Smith administered the Oath of Office to Liz Becerra

Jim Cox administered the Oath of Office to Leslie Irving

3. Remarks from Newly Elected Council Members

Council Member Gaudin issued an acceptance speech

Council Member Irving issued an acceptance speech

Council Member Becerra issued an acceptance speech

4. Appointment of Mayor and Mayor Pro Tem

Recommendation:

That Your Honorable City Council
(1) Direct the City Clerk to open nominations for the office of Mayor, take nominations, announce the outcome of the vote and declare the appointment upon a majority vote of the Council;
(2) Should the Council come to consensus on the office of Mayor, the newly appointed Mayor shall preside over the process for the office of Mayor Pro Tem, unless he/she prefers the City Clerk to facilitate the appointment; and (3) Open nominations for the office of Mayor Pro Tem, take nom inations, and
have the City Clerk announce the outcome of the vote and declare the appointment upon a majority vote of the Council.

City Clerk opened nominations for the office of Mayor

Council Member Irving nominated Council Member Becerra

Council Member Becerra accepted the nomination

City Clerk closed the nominations for the office of Mayor

Council Member Gaudin voted for Council Member Becerra

Council Member Irving voted for Council Member Becerra

Council Member Jones voted for Council Member Becerra

Council Member Harriman voted for Council Member Becerra

Council Member Becerra voted for Council Member Becerra

City Clerk declared that Council Member Becerra will hold the office of Mayor

City Clerk opened nominations for the office of Mayor Pro Tem

Council Member Irving nominated Council Member Harriman

Council Member Harriman accepted the nomination

City Clerk closed the nominations for the office of Mayor Pro Tem

Council Member Gaudin voted for Council Member Harriman

Council Member Irving voted for Council Member Harriman

Council Member Jones voted for Council Member Harriman

Council Member Harriman voted for Council Member Harriman

Mayor Becerra voted for Council Member Harriman

City Clerk declared that Council Member Harriman will hold the office of Mayor Pro Tem

Adjournment

Mayor Becerra adjourned the meeting at 6:29 p.m.

Attest:

_____________________ _________________________ Elizabeth Becerra, Mayor Jennifer Thompson, City Clerk

Attachment D

City Council Chambers
14343 Civic Drive
Victorville, CA
www.victorvilleca.gov

VICTORVILLE CITY COUNCIL

VICTORVILLE LIBRARY BOARD OF TRUSTEES

SOUTHERN CALIFORNIA LOGISTICS AIRPORT AUTHORITY

SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY

THE CITY AS HOUSING ASSETS SUCCESSOR

JOINT POWERS FINANCING AUTHORITY

VICTORVILLE WATER DISTRICT

Regular Meeting Minutes
Tuesday, December 17, 2024
5:00 p.m. Closed Session
6:00 p.m. Regular Session

5:00 p.m. Closed Session

Call to Order

Roll Call

Present: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Absent: None

Declaration of Closed Session Item(s) by City Attorney

CITY COUNCIL

A. CONFERENCE WITH LEGAL COUNSEL- EXISTING LITIGATION
Pursuant to Government Code § 54956.9(d)(1)
Case name unspecified: (Disclosure would jeopardize existing settlement negotiations)

B. CONFERENCE WITH LEGAL COUNSEL- EXISTING LITIGATION
Pursuant to Government Code § 54956.9(d)(1)

Case name unspecified: (Disclosure would jeopardize existing settlement negotiations)

Recess to Closed Session

6:00 p.m. Regular Session

Call to Order

Roll Call

Present: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Absent: None

Also Present: City Manager Keith C. Metzler, Deputy City Manager Sophie Smith, Deputy City Manager Jenele Davidson, Deputy City Manager Scott Webb, Deputy City Manager Tony Camargo,
City Clerk Jennifer Thompson, City Attorney Andre de
Bortnowsky

Closed Session Announcements by the City Attorney

City Attorney Andre de Bortnowsky announced two (2) closed session items as set forth on the agenda. There were no reportable actions with respect to these items.

Invocation: Pastor Dane Davis with Impact Christian Church

Pledge of Allegiance: Police Captain Randy German

Proclamations/Special Presentations

Proclamation declaring November 30th as Silverado Hawks Day

Mayor Becerra presented a proclamation to the Silverado High School Faculty and Football Team proclaiming November 30th as Silverado Hawks Day.

Presentation to Retiring Employees
Sophie Smith, Deputy City Manager
Josie Trevino, Human Resources Officer
Mayor Becerra announced the retirement of Deputy City Manager Sophie Smith and Human Resources Officer Josie Trevino. Mayor Becerra thanked them for their years of dedication and service to the City of Victorville and highlighted their accomplishments and contributions.

City Clerk Presents Agenda/Revisions to Agenda

City Clerk announced three (3) revisions.

Revision to agenda item 3:

Revising attachment A - Resolution 24-102
page two under the first Whereas add the
word “not” after the word “determined” to read as follows:
(WHEREAS, following the public hearing, the City Council determined not to authorize the formation of the District and the designation of the Future Annexation Area to finance the types of municipal services (the "Municipal Services") and the administrative expenses (the "Administrative Expenses") set forth in Exhibit A attached hereto and incorporated herein by this reference, which are described in more detail in the CFD Report attached hereto as Exhibit B and also incorporated herein by this reference; and)

Revision to agenda item 28:

Revising Attachment A, Section IV Subsection E parenthesis section to read as follows:
(including sales tax and up to an 18% tip).

Revising Attachment A, Section IV Subsection H. - Removing Long- term at the beginning of the sentence.

Revision to agenda item 31:

Adding Attachment D – Resume of Derek Marshall – nominee for Planning Commission Adding Attachment E – Resume of Tammie McDonald – nominee for CSAC

Conflict of Interest Declarations

There were no conflicts of interest reported.

Introduction to Public Comments

City Clerk Thompson provided an opening statement regarding public comments.

Public Comments

The following people spoke:

William Castellon spoke on general items

PUBLIC HEARING(S)

1. Update of the Master User Fee Schedule

Recommendation:

That the Honorable City Council and Victorville Water District Board of Directors:
(1) Open and conduct the Public Hearing;
(2) Close the Public Hearing; and
(3) Adopt Resolution Nos. 24- 105 and VWD 24-
010, amending the Master User
Fee Schedule by adjusting certain user fees based on the percentage change in the Consumer Price Index, adding various new fees, and making other updates and conforming changes.

The Chair opened the Public Hearing

There were no speakers

The Chair closed the Public Hearing

Motion was made to approve staff recommendations for point 3

Moved: Council Member Jones
Seconded: Council Member Irving

Motion passed 5-0

Ayes: Council Member Gaudin Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

2. Development Impact Fees (DIF) and Capacity Charges Annual Review – Master Fee Schedule, Implementation Policy and Capital Improvement Plan

Recommendation:

The Honorable City Council and Victorville Water District Board of Directors (District Board):
(1) Open and conduct the Public Hearing;
(2) Close the Public Hearing; and
(3) Adopt Resolution Nos. 24-005 and VWD 24-011, adopting an updated Master Fee Schedule for DIF and Capacity Charges, City Council Policy No. CP -24-05 establishing updated guidelines for implementation of said DIF and Capacity Charges and superseding City Council Policy No. CP -23-02, and the associated updated Capital Improvement Plan.

The Chair opened the Public Hearing

There were no speakers

The Chair closed the Public Hearing

Motion was made to approve staff recommendations for point 3

Moved: Council Member Jones
Seconded: Council Member Irving

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

3. Formation of Community Facilities District No. 2024-01 for Municipal Services

Recommendation:

Staff recommends that the Honorable City Council:
(1) Adopt Resolution No. 24- 102 – Resolution of Formation, forming CFD 2024- 01 and setting an election for December 17, as requested by the property owners;
(2) Adopt Resolution No. 24- 103 – Resolution Certifying the Election Results, upon the City Clerk’s opening of the sealed ballots that have been received; (3) Open and Conduct the Public Hearing to hear arguments for and against the adoption of Ordinance No. 2453, to allow for the levy of special taxes for CFD 2024-01;
(4) Close the Public Hearing;
(5) Introduce Ordinance No. 2453 for adoption and first reading by title only; (6) Waive further reading in full of proposed Ordinance No. 2453; and (7) Adopt Resolution No. 24- 107, establishing Council Policy CP -24-06 for administration of CFD 2024-01.

Questions ensued

The Chair opened the Public Hearing

There were no speakers

City Clerk Thompson announced there was one (1) public
comment received via
email that was distributed to the council and posted to the website

The Chair closed the Public Hearing

Motion was made to approve staff recommendations for point 1

Moved: Council Member Irving
Seconded: Mayor Becerra

Comments ensued

Motion passed 3-2

Ayes: Council Member Irving, Mayor Pro Tem Harriman, Mayor Becerra Noes: Council Member Jones, Council Member Gaudin

Motion was made to approve staff recommendations for point 2

Moved: Council Member Irving
Seconded: Mayor Becerra

Comments ensued

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Motion was made to approve staff recommendations for points 5 and 6

Moved: Council Member Irving
Seconded: Mayor Becerra

Motion passed 4-1

Ayes: Council Member Gaudin, Council Member Irving, Mayor Pro Tem Harriman, Mayor Becerra
Noes: Council Member Jones

Motion was made to approve staff recommendations for point 7

Moved: Council Member Irving
Seconded: Mayor Becerra

Motion passed 4-1

Ayes: Council Member Gaudin, Council Member Irving, Mayor Pro Tem Harriman, Mayor Becerra
Noes: Council Member Jones

CONSENT CALENDAR

4. Reduction of Securities for Tract Map No. 14741

Recommendation:

That the Honorable City Council approve the full release of the Monumentation Faithful Performance Security for Tract Map No.14741.

5. Reduction of Securities for Tract Map No. 16684

Recommendation:

That the Honorable City Council:
(1) Approve the full release of the Monumentation Faithful Performance Security for Tract Map No.16684; and
(2) Approve the full release of the Public Improvement Labor and Material Securities for Tract Map No. 16684.

6. Reduction of Securities for Tract Map No. 14751

Recommendation:

That the Honorable City Council approve the full release of the Street Faithful Performance Security for Tract Map No. 14751.

7. Payroll Demand Schedule No. 3B

Recommendation:

That the City Council and Board of Directors ratify Payroll Demand Schedule No. 3B for Payroll Period September 13, 2024, through September 27, 2024, in the amount of $2,336,456.94 covering Check Nos. 34316 through 34332, including Vendor checks. Please note employee Check No. 34317 has a live Check and an EFT Advice. Also included are Advice Nos. 318670 and 319230 through 319784, per adopted budget for Fiscal Year 2024 -2025 (period covering July 1, 2024, through June 30, 2025).

8. Notice of Completion - Bear Valley Road Reconstruction Project

Recommendation:

That the Honorable City Council accept as complete and approve the Notice of Completion for the Bear Valley Reconstruction Project and authorize the City Manager to execute the Notice of Completion.

9. Reduction of Securities for Tract Map No. 20274

Recommendation:

That the Honorable City Council:
(1) Approve an 80-percent reduction of the Landscape Maintenance Assessment District (LMAD) Public Improvement Faithful Performance Security for Tract Map No. 20274; and
(2) Accept the completed Landscape Maintenance Assessment District (LMAD) Public Improvements for Tract Map No. 20274.

10. Commercial Demand Schedule No. 10

Recommendation:

That the City Council and Board of Directors ratify Commercial Demand Schedule No. 10 in the amount of $8,645,766.24, covering Electronic Fund Transfers No. 341715 through 341856 and Warrant No. 797442 through 797601 for 10/31/2024 through 11/13/2024, per the adopted budget for Fiscal Year 2024- 2025 for the period covering July 1, 2024 through June 30, 2025.

11. Reduction of Securities for Tract Map No. 14992

Recommendation:

That the Honorable City Council approve the full release of the Street Improvement Faithful Performance Security for Tract Map No. 14992.

12. Reduction of Securities for Tract Map No. 14721

Recommendation:

That the Honorable City Council approve the full release of the Street Faithful Performance Security for Tract Map No. 14721.

13. Reduction of Securities for Tract Map No. 16507

Recommendation:

That the Honorable City Council;
(1) Approve the full release of the Monumentation Faithful Performance Security for Tract Map No.16507; and
(2) The release of the Subdivision Improvement Agreement for Tract Map No. 16507.

14. Commercial Demand Schedule No. 11

Recommendation:

That the City Council and Board of Directors ratify Commercial Demand Schedule No. 11 in the amount of $22,281,357.41, covering Electronic Fund Transfers No. 341857 through 342098 and Warrant No. 797602 through 797748 for 11/14/2024 through 11/26/2024 and Wire Transfers dated 11/25/2024, per the adopted budget for Fiscal Year 2024- 2025 for the period covering July 1, 2024 through June 30, 2025.

15. Notice of Completion – Kern River Interconnect Project

Recommendation:

That the Honorable City Council accept as complete and approve the Notice of Completion for Kern River Interconnect Project and authorize the City Manager to execute the Notice of Completion.

16. Notice of Completion – Old Town Septic to Sewer Conversion Project

Recommendation:

That the Honorable City Council accept as complete and approve the Notice of Completion for the Old Town Septic to Sewer Conversion Project and authorize the City Manager to execute the Notice of Completion.

17. Notice of Completion – Mojave Drive at Condor Road Traffic Signal

Recommendation:

That the Honorable City Council accept as complete and approve the Notice of Completion for the Mojave Drive at Condor Road Traffic Signal project and authorize the City Manager to execute the Notice of Completion.

Motion was made to approve staff recommendations for items 4 through 17

Moved: Council Member Irving
Seconded: Mayor Becerra

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

WRITTEN COMMUNICATIONS

18. Approval of Final Tract Map No. 14525

Recommendation:

That the Honorable City Council conditionally approve the following actions subject to the formation of Community Facilities District CFD No. 2024- 01 and the associated adoption of Ordinance 2453:
(1) Approve Final Tract Map No. 14525;
(2) Approve the execution of a Subdivision Improvement Agreement with Subdivider (SLPR, LLC) and the City for Final Tract Map No. 14525. (3) Approve the execution of a Lien Agreement with SLPR LLC as security for the public improvements for said tract; and
(4) Approve the release of the Land Division Improvement Construction Agreement for Parcel Map No. 15883 Parcel 1.

Motion was made to approve staff recommendations

Moved: Council Member Irving
Seconded: Mayor Pro Tem Harriman

Comments ensued

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

19. Hazard Mitigation Grant Program

Recommendation:

That the Honorable City Council adopt Resolution No. 24- 086, authorizing the City Manager or his/her designee to apply for, accept, and execute all documents deemed necessary to facilitate receipt of grant funding for the Hazard Mitigation Grant Program.

Motion was made to approve staff recommendation

Moved: Mayor Becerra
Seconded: Council Member Irving

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

20. Building 724 Heating, Ventilation, and Air Conditioning System Replacement

Recommendation:

That the Southern California Logistics Airport Authority Board of Directors:
(1) Approve Amendment Four to the General Services Provider Standard Agreement between SCLAA and FM Thomas Air Conditioning Inc., increasing the not to exceed compensation amount from $50,000 to $150,000 and; (2) Adopt Resolution No. SCLAA 24 -005 amending the fiscal year 2024 -2025 Building 724 Maintenance Budget by $126,296.00 and;
(3) Approve FM Thomas Air Conditioning Inc., to furnish and install a new Heating, Ventilation, and Air Conditioning (“HVAC”) system at Building 724.

Motion was made to approve staff recommendations

Moved: Council Member Irving
Seconded: Mayor Pro Tem Harriman

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

21. Construction Agreement with Scorpion Fire Protection, Inc., for Fire Suppression System Services, Project JM24-109

Recommendation:

That the Southern California Logistics Airport Authority Board of Directors approve the award of a Construction Agreement by and between the Southern California Logistics Airport Authority and Scorpion Fire Protection, Inc., in the amount not to exceed $50,000, in support of Fire Suppression System Services, Project JM24-109.

Questions ensued

Motion was made to approve staff recommendation

Moved: Council Member Jones
Seconded: Mayor Pro Tem Harriman

Comments ensued

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

22. Consultant/Professional Services Provider Agreement with Larry Walker Associates, Inc. for National Pollutant Discharge Elimination System (NPDES) Permit for Industrial Wastewater Treatment Plant

Recommendation:

That the Honorable Victorville Water District Board of Directors approve the Consultant/Professional Services Provider Agreement with Larry Walker Associates, Inc., in an amount not to exceed $499,272 for NPDES permit preparation for the Industrial Wastewater Treatment Plant’s excess recycled water discharge.

Questions ensued

Motion was made to approve staff recommendation

Moved: Council Member Irving
Seconded: Mayor Pro Tem Harriman

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

23. Custom Truck Beds for Water Field Service Vehicles

Recommendation:

That the Honorable City Council/Board of Directors:
(1) Find that Doug Page Manufacturing is the sole manufacturer for the procurement, manufacturing and installation of two (2) custom truck beds and a sole source is approved in accordance with VMC 2.28.100(b)(2); and (2) Authorize the procurement, manufacturing and installation of two (2) custom truck beds in the amount of $239,923 to Doug Page Manufacturing.

Motion was made to approve staff recommendations

Moved: Mayor Becerra
Seconded: Council Member Irving

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

24. Extension of Sunset Date for Certain Temporary Fee and Penalty Waivers for Animal Services Pursuant to Section 7.04.055 of the Victorville Municipal Code

Recommendation:

That the Honorable City Council adopt Resolution No. 24- 089, extending the sunset date of certain temporary fee and penalty waivers associated with the licensing and impoundment of dogs and cats in the city to June 30, 2025.

Motion was made to approve staff recommendation

Moved: Council Member Gaudin
Seconded: Council Member Irving

Comments ensued

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

25. Underfunded Landscape Maintenance Assessment Districts (LMADs) 1 -4, Consultant Contract Award

Recommendation:

That the Honorable City Council:
(1) Adopt Resolution No. 24- 090, amending the Fiscal Year 2024/2025 budget, approving an additional appropriation of $45,800 of General Fund funds and suspending Council Policy No. CP-97-3; and
(2) Award a contract to Willdan Financial Services in an amount not to exceed $45,800 for Assessment Engineering Services.

Questions ensued

Motion was made to approve staff recommendations for point 1

Moved: Council Member Irving
Seconded: Mayor Pro Tem Harriman

Comments ensued

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Motion was made to approve staff recommendation for point 2

Moved: Mayor Pro Tem Harriman
Seconded: Council Member Irving

Comments ensued

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

26. Construction Agreement with BluSky Restoration Contractors for the City Hall Reception and Security Expansion, Project JM25-080

Recommendation:

That the Honorable City Council approve the award of a construction agreement to BluSky Restoration Contractors in the amount not to exceed $380,928.45 for the City Hall Reception and Security Expansion, Project JM25-080.

Questions ensued

Motion was made to approve staff recommendation

Moved: Council Member Jones
Seconded: Mayor Pro Tem Harriman

Comments ensued

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

27. Development Impact Fee Credit Agreement against Roadway Fees by and between Prologis, LLC and the City of Victorville

Recommendation:

That the Honorable City Council:
(1) Approve the attached Development Impact Fee Credit Agreement against Roadway Fees by and between Prologis, LLC and the City of Victorville; and (2) Authorize the City Manager and City Attorney to make non- substantive changes and clarifications to the Development Impact Fee Credit Agreement.

Motion was made to approve staff recommendations

Moved: Mayor Becerra
Seconded: Council Member Jones

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

Recess was called at 8:01 p.m.

Recess concluded at 8:07 p.m.

28. City Council Policy No. CP -24-07 – City Council Spending and Expense Reimbursement Policy

Recommendation:

That Your Honorable City Council adopt City Council Policy No. CP -24-07, the City Council Spending and Expense Reimbursement Policy

Questions ensued

Motion was made to approve staff recommendation

Moved: Mayor Becerra
Seconded: Council Member Jones

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

29. Possible cancellation of the Regular City Council Meeting of January 7, 2025

Recommendation:

Any action is at the discretion of the City Council.

Motion was made to cancel the Regular City Council Meeting of January 7, 2025

Moved: Council Member Jones
Seconded: Council Member Gaudin

Comments ensued

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

30. Fiscal Year 2024 -2025 Training Schedule for Newly Elected Council Member Tiffany Gaudin

Recommendation:

That Your Honorable City Council approve and authorize Council Member Tiffany Gaudin to attend the New Mayors and Council Members Academy, the City Leaders Summit, and the City/County Conference.

Motion was made to approve staff recommendation

Moved: Council Member Jones
Seconded: Council Member Irving

Comments ensued

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

31. Appointments to City's Committees (Local Appointments List)

Recommendation:

That the City Council:
(1) Open nominations for two members for the Community Revitalization Investment Authority;
(2) Open nominations for two members for the Audit Committee; (3) Open nominations for two members for the Community Planning and Development (CPD) Grants Subcommittee as outlined below; and (4) Open nominations by newly elected Councilmembers for the Planning Commission and Community Services Advisory Committee. Returning Councilmembers may re-affirm previous appointments.

Questions ensued

Mayor Becerra opened nominations to appoint two members to the Community Revitalization Investment Authority

Council Member Jones nominated Council Member Irving and Mayor Becerra to serve on the Community Revitalization Investment Authority

City Manager Keith C. Metzler announced the
Community Revitalization
Investment Authority board has specific requirements and asked Deputy City Manager Scott Webb to further explain

Deputy City Manager Scott Webb announced when the Community Revitalization Investment Authority was established the adopted resolution required the members of council that sit on the board one (1) need be the Mayor and two (2) need be the Mayor Pro Tem and the third (3) can be selected by the council

Due to the above Council moved forward to appointments to the Audit Committee

Mayor Becerra opened nominations to appoint two members to the Audit Committee

Questions ensued

Mayor Pro Tem Harriman nominated Council Member Jones to serve on the Audit Committee

Council Member Jones accepted the nomination

Council Member Irving nominated Council Member Gaudin to serve on the Audit Committee

Council Member Gaudin accepted the nomination

Mayor Becerra closed the nominations

Council Member Gaudin voted for Council Member Gaudin and Council Member Jones

Council Member Irving voted for Council Member Gaudin and Council Member Jones

Council Member Jones voted for Council Member Gaudin and Council Member Jones

Council Member Harriman voted for Council Member Gaudin and Council Member Jones

Mayor Becerra voted for Council Member Gaudin and Council Member Jones

City Clerk declared that Council Member Gaudin and Council Member Jones were appointed to the Audit Committee
Mayor Becerra opened nominations to appoint two members to the Community Planning and Development Grants Subcommittee

Mayor Becerra nominated Mayor Becerra to serve on the Community Planning and Development Grants Subcommittee

Council Member Jones nominated Council Member Jones to serve on the Community Planning and Development Grants Subcommittee

Mayor Becerra closed the nominations

Council Member Gaudin voted for Mayor Becerra and Council Member Jones

Council Member Irving voted for Mayor Becerra and Council Member Jones

Council Member Jones voted for Mayor Becerra and Council Member Jones

Council Member Harriman voted for Mayor Becerra and Council Member Jones

Mayor Becerra voted for Mayor Becerra and Council Member Jones

City Clerk declared that Mayor Becerra and Council Member Jones were appointed to the Community Planning and Development Grants Subcommittee

Mayor Becerra opened nominations to appoint three members for the Planning Commission

Council Member Gaudin introduced and nominated Bill Thomas as an appointee to the Planning Commission

Council Member Gaudin voted for Bill Thomas

Council Member Irving voted for Bill Thomas

Council Member Jones voted for Bill Thomas

Council Member Harriman voted for Bill Thomas

Mayor Becerra voted for Bill Thomas
Council Member Irving introduced and nominated Derek Marshall as an appointee to the Planning Commission

Council Member Gaudin voted for Derek Marshall

Council Member Irving voted for Derek Marshall

Council Member Jones voted for Derek Marshall

Council Member Harriman declined the vote for Derek Marshall

Mayor Becerra voted for Derek Marshall

Mayor Becerra re-affirmed Rob Kurth as an appointee to the Planning Commission

Council Member Gaudin voted for Rob Kurth

Council Member Irving voted for Rob Kurth

Council Member Jones voted for Rob Kurth

Council Member Harriman voted for Rob Kurth

Mayor Becerra voted for Rob Kurth

City Clerk declared that Bill Thomas, Derek Marshall, and Rob Kurth were appointed to the Planning Commission

Mayor Becerra opened nominations to appoint three members to the Community Services Advisory Committee

Council Member Gaudin introduced and nominated Greg Temple to serve on the Community Services Advisory Committee

Council Member Gaudin voted for Greg Temple

Council Member Irving voted for Greg Temple

Council Member Jones voted for Greg Temple

Council Member Harriman voted for Greg Temple

Mayor Becerra voted for Greg Temple

Council Member Irving introduced and nominated Tammie McDonald to serve on the Community Services Advisory Committee

Council Member Gaudin voted for Tammie McDonald

Council Member Irving voted for Tammie McDonald

Council Member Jones voted for Tammie McDonald

Council Member Harriman voted for Tammie McDonald

Mayor Becerra voted for Tammie McDonald

Mayor Becerra re-affirmed Allison Mehrhof as an appointee to the Community Services Advisory Committee

Council Member Gaudin voted for Allison Mehrhof

Council Member Irving voted for Allison Mehrhof

Council Member Jones voted for Allison Mehrhof

Council Member Harriman voted for Allison Mehrhof

Mayor Becerra voted for Allison Mehrhof

City Clerk declared that Greg Temple, Tammie McDonald, and Allison Mehrhof were appointed to the the Community Services Advisory Committee

Upon further review of the Community Revitalization Investment Authority staff noted the abo ve direction was innacurate therefore Council moved forward to appointments to the Community Revitalization Investment Authority

Council Member Jones nominated Council Member Irving to serve on the Community Revitalization Investment Authority

Council Member Irving accepted the nomination

Council Member Gaudin voted for Council Member Irving

Council Member Irving voted for Council Member Irving

Council Member Jones voted for Council Member Irving

Council Member Harriman voted for Council Member Irving

Mayor Becerra voted for Council Member Irving

Mayor Pro Tem Harriman nominated Mayor Becerra to serve on the Community Revitalization Investment Authority

Mayor Becerra accepted the nomination

Council Member Gaudin voted for Mayor Becerra

Council Member Irving voted for Mayor Becerra

Council Member Jones voted for Mayor Becerra

Council Member Harriman voted for Mayor Becerra

Mayor Becerra voted for Mayor Becerra

City Clerk declared that Greg Temple, Tammie McDonald, and Allison Mehrhof were appointed to the the Community Services Advisory Committee

32. City Council appointments to outside agencies

Recommendation:

That the City Council consider and appoint members to fill the vacant committee positions indicated in Attachment A.

Questions ensued

Council Member Jones nominated Council Member Gaudin to serve as the alternate on the Mojave Desert and Mountain Recycling JPA, Southern California Association of Governments (SCAG) General Assembly, and the Victor Valley Wastewater Reclamation Authority (VVWRA)

Council Member Gaudin accepted the nomination

Council Member Gaudin voted for Council Member Gaudin

Council Member Irving voted for Council Member Gaudin

Council Member Jones voted for Council Member Gaudin

Council Member Harriman voted for Council Member Gaudin

Mayor Becerra voted for Council Member Gaudin

Council Member Jones nominated Mayor Becerra to serve as the primary on the CONFIRE, High Desert Corridor Joint Powers Agency , League of California Cities Desert Mountain Division , Mojave Desert Air Quality Management District Board (MDAQMD) , Solid Waste Advisory Task -Force (SWAT) , Victor Valley Economic Development Authority (VVEDA) , and Victor Valley Transit Authority (VVTA)

Mayor Becerra accepted the nomination

Council Member Gaudin voted for Mayor Becerra

Council Member Irving voted for Mayor Becerra

Council Member Jones voted for Mayor Becerra

Council Member Harriman voted for Mayor Becerra

Mayor Becerra voted for Mayor Becerra

City Clerk declared Council Member Gaudin as the alternate for the Mojave Desert and Mountain Recycling JPA, Southern California Association of Governments (SCAG) General Assembly, and the Victor Valley Wastewater Reclamation Authority (VVWRA)

City Clerk declared Mayor Becerra as the primary for the CONFIRE, High Desert Corridor Joint Powers Agency, League of California Cities Desert Mountain Division, Mojave Desert Air Quality Management District Board (MDAQMD), Solid Waste Advisory Task -Force (SWAT), Victor Valley Economic Development Authority (VVEDA), and Victor Valley Transit Authority (VVTA)

33. League of California Cities Policy Committee Travel Approval

Recommendation:

That Your Honorable City Council authorize travel to the League of California Cities Policy Committee meetings for the Council Member not appointed as a representative to the Desert Mountain Division.

Questions ensued

Motion was made to approve staff recommendation

Moved: Mayor Becerra
Seconded: Council Member Irving

Motion passed 5-0

Ayes: Council Member Gaudin, Council Member Irving, Council Member Jones, Mayor Pro Tem Harriman, Mayor Becerra

34. City Manager Reports

City Manager Keith C. Metzler provided an update on the progress of the Citywide Pavement Preservation and Maintenance Project . He also announced Burrtec would be offering free curbside Christmas tree pick-ups for Victorville residential customers starting on January 6th through January 17th.

35. Discussion and Possible Action Regarding Upcoming Agenda Items

None

36. Reports from Council Members

Council Member Jones reported on her attendance to the National League of Cities Conference. She also reported on her attendance to her multiple subcommittee meetings. She reported she was not able to attend the e mployee Christmas party due to a prior engagement.

Council Member Gaudin reported on her attendance to the 30th anniversary of Southern California Logistics Airport and the ribbon cutting for the new Animal Shelter. She also reported on her attendance to the one -year anniversary of the Wellness Center.

Mayor Pro Tem Harriman reported on his attendance to the 30 th anniversary of Southern California Logistics Airport and the ribbon cutting for the new Animal Shelter. He also reported on the success of the Christmas Parade.

Mayor Becerra recognized the Kiwanis Club for the success of the Christmas Parade. Additionally, she thanked the staff for the success of all the events including the 30th anniversary of Southern California Logistics Airport , the ribbon cutting ceremony for the new Animal Shelter , the Wellness Center one-year anniversary, and the Christmas Parade.

Adjournment

Mayor Becerra adjourned the meeting at 9:01 p.m.

Attest:

_____________________ _________________________ Elizabeth Becerra, Mayor Jennifer Thompson, City Clerk

Item Number: 11
City Council / Board of Directors
Consent Calendar
Meeting of: January 21, 2025
Submitted By:

Keith C. Metzler, City Manager
Randy German, Police Captain

Subject:

Automatic License Plate Reader Annual Report
Recommendation:

That the Honorable City Council review and file the attached Automatic License Plate Reader Annual Report.

Fiscal Impact:

There is no fiscal impact associated with this action.

Strategic Plan Goal:

This item aligns with Strategic Plan Goal B, Public Safety. The City focuses on implementing public safety strategies to support a thriving and growing community. In accordance with one strategy outlined within the plan, invest in technology that will assist efficient and effective police operations, the City Council has previously approved Phases 1-6 of the Automatic License Plate Reader (ALPR) program.

Background:

Since the City Council approved the ALPR program in 2019, Phases 1-6 have been completed, and 123 fixed cameras have been installed throughout the City. With the program complete, the cameras help create a perimeter internal to and around the City to better locate the vehicle being sought by our Police Department.

Discussion:

The ALPR program allows law enforcement to proactively prevent crime and improve the security and safety of the community in the most cost-effective fashion. ALPR technology assists with proactive, tactical, and investigative policing, thereby reducing ongoing costs for additional officers with a one-time capital expense. 3 4
5 7
The ALPR cameras continue to provide critical investigative information to solve murders, burglaries, and sex offender violations, among other crimes. The system immediately notifies our deputies with hits related to wanted vehicles, kidnapping suspects, violent offenders, in-progress robberies, shootings, and critical missing persons. This program allows our deputies to proactively prevent crime and improve the security and safety of our citizens.

Attachment A provides the Council with the City’s ALPR camera activity from January 2024 through December 2024. During this 12-month period, the cameras captured 567 hits and 116 arrests for various crimes: auto theft, robbery, attempted murder, assault/ domestic violence, and terrorist threats. In addition, narcotics and firearms were recovered. The attachment also highlights case summaries where the ALPR program proved invaluable in protecting our community's citizens.

Staff remains available for any questions or comments you might have.

Attachments: A. Victorville ALPR Camera Data

Attachment A
Victorville ALPR cameras
ALPR Calendar Year End Totals
(January - December 2024)

567
116
2024 Victorville ALPR Cameras
Total Hits
Total Arrests
96 2
4 9113
Total Charges from ALPR Hits (116)
Poss. Stolen Vehicle/Cold Plate
Assault/Domestic Violence Suspect
Robbery/Burglary Suspect
Embezzled Vehicle
Armed/Dangerous/Weapons
Evading
Carjacking
1 3
13 9
1 3
1 1 1
Other Charges from ALPR Arrest (33)
Victorville ALPR cameras
ALPR Calendar Year Running Totals
(January – December 2024)
158
135
156
118
25 27
33 31
Q1

JAN-MAR
Q2

APR-JUNE
Q3

JULY-SEPT
Q4

OCT-DEC
Quarterly ALPR Totals
January 2024 - December 2024
Total Hits
Total Arrests
96 2
4 9113
Total Charges from ALPR Hits (116)
Poss. Stolen Vehicle/Cold Plate
Assault/Domestic Violence Suspect
Robbery/Burglary Suspect
Embezzled Vehicle
Armed/Dangerous/Weapons
Evading
Carjacking
1 3
13 9
1 3
1 1 1
Other Charges from ALPR Arrest (33)
Victorville ALPR cameras
(January – December 2024)
Case Summary Examples
Summary 1 - ALPR hit on a stolen vehicle which was located in a nearby parking lot with the assistance of H80. A male was seen walking from the vehicle into Jack in the Box, and a short time later, the male along with another male were contacted and both admitted to driving the vehicle at different times over the past few days. The male explained that another male dropped off the vehicle several days prior, asking them to fix it, but he did not provide information on that subject. Both driver and passenger were arrested.

Summary 2 - A stolen U-Haul truck was identified through ALPR. Deputies located the box truck on 7th and La Paz and initiated a traffic stop.

The driver failed to yield and drove in opposing lanes of traffic and entered the I-15 freeway northbound using the I-15 NB offramp, driving on the opposite side of the roadway. Deputies aired the direction of travel and deputies located the truck on the 1-15 NB offramp at Mojave Drive. A witness observed the suspect run from the truck into the Circle K on Mojave. The suspect was detained inside the store by deputies and video surveillance showed the driver as the one who stole the box truck earlier in the day.

Summary 3 - Deputies located the stolen vehicle at a gas station and conducted a brief surveillance. When deputies attempted to contact the driver, he fled on foot from the deputies. After a short foot pursuit, he was taken into custody. A black BB gun was located inside of the vehicle.

Summary 4 - Deputies got an ALPR hit on a stolen vehicle and conducted a traffic stop. 3 subjects were in the vehicle. The vehicle was purchased with counterfeit money. The driver was arrested for the theft and the passenger was arrested for a felony warrant.

Summary 5 - Dispatch advised of an ALPR hit of a stolen Kia Soul near the intersection of Amargosa and La Mesa. Deputies located the vehicle traveling southbound I-15 near Oak Hills Road and initiated a traffic stop. The vehicle failed to yield, accelerated and led deputies on a pursuit. The vehicle reached speeds of 100mph and continued SB I-15, eventually exiting on University Parkway in San Bernardino. Deputies performed a PIT maneuver near the intersection of West College and N. State Street and the two occupants of the vehicle fled on foot. Both suspects were eventually detained without further incident and found to be juveniles. One juvenile was booked into Juvenile Hall and the other was released to his parents.

Summary 6 - At the same time of an assault with a deadly weapon call, an ALPR came out for a stolen vehicle. Deputies located the vehicle which then immediately led them on a pursuit onto the I-15 freeway. The vehicle exited in Hesperia and pulled into an apartment complex with only one gated entrance. Two occupants fled on foot from the vehicle. Deputies chased on foot for approximately 3 miles before the driver was located along the aqueduct. The driver was found to be on parole for home invasion robbery and a loaded Glock was found on the floorboard of the car. Driver was arrested.

Summary 7 - An ALPR hit was received on a stolen vehicle and when deputies attempted to stop it, a pursuit ensued. During the pursuit, the suspect nearly hit a police unit. The suspect fled on foot from the vehicle while it was still moving. Deputies established a perimeter and the suspect was located inside Doris Davies park. Driver was arrested.

Summary 8 - Deputies responded to an ALPR hit out of Duarte. Deputies located the vehicle still mobile in the area. A felony traffic stop was conducted, and the driver was taken into custody without incident. He admitted to taking the vehicle from the R/O's front yard but stated he took it to fix it because he was a mechanic. The R/O had no idea who the driver was. The driver was arrested and his cat (which was in the car with him) was taken by animal control.

Summary 9 - Deputies located a stolen vehicle that had been hitting ALPRs in the City all night. Vehicle failed to yield and led deputies on a 19-mile high-speed pursuit. The driver, a 17 year-old juvenile made his way around and entered the freeway southbound, exited Mojave, and went westbound, then north on HWY 395, passed Bear Valley, made a u-turn and a PIT maneuver was conducted at HWY 395/Bear Valley.

After the first PIT by deputies, the driver continued and rammed a deputy's unit. Once the vehicle was disabled, he fled on foot into the desert. Deputies caught him quickly. The driver was successfully taken into custody.

Summary 10 - Deputies located a stolen Kia after several ALPR hits throughout the day. The driver led deputies in a high-speed pursuit through several surface streets. The vehicle lost control and collided with a building and an electrical box. The vehicle caught fire. The driver was found to be a juvenile. He was jail checked and found to have a fracture on his right wrist due to the collision. Juvenile was treated at the hospital and then booked into juvenile hall.

Item Number: 12
City Council / Board of Directors
Consent Calendar
Meeting of: January 21, 2025
Submitted By:

Fredy Bonilla, City Engineer

Subject:

Reduction of Securities for Tract Map No. 14741
Recommendation:

That the Honorable City Council approve the full release of the Water, Sewer, Storm Drain and Street Public Improvement Labor and Material Securities for Tract Map No. 14741.

Fiscal Impact:

There is no fiscal impact as a result of this action.

Strategic Plan Goal:

This item aligns with “Goal E Invest in Infrastructure” in the City of Victorville Strategic Plan 2023-2026. Although this is not a Capital Improvement Project, we apply the same strategy to private development projects as they are essential in meeting the community’s needs.

Background:

Tract Map No. 14741 (Tract 14741) is a 159-lot single residential tract located on the northeast corner of Topaz Road and Luna Road. On May 1, 2018, the City Council approved a Subdivision Improvement Agreement (SIA) secured by improvement bonds with K. Hovnanian Ca Land Holding, LLC, as known as K. Hovnanian, for tract development. The conditions of approval for the tract required the developer to finalize various infrastructure components; those components being Landscaping Maintenance Assessment District (LMAD), Monumentation, Water, Sewer, Storm Drain, and Street Improvements. The developer has made significant progress in the development of the tract, as all conditioned public improvements have been completed and accepted by the City Council.
3 9
3 7
Discussion:

Per Victorville Municipal Code Section 17.64.070(3), the Labor and Materials securities are held for a 6-month period. Therefore, staff recommends the full release of the Water, Sewer, Storm Drain and Street Public Improvements Labor and Material Securities due to the acceptance taking place at the July 16, 2024, regular City Council meeting.

Staff remains available for any questions Council may have.

Attachments: A. Vicinity Map
B. Securities Table
C. Existing Securities

Attachment B
Securities Table

Securities Table
Street, Storm Drain, Sewer, Water, LMAD & Monumentation:

Faithful Performance Security
Street Improvements – No. 1155776 Labor & Materials Security Water Improvements – No. 1155777
Amount of ORIGINAL Security: $1,428,288.40 Amount of ORIGINAL Security: $714,144.20 Amount of Security CURRENTLY: $285,657.68 Amount of Security CURRENTLY: $714,144.20 Amount of Security being REDUCED: $0.00 Amount of Security being REDUCED: $714,144.20 Amount of Security REMAINING: $285,657.68 Amount of Security REMAINING: $0.00 Faithful Performance Security
Storm Drain Improvements – No. 1155778 Labor & Materials Security Storm Drain Improvements – No. 1155778
Amount of ORIGINAL Security: $6,380.00 Amount of ORIGINAL Security: $3,190.00 Amount of Security CURRENTLY: $1,276.00 Amount of Security CURRENTLY: $3,190.00 Amount of Security being REDUCED: $0.00 Amount of Security being REDUCED: $3,190.00 Amount of Security REMAINING: $1,276.00 Amount of Security REMAINING: $0.00 Faithful Performance Security
Sewer Improvements – No. 1155779 Labor & Materials Security Sewer Improvements – No. 1155779
Amount of ORIGINAL Security: $34,366.75 Amount of ORIGINAL Security: $17,183.38 Amount of Security CURRENTLY: $6,873.35 Amount of Security CURRENTLY: $17,183.38 Amount of Security being REDUCED: $0.00 Amount of Security being REDUCED: $17,183.38 Amount of Security REMAINING: $6,873.35 Amount of Security REMAINING: $0.00 Faithful Performance Security
Water Improvements – No. 1155776 Labor & Materials Security Water Improvements – No. 1155776
Amount of ORIGINAL Security: $130,157.50 Amount of ORIGINAL Security: $65,078.75 Amount of Security CURRENTLY: $26,031.50 Amount of Security CURRENTLY: $65,078.75 Amount of Security being REDUCED: $0.00 Amount of Security being REDUCED: $65,078.75 Amount of Security REMAINING: $26,031.50 Amount of Security REMAINING: $0.00

Securities Table
Street, Storm Drain, Sewer, Water, LMAD & Monumentation:

Developer:

K. Hovnanian CA Land Holdings, LLC
1260 Corona Pointe Ct Suite 301
Corona, Ca 92879

Faithful Performance Security
LMAD Improvements – No. 1155781 Labor & Materials Security LMAD Improvements – No. 1155781
Amount of ORIGINAL Security: $200,664.42 Amount of ORIGINAL Security: $100,332.21 Amount of Security CURRENTLY: $0.00 Amount of Security CURRENTLY: $0.00 Amount of Security being REDUCED: $0.00 Amount of Security being REDUCED: $0.00 Amount of Security REMAINING: $0.00 Amount of Security REMAINING: $0.00 Faithful Performance Security
Monumentation Improvements – No. 1155780
Amount of ORIGINAL Security: $43,109.00
Amount of Security CURRENTLY: $0.00
Amount of Security being REDUCED: $0.00
Amount of Security REMAINING: $0.00

Item Number: 13
City Council / Board of Directors
Consent Calendar
Meeting of: January 21, 2025
Submitted By:

Fredy Bonilla, City Engineer

Subject:

Reduction of securities and the release of Subdivision Improvement Agreements and Utility Surety Agreements for Tract Map No. 15310
Recommendation:

That the Honorable City Council:
(1) Approve the full release of the Street Faithful Performance Security for Tract Map Nos. 15310-1, 15310-2 and 15310-3;
(2) Approve the full release of the Street Labor and Material Security for Tract Map Nos. 15310-1, 15310-2 and 15310-3;
(3) The release of the Subdivision Improvement Agreement for Tract Map Nos. 15310-1, through 15310-4;
(4) The release of the Subdivision Improvement Agreement for Tract Map Nos. 15310-5 through 15310-6 and;
(5) The release of Utility Surety Agreement for Tract Map No. 15310-1 through 15310-4.

Fiscal Impact:

There is no fiscal impact as a result of this action.

Strategic Plan Goal:

This item aligns with “Goal E Invest in Infrastructure” in the City of Victorville Strategic Plan 2023-2026. Although this is not a Capital Improvement Project, we apply the same strategy to private development projects as they are essential in meeting the community’s needs.

Background:

Tract Map No. 15310 (Tract 15310) is a 6-phase tract map that includes a total of 221 residential lots located at the northwest corner of La Mesa Road and Mesa Linda Avenue.

In 2007, Standard Pacific Corporation, the subdivider for Tract 15310, recorded the map after entering into a subdivision agreement and posting securities for the required public 3 9
4 0
improvements. Standard Pacific Corporation completed most of the public improvements and built a total of 100 homes before construction was halted due to the Great Recession.

Frontier Communities (Frontier) acquired the tract and began developing it in November 2017. The conditions of approval for the tract required Frontier to complete various infrastructure components, including monumentation, sewer, and street improvements.

Frontier has diligently completed all required public improvements, which have been accepted by the City Council.

Discussion:

In accordance with Victorville Municipal Code Section 17.64.070(3), the remaining 20- percent of the Faithful Performance Securities are to be held for a one-year warranty period, and Labor and Materials securities will be held for a six-month period. Therefore, staff recommends the full release of the Street Improvement Faithful Performance Security and Labor and Material Security for Tract Map Nos. 15310-1, 15310-2, and 15310-3, as the acceptance of the Street public improvements took place at the regular City Council meeting on January 16, 2024.

Given that the public improvements have been completed and accepted by the City Council, staff also recommends the release of the Subdivision Improvement Agreement for Tract Map Nos. 15310-1 through 15310-4, the release of the Subdivision Improvement Agreement for Tract Map Nos. 15310-5 through 15310-6, and the release of the Utility Surety Agreement for Tract Map Nos. 15310-1 through 15310-4.

Staff remains available for any questions Council may have.

Attachments:

A. Vicinity Map
B. Securities Table
C. Existing Securities
D. Subdivision Improvement Agreement for Tract Map Nos. 15310-1 through 15310-4 E. Subdivision Improvement Agreement for Tract Map Nos. 15310-5 through 15310-6 F. Release of Subdivision Improvement Agreement for Tract Map Nos. 15310-1 through 15310-4
G. Release of Subdivision Improvement Agreement for Tract Map Nos. 15310-5 through 15310-6
H. Utility Surety Agreement
I. Satisfaction and Release of Utility Surety Agreement

Attachment B
Securities Table

Securities Table

Tract No. 15310-1

Tract No. 15310-2

Tract No. 15310-3

Tract No. 15310-5

Faithful Performance Security
Street Improvements – No. 0734849 Labor & Materials Security Water Improvements – No. 0734849
Amount of ORIGINAL Security: $172,572.00 Amount of ORIGINAL Security: $86,286.00 Amount of Security CURRENTLY: $34,514.40 Amount of Security CURRENTLY: $86,286.00 Amount of Security being REDUCED: $34,514.40 Amount of Security being REDUCED: $86,286.00 Amount of Security REMAINING: $0.00 Amount of Security REMAINING: $0.00 Faithful Performance Security
Street Improvements – No. 0734850 Labor & Materials Security Street Improvements – No. 0734850
Amount of ORIGINAL Security: $56,385.45 Amount of ORIGINAL Security: $28,192.73 Amount of Security CURRENTLY: $11,277.09 Amount of Security CURRENTLY: $28,192.73 Amount of Security being REDUCED: $11,277.09 Amount of Security being REDUCED: $28,192.73 Amount of Security REMAINING: $0.00 Amount of Security REMAINING: $0.00 Faithful Performance Security
Street Improvements – No. 0734851 Labor & Materials Security Street Improvements – No. 0734851
Amount of ORIGINAL Security: $205,813.30 Amount of ORIGINAL Security: $102,906.65 Amount of Security CURRENTLY: $41,162.66 Amount of Security CURRENTLY: $102,906.65 Amount of Security being REDUCED: $41,162.66 Amount of Security being REDUCED: $102,906.65 Amount of Security REMAINING: $0.00 Amount of Security REMAINING: $0.00 Faithful Performance Security
Sewer Improvements – No. 0731583 Labor & Materials Security Sewer Improvements – No. 0731583
Amount of ORIGINAL Security: $69,590.40 Amount of ORIGINAL Security: $34,795.20 Amount of Security CURRENTLY: $0.00 Amount of Security CURRENTLY: $0.00 Amount of Security being REDUCED: $0.00 Amount of Security being REDUCED: $0.00 Amount of Security REMAINING: $0.00 Amount of Security REMAINING: $0.00

Securities Table

Faithful Performance Security
Monumentation Improvements – No. 0731582

Tract No. 15310-6

Faithful Performance Security
Street Improvements – No. 0731584 Labor & Materials Security Street Improvements – No. 0731584
Amount of ORIGINAL Security: $208,022.93 Amount of ORIGINAL Security: $104,011.47 Amount of Security CURRENTLY: $0.00 Amount of Security CURRENTLY: $0.00 Amount of Security being REDUCED: $0.00 Amount of Security being REDUCED: $0.00 Amount of Security REMAINING: $0.00 Amount of Security REMAINING: $0.00 Amount of ORIGINAL Security: $1,965.00
Amount of Security CURRENTLY: $0.00
Amount of Security being REDUCED: $0.00
Amount of Security REMAINING: $0.00
Faithful Performance Security
Sewer Improvements – No. 0731586 Labor & Materials Security Sewer Improvements – No. 0731586
Amount of ORIGINAL Security: $62,852.80 Amount of ORIGINAL Security: $31,426.40 Amount of Security CURRENTLY: $0.00 Amount of Security CURRENTLY: $0.00 Amount of Security being REDUCED: $0.00 Amount of Security being REDUCED: $0.00 Amount of Security REMAINING: $0.00 Amount of Security REMAINING: $0.00 Faithful Performance Security
Street Improvements – No. 0731587 Labor & Materials Security Street Improvements – No. 0731587
Amount of ORIGINAL Security: $214,536.58 Amount of ORIGINAL Security: $107,268.29 Amount of Security CURRENTLY: $0.00 Amount of Security CURRENTLY: $0.00 Amount of Security being REDUCED: $0.00 Amount of Security being REDUCED: $0.00 Amount of Security REMAINING: $0.00 Amount of Security REMAINING: $0.00 Securities Table

Faithful Performance Security
Monumentation Improvements – No. 0731585

Tract No. 15310-1 through 15310-6

Faithful Performance Security
Monumentation Improvements – No. 0734848
Amount of ORIGINAL Security: $12,950.00
Amount of Security CURRENTLY: $0.00
Amount of Security being
REDUCED: $0.00
Amount of Security REMAINING: $0.00

Developer:

FH II, LLC
2151 E. Convention Center Way Suite 114
Ontario, Ca 91764

Amount of ORIGINAL Security: $2,447.00
Amount of Security CURRENTLY: $0.00
Amount of Security being REDUCED: $0.00
Amount of Security REMAINING: $0.00

Attachment D
Subdivision Improvement
Agreement for Tract Map
Nos. 15310-1 through
15310-4

Attachment E
Subdivision Improvement
Agreement for Tract Map
Nos. 15310-5 through
15310-6

Attachment F
Release of Subdivision
Improvement Agreement for
Tract Map Nos. 15310-1
through 15310-4

Recording Requested by:

The City of Victorville

When Recorded Please Return To:

CITY OF VICTORVILLE
14343 Civic Drive
Victorville, CA 92392

RELEASE OF SUBDIVISION AGREEMENT
Tract Map Nos. 15310-1 Through 15310-4

WHEREAS, the City of Victorville, hereinafter called “CITY” entered into a Subdivision Agreement with FH II, LLC, a California limited liability company, DBA Frontier Communities., hereinafter called “DEVELOPER”, for the substitution of existing security of Tract Map Nos. 15310-1 Through 15310-4 hereinafter called “PROPERTY”; and

WHEREAS, said Subdivision Agreement imposed duties, obligations, and requirements on the City and DEVELOPER; and

WHEREAS, such performance, obligations, and requirements were recorded on, March 22, 2018, as Document No. 2018- 00100856 in the office of the County Recorder of the County of San Bernardino.

NOW, THEREFORE, in consideration that these properties having a Subdivision Agreement against them by and between FH II, LLC, a California limited liability company, DBA Frontier Communities and the CITY and to be in compliance with said agreement hereinabove stated, the CITY hereby releases DEVELOPER from any further duty, obligation, or requirement imposed pursuant to the above indicated document only, and the same is hereby deemed of no further form and effect and shall cease to exist as a lien, duty obligation, or cloud on the title to the following described real properties:

See Exhibit “A”

I hereby state that all performances, obligations, and requirements required by the Subdivision Agreement, herein identified, per Title 17 of the Victorville Municipal Code required for 15310-1 Through 15310-4 have been complied with on the hereinabove described property.

_________________________
Fredy A. Bonilla, City Engineer
R.C.E. 70349

CITY OF VICTORVILLE

By: _____________________________
Elizabeth Becerra, Mayor

ATTEST:

________________________________
Jennifer Thompson, City Clerk

APPROVED AS TO FORM:

_________________________________
City Attorney

EXHIBIT “A”

Real property in the City of Victorville, County of San Bernardino, State of California described as follows:

Tract 15310-1: Lots 3 through 23, inclusive, of Tract Map No. 15310-1, recorded in Map Book No. 317, pages 4 through 6, inclusive, in the Office of the San Bernardino County Recorder; and

Tract 15310-2: Lots 68, 69 and 73, inclusive, of Tract Map No. 15310-2, recorded in Map Book No. 318, pages 42 through 44, inclusive, in the Office of the San Bernardino County Recorder; and

Tract Map No. 15310-3: Lots 74 through 110, inclusive, of Tract Map No. 15310-3, recorded in Map Book No. 318, pages 45 through 48, inclusive, in the Office of the San Bernardino County Recorder; and

Tract 15310-4: Lots 111 through 113, inclusive, of Tract Map No. 15310-4, recorded in Map Book No. 318, pages 49 through 51, inclusive, in the Office of the San Bernardino County Recorder

Attachment G
Release of Subdivision
Improvement Agreement
For Tract Map Nos.
15310-5 through
15310-6

Recording Requested by:

The City of Victorville

When Recorded Please Return To:

CITY OF VICTORVILLE
14343 Civic Drive
Victorville, CA 92392

RELEASE OF SUBDIVISION AGREEMENT
Tract Map Nos. 15310-5 Through 15310-6

WHEREAS, the City of Victorville, hereinafter called “CITY” entered into a Subdivision Agreement with FH II, LLC, a California limited liability company, DBA Frontier Communities., hereinafter called “DEVELOPER”, for the substitution of existing security of Tract Map Nos. 15310-5 Through 15310-6 hereinafter called “PROPERTY”; and

WHEREAS, said Subdivision Agreement imposed duties, obligations, and requirements on the City and DEVELOPER; and

WHEREAS, such performance, obligations, and requirements were recorded on, November 15, 2017, as Document No. 2017- 0487653 in the office of the County Recorder of the County of San Bernardino.

NOW, THEREFORE, in consideration that these properties having a Subdivision Agreement against them by and between FH II, LLC, a California limited liability company, DBA Frontier Communities and the CITY and to be in compliance with said agreement hereinabove stated, the CITY hereby releases DEVELOPER from any further duty, obligation, or requirement imposed pursuant to the above indicated document only, and the same is hereby deemed of no further form and effect and shall cease to exist as a lien, duty obligation, or cloud on the title to the following described real properties:

See Exhibit “A”

I hereby state that all performances, obligations, and requirements required by the Subdivision Agreement, herein identified, per Title 17 of the Victorville Municipal Code required for 15310-5 Through 15310-6 have been complied with on the hereinabove described property.

_________________________
Fredy A. Bonilla, City Engineer
R.C.E. 70349

CITY OF VICTORVILLE

By: _____________________________
Elizabeth Becerra, Mayor

ATTEST:

________________________________
Jennifer Thompson, City Clerk

APPROVED AS TO FORM:

_________________________________
City Attorney

EXHIBIT “A”

Real property in the City of Victorville, County of San Bernardino, State of California described as follows:

Tract 15310-5: Lots 152 through 178, inclusive, of Tract Map No. 15310-5, recorded in Map Book No. 318, pages 52 through 54, inclusive, in the Office of the San Bernardino County Recorder; and Tract Map No. 15310-6: Tract Map No. 15310-6, recorded in Map Book No. 318, pages 55 through 58, inclusive, in the Office of the San Bernardino County Recorder.

Attachment H
Utility Surety Agreement

Attachment I
Satisfaction and Release of
Utility Surety Agreement
Recording Requested by:

The City of Victorville

When Recorded Please Return To:

CITY OF VICTORVILLE
14343 Civic Drive
Victorville, CA 92392

Recording of this document is fee exempt under
Government Code Section 6103.

No Documentary Transfer Tax is due on the document
pursuant to Revenue Taxation Code Section 11922

SATISFACTION AND RELEASE OF UTILITY SURETY AGREEMENT
Tract Map Nos. 15310-1 through 15310-4

WHEREAS, the City of Victorville required the signing of a Utility Surety Agreement by the owner FH II, LLC, a California Limited Liability Company, DBA Frontier Communities or predecessor in interest of the below described property; and

WHEREAS, said Utility Surety Agreement imposed duties, obligations, and requirements on property owner; and

WHEREAS, such duties, obligations, and requirements were recorded on ________________, as Instrument No. _______________ in the office of the County Recorder of the County of San Bernardino; and

WHEREAS, property owner now is in full compliance with said Utility Surety Agreement and the duties, obligations, and requirements thereunder having been fulfilled;

NOW, THEREFORE, in consideration of the compliance with said agreement hereinabove stated, the City of Victorville hereby releases property owner, his heirs, assignees or successors in interest from any further duty, obligation, or requirement imposed pursuant to the above indicated document only, and the same is hereby deemed of no further form and effect and shall cease to exist as a lien, duty obligation, or cloud on the title to the following described real property:

See Exhibit “A”

I hereby state that all Utility Improvements required by Title 17 of the Victorville Municipal Code required for Tract Map Nos. 15310-1 through 15310-4 have been installed along the street frontages of the hereinabove described property.

_________________________
Fredy A. Bonilla, City Engineer
R.C.E. 70349

CITY OF VICTORVILLE

By: _____________________________
Elizabeth Becerra, Mayor

ATTEST:

________________________________
Jennifer Thompson, City Clerk

APPROVED AS TO FORM:

_________________________________
City Attorney

Exhibit “A”

Real property in the City of Victorville, County of San Bernardino, State of California described as follows:

Tract 15310-1: Lots 3 through 23, inclusive, of Tract Map No. 15310-1, recorded in Map Book No. 317, pages 4 through 6, inclusive, in the Office of the San Bernardino County Recorder; and

Tract 15310-2: Lots 68, 69 and 73, inclusive, of Tract Map No. 15310-2, recorded in Map Book No. 318, pages 42 through 44, inclusive, in the Office of the San Bernardino County Recorder; and

Tract Map No. 15310-3: Lots 74 through 110, inclusive, of Tract Map No. 15310-3, recorded in Map Book No. 318, pages 45 through 48, inclusive, in the Office of the San Bernardino County Recorder; and

Tract 15310-4: Lots 111 through 113, inclusive, of Tract Map No. 15310-4, recorded in Map Book No. 318, pages 49 through 51, inclusive, in the Office of the San Bernardino County Recorder

Item Number: 14
City Council / Board of Directors
Written Communications
Meeting of: January 21, 2025
Submitted By:

C. Eric Ray, Airport Director

Subject:

Ground Lease and Development Agreement for 80-Acres by and between the Southern California Logistics Airport Authority and Aviation Development Park, LLC.

Recommendation:

That the Southern California Logistics Airport Authority (“SCLAA”) Board of Directors:
(1) Approve entering into a Ground Lease and Development Agreement for 80-Acres (“Agreement”), by and between the SCLAA and Aviation Development Park, LLC, (“ADP”); and
(2) Authorize the Executive Director to execute said Agreement; and (3) Adopt Resolution No. SCLAA-25-001 amending the 2024/2025 budget increasing revenue in Airport account 4501191-45220 by $70,044.50.

Fiscal Impact:

The Agreement presented herein will generate approximately $4,517,092.67 in gross lease revenue over the initial term (February 2025 – January 2045). The table below outlines the fiscal impact of the initial 4 years of the Agreement.

FY 2024-25
(Feb 25 – June 25)
FY 2025-26
(July 25 – June 26)
FY 2026-27
(July 26 – June 27)
FY 2027-28
(July 27 –June 28)
$70,044.50 $170,208.14 $175,314.38 $180,573.81
The revenue associated with this Agreement increases the budgeted revenue established in Airport account 4501191-45220 for fiscal year 2024-25, and thereby requires an additional revenue appropriation in the amount of $70,044.50. Resolution No. SCLAA 25-001 is presented herein for the purpose of requesting approval of the required budget adjustment as outlined below.
5 7
0 Current FY24/25 Budget
Revenue
4501191-45220 Ground Lease $0
Proposed FY24/25 Budget
Revenue
4501191-45220 Ground Lease $70,044.50
Strategic Plan Goal:

The City of Victorville Strategic Plan 2023-2026 identifies multi-year strategic goals and various strategies to work toward achieving those goals. Goal A fosters fiscal health through disciplined long-term planning, cost control, increased revenues, and cost recovery.

Background:

Mr. Craig Garrick is the founder of ComAv. With over 250 employees, ComAv is the largest employer at the SCLA. Since executing their first lease agreement in 1998, ComAv has grown to its current leasehold estate that includes nine SCLA owned buildings and a significant ground leasehold interest. Mr. Garrick created ADP as a separate limited liability company in 2023 to develop a premium, upscale commercial aircraft parking and service facility to cater to a more upscale clientele.

ADP anticipates investing approximately $5,000,000 to construct the proposed development and improvement of the 80-Acre Ground Lease Area. Some of the improvements proposed are to clear, grub, and set the final grade of the Ground Lease Area; construct soil-cement pavement sections of adequate structural design to allow for parking Boeing 777 aircraft; soil-cement pavement shall either be capped with a minimum of 2 inches of asphalt or a suitable liquid asphalt emulsion; modify or reconstruct the perimeter fencing as needed to accommodate the development and maintain security; and construct utilities, as may be needed.

Discussion:

The proposed Agreement for 80-acres of Ground Lease Area entails an initial term of Twenty (20) years with a commencement date of February 1, 2025. The Agreement also contemplates two additional five-year option terms which commensurate with the privately funded investment being contemplated. The Ground Lease Area consists of airfield property assembled under Assessor’s Parcel Numbers: 0459-032-39; 0459-032-40; 0459-032-41; and 0459-032-42; which are comprised of approximately 80-acres. ADP has agreed to pay $14,008.90 per month with an annual three percent (3%) inflator. This amounts to approximately $.004 a square foot per month, which is comparable with adjacent parcels.

Because the Ground Lease and Development Agreement will increase local employment, produce a steady revenue stream, increase aircraft activity, and increase landing and fuel flowage fees, staff recommends that Your Honorable Southern California Logistics Airport 5 7
0 Authority Board approve the Ground Lease and Development Agreement with Aircraft Parking Development, LLC, for 80-acres of Ground Lease Area and authorize the Executive Director to execute said Agreement and adopt Resolution No. SCLAA-25-001 amending the 2024/2025 budget increasing revenue in Airport account 4501191-45200 by $70,044.50. Such approval is being requested, subject to any minor, non-substantive modifications to the Ground Lease and Development Agreement as approved by the Southern California Logistics Airport Authority Legal Counsel and the Southern California Logistics Airport Director.

Staff remains available for any questions or comments you may have.

CER/lf
Attachments: A. General Site Map
B. Ground Lease and Development Agreement for 80 Acres C. Resolution No. SCLAA-25-001
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Attachment A Taxiway Echo
Gravel Taxilane

ATTACHMENT B

GROUND LEASE AND DEVELOPMENT
AGREEMENT FOR 80 ACRES
1 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres

SOUTHERN CALIFORNIA LOGISTICS AIRPORT AUTHORITY

GROUND LEASE AND DEVELOPMENT AGREEMENT

This Ground Lease and Development Agreement (hereinafter referred to as the “Lease”) dated this _______ day of ____________, 2025 for reference purposes only, is entered into by and between the SOUTHERN CALIFORNIA LOGISTICS AIRPORT AUTHORITY (“SCLAA”), a California joint powers authority, (hereinafter referred to as “Lessor”) and AVIATION DEVELOPMENT PARK, LLC, a California limited liability company, (hereinafter referred to as “ Lessee”). Lessor and Lessee are sometimes hereinafter referred to individually as a “Party” or collectively as the “Parties”.

RECITALS

These Recitals are included to assist in interpreting this Lease and to understand the basis upon which certain terms and conditions have been included. It is not intended, nor should it be construed, to supersede or amend the specific terms and conditions of this Lease.

A. The Lessor has previously acquired certain properties which are adjacent to the former George Air Force Base, which is now known as the Southern California Logistics Airport (the “SCLA”).

B. The properties so acquired have become part of the SCLA and are subject to certain aeronautical restrictions.

C. Lessee seeks to lease from the Lessor a portion of the real property so acquired by Lessor (hereinafter defined as the “ Ground Lease Area ” and described more fully below) under the terms and conditions set forth in this Lease.

AGREEMENT

NOW THEREFORE, in consideration of the mutual promises contained herein, the Parties hereby agree as follows:

1. Ground Lease Area.

(a) Subject to the terms and conditions herein contained, Lessor hereby leases to Lessee and Lessee hereby leases from Lessor, that certain real property at the SCLA described as follows:

(1) Approximately Eighty ( 80) acres of airfield property consisting of Assessor’s Parcel Numbers: 0459-032-39; 0459-032-40; 0459-032-41; and 0459-032-42; located near the northern end of the SCLA, as more specifically described on Exhibit A, attached hereto and incorporated herein by this reference (the “Ground Lease Area”); and
2 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres (2) All appurtenances, access rights, and other rights, privileges, and easements applicable thereto.

2. Development and Improvement of Ground Lease Area.

(a) Lessee shall, at Lessee’s sole cost and expense, develop the Ground Lease Area by constructing and thereafter maintaining thereon the improvements described in Exhibit B , attached hereto and incorporated herein by this reference (collectively hereinafter the “Improvements”).

(b) Lessee’s development and construction of the Improvements on the of the Ground Lease Area as described in Exhibit B , shall be performed in full compliance with the provisions and requirements set forth in this Lease, including without limitation, all of the following:

(1) Conformance with all applicable plans, including, but not limited to the Southern California Logistics Airport Specific Plan.

(2) Completion of the entitlement process for the development of the Improvements through the City of Victorville (the “ City”), with resulting construction plans and specifications to be submitted to the SCLA Airport Director for review prior to the commencement of construction. Such plans and specifications may be rejected, within a reasonable period of time, if not in conformity with this Lease, the SCLA, and the City standards.

(3) Compliance with all applicable Federal, State, and local laws, ordinances, standards, codes, guidelines, rules, and regulations , including without limitation, the rules and regulations of Lessor and where applicable, the Federal Aviation Administration (“FAA”) that are or may become applicable to Lessee’s development of the Improvements on the Ground Lease Area (collectively hereinafter, “ Applicable Laws”).

(4) Lessee shall construct the Improvements using properly licensed and insured contractors and in full compliance with all applicable prevailing wage laws and public bidding requirements.

(5) Lessee shall require the issuance of a Faithful Performance Bond and a Payment Bond for any Improvement work performed on the Ground Lease Area as follows:

BOND REQUIREMENTS - A Faithful Performance Bond benefiting the Lessor in the amount of one hundred twenty-five percent (125%) of the bid amount and a Payment Bond in the amount of one hundred twenty -five percent (125%) of the bid amount. Bonds must be issued by an admitted surety insurer in the State of California. When a contract for constructing the Improvements is signed, the successful bidder shall provide, withi n ten 3 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres (10) working days, the Faithful Performance and Payment Bonds in the amounts set forth herein.

(c) Lessee shall, at Lessee’s own cost and expense, comply with all Applicable Laws and the requirements of all governmental authorities which are binding upon and applicable to Lessee and/or the Lessee’s development or construction of the Improvements, whether those Applicable Laws and requirements are now in force or are subsequently enacted. If the approval or issuance of permits by any Federal, State, or local governmental agency is required for the lawful use of the Ground Lease Area or any portion of thereof, Lessee shall procure and maintain such approvals and/or permits prior to the commencement of and throughout the Term (as hereinafter defined) of this Lease.

(d) Following Lessee’s development and improvement of the Ground Lease Area in accordance with the requirements set forth in this Lease, Lessee shall use the Ground Lease Area as a commercial aircraft parking and service area. Lessee shall not change the use of the Ground Lease Area without first obtaining the written consent of Lessor.

3. Right to Terminate for Development. INTENTIONALLY OMITTED.

4. Ownership of Improvements and Fixtures.

(a) Improvements. During the Term of this L ease, Lessee’s development, including all Improvements constructed by Lessee on or about the Ground Lease Area, shall be owned and maintained by L essee. Upon the expiration or termination of this Lease, said Improvements shall become the sole property of Lessor.

(b) Trade Fixtures and Personal Property. Any and all trade fixtures, specialized equipment, signs, movable trailers, and other personal property used by Lessee on the Ground Lease Area shall remain Lessee’s sole property and Lessee shall remove the same within thirty (30) days after the expiration or termination of this Lease, provided any damages caused by such removal are repaired by Lessee.

5. Term.

(a) The term of this Lease shall be for a period of Twenty (20) years (the “Initial Term ”) commencing on February 1, 2025, (the “ Commencement Date”) and expiring on January 31, 2045, (the “ Expiration Date”) unless sooner terminated or extended as hereinafter provided.

4 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres (b) Option to Extend Term. Upon expiration of the Initial Term, Lessee shall have the option to renew this Lease for two (2) additional five (5) year terms (each an “Option Term”), provided that: (i) Lessee is in good standing and otherwise in full compliance with all of the terms and conditions of this Lease; (ii) Lessee provides Lessor written notice of its desire to renew at least three hundred sixty -five (365) days prior to the expiration of the then applicable Term; and (iii) Lessor confirms in writing Lessee’s exercise of its Option Term. Only one (1) Option may be exercised at a time by Lessee.

Upon confirmation of such exercise by Lessor, all references to the Expiration Date following any such exercise of the Options shall mean January 31, 2050, and January 31, 2055, respectively. All further references to the Term of this Lease shall mean and include the Initial Term and any confirmed Option Term.

6. Rent.

(a) Monthly Base Rent. During the first (1st) year of the Term, Lessee shall pay to Lessor a monthly base rent of Fourteen Thousand Eight Dollars and Ninety Cents ($14,008.90) (the “Monthly Base Rent”). Commencing on February 1, 2026, the Monthly Base Rent s hall be increased by three percent (3%) , and on each annual anniversary of the Commencement Date thereafter during the Term, the then- current Monthly Base Rent shall be increased by an additional three percent (3%). All further references to the Monthly Base Rent shall mean and include any such increased amount as calculated under the provisions of this paragraph.

(b) Waiver of Monthly Base Rent . Notwithstanding the for egoing, Lessor acknowledges that the Lessee will entitle the Improvements, perform the construction thereof, and market the Ground Lease Area, for an anticipated duration of one (1) year. Therefore, Lessor agrees and consents to waiving the Monthly Base Rent during the first (1 st) twelve (12) months of the Term, provided the following three (3) conditions are satisfied:

(1) Condition 1. Lessee completes the entitlement process by May 31, 2025.

(2) Condition 2. Lessee begins construction of the
Improvements no later than June 30, 2025.

(3) Condition 3. Lessee completes construction of the
Improvements and all items listed on Exhibit B no later than January 1, 2026.

If Condition 1, Condition 2, and Condition 3 are not satisfied timely, all waived Monthly Base Rent will be due and payable to Lessor in a lump sum on February 1, 2026.

5 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres (c) Payment for Maintenance of Gravel Taxilane. Lessor shall maintain the aircraft access route (the “Gravel Taxilane”) as depicted on Exhibit A which connects Taxiway Echo to the Ground Lease Area. In acknowledgment of the upkeep and maintenance provided by Lessor to the Gravel Taxilane, Lessee shall reimburse Lessor fifty percent (50%) of the annual maintenance cost, up to a maximum of Ten Thousand Dollars ($10,000) per year. The reimbursement amount shall be computed or determined based on the Lessor’s actual labor and equipment expense.

(d) Payment. Monthly Base Rent shall be payable in advance and without demand to:

Southern California Logistics Airport Authority
Attn: Airport Director
18374 Phantom West
Victorville, California 92394

or at such other place as Lessor may designate in writing from time to time. Lessee shall also pay to Lessor within thirty (30) days of presentation of an invoice, such other charges as it may incur for use of facilities and services at the SCLA which shall be charged in accordance with the SCLA Rules and Regulations (which are attached hereto as Exhibit C and incorporated by this refer ence), as such may be amended from time to time by Lessor.

7. Security Deposit . Lessee shall deposit with the Lessor upon execution hereof the sum of Fourteen Thousand Eight Dollars and Ninety Cents ($ 14,008.90) as security for Lessee’s faithful performance of L essee’s obligations hereunder (the “Security Deposit”). If Lessee fails to pay rent or other charges due hereunder, fails to pay any utility or service provider, or otherwise defaults with respect to any provision of this Lease, the Lessor may use, apply or retain all or any portion of said deposit for payment of any rent or other charges in default or for the payment of any other sum to which the Lessor may become obligated by reason of Lessee’s default, or to compensate the Lessor for any loss or damage which the L essor may suffer thereby. At all times during the Term hereof, Lessee must maintain at a minimum the amount of Security Deposit specified in this Section.

8. Fee Reimbursements. Upon receipt of an invoice from Lessor, Lessee shall promptly reimburse Lessor for its share of any fees or costs incurred by Lessor that are related to this Lease, including but not limited to escorting or providing utilities to the Ground Lease Area, taxes, permits, or fees associated with maintaining or repairing the Ground Lease Area and the Gravel Taxilane. In no event shall Lessor be liable for any charges or fees used or supplied upon or in connection with Lessee’s use of the Ground Lease Area and Lessee shall indemnify, defend, and hold harmless Lessor against any liability on account thereof.

9. Late Charge. Lessee hereby acknowledges that late payment by Lessee to Lessor of any installment of rent or any other sums due hereunder will cause Lessor to 6 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Accordingly, if any installment of rent, or any other sum due from Lessee is not received by the Lessor within ten (10) days after such amount is due, whether or not any notice of default or other notice has been given, Lessee shall pay to the Lessor a charge equal to six percent (6%) of the amount past due (the “Late Charge”), in addition to the payment of the past due amount itself. The Parties hereby agree that such Late Charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee, and no more than one (1) Late Charge shall be assessed per month.

10. Brokerage Commission. Lessor and Lessee represent and affirm to each other that they have not had any dealings with any real estate brokers, finders or agents and no commissions or fees are payable by either Party in connection with this Lease.

11. Holding Over . In the event Lessee, with Lessor’s prior written consent, holds over and continues in possession of the Ground Lease Area, or any part thereof, after the Expiration Date, such occupancy shall be considered a month-to-month tenancy subject to all the terms and conditions of this Lease in effect on the day immediately preceding the Expiration Date, except that the Monthly Base Rent for any such holdover period shall be increased to one hundred fifty percent (150%) of Monthly Base Rent then currently in ef fect. If Lessee, without Lessor’s prior written consent, holds over or continues in possession of the Ground Lease Area, or any part thereof, after the Expiration Date of this Lease, such occupancy shall be deemed a tenancy at sufferance, permitting the Lessor to immediately commence eviction proceedings without notice to Lessee.

12. Right to Relocate. INTENTIONALLY OMITTED.

13. Easements; Quiet Enjoyment. Lessee agrees that the Ground Lease Area shall be subject to the outstanding easements and rights-of-way, if any, that are of record as of the date of this Lease and further to the right of entry in favor of the United States Air Force (“Air Force ”) for purposes of environmental remediation under the Comprehensive Environmental Response, Compensation, and Liability of 1980 (CERCLA). Lessor shall use best efforts to ensure the quiet use and enjoyment of the Ground Lease Area by Lessee. Unreasonable interference by Lessor or the Air Force in the quiet enjoyment of the Ground Lease Area by Lessee such that it results in a material financial detriment to Lessee and Lessee being unable to continue its business functions in a reasonably commercial manner, shall entitle Lessee to terminate this Lease. 7 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres

14. Use of Ground Lease Area.

(a) The Ground Lease Area is to be used by Lessee as a commercial aircraft parking and service area, as depicted on Exhibit D, and for the development and improvement of the Ground Lease Area, inclusive of all related and ancillary business operations and logistical functions, and for no other purpose, unless otherwise agreed to in writing by Lessor.

(1) In the event the use restrictions described in the immediately preceding paragraph are violated and such violation continues for a period of ninety (90) days following Lessee’s receipt of written notice of such violation, or there is a discontinuation of all business operations on the Ground Lease Area for a period in excess of twelve (12) months without Lessor’s prior written approval, Lessee shall be deemed in violation of this Lease and Lessor shall be entitled to terminate this Lease.

(2) Lessee agrees to comply with all Applicable Laws in connection with its use of the Ground Lease Area, to keep the Ground Lease Area in a clean, sanitary, and safe condition, and to use commercially reasonable precautions to prevent damage, or injury to the Ground Lease Area.

(b) Acceptance of Ground Lease Area. Lessee acknowledges that it has satisfied itself by its own independent investigation that the Ground Lease Area is suitable for its intended use, and that neither Lessor nor the Lessor’s agent (s) have made any representation or warranty as to the present or future suitability of the Ground Lease Area for the conduct of Lessee’s business. Lessee’s taking possession or use of the Ground Lease Area for any purpose shall constitute Lessee’s acceptance of the Ground Lease Area “as-is” in its existing condition.

(c) Notice of Presence of Asbestos and Lead-Based Paint. Lessee, its successors, and assigns are warned that the Ground Lease Area may contain asbestos materials and lead- based paint materials. No warranties, either expressed or implied, are given with regard to the quantity, location, or condition of the asbestos containing materials or the lead-based paint materials. Lessee, its successors, and assigns, shall be deemed to have relied solely on their own judgment in assessing the overall condition of all or any portion of the Ground Lease Area, including any asbestos hazards or lead- based paint hazards or concerns. Lessee acknowledges that Lessee was given every opportunity to inspect the Ground Lease Area to assess the risk, if any, from asbestos containing material or lead-based paint materials.

(d) Lessor assumes no liability for damages for personal injury, illness, disability or death to Lessee or to Lessee’s successors, assigns, employees, invitees, or any other persons subject to Lessee’s control or direction, or to any person, including members of the general public, arising from or incident to the purchase, transportation, removal, handling, use, disposition or any activity causing or leading to contact of any kind whatsoever with asbestos or lead-based paint on the Ground Lease Area, whether Lessee, its successors or assigns has or have properly warned or failed to properly warn 8 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres the individuals injured. Lessee, its successors and/or assigns, further agree to comply with all federal, state, and local laws relating to asbestos and lead-based paint in their use and occupancy of the Ground Lease Area.

15. Ownership of Improvements at Lease Expiration. Throughout the Term, the Improvements on the Ground Lease Area shall be owned by Lessee. Upon the expiration or termination of this Lease, the Improvements shall become the sole property of Lessor, at no expense to Lessor. Any and all fixtures, specialized equipment, signs, and personal property used by Lessee on the Ground Lease Area shall remain Lessee’s sole property and Lessee shall have the right to remove the same within thirty (30) days after the expiration or termination of this Lease, provided any damages caused by such removal are repaired and or reimbursed to the Lessor by Lessee. Any and all trade fixtures, specialized equipment, signs, and personal property left on or about the Ground Lease Area following expiration of the t hirty (30) day period shall become the sole property of Lessor. Upon demand of Lessor, Lessee shall cause the execution of any documents reasonably requested by Lessor to evidence the transfer of title to such items.

16. Waste or Nuisance. Lessee shall not commit or permit the commission by others of any waste on the Ground Lease Area. Lessee shall not maintain, commit, or permit the maintenance or commission of any nuisance on the Ground Lease Area nor shall Lessee use or permit the use of the Ground Lease Area for any unlawful purpose.

17. Taxes and Other Charges . Lessee shall pay when due and prior to delinquency all taxes, assessments, and other charges, as applicable, including, but not limited to, possessory interest taxes levied or imposed by any governmental entity on the possessory interest of Lessee in the Ground Lease Area and/or any improvements on the Ground Lease Area and the personal property, trade fixtures, appliances, and leased equipment placed by Lessee in, on, or about the Ground Lease Area, during the Term of this Lease or any extension thereof . Lessee recognizes that the interests of Lessee in this Lease may be subject to the imposition of a possessory interest tax by the San Bernardino County Assessor, and Lessee agrees to pay such tax amount as may be so levied with respect to the possessory interest of Lessee in the Ground Lease Area under this Lease. Lessee further acknowledges that in the event the Ground Lease Area is subject to possessory interest tax pursuant to California Health and Safety Code Section 33673, the Ground Lease Area shall be assessed in the same manner as privately owned property and Lessee shall pay taxes upon the assessed value of the Ground Lease Area and not merely the assessed value of its leasehold interest.

18. Compliance with Air Force and FAA Requirements. Any use, occupancy or activity of Lessee on the Ground Lease Area which may result in either the receipt by Lessor of a notice of default from either the Air Force or the FA A, shall be deemed to be a default of Lessee under this Lease if not cured prior to the expiration of the notice and cure period specified in Section 32 below. The response of Lessor following receipt of any such notice of default or breach from the Air F orce and/or the FAA shall not waive, stay, or otherwise mitigate or remedy the default of Lessee to Lessor under this Lease.

Lessee shall have the right to participate in any proceeding between the Air Force, the 9 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres FAA, and Lessor for the resolution of an alleged default, breach, or other dispute of the Parties.

19. Insurance. Lessee shall procure and maintain for the duration of the Lease insurance against claims for injuries to persons or damages to property which may arise from or in connection with Lessee’s operation and use of the Ground Lease Area. The cost of such insurance shall be borne by the Lessee. Coverage shall be at least as broad as:

(a) Commercial General Liability Insurance (“CGL”). Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products completed operations, property damage, bodily injury and personal and advertising injury with limits no less than Five Million Dollars ($5,000,000) per occurrence.

If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence.

(b) Property Insurance. INTENTIONALLY OMITTED

(c) Commercial Vehicle Liability Insurance. ISO Form Number CA 00 01 covering any auto (Code 1), or if Lessee has no owned autos, hired (Code 8) and non- owned (Code 9), with limit no less than One Million Dollars ($1,000,000) per accident for bodily injury and property damage.

(d) Workers’ Compensation Insurance. Workers’ Compensation: as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit s of no less than One Million Dollars ( $1,000,000) per accident for bodily injury or disease. If Lessee has no employees, it may certify or warrant to Lessor 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 may be waived by the Risk Manager.

(e) Lessee may use Umbrella or Excess Policies to provide the li ability limits as required in this Lease. This form of insurance will be acceptable provided that all of the Primary and Umbrella or Excess policies shall provide all of the insurance coverages herein required, including, but not limited to, primary and noncontributory, additional insured, Self -Insured Retentions, indemnity and defense requirements. The Umbrella and Excess policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the un derlying CGL insurance. No insurance maintained by the Additional Insureds, whether primary or excess, and which also apply to loss covered hereunder, shall be called upon to contribute to a loss until Lessee’s primary and excess policies are exhausted.

(f) If the Lessee maintains broader coverage and/or higher limits than the minimum limits shown above, the Lessor requires and shall be entitled to the broader coverage and/or the higher limits maintained by the Lessee. Any available insurance 10 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the Lessor.

(g) The insurance policies are to contain, or be endorsed to contain the following provisions:

(1) Additional Named Insureds. Notwithstanding any inconsistent statement in any required insurance policies or any subsequent endorsements attached thereto, the protection offered by the commercial general liability policy described in subsection (a) above shall bear an endorsement whereby it is provided that, the Southern California Logistics Airport Authority ( “Lessor”), the City of Victorville, the City Attorney, the Victor Valley Economic Development Authority, the United States Air Force, and their respective officers, officials, employees, servants, volunteers, agents, and independent contractors are named as Additional Insureds. General Liability coverage can be provided in the form of an endorsement to the Lessee’s insurance (at least as broad as ISO Form CG 20 10 11 85 or if not available, through the addition of both CG 20 10, CG 20 26, CG 20 33, or CG 2038; and CG 20 37 if a later edition is used).

(2) Waiver of Subrogation Rights. Lessee hereby grants to the Southern California Logistics Airport Authority ( “Lessor”), the City of Victorville, the City Attorney, the Victor Valley Economic Development Authority, the United States Air Force, and their respective officers, officials, employees, servants, volunteers, agents, and independent contractors a waiver of any rig ht to subrogation which any insurer of said Lessee may acquire against the Southern California Logistics Airport Authority, the City of Victorville, the City Attorney, the Victor Valley Economic Development Authority, and the United States Air Force. Less ee agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the Lessor has received a waiver of subrogation endorsement from the insurer.

(3) For any claims related t o this Lease, the Lessee’s coverage shall be primary and noncontributory and at least as broad as ISO CG 20 01 04 13 as respects the Southern California Logistics Airport Authority ( “Lessor”), the Victor Valley Economic Development Authority, the City of Victorville, the City Attorney and the United States Air Force and their officers, officials, employees, volunteers, contractors, and subcontractors. Any insurance or self -insurance maintained by the Southern California Logistics Airport Authority (“Lessor”), the Victor Valley Economic Development Authority, the City of Victorville, the City Attorney and the United States Air Force and their officers, officials, employees, volunteers, contractors, and subcontractors shall be in excess of the Lessee’s insurance and shall not contribute with it, and Lessor's coverage shall be primary and noncontributory for any claims unrelated to this Lease.

20. Proof of Insurance Coverage.

(a) Lessee shall secure from a good and responsible company or companies authorized to do insurance business in the State of California the policies of 11 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres insurance required by this Lease and furnish to Lessor certificates of said insurance on or before the Commencement Date.

(b) Each insurance policy required by this Lease shall provide that coverage should not be canceled, except with written notice to the Lessor.

(c) Lessee shall furnish the Lessor with original certificates of insurance and amendatory endorsements, or copies of applicable policy language effecting coverage required by this L ease and a copy of the Declarations and Endorsements Pages of the CGL and any Excess policies listing all policy endorsements. All certificates, endorsements and copies or Declarations and Endorsements are to be received and approved prior to the Commencement Date and before Lessee takes occupancy or permits any work on the Ground Lease Area to commence. However, failure to obtain the required documents prior to the work beginning shall not waive the Lessee’s obligation to provide them.

21. Personal Property at Risk of Lessee. All personal property which Lessee maintains at the Ground Lease Area shall be at the risk of Lessee only. Except for the grossly negligent, reckless, or unlawful intentional acts of Lessor, its agents, employees, guests or invitees, Lessor shall not be liable for any damage to any property of Lessee or for any damage to Lessee’s property in moving the same to or from the Ground Lease Area.

22. Utilities and Other Services.

(a) If needed, Lessee shall contract with and pay the applicable provider, whether the provider is the Lessor or other party, all charges for water, gas, electricity, sewer, waste disposal, or other utilities used or supplied upon or in connection with its use of the Ground Lease Area and shall indemnify, defend, and hold harmless Lessor against any liability on account thereof . Lessee shall obtain separate metering devices for utility services, as applicable. Lessee agrees to promptly reimburse the Lessor upon receipt of an invoice, its proportionate share of the actual cost of utility services from any common utility service, which may have been paid by Lessor. In addition to the amount of the utility bill that the Lessor may have paid, Lessee shall pay to Lessor a three percent (3%) administrative fee for any pass-through billing processed. In no event shall Lessor be liable for any interruption or failure in the supply of any such utilities to the Ground Lease Area.

12 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres (b) Consent to Energy Use Data Disclosure. By executing this Lease, Lessee hereby consents to disclosure of its energy usage data as required for Lessor to comply with California Public Resources Code section 25402.10 and the implementing regulations of the California Energy Commission (20 Cal. Code Regs. Sections 1680 through 1685). Strictly for the purposes of ensuring such compliance, including any required public disclosure of aggregated energy use, Lessee agrees t o provide such energy usage data directly to Lessor and/or authorizes Lessor to obtain the required energy usage data directly from Lessee’s utility providers upon request without the need to execute any further authorizations or consent forms. L essee’s consent and authorization is deemed given upon the execution of this Lease and shall continue to be in effect throughout the Term or any extension thereof.

23. Signs. Lessee shall not post, install, erect , or operate any sign, placard, poster, or other device on any part of the Ground Lease Area without the prior written permission of Lessor. Such signs as may from time to time be permitted by the Lessor shall be made, posted, maintained and removed (and any damage caused by such removal shall be repaired), at Lessee’s own cost and expense. Lessor shall have the right to remove unauthorized signs at Lessee’s expense. Lessee shall be responsible for all costs associated with the purchase and installation of any required Building Standard Suite Signage in accordance with local codes.

24. Liens. Lessee shall not suffer or permit any liens to stand against the Ground Lease Area, or any part thereof, by reason of any work, labor, services , or materials done for, or supplied to Lessee or anyone holding the Ground Lease Area or any part thereof through or under Lessee. If any such lien shall at any time be filed against the Ground Lease Area, Lessee shall cause such lien to be discharged of record sixty (60) days after the date that Lessee receives notice of the filing. Notwithstanding the above, in any bona fide dispute between Lessee and any third party concerning work done by the third party on or for the Ground Lease Area, and as a resul t of the dispute the third party files a lien against the Ground Lease Area, then, in lieu of obtaining the discharge of the lien within the sixty (60) day period, Lessee, at its option, may either file suit against the third party, a part of the suit being to judicially negate or remove the lien or Lessee may file an appropriate bond or other device allowed by law to remove the lien.

25. Inspection by Lessor . Lessee shall permit Lessor, or its agents, representatives, or employees to enter the Ground Lease Area and the Improvements upon, except in the event of an emergency, at least twenty-four (24) hours prior notice and at mutually agreeable, reasonable times for the purpose of inspecting the Ground Lease Area and the Improvements erected thereon to determine whether Lessee is complying with the terms of this Lease, for the purpose of doing other lawful acts that may be necessary to protect Lessor’s interest in the Ground Lease Area, or for the purpose of performing Lessor’s duties under this Lease.

13 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres

26. Assignment and Subletting.

(a) Lessee shall not cause, or permit, by operation of law or otherwise, any assignment, encumbrance, or transfer of this Lease or any estate or interest therein without the prior written consent of Lessor and subject to the provisions of Section 26(b) below.

(b) Lessee shall not sublet the Ground Lease Area or any part thereof without the prior written consent of Lessor . Any consent to a subl ease or assignment shall be conditioned upon the proposed sublessee or assignee demonstrating to Lessor its ability to perform and complete the obligations of Lessee under this Lease , as determined by objective standards of financial capability, creditworthiness, and experience required for such performance. In addition, if Lessee’s proposed sublease or assignment arrangement will result in any increased rents or profits accruing to Lessee in excess of the Monthly Base Rent due to Lessor under this Lease, such consent shall further be conditioned upon Lessor receiving fifty percent (50%) of the excess amount thereof. An assignment or subletting shall not relieve Lessee of any of its obligations or liabilities under this Lease: both Lessee and any subsequent assignees will be deemed to be bound hereunder. The Lessor ’s consent to any such assignment, transfer or subletting shall not constitute consent to any further assignment, transfer, or subletting.

(c) The provisions of this Section 26 are not intended, nor should they be construed to prevent Lessee from allowing such independent contractors onto the Ground Lease Area who are involved in Lessee’s normal operations on the Ground Lease Area (such as repair and maintenance personnel, j anitorial personnel, and similar personnel). Additionally, nothing in this Section 26 should be construed to prevent subcontractors of Lessee from conducting their work on the Ground Lease Area in conjunction with the normal operations conducted by Lessee as permitted by this Lease.

To the extent that Lessor must grant its consent for Lessee’s subcontractors to enter the Ground Lease Area for the above-described purposes, consent is hereby deemed to be granted.

27. Indemnification.

(a) To the fullest extent permitted by law, Lessee hereby agrees to defend, indemnify and hold harmless Lessor, the City of Victorville, the Victor Valley Economic Development Authority , and each of their respective officers, officials, employees, directors, agents, volunteers, independent contractors and assigns, (collectively hereinafter, the “Indemnified Parties”), from and against any and all claims, actions, suits, proceedings, demands, losses, judgments and costs and expenses, including attorneys’ fees, (collectively hereinafter “ Claims”) for any personal injuries, deaths, or property damage (including property ow ned by Lessor) arising out of or resulting from Lessee’s performance of this Lease, except to the extent such Claims are caused by the sole negligence or willful misconduct of the Indemnified Parties .

14 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres (b) Lessor does not and shall not waive any rights that it may have against Lessee under this Section because of the acceptance by or deposit with the Lessor of any insurance policy or certificate required under this Lease. The provisions of this Section 27 shall apply regardless of whether said insurance policies are determined to be applicable to the Claims.

(c) The provisions of this Section 27 shall survive the expiration or termination of this Lease.

28. Lessor’s Environmental Representations.

(a) Except as otherwise provided in Section 14 hereof, Lessee shall not be held responsible or deemed liable by the Lessor for any hazardous environmental condition on the Ground Lease Area which existed prior to Lessee’s occupancy of the Ground Lease Area.

(b) Except as provided Section 14, Lessor represents that to the best of its actual knowledge the Ground Lease Area is free from any violations of law or regulations pertaining to occupational hazards and environmental conditions or Hazardous Materials as defi ned in Section 29 of this Lease. In the event that any hazardous environmental conditions exist on the Ground Lease Area as of the Commencement Date which result in a loss to Lessee and which were caused by Lessor, or parties or entities within the control of, or under contract with Lessor, then Lessor shall indemnify Lessee for any such loss. Lessor shall indemnify Lessee from hazardous environmental conditions or violations caused directly by Lessor, its employees, agents, or licensees subsequent to the Commencement Date.

(c) Lessee sh all be solely responsible for obtaining, at its sole cost and expense, any environmental permits required for its operation under this Lease.

29. Compliance with Environmental Laws.

(a) The words and phrases set forth below shall have the following definitions:

(1) “Hazardous Materials” means and includes any material that because of its quality, concentration or physical or chemical characteristics, poses a significant present or potential hazard to human health and safety or to the environment if released into the workplace or the environment. Hazardous Materials include hazardous wastes, toxic substances, petroleum products and motor fuels and similar substances and materials, including all substances and materials defined as hazardous or toxic substances or materials under California Health and Safety Code Section 25501(n) or other similarly applicable state, federal or local Environmental Laws, as hereinafter defined.

15 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres (2) “Environmental Laws ” means and includes the various health and safety laws and regulations of state, federal and local agencies pertaining to the manufacture, use, storage, disposal, release, and reporting relating to Hazardous Materials.

(b) Following the Commencement Date, Lessee shall not cause or permit any Hazardous Materials to be used, generated, manufactured, produced, stored, brought upon, or released in violation of Environmental Laws, on, under or about the Ground Lease Area, or transported to and from the Ground Lease Area, by Lessee, its agents, employees, contr actors, or invitees in violation of any Environmental Law s.

Lessee shall indemnify, defend, and hold harmless Lessor, the Victor Valley Economic Development Authority, and the City of Victorville from any damage, cost, expense, liability, fine, or penalty resulting from any unauthorized discharge, emission, spill, storage, release, disposal , or use of any Hazardous Materials to the extent caused by Lessee, its officers, agents, employees, contractors, or invitees, in violation of Environmental Laws. This obligation of Lessee shall survive the Expiration Date or earlier termination of this Lease and shall apply whenever the Lessor incurs cost or liability arising from any use or activity of Lessee relating to Hazardous Materials during Lessee’s occupancy of the Ground Lease Area.

(c) Without limiting the foregoing, if the presence of any Hazardous Material on, under or about the Ground Lease Area caused by Lessee, its agents, employees, contractors, or invitees results in an unpermitted, unscheduled or unauthorized release or contamination of the Ground Lease Area by such Hazardous Material at any time during the Term or any extension thereof, then Lessee shall , at its sole cost and expense , promptly take all actions necessary to return the Ground Lease Area to a condition that is consistent with any and all Environmental Laws.

(d) Lessee shall immediately notify Lessor of the occurrence of any of the following events: (i) receipt by Lessee of any notice of violation from any governmental entity regarding the application of Environmental Laws to the Ground Lease Area or the investigation or enforcement by such governmental entity of any such Environmental Laws in connection with Lessee’s occupancy or use of the Ground Lease Area, and (ii) unpermitted, unscheduled or unauthorized release of any Hazardous Material on the Ground Lease Area which may occur at any time during the Term or any Option Term.

(e) To the extent Lessee may conduct any use or activity on the Ground Lease Area which includes the use, handling, transport, or disposal of any Hazardous Materials in quantities which exceed the threshold amounts authorized under California Health and Safety Code Section 25507 , Lessee shall, at its sole cost and expense, prepare and submit to the City of Victorville (or designated local Certified Unified Program Agency “CUPA”) for approval, renewal or amendment, as applicable, a Business Plan for the Ground Lease Area, as the term “Business Plan” is described under California Health and Safety Code Section 25504.

16 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres (f) Notwithstanding any of the foregoing, in the event Lessee, its agents, employees, contractors, or invitees, fails to use and maintain t he Ground Lease Area in accordance with the provisions of this Section 29 , Lessor and/or the City of Victorville shall have the right, but not the obligation, to enter the Ground Lease Area and undertake remedial action as necessary in order to ensure that the Ground Lease Area is in compliance with all Environmental Laws. In such event, Lessee shall reimburse Lessor and/or the City of Victorville for all reasonable sums incurred by it for such remediation activities.

30. Surrender of Ground Lease Area. On the Expiration Date, or upon the date of any earlier or later termination of this Lease as may be provided for herein, Lessee shall surrender and deliver the Ground Lease Area and any Improvements constructed thereon to the Lessor clean, free of debris, and in reasonable operating condition.

31. Compliance with Laws . Lessee shall comply with all A pplicable Laws, including without limitation the SCLA and FAA Rules and Regulations. Lessee agrees to abide by and conform to the SCLA Rules and Regulations attached hereto as Exhibit C and incorporated herein by this reference and as such as may be amended or modified from time to time by the SCLAA, and to cause its officers, agents, employees, suppliers, shippers, customers, and invitees to so abide and conform. Lessor shall have the right, from time to time, to modify, amend, and enforce said rules and regulations. In addition, Lessee agrees to abide by the Selected FAA Rules and Regulations attached hereto as Exhibit E and incorporated herein by this reference, as such may be amended from time to time, and to cause its officers, agents, employees, suppliers, shippers, customers, and invitees to so abide and conform. The Lessor shall not be responsible to Lessee for the noncompliance with said rules by other lessees or tenants or their officers, agents, employees, suppliers, shippers, customers, and/or invitees. The judgment of any court of competent jurisdiction, or the admission of Lessee in a proceeding brought against Lessee by any government entity, that Lessee has violated any such Applicable Laws (except where such admission may be the basis for settlement) shall be conclusive as between the Lessor and Lessee and sh all constitute grounds for declaration of default, breach, forfeiture, and termination of this Lease by the Lessor. Lessor shall not be responsible to Lessee for the non- compliance with said rules by other tenants, their agents, employees, and invitees.

32. Default of Lessee.

(a) In the event Lessee should default in the performance of any covenant or condition of this Lease (excluding the payment of Monthly Base Rent or other amounts due hereunder or failure to develop the Ground Lease Area) and such default is not cured or removed within thirty (30) days after service of written notice of default upon Lessee of such default in the performance of any covenants and conditions, Lessor shall have the right and option to terminate this Lease and/or exercise the remedies set forth in Section 33, without prejudice to any claim for arrears of rent or breach of covenant .

Notwithstanding the foregoing, if Lessee, prior to the expiration of such thirty (30) day period for default diligently commences to cure such default but is unable to do so within 17 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres the thirty (30) day period, then Lessee shall not be in default provided that Lessee continues to make a diligent effort to cure the default . Any statutory notice required as part of any eviction action or similar type of proceeding may be included with any notice of default given pursuant to this Section and the Lessor need not declare a default and have such default remain uncured prior to delivery of such statutory notice.

(b) Failure to pay the Monthly Base Rent or any other amounts within ten (10) business days after Lessee receives written notice from Lessor that such amount is overdue shall be deemed a default under this provision. Lessee shall cure such default within ten (10) business days after service of written notice.

(c) In the event of default, the Improvements and all construction, other improvements, and facilities on or about the Ground Lease Area shall become the sole property of Lessor.

33. Remedies of Lessor. In the event of any breach of this Lease by Lessee and following the expiration of any cure periods provided in Section 32, Lessor may at any time thereafter, with or without notice or demand and without limiting Lessor in the exercise of any other right or remedy which Lessor may have by reason of such breach, do any of the following:

(a) Terminate Lessee’s right to possession of the Ground Lease Area by any lawful means, in which case this Lease shall terminate, and Lessee shall immediately surrender possession of the Ground Lease Area to Lessor. This may involve Lessor filing an unlawful detainer action and receiving a court order for Lessee to vacate the Ground Lease Area. In such event Lessor shall be entitled to recover from Lessee all damages incurred by Lessor by reason of Lessee’s default, including, but not limited to:

(1) the cost of repairing or restoring damages to the Ground Lease Area caused by Lessee;

(2) the cost of removal of Lessee’s Improvements , fixtures, and other contents of the Ground Lease Area;

(3) the costs associated with past or future brokerage
commissions and marketing expenses and other costs payable by Lessor in connection with the recovery of possession of the Ground Lease Area; and

(4) reasonable attorneys’ fees; and court costs, as well as: (i) the worth at the time of award by the court having jurisdiction thereof of the unpaid rent which had been earned at the time of termination; and (ii) the worth at the time of award by the court having jurisdiction thereof of the amount by which the unpaid rent for the unexpired balance of the term after the time of such award may exceed the amount of such rental loss for the same period that Lessee proves could be reasonably avoided.

18 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres (b) Pursue any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the State of California.

34. Default of Lessor. In the event Lessor should default in the performance of any covenant or condition of this Lease and such default is not cured or removed within thirty (30) days after service of written notice of default upon Lessor, then Lessee shall have the right and option to pursue all remedies available to it under law or equity. If Lessor, prior to the expiration of such thirty (30) day period for a default, diligently commences to cure such default, but is unable to do so within the thirty (30) day period, then Lessor shall not be in default provided that Lessor continues to make a diligent effort to cure the default. In the event of an uncured default Lessee shall have all remedies available at law or in equity for any default or breach of this Lease by Lessor.

35. Force Majeure-Unavoidable Delays. If the performance of any act required by this Lease to be performed by either Party is prevented or delayed by reason of an act of God; strike; lockout; labor disputes ; inability to secure materials ; lack of goods , products, or materials; unreasonably restrictive governmental regulations or laws; or by actions of governmental entities (as to Lessor, not including those under Lessor’s control) particularly actions requiring environmental clean-up activities in compliance with Federal regulations; or by other cause (except financial inability ) that is beyond the reasonable control of the Party required to perform the act, the time for performance of the act will be extended for a period equivalent to the period of delay, and performance of the act during the period of delay will be excused. However, nothing contained in this Section 3 5 shall excuse the prompt payment of any amounts due from one Party to the other as required by this Lease or the performance of any act rendered difficult solely because of the financial condition of the Party required to perform the act.

36. Notices. Any and all notices or demands required or permitted to be given hereunder must be personally delivered; or mailed by registered or certified mail, return receipt requested ; or sent by a nationally recognized overnight courier, addressed as follows:

To Lessor: Southern California Logistics Airport Authority 18374 Phantom West
Victorville, CA 92394
Attn: Airport Director

With copies to: Green, de Bortnowsky, LLP
30077 Agoura Court, Suite 210
Agoura Hills, CA 91301
Attn: Andre de Bortnowsky

19 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres To Lessee: Aviation Development Park, LLC
958 SVL Box
Spring Valley Lake, CA 92395
Attn: Craig Garrick

or at such other address or addresses that either Party may hereafter designate in writing to the other. Any notice or demand which is mailed by registered or certified mail as provided above shall be deemed to be effective and given for all purposes three (3) business days following the time of deposit thereof, postage prepaid, in the United States mail.

37. Memorandum of Lease for Recording. Neither Party shall record this Lease without the written consent of the other. However, Lessor and Lessee shall, at the request of either at any time during the Term or any extension thereof, execute a memorandum or “short form” of this Lease for purposes of, and in a form suitable for, being recorded.

The memorandum or “short form” of this Lease shall describe the P arties, set forth a description of the Ground Lease Area, specify the Term of this Lease, including the possibility of the Option Terms, and shall incorporate this Lease by reference.

38. No Condemnation of the Ground Lease Area. INTENTIONALLY OMITTED.

39. Maintenance. Lessee shall at all times during the Term hereof and until the Ground Lease Area is surrendered to Lessor upon the expiration or termination of this Lease, keep and maintain the Ground Lease Area in good and substantial order and repair, and shall undertake all necessary repair and maintenance of the Ground Lease Area and any Improvements constructed thereon. Lessee shall be responsible for all operating expenses associated with maintaining the Ground Lease Area, including, but not limited to: cleaning; preventative maintenance; repair; all regularly required inspections and servicing; landscape maintenance; etc. Lessee also agrees throughout the Term to supply copies of all life safety related certifications and/or inspection records to the Lessor in a timely manner, if such systems are constructed.

40. Damage or Destruction of Ground Lease Area. Unless occasioned by the negligence or intentionally unlawful act of Lessee, if, during the Term of this Lease or any renewal thereof, any portion of the Ground Lease Area shall be damaged by fire or other catastrophic event , so as to render such portion of the Ground Lease Area untenantable, the obligations under this Lease shall be immediately suspended while such portion of the Ground Lease Area remains untenant able. In the event of such damage, the Lessee shall give Lessor notice of such untenant able conditions and the Lessor shall elect in its sole discretion, whether to repair the Ground Lease Area or to cancel this Lease with respect thereto. It shall notify Lessee in writing of its election within thirty (30) days after such damage. In the event Lessor elects to repair the Ground Lease Area, the work or repair shall begin promptly and shall be carried on without unnecessary delay. In the event the Lessor elects not to repair the Ground Lease Area or portion thereof, the Lease shall be deemed canceled as of the date of damage with respect to the applicable portion. Such damage shall not extend the Lease Term. 20 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres Notwithstanding anything in this paragraph to the cont rary, if the Ground Lease Area is rendered inadequate for Lessee to conduct its normal operations in or upon the Ground Lease Area (or such portion of the Ground Lease Area which is still tenantable), and it is reasonably anticipated that the damages shall not be repaired or otherwise resolved, within sixty (60) days of the date the damage occurred, then Lessee, at its sole and exclusive option, may immediately terminate this L ease. Additionally, irrespective of whether Lessee remains in possession and occupancy of the Ground Lease Area or elects to terminate this Lease, rent payable under this Lease shall abate during the period that the Ground Lease Area is not totally useable by Lessee. The abatement shall be pro rata in proportion to the ratio that the amount of space which Lessee is actually able to occupy and from which it is able to conduct operations bears to the total Ground Lease Area. L essee shall continue to make all other payments during this period, including taxes.

41. Miscellaneous.

(a) One (1) or more waivers of any provision of this Lease by Lessor shall not be construed as a waiver of a subsequent breach of the same provision and Lessor’s consent or approval shall not be deemed to waive or render unnecessary Lessor’s consent or approval to or of any subsequent or similar act by Lessee.

(b) The construction of any improvements on the Ground Lease Area shall be approved by Lessor and performed by Lessee in compliance with all provisions of this Lease.

(c) If either Party to this Lease shall bring any action, suit, counterclaim, appeal, arbitration, or mediation for any relief against the other, declaratory or otherwise, to enforce the terms hereof or to declare rights hereunder (collectively, an “Action”), the losing Party shall pay to the Prevailing Party a reasonable sum for attorneys’ fees and costs incurred in bringing and prosecuting such Action and/or enforcing any judgment, order, ruling, or award (collectively, a “ Decision”) granted therein, all of which shall be deemed to have accrued on the commencement of such Action and shall be paid whether or not such Action is prosecuted to a Decision. Any Decision entered in such Action shall contain a specific provision providing for the recovery of attorneys’ fees and costs incurred in enforcing such D ecision. The court or arbitrator may fix the amount of reasonable attorneys’ fees and costs on the request of either Party. For the purposes of this paragraph, attorneys’ fees shall include, without limitation, fees incurred in the following: (1) post judgment motions and collection actions; (2) contempt proceedings; (3) garnishment, levy, and debtor and third-party examinations; (4) discovery; and (5)

21 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres bankruptcy litigation. “Prevailing Party” within the meaning of this paragraph includes, without limitation, a Party who agrees to dismiss an Action upon the other Party’s payment of the sums allegedly due or performance of the covenants allegedly breached, or who obtains substantially the relief sought by it. Nothing contained in this Section shall be interpreted to mean that Lessor has agreed to arbitrate any dispute which may aris e hereunder.

(d) This Lease can be modified, supplemented, amended, or rescinded only by a writing expressly referring to this Lease and signed by the authorized representatives of the Parties.

(e) If any provision of this Lease or any application thereof shall be invalid or unenforceable, the remainder of this Lease and any other application of such provision shall not be affected thereby. Unless otherwise expressly provided herein, any approval or consent of Lessor required hereunder shall not be unreasonably withheld or delayed. This Lease shall be binding upon and inure to the benefit of and be enforceable by the respective successors of the P arties hereto. The Section headings in this Lease are for purposes of reference only and shall not limit or define the meaning hereof.

(f) This Lease contains the entire understanding and agreement of the Parties, supersedes all prior understandings and agreements, and cannot be changed orally. This Lease shall be constru ed in accordance with the laws of the State of California. Time is of the essence.

(g) This Lease shall be of no force or effect unless executed by both Parties. Each person executing this Lease for the respective Parties expressly represents and warrants that he or she has the authority to enter into leases on behalf of and bind the entity on whose behalf this Lease is executed.

(h) This Lease may be executed by the Parties in counterparts, and when executed by each of the Parties, each counterpart shall be deemed to be a part of the same instrument.

[END OF PAGE – SIGNATURES FOLLOW]
22 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres IN WITNESS WHEREOF, the Parties have executed this Lease as of the dates set forth below.

LESSEE

AVIATION DEVELOPMENT PARK, LLC

__________________________ __________________
Craig Garrick Date
Chief Executive Officer/Manager

LESSOR
SOUTHERN CALIFORNIA LOGISTICS AIRPORT AUTHORITY (“SCLAA”)

__________________________ __________________
Keith C. Metzler Date
Executive Director

ATTEST

__________________________ __________________
Jennifer Thompson Date
SCLAA Secretary

APPROVED AS TO FORM:

__________________________ __________________
Andre de Bortnowsky Date
SCLAA Legal Counsel

RISK MANAGER

__________________________ __________________
Sandra Bostick Date

22 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres

EXHIBIT A

GROUND LEASE AREA

Approximately Eighty (80) acres / 3,484,800 square feet of airfield property assembled under Assessor’s Parcel Numbers: 0459-032-39; 0459-032-40; 0459-032-41; and 0459- 032-42, located near the northern end of the SCLA, as depicted on Exhibit A-1.

I
,---.-----;;-;;;;----:---....-.,,..-,------;;,:::----;:;-,--------- __;:_--- Ir.
/..

Exhibit A-1Taxiway Echo
Gravel Taxilane
23 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres

EXHIBIT B

DEVELOPMENT AND IMPROVEMENT OF GROUND LEASE AREA

Subject to the terms and conditions of the L ease, Lessor and Lessee hereby affirm and acknowledge that the following items of work shall represent the d evelopment and Improvements contemplated for the Ground Lease Area within this Lease.

Location Description Notes
80 Acres Construction must begin by June 30. 2025 , and be completed by January 1, 2026.

80 Acres Clear, grub, and set the final grade of the Ground Lease Area.

80 Acres Construct soil -cement pavement sections of adequate structural design to allow for parking Boeing 777 aircraft.

80 Acres Soil-Cement pavement shall either be capped with a minimum of Two (2) inches of asphalt or a suitable liquid asphalt emulsion.

80 Acres Modify or reconstruct Air Operations Area (“AOA”) fencing as needed to accommodate the development and maintain
security per SCLA requirements.

80 Acres Construct utilities, as may be needed.
80 Acres Other related improvements as approved.

The Lessor hereby consents to the Lessee performing said development and consulting Improvements on the Ground Lease Area upon Lessor receiving and approving detailed plans describing the development and Improvements Lessee desires to construct on the Ground Lease Area. The development and Improvement work on the Ground L ease Area must be approved in writing by Lessor prior to any work being performed.

24 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres

EXHIBIT C

SCLA RULES AND REGULATIONS

Southern California
Logistics Airport
Rules and Regulations
Amended
April 17, 2007

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RULES AND REGULATIONS FOR THE U SERS OF SOUTHERN CALIFORNIA LOGISTICS AIRPORT; ESTABLISHING FEES FOR THE VARIOUS USES; DEFINING TERMS; PROHIBITING OR LIMITING CERTAIN ACTIVITIES; FIXING PENALTIES FOR VIOLATIONS; AND PROVIDING FOR AMENDMENTS TO

THESE RULES AND REGULATIONS AS MAY BE NEEDED FROM TIME TO TIME

SECTION 1. SHORT TITLE:

1.1 These Rules and Regulations shall be referred to as the Southern California Logistics Airport (SCLA) Rules and Re gulations. It ma y be amended by a majority vote by the Board of the Southern California Logistics Airport Authority (SCLAA).

SECTION 2. APPLICABILITY:

2.1 These Rules and Regulations apply equally to every Airport User. The Airport Operating Manual or Specifications, as applicable, adopted in accordance with FAR Part 139, and the Ai rport Policies and Proc edures Manual are hereby made by reference a part of these Rules and Regulations.

SECTION 3. RESPONSIBILITIES
:

3.1 Management: It shall be the responsibility of the Airport Director to fairly and impartially administer these Rules and Regulations.

3.2 Users:

It shall be the responsibility of ev ery Airport User, pilot or other, to become familiar with the SCLA Rules and Regulatio ns and to obey those Rules and Regulations. Current copies of these Rules and Regulations will be maintained reflecting an y amendments and will be posted at the SCLA Administrative Office and at Million Air. Additional copies will be provided by the SCLA Airport Director through the SCLA Administrative Office to any Airport User who requests such copy.

SECTION 4. DEFINITIONS:

For the purposes of these Rules and Regulations, th e following definitions and meanings shall apply unless otherwise specified:

4.1 “Air Operations Area” or “AOA” means the area upon which aircraft are able to operate and includes the runways, taxiways, taxi lanes, apron area, and the vehicle and personnel gates that lead to these areas.

4.2 “Air Carrier” means an y person who undertak es directly, by lease, or other arrangement, to e ngage in air transportation of persons or things. An “Air Carrier” operates in various categories, under authority or certification by the FAA and holds a curre nt FAA certificate to trans port air pass engers or property for hire.

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4.3 “Aircraft” means a device that is used, or is intended to be used, for flight in the air. “Aircraft” includes airplanes, helicopters and gliders, and lighter than air devices such as blimps or balloons, but does not include hang gliders.

4.4 “Aircraft Owner” shall mean a Pers on who holds title to an Aircraft.

4.5 “Aircraft Operator” shall mean the Person who is operating or controlling an Aircraft while said Aircraft is on Airport property.

4.6 “Aircraft Storage” shall have t he same meaning as “Stored Aircraft”.

4.7 “Airport” means the SCLA , its buildings and facilities, all lands owned and or controlled by the SCLAA contiguous to the airport, including airspace above such land and the designated approaches thereto.

4.8 “Airport Director” means that person so appointed by the SCLAA or his designated representative.

4.9 “Airport Master Security Program” or “Airport Security Program” means the Security Program, which is the responsibility of an Airport Operator pursuant to TSA 1542.

4.10 “Airport Operations and Security Department” or means the Airport Operations and Security Department of the Southern California Logistics Airport.

4.11 “Airport Security Areas” or “Sec ure Areas” means Air Operations Areas, roadways, and common Air Carrier areas with in terminal fa cilities (i.e. baggage makeup areas), excluding exclusive leaseh old structural areas, to which public access is limited or denied under Airport Master Security Program.

4.12 “Airport Security Coordinator” or “ASC” means an individual appointed by the Airport Director, charged with the responsibility to implement and enforce the Airport Master Security Program, employed by the City of Victorville and under the direction of the Airport Director, or the Airport Security Coordinator’s designated representative.

4.13 “Airport Tenant” mean s an individual, partnershi p, corporatio n or other business entity, and its agents, employ ees, representatives, and subtenants which occupies or controls all or part of Airport areas, buildings or other facilities which they lease from the Southern California Logistics Airport Authority.

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4.14 “Airport Tenant Security Program” s hall have the same meaning as set forth in TSA1542.113, entitled “Airport Tenant Security Programs.”

4.15 “Airport User” means any Person who uses the Southern California Logistics Airport, including but not limited to, Airport Tenants and subtenants, Fixed Base O perators, Air Carriers, Aircraft Owners, Aircraft Operators, Commercial Operators, passengers, and their employees, agents, representatives, agents, successors and assigns.

4.16 “Authorized Person” means an i ndividual authorized with a Personnel Identification Badge issued by the Airport Securi ty Coordinator, or his designated representative, to have unescorted access authority to Airport Security Areas.

4.17 “Air Traffic” means Aircraft operating in the air or on an Airport surface, exclusive of loading ramps or parking areas.

4.18 “Air Traffic Clearance” means an aut horization issued by Air Traffic Control personnel for an Aircraft to proceed under specified traffic conditions within controlled airspace.

4.19 “Air Traffic Control” or “ATC” sha ll mean the Air Traffic Control of the Southern California Logistics Airport.

4.20 “Airworthy Condition” means a conditi on wherein an Aircraft can take flight under its own power. See definition of “Non-Airworthy Aircraft” below.

4.21 “Autorotation” means a rotorcraft flight s condition in which the lifting rotor is driven entirely by action of the air w hen the rotorcraft (helicopter) is in motion.

4.22 “Balloon” means a lighter-than air aircraft, which is not engine-driven.

4.23 “Based Aircraft,” means Aircraft that ar e parked on the Airport for thirty (30) days or longer and are not part of an aircraft storage program.

4.24 “Ceiling” means the height above the ear th's surface of the lowest layer of clouds or obscuring phenomena, that is re ported as “broken,” “overcast,” or “obscuration,” and is not classified “thin” or “partial”.

4.25 “City” means the City of Victorville.

4.26 “Commercial Operator” means any Pe rson who, for compensation or hire, engages in the carriage of persons, prope rty, or mail in air commerce, or engages in other aerial activity such as flight instruction, aerial photography, fire fighting, agricultural aviation activities, or traffic surveillance.

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4.27 “Criminal Hi story Records Chec k (CHRC)” means a fi ngerprint-based criminal history records check as described in 49 CFR § 1542.

4.28 “Commercial Use” means use of SCLA for revenue-producing commercial activities.

4.29 “Dismantled Aircraft” means an Airc raft which has been disassembled to a point where it is not reasonable to assume that said Aircraft can be reassembled and placed in an Airworthy Condition.

4.30 “Driving Permit” means a permit issued by the Airport Director or his designee in order for an Individual to operate a Vehicle on the Airport.

4.31 “Escort” means an Authorized Pe rson or Authorized Persons accompanying, monitoring, directing and controlling the actions of an Individual or Individual s who are not displaying Personnel Identification Badges, and/or who are not otherwise Authorized Persons, within Airport Security Areas. The Authorized Pe rson(s) performing an Escort must be displaying valid Personnel Identification Badges, must be accompanying the Individual or Individuals for perfo rmance of direct job duties and must ensure that those Individu als who are being escort ed remain within sight and sound at all times.

4.32 “Executive Director” means the Execut ive Director of the Southern California Logistics Airport Authority.

4.33 “FAA” means the Federal Aviation Administration of the United States Government or any federal agencies succeeding to its jurisdiction.

4.34 “Fixed Base Operator” means any Person who rents, leases, or owns facilities located on SCLA, who by virtue of his specific type of aviation or aviation related activity, requires the occupancy of a site with contiguous aircraft apron and direct access to t he Aircraft Operation Area, and who engages in a business activity providing aviation sales or service, including but not limited to any of the following:

1. Selling and/or servic ing new and used Aircraft and component parts;

2. Aircraft ma intenance and repairs;

3. Sales and/or repair of avionics;

4. Aviation training (incl uding ground or flight instruction);

5. Aerial photography;

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6. Air ambulance service;

7. Aircraft agricultural operat ions (crop dusting, spraying, or the application of seed, fertilizers, pesticides, defoliants, etc);

8. Aircraft rental, charter, leasing;

9. Aircraft Storage;

10. Fuel and oil sales and servicing; and

11. Aircraft servicing or gr ound handling including cargo handling, baggage handling, lavatory service, water service, air starts, ground power, or other elements related to aircraft handling.

4.35 ”Flight Visibility” m eans the average forward hori zontal distance from the cockpit of an Aircraft in flight, at which prominen t unlighted objects may be seen and identified by day, and prom inent lighted objects may be seen and identified by night.

4.36 “Ground Visibility” means prevailing horizontal visibility near the earth's surface.

4.37 “Helicopter” means a rotor driven aircraft (rotorcraft) that, for its horizontal motion, depends primarily on its engine-driven rotors.

4.38 “IFR” means Instrument Flight Rules covering meteorological conditions below the minimums for flight under visual (VFR) conditions.

4.39 “Individual” means a natural person.

4.40 “Maintenance” means inspection, ov erhaul, repair, preservation, and the replacement of parts, including preventive maintenance.

4.41 “Movement Area” mean s the runways, taxiways , and other areas of the Airport, which are ut ilized for taxiing, takeoff, an d landing of Aircraft. The Movement Area does not include parking and loading ramps. Entry into the Movement Area requires ATC approval.

4.42 “Night” means the ti me between the end of ev ening civil twilight and the beginning of morning civil twilight as published in the American Air Almanac, converted to local time.

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4.43 “Non-Airworthy Condition ” means when an Aircraft cannot take flight under its own power as a result of being in disrepair or in the process of being disassembled.

4.44 “Notice of Violation” means a written notification of non-compliance with these Rules and Regulations, issued by the Ai rport Director or his designated representative.

4.45 “Person” means an individual, firm, partnership, corporation, company, association, joint-stock association, or gover nmental entity, and includes a trustee, receiver, assignee, or similar representative of any of them.

4.46 “Personnel Identification Badge” means a Personnel Id entification Badge issued to an Individual by the Southe rn California Logistics Airport for purposes of granting that Individual unescorted access authority to the Restricted Area.

4.47 “Ramp” means an improved surfaced area reserved exclusively for the parking and taxiing of Aircraft.

4.48 “Restricted Area” means all areas or facilities accessible only by Authorized Persons or Person s under Escort, and includin g all Ramp areas and the Aircraft Operations Area (AOA).

4.49 “Roadway” means that po rtion of an area improved or designed or ordinarily used for vehicular travel. A roadway on the Airport Operations Area is called a vehicle service road (“VSR”).

4.50 “Runway” means an im proved surfaced area rese rved exclusively for the landing and taking off of Aircraft.

4.51 “Scheduled Air Carrier” means any Pe rson providing scheduled passenger or cargo service from the Airport in ac cordance with a published schedule and having at least one scheduled departur e per day, or no less than five scheduled departures per week, and operating under authority of the Federal Aviation Administration and the Airport.

4.52 “Security Perimeter” means the portio n of the Airport that is enclosed by fencing, walls or other barriers, and to which ac cess is controlled through designated entry points.

4.53 “SCLA” means Southern California Logistics Airport.

4.54 “SCLAA” means Southern California Logistics Airport Authority.

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4.55 “Security Devices” means equipmen t installed or plac ed by or under the direction of the Southern California Logistics Airport Authority, or designated representative, to monito r or control entrances to and exits from Airport Security Areas. “Security Devices” include, but are not limited to, bells, sirens, communication equipment, locks and corresponding keys, emergency exits, electronic access control and other security equipment.

4.56 “Security Identification Display Area ” or “SIDA” shall have the same meaning as set forth in TSA1542.205. Before being granted unescorted access to the SIDA, Individuals must undergo a Cr iminal History Re cord Check and employment history verification.

4.57 “Security Screening Area” means an access po int, including entrances and exits, to the Airport Security Areas, Secure Areas and the Sterile Areas, where Vehicles, equipmen t, Individuals, and belonging s are inspected prior to entrance.

4.58 “Sterile Area” means an area to which access is controlled by the inspection of Individuals and property in accordance with FAA and TSA requirements.

4.59 “Stirling Airport International” or “SAI” means SCLA’s development partner.

4.60 “Stored Aircraft” means aircraft that are parked at/on airport property and are part of an aircraft storage program.

4.61 “Taxiway” means an improved surfac ed area reserved exclusively for use by aircraft to proceed to and from ramp and runway areas.

4.62 “Traffic Pattern” means the traffic flow that is prescribed for aircraft landing at or taking off from SCLA.

4.63 “Unnecessary Noise” me ans any engine noise that is greater than the level produced when the engines are at idle except when required for taxiing of the aircraft, takeoff or landings.

4.64 “Vehicle” means every device in, upon or which any Individual or property is or may be transported or drawn upon a roadway, exce pting devices moved by human power or used exclusively upon st ationary rails or tracks. A bicycle shall be considered a vehicle under all porti ons of these Rules and Regulations, which govern right-of-way.

4.65 “Vehicle Owner” means a person who holds the legal title of a vehicle.

4.66 “Vehicle Service Road ” or “VSR”. (See Roadway.)

4.67 “VVEDA” means the Victor Valley Economic Development Authority.

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4.68 “VFR” means Visual Fl ight Rules covering meteor ological conditions, above those requiring flight under IFR conditions.

4.69 “Word Construction”: The following co nstruction applies throughout these Rules and Regulations:

1. Words importing the sin gular include the plural,

2. Words importing the plural include the singular; and,

3. Words importing the ma sculine gender include the
feminine and the neutral gender.

SECTION 5. NECESSITY:

5.1 These Rules & Regulati ons are enacted to protect the h ealth, safety and peace, and to promote the welfare and convenience of the general public using SCLA, or affected by activities related to the Airport by providing for the orderly conduct of activities on, or related to, the Airport. The use of the Airport or any of its facilities in any manner shall create an obligation on the part of the Airport User to obey all of the rules and regulations herein provided.

SECTION 6. BASED AIRCRAFT:

6.1 Any Person desiring to base an Aircraft at SCLA shall register such Aircraft at the Airport Operations and Security Department as soon as possible but not later than 24 hours after the arrival of the Aircraft. If a c hange in ownership occurs while the Aircraft is based at the Airport, the new Aircraft Owner shall re-register the Aircraft with the Airport Operations and Security Department, again, no later than 24 hours after the change in ownership occurred.

6.2 Except as specifically set forth in an Airport land or facility sublease, Aircraft in a Non-Airworthy Condition shall not be pe rmitted to remain on the Airport in excess of five (5) days without the ex press prior written permission of the Airport Director. Such Aircraft shall be removed from the Airport or stored at the Aircraft Owner’s expense.

SECTION 7. AIRCRAFT STORAGE AND PARKING:

7.1 Aircraft shall only be st ored or parked at places as set forth in such Person’s sublease or as may be authorized by the Airport Director, and such storage or parking shall be at the sole risk of the Aircraft Owner and/or Aircraft Operator, and without any responsibility to SCLAA, VVEDA or Stirling Airport International, or any of their officers, employees, agents or representatives, for any loss of, or damage to the Aircraft while so stored or parked. The Aircraft Owner and/or the Aircraft O perator shall be responsi ble for the tying-down and/or securing of his Ai rcraft. The Aircraft Owner and/or Aircraft Operator shall likewise be responsibl e for any liability arising from or caused by his

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Aircraft or his activities. All Airport Tenants desiring to store Aircraft at SCLA must notify the Airport Director in writing prior to the Aircraft arriving at SCLA.

SECTION 8. COMMERCIAL ACTIVITY:

8.1 No Person shall utilize SCLA for any revenue-producing commercial activities without the express written permi ssion of SCLAA or its designated representative, and obtaining a City of Victorville Busi ness License for such activities, and paying the fees and ch arges established for such use or license.

SECTION 9. AIRPORT FEES
:

9.1 Funding for Airport opera tions and capital improvem ents is deri ved through various types or classes of Airport User Fees. Airport User fees are specifically established to compensate the Airport for the use, maintenance and repair of Airport facilities, as well as to minimize the need for on-going general taxpayer support.

9.2 A schedule of rates and c harges for the use of the Airport and its facilities may be found as Attachment A to these Rules and Regulations.

9.3 Any Aircraft Owner or Aircraft Operator who fails to pay any fee duly charged for Aircraft owned or controlled by hi m shall have such Aircraft subject to impounding until the fees are paid, along with any im pound fees, or until the Aircraft is sold for charges.

SECTION 10. HOURS OF OPERATION:

10.1 SCLA shall be open for public use at all hours of the day and night, subject to any restrictions imposed by the Airport Director due to inclement weather, condition of the landing ar ea, presentation of special events, construction or repair activities, or similar causes. The control tower is open 24 hours a day, 7 days a week. The Airport is attended from 6:00 A.M. to 10:00 P.M. daily by Million Air. Services may be obtained from Million Ai r during said hours at telephone number (760) 246-7794 or UNICOM (122.85 MHz).

SECTION 11. UNATTENDED AIRCRAFT:

11.1 No Aircraft shall be left unattended on the Airport unless properly secured or within a hangar. Aircraft Owners and/or Aircraft Operators of Aircraft left so unattended shall be liable for damage to other Aircra ft or property resulting from the failure to adequately secure or tie down the Aircraft.

SECTION 12. MAINTENANCE:

12.1 Unless otherwise authorized by the Airport Director, or specified as a permitted use in an Airport facility or land sublease, no Aircraft or Vehicle maintenance, other than that which is required to remove damaged Aircraft from the Runway or Taxiway(s), or that wh ich is necessary to replac e a flat tire, shall be

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performed at SCLA except in areas sp ecifically designated by the Airport Director for that purpose.

SECTION 13. EQUIPMENT REQUIREMENTS:

13.1 Every Aircraft usin g SCLA shall be equipped with a fully functional, two-way radio, except when operating into or from the Airport under an FAA waiver for radio maintenance. The ATC frequen cy is 118.35 MH z and the ground control frequency is 124.45 MHz. Weather and traffic advisories are broadcast on 109.40 MHz. No fixed-wing Aircra ft equipped with a tailskid shall operate on any paved surface of SCLA.

SECTION 14. ACCIDENTS:

14.1 Every Person involved in, or witnessi ng an Aircraft operating accident on the Airport shall report promptly the details of such accident to the Airport Director, ATC, or FAA.

14.2 In addition, the Aircra ft Owner and/or the Aircraft Operator, including pilot, shall report fully to the California Di vision of Aeronautics the details on any accident in which there is death or injury, or in which damage to the property of others exceeds $400.00.

14.3 The Aircraft Owner and/or the Airc raft Operator of an Aircraft which is damaged or wrecked in an accident shall be responsibl e for the prompt removal of the Aircraft as directed by the Airport Director.

14.4 Where the Aircraft Owner and/or Airc raft Operator of an Aircraft which is damaged or wrecked in an accident is unable to arrange for removal of such disabled or wrecked Aircraft, the Airport Director shal l have the authority to move, or arrange the removal of, the Aircraft when released (if applicable) by the FAA or the National Transportation Safety Board (NTSB).

14.5 No liability shall be incurred by the SCLAA, SAI, VVEDA, the Airport Director or any of their officers, employees, agents, succe ssors and assigns, for damage aggravated by, or resulting from, removal of an Aircraft pursuant to Section 14.4 of these Rules and Regulations.

SECTION 15. NOISE:

1 5 . 1 N o P e r s o n shall operate any Aircraft in flight or on the ground in such a manner as to cause Unnecessary Noise as determined by applicable Federal or State or local laws and regulations.

SECTION 16. RESTRICTED AREAS:

16.1 Restricted Areas include those area s leased to the Ar my National Training Center, Advanced Unm anned Systems-Concept Ex ploration, Southern California Aviation, Victorville Aerospace LLC, Army Reserve, or other area that has direct access to the AOA. No Person shall enter any Restricted Area

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except (a) employees or invitees of the leaseholder, (b) Persons duly authorized by the Airport Director, including, but not limited to, Authorized Persons who have received Personnel Identification Badges, or (c) security or fire-fighting personnel.

16.2 Every Person who has access to a re stricted area shall close and lock the door, gate or other device immediately after it has been used unless it is under surveillance of a Person who is responsible for controlling entry at that access point.

16.3 Every Airport Tenant w hose premises have total or limited access to any Restricted Areas shall prevent access to the Restricted Areas by Persons who are not authorized to have such access.

16.4 The Airport Director’s staff is authoriz ed to close and lock any door, gate or other device permitting access to a Restricted Area that is found open or unlocked and unattended.

16.5 Every Person to whom a key, code or access device has been issued by the Airport Security Director, or his desi gnated staff, shall us e the key, code or access device to enter a Restrict ed Area only in accordance with any conditions of issuance and only at Restricted Area access points.

16.6 Except where authorized by the Ai rport Director and subject to any conditions of issuance, no Person shall:

1. Loan or give to another Person a key, code or access device issued to him; or

2. Have possession of, or use for any purpose, a key, code or access device that was issued to him by a Person not
having authority to do so.

SECTION 17. ANIMALS:

17.1 No Person shall willfu lly and knowingly allow or permit any animal owned, possessed, or harbored by him to en ter the Airport unless the animal is leashed or restricted in such manner as to be under control, or is in a shipping container, or is otherwise under physical restraint, nor shall any Person allow or permit such animal except “special assistance animals” (i.e. guide dog) to enter any Airport building without the approval of the Airport Director.

SECTION 18. ACCESS TO RUNWAYS AND TAXIWAYS:

18.1 No Person shall enter upon any Runway or Taxiway, or the movement area as defined by FAA, without the express consent of the Air Traffic Control Tower representative.

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SECTION 19. STARTING ENGINES:

19.1 No Person shall start any Aircraft engine at SCLA:

1. Unless a competent opera tor is at the controls;

2. Unless the Aircraft is equipped with adequate brakes fully applied or the wheels are securely blocked with blocks or chocks that can be removed safely (Skid equipped helicopters do not have brakes or chocks);

3. When the Aircraft is in such a po sition that the propeller slipstream or jet blast can cause damage to, or interfere with the operation of, other Aircraft, Vehicles, mobile equipment, hangars, shops, other buildings, or can cause injury to passengers, spectators, or other personnel; and

4. When the Aircraft is within 50 feet of any buildi ng without prior written consent.

SECTION 20. ENGINE RUN-UPS:

20.1 No Person shal l conduct an aircraft engine run-up beyond idle anywhere on the Airport other than in areas designat ed by the Airport Director (with the exception of helicopters, which routinely operate with engines beyond idle as part of normal operations).

20.2 Persons who want to conduct an engine ru n-up beyond idle shall first call ATC on the ground control frequency, 124.45 MHz, and request clearance to one of the two engine run-up areas. ATC will advise the Airport User, given the current wind direction, to proceed to one of two designated engine run-up areas.

20.3 ATC will make the final determina tion of which engi ne run-up area should be used.

20.4 The Person requesting the engine run-up beyond idle will conduct the engine run-up in the ar ea designated by ATC and he shall exercise the necessary caution to ensure no damage is created by the engine run-up.

SECTION 21. TAXIING:

21.1 Only those personnel that have training and are qualified to taxi a particular type of Aircraft are permitted to taxi Aircraft at SCLA.

21.2 No Person shall taxi any Aircraft into , out of, or within any hangar or other building on or adjacent to the Airport.

21.3 No Person shall taxi any Aircraft ac ross the double yellow lines on the edge of Taxiways and the apron.

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21.4 Nor shall any Person move any Aircraft under its own power on the Airport unless that Person is in full control of such aircraft, and has assured himself that there is no danger of collision wi th other Aircraft, Ve hicles, equipment, buildings, or other obstacles. Aircraft shall be taxied at a safe speed.

SECTION 22. DUMPING REFUSE:

22.1 No Person shall place, deposit, or dump any garbage, cans, bottles, papers, ashes, sewage, carcass of any dead animal, offal, trash rubbish, debris or any other refuse in any location on the Airp ort except in containers designed for such purposes.

SECTION 23. FIREARMS:

23.1 No Person shall shoot any projectile from a firearm or other device, into, on, or across any portion of the Airport, nor have in his possession, or under his control, any firearm which is not un loaded and securely wrapped and boxed for shipment, or explosive or explosive device; provided,

23.2 However, that this Se ction does not apply to peace officers, military personnel, or Airport security guards who are acting in the performance of their duties as such. Firearms on Ai rport property are pre-co ordinated with ASCs when possible.

SECTION 24. TRAFFIC PATTERN:

24.1 Every Aircraft before landing and after takeoff shall be flown as directed by ATC.

SECTION 25. TAKE-OFFS AND LANDINGS:

25.1 No aeronautical activity shall be c onducted at SCLA exce pt in conformance with current Federal Aviation Regulations, State of California law and regulations, and these Rules and Regulations.

25.2 All initial takeoffs shall commence at the end of the Runway unless cleared by the ATC Tower.

25.3 Due to the complex mix of Aircra ft that utilize SCLA, there is need to limit those type of aircraft and aerial activities that represent a potential hazard to normal flight operations. The followin g aircraft and aerial activities are restricted from operating at SCLA exc ept in emergency situations or with prior approval of the Airport Director:

1. Hot Air Balloons;

2. Hang Gliders;

3. Parachutists;

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4. Radio Contro lled Aircraft;

5. Ultra Ligh t Aircraft;

6. Gliders; and

7. Motorized Lighter than Air Aircraft.

SECTION 26. AIRCRAFT FUELING AND DEFUELING:

26.1 In accordance with the regulations from the Na tional Fire Protection Association (NFPA), Uniform Fire Code (UFC), and the Department of Transportation (DOT) the following rules and regulat ions must be observed while fueling aircraft:

26.2 All fuel servicing must be done out side of any building or hangar. (NFPA 407 3-10).

26.3 Aircraft shall be located a minimum of fifty (50) feet away from any building openings, doors, windows, etc.

26.4 During fuel handling, no passenger shall be permitted in or on the Aircraft unless a cabin attendant is stationed at or near the cabin door.

26.5 Fueling shall not be done while an on-b oard engine is operating (“hot fueling”) without the permission of the Airport Director and then, it shall only be permitted when representatives of t he Fire Department are standing by.

Exception is allowed for A.P.U. operation on large aircraft. (NFPA 407 3-5.1)

26.6 Equipment other than Aircraft serv ice equipment shall not be permitted within fifty (50) feet of an Aircraft dur ing fueling or defueling. (NFPA 407 3-

5.1)

26.7 No open flames, smoking, battery char gers, or any material or device which is likely to cause a spark shall be in use within fifty (50) feet of an Aircraft or fueling truck during fuelin g or defueling operation. (NFPA 407 3-7, 3-8).

Exception is allowed for Ground Power Units.

26.8 All hoses, funnels and appur tenances used in fueling or defueling activities shall be equipped properly with grounding and bondin g devices to prevent possible static ignition of volatile liq uids or vapors. Such grounding and bonding devices shall be used during all fueling and defueling activities.

26.9 Refueling vehicles, fuel hoses and defueling equipment shall be maintained in a safe, sound, operational and non-leaking condition.

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26.10 Gravity (hand) fueli ng may not be accomplished with any container having a capacity greater than five (5) US gallons. (NFPA 407 3-2.3)

26.11 All portable fuel containers must be approved and marked so as to identify the product contained therein. (UFC)

26.12 Any fuel transported by privately owned vehicles, not specifically designed for the transport of flammable liqui ds and appropriately placarded, are limited to a maximum of 20 U.S. gallons in an approved and marked container. (DOT and UFC)

26.13 Portable fuel containers shall be kept in approved locations, at least fifty (50) feet from any build ing, and secured in a cabinet or locker marked “Flammable.” (UFC)

26.14 Every Person engaged in aircraft fuel handling shall exercise due care to prevent the overflow of t anks and spilling of fuel. Fuel spills are a fuel operator’s responsibility.

26.15 Where there has been a fuel spill or leak, no Person shall start the engine of any Aircraft in close proximity until the spill or leak has been cleaned up. In event such spills or leaks are over 10 ft. in any direction, or over 50 sq. ft. in area, or continues to flow, or ar e otherwise a hazard to persons or properties, the SCLA Fire Department & Haz-Mat shall be notified.

26.16 In addition, all fuel storage on the Airport shall be regulated by NFPA 407, the UFC, and be approved by the City of Victorville Fire Chief or his designee.

SECTION 27. VEHICLE OPERATIONS:

27.1 No Person shall travel on any portion of the Ai rport except upon the roads, walks, or places provided for the particular class of traffic, nor occupy the roads or walks in such manner as to hinder or obstruct their proper use.

27.2 Unless escorted by an Authorized Pe rson who is authorized to drive on the AOA, no Person shall operate a Vehicle on the Airport with out successfully passing the SCLA driving test, being issued a Personnel Identification Badge, and possessing a valid state driver’s license, with the exception of the Airport ARFF, or Law Enforcement.

27.3 No Person shall operate a powered industrial vehicle without a Driving Permit on the Ramps, Taxiways, R unways or designated Roadways. An exception will be made for employees working within the exclusive leaseholders premises as authorized by the Airport Director.

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27.4 Persons who employ Individuals at th e Airport shall be responsible to provide training for powered industrial vehicl es and equipment, and for maintaining all training materials and records relating to the employee’s duties.

27.5 SCLA requires that employers "cert ify" that training and evaluations have been completed and maintained in the em ployee’s files up to 180 days upon separation of employment, and are available for inspection by the FAA, TSA and the Airport Operations and Security Department upon request.

27.6 Motor-vehicle traffic shall yiel d the right-of-way to Aircraft.

27.7 Every vehicle, excludi ng ARFF and construction vehicles operating within the Movement Area, shall have a flashing yellow beacon and carry a 2-way radio or be escorted by a vehi cle so equipped. Constr uction vehicles must be identified with an orange and white flag and a 2-way radio or be escorted by an authorized vehicle so equipped.

27.8 Any accident, involving a motor vehicle, which results in a fatality or injury, or in property damage, shall be reported by the driver, or his representative, to the Airport Director.

27.9 No Person shall operate any motor vehicle on the airport in excess of 25 miles per hour except emergency vehi cles responding to an emergency situation, or emergency vehicles involv ed in training or drills with prior ATC coordination. On passenger loading ramps, around parked Aircraft, and in areas immediately adjacent to hangars, speed shall not exceed ten (10) miles per hour.

27.10 Vehicles shall not be parked on the Airport other than in the manner and locations indicated by posted traffic signs and markings.

27.11 Unattended Vehicles may be parked only in designated Airport vehicle parking lots.

27.12 Vehicles parked other than specified in “27.10” and “27.11” above, may be moved by Airport personnel, and in such event a towing charge will be levied prior to releasing the Vehicle from impound. Neither SCLAA, VVEDA, the City, nor any of their respective offi cers, employees, agents, or designated representatives shall be liable for damages sustained by such Vehicles during said movement.

27.13 Motor vehicles shall not be driven on or across Runways or other portions of the Movement Area without permission fr om ATC Tower to do so. Two-way radio communications with Ground Cont rol (on frequency 124.45) shall be required between the ATC Tower and such vehicles. Exceptions may be granted during maintenance activities as long as two-way radio

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communications control is maintained wi th at least one vehicle controlling the activity. ARFF vehicles may contact the ATC tower on the fire net per operational agreement.

27.14 Motor vehicles shall not be driven or parked upon, or within fi fty (50) feet of Aircraft parking areas, ramp areas, or aprons without express approval of the Airport Director. Exceptions: ai rcraft support, airport maintenance, emergency vehicles, or fuel or service vehicles.

27.15 No Person may operate a motor vehicle or Aircraft in or on any portion of the Airport while under the influence of alcohol or drugs.

27.16 No Vehicle shall be operated on the Airport unless the Vehicle has been registered to drive on the Airport with Airport Operat ions. To register a Vehicle to drive on the Air port requires: a) proof of ownership, b) proof of vehicle registration with the Department of Motor Vehicles for State of California, or the Department of Moto r Vehicles for another State; and c) proof of insurance as set forth in Section 37 of these Rules and Regulations.

27.17 Vehicles passing through electronic access perimeter security gates are required to stop just past the gate and wait for the gate to fully close before continuing. Vehicle o perators should ensure no unauthorized persons enter the AOA while the gate is closing. V ehicle entry procedure is one vehicle per gate activation unless the vehicles following are under Escort.

SECTION 28. FIRE HAZARDS:

28.1 No Person shall light or smoke any cigarette, cigar, pipe, or similar object in the following Airport areas:

i. Within any hangar, or fuel handling or fuel storage areas;

ii. Inside any Aircraft (whe ther or not such Aircraft are parked or stored) or within fifty (50) feet thereof;

iii. Within fifty (50) feet of any "No Smoking" sign posted;

iv. Within any Vehicle operating on the AOA;

v. Within any buildin g on the Airport.

28.2 No Person may use flammable liquids, solvents, or substances to clean any Aircraft, engine, part, or accessory thereof, within any hangar or building except a building specially designed for that purpose and approved in writing by the Airport Director. Such approval shall only be granted when the Airport Director approves the ventilation provisions, fireproofing, and fire-extinguishing equipment.

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28.3 No Person shall light or use any open flame for any purpose in any hangar or other building on the airpor t without the prior written consent of the Airport Director and Fire Chief.

28.4 No Person shall operate any welding or cutting equipment (electric or gas) anywhere on the Airport without prior written approval of the Airport Director and the SCLA Fire Department. A we lding permit is required and may be obtained at the fire station.

28.5 No Person shall clean or degrease any Aircraft or part thereof except at or in a maintenance station properly equipped for such purposes, or in a space designated or authorized by the Airport Director.

28.6 No Person shall store or stock any material or subs tance, or lease or permit such activities in or on the Airport in su ch a manner, or of such nature, as to constitute a fire hazard. No Person shall keep, store or discard any flammable liquid, gas, signal flare, or other fl ammable material in any hang ar, shop, building, room, enclosure, or other pl ace on the Airport except in areas specially designated by the SCLA Fire Department for such purpose.

28.7 Lessees of hangars, shops , or other Airport areas shall provide suitable metal receptacles with hinged lid s for the storage of oily waste, rags, and other similar rubbish. The lesse e shall remove all such materials at frequent intervals.

28.8 Every lessee shall mainta in his leased area clean an d reasonably free of oil, grease, waste, other flammable materials and weeds.

28.9 Lessees shall provide, and maintain in proper wo rking order, adequate and readily accessible fire extinguishers. Each such extinguisher shall bear a suitable tag, which indicates the most rece nt date of inspection or servicing.

SCLA Fire Department shall approve all extinguishers, their type, and location.

28.10 No Person shall move , relocate, or otherwise disturb any wheeled fire extinguisher on the Airport without the permission of the SCLA Fire Department unless specifically for emergency use.

28.11 All fires on the Airp ort, regardless of size, even if extinguished, shall be immediately reported to the SCLA Fire Department without delay.

SECTION 29. FUEL SALES:

29.1 No Person shall deliver av iation fuels or lubricants to, or dispense such fuel from, at, or upon the Airport without a lease or permit from the Airport Director.

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29.2 For the right, privilege and concession of making deliveries of all types of aviation fuels and lubricants, and other fuels, to any Person or location at or upon the Airport, other than to a central fuel person or location at or upon the Airport, other than to a central fuel service stand provided by the Airport, there is levied against such lease or permit holder, a flowage fee of ten cents (.10) for each gallon of fuel so delivered.

29.3 No fuel shall be st ored anywhere on the Airport except approved by the Airport Director and the SCLA Fire Department.

SECTION 30. SECURITY:

30.1 Though not required, SC LA operates under the guidelines established by FAR Part 139 “CERTIFICATION A ND OPERATIONS SERVING CERTAIN AIRCRAFT OPERATORS.” To this end, SCLA has prepared and implemented a security program that parallels the requirements contained in TSA 1542. This program includes the following elements: Personnel Identification Badging, c ontrolled access to the Air Operations Area (AOA), driver licensing for pers onnel operating on the AOA, Vehicle registration, and perimeter security. All personnel operating at SCLA are required to abide by the SCLA Airport Master Security Program.

30.2 Personnel Identific ation Badges. Only those Individuals that have a need to be on the AOA will be issued a Personne l Identification Badge and granted unescorted access to the AOA and Rest ricted Areas. Individuals that require access must apply for a Personnel Identification Badge at the Airport Operations and Security Department. Lost or stolen Personnel Identification Badges must be reported to the Airport Operations and Security Department immediately. The application process includes:

1. A ten-year employment/educ ation or unemploy ment history verification check, with five y ears verified by the Individual’s former employer(s), and

2. A CHRC, which is information gathered from the Federal Bureau of Investigation, provided to SC LAA after submitting a Live Scan Fingerprint to the Transportation Clearing House.

30.3 Fingerprints are collected by the Ai rport Security Coordinator, or his designated representative, at the expense of the Individual’s employer.

30.4 A Fingerprint-based Crimi nal History Records Che ck as described in TSA 1542.209 is required before authorized unescorted access to the Airport is granted. The results of the CHRC wil l be among the determining factors as to whether the issuance of a Personnel Identification Badge is granted.

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30.5 Identification for Authorized Pers ons contains the I ndividual’s photograph, name, company name, expiration date, identification number and color blocks that indicate authorized access areas granted to the badge holder.

30.6 Individuals who have a need to be within the Airport Operations Area (AOA) are required to attend an Airport Familiarization a nd Security Identification Display Area (SIDA) class and will be required to di splay a Personnel Identification Badge while operating in such areas.

30.7 The Airport Badging Offi ce issues Non-Driving I dentification Badge and Identification Badges with Driving Permit, upon completion of a SIDA Class and AOA Drivers Training and satisfac tory score upon completion of a written test. Driving permits will be determined and issued in accordance with the applicant’s job related duties on the airport.

30.8 The Airport Security Coordinator wil l confirm or deny an applicant’s request for a badge based on verification of the CHRC and the
employment/education or unemployment history verification check, with five years verified by the employer, and the need of the applicant to access the AOA. If a Personne l Identification Badge is warr anted, the Airport Security Coordinator, or his designated representative, will issue the Badge.

30.9 All Personnel Identification Badges issued by the Airport Operations and Security Department are the property of Southern California Logistics Airport Authority and MUST be retu rned upon expiration, separation of employment (for any reason), when t he job function no longer requires Personnel Identification Badge, and upon demand of staff from the Southern California Logistics Airport. Any misuse or willful failure to return a Personnel Identification Badge is punishab le by fine as dictated in the Airport Rules and Regulations. Pers onnel Identificatio n Badges are non- transferable and must be used only by th e Individual to whom they are issued.

30.10 No Individual shall enter the AOA of the Airp ort without a Personnel Identification Badge unless the Individual is accompanied by an Authorized Person with a Personnel Identification Badge who shall be fully responsible for the unbadged person being escorted. Fire department personnel responding to an emergency wearing uniforms or othe r identifying clothing, shall not be required to wear an identification badge.

30.11 No Authorized Person shall Escort any Individual who is not in the performance of job-related duties and who requests access to the Airport as a visitor without the consent and approval of the Air port Director. Person(s) denied access to the Airport by Airport security officers, must abide by the decision of the security officers under the direction of this rule. Visitor Escort must be conducted during no rmal business hours of the Airport

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Operations and Security Department, unl ess prior approval of the Airport Director has been established

30.12 Authorized Persons shall always prominently display their Personnel Identification Badge while on the AOA. Failure to prominently display an issued Personnel Identification Badge wh ile on the AOA shall constitute a violation for which a fine shall be asse ssed as set forth in Section 43, PENALTIES AND APPEALS.

30.13 Individuals who do not display a Personnel Identification Badge, and who are not under Escort by an Authoriz ed Person displaying a Personnel Identification Badge, shall immediately be report ed to the Airport Director and shall be escorted off the AOA by the Airport Director or his staff.

30.14 Authorized Persons w ho have been issued a Personnel Identification Badge and are involved in an accide nt while operating on the AOA will be asked to submit to a drug-screening test. Author ized Persons who refuse to submit to the drug-screening test will be consi dered as having failed the test and the Authorized Person will be consider ed to be under the influence of drugs or alcohol.

30.15 Controlled Access to the AOA . Any Airport Tenant that has direct access to the AOA, should, because of their imm ediacy of access, be considered part of the AOA. These Airport Tenants shal l therefore take measures to protect access to the AOA. As required by TSA 1542.113 Airport Tenant Security Programs, the Airport Tenant must a ssume responsibility for specified security measures of the Secure Area, AOA, or SIDA. Airport Tenants are encouraged to develop individual securi ty programs designed to meet the needs of their particular businesses. In all cases such security programs must be approved in writing by the Airport Director.

30.16 While on the AOA, customers and cli ents of the Airport or Airport Tenants must be under Escort at all times. Failure to provide an Escort may constitute the issuance of a Notice of Violation that could result in sanctions.

See Section 43, PENALTIES AND VIOLATIONS
for a discussion on the
scope of fines/penalties associated with vi olations of the Airport Security Program.

30.17 The Airport Operations and Security Department administers the licensing program for drivers on the AOA. This program involves a study element that describes the procedures for driv ing on the AOA at SCLA. A written test will be administered and all applicants must pass the test in order to receive a license to drive on the AOA.

30.18 Vehicle Registration for driving on the AOA. All Vehicles that operate on the AOA must be registered with the Airport Operations and Security

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Department. All Vehicles that operat e on the AOA will be issued a Radio Call Sign that must be utilized wh ile on the AOA. Airport Standard Operating Procedure No. 200-01 describes the Radio Call Sign Procedure.

30.19 Perimeter Security . The Airport is surrounded by an eight-foot (8’) high chain link fence. Barbed wire is pl aced atop this fence. There are numerous locked gates that access the Airport perimeter. Airport Tenants that are situated on the immediate perimeter of the AOA must employ secured personnel doors.

30.20 All Persons that operate on the Airpor t are charged with the responsibility of maintaining the security of the Airpor t. To this end, Persons who observe breeches in security are to call said in cidents to the attention of the Airport Operations and Security Department.

30.21 A Person’s responsibi lity under Section 30.20 includes breeches to the procedural elements of the Airport Security Program, as well as the physical elements of the Airport Security Program (perimeter fence, vehicle gates, etc.).

30.22 The issuance under this Section of either (i) a Personnel Identification Badge, or (ii) a Personnel Identification Badge with Driving Permit to drive on the AOA, shall be conditioned upon the express consent of the Individual to whom the badge is issued, to a dr ug and alcohol screening in the event that such Individual is involved in an accident while on Airport property.

30.23 In the event that an Individual to whom a Personnel Identification Badge or Personnel Identification Badge with Driving Permit has been issued (a) tests positive for the use of a controlled s ubstance not prescribed by a physician or has a blood alcohol content equal to or in excess of .08, or (b) refuses to consent to a drug and alcohol screeni ng, then such Indi vidual’s Personnel Identification Badge a nd/or Driving Permit shall be revoked by the Airport Director.

30.24 A Personnel Identification Badg e and/or Driving Permit which has been revoked under Section 30. 23 of these Rules and Regulations will remain revoked until the Individual ’s employer petitions the Airport Director in writing, to have said Individual’s Personnel Identification Badge and/or Driving Permit reinstated.

30.25 Reinstatement of a Personnel Ident ification Badge and/ or Driving Permit which has been revoked under Sect ion 30.23 of these Rules and Regulations remains the prerogative of the Airport Director; however, reinstatement will not be unreasonably withheld.

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30.26 Reinstatement of a Personnel Ident ification Badge and/ or Driving Permit which has been revoked under Sect ion 30.23 of these Rules and Regulations will depend on, as a minimum, the employ er’s verification of a negative drug test as part of a return to duty test. Any Individual who has verified positive drug test results on two drug tests will not be permitted to thereafter work or drive on the AOA, r egardless of whether such Individual is accompanied by an Indi vidual properly in posse ssion of a Personnel Identification Badge and/or Permit.

SECTION 31. AIRPORT SECURITY AREAS:

31.1 Unauthorized Entry and Exit : No Person shall seek entry to or exit from Airport Security Areas except through designated entrances and exits. No Individual shall seek entry to or exit from Airport Security Areas over, under or through fencing, walls, window, air or other vents.

31.2 Only Authorized Persons, or those Individuals under Escort, shall have access by any means to Airport Security Areas.

31.3 A Person performing an Escort must, at all times, be in a position to actively monitor, direct and control the move ments and actions of the accompanied Individual(s).

31.4 No Individual shall ente r/exit or allow another I ndividual to enter/exit into Airport Security Areas except by usin g his Personnel Identification Badge.

No Individual shall follow another Individual into an Airport Security Area without first using his or her Pers onnel Identification Badge through any electronic access installed at the entry /exit point. This provision does not apply to an Individual under Escort

31.5 No Individual shall drive a Vehicle into Airport Security Areas unless the Individual has used his or her Pers onnel Identification Badge to open any electronic access installed at the entry point. No Individual shall allow other Vehicles to follow or tailgate in Airpor t Security Areas. This provision does not apply to Vehicles under Escort.

31.6 No Person shall tamper with or in any way hamper the effective operation of Security Devices.

31.7 Security of Access Points
: No Person shall leave open, propped or
unsecured any door, gate or access point leading to or allowing access to Airport Security areas. No Person sha ll hold, prop or caus e a door, gate or access point to be open beyond the period of time allowed by a Security Device unless an Authorized Person attends the door. When an Authorized Person is attending a security door, he or she must be physically present at the door and must use his or her Pers onnel Identification Badge to activate additional time for the door to be open.

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SECTION 32. RESPONSIBILITY OF AIRPORT TENANTS:

32.1 Adherence to the Security Rules and Regulations : Airport Tenants with access to Airport Security Areas on t heir leased area shall follow these Rules and Regulations by posting signs, approved by the SCLAA, which prohibit access into the Airport Security Areas. Airport Tenants with access to Airport Security Areas shall at all times keep the access secured or staffed in a manner that prevents unauthorized Individuals from accessing Airport Security Areas. Airport Tenants shall retain keys or other means of access to Airport Security Areas under their control and issue such access only to Authorized Persons.

32.2 Airport Tenants with acce ss to Airport Security Areas shall appoint at least one employee of the Airport Tenant as the security contact primarily responsible for the Air port Tenant’s leased area which access Airport Security Areas. Airport Tenants sh all advise the Airport Security Coordinator in writing of the Individual or Individuals at all times having such responsibility.

32.3 Airport Tenants must provide a quarte rly employee roster to the Airport Operations and Security Department in the months of January, April, July and October, and immediately notify the Airport Operations and Security Department of employee separation.

32.4 Airport Tenants must immediately confiscate Personnel Identification Badges, with or without access media, as well as any keys that would allow access to the Airport, from Individuals upon separation of employment. Any misuse or willful failure to return a Personnel Identification Badge is punishable by fine as dictated in these Rules and Regulations.

SECTION 33. OTHER PROHIBITED ACTS:

33.1 Bypassing Security Screening Area : No Individual shall enter a Sterile Area through a Security Screening Area unless first going through equipment that has been installed for inspection of I ndividuals and their belongings. Armed federal and local law enfor cement officers on official duties at the Airport, airport operations and maintenance per sonnel, and others exempted by the FAA do not have to be inspected, provided they follow FAA and TSA regulations.

33.2 Statements Against Avia tion Safety or Security : No Person shall make a statement to another so as to indicate that the Person or another may have possession of a firearm, bomb or explosive device while at the Airport.

33.3 Interference with Airport Personnel : No Person shall intimidate, threaten, hinder or obstruct Airport Personnel or Airport Security Officers in the performance of his or her official j ob duties or lessen the ability of such person to perform his or her duties.

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33.4 Interference with Flight Operations : No Person shall intimidate, threaten, hinder or obstruct an aircraft crewmember in the performance of his or her official job duties or lessen the abilit y of such aircraft crewmember to perform his or her duties.

33.5 Unattended Baggage : No Person shall leave any bag, luggage, box or container unattended in the terminal areas of the Airport, which are accessible to the public.

33.6 Presenting a Weapon at Security Screening Area : No Person shall place firearm(s), explosive device(s), knife/ knives or other FAA/TSA prohibited items that could be used as a w eapon onto inspection equipment at a Security Screening Area without first dec laring such item(s). Only Persons authorized by the TSA may test Security Screening Areas.

SECTION 34. ENFORCEMENT:

34.1 Notices of Violation : The Airport Operations and Security Department will conduct inspections and enforce violat ions of these Rules and Regulations, Minimum Standards, and any permits issued hereunder regarding activities at the Airport. All Personnel Identifi cation Badge holders and persons with access cards will be subject to a Notice of Violation (NOV) when reasonable grounds exist to believe that Rules and Regulations, Minimum Standards or a permit have been violated, either by commission or omission.

34.2 NOV’s will be monitor ed and issued by Airport Operations and Security Department personnel or by recommendat ion from an Authorized Person of Authority. A copy of the NOV will be given to the Personnel Identification Badge holder, or the Person(s) observed committing the violation(s).

34.3 The NOV may serve as a notice only or may include a penalty ranging from suspension to revocation. Any violati on of a severe nature as determined by the Airport Director will warrant imm ediate suspension or revocation of the Personnel Identificati on Badge. Severe violati ons include, but are not limited to, any violation that may result in property damage, injury, runway incursions, or other safety hazards, or that threatens the environment or public welfare.

34.4 The receipt of three (3) NOVs, whic h have not been appealed or that have been upheld upon appeal, within a twent y-four (24) mont h period will be considered grounds for revocation of the Personnel Identification Badge.

34.5 When an NOV or sa nction is issued, a letter indica ting as such will be sent to the Individual’s employer, advising the employer of the violation.

34.6 Upon written request, t he Airport Security Coor dinator may review and recommend modification of the NOV.

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SECTION 35. SUSPENSIONS:

An Individual’s authorization to use a Personnel Identification Badge may be suspended for any of the following reasons:

1. Violation of these Rule and Regulations.

2. Violation of any rule or regulation of SCLAA for which a criminal penalty may be imposed.

3. Violation while on Airport proper ty of any law of the State of California or the United States for which a criminal penalty may be imposed.

4. Actions which interfere with or threaten the operation of the Airport, or the comfort, safety or convenience of passengers, Authorized Person’s employed by the City of Victorville, or otherwise constitute just cause for suspension.

35.2 The Airport Director or an Airport Security Coor dinator shall issue written notice of the Suspension, which sha ll state the nature and date of the violation, the length of Suspension, and the date the Suspension shall begin and the Individual’s right to have a hear ing pursuant to the provisions of Section 43 of these Rules and Regulat ions. The suspension may be for up to ninety (90) days as determined by the Airport Director or the Airport Security Coordinator.

SECTION 36. REVOCATION:

36.1 An Individual’s author ization to use a Personnel Identification Badge may be revoked for any of the following reasons:

1. Any act that seriously endangers property or Persons or indicates willful or reckless disregard for, and which has an immediate impact on the health, safety or welfare of the public or poses a serious threat to the security of the Airport.

2. A violation warranting Suspensi on where the Individual has had a previous suspension for the same or similar offense.

36.2 The Airport Direct or or Airport Security Coordinator shall issue a written notice of Revocation, which shall state the nature and date of violation, the date and Revocation shall begin, and the Individual’s right to a hearing pursuant to the provisions of Section 43 of these Rules and Regulations.

SECTION 37. LIABILITY INSURANCE:

37.1 Every Airport User shall carry insuranc e as required by their lease, sublease or permit to operate on Southern California Logistics Airport and as required

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by State and Federal regulations. Any person operating a vehicle within the fenced area of the Airport, who does not have a lease, sublease, or Operating Permit, is required to have comprehensi ve automobile insurance with combined single limits for bodily injury and property damage of not less than $1,000,000.

37.2 Airport Users shall prov ide Certificates of Insu rance naming VVEDA, SCLA and Stirling Airports International as Additional Insured’s with respect to their lease, sublease or permit. These Certificates of Insurance shall also provide for a 30-day Notice of Cancellation for those policies listed on the Certificate of Insurance.

37.3 The Airport User shall formally advise its Insurers that all Vehicles in use with or without valid Airside Vehicle Permits ar e intended to be operated on that portion of the Souther n California Logistics Air port premises known as Airside, and should those Insurers ex clude, limit, or otherwise restrict coverage while the Vehicle is on Airs ide, the Occupant shall obtain and keep in full force and effect at all ti mes, a policy of Aviation Liability insurance covering both license-plated and unlicensed plated Vehicles while on Airside

SECTION 38. ILLEGAL ACTIVITIES:

No Person shall:

38.1 Take or use any Aircraft, aircraft parts, instruments, or tools pertaining thereto, which are owned, controlled, or operat ed by any other Person, while such Aircraft, parts, instruments, or tools are stored or otherwise left on SCLA, or within its hangars, building, or facilities, without th e written consent of the owner/operator thereof, except upon satisfactory evidence of the right to do so duly presented to the Airport Director, or authorized by him or so ordered by a court of competent jurisdiction.

38.2 Land, takeoff, taxi, or otherwise operat e any Aircraft on, at, or from SCLA when he knows such Aircraft is not oper ating properly, or is equipped with any part or safety device which is defecti ve or unsafe. Deviations from this restriction shall only be permitted by s pecific authorization from the Airport Director and/or FAA if required, or his designated representative.

38.3 Operate any Aircraft on or at the Airport, or on any Runway thereof, when the Airport or Runway has been closed to traffic by the Airport Director or other legal authority, or when such closure has been indicated by the placement of an "X" at each end of the closed Runway.

38.4 Operate any aircraft on, at, or in the vicinity of SCLA in willfu l or wanton disregard for the safety of persons or property, whet her his own or that of others.

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38.5 Engage in the performa nce of any aerobatics, stunt, or maneuver not necessary to a normal ta keoff, landing, normal turn or level flight of the Aircraft, over or within one mile of the exterior boundaries of the airport without the permission of the Airport Director or ATC.

38.6 Engage in the sale of any goods, wa res, merchandize, or services at or upon the Airport without first having se cured from the Airport Director a lease or permit therefore, and paying any required fees for such lease or permit.

38.7 Board an aircraft at the Airport wit hout the prior approval of the Aircraft’s owner or representative.

SECTION 39. AIRPORT CLOSURE:

39.1 The Airport Director is hereby directed and authorized to close the Airport, or portions thereof, or susp end operations related to the land ing, takeoff, or taxiing of Aircraft during any period in which he determ ines that such operations, or their continuance, would be hazardous.

39.2 Causes for such closure could incl ude, but would not be limited to, adverse weather conditions, runway maintenance or repairs, runway obstacles, fire, Aircraft or other accident.

39.3 The Airport Director or his designee shall immediately notify the Riverside Flight Service Station and issue a NOTAM, advising of the closure.

SECTION 40. THRU-THE-FENCE ACTIVITIES:

40.1 Thru-the-fence activi ties, defined as accessing th e Airport from private land outside the airport perimeter for the purpose of utilizing or otherwise benefiting from the Airport, are strictly prohibited.

SECTION 41. SEVERABILITY:

41.1 Should any article, section, sub-se ction, sentence, clause or phrase of these Rules and Regulations be held invalid or unconstitutional for any reason, such decision shall not affect the remaining portion of these Rules and Regulations.

41.2 The SCLA Au thority hereby declares that it would have adopted these Rules and Regulations and each article, secti on, sub-section, sentence, clause or phrase, regardless of the fact that an y one or more articles, sections, sub- sections, sentences, clauses, or phrases be declar ed invalid or unconstitutional.

SECTION 42. DISMANTLING AIRCRAFT:

42.1 No Person shall disman tle an Aircraft of any type outside of a hangar unless they receive prior written approval fr om the Airport Director. Any Person permitted to dismantle an aircraft outside of a hangar must:

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42.2 Submit a written request to the Airport Director describing the type of aircraft to be dismantled, the dismantling procedures to be employed, the procedures for disposing of all dismantled material, toxic material clean up and abatement procedures, and the schedule for dismantling an aircraft.

42.3 Conduct all aircraft dism antling within a fenced in area to prevent visual contact with the dismantling activity.

42.4 Return the area used for dismantling to its original condition as approved by the Airport Director in his/her sole discretion.

42.5 Procure a performance bond to ensure any contamination, remediation of contamination and the dismantling area is returned to its original state. The amount of the bond will depend upon the procedures set forth in the request and the potential exposure and land clean-up cost to the Airport.

42.6 Receive the prior approval of the SCLA Fire Department.

42.7 Adhere to all City of Victorville, State and Federal environmental regulations.

42.8 Upon receipt of the information set forth in 42.1 through 42.7 above, the availability of land to conduct dismantling and other airport operating requirements and/or constraints, the Airport Director will either approve the Aircraft dismantling request by issuin g a written Letter of Permit with appropriate indemnities and airport prot ection provisions to the requesting person or business or deny the request by providing a Letter of Denial to the requestor.

SECTION 43. PENALTIES AND APPEALS:

43.1 Fixing penalties for violations: Any Airport User including, without limitation, sublessees, suppliers, contra ctors, guests, invitees, or others that do not adhere to or violates these Rules and Regulations shall be sanctioned.

43.2 Sanctions may include, but are not limited to, a fine paid to the Airport, denial of the use of the Airport for a specified period of time, and/or a referral to the Transportation Security Administration and/or Airport Authority Attorney with a recommendation for criminal prosecution.

43.3 In determining the sanctions to be imposed, the Airport Director may take into consideration any mitigating or aggravating factors th at may exist including, without limitation, the number of previous violations and the cooperation of the person involved.

43.4 Fines shall be assessed from $ 100.00 to $10,000.00 per day per incident depending on the severity of the violation.

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43.5 Should an infraction occur, and should the infraction and situation surrounding the infraction warrant, fines will be assessed on a graduated/increasing basis.

43.6 All fines assessed to a sublessee, or to a sublessee’s suppliers, contractors, guests, invitees, or others, will be added to a Sublessee’s monthly rent and subjected to late fees and default provisions as set forth in a Sublessee’s land or facility Sublease.

43.7 Fines assessed to Airport Users who do not have a land or facility Sublease at SCLA, shall be paid before the Airport User is perm itted to use the Airport again.

43.8 Continuous violation of these Rules and Regulations shall result in denial to use the Airport. Attachment B provid es an example of fines as may be applied.

43.9 Removal from Airport Premises
: The Airport Director, or his designated
representative, may order removal of anyone from the Airport who knowingly and willfully violates any provision of these Rules and Regulations.

43.10 Recourse unde r Tenant’s Lease: SCLAA may take ac tion against Airport Tenants under their lease agreements irrespective of any other penalties under these Rules and Regulations.

43.11 RIGHTS OF APPEAL : Fines and other sanction s may be appealed to the Executive Director. Reque sts for appeal must be made in writing to the Executive Director within ten (10) bu siness days from the date the fine was presented to the Airport User.

43.12 The Executive Director (or his de signated representative) will convene an administrative hearing and shall serve as the hear ing officer (the “Hearing Officer”). Failure of any Airport User to properly file an appeal shall constitute a waiver of its right to an administrative hearing and adjudication of the fine or any portion of the total amount of the fine.

43.13 The Airport User or ot her Person in receipt of the fine or sanction shall be provided a written notice of the date, time, and loca tion of the hearing. The notice will include the date, time and nature of the alleged violation.

43.14 The hearing shall be conducted in an informal manner an d strict rules of evidentiary procedure will not apply. The Hearing Officer may consider any evidence that is reasonabl y probative and aids in the determination of the facts.

43.15 Parties are entitled to be represented by an attorney of th eir choice, to bring witnesses, and present documentary evidence. Parties have the right to have

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all records or documents relevant to the proceedings provided to them at the cost of reproduction.

43.16 At the conclusion of the appeal hearing, and pursuant to the Hearing Officer’s authority, the Airport Director’s im position of sanction s may be upheld, modified or reversed. Parties will be provided with the results of the hearing in writing, including any penalties imposed by the Hearing Officer. The decision of the Hearing Officer is final.

SECTION 44. EFFECTIVE DATE

44.1 These changes contai ned in the Southern Californ ia Logistics Airport Rules and regulations shall be of full force and effective immediately upon filing of same with proof of pub lication with approval of the Southern California Logistics Airport Authority.

____________________________
Peter R. Soderquist
Airport Director

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Attachment A

SOUTHERN CALIFORNIA LOGISTICS AIRPORT
Airport Rates and Charges

Introduction / Guiding Principles:

A.1 In establishing a Schedule of Airport Rates an d Charges, the Southern California Logistics Airport Authority (the “Airport Authority”) is required by federal regulations to ensure that char ges are fair, reasonable and non- discriminatory. Further, Airport Rates and Ch arges are to be reasonably consistent with the rates and charges being applied by other airports for similar types of activities , unless there is a specia l situation unique to the Southern California Logistics Airport.

A.2 The Airport Authority fully recognizes the FAA prohibition against the diversion of Airport revenues for non-airport purposes. It is recognized that failure to collect fair and reasonable fees and market-based rents for the use of Airport property, facilities and equipment can be considered a form of Revenue Diversion. The Authority also recognizes the FAA requirement to establish a Schedule of Rates and Char ges that will pe rmit the Airport to be as self- sustaining as possible.

Airport User Fees Defined:

A.3 Aircraft Landing Fees: The Sout hern California Logistic s Airport Authority (SCLA) has expended a si gnificant amount of funds to provide aviation facilities for the benefit of aircraft owners and operators. Landing fees are assessed to help offset the cost of operating and maintaining the Airport’s runway, taxiway, and aircraft parki ng ramp areas. Landing fees are based upon the Certified Maximum Gross Landing Weight (MGLW) of the aircraft multiplied by the Airport Authority’s established landing fee rate per 1,000 pounds of Certified Maximum Gross Landing Weight.

A.4 Commercial Aircraft: The Air port Authority assesses a landing fee on each aircraft landing conducted by an airlin e or other commercial Air Carrier, operating under FAR Part 121 (airline), Part 129 (inter national airline), Part 135 (air taxi), or other similar regulat ion, regardless of the purpose of the landing.

A.5 Signatory Landi ng Fees: Signatory landing fees are assessed to an airline, or other large (over 75,000 lbs MGLW ) commercial aircraft operator having a Signatory Operating Agr eement with SCLA. To be eligible for Signatory Operating Agreement stat us, the operator must have one or more of the following:

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i. A lease with the Airport Authority of a ground site having at least 10,000 square f eet or more that is used to accommodate the organization’s primary base of
business on Airport property.

ii. A lease with the Airport Authority, or an approved sublease, of a building, or part of a bu ilding totaling at least 4,000 square feet that is used as the
organization’s primary base of operations on the
Airport.

iii. Commercial Airlines operating under the military
Civilian Reserve Air Force (CRAF) program.

A.6 Non-Signatory Landing Fees: N on-signatory Landing Fees are assessed at a rate of 125% of the Signatory Landing Fee rate for large commercial operators (over 75,000 lbs MGLW) usi ng the Airport who do not have Signatory Operating Agreement status with the Airport Authority, or have an agreement, but do not meet any of the Si gnatory eligibility criteria specified in paragraph 2 above. The Non-Signatory Landing Fee is intended to compensate the Airport Authority for the operator’s use of the Airport’s runway and taxiway areas as well as compensation for the privilege of being able to access the airport to conduct business.

A.7 Private Aircraft: The Airport Authority assesses a landing fee on each aircraft landing conducted by large private operators (over 75,000 lbs MGLW) operating under FAR Part 91, or other similar regulation, regardless of the purpose of the landi ng. Landing fees for pr ivate aircraft that are operated under FAR Pa rt 91 and are based at th e airport under conditions set forth in a long term agreement with the Authority will be charged landing fees as required by that agreement.

Aircraft Parking Fees:

A8. Signatory Aircraft Parking Fees: Ai rcraft having Signatory status as defined in A.1 above, are not required to pay parking fees during the time an aircraft is in the loading/ unloadi ng process (24 hour maximu m). Signatory Aircraft are also exempt from aircraft par king fees on the weekend, and over national holidays, as long as the we ekend/holiday parking occurs in the middle of the loading/unloading process. Signatory Aircraft that are not in the unloading/loading process, and/or use airc raft parking areas in excess of the 24-hour maximum, are required to pay established aircraft parking fees.

A9. Non-Signatory Aircraft: Non-signatory aircraft are required to pay established aircraft parking fees.

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A10. Private Aircraft: All private aircraft (both heavy and light) are required to pay aircraft parking fees. Aircraft that ar e based at the airport under conditions set forth in a long term agreement with t he Authority will be charged parking fees as required by that agreement.

A.11 Aircraft Storage Fees: Aircraft stor age fees are charged to aircraft that are stored on areas other than the main parking apron. Fees are payable under one of three different categories: under 50,000 lbs MGTW, narrow body aircraft, and wide body aircraft. Remote aircraft storage is occasioned by the many acres of closed runways and taxiways that make a suitable “hard stand” for aircraft parking. The availabilit y of these areas is directly related to the longevity of these surfaces. As these surfaces fail to be usable for aircraft parking, they will be removed from the inventory of remote parking.

The Airport Authority makes no repres entation that it will maintain these surfaces and those businesses that stor e aircraft thereon do so at their own risk.

A.12 Fuel Flowage Fees: A substantial percentage of the fuel dispensed at SCLA is “pre-purchased” by large aircraft operators that enjoy discounts based on the large volumes of fuel these ca rriers purchase nationally. This pre- purchased fuel is stored in SCLA’s fuel farm to which SCLA assesses a storage fee . SCLA also assesses a flowage fee on each gallon of fuel delivered from the fuel farm to the aircraft.

A.13 Fuel flowage and fuel storage fees reflect the int ent of the Airport Authority to generate reasonable revenues for the use of the airport’s fuel storage facility, while at the same time, enc ouraging aircraft operators to use SCLA as a base of operations.

A.14 All fuel sold at SCLA is subject to the described fuel flowage fees with following exceptions:

1. Non-Signatory Air Cargo Oper ators: Commercial Air Cargo Operators that are cons idered Non-Signatory as defined in Section A.1 above and pre-purchase f uel that is stored in the Airport’s fuel farm for use in their aircraft, shall pay flowage fees and storage fees.

2. Signatory Cargo Operators: Co mmercial Air Cargo Operators that meet the requirements of Signatory st atus as defined in Section A.1 above and pre-purchase fuel that is stored in the Airport’s fuel farm for use in their aircraft shall pay the appropriate storage fee.

3. Non-Commercial Signatory: Ba sed operators (signatory) that are non-commercial (Part 91) will pay the appropriate storage fee and a modified flowage fee as provided in the operators lease agreement.

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Southern California Logistics Airport
Schedule of Rates and Charges

Landing Fees
:

Signatory airline (over 75,000 lbs MGLW) $ .85 per 1,000 pounds MGLW Non-signatory airline (over 75,000 lbs MGLW) $1.06 per 1,000 pounds MGLW Private aircraft (over 75,000 lbs MGLW) $ .85 per 1,000 pounds MGLW

Fueling Fees
:
(Flowage fee -$ .08 per gal; Storage fee -$ .02 per gallon)

Aircraft Parking Fees
: (commercial aircraft)

Signatory airline $200.00 per day
Non-signatory airline $200.00 per day

Transient Aircraft Tie down Fees
: (general aviation aircraft; main ramp)

Single engine . . . . . . . . . .. . .. . . . . . . $ 5.00 per day $ 80.00 per month Multi engine . . . . . . . . . . . . . . . . . . . . . $ 10.00 per day $120.00 per month Mid-weight aircraft (12.5K lbs to 25K lbs) $ 20.00 per day $200.00 per month Large aircraft (25Klbs to 100K lbs) $ 30.00 per day $300.00 per month Narrow body . . . . . . . . . . . . . . . . . . . . .$100.00 per day $1,000.00 per month Wide body . . . . . . . . . . . . . . . . . . . . . . . $200.00 per day $2,000.00 per month

Wash Rack:

Any aircraft……………………………….........$ 40.00 per hour $240.00 per day

Live Scan Fingerprint Transmission Fee Per Applicant for Criminal History Records Check:

Call Airport Operations at (760) 243-1915 for Fingerprint transmission fees.

Personnel Identification Badge

Personnel Identification Badge with or without access card……….…...$ 10.00 Lost Personnel Identification Badge …………………………………….$ 100.00

(Fees are subject to change)

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Notes:

Parking charges for Signatory Airlines do not apply for the first 24 hours, weekends, or holidays. Transient airc raft tie down fees apply to aircraft remaining overnight. Transient airc raft remaining parked longer than overnight Military aircra ft are exempt from payi ng landing, parking and storage fees.

Definitions
:

Signatory
–
Having a lease or sublease of a ground site or build ing space on the Airport in accordance with the Airport Author ity’s Rates and Charges Policy; or, an airline having a contractual airl ine operating arrangement with an organization that has such a lease on airport property.

Non-signatory –
Those operators who do not have an On-Airport Lease Agreement with the Airport Authority in accordance with the Rates & Charges Policy.

MGLW
– Maximum (certificated) Gross Landing Weight

MGTW
– Maximum (certificated) Gross Takeoff Weight

Narrow body aircraft
- i.e. B-727; B-737; DC-9; MD-80

Wide body aircraft
- i.e. B747; B-777; DC-10; MD-11

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Attachment B
SCLA

SCHEDULE OF FINES

B.1 In most situations , a sanction or fine will be le vied upon the employer of the Individual involved in the infraction. All sanctions or fines assessed will be added to the employ er’s basic monthly rent and subjected to late fees and default provisions as set forth in an Airport Tenant’s land or facility sublease.

Fines assessed to Airport Users who do not have a land or facility Sublease at SCLA, shall be paid before the Airport User is perm itted to use the Airport again. Continuous violatio n of these Rules and Regul ations shall result in denial to use the Airport.

B.2 The following schedule should be regarded as a suggested schedule of fines. The Airport Director has the sole discretion and authority to levy fines, their amount and final disposition.

B.3 For minor infractions related to vehicle operations on the AOA such as:

Speeding on the AOA. $100.00
Operating a vehicle on the AOA without:

Airport Issued I’D Badge or drivers permit, appropriate markings or two-way radio communication with ATCT. $100.00 Runway incursion. $500.00
Taxiway incursion. $300.00
For negligence resulting in, and failure to correct, FOD $100.00

B.4 For breeches in security such as:

1. Leaving a perimeter gate unattended. $100.00

2. Failure to accompany non-badge d person on the AOA. $100.00

3. Sharing a security code or vehicle gate card. $300.00

4. Bypassing Security. $300.00

5. Sharing a Personnel Identif ication Badge. $300.00

6. Losing a Personnel Identific ation Badge. $100.00

B.5 For miscellaneous infractions of the Rules and Regulations such as:

1. Smoking in a non-approved area. $100.00

2. Parking or storing aircraft in non-approved areas. $100.00

3. Performing aircraft maintenance in unauthorized areas. $100.00

4. Knowingly allow an unsafe condition to exist. $300.00

5. Bringing an unauthorized vehicle on the airport. $100.00

B.6 A Federal Aviation Administrati on (FAA) or Transportation Security Administration (TSA) fine levied at the SCLA may be directly forwarded to a tenant if such tenant action is cause for the FAA/TSA penalty

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A second violation of the above listed offens es will result in the doubling of the applicable fine. A third offense will result in the tripling of the applicable fine and a suspension of privileges until corrective actions are taken and documented. 25 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres

EXHIBIT D
U

SE OF GROUND LEASE AREA
T
he Ground Lease Area is to be used by Lessee for the development of an Eighty (80) acre commercial aircraft parking and service area. Lessee may park and store aircraft and perform certain preventative maintenance required to maintain aircraft in an airworthy condition. Lessee may dismantle, deconstruct , part -out, tear -down and disassemble aircraft on the Ground Lease Area. The following definitions shall serve as a gui de to govern Lessee’s permitted actions and use of the Ground Lease Area.

Definitions
D
ismantling
The orderly removal and salvaging of aircraft assemblies, parts, and components.

D
econstruct
Same as disassemble, part-out, tear-down and dismantling.

P
art-Out
Same as dismantling, disassemble, tear-down and deconstruct.

T
ear-Down
Same as dismantling, disassemble, part-out and deconstruct.

D
isassemble
Same as dismantling, part-out, tear-down and deconstruct.

A
t no time shall any demolition activities occur on the Ground Lease Area. The definition below shall serve as a guide to govern Lessee’s prohibited actions and prohibited use of the Ground Lease Area.

Definition
D
emolish
To forcefully tear down, cut up, take apart or otherwise to reduce to smaller components for the purpose of final disposal or recycling. This action includes the removal of insulation and final removal of all residual fuel, oils, and other fluids.

T
he c ondition of the Ground Lease Area shall be established resulting from a walk - through inspection attended by both Lessee and Lessor prior to the date Lessee takes possession. The findings of this walk -through inspection shall be memorialized at the time of the walk-through inspection via the SCLA Property Checklist. 26 SCLAA Ground Lease and Development AgreementAircraft Parking 80 Acres

EXHIBIT E
S

ELECTED FAA RULES AND REGULATIONS

EXHIBIT E

SELECTED FAA RULES AND REGULATIONS

LICENSE PROVISIONS REQUIRED BY THE FEDERAL

AVIATION ADMINISTRATION

1. The Lessee, for himself/herself, his/her heirs, personal representatives, successors in interest, and assigns, as part of the consideration hereof, does hereby covenant and agree “as a covenant running with the land” that in the event facilities are constructed, maintained, or otherwise operated on the property described in this Lease for a purpose for which a Federal Aviation Administration activity, facility, or program is extended or for another purpose involving the provision of similar services or benefits, the Lessee shall maintain and operate such facilities and services in compliance with all requirements imposed by the Non-discrimination Acts and Regulations in the Pertinent List of Non-Discrimination Authorities set forth in Provision 19 hereof (as such may be amended), such that no person on the grounds of race, color, or national origin, will be excluded from participation in, denied benefits of , or otherwise subjected to discrimination in the use of said facilities.

2. The Lessee, for himself/herself, his/her heirs, personal representative, successors in interest, and assigns, as part of the consideration hereof, does hereby covenant and agree “as a covenant running with the land” that: (1) no person on the grounds of race, color or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities, (2) that in the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subject to discrimination, (3) that the Lessee shall use the premises in compliance with all other requirements imposed by or pursuant to the Non-Discrimination Acts and Regulations in the Pertinent List of Non-Discrimination Authorities set forth in Provision 19 hereof (as such may be amended).

3. In the event of breach of any of the above nondiscrimination covenants, Authority shall have the right to terminate the Lease, and to reenter and repossess said land and the facilities thereon, and hold the same as if said Lease had never been made or issued. This provision does not become effective until the procedures of 49 CFR Part 21 are allowed and completed including expiration of appeal rights.

4. Lessee shall furnish its accommodations and/or services on a fair, equal and not unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable and not unjustly discriminatory prices for each unit or service: PROVIDED THAT the Lessee may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar type of price reductions to volume purchasers.

5. Non-compliance with Provision 4 above shall constitute a material breach hereof and in the event of such non-compliance, Authority shall have the right to terminate the Lease Agreement, and the estate hereby created without liability therefor, or at the election of the Authority or the United States either or both said Governments shall have the right to judicially enforce provisions.

EXHIBIT E

6. Lessee agrees that it shall insert the above five provisions in any lease/sublease agreement, by which said Lessee grants a right or privilege to any person, firm or corporation to render accommodations and/or services to the public on the premises herein leased.

7. Lessee will comply with pertinent statutes, Executive Orders and such rules as are promulgated to assure that no person shall, on the grounds of race, creed, color, national origin, sex, age, or handicap be excluded from participating in any activity conducted with or benefiting from Federal assistance. If the Lessee transfers its obligation to another, the transferee is obligated in the same manner as the Lessee. This provision obligates the Lessee for the period during which the property is owned, used, or possessed by the Lessee and the airport remains obligated to the Federal Aviation Administration. This provision is in addition to that required by Title VI of the Civil Rights Act of 1964.

8. Nothing in the above Provisions 6 or 7 shall be construed as granting permission or consent for the Lessee to sublease or transfer the premises leased herein.

9. The Lessee assures that it will undertake an affirmative action program as required by 14 CFR Part 152, Subpart E, to insure that no person shall on the grounds of race, creed, color, national origin, or sex be excluded from participating in any employment activities covered in 14 CFR, Part 152, Subpart E. The Lessee assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by this subpart. The Lessee assures that it will require that its covered sub-organizations provide assurance to the Authority, that they similarly will undertake affirmative action programs and that they will require assurances from their sub-organizations, as required by 14 CFR Part 152, Subpart E, to the same effect.

10. The Authority reserves the right to further develop or improve the landing area of the airport as it sees fit, regardless of the desires or view of the Lessee and without interference or hindrance.
11 The Authority reserves the right, but shall not be obligated to the Lessee to maintain and keep in repair the landing area of the airport and all publicly owned facilities of the airport, together with the right to direct and control all activities of the Lessee in this regard.

12. This Lease shall be subordinate to the provisions and requirements of any existing or future agreement between the Authority and the United States, relative to the development, operation and maintenance of the airport.

13. There is hereby reserved to the Authority, its successors and assigns, for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the premises herein leased. This public right of flight shall include the right to cause in said airspace any noise inherent in the operation of any aircraft used for navigation or flight through the said airspace or landing at, taking off from or operation on this airport.

EXHIBIT E

14. Lessee agrees to comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations in the event future construction of building is planned for the Leased Premises, or in the event of any planned modification or alteration of any present or future building or structure situated on the Leased Premises.

15. Lessee, by accepting this Lease expressly agrees for itself, its successors and assigns that it will not erect nor permit the erection of any structure or object nor permit the growth of any tree on the land leased hereunder which would violate the obstruction height limitations as set forth in Federal Air Regulation (FAR), Part 77. In the event the aforesaid covenants are breached, the Authority reserves the right to enter upon the land leased hereunder and to remove the offending obstruction, all of which shall be at the expense of the Lessee.

16. The Lessee, by accepting this Lease, agrees for itself, its successors and assigns that it will not make use of the Leased Premises, in any manner which might interfere with the landing and taking off of aircraft from this airport or otherwise constitute a hazard. In the event the aforesaid covenant is breached, the Authority reserves the right to enter upon the premises hereby leased and causes the abatement of such interference at the expense of the Lessee.

17. It is understood that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308a of the Federal Aviation Act of 1958, as amended.

18. This Lease and all the provision hereof shall be subject to whatever right the United States Government now has or in the future may have or acquire, affecting the control, operation, regulation and taking over of said airport or the exclusive or non-exclusive use of the airport by the United States during time of war or national emergency.

19. The following constitutes the Pertinent List of Non-Discrimination Authorities, which are incorporated herein by this reference as if set forth in full:
• Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d et seq ., 78 stat. 252), (prohibits discrimination on the basis of race, color, national origin); and 49 CFR part 21; • The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, (42 U.S.C. § 4601), (prohibits unfair treatment of persons displaced or whose property has been acquired because of Federal or Federal-aid programs and projects); • Section 504 of the Rehabilitation Act of 1973, (29 U.S.C. § 794 et seq.), as amended, (prohibits discrimination on the basis of disability); and 49 CFR part 27; • The Age Discrimination Act of 1975, as amended, (42 U.S.C. § 6101 et seq.), (prohibits discrimination on the basis of age);
• Airport and Airway Improvement Act of 1982, (49 USC § 471, Section 47123), as amended, (prohibits discrimination based on race, creed, color, national origin, or sex);

EXHIBIT E

• The Civil Rights Restoration Act of 1987, (PL 100-209), (Broadened the scope, coverage and applicability of Title VI of the Civil Rights Act of 1964, The Age Discrimination Act of 1975 and Section 504 of the Rehabilitation Act of 1973, by expanding the definition of the terms “programs or activities” to include all of the programs or activities of the Federal-aid recipients, sub-recipients and contractors, whether such programs or activities are Federally funded or not); • Titles II and III of the Americans with Disabilities Act, which prohibit discrimination on the basis of disability in the operation of public entities, public and private transportation systems, places of public accommodation, and certain testing entities (42 U.S.C. §§ 12131 – 12189) as implemented by Department of Transportation regulations at 49 CFR parts 37 and 38;
• The Federal Aviation Administration’s Non-discrimination statute (49 U.S.C. § 47123) (prohibits discrimination on the basis of race, color, national origin, and sex); • Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, which ensures discrimination against minority populations by discouraging programs, policies, and activities with disproportionately high and adverse human health or environmental effects on minority and low-income populations;
• Executive Order 13166, Improving Access to Services for Persons with Limited English Proficiency, and resulting agency guidance, national origin discrimination includes discrimination because of limited English proficiency (LEP). To ensure compliance with Title VI, you must take reasonable steps to ensure that LEP persons have meaningful access to your programs (70 Fed. Reg. at 74087 to 74100); • Title IX of the Education Amendments of 1972, as amended, which prohibits you from discriminating because of sex in education programs or activities (20 U.S.C. 1681 et seq).

ATTACHMENT C

Resolution No. SCLAA 25-001
RESOLUTION NO. SCLAA 25-001

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE SOUTHERN

CALIFORNIA LOGISTICS AIRPORT AUTHORITY AMENDING THE ANNUAL BUDGET FOR FISCAL YEAR 2024-2025

WHEREAS, the Executive Director of the Southern California Logistics Airport Authority (“SCLAA”) did heretofore submit to the SCLAA Board of Directors an estimate of the expenditures and revenues of the City departments and offices, together with a proposed budget for the fiscal year 2024-2025; and

WHEREAS, copies of said budget were prepared and distributed to the SCLAA Board of Directors, approved by the SCLAA Board of Directors prior to June 30, 2024, and have been available for the inspection by the public in the office of the Authority Secretary of the SCLAA; and

WHEREAS, after preparation of the budget, a need to amend the budget is being recommended to the SCLAA Board of Directors for approval; and

WHEREAS, the Executive Director or his designee will provide all necessary justification for the budget amendment as an attachment to this resolution or in the associated SCLAA agenda report.

NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE SOUTHERN
CALIFORNIA LOGISTICS AIRPORT AUTHORITY HEREBY RESOLVE AS FOLLOWS:

SECTION 1. That the annual budget for the fiscal year 2024-2025 for the SCLAA be hereby amended to reflect a change in the amounts and associated accounts listed below and as described in the corresponding Agenda Item.

Account Amount Adjusted
4501191-45220 70,044.50

SECTION 2. That copies of such amended budget, certified by the Authority Secretary, shall be filed with the auditors of the SCLAA and in the office of the Authority Secretary for public inspection and certified copies thereof shall be made available for use by the SCLAA, City departments, offices and subsidiary districts of the City.

Item Number: 15
City Council / Board of Directors
Written Communications
Meeting of: January 21, 2025
Submitted By:

Brenda Hampton, Director of Electric Utility Services

Subject:

Approval of a North American Energy Standards Board Base Contract and Special Provisions (“NAESB”) for the Sale and Purchase of Natural Gas with Morgan Stanley Capital Group Inc.

Recommendation:

The Honorable City Council:
(1) Approve the North American Energy Standards Board Base Contract, Special Provisions to the Base Contract, Credit Support Addendum, and Special Provisions to the Credit Support Addendum (collectively, the “NAESB”) with Morgan Stanley Capital Group Inc. for natural gas supply and related services and authorize the City Manager to execute the agreement; and (2) Allow the City Manager and/or his/her designee to execute transaction confirmations under the NAESB contracts for procurement of firm gas supply not to exceed $3.65 million total estimated cost and for terms not to exceed 24 months.

Fiscal Impact:

This purchase will have a fiscal impact of approximately $819,000 over the next 12 months (600 Dth/day x 273 days x $5.00/Dth). This amount represents Victorville Municipal Utility Services (“VMUS”) best estimate of the gas supply required to serve the gas customers at the Southern California Logistics Airport during the contract term along with scheduling services and imbalance management under a high gas price scenario.

No additional appropriations will be required as the funds have been budgeted for during Fiscal Year 2024-2025 for purchased gas.

Account Amount
4190210-53020
(Purchased Gas)
$819,000
3 9
4 1
Strategic Plan Goal:

This item supports the City’s Strategic Plan, Goal A, Fiscal Sustainability. Execution of this contract will enable VMUS to procure firm natural gas supply delivered from the Kern River Gas Transmission system (“Kern River” or “KRGT”) at competitive market prices thereby reducing total delivered cost of gas for VMUS customers.

Background:

VMUS has received bundled natural gas service from Southwest Gas (SWG) for decades.

The cost of SWG service has continually increased to the point where bypassing SWG in favor of interconnecting with the nearby Kern River system was economically justified.

On February 7th, 2023, the Victorville City Council approved the execution of an Interconnection Agreement (“IA”) with KRGT to enable construction of a natural gas pipeline interconnection, meter station facilities, odorizer, and VMUS pipeline extension construction project. The construction of this infrastructure provided a new natural gas delivery point for the City, enabling VMUS to have an alternate supply of natural gas through KRGT’s interstate transmission system as an alternative to VMUS being a captive retail customer of Southwest Gas Corporation.

On July 16th, 2024, the Victorville City Council approved a Capacity Release Agreement with High Desert Power Project, LLC (“HDPP”) and a Transportation Services Agreement with Kern River Gas Transmission Company for the permanent release of HDPP firm gas transmission capacity on the KRGT High Desert Lateral (“HDL”) to serve the City of Victorville’s new gas delivery point on the HDL. Construction and commissioning of the new Kern River interconnection was completed in September 2024.

Kern River transports approximately 1.8 billion cubic feet of gas per day from gas production basins in the Rocky Mountains to end-user customers in Utah, Nevada, and California. VMUS’s current gas supply needs are small in comparison, less than 1,000 cubic feet per day.

Most of the natural gas purchased and sold in the U.S. and on the Kern River system is transacted under NAESB contracts, which are largely based on the Uniform Commercial Code (UCC). The NAESB is a standard contract designed for transactional efficiency. A NAESB “Contract” consists of several related documents:

1. NAESB Base Contract. The NAESB Base Contract identifies the parties, selected options where options are provided in the General Terms and Conditions, and the non-price/non-volume aspects of the parties agreement;

2. General Terms and Conditions. These are attached to the NAESB Base Contract and are largely based on UCC law;

3. Special Provisions. Special Provisions are negotiated modifications of and additions to the General Terms and Conditions to reflect the business needs of the parties. Special Provisions can include terms such as credit support, added representations and warranties, and alternative dispute resolution; 3 9
4 1

4. Transaction Confirmation(s) (1-2 pages). Transaction Confirmations (TCs) contain the price, volume, term, and delivery point terms of the agreement.

VMUS negotiated the NAESB Contract with Morgan Stanley Capital Group Inc. that also includes a Credit Support Addendum and Special Provisions to the Credit Support Addendum. The Credit Support Addendum and Special Provisions thereto replace Section 10.1 of the NAESB General Terms and Conditions and provide an objective and transparent collateral threshold based upon the City’s credit rating, which is more administratively efficient for both parties.

A NAESB Contract consisting solely of the NAESB Base Contract, General Terms and Conditions and Special Provisions is valid and executory indefinitely unless terminated by one or both parties with 30-days prior notice. It is the execution of one or more TCs that activates that NAESB Contract and the parties’ obligations to physically deliver and receive gas at the specified volume, delivery point and pricing. Termination of a NAESB Contract only becomes effective upon completion of the parties’ performances under any executory TCs.

Discussion:

A NAESB Contract is required to allow VMUS to procure gas supply from a reputable and creditworthy marketer for delivery into the Kern River capacity for ultimate delivery into the VMUS distribution system. The City issued a Request for Proposal (RFP) on August 22, 2024. Two potential gas suppliers were short-listed. The NAESB contract that is presented is with Morgan Stanley Capital Group Inc., a subsidiary of Morgan Stanley that engages mainly in sales, trading and market-making activities in commodities.

The NAESB was negotiated by the VMUS commercial team, with review and advice from the City attorney and an outside consultant with in-depth expertise in the natural gas industry.

Due to its relatively small gas demand, VMUS will only take gas supply from one supplier at any given time. This will be accomplished by executing one or more TCs with one of the suppliers where an NAESB contract has been established. Execution of the NAESB contracts does not preclude the City from executing additional NAESB contracts with other qualified suppliers.

Execution of this Agreement and authorizing the City Manager or his/her designee to execute subsequent transaction confirmations will allow VMUS to efficiently and reliably manage gas supply to VMUS customers.

Staff remains available to answer any questions the City Council may have.

Attachments: A. Base Contract and Special Provisions for Sale and Purchase of Natural Gas with General Terms and Conditions
B. Resolution No. 25-003

ATTACHMENT A

Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 1 of 14 September 5, 2006
Base Contract for Sale and Purchase of Natural Gas
This Base Contract is entered into as of the following date: December 20th, 2024 The parties to this Base Contract are the following:

PARTY A
City of Victorville

PARTY NAME PARTY B
MORGAN STANLEY CAPITAL GROUP INC.
14343 Civic Drive, Victorville, CA 92392 ADDRESS 1585 Broadway, 3rd Floor New York, NY 10036
Victorville, CA (victorvilleca.gov) BUSINESS WEBSITE www.morganstanley.com

CONTRACT NUMBER
09-324-0653 D-U-N-S® NUMBER 130198013
US FEDERAL: 95-2235918
OTHER:

TAX ID NUMBERS US FEDERAL: 13-3200368
OTHER:

California JURISDICTION OF
ORGANIZATION Delaware
Corporation LLC
Limited Partnership Partnership
LLP Other: Municipal Corporation

COMPANY TYPE
Corporation LLC
Limited Partnership Partnership
LLP Other:

GUARANTOR
(IF APPLICABLE)

CONTACT INFORMATION
ATTN: Victorville Municipal Utility Services
TEL#: 760-243-6340 FAX#: 760-269-0039
EMAIL: [email protected]
▪ COMMERCIAL
1585 Broadway, New York, NY 10036
ATTN: Manager, Nat Gas Ops
TEL#: 914-225-1500 FAX#: 914-701-5542
EMAIL: [email protected]
ATTN: Victorville Municipal Utility Services
TEL#: 760-243-6340 FAX#: 760-269-0039
EMAIL: [email protected]
▪ SCHEDULING
1585 Broadway, New York, NY 10036
ATTN: Manager, Nat Gas Ops
TEL#: 914-225-1500 FAX#: 914-701-5542
EMAIL: [email protected]
ATTN: Victorville Municipal Utility Services
TEL#: 760-243-6340 FAX#: 760-269-0039
EMAIL: [email protected]
▪ CONTRACT AND

LEGAL NOTICES
1585 Broadway, New York, NY 10036
ATTN: Legal - Commodities
TEL#: N/A FAX#: 212-404-9899
EMAIL: [email protected] _
ATTN: Victorville Municipal Utility Services
TEL#: 760-243-6340 FAX#: 760-269-0039
EMAIL: [email protected]
▪ CREDIT
1585 Broadway, New York, NY 10036
ATTN: Credit Risk Manager
TEL#: (212) 296-8690 FAX#:

EMAIL: [email protected]
ATTN: Victorville Municipal Utility Services
TEL#: 760-243-6340 FAX#: 760-269-0039
EMAIL: [email protected]
▪ TRANSACTION

CONFIRMATIONS
1585 Broadway, New York, NY 10036
ATTN: Manager, Nat Gas Ops
TEL#: 914-225-5300 FAX#: 914-750-0408
EMAIL: [email protected]
ATTN:

TEL#: FAX#:

EMAIL:
▪ FORCE MAJEURE

NOTICES
1585 Broadway, 3rd Floor New York, NY 10036
ATTN: Manager, Gas Ops
TEL#: 914-225-1436 / 1501 (East)/ 914.225.1611/ 1501 (West) FAX#: 212.507.6778 (East)/ 914.750.1487 (West)
EMAIL: [email protected]

ACCOUNTING INFORMATION
ATTN: Accounts Payable
TEL#: 760-243-1956 FAX#:

EMAIL: [email protected]
▪ INVOICES
▪ PAYMENTS
▪ SETTLEMENTS
1585 Broadway, New York, NY 10036
ATTN: Manager Natural Gas, Ops
TEL#: 443-627-6673FAX#: 914-750-1494
EMAIL: [email protected]
BANK: Wells Fargo Bank
ABA: 121000248 ACCT: 9940075261
OTHER DETAILS:

WIRE TRANSFER

NUMBERS
(IF APPLICABLE)
BANK: Northern Trust International NY
ABA: 026001122 ACCT: 102897-20010
OTHER DETAILS:

Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 2 of 14 September 5, 2006
BANK: Wells Fargo Bank
ABA: 121042882 ACCT: 9940075261
OTHER DETAILS:

ACH NUMBERS
(IF APPLICABLE)
BANK:

ABA: ACCT:

OTHER DETAILS:

ATTN: Accounts Receivable
ADDRESS: 14343 Civic Drive, PO Box 5001
Victorville, CA 92393-5001
CHECKS
(IF APPLICABLE)
ATTN:

ADDRESS:

Base Contract for Sale and Purchase of Natural Gas
(Continued)
This Base Contract incorporates by reference for all purposes the General Terms and Conditions for Sale and Purchase of Natural Gas published by the North American Energy Standards Board. The parties hereby agree to the following provisions offered in said General Terms and Conditions. In the event the parties fail to check a box, the specified default provision shall apply. Select the appropriate box(es) from each section:

Section 1.2
Transaction
Procedure
Oral (default)
OR
Written
Section 10.2
Additional
Events of
Default
No Additional Events of Default (default)

Indebtedness Cross Default
Party A: _$10,000,000__
Party B: $10,000,000

Transactional Cross Default
Specified Transactions:
“Specified Transactions” means any contract
or transaction, including an agreement with respect
thereto (whether or not documented under or
effected pursuant to a master agreement), now
existing or hereafter entered into between one
Party (or any guarantor of such Party or any
Affiliate of such Party) and the other Party (or any
guarantor of such Party or any Affiliate of such
Party).

Section 2.7
Confirm
Deadline
2 Business Days after receipt (default)
OR
Business Days after receipt
Section 2.8
Confirming
Party
Seller (default)
OR
Buyer
OR
Other: Party B
Section 3.2
Performance
Obligation
Cover Standard (default)
OR
Spot Price Standard
Section 10.3.1
Early
Termination
Damages
Early Termination Damages Apply (default)
OR
Early Termination Damages Do Not Apply
Note: The following Spot Price Publication applies to both of the immediately preceding.

Section 10.3.2
Other
Agreement
Setoffs
Other Agreement Setoffs Apply (default)
Bilateral (default)
Triangular
OR
Other Agreement Setoffs Do Not Apply
Section 2.31
Spot Price
Publication
Gas Daily Midpoint (default)
OR

Section 6
Taxes
Buyer Pays At and After Delivery Point (default) OR
Seller Pays Before and At Delivery Point
Section 7.2
Payment
Date
25th Day of Month following Month of delivery (default) OR
Day of Month following Month of delivery
Section 15.5
Choice Of Law California
Section 7.2
Method of
Payment
Wire transfer (default)
Automated Clearinghouse Credit (ACH)
Check Section 15.10
Confidentiality
Confidentiality applies (default)
OR
Confidentiality does not apply
Section 7.7
Netting
Netting applies (default)
OR
Netting does not apply
Special Provisions: Number of sheets attached: 14
Addendum(s): Credit Support Annex

Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 3 of 14 September 5, 2006
IN WITNESS WHEREOF, the parties hereto have executed this Base Contract in duplicate.

CITY OF VICTORVILLE PARTY NAME MORGAN STANLEY CAPITAL GROUP INC.

By:

SIGNATURE

By:

PRINTED NAME
TITLE

Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 4 of 14 September 5, 2006
General Terms and Conditions
Base Contract for Sale and Purchase of Natural Gas

SECTION 1. PURPOSE AND PROCEDURES

1.1. These General Terms and Conditions are intended to facilitate purchase and sale transactions of Gas on a Firm or Interruptible basis. "Buyer" refers to the party receiving Gas and "Seller" refers to the party delivering Gas. The entire agreement between the parties shall be the Contract as defined in Section 2.9.

The parties have selected either the “Oral Transaction Procedure” or the “Written Transaction Procedure” as indicated on the Base Contract.

Oral Transaction Procedure:

1.2. The parties will use the following Transaction Confirmation procedure. Any Gas purchase and sale transaction may be effectuated in an EDI transmission or telephone conversation with the offer and acceptance constituting the agreement of t he parties. The parties shall be legally bound from the time they so agree to transaction terms and may each rely thereon. Any such transaction shall be considered a “writing” and to have been “signed”. Notwithstanding the foregoing sentence, the parties agree that Confirming Party shall, and the other party may, confirm a telephonic transaction by sending the other party a Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means within three Business Days of a transaction covered by this Section 1.2 (Oral Transaction Procedure) provided that the failure to send a Transaction Confirmation shall not invalidate the oral agreement of the parties. Confirming Party adopts its confirming letterhead, or the like, as its signature on any Trans action Confirmation as the identification and authentication of Confirming Party. If the Transaction Confirmation contains any provisions other than those relating to the commercial terms of the transaction (i.e., price, quantity, performance obligation, delivery point, period of delivery and/or transportation conditions), which modify or supplement the Base Contract or General Terms and Conditions of this Contract (e.g., arbitration or additional representations and warranties), such provisions shall not be deemed to be accepted pursuant to Section 1.3 but must be expressly agreed to by both parties; provided that the foregoing shall not invalidate any transaction agreed to by the parties.

Written Transaction Procedure:

1.2. The parties will use the following Transaction Confirmation procedure. Should the parties come to an agreement regarding a Gas purchase and sale transaction for a particular Delivery Period, the Confirming Party shall, and the other party may, re cord that agreement on a Transaction Confirmation and communicate such Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means, to the other party by the close of the Business Day following the date of agreement. The parties acknowledge that their agreement will not be binding until the exchange of nonconflicting Transaction Confirmations or the passage of the Confirm Deadline without objection from the receiving party, as provided in Section 1.3.

1.3. If a sending party's Transaction Confirmation is materially different from the receiving party's understanding of the agreement referred to in Section 1.2, such receiving party shall notify the sending party via facsimile, EDI or mutually agreeable electronic means by the Confirm Deadline, unless such receiving party has previously sent a Transaction Confirmation to the sending party. The failure of the receiving party to so notify the sending party in writing by the Confirm Deadline constitutes the receiving party's agreement to the terms of the transaction described in the sending party's Transaction Confirmation. If there are any material differences between timely sent Transaction Confirmations governing the same transaction, then neither Transaction Confirmation shall be binding until or unless such differences are resolved including the use of any evidence that clearly resolves the differences in the Transaction Confirmations. In the event of a conflict among the terms of (i) a binding Transaction Confirmation pursuant to Section 1.2, (ii) the oral agreement of the parties which may be evidenced by a recorded conversation, where the parties have selected the Oral Transaction Procedure of the Base Contract, (iii) the Base Contract, and (iv) these General Terms and Conditions, the terms of the documents shall govern in the priority listed in this sentence.

1.4. The parties agree that each party may electronically record all telephone conversations with respect to this Contract between their respective employees, without any special or further notice to the other party. Each party shall obtain any necessary consent of its agents and employees to such recording. Where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, the parties agree not to contest the validity or enforceability of telephonic recordings entered into in accordance with th e requirements of this Base Contract.

SECTION 2. DEFINITIONS
The terms set forth below shall have the meaning ascribed to them below. Other terms are also defined elsewhere in the Contr act and shall have the meanings ascribed to them herein.

2.1. “Additional Event of Default” shall mean Transactional Cross Default or Indebtedness Cross Default, each as and if selected by the parties pursuant to the Base Contract.

2.2. “Affiliate” shall mean, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, “control” of any entity or person means ownership of at least 50 percent of the voting power of the entity or person.

Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 5 of 14 September 5, 2006

2.3. “Alternative Damages” shall mean such damages, expressed in dollars or dollars per MMBtu, as the parties shall agree upon in the Transaction Confirmation, in the event either Seller or Buyer fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer.

2.4. "Base Contract" shall mean a contract executed by the parties that incorporates these General Terms and Conditions by reference; that specifies the agreed selections of provisions contained herein; and that sets forth other information required herein and any Special Provisions and addendum(s) as identified on page one.

2.5. "British thermal unit" or "Btu" shall mean the International BTU, which is also called the Btu (IT).

2.6. "Business Day(s)" shall mean Monday through Friday, excluding Federal Banking Holidays for transactions in the U.S.

2.7. "Confirm Deadline" shall mean 5:00 p.m. in the receiving party's time zone on the second Business Day following the Day a Transaction Confirmation is received or, if applicable, on the Business Day agreed to by the parties in the Base Contract; provided, if the Transaction Confirmation is time stamped after 5:00 p.m. in the receiving party's time zone, it shall be deemed received at the opening of the next Business Day.

2.8. "Confirming Party" shall mean the party designated in the Base Contract to prepare and forward Transaction Confirmations to the other party.

2.9. "Contract" shall mean the legally -binding relationship established by (i) the Base Contract, (ii) any and all binding Transaction Confirmations and (iii) where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, any and all transactions that the parties have entered into through an EDI transmission or by telephone, but that have not been confirmed in a binding Transaction Confirmation, all of which shall form a single integrated agreement between the parties.

2.10. "Contract Price" shall mean the amount expressed in U.S. Dollars per MMBtu to be paid by Buyer to Seller for the purchase of Gas as agreed to by the parties in a transaction.

2.11. "Contract Quantity" shall mean the quantity of Gas to be delivered and taken as agreed to by the parties in a transaction.

2.12. "Cover Standard", as referred to in Section 3.2, shall mean that if there is an unexcused failure to take or deliver any quantity of Gas pursuant to this Contract, then the performing party shall use commercially reasonable efforts to (i) if Buye r is the performing party, obtain Gas, (or an alternate fuel if elected by Buyer and replacement Gas is not available), or (ii) if Sell er is the performing party, sell Gas, in either case, at a price reasonable for the delivery or production area, as applicable, con sistent with:
the amount of notice provided by the nonperforming party; the immediacy of the Buyer's Gas consumption needs or Seller's Gas sales requirements, as applicable; the quantities involved; and the anticipated length of failure by the nonperforming party.

2.13. "Credit Support Obligation(s)” shall mean any obligation(s) to provide or establish credit support for, or on behalf of, a party to this Contract such as cash, an irrevocable standby letter of credit, a margin agreement, a prepayment, a security interest in an asset, guaranty, or other good and sufficient security of a continuing nature.

2.14. "Day" shall mean a period of 24 consecutive hours, coextensive with a "day" as defined by the Receiving Transporter in a particular transaction.

2.15. "Delivery Period" shall be the period during which deliveries are to be made as agreed to by the parties in a transaction.

2.16. "Delivery Point(s)" shall mean such point(s) as are agreed to by the parties in a transaction.

2.17. "EDI" shall mean an electronic data interchange pursuant to an agreement entered into by the parties, specifically relating to the communication of Transaction Confirmations under this Contract.

2.18. "EFP" shall mean the purchase, sale or exchange of natural Gas as the "physical" side of an exchange for physical transaction involving gas futures contracts. EFP shall incorporate the meaning and remedies of "Firm", provided that a party’s excuse for nonperformance of its obligations to deliver or receive Gas will be governed by the rules of the relevant futures exchange regulated under the Commodity Exchange Act.

2.19. "Firm" shall mean that either party may interrupt its performance without liability only to the extent that such performance is prevented for reasons of Force Majeure; provided, however, that during Force Majeure interruptions, the party invoking For ce Majeure may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nominatio n is made to the Transporter and until the change in deliveries and/or receipts is confirmed by the Transporter.

2.20. "Gas" shall mean any mixture of hydrocarbons and noncombustible gases in a gaseous state consisting primarily of methane.

2.21. “Guarantor” shall mean any entity that has provided a guaranty of the obligations of a party hereunder.

2.22. "Imbalance Charges" shall mean any fees, penalties, costs or charges (in cash or in kind) assessed by a Transporter for failure to satisfy the Transporter's balance and/or nomination requirements.

2.23. “Indebtedness Cross Default” shall mean if selected on the Base Contract by the parties with respect to a party, that it or its Guarantor, if any, experiences a default, or similar condition or event however therein defined, under one or more agreements or instruments, individually or collectively, relating to indebtedness (such indebtedness to include any obligation whether pres ent or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of borrowed money in an aggregate amount greater than the threshold specified in the Base Contract with respect to such party or its Guarantor, if any, which r esults in such indebtedness becoming immediately due and payable.

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2.24. "Interruptible" shall mean that either party may interrupt its performance at any time for any reason, whether or not caused by an event of Force Majeure, with no liability, except such interrupting party may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is made to the Transporter and until the change in deliveries and/or receipts is confirmed by Transporter.

2.25. "MMBtu" shall mean one million British thermal units, which is equivalent to one dekatherm.

2.26. "Month" shall mean the period beginning on the first Day of the calendar month and ending immediately prior to the commencement of the first Day of the next calendar month.

2.27. "Payment Date" shall mean a date, as indicated on the Base Contract, on or before which payment is due Seller for Gas received by Buyer in the previous Month.

2.28. "Receiving Transporter" shall mean the Transporter receiving Gas at a Delivery Point, or absent such receiving Transporter, the Transporter delivering Gas at a Delivery Point.

2.29. "Scheduled Gas" shall mean the quantity of Gas confirmed by Transporter(s) for movement, transportation or management.

2.30. “Specified Transaction(s)” shall mean any other transaction or agreement between the parties for the purchase, sale or exchange of physical Gas, and any other transaction or agreement identified as a Specified Transaction under the Base Contract.

2.31. "Spot Price " as referred to in Section 3.2 shall mean the price listed in the publication indicated on the Base Contract, under the listing applicable to the geographic location closest in proximity to the Delivery Point(s) for the relevant Day; p rovided, if there is no single price published for such location for such Day, but there is published a range of prices, then the Spot Pr ice shall be the average of such high and low prices. If no price or range of prices is published for such Day, then the Spot Price shall be the average of the following: (i) the price (determined as stated above) for the first Day for which a price or range of prices is published that next precedes the relevant Day; and (ii) the price (determined as stated above) for the first D ay for which a price or range of prices is published that next follows the relevant Day.

2.32. "Transaction Confirmation" shall mean a document, similar to the form of Exhibit A, setting forth the terms of a transaction formed pursuant to Section 1 for a particular Delivery Period.

2.33. “Transactional Cross Default” shall mean if selected on the Base Contract by the parties with respect to a party, that it shall be in default, however therein defined, under any Specified Transaction.

2.34. “Termination Option” shall mean the option of either party to terminate a transaction in the event that the other party fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer for a designated number of days during a period as specified on the applicable Transaction Confirmation.

2.35. "Transporter(s)" shall mean all Gas gathering or pipeline companies, or local distribution companies, acting in the capacity of a transporter, transporting Gas for Seller or Buyer upstream or downstream, respectively, of the Delivery Point pursuant to a particular transaction.

SECTION 3. PERFORMANCE OBLIGATION

3.1. Seller agrees to sell and deliver, and Buyer agrees to receive and purchase, the Contract Quantity for a particular transaction in accordance with the terms of the Contract. Sales and purchases will be on a Firm or Interruptible basis, as agreed to by the parties in a transaction.

The parties have selected either the “Cover Standard” or the “Spot Price Standard” as indicated on the Base Contract.

Cover Standard:

3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an am ount equal to the positive difference, if any, between the purchase price paid by Buyer utilizing the Cover Standard and the Contract Price, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually delivered by Seller for such Day(s) excluding any quantity for which no replacement is available ; or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in the amount equal to the positive difference, if any, between the Contract Price and the price received by Seller utilizing the Co ver Standard for the resale of such Ga s, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually taken by Buyer for such Day(s) excluding any quantity for which no sale is available ; and (iii) in the event that Buyer has used commercially reasonable efforts to replace the Gas or Seller has used commercially reasonable efforts to sell the Gas to a third party, and no such replacement or sale is available for all or any portion of the Contract Quantity of Gas , then in addition to (i) or (ii) above, as applicable, the sole and exclusive remedy of the performing party with respect to the Gas not replaced or sold shall be an amount equal to any unfavorable difference between the Contract Price and the Spot Price, adjusted for such transportation to the applicable Delivery Point, multiplied by the quantity of such Gas not replaced or sold. Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party’s invoice, which shall set forth the basis upon which such amount was calculated.

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Spot Price Standard:

3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting the Contract Price from the Spot Price; or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by Sell er and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting the applicable Spot Price from the Contract Price. Imbalance Charges shall not be recovered under th is Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party’s invoice, whic h shall set forth the basis upon which such amount was calculated.

3.3. Notwithstanding Section 3.2, the parties may agree to Alternative Damages in a Transaction Confirmation executed in writing by both parties.

3.4. In addition to Sections 3.2 and 3.3, the parties may provide for a Termination Option in a Transaction Confirmation executed in writing by both parties. The Transaction Confirmation containing the Termination Option will designate the lengt h of nonperformance triggering the Termination Option and the procedures for exercise thereof, how damages for nonperformance will be compensated, and how liquidation costs will be calculated.

SECTION 4. TRANSPORTATION, NOMINATIONS, AND IMBALANCES

4.1. Seller shall have the sole responsibility for transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility for transporting the Gas from the Delivery Point(s).

4.2. The parties shall coordinate their nomination activities, giving sufficient time to meet the deadlines of the affected Transporter(s).

Each party shall give the other party timely prior Notice, sufficient to meet the requirements of all Transporter(s) involved in the transaction, of the quantities of Gas to be delivered and purchased each Day. Should either party become aware that actual deliveries at the Delivery Point(s) are greater or lesser than the Scheduled Gas, such party shall promptly notify the other party.

4.3. The parties shall use commercially reasonable efforts to avoid imposition of any Imbalance Charges. If Buyer or Seller receives an invoice from a Transporter that includes Imbalance Charges, the parties shall determine the validity as well as the cause of such Imbalance Charges. If the Imbalance Charges were incurred as a result of Buyer’s receipt of quantities of Gas greater than or less than the Scheduled Gas, then Buyer shall pay for such Imbalance Charges or reimburse Seller for such Imbalance Charges paid by Seller. If the Imbalance Charges were incurred as a result of Seller’s delivery of quantities of Gas greater than or less than the Scheduled Gas, then Seller shall pay for such Imbalance Charges or reimburse Buyer for such Imbalance Charges paid by Buyer.

SECTION 5. QUALITY AND MEASUREMENT
All Gas delivered by Seller shall meet the pressure, quality and heat content requirements of the Receiving Transporter. The unit of quantity measurement for purposes of this Contract shall be one MMBtu dry. Measurement of Gas quantities hereunder shall be in accordance with the established procedures of the Receiving Transporter.

SECTION 6. TAXES
The parties have selected either “Buyer Pays At and After Delivery Point” or “Seller Pays Before and At Delivery Point” as indicated on the Base Contract.

Buyer Pays At and After Delivery Point:

Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“Taxes”) on or with respect to the Gas prior to the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas at the Delivery Point(s) and all Taxes after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other party’s responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled to an exemption from any such Taxes or charges shall furnish the other party any necessary documentation thereof.

Seller Pays Before and At Delivery Point:

Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“Taxes”) on or with respect to the Gas prior to the Delivery Point(s) and all Taxes at the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other party’s responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled to an exemption from any such Taxes or charges shall furnish the other party any necessary documentation thereof.

SECTION 7. BILLING, PAYMENT, AND AUDIT

7.1. Seller shall invoice Buyer for Gas delivered and received in the preceding Month and for any other applicable charges, providing supporting documentation acceptable in industry practice to support the amount charged. If the actual quantity delivered is not known by the billing date, billing will be prepared based on the quantity of Scheduled Gas. The invoiced quantity will then be adjusted to the actual quantity on the following Month's billing or as soon thereafter as actual delivery information is available.

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7.2. Buyer shall remit the amount due under Section 7.1 in the manner specified in the Base Contract, in immediately available funds, on or before the later of the Payment Date or 10 Days after receipt of the invoice by Buyer; provided that if the Payment Date is not a Business Day, payment is due on the next Business Day following that date. In the event any payments are due Buyer hereunder, payment to Buyer shall be made in accordance with this Section 7.2.

7.3. In the event payments become due pursuant to Sections 3.2 or 3.3, the performing party may submit an invoice to the nonperforming party for an accelerated payment setting forth the basis upon which the invoiced amount was calculated. Paymen t from the nonperforming party will be due five Business Days after receipt of invoice.

7.4. If the invoiced party, in good faith, disputes the amount of any such invoice or any part thereof, such invoiced party will pay such amount as it concedes to be correct; provided, however, if the invoiced party disputes the amount due, it must provide supporting documentation acceptable in industry practice to support the amount paid or disputed without undue delay. In the event the parties are unable to resolve such dispute, either party may pursue any remedy available at law or in equity to enforce its rights pursuant to this Section.

7.5. If the invoiced party fails to remit the full amount payable when due, interest on the unpaid portion shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum; or (ii) the maximum applicable lawful interest rate.

7.6. A party shall have the right, at its own expense, upon reasonable Notice and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other party only to the extent reasonably necessary to verify the accuracy of any statement, charge, payment, or computation made under the Contract. This right to examine, audit, and to obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Contract. All invoices and billings shall be conclusively presumed final and accurate and all associated claims for under- or overpayments shall be deemed waived unless such invoices or billings are objected to in writing, with adequate explanation and/or documentation, within two years after the Month of Gas delivery. All retroactive adjustments under Section 7 shall be paid in full by the party owing payment within 30 Days of Notice and substantiation of such inaccuracy.

7.7. Unless the parties have elected on the Base Contract not to make this Section 7.7 applicable to this Contract, the parties shall net all undisputed amounts due and owing, and/or past due, arising under the Contract such that the party owing the greater amount shall make a single payment of the net amount to the other party in accordance with Section 7; provided tha t no payment required to be made pursuant to the terms of any Credit Support Obligation or pursuant to Section 7.3 shall be subject to netting un der this Section. If the parties have executed a separate netting agreement, the terms and conditions therein shall prevail to the ex tent inconsistent herewith.

SECTION 8. TITLE, WARRANTY, AND INDEMNITY

8.1. Unless otherwise specifically agreed, title to the Gas shall pass from Seller to Buyer at the Delivery Point(s). Seller shall have responsibility for and assume any liability with respect to the Gas prior to its delivery to Buyer at the specified Delivery Point(s).

Buyer shall have responsibility for and assume any liability with respect to said Gas after its delivery to Buyer at the Delivery Point(s).

8.2. Seller warrants that it will have the right to convey and will transfer good and merchantable title to all Gas sold hereunder and delivered by it to Buyer, free and clear of all liens, encumbrances, and claims. EXCEPT AS PROVIDED IN THIS SECTION 8.2 AND IN SECTION 15.8, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE, ARE DISCLAIMED.

8.3. Seller agrees to indemnify Buyer and save it harmless from all losses, liabilities or claims including reasonable attorneys' fees and costs of court ("Claims"), from any and all persons, arising from or out of claims of title, personal injury (including death) or property damage from said Gas or other charges thereon which attach before title passes to Buyer. Buyer agrees to indemnify Seller and save it harmless from all Claims, from any and all persons, arising from or out of claims regarding payment, personal injury (including death) or property damage from said Gas or other charges thereon which attach after title passes to Buyer.

8.4. The parties agree that the delivery of and the transfer of title to all Gas under this Contract shall take place within the Customs Territory of the United States (as defined in general note 2 of the Harmonized Tariff Schedule of the United States 19 U.S.C. §1202, General Notes, page 3); provided, however, that in the event Seller took title to the Gas outside the Customs Territory of the United States, Seller represents and warrants that it is the importer of record for all Gas entered and delivered into the United States, and shall be responsible for entry and entry summary filings as well as the payment of duties, taxes and fees, if any, and all applicable record keeping requirements.

8.5. Notwithstanding the other provisions of this Section 8, as between Seller and Buyer, Seller will be liable for all Claims to the extent that such arise from the failure of Gas delivered by Seller to meet the quality requirements of Section 5.

SECTION 9. NOTICES

9.1. All Transaction Confirmations, invoices, payment instructions, and other communications made pursuant to the Base Contract ("Notices") shall be made to the addresses specified in writing by the respective parties from time to time.

9.2. All Notices required hereunder shall be in writing and may be sent by facsimile or mutually acceptable electronic means, a nationally recognized overnight courier service, first class mail or hand delivered.

9.3. Notice shall be given when received on a Business Day by the addressee. In the absence of proof of the actual receipt date, the following presumptions will apply. Notices sent by facsimile shall be deemed to have been received upon the sendin g party's receipt of its facsimile machine's confirmation of successful transmission. If the day on which such facsimile is received is not a Business Day or is after five p.m. on a Business Day, then such facsimile shall be deemed to have been received on the next

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following Business Day. Notice by overnight mail or courier shall be deemed to have been received on the next Business Day after it was sent or such earlier time as is confirmed by the receiving party. Notice via first class mail shall be considered del ivered five Business Days after mailing.

9.4. The party receiving a commercially acceptable Notice of change in payment instructions or other payment information shall not be obligated to implement such change until ten Business Days after receipt of such Notice.

SECTION 10. FINANCIAL RESPONSIBILITY

10.1. If either party (“X”) has reasonable grounds for insecurity regarding the performance of any obligation under this Contract (whether or not then due) by the other party (“Y”) (including, without limitation, the occurrence of a material change in the creditworthiness of Y or its Guarantor, if applicable), X may demand Adequate Assurance of Performance. “Adequate Assurance of Performance” shall mean sufficient security in the form, amount , for a term, and from an issuer, all as reasonably acceptable to X, including, but not limited to cash, a standby irrevocable letter of credit, a prepayment, a security interest in an asset or guaranty. Y hereby grants to X a continuing first priority security interest in, lien on, and right of setoff against all Adequate Assura nce of Performance in the form of cash transferred by Y to X pursuant to this Section 10.1. Upon the return by X to Y of such Ad equate Assurance of Performance, the security interest and lien granted hereunder on that Adequate Assurance of Performance shall be released automatically and, to the extent possible, without any further action by either party.

10.2. In the event (each an "Event of Default") either party (the "Defaulting Party") or its Guarantor shall: (i) make an assignment or any general arrangement for the benefit of creditors; ( ii) file a petition or otherwise commence, authorize, or acquiesce in the commencement of a proceeding or case under any bankruptcy or similar law for the protection of creditors or have such petition filed or proceeding commenced against it; ( iii) otherwise become bankrupt or insolvent (however evidenced); ( iv) be unable to pay its debts as they fall due; ( v) have a receiver, provisional liquidator, conservator, custodian, trustee or other similar official appointed with respect to it or substantially all of its assets; (vi) fail to perform any obligation to the other party with respect to any Credit Support Obligations relating to the Contract; ( vii) fail to give Adequate Assurance of Performance under Section 10.1 within 48 hours but at least one Business Day of a written request by the other party; (viii) not have paid any amount due the other party hereunder on or before the second Business Day following written Notice that such payment is due; or ix) be the affected party with respect to any Additional Event of Default; then the other party (the "Non-Defaulting Party") shall have the right, at its sole election, to immediately withhold and/or suspend deliveries or payments upon Notice and/or to terminate and liquidate the transactions under the Contr act, in the manner provided in Section 10.3, in addition to any and all other remedies available hereunder.

10.3. If an Event of Default has occurred and is continuing, the Non -Defaulting Party shall have the right, by Notice to the Defaulting Party, to designate a Day, no earlier than the Day such Notice is given and no later than 20 Days after such Notice is given, as an early termination date (the “Early Termination Date”) for the liquidation and termination pursuant to Section 10.3.1 of all transactions under the Contract, each a “Terminated Transaction ”. On the Early Termination Date, all transactions will termin ate, other than those transactions, if any, that may not be liquidated and terminated under applicable law (“Excluded Transactions ”), which Excluded Transactions must be liquidated and terminated as soon thereafter as is legally permissible, and upon termination shall be a Terminated Transaction and be valued consistent with Section 10.3.1 below. With respect to each Excluded Transaction, its actual termination date shall be the Early Termination Date for purposes of Section 10.3.1.

The parties have selected either “Early Termination Damages Apply” or “Early Termination Damages Do Not Apply” as indicated on the Base Contract.

Early Termination Damages Apply:

10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall determine, in good faith and in a commercially reasonable manner, (i) the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Sectio n

3.2), for which payment has not yet been made by the party that owes such payment under this Contract and (ii) the Market Value, as defined below, of each Terminated Transaction. The Non-Defaulting Party shall (x) liquidate and accelerate each Terminated Transaction at its Market Value, so that each amount equal to the difference between such Market Value and the Contract Value, as defined below, of such Terminated Transaction(s) shall be due to the Buyer under the Terminated Transaction(s) if such Market Value exceeds the Contract Value and to the Seller if the opposite is the case; and (y) where appropriate, discount each amount then due under clause (x) above to present value in a commercially reasonable manner as of the Early Termination Date (to take account of the period between the date of liquidation and the date on which such amount would have otherwise been due pursuant to the relevant Terminated Transactions).

For purposes of this Section 10.3.1, “Contract Value” means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the Contract Price, and “Market Value” means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the market price for a similar transaction at the Delivery Point determined by the Non-Defaulting Party in a commercially reasonable manner. To ascertain the Market Value, the Non-Defaulting Party may consider, among other valuations, any or all of the settlement prices of NYMEX Gas futures contracts, quotations from leading dealers in energy swap contracts or physical gas trading markets, similar sales or purchases and any other bona fide third -party offers, all adjusted for the length of the term and differences in transportation costs. A party shall not be required to enter into a replacement transaction(s) in order to determine the Market Value. Any extension(s) of the term of a transaction to which parties are not bound as of the Early Termination Date (including but not limited to “evergreen provisions”) shall not be considered in determining Contract Values and Market Values. For the avoidance of doubt, any option pursuant to which one party has the right to exten d

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the term of a transaction shall be considered in determining Contract Values and Market Values. The rate of interest used in calculating net present value shall be determined by the Non-Defaulting Party in a commercially reasonable manner.

Early Termination Damages Do Not Apply:

10.3.1. As of the Early Termination Date, the Non -Defaulting Party shall determine, in good faith and in a commercially reasonable manner, the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Sectio n

3.2), for which payment has not yet been made by the party that owes such payment under this Contract.

The parties have selected either “Other Agreement Setoffs Apply” or “Other Agreement Setoffs Do Not Apply” as indicated on the Base Contract.

Other Agreement Setoffs Apply:

Bilateral Setoff Option:

10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option and without prior Notice to the Defaulting Party, the Non -Defaulting Party is hereby authorized to setoff any Net Settlement Amount against (i) any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract; and (ii) any amount(s) (including any excess cash margin or excess cash collateral) owed or held by the party that is entitled to the Net Settlement Amount under any other agreement or arrangement between the parties.

Triangular Setoff Option:

10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option, and without prior Notice to the Defaulting Party, the Non-Defaulting Party is hereby authorized to setoff (i) any Net Settlement Amount against any margin or other collateral held by a party in connec tion with any Credit Support Obligation relating to the Contract; (ii) any Net Settlement Amount against any amount(s) (including any excess cash margin or excess cash collateral) owed by or to a party under any other agreement or arrangement between the parties; (iii) any Net Settlement Amount owed to the Non -Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Non -Defaulting Party or its Affiliates to the Defaulting Party under any other agreement or arrangement; (iv) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Defaulting Party to the Non-Defaulting Party or its Affiliates under any other agreement or arrangement; and/or (v) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Defaulting Party or its Affiliates to the Non -Defaulting Party under any other agreement or arrangement.

Other Agreement Setoffs Do Not Apply:

10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option and without prior Notice to the Defaulting Party, the Non -Defaulting Party may setoff any Net Settlement Amount against any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract.

10.3.3. If any obligation that is to be included in any netting, aggregation or setoff pursuant to Section 10.3.2 is unascertained, the Non-Defaulting Party may in good faith estimate that obligation and net, aggregate or setoff, as applicable, in respect of the estimate, subject to the Non-Defaulting Party accounting to the Defaulting Party when the obligation is ascertained. Any amount not then due which is included in any netting, aggregation or setoff pursuant to Section 10.3.2 shall be discounted to net presen t value in a commercially reasonable manner determined by the Non-Defaulting Party.

10.4. As soon as practicable after a liquidation, Notice shall be given by the Non-Defaulting Party to the Defaulting Party of the Net Settlement Amount, and whether the Net Settlement Amount is due to or due from the Non -Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of the Net Settlement Amount, provided that failure to give such Notice shall not affect the validity or enforceability of the liquidation or give rise to any claim by the Defaulting Party against the Non-Defaulting Party. The Net Settlement Amount as well as any setoffs applied against such amount pursuant to Section 10.3.2, shall be paid by the close of business on the second Business Day following such Notice, which date shall not be earlier than the Early Termination Date. Interest on any unpaid portion of the Net Settlement Amount as adjusted by setoffs, shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum; or (ii) the maximum applicable lawful interest rate.

10.5. The parties agree that the transactions hereunder constitute a "forward contract" within the meaning of the United States Bankruptcy Code and that Buyer and Seller are each "forward contract merchants" within the meaning of the United States Bankruptcy Code.

10.6. The Non-Defaulting Party's remedies under this Section 10 are the sole and exclusive remedies of the Non -Defaulting Party with respect to the occurrence of any Early Termination Date. Each party reserves to itself all other rights, setoffs, counterclaims and other defenses that it is or may be entitled to arising from the Contract.

Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 11 of 14 September 5, 2006

10.7. With respect to this Section 10, if the parties have executed a separate netting agreement with close -out netting provisions, the terms and conditions therein shall prevail to the extent inconsistent herewith.

SECTION 11. FORCE MAJEURE

11.1. Except with regard to a party's obligation to make payment(s) due under Section 7, Section 10.4, and Imbalance Charges under Section 4, neither party shall be liable to the other for failure to perform a Firm obligation, to the extent such failure was caused by Force Majeure. The term "Force Majeure" as employed herein means any cause not reasonably within the control of the party claiming suspension, as further defined in Section 11.2.

11.2. Force Majeure shall include, but not be limited to, the following: (i) physical events such as acts of God, landslides, lightning, earthquakes, fires, storms or storm warnings, such as hurricanes, which result in evacuation of the affected area, floods, washouts, explosions, breakage or accident or necessity of repairs to machinery or equipment or lines of pipe; (ii) weather related events affecting an entire geographic region, such as low temperatures which cause freezing or failure of wells or lines of p ipe; (iii) interruption and/or curtailment of Firm transportation and/or storage by Transporters; (iv) acts of others such as strikes, lockouts or other industrial disturbances, riots, sabotage, insurrections or wars , or acts of terror ; and (v) governmental actions such as necessity for compliance with any court order, law, statute, ordinance, regulation, or policy having the effect of law promul gated by a governmental authority having jurisdiction. Seller and Buyer shall make reasonable efforts to avoid the adverse impacts of a Force Majeure and to resolve the event or occurrence once it has occurred in order to resume performance.

11.3. Neither party shall be entitled to the benefit of the provisions of Force Majeure to the extent performance is affected by any or all of the following circumstances: (i) the curtailment of interruptible or secondary Firm transportation unless primary, in-path, Firm transportation is also curtailed; (ii) the party claiming excuse failed to remedy the condition and to resume the perfor mance of such covenants or obligations with reasonable dispatch; or (iii) economic hardship, to include, without limitation, Seller’s ability to sell Gas at a higher or more advantageous price than the Contract Price, Buyer’s ability to purchase Gas at a lower or more advantageous price than the Contract Price, or a regulatory agency disallowing, in whole or in part, the pass through of costs resulting from this Contract; (iv) the loss of Buyer’s market(s) or Buyer’s inability to use or resell Gas purchased hereunder, except, in either case, as provided in Section 11.2; or (v) the loss or failure of Seller’s gas supply or depletion of reserves, except, in either case, as provided in Section 11.2.

The party claiming Force Majeure shall not be excused from its responsibility for Imbalance Charges.

11.4. Notwithstanding anything to the contrary herein, the parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the party experiencing such disturbance.

11.5. The party whose performance is prevented by Force Majeure must provide Notice to the other party. Initial Notice may be given orally; however, written Notice with reasonably full particulars of the event or occurrence is required as soon as reasonably possible. Upon providing written Notice of Force Majeure to the other party, the affected party will be relieved of its obligation, from the onset of the Force Majeure event, to make or accept delivery of Gas, as applicable, to the extent and for the duration of Force Majeure, and neither party shall be deemed to have failed in such obligations to the other during such occurrence or event.

11.6. Notwithstanding Sections 11.2 and 11.3, the parties may agree to alternative Force Majeure provisions in a Transaction Confirmation executed in writing by both parties.

SECTION 12. TERM
This Contract may be terminated on 30 Day’s written Notice, but shall remain in effect until the expiration of the latest Delivery Period of any transaction(s). The rights of either party pursuant to Section 7.6, Section 10, Section 13, the obligations to make payment hereunder, and the obligation of either party to indemnify the other, pursuant hereto shall survive the termination of the Base Contract or any transaction.

SECTION 13. LIMITATIONS

FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY. A PARTY’S LIABILITY

HEREUNDER SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN OR IN A TRANSACTION, A PARTY’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS

EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE,

EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE

LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR

CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE

LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICU LT OR IMPOSSIBLE TO DETERMINE, OR

OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS.

Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 12 of 14 September 5, 2006
SECTION 14. MARKET DISRUPTION
If a Market Disruption Event has occurred then the parties shall negotiate in good faith to agree on a replacement price for the Floating Price (or on a method for determining a replacement price for the Floating Price) for the affected Day, and if the parties have not so agreed on or before the second Business Day following the affected Day then the replacement price for the Floating Pr ice shall be determined within the next two following Business Days with each party obtaining, in good faith and from non -affiliated market participants in the relevant market, two quotes for prices of Gas for the affected Day of a similar quality and quanti ty in the geographical location closest in proximity to the Delivery Point and averaging the four quotes. If either par ty fails to provide two quotes then the average of the other party’s two quotes shall determine the replacement price for the Floating Price. "Floating Price" means the price or a factor of the price agreed to in the transaction as being based upon a specified index. "Market Disruption Event" means, with respect to an index specified for a transaction, any of the following events: (a) the failure of the index to ann ounce or publish information necessary for determining the Floating Price; (b) the failure of trading to commence or the permanent discontinuation or material suspension of trading on the exchange or market acting as the index; (c) the temporary or permane nt discontinuance or unavailability of the index; (d) the temporary or permanent closing of any exchange acting as the index; or (e) both parties agree that a material change in the formula for or the method of determining the Floating Price has occurred. For the purposes of the calculation of a replacement price for the Floating Price, all numb ers shall be rounded to three decimal places. If the fourth decimal number is five or greater, then the third decimal number shall be increased by one and if the fourth decimal number is less than five, then the third decimal number shall remain unchanged.

SECTION 15. MISCELLANEOUS

15.1. This Contract shall be binding upon and inure to the benefit of the successors, assigns, personal representatives, and heirs of the respective parties hereto, and the covenants, conditions, rights and obligations of this Contract shall run for the full term of this Contract.

No assignment of this Contract, in whole or in part, will be made without the prior written consent of the non-assigning party (and shall not relieve the assigning party from liability hereunder), which consent will not be unreasonably withheld or delayed; provided, either party may (i) transfer, sell, pledge, encumber, or assign this Contract or the accounts, revenues, or proceeds hereof in connection with any financing or other financial arrangements, or (ii) transfer its interest to any parent or Affiliate by assignment, merger or otherwise without the prior approval of the other party. Upon any such assignment, transfer and assumption, the transferor shall remain principally liable for and shall not be relieved of or discharged from any obligations hereunder.

15.2. If any provision in this Contract is determined to be invalid, void or unenforceable by any court having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other provision, agreement or covenant of this Contract.

15.3. No waiver of any breach of this Contract shall be held to be a waiver of any other or subsequent breach.

15.4. This Contract sets forth all understandings between the parties respecting each transaction subject hereto, and any prior contracts, understandings and representations, whether oral or written, relating to such transactions are merged into and superseded by this Contract and any effective transaction(s). This Contract may be amended only by a writing executed by both parties.

15.5. The interpretation and performance of this Contract shall be governed by the laws of the jurisdiction as indicated on the Base Contract, excluding, however, any conflict of laws rule which would apply the law of another jurisdiction.

15.6. This Contract and all provisions herein will be subject to all applicable and valid statutes, rules, orders and regulations of any governmental authority having jurisdiction over the parties, their facilities, or Gas supply, this Contract or transaction or any provisions thereof.

15.7. There is no third party beneficiary to this Contract.

15.8. Each party to this Contract represents and warrants that it has full and complete authority to enter into and perform this Contract.

Each person who executes this Contract on behalf of either party represents and warrants that it has full and complete authority to do so and that such party will be bound thereby.

15.9. The headings and subheadings contained in this Contract are used solely for convenience and do not constitute a part of this Contract between the parties and shall not be used to construe or interpret the provisions of this Contract.

15.10. Unless the parties have elected on the Base Contract not to make this Section 15.10 applicable to this Contract, neither party shall disclose directly or indirectly without the prior written consent of the other party the terms of any transaction to a third party (other than the employees, lenders, royalty owners, counsel, accountants and other agents of the party, or prospective purchasers of all or substantially all of a party’s assets or of any rights under this Contract, provided such persons shall have agreed to keep such terms confidential) except (i) in order to comply with any applicable law, order, regulation, or exchange rule, (ii) to the extent necessary for the enforcement of this Contract , (iii) to the extent necessary to implement any transaction, (iv) to the extent necessary to comply with a regulatory agency’s reporting requirements including but not limited to gas cost recovery proceedings; or (v) to the extent such information is delivered to such third party for the sole purpose of calculating a published index. Each party shall notify the other party of any proceeding of which it is aware which may result in disclosure of the terms of any transaction (other than as permitted hereunder) and use reasonable efforts to prevent or limit the disclosure. The existence of this Contract is not subject to this confidentiality obligation. Subject to Section 13, the parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with this confidentiality obligation. The terms of any transaction hereunder shall be kept confidential by the parties hereto for one year from the expiration of the transaction.

In the event that disclosure is required by a governmental body or applicable law, the party subject to such requirement may disclose the material terms of this Contract to the extent so required, but shall promptly notify the other party, prior to disclos ure, and shall cooperate (consistent with the disclosing party’s legal obligations) with the other party’s efforts to obtain protective orde rs or similar restraints with respect to such disclosure at the expense of the other party.

Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 13 of 14 September 5, 2006

15.11. The parties may agree to dispute resolution procedures in Special Provisions attached to the Base Contract or in a Transaction Confirmation executed in writing by both parties

15.12. Any original executed Base Contract, Transaction Confirmation or other related document may be digitally copied, photocopied, or stored on computer tapes and disks (the “Imaged Agreement”). The Imaged Agreement, if introduced as evidence on paper, the Transaction Confirmation, if introduced as evidence in automated facsimile form, the recording, if introduced a s evidence in its original form, and all computer records of the foregoing, if introduced as evidence in printed format, in any judicial, arbitration, mediation or administrative proceedings will be admissible as between the parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissi bility of the recording, the Transaction Confirmation, or the Imaged Agreement on the basis that such were not originated or maintained in documentary form. However, nothing herein shall be construed as a waiver of any other objection to the admissibility of such evidence.

DISCLAIMER: The purposes of this Contract are to facilitate trade, avoid misunderstandings and make more definite the terms of contracts of purchase and sale of natural gas. Further, NAESB does not mandate the use of this Contract by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF

THIS CONTRACT ACKNOWLEDGES AND AGREES TO NAESB'S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS OR

REPRESENTATIONS, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CONTRACT OR ANY PART THEREOF, INCLUDING

ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR

ANY PARTICULAR PURPOSE (WHETHER OR NOT NAESB KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT

AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. EACH USER OF THIS CONTRACT ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY DIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY USE OF THIS CONTRACT.

Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 14 of 14 September 5, 2006

TRANSACTION CONFIRMATION EXHIBIT A

FOR IMMEDIATE DELIVERY

Letterhead/Logo

Date: ____________________________, _____
Transaction Confirmation #: _______________

This Transaction Confirmation is subject to the Base Contract between Seller and Buyer dated ______________________. The terms of this Transaction Confirmation are binding unless disputed in writing within 2 Business Days of receipt unless otherwise specified in the Base Contract.

SELLER:
_______________________________________________
_______________________________________________
_______________________________________________
Attn: ___________________________________________
Phone: _________________________________________
Fax: ___________________________________________
Base Contract No. ________________________________
Transporter: _____________________________________
Transporter Contract Number: _______________________

BUYER:
_______________________________________________
_______________________________________________
_______________________________________________
Attn: ___________________________________________
Phone: _________________________________________
Fax: ___________________________________________
Base Contract No. ________________________________
Transporter: _____________________________________
Transporter Contract Number: _______________________

Contract Price: $ /MMBtu or ______________________________________________________________________

Delivery Period: Begin: , ___ End: , ___

Performance Obligation and Contract Quantity: (Select One)

Firm (Fixed Quantity): Firm (Variable Quantity): Interruptible:

MMBtus/day MMBtus/day Minimum Up to MMBtus/day

EFP MMBtus/day Maximum
subject to Section 4.2. at election of
Buyer or
Seller

Delivery Point(s): ________________________
(If a pooling point is used, list a specific geographic and pipeline location):

Special Conditions:

Seller: __________________________________________

By: ____________________________________________

Title: ___________________________________________

Date: __________________________________________

Buyer: __________________________________________

By: ____________________________________________

Title: ___________________________________________

Date: __________________________________________

1 Special Provisions to Base Contract for Sale and Purchase of Natural Gas (the “NAESB”) Between
City of Victorville (“Party A”)
and
Morgan Stanley Capital Group Inc. (“Party B”)
dated December 20th, 2024
Party A and Party B (each a “Party” and together the “Parties”) hereby agree to these Special Provisions, which modify and are incorporated into the NAESB Base Contract for Sale and Purchase of Natural Gas (NAESB Standard 6.3.1, released Sept. 5; 2006) (“Base Contract”) executed by the Parties on December 20th, 2024 (the “Effective Date”). All Transactions are entered into in reliance on the fact that all components of the Contract form a single agreement between the Parties; the Parties would not otherwise enter into any Transactions. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Base Contract.

Amendments to Section 1. Purpose & Procedures
Section 1.3 is amended by:

Deleting the third sentence of Section 1.3 in its entirety.

In the last sentence of Section 1.3, deleting the subparagraph “(ii)” and replacing it with the following:
“(ii) the oral agreement, or electronic agreement formed on an electronic trading system (“ETS”) of the Parties which may be evidenced by a recorded conversation or electronic confirmation from an ETS, where the Parties have selected the Oral Transaction Procedure of the Base Contract,” Section 1.4 is amended by adding at the end thereof:
“The Parties agree not to contest, the validity or enforceability of this Base Contract including the validity or enforceability of any Transaction on the grounds that it does not meet the statute of frauds or any other statute, regulation or judicial decision that agreements be written or signed.” Amendments to Section 2. Definitions
Section 2 is amended by:
(1) adding the following at the end of Section 2.6:
“A Business Day shall open at 8:00 a.m. and close at 5:00 p.m. local time at the relevant Party’s principal place of business. The relevant Party is the intended recipient of a Notice, demand for Adequate Assurance of Performance, Transaction Confirmation, payment or other item.” The following additional definitions are added at the end of Section 2:

2 “2.36 “Affiliate” means, in relation to any person, any entity controlled, directly or indirectly, by such person, any entity that controls, directly or indirectly, such person, or any entity directly or indirectly under common control with such person. For this purpose, “control” of any entity or person means ownership of a majority of the voting power of the entity or person. Notwithstanding the foregoing, with respect to Party, the term Affiliate shall include, but not be limited to, any political subdivision of Party A, or an instrumentality, agency or department of Party A, guarantor of Party A.

2.37 “Authorizing Law” means the statute(s) under which Party A is created, organized and authorized to enter into this Contract and each Transaction, and includes, but is not limited to, (i) the California Constitution (including without limitation Article XI, Sections 5 and 9; (ii) California Government Code Section 39732; (iii) California Public Utilities Code, Division 5, beginning with Section 10001; (iv) the Charter of the City of Vic torville; (v) Resolutions and Ordinances of the Victorville City Council; and (vi) the provisions of the Victorville Municipal Code, as amended and supplemented from time to time.

2.38 “Breakage Costs” means all costs and losses which the Non-Defaulting Party may incur in terminating and liquidating under Section 10 any Terminated Transactions and Specified Transactions, including, without limitation, attorneys fees, and costs (incl uding, but not limited to, funding costs) and losses incurred in maintaining, terminating and/or re -establishing any hedge or related trading positions, except for such of the foregoing amounts already included in the Net Settlement Amount.

2.39 “Incipient Illegality ” means (a) the enactment by any legislative body with competent jurisdiction over Party A of legislation which, if adopted as law, would render unlawful (i) the performance by such party of any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of a Transaction or the compliance by such party with any other material provision of this Contract relating to such Transaction or (ii) the performance by Party A of any contingent or other obligation which Party A has under any Credit Support Obligation relating to such Transaction, (b) any assertion in any proceeding, forum or action by Party A, in respect of such party or in respect of any entity located or organized under the laws of the state in which such party is located to the effect that performance under this Contract or similar agreements is unlawful or (c) the occurrence with respect t o Party A or any Guarantor of Party A of any event that constitutes an Illegality.

2.40 “Illegality” After giving effect to any applicable provision, disruption fallback or remedy specified in, or pursuant to, the relevant Transaction Confirmation or elsewhere in this Contract, due to an event or circumstance (other than any action taken by a party or, if applicable, any Guarantor of such party) occurring after a Transaction is entered into, it becomes unlawful under any applicable law (including without limitation the laws of any country in which payment, delivery or compliance is required by either party or any Guarantor, as the case may be), on any day, or it would be unlawful if the relevant payment, delivery or compliance were required on that day (in each case, other than as a result of a breach by the party of Sections 15.6 or 15. 8) for such party or any Guarantor of such party (which will be the Defaulting Party) to perform any absolute or contingent obligation to make a payment or delivery which such party or Guarantor has under any Transaction or Credit Support Obligation relati ng to such Transaction, to receive a payment or delivery under such Transaction or Credit Support Obligation or to comply with any other material provision of such Transaction or Credit Support Obligation.”

3 Amendments to Section 3. Performance Obligation
Section 3 is amended by inserting the following new sections:

The following new Section 3.5 is hereby added:
“Party
required to
deliver
document

Form/Document/Certificate Date by which to be delivered Party A and
Party B
(i) A secretary’s certificate and resolutions
(“authorizing resolutions”) or (ii) other
authority documentation, in either case,
which (x) authorizes the Party to enter into
Transactions of the type contemplated by
the Parties and (y) is reasonably
satisfactory in form and substance to the
other Party.

Upon execution of this Base
Contract and as deemed
necessary for any further
documentation.

Party A and
Party B
Certified copies of documents evidencing
each Party’s capacity to execute the Base
Contract, each Confirmation and any Credit
Support Obligation (if applicable) and to
perform its obligations hereunder and
thereunder.

Upon the execution of this Base
Contract, and, with respect to a
Confirmation, upon the other
Party’s request.

Party B A copy of the annual report of Morgan
Stanley containing audited consolidated
financial statements for each such fiscal
year, certified by independent certified
public accountants and prepared in
accordance with generally accepted
accounting principles in the country in
which such Party is organized; provided
however that Party B shall not be required
to deliver such annual report if it is publicly
available at www.morganstanley.com, or at
www.sec.gov.

As soon as practicable after the
execution of this Contract and
also within 120 calendar days
after the end of each fiscal year
while there are any obligations
outstanding under this Base
Contract.

4 Party A A copy of the annual report of such Party
containing audited consolidated financial
statements for each such fiscal year,
certified by independent certified public
accountants, and prepared in accordance
with generally accepted accounting
principles in the country in which such
Party is organized.

As soon as practicable after the
execution of this Contract and also
within 180 calendar days after the
end of each fiscal year while there
are any obligations outstanding
under this Base Contract.

Party A A notice of Incipient Illegality specifying
the nature of that Incipient Illegality and
such other information about that
Incipient Illegality as Party B may
reasonably require.

Promptly upon becoming aware of
occurrence of an Incipient Illegality
and as deemed necessary for any
other information Party B may
reasonably require.

Party A Certified copies of the Authorizing Law,
any other charter, statute or comparable
legislation creating Party A and
authorizing Party A to enter into the
Contract;
On the Effective Date and as a
condition to the obligations of Party
B under this Contract.

Party A A written opinion of legal counsel to Party
A (and any Guarantor) reasonably
satisfactory to Party B.

On the Effective Date and as a
condition to the obligations of Party
B under this Contract.”

Amendments to Section 8. Title, Warranty And Indemnity Section 8 is amended by replacing in Section 8.2 the words “THIS SECTION 8.2” with “THIS SECTION 8”.

Amendments to Section 9. Notices.

Section 9.2 is amended by adding the following at the end thereof:
“provided, however, that: (i) all notices permitted or required under Section 10 must be either sent by a nationally recognized overnight courier service or hand delivered; and (ii) a copy of such notices to Party B must also be sent by facsimile to:

Morgan Stanley Capital Group Inc.
1585 Broadway
New York, New York 10036-8293
Attention: Close-out Notices
With a mandatory copy to:

Email.: [email protected]”

Amendments to Section 10. Financial Responsibility

Section 10.1 shall be deleted in its entirety.

Section 10.2 shall be amended by the following:

5 a. Clause (v) is hereby deleted and replaced with the following:

“(v) seek or become subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or substantially all its assets; or (b) in the case of Party A, any guarantor of Party A, or any Affiliate of Party A (1) there shall be appointed or designated with respect to it, an entity such as an organization, board, commission, authority, agency or other body to monitor, review, oversee, recommend or declare a financial emergency or similar state of financial distress with respect to it, or (2) there shall be declared or introduced or proposed by it or any legislative or regulatory body the existence of a state of financial emergency in respect of it;”

b. On the seventh line, in subsection 10.2(vii), replacing “48 hours but at least one Business Day” with “two (2) Business Days “;

c. On the ninth line, deleting the word “or” before the number “(ix)”;

d. On the ninth line, adding the following as clauses (x) through (xv):
“ (x) have failed to perform any other covenant or material obligation under the Contract for reasons other than Force Majeure , if such breach is not cured within thirty (30) calendar days from notice of a demand for cure;”
(xi) consolidate or amalgamate with, or merge with or into, or transfer all or substantially all its assets to, or reorganize, incorporate, reincorporate, or reconstitute into or as, another entity, or another entity transfers all or substantially all its assets to, or reorganizes, incorporates, reincorporates, or reconstitutes into or as, the Defaulting Party or its Guarantor, or in the case of Party A, an entity such as an organization, board, commission, authority, agency or body succeeds to the principal functions of, or powers and duties granted to Party A, (a) the creditworthiness of the Defaulting Party, its Guarantor or the resulting, surviving, transferee or successor entity is materially weaker than that of the Defaulting Party or such Guarantor, a s the case may be, immediately prior to such action; (b) the resulting, surviving, transferee or successor entity fails to assume all the obligations of the Defaulting Party or such Guarantor under this Contract or any Credit Support Obligations to which it or its predecessor was a Party, by either operation of law or pursuant to an agreement reasonably satisfactory to the Non - Defaulting Party; (c) the benefits of any Credit Support Obligation fail to extend (without the consent of the Non-Defaulting Party) to the performance by such resulting, surviving, transferee or successor entity of its obligations under this Contract, or (d) in the case of Party A, the sources of payment for its obligations as set forth in the Schedule are no longer available for the satisfaction of such resulting, surviving, transferee or successor entity’s obligations to the other party hereto;
(xii) make a materially incorrect or misleading representation or warranty under the Contract or a Credit Support Obligation;
(xiii) a Credit Support Obligation expires or terminates with respect to the obligations of a Party under this Contract or a Transaction Confirmation, or such Credit Support Obligation fails or ceases to be in full force or effect for the purpose of this Contract or a Transaction Confirmation (in either case other than in accordance with the terms of this Contract and any applicable Transaction Confirmation) before the satisfaction of all obligations of such Party under this Contract and under each Transaction to which such Credit Support Obligation relates, without the written consent of the other Party; or

6 (xiv) repudiate any obligation under (a) this Contract, (b) any Credit Support Obligation, or (c) any Specified Transaction.

Section 10.3 is amended by:
(1) replacing the first sentence with the following:

If an Event of Default has occurred and is continuing, the Non-Defaulting Party shall have the right, by Notice to the Defaulting Party, to: (i) suspend its performance hereunder; (ii) withhold any payments due to the Defaulting Party under this Contract; and/or (iii) designate a Day, which day shall be no earlier than the Day such Notice is given and no later than 20 Days after such Notice is given, as an early termination date for the liquidation and termination pursuant to Section 10.3.1 of all transactions under the Contract (the “Early Termination Date”), each a “Terminated Transaction. Notwithstanding the foregoing, if Party A is the Defaulting Party, an Early Termination Date in respect of all outstanding transactions shall occur immediately upon the occurrence with respect to Party A of an Event of Default specified in Section 10.2 (i), (ii), (ii), (iv), and (v) (an “Automatic Early Termination”);
(2) deleting the words “legally permissible” and replacing them with “commercially practicable”; and

(3) adding the following as a new final sentence:

If an Early Termination Date occurs as a result of Automatic Early Termination, the Defaulting Party shall fully indemnify the Non-Defaulting Party on demand against all direct expense, loss, damage or liability that the Performing Party may incur in respect of this Contract, as a consequence of movements in commodity, exchange or other relevant rates or prices or Breakage Costs between the Early Termination Date and the Business Day on which the Performing Party first becomes aware that the Early Termination Date has occurred.”

The “Early Termination Damages Apply” version of Section 10.3.1 is amended by adding:

(i) “together with (iii) any Breakage Costs incurred by the Non -Defaulting Party.” at the end of the first sentence, and

(ii) “adjusted for Breakage Cost, if any” in the second sentence after the words “as defined below, of such Terminated Transaction(s)” and before the words “shall be due to the Buyer”.

Section 10.3.1 is further amended by adding “and any similar information from internal sources if that information is of the same type used by the Non -Defaulting Party in the regular course of its business for the valuation of similar Transactions” after “bona fide third Party offers” in the definition of “Market Value”.

Amendments to Section 11. Force Majeure
Section 11.3 is amended by:
(1) replacing “curtailment” with “loss, interruption or curtailment” in the second line thereof; (2) adding “, on any transporter necessary to effect receipt or delivery of Gas hereunder” between “transportation” and “unless” in the second line thereof;

7 (3) in clause (i), replacing “curtailed” with “lost, interrupted or curtailed, and then only to the extent of such loss, interruption or curtailment on the affected pipeline segment”; (4) replacing “Buyer’s inability” with “Buyer’s inability or inability economically”; (5) replacing “or (v)” with “(v)”; and
(6) adding the following at the end of the second to last sentence of Section 11.3:
“(vi) increases or decreases in natural gas supply due to allocation or reallocation of production by producers, well operators, or other parties controlling production or well operation (except for an allocation or reallocation of production pursuant to a governmental order); or
(vii) failure of specific, individual wells or appurtenant facilities in the absence of a force majeure event broadly affecting other wells in the same geographic area.” Section 11.5 is amended by replacing “Upon providing written Notice of Force Majeure to the other Party,” in the beginning of the third sentence with “If the Party receiving notice of Force Majeure has not provided the Party claiming Force Majeure with a notice of objection or dispute by the end of the third Business Day following receipt of the claiming Party’s written Force Majeure notice, then”.

Amendments to Section 14. Market Disruption Event
Section 14 is amended by deleting the sentence beginning “If either Party fails to provide” and replacing it with the following:
“If either Party fails to provide two quotes, then the Parties shall use the average of all of the quotes obtained to determine the replacement price for the Floating Price.” Amendments to Section 15. Miscellaneous
Section 15.3 is amended by adding the following at the end thereof:
“No failure on the part of any Party to exercise, and no delay in exercising, any right under the Contract, a Transaction, or a Transaction Confirmation shall operate as waiver thereof, nor shall any partial exercise of any such right preclude the exercise of any other right. No waiver shall be valid unless set forth in a signed writing.”
Section 15.5 is amended by inserting the following at the end thereof:
“ (a) Reference Proceedings. Any dispute between the parties arising out of or in connection with this Contract or its performance, breach, or termination (including the existence, validity and interpretation of this Contract and the applicability of any statute of limitation period) ( each, a “Dispute”) shall be resolved by a reference proceeding in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections (a “Reference Proceeding”), which shall constitute the exclusive remedy for the resolution of any Dispute. As a condition precedent to initiating a Reference Proceeding with respect to any Dispute, the parties shall comply with the provisions of Section 15.5(b). (b) Notice of Dispute. Prior to initiating the Reference Proceeding, a party (the “Disputing Party”) shall provide the other party (the “Responding Party”) with a written notice of each issue in dispute, a proposed means for resolving each such issue, and support for such position (the “Notice of

8 Dispute”). Within 10 days after receiving the Notice of Dispute, the Responding Party shall provide the Disputing Party with a written notice of each additional issue (if any) with respect to the Dispute raised by the Notice of Dispute, a proposed means for resolving every issue in dispute, and support for such position (the “Dispute Response”). Thereafter, the parties shall meet to discuss the matter and attempt in good faith to reach a negotiated resolution of the dispute. If the parties do not resolve the Dispute by mutual agreement within 60 days after receipt of the Dispute Response, (the “Negotiation Period”), then either party may provide to the other party written notice of intent for judicial reference (the “Impasse Notice”) in accordance with the further provisions of this Section15.5(b).
(c) Applicability; Selection of Referees.
(i) The party that provides the Impasse Notice shall nominate one referee at the same time it provides the Impasse Notice. The other party shall nominate one referee within 10 days of receiving the Impasse Notice. The two referees (the “Party-Appointed Referees”) shall appoint a third referee (the “Third Referee”, together with the Party -Appointed Referees, the “Referees”). The Party - Appointed Referees shall be competent and experienced in matters involving the natural gas energy business in the United S tates, with at least 10 years of natural gas industry experience as a practicing attorney. The Third Referee shall be an active or retired California state or federal judge. Each of the Party -Appointed Referees and the Third Referee shall be impartial and independent of either party and of the other referees and not employed by any of the parties in any prior matter.
(ii) If the Party-Appointed Referees are unable to agree on the Third Referee within 45 days from delivery of the Impasse Notice, then the Third Referee shall be appointed pursuant to CCP Section 640(b) in an action filed in the Superior Court of California, Co unty of San Francisco (the “Court”), and with due regard given to the selection criteria above. A request for appointment of a referee may be heard on an ex parte or expedited basis, and the parties agree that irreparable harm would result if ex parte rel ief is not granted. Pursuant to CCP Section 170.6, each party shall have one peremptory challenge to the referee selected by the Court. (d) Discovery; Proceedings.
(i) The parties agree that time is of the essence in conducting the Reference Proceeding.

Accordingly, the referees shall be requested, subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial -setting conference within 20 days after the date of selection of the Third Referee, (ii) if practicable, try all issues of law or fact within 180 days after the date of the conference, and (iii) report a statement of decision within 20 days after the matter has been submitted for decision.
(ii) Discovery and other pre -hearing procedures shall be conducted as agreed to by the parties, or if they cannot agree, as determined by the Third Referee after discussion with the parties regarding the need for discovery and other pre-hearing procedures. (iii) Except as expressly set forth herein, the Third Referee shall determine the manner in which the Reference Proceeding is conducted, including the time and place of hearings, the order of presentation of evidence, and all other questions that arise wit h respect to the course of the Reference Proceeding. The Reference Proceeding, including the trial, shall be conducted at a neutral location selected by the parties, or if not agreed by the parties, by the Third Referee, in San Francisco, California.
(iv) All proceedings and hearings conducted before the referees, except for trial, shall be conducted without a court reporter, except that when any party so requests, a court reporter will be used at any hearing conducted before the referees, and the refe rees will be provided a courtesy

9 copy of the transcript. The party making such a request shall have the obligation to arrange for and pay the court reporter.
(e) Decision. The referees shall render a written statement of decision setting forth findings of fact and conclusions of law. The decision shall be entered as a judgment in the court in accordance with the provisions of CCP Sections 644 and 645. The de cision shall be appealable to the same extent and in the same manner that such decision would be appealable if rendered by a judge of the Court. The parties intend this general reference agreement to be specifically enforceable in accordance with the CCP.
(f) Expenses. Each party shall bear the compensation and expenses of its respective Party Appointed Referee, own counsel, witnesses, consultants and employees. All other expenses of judicial reference shall be split equally between the parties. (g) THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY JUDICIAL ACTION ARISING HEREUNDER. In the event such judicial proceedings are instituted by either Party, the prevailing Party shall be entitled to award of its costs and attorneys’ fees incurred in c onnection with such proceedings”
Section 15.8 is amended by inserting the following at the end thereof:
(A) “Mutual Representations and Warranties. Each Party represents and warrants to the other Party, as of the date of the Base Contract and these Special Provisions, of each Transaction hereunder, and of each delivery of Gas in connection with such Transaction, that:
(i) it is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing;

(ii) the execution of, and delivery and performance under, this Contract does not violate or conflict with any law, rule, or regulation applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of govern ment applicable to it or any of its assets, or any contractual restriction binding on or affecting it or any of its assets;

(iii) there is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, governmental body or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Contract or any Transaction to which it is a Party or its ability to perform its obligations under the same; (iv) it is not relying upon any representations of the other Party, other than those set forth in this Contract, any Transaction Confirmation or any Credit Support Obligation(s) of the other Party;

(v) it has entered into this Contract and each Transaction and Transaction Confirmation thereof as principal (and not as advisor, agent, broker or in any other capacity, fiduciary or otherwise) and has made its trading and investment decisions (including regar ding the suitability thereof), with a full understanding of the material terms and risks, and ability to assume the risks of the same, and based upon its own judgment and any advice from such advisors as it has deemed necessary and not in reliance upon any view expressed by the other Party. Each Party expressly acknowledges that the other Party is not acting with respect to any communication (written or oral) as a “municipal advisor,” as such term is defined in Section 975 of the U.S. Dodd-Frank Wall Street Reform & Consumer Protection Act;
(vi) it and its Guarantor, if applicable, is an “eligible contract participant” as defined in Section 1a(18) of the Commodity Exchange Act, as amended);

10 (vii) it is not (i) an employee benefit plan (hereinafter an "ERISA Plan"), as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), subject to Title I of ERISA or a plan subject to Section 4975 of the Internal Rev enue Code of 1986, as amended, or subject to any other statute, regulation, procedure or restriction that is materially similar to Section 406 of ERISA or Section 4975 of the Code (together with ERISA Plans, "Plans"), (ii) a person any of the assets of who m constitute assets of a Plan, or (iii) in connection with any Transaction under this Contract, a person acting on behalf of a Plan, or using the assets of a Plan.

It will provide notice to the other Party in the event that it is aware that it is in breac h of any aspect of this representation or is aware that with the passing of time, giving of notice or expiry of any applicable grace period it will breach this representation; and (viii) No Event of Default with respect to it, or event which with notice and/or lapse of time would constitute such an Event of Default, has occurred and is continuing and no such event would occur as a result of it entering into or performing its obligations under this Contract.

(B) Warranties of Party A. Party A hereby further represents and warrants to Party B, as of the date of the Base Contract and these Special Provisions, of each Transaction hereunder, and of each delivery of Gas in connection with such Transaction, that:
(i) The execution and delivery by Party A of this Contract, any oral agreement and each Transaction Confirmation, and any other documentation relating hereto, and the performance by Party A of its obligations hereunder, are in furtherance, and not in violation, of the municipal and other stated purposes for which Party A is organized pursuant to the Authorizing Law;

(ii) All acts necessary to the valid execution, delivery and performance of this Contract and each Transaction and Transaction Confirmation, including, without limitation, competitive bidding, public notice, election, referendum, prior appropriation or other required procedures has or will be taken and performed as required under the Authorizing Law and Party A’s ordinances, bylaws or other regulations;

(iii) Neither this Contract nor any Transaction constitutes any kind of investment by Party A, and none of Party A’s obligations under this Contract create any kind of indebtedness or security interest that is proscribed by any constitution, charter, law, rule, regulation, government code, constituent or governing instrument, resolution, guideline, ordinance, order, writ, judgment, decree, charge, or ruling to which Party A (or any of its officials in their respective capacities as such) or its property is subject;

(iv) Other than those referred to herein, no authorizations, approvals, and resolutions of the governing body or other authorized body of Party A limit or restrict in any regard the type, number, duration, quantity, price, or total value of Transactions that Pa rty A may enter into with Party B and/or with any other entity;

(v) Party A’s obligations to make payments hereunder are unsubordinated obligations and such payments are: (a) operating and maintenance costs (or similar designation) which enjoy first priority of payment at all times under any and all bond ordinances or indentures to which it is a party, the Authorizing Law and all other relevant constitutional, organic or other governing documents and applicable law; or (b) otherwise not subject to any prior claim under any and all bond ordinances or indentures to which it is a party, the Authorizing Law and all other relevant constitutional, organic or other governing documents and applicable law and are available without limitation or deduction to satisfy all Party A’s obligations hereunder and under each Transaction;

11 (vi) It is not entitled to claim immunity on the grounds of sovereignty or other similar grounds with respect to itself or its revenues or assets (irrespective of their use or intended use) from: (a) suit or arbitration, (b) jurisdiction of any court, (c) relie f by way of injunction, order for specific performance or for recovery of property, (d) attachment of its assets (whether before or after judgment) or (e) execution or enforcement of any judgment or arbitration award to which it or its revenues or assets might otherwise be made subject to in any proceedings in the courts of any jurisdiction or in any arbitration and no such immunity (whether or not claimed) may be attributed to such Party or its revenues or assets;

(vii) All persons making up the governing body of Party A are the duly elected or appointed incumbents in their positions and hold such positions in good standing in accordance with the Authorizing Law and other applicable law; and

(viii) Entry into and performance of this Contract and each Transaction by Party A will not adversely affect the exclusion from gross income for federal income tax purposes of interest on any obligation of Party A otherwise entitled to such exclusion.” Section 15.10 is amended by:
inserting “Affiliates,” before “employees,” in the first sentence of the first paragraph, and by inserting the following at the end thereof:
“Notwithstanding the foregoing, it shall not be deemed a breach of this Section 15.10 if a Party discloses the terms or conditions of a Transaction (other than the name of and any other identifying information relating to the other Party) to an entity that aggregates and reports to the public price data on an aggregate basis.

The following new Sections 15.13, 15.14 and 15.15 are hereby added:
“15.13 Regulatory Matters. To the extent, if any, that a Transaction does not qualify as a “first sale” as defined by the Natural Gas Act and §§ 2 and 601 of the Natural Gas Policy Act, each Party irrevocably waives its rights, including its rights under §§ 4-5 of the Natural Gas Act, unilaterally to seek or support a change in the rate(s), charges, classifications, terms or conditions of this Contract, any Transaction hereunder or any other agreements entered into in connection with this Contract (collectively, the “Covered Agreements”). By this provision, each Party expressly waives its right to seek or support: (i) an order from the U.S. Federal Energy Regulatory Commission (“FERC”) finding that the market-based rate(s), charges, classifications, terms or conditions agreed to by the Parties under the Covered Agreements are unjust and unreasonable; or (ii) any refund with respect thereto. Each Party agrees not to make or support such a filing or request, and that these covenants and waivers shall be bi nding notwithstanding any regulatory or market changes that may occur hereafter. Absent the agreement of both Parties to the proposed change, the standard of review for changes to any section of the Covered Agreements proposed by a Party (to the extent th at any waiver as set forth in this Section 15.13 is unenforceable or ineffective as to such Party), a non-Party or FERC acting sua sponte, shall be the “public interest” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co. , 350 U.S. 348 (1956) and clarified by Morgan Stanley Capital Group Inc. v. Pub. Util. Dist. No. 1 of Snohomish County, 128 S. Ct. 2733 (2008) and further, refined in NRG Power Marketing v. Maine Public Utilities Commission , 558 U.S. 165 (2010) (the “Mobile-Sierra” doctrine).

15.14 U.S. Resolution Stay. The Parties agree that (i) to the extent that prior to the date hereof the Parties hereto have adhered to the 2018 ISDA U.S. Resolution Stay Protocol (the “Protocol”), the terms of the Protocol are incorporated into and form a part of this Contract, and fo r such

12 purposes this Contract shall be deemed a Protocol Covered Agreement and each party shall be deemed to have the same status as Regulated Entity or Adhering Party as applicable to it under the Protocol; (ii) to the extent that prior to the date hereof the Pa rties have executed a separate agreement the effect of which is to amend the qualified financial contracts between them to conform with the requirements of the QFC Stay Rules (the “Bilateral Agreement”), the terms of the Bilateral Agreement are incorporated into and form a part of this Contract and for such purposes each party shall be deemed to have the same status as “Covered Entity”, “Counterparty Entity” or “Client Entity” (or other similar term) as applicable to it under the Bilateral Agreement; or (ii i) if clause (i) and clause (ii) do not apply, the terms of Section 1 and Section 2 and the related defined terms (together, the “Bilateral Terms”) of the form of bilateral template entitled “Full -Length Omnibus (for use between U.S. G-SIBs and Corporate Groups)” or the “Agency Version of Omnibus Agreement (for use with U.S. G -SIBs)”, as applicable, published by ISDA on November 2, 2018 (currently available on the 2018 ISDA U.S. Resolution Stay Protocol page at www.isda.org, the effect of which is to amend the qualified financial contracts between the Parties thereto to conform with the requirements of the QFC Stay Rules, are hereby incorporated into and form a part of this Contract, and for such purposes this Contract shall be deemed a “Covered Agreement,” Party B shall be deemed a “Covered Entity” and Party A shall be deemed a “Counterparty Entity” (or “Client Entity” for the Agency version, as applicable). In the event that, after the date of this Contract, all Parties hereto become adhering Parties to the Protocol, the terms of the Protocol will replace the terms of this section. In the event of any inconsistencies between this Contract and the terms of the Protocol, the Bilateral Agreement or the Bilateral Terms (each, the “QFC Stay Terms”), as applicable , the QFC Stay Terms will govern. Terms used in this paragraph without definition shall have the meanings assigned to them under the QFC Stay Rules. For purposes of this paragraph, references to “this Contract” include any related credit enhancements entered into between the Parties, directly or indirectly through an agent, or provided by one to the other. In addition, the Parties agree that the terms of this paragraph shall be incorporated into any related covered affiliate credit enhancements, as applicable, with all references to Party B replaced by references to the covered affiliate support provider.
“QFC Stay Rules” means the regulations codified at 12 C.F.R. 252.2, 252.81–8, 12 C.F.R. 382.1-7 and 12 C.F.R. 47.1 -8, which, subject to limited exceptions, require an express recognition of the stay-and-transfer powers of the FDIC under the Federal Deposit Insurance Act and the Orderly Liquidation Authority under Title II of the Dodd Frank Wall Street Reform and Consumer Protection Act and the override of default rights related directly or indirectly to the entry of an affiliate into certain insolvency proc eedings and any restrictions on the transfer of any covered affiliate credit enhancements.

15.15 California Public Records Act. Party B acknowledges that Party A is a public entity subject to the requirements of the California Public Records Act (Cal. Gov. Code section 7920 et seq.) and that Party A may be required to make public the Base Contract and/or any Transaction Confirmation (which may be partially redacted by Party A) pursuant to the terms of this Section 15.15 in connection with the process of seeking approval from its governing body or a similar forum of applicable authority (however described or situated), as the case m ay be, for the execution of the Base Contract or any Transaction Confirmation. Party B may submit information to Party A that Party B considers confidential, proprietary, or trade secret information pursuant to the Uniform Trade Secrets Act (Cal. Civ. Code section 3426 et seq.), or otherwise protected f rom disclosure pursuant to an exemption to the California Public Records Act . Upon request or demand of any third person or entity not a party to the Base Contract or any Transaction Confirmation (“Requestor”) pursuant to the California Public Records Act for production, inspection and/or copying of the Base Contract, any Transaction Confirmation, or any information considered by Party B to be as confidential, proprietary or trade secret information (“ Confidential Information”), Party A as soon as practical shall notify Party B that such request has been made, by notice as set forth in Section 9.2 of the Base Contract. Party B shall be solely responsible for taking whatever legal steps necessary to protect Co nfidential Information and to prevent release of Confidential 13 Information to the Requestor by Party A. If Party B takes no such action within ten (10) days, after receiving the foregoing notice from Party A, Party A shall be permitted to comply with the Requestor’s demand.”
[Signature page follows.]

14 IN WITNESS WHEREOF, the parties have caused these Special Provisions to be duly executed and become effective as of the date first written above.

City of Victorville Morgan Stanley Capital Group Inc.

By: By:

Name: Name:

Title: Title:

Copyright © 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 1 Adopted October 9, 2003
Model Credit Support Addendum
to the
Base Contract for Sale and Purchase of Natural Gas
Between
City of Victorville (“Party A”)
and
Morgan Stanley Capital Group Inc. (“Party B”)
This Model Credit Support Addendum (“CSA”) is entered into as of this 20th day of December, 2024. The parties to this CSA are the following:

Attn:

Ph
Party A
Name and Address CITY OF VICTORVILLE
14343 Civic Drive
Victorville, CA 92392
Base Contract Date: December 20th, 2024
Attn:

Phone:

E-mail Address:

Bank:

ABA:

ACCT:

Other Details:

Party B

MORGAN STANLEY CAPITAL GROUP INC
1585 Broadway, 3rd Floor (Commodities)
New York, NY 10036
Base Contract Date: December 20th, 2024
Credit Related Notices:

Attn: Credit Risk Manager
Phone: (212) 296-8690 Fax:

E-mail Address: [email protected]
Wire Transfer or ACH Numbers (if applicable):

Bank: Northern Trust International NY
ABA: 026001122
ACCT: 102897-20010/Morgan Stanley Capital Group Inc.

Other Details:

This CSA is published by the North American Energy Standards Board, Inc. The parties hereby agree to the following provisions offered in said CSA Elections.

Credit Support
Provider Party A: None
Party B: None
Interest Rate The “Interest Rate” shall be, with respect to Eligible Collateral in the form of Cash, “Federal Funds Rate” as set forth in the weekly statistical release designated as H.15 (519), or any successor publication, published by
the Board of Governors of the Federal Reserve
System.

Eligible
Collateral
Valuation
Percentage
Party A: Cash 100%
Letters of Credit 100%*
Other _____________ ___%
Minimum
Transfer
Amount
$100,000.00 for either party; provided, however,
that if an Event of Default with respect to a party has occurred and is continuing, the Minimum Transfer
Amount with respect to such party shall be zero.

See attached Rating Matrix

Copyright © 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 2 Adopted October 9, 2003

Party B: Cash 100%
Letters of Credit 100%*
Other _____________ ___%
* - See Definition of Valuation Percentage.

Letter of
Credit Issuer
Requirements
A U.S. commercial bank or a U.S. branch office of a
foreign bank, in either case: (i) maintains, a Credit
Rating of at least (a) “A“ by S&P and “A2” by Moody’s,
if such entity is rated by both S&P and Moody’s or (b)
“A“ by S&P or “A2” by Moody’s, if such entity is rated
by either S&P or Moody’s, but not both, (ii) meets the
applicable criteria of the Secured Party for letter of
credit issuers as in effect at such time (including credit, legal, and risk management criteria); (iii) is “well
capitalized” within the meaning of Section 38 of the
Federal Deposit Insurance Act, as amended, or any
successor statute, and any applicable regulations
thereunder; (iv) satisfies all regulatory capital
requirements applicable to it (including any individual regulatory capital requirements); and (v) is
substantially in the form set forth in Schedule 1
attached hereto, with such changes to the terms in that form as the issuing bank may require and as may be
acceptable to the beneficiary thereof.

Transfer
Method for
Other Eligible
Collateral

Party A: Not Applicable

Party B: Not Applicable
Notification
Time

Close of
Business
1 p.m. Eastern Prevailing Time
Other 10:00 AM New York Time

5 p.m. Eastern Prevailing Time
Other

Collateral
Threshold See attached Rating Matrix
See attached Independent Amounts,
specified in the Model CSA Special Provisions
Flat amounts
Party A: [$0]
Party B: [$0]
Rounding
Amount
Party A: $10,000

Party B: $10,000
Eligibility
Requirements
to Hold Cash
A party shall be entitled to hold Cash provided
that the following conditions are satisfied: (1) it is
not a Defaulting Party, and (2) Cash shall be held
only within the United States
Custodian
Requirements

A U.S. commercial bank or a U.S. branch office of a
foreign bank, in either case, with a Credit Rating of at least (a) “A“ by S&P and “A2” by Moody’s, if such
entity is rated by both S&P and Moody’s or (b) “A“ by
S&P or “A2” by Moody’s, if such entity is rated by
either S&P or Moody’s, but not both.

OPTION A for CSA Paragraphs 4, 5 and 6 – OR – OPTION B for CSA Paragraphs 4, 5 and 6 (Exhibit A for elections is attached.)
Special Provisions Number of sheets attached: Four (4) pages

IN WITNESS WHEREOF, the parties hereto have executed this Model Credit Support Addendum to the Base Contract in duplicate.

CITY OF VICTORVILLE PARTY NAME MORGAN STANLEY CAPITAL GROUP INC.

By:

SIGNATURE

By:

PRINTED NAME
TITLE

Copyright © 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 3 Adopted October 9, 2003

GENERAL TERMS AND CONDITIONS
of the

MODEL CREDIT SUPPORT ADDENDUM
to the

BASE CONTRACT FOR PURCHASE AND SALE OF NATURAL GAS

Paragraph 1. Purpose

This CSA constitutes an Addendum to that certain Base Contract for Sale and Purchase of Natural Gas, as identified on the front page herein, between the parties (“Base Contract”), and supplements, forms part of, and amends the Base Contract affecting transactions thereunder. Capitalized terms used in this CSA that are not herein defined will have the meanings ascribed to them in the Base Contract. In the event of a conflict between the terms of this CSA and the Base Contract, the terms of this CSA shall apply for the purposes of this CSA.

The terms set forth below shall have the meanings ascribed to them below. Other terms are also defined elsewhere in the Base Contract and shall have the meanings ascribed to them therein.

Paragraph 2. Definitions.

As used in this CSA:

“Cash” shall mean United States Dollars.

“Close of Business” shall have the meaning set forth in the elections on Page 2 herein.

"Collateral Requirement" shall have the meaning set forth in Paragraph 3 herein.

"Collateral Threshold" shall mean, with respect to a party, the amount, if any, set forth in the elections on Page 1 herein for such party; provided, however, that the Collateral Threshold for a party that is a Defaulting Party shall be zero (0) upon the occurrence and during the continuance of an Event of Default.

"Credit Support Default" shall have the meaning set forth in Paragraph 10 herein.

“Credit Support Provider”, if applicable, shall mean the entity set forth in the elections on Page 1 herein.

“Custodian” shall mean an entity that meets the Custodian Requirements set forth in the elections on Page 2 herein.

"Defaulting Party" shall have the meaning set forth in Paragraph 10 herein.

"Demand Date" shall mean, with respect to a party's (i) demand for the Transfer of Eligible Collateral pursuant to Paragraph 4 herein, (ii) demand for Reduction or Substitution of Posted Collateral pursuant to Paragraph 5 herein, and/or (ii i) demand for Disputed Calculations pursuant to Paragraph 6 herein:
(a) the date on which a demand is made, if such demand is received prior to the Notification Time on a Business Day; or
(b) the following Business Day if a demand is made on a non -Business Day or after the Notification Time on a Business Day.

"Eligible Collateral" shall have the meaning set forth in the elections on Page 1 herein.

"Exposure" shall mean the Net Settlement Amount, as calculated by the Secured Party in good faith and in a commercially reasonable manner, that the Pledging Party would owe to the Secured Party if an Early Termination Date had been designated as of the date of such calculation as provided for in Section 10 of the Base Contract; provided that such calculations shall be at the mid point between the bid price and the offer price.

"Interest Amount" shall mean the aggregate sum of the amounts of interest calculated for each day in that Interest Period on the principal amount of Cash held by the Secured Party on that day, determined for each such day as follows: (x) the amount of Cash on that day; multiplied by (y) the Interest Rate for that day: divided by (z) 360.

"Interest Period" shall mean the period from (and including) the last Business Day on which an Interest Amount was Transferred (or if no Interest Amount has yet been Transferred, the Business Day on which Cash was Transferred to the Secured Party) to (but excluding) the Business Day on which the current Interest Amount is to be Transferred.

Copyright © 2003 North American Energy Standards Board, Inc. Model Credit Support Addendum All Rights Reserved Page 4 Adopted October 9, 2003

"Interest Rate" shall have the meaning set forth in the elections on Page 1 herein.

"Letter of Credit" shall have the meaning set forth in Paragraph 7 (a) herein. “Letter of Credit Default” shall have the meaning set forth in Paragraph 7(b) herein.

“Minimum Transfer Amount” shall mean the amount set forth in the elections on Page 1 herein for a party.

“Notification Time” shall have the meaning set forth in the elections on Page 2 herein.

“Notice” shall have the meaning set forth in Paragraph 9 herein.

“Pledging Party” shall have the meaning set forth in Paragraph 3 herein.

"Posted Collateral" shall mean (1) all Eligible Collateral and all proceeds thereof that have been Transferred to or received by the Secured Party hereunder and not Transferred to the Pledging Party pursuant to Paragraph 4 or released by the Secured Party, (2) any Interest Amount or portion thereof held by the Secured Party and not Transferred pursuant to Paragraph 8(c), and (3) any Cash received and held by the Secured Party after drawing on any Letter of Credit.

"Reference Market Maker " shall mean a leading dealer in the relevant market that is not an affiliate of either party selected by a party determining any disputed calculations pursuant to Paragraph 6 herein in a commercially reasonable manner from among dealers which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit.
“Rounding Amount” shall mean the amount set forth in the elections on Page 1 herein for a party.

“Secured Party” shall have the meaning set forth in Paragraph 3(b) herein.

"Letter of Credit Issuer Requirements" shall have the meaning set forth in the elections on Page 1 herein.

"Transfer” or “Transferred" shall mean, with respect to any Eligible Collateral, Posted Collateral, or Interest Amount, and in accordance with the instructions of the appropriate party:

(i) in the case of Cash, payment or delivery by wire transfer in immediately available federal funds into one or more bank accounts set forth on Page 1 herein (or as otherwise specified in a demand Notice);

(ii) in the case of Letters of Credit, delivery of the Letter of Credit by the Pledging Party to the Secured Party at the address specified in this CSA (or as otherwise specified in a demand Notice) or delivery of an executed amendment to such Letter of Credit (extending the term or increasing the amount available to the Secured Party thereunder) by the Pledging Party, to the Secured Party; and for purposes of Paragraph 5, return of the Letter of Credit by the Secured Party to the Pledging Party or delivery of an executed amendment (which amendment shall be given by the Pledging Party to the Secured Party) to the Letter of Credit in form and substance satisfactory to the Secured Party, reducing the amount available to the Secured Party thereunder, in each case to the address specified in the applicable demand letter or this CSA; and

(iii) in the case of any other Eligible Collateral, the Transfer methodology specified by the parties in the elections on Page 1 herein.

(iv) in any case in which Eligible Collateral or Posted Collateral is in the form of a Letter of Credit, the deadlines set forth in Paragraph 7 (h).

(iv) In connection with each Transfer of any Eligible Collateral to the Secured Party pursuant to this CSA, the Secured Party will, upon request of the Pledging Party, provide a receipt in form and substance reasonably satisfactory to the Pledging Party showing the Eligible Collateral Transferred to it. In connection with each Transfer of any Posted Collateral to the Pledging Party pursuant to this CSA, the Pledging Party will, upon request of the Secured Party, provide a receipt in form and substance reasonably satisfactory to the Secured Party showing the Posted Collateral Transferred to it.

“Valuation Percentage” shall mean the percentage set forth in the elections on Page 1 herein for each form of Eligible Collateral; provided with respect to Letters of Credit the Valuation Percentage shall be 100% unless either (i) a Letter of Credit

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Default shall apply with respect to such Letter of Credit or ( ii) 20 or fewer Business Days remain prior to the expiration of such Letter of Credit, in which case the Valuation Percentage shall be zero (0).

"Value" shall mean the Valuation Percentage multiplied by the amount of Posted Collateral; provided with respect to Letters of Credit, such amount shall be the amount then available to be unconditionally drawn under the Letter of Credit held by the Secured Party.

Paragraph 3. Calculation of Collateral Requirement.

On any Business Day, the " Collateral Requirement" for a party (the “ Pledging Party”) means the Secured Party’s Exposure minus the sum of:

(a) the Pledging Party's Collateral Threshold; plus

(b) the Value of all Posted Collateral then held by the party other than the Pledging Party (the “ Secured Party”), and any accrued Interest Amount that has not yet been Transferred to the Pledging Party;

provided, however, that, the Collateral Requirement of the Pledging Party will be deemed to be zero (0) whenever the calculation of such Pledging Party’s Collateral Requirement yields a number less than zero (0).

OPTION A: Paragraphs 4, 5, and 6
If the parties select Option A of the elections on Page 1 herein, the following Paragraphs 4, 5 and 6 shall apply.

Paragraph 4. Transfer of Eligible Collateral.

On any Business Day on which (i) no Credit Support Default with respect to the Secured Party has occurred and is continuing, (ii) no Event of Default with respect to the Secured Party has occurred and is continuing, (iii) no Early Termination Date ha s occurred or been designated by the Pledging Party for which there exist any unsatisfied payment obligations under the Base Contract, and (iv) the Pledging Party’s Collateral Requirement equals or exceeds its Minimum Transfer Amount, the Secured Party may demand, by Notice to the Pledging Party, that the Pledging Party Transfer to the Secured Party, and the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Part y having a Value on the date of Transfer at least equal to the Pledging Party’s Collateral Requirement. The amount of Eligible Collateral required to be Transferred hereunder shall be rounded up to the nearest integral multiple of the Rounding Amount.

Unless otherwise agreed to in writing by the parties, the Pledging Party shall Transfer the Eligible Collateral by the Close of Business on the Business Day following the Demand Date. Any Letter of Credit or other type of Eligible Collateral (other than Cash) shall be Transferred to the address specified in this CSA or to such address as the Secured Party shall specify in its demand, pursuant to this Paragraph 4. Any demand made by the Secured Party pursuant to this Paragraph 4 shall specify wire transfer information for the account(s) to which Eligible Collateral in the form of Cash shall be Transferred if different then that set forth in this CSA. Notwithstanding anything to the contrary in this CSA, in the event of a Credit Support Default o r an Event of Default, with respect to the Pledging Party which gives rise to an obligation to Transfer Eligible Collateral, the Pledging Party shall have no obligation to Transfer such Eligible Collateral if such event is cured or otherwise no longer ex ists prior to the time that such Eligible Collateral is required to be provided hereunder.

Paragraph 5. Reduction and Substitution of Posted Collateral. (a) On any Business Day a Pledging Party may demand, by Notice to the Secured Party, a reduction in the amount of Posted Collateral previously provided by the Pledging Party for the benefit of the Secured Party, and the Secured Party shall comply with said demand, provided that after giving effect to the demanded reduction in Posted Collateral, (i) the Pledging Party shall have a Collateral Requirement of zero (0) as of the date the Secured Party would be required to return the requested Posted Collateral, (ii) no Credit Support Default with respect to the Pledging Party has occurred and is continuing, (iii) no Event of Default with respect to the Pledging Party has occurred and is continuing, and (iv) no Early Termination D ate has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligations under the Base Contract. The amount of the Posted Collateral reduction shall be made by the Secured Party if such amount equals or exceeds the Secured Party’s Minimum Transfer Amount; provided however, such amount actually returned by the Secured Party shall be rounded down to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed in writing by the parties, the Secured Party shall effect a permitted reduction in Posted Collateral by the Close of Business on the Busine ss Day following the Demand Date for such reduction. If a permitted reduction in Posted Collateral is to be effected by a reduction in the amount that may be drawn under an outstanding Letter of Credit previously issued for the benefit of the Secured Party, the Secured Party shall promptly take such action as is reasonably necessary to cooperate with the Pledging Party to effectuate such reduction.

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(b) Except when (i) a Credit Support Default with respect to the Pledging Party has occurred and is continuing, or (ii) an Event of Default with respect to the Pledging Party has occurred and is continuing, or (iii) an Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligation under the Base Contract, the Pledging Party may substitute for existing Posted Collateral new Eligible Collateral of equal or greater Value (provided that, if such substitute Eligible Collateral is of a type not designated as Eligible Collateral in the elections on Page 1 herein, then the substitution may not occur unless the Secured Party consents to such substitution). Upon the Transfer to the Secured Party of the substitute Eligible Collateral, the Secured Party shall Transfer the relevant replaced Posted Collateral (as specified by the Pledging Party) to the Pledging Party by the Close of Business on the second Business Day after such Transfer has been effected. Notwithstanding anything herein to the contrary, no such substitution shall be permitted unless (x) the substitute Eligible Collateral is Transferred to the Secured Party prior to, the release of the Posted Collateral to be r eturned to the Pledging Party and, if applicable, the security interest in, and lien upon, such substituted Eligible Collateral grant ed pursuant hereto in favor of the Secured Party shall have been perfected as required by applicable law and shall constitute a first priority perfected security interest therein and general first lien thereon, and (y) after giving effect to such substi tution, the Value of such substitute Eligible Collateral, together will all other Posted Collateral held by the Secured Party, shall equa l or exceed the Pledging Party’s Collateral Requirement. Each substitution of Eligible Collateral shall constitute a representati on, warranty and agreement by the Pledging Party that the substituted Eligible Collateral shall be subject to and governed by the terms and conditions of this CSA, including without limitation and if applicable, the security interest in, general first lie n on and right of offset against, such substituted Eligible Collateral granted pursuant to Paragraph 13(a) in favor of the Secured Party. (c) The Transfer of any Posted Collateral by the Secured Party to the Pledging Party in accordance with this Paragraph 5 shall be deemed a release by the Secured Party of its security interest, general first lien and right of offset granted pursu ant to Paragraph 13(a) hereof only with respect to such returned Posted Collateral.

Paragraph 6. Disputed Calculations.

(a) If the Pledging Party disputes the amount of Eligible Collateral requested by the Secured Party and such dispute relates to the amount of the Exposure as determined by the Secured Party, then the Pledging Party shall (i) notify the Secure d Party of the existence and nature of the dispute not later than the Close of Business on the Demand Date , and (ii) Transfer Eligible Collateral to or for the benefit of the Secured Party in accordance with Paragraph 4 and in an amount equal to the Pledging Party's own calculation of its Collateral Requirement as determined, in accordance with Paragraph 3. Such calculation shall be made in good faith and a commercially reasonable manner that is consistent with Section 10 of the Base Contract. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting calculations. If the parties have not been able to resolve their dispute on or before the Notification Time on t he second Business Day following the Demand Date, then the amount of the Exposure shall be recalculated with each party requesting quotations from one (1) Reference Market -Maker by the Notification Time on the third (3 rd) Business Day following the Demand Date (taking the arithmetic average of those quotations obtained to obtain the average Exposure, provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s calculation shall control) for the purpose of recalculating the Exposure of each transaction in respect of wh ich the parties disagree as to the Exposure thereof. The Pledging Party shall inform the Secured Party of the quotation it has obtained, if any, by the Notification Time on the third (3 rd) Business Day following the Demand Date. The Secured Party shall inform the Pledging Party of the results of such recalculation in reasonable detail by the Notification Time on the fourth (4 th) Business Day following the Demand Date. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the fifth (5 th) Business Day following the Demand Date. If the Pledging Party fails to dispute the amount of the Collateral requirement within the time period specified above, then the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party's Collateral Requirement, as originally demanded by the Secured Party.

(b) If the Secured Party disputes the amount of Eligible Collateral to be reduced by the Secured Party and such dispute relates to the amount of the Exposure claimed by the Pledging Party, then the Secured Party shall (i) notify the Pledging Par ty of the existence and nature of the dispute by the Close of Business on the Demand Date for such reduction, and (ii) effect th e reduction of Eligible Collateral to or for the benefit of the Pledging Party in accordance with Paragraph 5 and in an amount equal to the Secured Party's own estimate, made in a commercially reasonable manner , of the Pledging Party’s Collateral Requirement as determined in accordance with Paragraph 3. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting amounts. If the parties have not been able to resolve their disput e on or before the Notification Time on the second (2 nd) Business Day following the Demand Date for such reduction, then the Secured Party’s Exposure shall be recalculated by each party requesting quotations from one (1) Reference Market -Maker by the Notification Time on the third (3 rd) Business Day following the Demand Date for such reduction (taking the arithmetic average of those quotations obtained to obtain the average Exposure; provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s calculations shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The Pledging Party shall inform the Secured Party of the quotation it has obtained, if any, by the Notification Tim e on the third (3 rd) Business Day after the Demand Date. The Secured Party shall inform the Pledging Party of the results of such recalculation in reasonable detail by the Notification Time on the fourth (4 th) Business Day after the Demand Date for such reduction. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the

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fifth (5 th) Business Day after the Demand Date for such reduction. If the Secured Party fails to dispute the amount of the demanded reduction within the time period specified above, then the Secured Party shall Transfer or cause to be Transferred to the Pledging Party, Eligible Collateral for the benefit of the Pledging Party having a Value on the date of Transfer at le ast equal to the Pledging Party's demanded reduction.

OPTION B: Paragraphs 4, 5, and 6
If the parties select Option B of the elections on Page 1 herein, the following Paragraphs 4, 5 and 6 and the related timing requirements and party information set forth in the Exhibit A to this CSA shall apply.

Paragraph 4. Transfer of Eligible Collateral.

On any Business Day on which (i) no Credit Support Default with respect to the Secured Party has occurred and is continuing, (ii) no Event of Default with respect to the Secured Party has occurred and is continuing, (iii) no Early Termination Date ha s occurred or been designated by the Pledging Party for which there exist any unsatisfied payment obligations under the Base Contract, and (iv) the Pledging Party’s Collateral Requirement equals or exceeds its Minimum Transfer Amount, the Secured Party may demand, by Notice to the Pledging Party, that the Pledging Party Transfer to the Secured Party, and the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Part y having a Value on the date of Transfer at least equal to the Pledging Party’s Collateral Requirement. The amount of Eligible Collateral required to be Transferred hereunder shall be rounded up to the nearest integral multiple of the Rounding Amount.

Unless otherwise agreed to in writing by the parties, the Pledging Party shall Transfer the Eligible Collateral by the Close of Business on the Business Day following the Demand Date. Any Letter of Credit or other type of Eligible Collateral (other tha n Cash) shall be Transferred to the address specified in this CSA or to such address as the Secured Party shall specify in its demand, pursuant to this Paragraph 4. Any demand made by the Secured Party pursuant to this Paragraph 4 shall specify wire transfer information for the account(s) to which Eligible Collateral in the form of Cash shall be Transferred if differe nt then that set forth in this CSA. Notwithstanding anything to the contrary in this CSA, in the event of a Credit Support Default o r an Event of Default, with respect to the Pledging Party which gives rise to an obligation to Transfer Eligible Collateral, the Pledging Party shall have no obligation to Transfer such Eligible Collateral if such event is cured or otherwise no longer ex ists prior to the time that such Eligible Collateral is required to be provided hereunder.

Paragraph 5. Reduction and Substitution of Posted Collateral. (a) On any Business Day a Pledging Party may demand, by Notice to the Secured Party, a reduction in the amount of Posted Collateral previously provided by the Pledging Party for the benefit of the Secured Party, and the Secured Party shall comply with said demand, provided that after giving effect to the demanded reduction in Posted Collateral, (i) the Pledging Party shall have a Collateral Requirement of zero (0) as of the date the Secured Party would be required to return the requested Posted Collateral; (ii) no Credit Support Default with respect to the Pledging Party has occurred and is continuing ; (iii) no Event of Default with respect to the Pledging Party has occurred and is continuing; and (iv) no Early Termination D ate has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligations under the Base Contract. The amount of the Posted Collateral reduction shall be made by the Secured Party if such amount equals or exceeds the Secured Party’s Minimum Transfer Amount; provided however, such amount actually returned by the Secured Party shall be rounded down to the nearest integral multiple of the Rounding Amount. Unless otherwise agreed in writing by the parties, the Secured Party shall effect a permitted reduction in Posted Collateral by the Close of Business on the Business Day following the Demand Date for such reduction. If a permitted reduction in Posted Collateral is to be effected by a reduction in the amount that may be drawn under an outstanding Letter of Credit previously issued for the benefit of the Secured Party, the Secured Party shall promptly take such action as is reasonably necessary to cooperate with the Pledging Party to effectuate such reduction.
(b) Except when (i) a Credit Support Default with respect to the Pledging Party has occurred and is continuing, or (ii) an Event of Default with respect to the Pledging Party has occurred and is continuing or (iii) an Early Termination Date has occurred or been designated by the Secured Party for which there exist any unsatisfied payment obligation under the Base Contract, the Pledging Party may substitute for existing Posted Collateral new Eligible Collateral of equal or greater Value on the Business Day following the Demand Date thereof (provided that, if such substitute Eligible Collateral is of a type not designated as Eligible Collateral in the elections on Page 1 herein, then the substitution may not occur unless the Secured Party consents to such substitution). Upon the Transfer to the Secured Party and/or its Custodian of the substitute Eligible Collateral, the Secured Party and/or its Custodian shall Transfer the relevant replaced Posted Collateral (as specified by th e Pledging Party) to the Pledging Party by the Close of Business on the Business Day after such Transfer has been effected.

Notwithstanding anything herein to the contrary, no such substitution shall be permitted unless (x) the substitute Eligible Collateral is Transferred to the Secured Party and/or its Custodian simultaneously with, or has been Transferred to the Secured Party and/or its Custodian prior to, the release of the Eligible Collateral to be returned to the Pledging Party and, if applicable, the security interest in, and lien upon, such substituted Eligible Collateral granted pursuant hereto in favor of the Secured Party shall have been perfected as required by applicable law and shall constitute a first priority perfected securit y interest therein and general first lien thereon, and (y) after giving effect to such substitution, the Value of such substitu te Eligible Collateral, together will all other Posted Collateral held by the Secured Party, shall equal or exceed the Pledging Party’s Collateral Requirement. Each substitution of Eligible Collateral shall constitute a representation, warranty and

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agreement by the Pledging Party that the substituted Eligible Collateral shall be subject to and governed by the terms and conditions of this CSA, including without limitation and if applicable, the security interest in, general first lien on and r ight of offset against, such substituted Eligible Collateral granted pursuant to Paragraph 13(a) in favor of the Secured Party. (c) The Transfer of any Eligible Collateral by the Secured Party and/or its Custodian to the Pledging Party in accordance with this Paragraph 5 shall be deemed a release by the Secured Party of its security interest, general first lien and right o f offset granted pursuant to Paragraph 13(a) hereof only with respect to such returned Eligible Collateral.

Paragraph 6. Disputed Calculations.

(a) If the Pledging Party disputes the amount of Eligible Collateral requested by the Secured Party and such dispute relates to the amount of the Exposure as determined by the Secured Party, then the Pledging Party shall (i) notify the Secure d Party of the existence and nature of the dispute not later than the Close of Business on the Business Day following the Demand Date that the demand for Eligible Collateral is made by the Secured Party pursuant to Paragraph 4, and (ii) Transfer Eligible Collateral to or for the benefit of the Secured Party in accordance with Paragraph 4 and in an amount equal to the Pledging Party's own calculation of its Collateral Requirement, in accordance with Paragraph 3. Such calculation shall be made in good faith and a commercially reasonable manner that is consistent with Section 10 of the Base Contract. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting calculations. If the parties have not been able to resolve their dispute on or before the Notification Time on the Business Day following the Demand Date, then the amount of the Exposure shall be recalculated with each party requesting quotations from one (1) Reference Market -Maker by the Notification Time on the Business Day following the Demand Date (taking the arithmetic average of those quotations obtained to obtain the average Exposure, provided, that, if only one (1) quotation can be obtained, then that quotation shall be used and if no quotations can be obtained, then the Secured Party’s calculation shall control) f or the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof. The Party shall inform the Party of the quotation it has obtained, if any, by the Notification Time on the Business Day following the Demand Date. The Party shall inform the Party of the results of such recalculation in reasonable detail by the Notification Time on the Business Day following the Demand Date. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the Business Day following the Demand Date. If the Pledging Party fail s to dispute the amount of the Collateral requirement within the time period specified above, then the Pledging Party shall Transfer or cause to be Transferred to the Secured Party, Eligible Collateral for the benefit of the Secured Party having a Value on the date of Transfer at least equal to the Pledging Party's Collateral Requirement, as demanded by the Secured Party.

(b) If the Secured Party disputes the amount of Eligible Collateral to be reduced by the Secured Party and such dispute relates to the amount of the Exposure claimed by the Pledging Party, then the Secured Party shall (i) notify the Pledging Par ty of the existence and nature of the dispute by the Close of Business on the Business Day following the Demand Date for such reduction, and (ii) effect the reduction of Eligible Collateral to or for the benefit of the Pledging Party in accordance wit h Paragraph 5 and in an amount equal to the Secured Party's own estimate, made in a commercially reasonable manner, of the Pledging Party’s Collateral Requirement in accordance with Paragraph 3. In all such cases, the parties thereafter shall promptly consult with each other in order to reconcile the two conflicting amounts. If the parties have not been able to res olve their dispute on or before the Notification Time on the Business Day following the Demand Date for such reduction, then the Secured Party’s Exposure shall be recalculated by each party requesting quotations from one (1) Reference Market -Maker by the Notification Time on the Business Day following the Demand Date for such reduction (taking the arithmetic average of those quotations obtained to obtain the average Exposure; provided, that, if only one (1) quotation can be obtained, then tha t quotation shall be used and if no quotations can be obtained, then the Pledging Party’s calculations shall control) for the purpose of recalculating the Exposure of each transaction in respect of which the parties disagree as to the Exposure thereof .

The Party shall inform the Party of the quotation it has obtained, if any, by the Notification Time on the Business Day after the Demand Date. The Party shall inform the Party of the results of such recalculation in reasonable detail by the Notification Time on the Business Day after the Demand Date for such reduction. Eligible Collateral shall thereupon be provided, returned, or reduced, if necessary, by the Close of Business on the Business Day after the Demand Date for such reduction. If the Secured Party fails to dispute the amount of the demanded reduction within the time period specified above, then the Secured Party shall Transfer or cause to be Transferred to the Pledging Party, Eligible Collateral for the benefit of the Pledging Party having a Value on the date of Transfer at least equal to the Pledging Party's demanded reduction.

Paragraph 7. Letters of Credit.

Eligible Collateral provided in the form of a Letter of Credit shall be subject to the following provisions.

(a) Each “Letter of Credit” shall be an irrevocable, transferable, standby letter of credit, issued by an entity that meets the requirements of a Letter of Credit Issuer Requirements set forth in the elections on Page 1 herein in a form reasonably acceptable to the Secured Party.
(b) “Letter of Credit Default” shall mean with respect to an outstanding Letter of Credit that is held by the Secured Party as Posted Collateral the occurrence of any of the following events: (i) the issuer of such Letter of Credit shall fail to

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meet the Letter of Credit Issuer Requirements set forth in the elections on Page 1 herein, (ii) the issuer of such Letter of Credit goes bankrupt; (iii) the issuer of the Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit if such failure shall be continuing after the lapse of any applicable grace period; (iv) the issuer of such Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit; or (v) such Letter of Credit shall expire or terminate, or shall fail or cease to be in full force and effe ct (other than in accordance with its terms) prior to the satisfaction of all obligations of the Pledging Party under each transaction to which such Letter of Credit shall relate without the written consent of the other party; provided, however, that no Letter of Credit Default shall occur in any event with respect to a Letter of Credit after the time such Letter of Credit is required to be canceled or returned to the Pledging Party in accordance with the terms of this CSA.

Upon the occurrence of a Letter of Credit Default, the Pledging Party agrees to Transfer to the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case on or before the second Business Day after the occurrence thereof (or the fifth (5) Business Day after the occurrence thereof if and only if clause (i) under the definition of Letter of Credit Default applies).
(c) Unless otherwise agreed in writing by the parties, each Letter of Credit shall be provided in accordance with this Paragraph 7 and each Letter of Credit shall be maintained for the benefit of the Secured Party. The Pledging Party shall (i) renew or cause the renewal of each outstanding Letter of Credit on a timely basis as provided in the relevant Letter of Credit, (ii) Transfer either a substitute Letter of Credit or other Eligible Collateral, in each case at least twenty (20) Business Days prior to the expiration of the outstanding Letter of Credit, and (iii) Transfer for the benefit of the Secured Party either a substitute Letter of Credit or other Eligible Collateral, in each case within one (1) Business Day, if the bank issuing a Letter of Credit shall fail to honor the Secured Party’s properly documented request to draw on an outstanding Letter of Credit, provided that, as a result of the Pledging Party’s failure to perform in accordance with (i), (ii), or (iii) above, the Pledging Party’s Collateral Requirement would be greater than zero (0). (d) As one method of providing Posted Collateral, the Pledging Party may increase the amount of an outstanding Letter of Credit or establish one or more additional Letters of Credit. (e) Upon or at any time after the occurrence of an Event of Default with respect to the Pledging Party and/or the designation of an Early Termination Date by the Secured Party, the Secured Party may draw on the entire undrawn portion of any outstanding Letter(s) of Credit upon submission to the bank issuing such Letter of Credit in accordance with the specific requirements of the Letter of Credit. Cash proceeds received from drawing upon the Letter of Credit shall be deemed Posted Collateral as security for the Pledging Party’s obligations to the Secured Party and the Secured Party shall have the rights and remedies set forth in this CSA with respect to such Cash proceeds.

Notwithstanding the Secured Party’s receipt of Cash under the Letter of Credit, the Pledging Party shall remain liable (i) for any failure to Transfer sufficient Posted Collateral, and (ii) for any amounts owing to the Secured Party and remaining unpaid after the application of the amounts so drawn by the Secured Party. (f) A Pledging Party may substitute a Letter of Credit for one or more other outstanding Letter(s) of Credit issued for the benefit of the Secured Party, provided that the Value of such substitute Letter of Credit shall be at least equal to the Value of the Letter(s) of Credit being replaced, and provided further that no Letter of Credit shall be canceled unless and until the Letter of Credit to be substituted therefor shall have been validly executed, issued and Transferred for the benefit of the Secured Party in accordance with applicable law. (g) In all cases, the costs and expenses incurred by the Pledging Party to establish, renew, substitute, cancel, and/or increase the amount of (as the case may be) a Letter of Credit shall be borne by the Pledging Party. (h) In any case in which Eligible Collateral or Posted Collateral is in the form of a Letter of Credit (which permits draws based on a facsimile copy), the deadlines set forth in this CSA for providing such collateral to the other party may be met by providing a facsimile copy of the Letter of Credit with an original transmitted by overnight courier for delivery on the next Business Day.

Paragraph 8. Care and Use of Cash.

Eligible Collateral provided in the form of Cash shall be subject to the following provisions.

(a) Eligibility to Hold Cash.

(i) If a party is not eligible to hold Cash as set forth in the elections on Page 1 herein, then such Cash shall be held in a Collateral Account in accordance with the provisions of Paragraph 8(e).

(ii) The Secured Party or its Custodian will be entitled to hold Cash provided that the following conditions, as applicable, are satisfied: (1) the Secured Party is not a Defaulting Party, (2) the Secured Party or its Credit Support Provider, if applicable, meets the Eligibility Requirements to Hold Cash requirements set forth in the elections on