Agenda packet — Watsonville City Council, July 9, 2024 (part 3 of 4)

Reso No. (CM)
Meeting Date: 070924 2
WHEREAS, the deadline for submittal of Request for Statement of Qualifications was August 9, 2023; and
WHEREAS, a total of sixteen firms submitted a proposal; these proposals were reviewed by City staff; and
WHEREAS, the Interim City Manager has recommended that the proposal from Michael K. Nunley & Associates, Inc., be accepted as the best response.

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

1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that adopting a Resolution awarding contract to Michael K. Nunley & Associates, Inc. for wastewater engineering support services does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal.

Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.

2. The Council awards a contract to Michael K. Nunley & Associates, Inc., a corporation, for wastewater engineering support services, in an amount not to exceed $250,000.

3. That the Contract for Consultant Services between the City of Watsonville and Michael K. Nunley & Associates, Inc., a copy of which is attached hereto and incorporated herein by this reference, is hereby approved.

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Reso No. (CM)
Meeting Date: 070924 3

4. The InterimCity Manager is hereby authorized and directed to execute said contract for and on behalf of the City of Watsonville with minor revisions that may be approved by the Interim City Manager and the City Attorney. **************************************

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Consultant Contract Architects or Engineers w/employees Page 1 of 9

CONTRACT FOR CONSULTANT SERVICES BETWEEN
THE CITY OF WATSONVILLE AND MICHAEL K. NUNLEY & ASSOCIATES, INC.

THIS CONTRACT, is made and entered into this ______________________, by and between the City of Watsonville, a municipal corporation, hereinafter called “City,” and Michael K. Nunley & Associates, Inc. hereinafter called "Consultant."

WITNESSETH
WHEREAS, the City needs to obtain certain professional, technical and/or specialized services of an independent contractor to assist the City in the most economical manner; and
WHEREAS, Consultant has the requisite skill, training, qualifications, and experience to render such services called for under this Contract to City.

THE PARTIES HEREBY AGREE AS FOLLOWS:

SECTION 1. SCOPE OF SERVICES. Consultant shall perform those services as specified in detail in Exhibit "A," entitled "SCOPE OF SERVICES" which is attached hereto and incorporated herein.

SECTION 2. TERM OF CONTRACT. The term of this Contract shall be from July 1, 2024 to June 30, 2025, inclusive.

SECTION 3. SCHEDULE OF PERFORMANCE. The services of Consultant are to be completed according to the schedule set out in Exhibit "B," entitled "SCHEDULE OF PERFORMANCE," which is attached hereto and incorporated herein. Consultant will diligently proceed with the agreed Scope of Services and will provide such services in a timely manner in accordance with the "SCHEDULE OF PERFORMANCE." SECTION 4. COMPENSATION. The compensation to be paid to Consultant including both payment for professional services and reimbursable expenses as well as the rate and schedule of payment are set out in Exhibit "C" entitled "COMPENSATION," which is attached hereto and incorporated herein.

SECTION 5. METHOD OF PAYMENT. Except as otherwise provided in Exhibit "C," each month, Consultant shall furnish to the City a statement of the work performed for compensation during the preceding month. Such statement shall also include a detailed record of the month's actual reimbursable expenditures.

SECTION 6. INDEPENDENT CONSULTANT. It is understood and agreed that Consultant, in the performance of the work and services agreed to be performed by Consultant, shall act as and be an independent Consultant and not an agent or employee of City, and as an independent Consultant, shall obtain no rights to retirement DocuSign Envelope ID: 6E7F97F6-B4A2-45F6-A0F1-254CED54DA90

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Consultant Contract Architects or Engineers w/employees Page 2 of 9 benefits or other benefits which accrue to City's employees, and Consultant hereby expressly waives any claim it may have to any such rights.

SECTION 7. ASSIGNABILITY. Consultant shall not assign or transfer any interest in this Contract nor the performance of any of Consultant's obligations hereunder, without the prior written consent of City, and any attempt by Consultant to so assign this Contract or any rights, duties or obligations arising hereunder shall be void and of no effect.

SECTION 8. INDEMNIFICATION.

To the full extent permitted by law (subject to the limitations of Civil Code section 2782.8 for any “design professional services” performed under this Contract), Consultant will indemnify, hold harmless, release and defend the City (including its officers, elected or appointed officials, employees, volunteers or agents) from and against any and all liability or claims (including actions, demands, damages, injuries, settlements, losses or costs [including legal costs and attorney’s fees])(collectively “Liability”) of any nature, to the extent arising out of, pertaining to, or relating to Consultant’s negligence, recklessness, or willful misconduct in the performance of this Contract. In no event shall the cost to defend charged to the Consultant exceed the Consultant’s proportionate percentage of fault. Consultant’s indemnification obligations under this Contract are not limited by any limitations of any insurance held by Consultant, including, but not limited to, workers compensation insurance.

SECTION 9. INSURANCE.

A. Errors and Omissions Insurance. Consultant shall obtain and maintain in full force throughout the term of this Contract a professional liability insurance policy (Errors and Omissions), in a company authorized to issue such insurance in the State of California, with limits of liability of not less than One Million Dollars ($1,000,000.00) to cover all professional services rendered pursuant to this Contract.

B. Auto and Commercial General Liability Insurance. Consultant shall also maintain in full force and effect for the term of this Contract, automobile insurance and commercial general liability insurance with an insurance carrier satisfactory to City, which insurance shall include protection against claims arising from bodily and personal injury, including death resulting therefrom, and damage to property resulting from any actual occurrence arising out of the performance of this Contract. The amounts of insurance shall not be less than the following:
(1) Commercial general liability insurance, or equivalent form, with a combined single limit of not less than $500,000.00 per occurrence. If such insurance contains a general aggregate limit, such limit shall apply separately to each project Consultant performs for City. Such insurance shall (a) name City, its appointed and elected officials, and its employees as insureds; and (b) be primary with respect to insurance or self-insurance programs maintained by City and (c) contain standard separation of insured's provisions.

DocuSign Envelope ID: 6E7F97F6-B4A2-45F6-A0F1-254CED54DA90

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Consultant Contract Architects or Engineers w/employees Page 3 of 9 (2) Business automobile liability insurance, or equivalent form, with a combined single limit of not less than $500,000.00 per occurrence. Such insurance shall include coverage for owned, hired and non-owned automobiles.

C. Workers’ Compensation Insurance. In accordance with the provisions of Section 3700 of the Labor Code, Consultant shall be insured against liability for Workers’ Compensation or undertake self-insurance. Consultant agrees to comply with such provisions before commencing performance of any work under this Contract.

D. Proof of Insurance to City before Notice to Proceed to Work. Consultant shall satisfactorily provide certificates and endorsements of insurance to the City Clerk before Notice to Proceed to Work of this Contract will be issued. Certificates and policies shall state that the policy shall not be canceled or reduced in coverage without thirty (30) days written notice to City. Approval of insurance by City shall not relieve or decrease the extent to which Consultant may be held responsible for payment of damages resulting from services or operations performed pursuant to this Contract.

Consultant shall not perform any work under this Contract until Consultant has obtained the required insurance and until the required certificates have been submitted to the City and approved by the City Attorney. If Consultant fails or refuses to produce or maintain the insurance required by these provisions, or fails or refuses to furnish City required proof that insurance has been procured and is in force and paid for, City shall have the right at City's election to forthwith terminate this Contract immediately without any financial or contractual obligation to the City. As a result of such termination, the City reserves the right to employ another consultant to complete the project.

E. Written notice. Contractor shall provide immediate written notice if (1) any insurance policy required by this Contract is terminated; (2) any policy limit is reduced; (3) or any deductible or self insured retention is increased.

SECTION 10. NON-DISCRIMINATION. Consultant shall not discriminate, in any way, against any person on the basis of age, sex, race, color, creed, national origin or disability in connection with or related to the performance of this Contract.

SECTION 11. TERMINATION.

A. City and Consultant shall have the right to terminate this Contract, without cause, by giving not less than ten (10) days written notice of termination.

B. If Consultant fails to perform any of its material obligations under this Contract, in addition to all other remedies provided by law, City may terminate this Contract immediately upon written notice.

C. The City Manager is empowered to terminate this Contract on behalf of City.

D. In the event of termination, Consultant shall deliver to City copies of all work papers, schedules, reports and other work performed by Consultant and upon receipt thereof, Consultant shall be paid in full for services performed and reimbursable expenses incurred to the date of termination.

DocuSign Envelope ID: 6E7F97F6-B4A2-45F6-A0F1-254CED54DA90

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Consultant Contract Architects or Engineers w/employees Page 4 of 9 SECTION 12. COMPLIANCE WITH LAWS. Consultant shall comply with all applicable laws, ordinances, codes and regulations of the federal, state and local governments. Consultant shall obtain and maintain a City of Watsonville business license during the term of this Contract.

SECTION 13. GOVERNING LAW. City and Consultant agree that the law governing this Contract shall be that of the State of California. Any suit brought by either party against the other arising out of the performance of this Contract shall be filed and maintained in the Municipal or Superior Court of the County of Santa Cruz.

SECTION 14. PRIOR CONTRACTS AND AMENDMENTS. This Contract represents the entire understanding of the parties as to those matters contained herein.

No prior oral or written understanding shall be of any force or effect with respect to those matters covered hereunder. This Contract may only be modified by a written amendment.

SECTION 15. CONFIDENTIAL INFORMATION. All data, documents, discussions or other information developed or received by or for Consultant in performance of this Contract are confidential and not to be disclosed to any person except as authorized by the City Manager or his designee, or as required by law.

SECTION 16. OWNERSHIP OF MATERIALS. All reports, documents or other materials developed or received by Consultant or any other person engaged directly by Consultant to perform the services required hereunder shall be and remain the property of City without restriction or limitation upon their use.

SECTION 17. COVENANT AGAINST CONTINGENT FEES. The Consultant covenants that Consultant has not employed or retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure the Contract, and that Consultant has not paid or agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fees, commissions, percentage, brokerage fee, gift, or any other consideration contingent on or resulting from the award or making of this Contract, for breach or violation of this covenant, the City shall have the right to annul this Contract without liability, or in its discretion, to deduct from the Contract price or consideration or otherwise recover, the full amount of such fee, commission, percentage fee, gift, or contingency.

SECTION 18. WAIVER. Consultant agrees that waiver by City or any one or more of the conditions of performance under this Contract shall not be construed as waiver of any other condition of performance under this Contract.

SECTION 19. CONFLICT OF INTEREST.

A. A Consultant shall avoid all conflict of interest or appearance of conflict of interest in performance of this Contract. Consultant shall file a disclosure statement, if required by City Council Resolution, which shall be filed within thirty (30) days from the effective date of this Contract or such Resolution, as applicable.

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Consultant Contract Architects or Engineers w/employees Page 5 of 9 B. No member, officer, or employee of the City, during their tenure, or for one (1) year thereafter, shall have any interest, direct or indirect, in this Contract or the proceeds thereof and Consultant agrees not to allow, permit, grant, transfer, or otherwise do anything which will result in such member, officer, or employee of the City from having such interest.

SECTION 20. AUDIT BOOKS AND RECORDS. Consultant shall make available to City, its authorized agents, officers and employees, for examination any and all ledgers and books of account, invoices, vouchers, canceled checks and other records or documents evidencing or related to the expenditures and disbursements charged to the City, and shall furnish to City, its authorized agents and employees, such other evidence or information as City may require with respect to any such expense or disbursement charged by Consultant.

SECTION 21. NOTICES. All notices shall be personally served or mailed, postage prepaid, to the following addresses, or to such other address as may be designated by written notice by the parties:

CITY
City Clerk’s Office
275 Main Street, Suite 400
Watsonville, CA 95076
(831) 768-3040

CONSULTANT
Michael K. Nunley & Associates, Inc.

P.O. Box 1604
Arroyo Grande, CA 93421
(805) 904-6530
SECTION 22. EXHIBITS:

Exhibit A: Scope of Services
Exhibit B: Schedule of Performance
Exhibit C: Compensation
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Consultant Contract Architects or Engineers w/employees Page 6 of 9 WITNESS THE EXECUTION HEREOF, on the day and year first hereinabove written.

CITY

CITY OF WATSONVILLE
BY ______________________________
Tamara Vides, Interim City Manager

ATTEST:

BY ______________________________
Irwin I. Ortiz, City Clerk
APPROVED AS TO FORM:

BY ______________________________
Samantha W. Zutler, City Attorney

CONSULTANT

BY_________________________________
Michael K. Nunley, President & CEO
MICHAEL K. NUNLEY & ASSOCIATES, INC.

DocuSign Envelope ID: 6E7F97F6-B4A2-45F6-A0F1-254CED54DA90

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Consultant Contract Architects or Engineers w/employees Page 7 of 9 EXHIBIT "A"

SCOPE OF SERVICES
The scope of services is as follows:

As-needed engineering services for the Wastewater Division as described in the letter proposal dated June 20, 2024.

See attachment labeled Exhibit “A”
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Consultant Contract Architects or Engineers w/employees Page 8 of 9 EXHIBIT “B”

SCHEDULE OF PERFORMANCE
Services shall commence immediately upon execution of this Contract. All services performed under the provisions of this Contract shall be completed in accordance with the following schedule: July 1, 2024 to June 30, 2025.

DocuSign Envelope ID: 6E7F97F6-B4A2-45F6-A0F1-254CED54DA90

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Consultant Contract Architects or Engineers w/employees Page 9 of 9 EXHIBIT “C”

COMPENSATION
a. Total Compensation. The total obligation of City under this Contract shall not exceed ___________$250,000___________.
b. Basis for Payment. Payment(s) to Consultant for services performed under this Contract shall be made as in accordance with the current fee schedule included in Exhibit A, subject to increase on an annual basis and shall include payment for reimbursable expenses.
c. Payment Request. Consultant shall submit a request for payment for services on a monthly basis by letter to Director, or said Director's designated representative. Such request for payment shall cover the preceding monthly period during the term hereof, shall note the City's purchase order number for this Contract, shall contain a detailed listing of the total number of items or tasks or hours for which payment is requested, the individual dates on which such services were rendered, and invoices for reimbursable expenses, if any. Upon receipt in the Office of Director of said payment request, Director shall cause payment to be initiated to Consultant for appropriate compensation.

DocuSign Envelope ID: 6E7F97F6-B4A2-45F6-A0F1-254CED54DA90

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121 North Fir Street, Suite G
Ventura, CA 93001
805.947.4971 PHONE
June 20, 2024
Courtney Lindeberg
Public Works Director
City of Watsonville
SUBJECT: MKN Proposal for Program Management Support Services Dear Ms. Lindeberg,
Michael K. Nunley & Associates, Inc. (MKN) is pleased submit our proposal to the City of Watsonville (City) to provide asneeded program management support for the City of Watsonville for wastewater program and infrastructure project management support as staffing changes are occurring.

PROJECT BACKGROUND AND UNDERSTANDING
The City owns and operates a wastewater collection system, a wastewater treatment plant and a recycled water treatment plant among other facilities and programs. The City is currently going through staffing changes in their Wastewater Division, and Staff has requested MKN’s Principal Engineer, Adam Bugielski, and Senior Project Manager, Becca Bugielski, to assist in performing program management services when the project workload exceeds the City’s staffing levels. Supporting both Adam and Becca will be the MKN technical team that will be utilized on an as needed basis.

SCOPE OF WORK
MKN will provide the City with the following services as needed:
x Preparing Request for Proposal/Qualifications;
x Grant Funding applications;
x Managing and reviewing consultants deliverables;
x Coordination with City Engineering and Operations Staff; x Providing minor design services and project studies;
x Developing project specification in City format;
x Assisting with compliance monitoring and reporting required by the Water Quality Control Board; x Assisting during the bid and construction phases of projects; and x Assisting with staffing for oncall WWTP contract operator support Each project or task will vary based on the specific scope and current phase, however our Program Management Team is experienced and prepared to efficiently support the Wastewater Division at any stage. We are supported by local engineering staff in our San Jose office, as well as technical resources in other MKN offices.

MKN will be available for program management support for the City of Watsonville through July 2025. It is assumed that the proposed scope and budget for this proposal will include multiple wastewater projects/tasks to be assigned by the Public Works Director or designee.

DocuSign Envelope ID: 6E7F97F6-B4A2-45F6-A0F1-254CED54DA90

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Program Management Services | 2
BUDGET and SCHEDULE
MKN proposes to complete tasks on an asneeded basis with a budget nottoexceed $250,000. Our standard fee schedule is attached, but may be adjusted in January 2025.

This budget is based on the anticipated needs for a oneyear period. It is assumed that should needs arise above the budgeted amount, additional budget may be added to a mutually agreed upon amount. Additionally, this proposal includes program management support outside of ongoing operations, maintenance, and emergency responses. It is assumed that these responsibilities, along with the designated Chief Plant Operator and other required personnel, will continue to be managed by City Staff.

We hope this proposal meets your expectations. We are happy to answer any questions you have and look forward to working with you.

Sincerely,
Adam Bugielski, PE
Principal Engineer
Attachments:
2024 Fee Schedule
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The foregoing Billing Rate Schedule is effective through December 31, 2024 and will be adjusted each year after at a rate of 2 to 5%.

DIRECT PROJECT EXPENSES
OutsideReproduction Cost + 10%
Subcontracted or Subconsultant Services Cost + 10%
Travel & Subsistence (other than mileage) Cost
Auto Mileage Current IRS Rate

CATEGORY POSITION HOURLY RATE
Communications
and
Administrative
Administrative Assistant $110
Strategic Communications Coordinator $120
Strategic Communications Specialist $160
Designers and
Technicians
CAD Technician I $145
CAD Design Technician II $165
Senior Designer $179
Planning
GIS Specialist $175
Planner I $191
Planner II $217
Senior Planner $234
Engineers
Engineering Technician $119
Assistant Engineer I $159
Assistant Engineer II $178
Project Engineer I $193
Project Engineer II $208
Senior Engineer I $227
Senior Engineer II $239
Senior Engineer III $254
Principal Engineer $276
Project
Management
Project Manager $244
Senior Project Manager $254
Project Director $297
Senior Project Director $315
Construction
Management
Services
Scheduler $170
Construction Inspector $190
Assistant Resident Engineer $190
Resident Engineer $202
Construction Manager $220
Principal Construction Manager $259
2024 FEE SCHEDULE
DocuSign Envelope ID: 6E7F97F6-B4A2-45F6-A0F1-254CED54DA90

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7/2/2024 12:12:28 PM
C:\Program Files\eSCRIBE\TEMP\12122553265\12122553265,,,Labor Compliance Consultant Agreement.docx Agenda Report
MEETING DATE: Tuesday, July 9, 2024
TO: City Council
FROM: PUBLIC WORKS & UTILITIES DIRECTOR LINDBERG

ASST PUBLIC WORKS & UTILITIES DIRECTOR GREEN
SUBJECT: APPROVE CONSULTANT AGREEMENT WITH CUMMING
MANAGEMENT GROUP, INC. FOR ON-CALL LABOR

COMPLIANCE SERVICES IN AN AMOUNT NOT TO EXCEED
$300,000
RECOMMENDED ACTION:

Adopt a resolution awarding a contract to Cumming Management Group, Inc. for on-call labor compliance services in an amount not to exceed $300,000 over a three-year performance period.

BACKGROUND:

On-call labor compliance services to help ensure that the larger capital improvement project contractors comply with state labor laws in the execution of construction contracts for the City.

DISCUSSION:

The Public Works Department issues several construction contracts a year that are required to comply with California Department of Industrial Relations (DIR) Prevailing Wage laws and apprenticeship requirements. In April 2024, staff issued a Request for Proposal (RFP) for On-Call Labor Compliance Services. RFP submissions were due May 23, 2024, at 5:00PM electronically through the City’s OpenGov procurement portal.

One proposal was received from Cumming Management Group, Inc. Staff reviewed the proposal received and determined that Cumming is qualified to provide on-call labor compliance services based on their experience in providing labor compliance and monitoring services for Capital Improvement Projects for the City and other public agencies.

Staff therefore recommends that a consulting agreement be executed with Cumming Group to provide labor compliance services over a three-year period beginning July 2024. Services will be provided on an as-needed basis and may include verification of proper workforce classifications, verification of payment of

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7/2/2024 12:12:28 PM
C:\Program Files\eSCRIBE\TEMP\12122553265\12122553265,,,Labor Compliance Consultant Agreement.docx prevailing wages by Contractor and subcontractors, verification of proper submittal of certified payroll reporting, on-site interviews, apprentice ratio utilization reporting, monitoring apprenticeships, and other tasks as needed to support the City's labor compliance requirements. The majority of the City's projects are managed by the Public Works Department, though other City departments may also require support on a per-project basis.

STRATEGIC PLAN:

This agreement is consistent with the following strategic plan goals:
2-Infrastructure & Environment
FINANCIAL IMPACT:

The total cost of this agreement will not exceed $300,000. The contract will be an on-call, as-needed basis. Therefore, as project needs arise, specific labor compliance monitoring tasks will be assigned, and the services paid by the appropriate fund.

ALTERNATIVE ACTION:

No reasonable alternatives are known at this time.

ATTACHMENTS AND/OR REFERENCES (If any):

None.

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Reso No. (CM)
Meeting Date: 070924 SWZ ______ TV ______ PWU ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE AWARDING PROFESSIONAL SERVICES CONTRACT
TO CUMMING MANAGEMENT GROUP, INC., A CORPORATION, FOR

ON-CALL LABOR COMPLIANCE SERVICES, IN AN AMOUNT NOT TO
EXCEED $300,000 FOR A THREE YEAR TERM, AND AUTHORIZING

AND DIRECTING THE INTERIM CITY MANAGER TO EXECUTE SAME
WHEREAS, § 3-5.500 of the Municipal code provides that an RFP or RFQ process is found to be an effective and efficient way to procure professional services and procurement of professional services shall be based on proposals solicited from capable professionals and be evaluated based on a combination of factors including education, training, experience and demonstrated competence and professional qualifications necessary for the satisfactory performance of the services required; and WHEREAS, § 3-5.540 of the Municipal Code provides that contracts for professional services estimated to cost more than One Hundred Thousand and no/100ths ($100,000.00) Dollars must be awarded by the Council, and that the selection will be based on demonstrated competence and on the education, training and experience and professional qualifications necessary for the satisfactory performance of the services required, that cost will not be the only basis for selection, use a qualifications-based selection process as described in subdivision (a) of § 45271 of the California Government Code and negotiated as described in § 4528; and WHEREAS, a Request for Proposal (RFP) was issued on April 26, 2024, asking for qualified consultants to assist the City with on-call labor compliance services; and WHEREAS, the deadline for submittal of Request for Statement of Qualifications was May 23, 2024; and

1 All references to section numbers will be to the California Government Code

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Reso No. (CM)
Meeting Date: 070924 2
WHEREAS, a total of one firm submitted a proposal; these proposals were reviewed by City staff; and
WHEREAS, the Interim City Manager has recommended that the proposal from Cumming Management Group, Inc., be accepted as the best response.

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

1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that adopting a Resolution awarding contract to Cummings Management Group, Inc. for oncall labor compliance services does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.

2. The Council awards a contract to Cumming Management Group, Inc., for oncall labor compliance services, in an amount not to exceed $300,000, for a three (3) year term.

3. That the Contract for Consultant Services between the City of Watsonville and Cumming Management Group, Inc., a copy of which is attached hereto and incorporated herein by this reference, is hereby approved.

4. The Interim City Manager is hereby authorized and directed to execute said contract for and on behalf of the City of Watsonville with minor revisions that may be approved by the Interim City Manager and the City Attorney. **************************************

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CONTRACT FOR CONSULTANT SERVICES BETWEEN
THE CITY OF WATSONVILLE AND CUMMING MANAGEMENT GROUP, INC.

THIS CONTRACT, is made and entered into this ______________________, by and between the City of Watsonville, a municipal corporation, hereinafter called “City,” and Cumming Management Group Inc., hereinafter called "Consultant."

THE PARTIES HEREBY AGREE AS FOLLOWS:

SECTION 1. SCOPE OF SERVICES. Consultant shall perform those services as specified in detail in Exhibit "A," entitled "SCOPE OF SERVICES" which is attached hereto and incorporated herein.

SECTION 2. TERM OF CONTRACT. The term of this Contract shall be from July 1, 2024 to June 30, 2027, inclusive.

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benefits or other benefits which accrue to City's employees, and Consultant hereby expressly waives any claim it may have to any such rights.

SECTION 8. INDEMNIFICATION.

SECTION 9. WAIVER OF CONSEQUENTIAL DAMAGES.

Notwithstanding any other provisions of this Agreement, and to the fullest extent permitted by law, neither Party shall be liable to the other for any incidental, special, indirect or other consequential damages incurred due to the fault of the other Party, regardless of the nature of the fault or whether it was committed by the City or Consultant, or their employees, subconsultants, or subcontractors. Consequential damages include, without limitation, liability for loss of use of the Project or existing property, loss of profits, loss of use, loss of production, loss of goodwill, or business interruption, however the same may be caused.”
SECTION 10. INSURANCE.

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actual occurrence arising out of the performance of this Contract. The amounts of insurance shall not be less than the following:
(1) Commercial general liability insurance, or equivalent form, with a combined single limit of not less than $500,000.00 per occurrence. If such insurance contains a general aggregate limit, such limit shall apply separately to each project Consultant performs for City. Such insurance shall (a) name City, its appointed and elected officials, and its employees as insureds; and (b) be primary with respect to insurance or self-insurance programs maintained by City and (c) contain standard separation of insured's provisions.
(2) Business automobile liability insurance, or equivalent form, with a combined single limit of not less than $500,000.00 per occurrence. Such insurance shall include coverage for owned, hired and non-owned automobiles.

SECTION 11. NON-DISCRIMINATION. Consultant shall not discriminate, in any way, against any person on the basis of age, sex, race, color, creed, national origin or disability in connection with or related to the performance of this Contract.

SECTION 12. TERMINATION.

A. City and Consultant shall have the right to terminate this Contract, without cause, by giving not less than ten (10) days written notice of termination.

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C. The City Manager is empowered to terminate this Contract on behalf of City.

SECTION 13. COMPLIANCE WITH LAWS. Consultant shall comply with all applicable laws, ordinances, codes and regulations of the federal, state and local governments. Consultant shall obtain and maintain a City of Watsonville business license during the term of this Contract.

SECTION 14. GOVERNING LAW. City and Consultant agree that the law governing this Contract shall be that of the State of California. Any suit brought by either party against the other arising out of the performance of this Contract shall be filed and maintained in the Municipal or Superior Court of the County of Santa Cruz.

SECTION 15. PRIOR CONTRACTS AND AMENDMENTS. This Contract represents the entire understanding of the parties as to those matters contained herein.

No prior oral or written understanding shall be of any force or effect with respect to those matters covered hereunder. This Contract may only be modified by a written amendment.

SECTION 16. CONFIDENTIAL INFORMATION. All data, documents, discussions or other information developed or received by or for Consultant in performance of this Contract are confidential and not to be disclosed to any person except as authorized by the City Manager or his designee, or as required by law.

SECTION 17. OWNERSHIP OF MATERIALS. All reports, documents or other materials developed or received by Consultant or any other person engaged directly by Consultant to perform the services required hereunder shall be and remain the property of City without restriction or limitation upon their use.

SECTION 18. COVENANT AGAINST CONTINGENT FEES. The Consultant covenants that Consultant has not employed or retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure the Contract, and that Consultant has not paid or agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fees, commissions, percentage, brokerage fee, gift, or any other consideration contingent on or resulting from the award or making of this Contract, for breach or violation of this covenant, the City shall have the right to annul this Contract without liability, or in its discretion, to deduct from the Contract price or consideration or otherwise recover, the full amount of such fee, commission, percentage fee, gift, or contingency.

DocuSign Envelope ID: 4897883B-61A8-49A5-ABA8-B6D0D2E32458

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SECTION 19. WAIVER. Consultant agrees that waiver by City or any one or more of the conditions of performance under this Contract shall not be construed as waiver of any other condition of performance under this Contract.

SECTION 20. CONFLICT OF INTEREST.

B. No member, officer, or employee of the City, during their tenure, or for one (1) year thereafter, shall have any interest, direct or indirect, in this Contract or the proceeds thereof and Consultant agrees not to allow, permit, grant, transfer, or otherwise do anything which will result in such member, officer, or employee of the City from having such interest.

SECTION 21. AUDIT BOOKS AND RECORDS. Consultant shall make available to City, its authorized agents, officers and employees, for examination any and all ledgers and books of account, invoices, vouchers, canceled checks and other records or documents evidencing or related to the expenditures and disbursements charged to the City, and shall furnish to City, its authorized agents and employees, such other evidence or information as City may require with respect to any such expense or disbursement charged by Consultant.

SECTION 22. NOTICES. All notices shall be personally served or mailed, postage prepaid, to the following addresses, or to such other address as may be designated by written notice by the parties:

CITY
City Clerk’s Office
275 Main Street, Suite 400
Watsonville, CA 95076
(831) 768-3040

CONSULTANT
Cumming Group, Inc.
3230 Monument Way
Concord, CA 94518
(925) 768 - 7184
SECTION 23. EXHIBITS:

Exhibit A: Scope of Services
Exhibit B: Schedule of Performance
Exhibit C: Compensation
///
///
///
DocuSign Envelope ID: 4897883B-61A8-49A5-ABA8-B6D0D2E32458

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WITNESS THE EXECUTION HEREOF, on the day and year first hereinabove written.

CITY

CITY OF WATSONVILLE
BY ______________________________
Tamara Vides, City Manager Pro
Tempore

ATTEST:

BY ______________________________
Irwin I. Ortiz, City Clerk
APPROVED AS TO FORM:

BY ______________________________
Samantha W. Zutler, City Attorney

CONSULTANT

BY_________________________________
John Caputo, Vice President, Operations
and Development
DocuSign Envelope ID: 4897883B-61A8-49A5-ABA8-B6D0D2E32458

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EXHIBIT "A"

SCOPE OF SERVICES
The scope of services is as follows: On-Call Labor Compliance Services on an asneeded basis which may include the following items on any particular project, as requested by the City:
• Provide the City with a list of applicable worker classifications and wage determinations to be included in bidding documents for pre-construction professional service agreements and construction contracts.
• Attend pre-construction meetings on selected projects to ensure contractors are informed and educated on relevant laws and provide forms/documentation for California Department of Industrial Relations prevailing wage and Davis Bacon compliance. • Provide contractors with a telephone and email contact where contractors and subcontractors can call for clarification of compliance requirements and assistance. • Confirm contractors are in compliance with all state and federal labor compliance standards and regulations; review and audit project time sheets, verify project wage determinations and work classifications used including hours worked. Verify contractors are maintaining proper records per California Labor Code Sections 1776 and 1812. Review work classifications with the state and federal wage classifications and/or Davis-Bacon Act requirements. • Conduct site visits during construction and interview workers. Interview a minimum of one worker per craft on site, or as required by the project funding source. Site visits are to be coordinated with contractors.
• For projects subject to Davis-Bacon provisions, complete U.S. General Services Administration Standard Form (SF) 1445, Labor Standards Interview. • Confirm that contractors have posted job site notices for all projects with regard to prevailing wage requirements per California Labor Code Section 1773.2 and WH-1321, when applicable.
• Monitor weekly certified payroll reports (CPRs) including, but not limited to:
o Proper wages paid for the classification selected;
o Proper calculations and payment of fringe benefits and training contributions; o Review overtime hours, shift pay, weekend or holiday work and payments; o Notify the prime contractor of any deficiencies in wages, overtime compensation, incomplete or inaccurate CPRs, and/or incomplete or inaccurate Statements of Compliance.
o Prepare a project summary sheet that identifies the total number of workers by classification and City and County of residence.
• Cross reference certified payroll records with onsite interviews to verify all workers are listed and review that the Statement of Compliance is complete and signed by an individual of knowledge and authority.
• Monitoring of all apprenticeship requirements including: Collection and review of DAS-140 and DAS-142 forms.
o Review of applicable ratios, correct wages paid, and training contributions (CAC Forms).
o Verification that all apprentices also have an active Division of Apprentice Standards and/or BAT (US Dept. of Labor Bureau of Apprenticeship Training) registration. o Verify apprenticeship utilization as set forth in California Labor Code Section 1777.5. • Identify inconsistencies or deliberate deceptions on the part of the contractors and/or subcontractors through review of cancelled checks, time sheets, and related records and seek appropriate resolution within the California Prevailing Wage laws and/or Davis-Bacon Act regulations.

DocuSign Envelope ID: 4897883B-61A8-49A5-ABA8-B6D0D2E32458

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• Coordinate with the City, contractors, and subcontractors with the goal of amicable agreement on resolving issues related to violations, penalties, and compliance. • Provide a monthly report to City for each project assigned containing a list of compliance tasks performed, compliance status for each Contractor and Subcontractor on project, use of apprentices, and the submitted Local Hire Residency Compliance Forms. • Attend any compliance or auditing meetings with the state and/or federal agencies relating to the labor compliance on all projects.
• Provide training and other assistance relating to labor compliance as requested by the City. • Prior to project closeout, submit a notice to contractors or subcontractors if there are still outstanding items. Allow contractors or subcontractors ten (10) days to submit additional documentation or to make corrections.
• Upon project completion, provide the City with a written statement that all state and federal labor standards and regulations have been successfully complied with, as well as all CPRs and all other documentation and correspondence related to the project. • Assist the City with public records requests related to certified payroll compliance requests, as requested by City. Information provided shall be redacted of personal information prior to sharing with public record request.
• Maintain all project records for a period of three (3) years after project completion.

DocuSign Envelope ID: 4897883B-61A8-49A5-ABA8-B6D0D2E32458

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EXHIBIT “B”

Work shall be on an on-call and as-needed basis from July 1, 2024 to June 30, 2027 DocuSign Envelope ID: 4897883B-61A8-49A5-ABA8-B6D0D2E32458

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EXHIBIT “C”

COMPENSATION
a. Total Compensation. The total obligation of City under this Contract shall not exceed _____$300,000______________________.
b. Basis for Payment. Payment(s) to Consultant for services performed under this Contract shall be made as follows and shall include payment for reimbursable expenses: See attached Fee schedule provided by Consultant. c. Payment Request. Consultant shall submit a request for payment for services on a monthly basis by letter to Director, or said Director's designated representative. Such request for payment shall cover the preceding monthly period during the term hereof, shall note the City's purchase order number for this Contract, shall contain a detailed listing of the total number of items or tasks or hours for which payment is requested, the individual dates on which such services were rendered, and invoices for reimbursable expenses, if any. Upon receipt in the Office of Director of said payment request, Director shall cause payment to be initiated to Consultant for appropriate compensation.

DocuSign Envelope ID: 4897883B-61A8-49A5-ABA8-B6D0D2E32458

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7/3/2024 9:24:25 PM
C:\Program Files\eSCRIBE\TEMP\21242229516\21242229516,,,Report - Purchase Order Arata Equipment .docx Agenda Report
MEETING DATE: Tuesday, July 9, 2024
TO: City Council
FROM: PUBLIC WORKS & UTILITIES DIRECTOR LINDBERG

PUBLIC WORKS ADMINISTRATIVE SERVICES MANAGER
GORDO
SUBJECT: AUTHORIZATION TO ESTABLISH A BLANKET PURCHASE

ORDER WITH ARATA EQUIPMENT COMPANY FOR AN
AMOUNT NOT TO EXCEED $150,000 PER YEAR
RECOMMENDED ACTION:

It is recommended that the City Council adopt a resolution authorizing the establishment purchase order with Arata Equipment Company for an amount not to exceed $150,000 per year for the next three (3) fiscal years for the acquisition of truck parts.

BACKGROUND:

Requesting approval establishing a purchase order with Arata Equipment Company for an amount not to exceed $150,000 per year for the next three (3) fiscal years.

DISCUSSION:

The Vehicle Maintenance Division is responsible for the maintenance and repair of the City’s vehicle & equipment fleet. Arata Equipment Company is an exclusive authorized distributor of solid waste collection vehicles in the City Fleet. The City relies on Arata for replacement parts for the various models and types of trucks. The cost for parts for large trucks is typically higher than regular duty vehicles and, in many instances, can only be purchased via authorized distributors. Arata is the exclusive provider of parts for Wittkie and Labrie which are the makes of all the City’s garbage collection vehicles. The demands placed on the solid waste fleet create heavy wear and tear which results in shorter maintenance intervals and quicker replacement of parts. Establishing a purchase order with Arata Equipment Company will ensure fast access to parts to get garbage collection vehicles back on the road.

STRATEGIC PLAN:

This contract is consistent with the following Strategic Plan Priority:
2-Infrastructure & Environment
7-Efficient and Well-performing Government

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7/3/2024 9:24:25 PM
C:\Program Files\eSCRIBE\TEMP\21242229516\21242229516,,,Report - Purchase Order Arata Equipment .docx FINANCIAL IMPACT:

Funds for this purchase order are available in the Vehicle Maintenance and Solid Waste Division operating budgets.

ALTERNATIVE ACTION:

No reasonable alternatives are known currently.

ATTACHMENTS AND/OR REFERENCES (If any):

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Reso No. (CM)
Meeting Date: 070924 SWZ ______ TV ______ PWU ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING A BLANKET PURCHASE ORDER TO

ARATA EQUIPMENT COMPANY, A CORPORATION, FOR PURCHASE
OF TRUCK PARTS, IN AN AMOUNT NOT TO EXCEED $150,000 PER YEAR, FOR THE NEXT THREE FISCAL YEARS; AND AUTHORIZING

AND DIRECTING THE INTERIM CITY MANAGER TO EXECUTE SAME
WHEREAS bidding requirements for the purchase of supplies, equipment and non-personal contractual services and the sale of personal property are set forth in Chapter 5 of Title 3 of the Municipal Code; and
WHEREAS, § 3-5.540 of the Municipal Code provides that purchases for equipment, supplies., and professional services estimated to cost more than One Hundred Thousand and no/100ths ($100,000.00) Dollars shall be by written contract with the lowest responsible, responsive bidder pursuant to the procedures prescribed in this article; and
WHEREAS, § 3-5.210 of the Municipal Code provides for exemptions to the requirements the chapter; specifically §3-5.210 (c) Equipment, supplies or nonprofessional services are unique, available only from one (1) source, or sought to match existing equipment or supplies already in use (also known as a sole source purchase); and
WHEREAS, Arata Equipment is the only authorized regional distributors for parts for the model of trucks in the waste and recycling collection fleet.

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

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Reso No. (CM)
Meeting Date: 070924 2
for the purchase of truck parts does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.

2. The Council finds that the purchase of truck parts for solid waste collection vehicles is available from one source that meets the needs of the City (also known as a sole source purchase).

3. This purchase is exempt from the purchasing procedures of Chapter 5 of Title 3 of the Municipal Code as a sole source purchase under subdivision (c) of § 3-5.210 of the Municipal Code.

4. The Council hereby authorizes a purchase order for the purchase of truck parts to Arata Equipment Company, a corporation, in an amount not to exceed $150,000 per year for the next three (3) fiscal years 24-25, 25-26 and 26-27.

5. The Interim City Manager is hereby authorized and directed to execute said blanket purchase order for and on behalf of the City of Watsonville with minor revisions that may be approved by the Interim City Manager and the City Attorney. **************************************

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7/3/2024 9:19:26 PM
C:\Program Files\eSCRIBE\TEMP\21192396462\21192396462,,,Report - Mission Linen Uniform Rental Services .docx Agenda Report
MEETING DATE: Tuesday, July 9, 2024
TO: City Council
FROM: PUBLIC WORKS & UTILITIES DIRECTOR LINDBERG

PW&U ADMINISTRATIVE SERVICES MANAGER GORDO
SUBJECT: AUTHORIZATION TO ENTER INTO A CONTRACT WITH

MISSION LINEN FOR A NOT TO EXCEED AMOUNT OF
$150,000 FOR THREE (3) YEARS
RECOMMENDED ACTION:

It is recommended that the City Council adopt a resolution authorizing a three (3) year service agreement with Mission Linen to provide uniform rental services for various City groups.

BACKGROUND:

Requesting approval of a contract for an amount not to exceed $150,000 per year for next 3 years with Mission Linen for uniform rental services.

DISCUSSION:

Uniforms are an essential part of employee safety & protection for staff to perform their daily tasks, in addition, they promote awareness of staff while working out in the field or in City facilities. Mission Linen provides uniform rental services of regularly laundered garments for staff use while at work to over 100 City employees.

Mission Linen has been providing uniform services from 2017 to 2022. In May of 2022 the City performed a Request for Proposals for uniform services, at this time another uniform rental vendor was selected as the lowest bidder. Unfortunately, the service arrangement with this vendor was ended by mutual accord as allowed in the agreement language. Mission Linen was the second lowest bidder in May 2022, consequently staff contacted them to solicit their interest and/or willingness to provide services to the City and maintain uniform services.

STRATEGIC PLAN:

This contract is consistent with the following Strategic Plan goal:
4 – Fiscal Health
7-Efficient and Well-performing Government

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7/3/2024 9:19:26 PM
C:\Program Files\eSCRIBE\TEMP\21192396462\21192396462,,,Report - Mission Linen Uniform Rental Services .docx FINANCIAL IMPACT:

Funds for this contract are available in each group’s adopted operating budgets.

ALTERNATIVE ACTION:

No reasonable alternatives are known currently.

ATTACHMENTS AND/OR REFERENCES (If any):

A) Staff Report 05/10/2022

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5/3/2022 11:41:13 AM
C:\Program Files\eSCRIBE\TEMP\11411124094\11411124094,,,Contract Approval for Aramark Uniform Services.docx Agenda Report
MEETING DATE: Tuesday, May 10, 2022
TO: City Council
FROM: PUBLIC WORKS & UTILITIES DIRECTOR DI RENZO

ENRIQUE VASQUEZ, MUNICIPAL SERVICES OPERATIONS

MANAGER
SUBJECT: AUTHORIZATION TO ENTER A CONTRACT WITH ARAMARK

UNIFORM SERVICES, A DIVISION OF ARAMARK UNIFORM &
CAREER APPAREL GROUP, INC. FOR A NOT TO EXCEED
AMOUNT OF $145,765.62
STATEMENT OF ISSUES:

City staff requires uniform and laundry services which are utilized by various departments in the performance of their duties.

RECOMMENDED ACTION:

Staff recommends that the City Council adopt a resolution awarding a three-year contract to Aramark Uniform Services, a division of Aramark Uniform & Career Apparel Group, Inc. for uniform and laundry services, in an amount not to exceed the amount of $145,765.62 for three years; authorizing a 10% contingency for unforeseen circumstances; and authorizing the City Manager Pro Tempore to execute the Contract.

DISCUSSION:

The uniform and laundry services provided by Aramark Uniform Services are an essential part of employee safety as they provide the required apparel necessary for work in accordance with the needs of different departments. The services provided will ensure our employees have access to a steady supply of regularly laundered garments available for their required use while at work. Aramark will provide services that include towels, floor mats and, jackets, vests, pants, and shirts to over 100 employees.

The service locations are as follows:

BUILDING ADDRESS
Airport 100 Aviation Way, Watsonville, CA
Municipal Service Center 320 Harvest Drive, Watsonville, CA Library 275 Main Street, 2nd Floor, Watsonville, CA
Landfill 730 San Andreas Road, Watsonville, CA
Water Resources Center 500 Clearwater Lane, Watsonville, CA Central Offices 250 Main Street, Watsonville, CA
Attachment B

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Attachment A

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5/3/2022 11:41:13 AM
C:\Program Files\eSCRIBE\TEMP\11411124094\11411124094,,,Contract Approval for Aramark Uniform Services.docx Staff solicited formal Request for Quotations (RFQ) on December 14, 2021 and selected Aramark Uniform Services as the lowest, responsible bid in accordance with Municipal Code procedures 3-5.400.

The quotes received per the RFQ were the following:

Vendor Name Yearly Charge
Aramark $44,171.40
Mission Linen $57,698.58
Prudential Overall Supply $58,351.28
Cintas $82,875.94
STRATEGIC PLAN:

This contract is consistent with Strategic Plan Goal:
2 - Fiscal Health
FINANCIAL IMPACT:

This is a broad service contract that will cover the ongoing needs of multiple divisions within the City. As such, funds are available in each of the divisions ALTERNATIVE ACTION:

None
ATTACHMENTS AND/OR REFERENCES (If any):

None.

Attachment B

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Attachment A

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Reso No. (CM)
Meeting Date: 070924 SWZ ______ TV ______ PWU ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE AWARDING CONTRACT TO MISSION LINEN, A

CORPORATION, FOR UNIFORM RENTAL SERVICES, IN AN AMOUNT
NOT TO EXCEED $150,000 PER YEAR FOR A TERM OF THREE (3) YEARS; AND AUTHORIZING AND DIRECTING THE INTERIM CITY

MANAGER TO EXECUTE SAME
WHEREAS, § 3-5.500 of the Municipal code provides that an RFP or RFQ process is found to be an effective and efficient way to procure professional services and procurement of professional services shall be based on proposals solicited from capable professionals and be evaluated based on a combination of factors including education, training, experience and demonstrated competence and professional qualifications necessary for the satisfactory performance of the services required; and WHEREAS, § 3-5.540 of the Municipal Code provides that contracts for professional services estimated to cost more than One Hundred Thousand and no/100ths ($100,000.00) Dollars must be awarded by the Council, and that the selection will be based on demonstrated competence and on the education, training and experience and professional qualifications necessary for the satisfactory performance of the services required; and
WHEREAS, the service arrangement with the vendor awarded by contract in 2022 (Resolution No. 84-22) was ended by mutual accord; and
WHEREAS, Mission Linen was the second lowest bidder in May 2022; and WHEREAS, the Interim City Manager has recommended that the proposal from Mission Linen, in an amount not to exceed $150,000 per year, be accepted as the best response.

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

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Reso No. (CM)
Meeting Date: 070924
2 1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that adopting a Resolution awarding contract to Mission Linen, a corporation, for the Uniform Rental Services does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.

2. That the former City Manager awarded a contract to Mission Linen, for Uniform Rental Services, in an amount not to exceed $150,000 per year for a term of three (3) years, in April 2024.

3. The City Council hereby ratifies the contract awarded by the City Manager. **************************************

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Attachment A

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Attachment A

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Attachment A

Page 2 of 3 ends

Attachment A

Page 2 of 3 ends

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Attachment A

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Attachment A

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Attachment A

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7/5/2024 3:03:43 PM
C:\Program Files\eSCRIBE\TEMP\1534011208\1534011208,,,Report - Purchase Generators.docx Agenda Report
MEETING DATE: Tuesday, July 9, 2024
TO: City Council
FROM: PUBLIC WORKS & UTILITIES DIRECTOR LINDBERG

ASST PUBLIC WORKS & UTILITIES DIRECTOR GREEN
SUBJECT: AUTHORIZE CITY MANAGER TO NEGOTIATE AND EXECUTE A

PURCHASE ORDER FOR PORTABLE GENERATOR
PROCUREMENT IN AN AMOUNT NOT TO EXCEED $200,000,

PAID FOR BY THE SOLID WASTE ENTERPRISE FUND AND

SEWER ENTERPRISE FUND
RECOMMENDED ACTION:

Authorize City Manager to negotiate and execute a purchase order for the procurement of two portable generators from Volvo Construction Equipment & Service, in an amount not to exceed $200,000.

BACKGROUND:

The Sewer Collections and Solid Waste divisions require the replacement of existing portable generators that have reached the end of their useful service life.

DISCUSSION:

The sewer collections division utilizes a 100 kW portable diesel generator for emergency responses required at the City’s sewer lift stations. The landfill also utilizes a portable diesel generator of the same size to provide emergency backup power to the landfill equipment in the case of a power outage. Both generators are reaching the end of their serviceable lifespan, requiring replacement.

Staff obtained a quote to purchase two Bobcat (formerly Doosan) generators from the low bidder, Volvo Construction Equipment & Service, who was awarded the contract from the competitively bid process vendor Sourcewell. Sourcewell is a National Joint Powers Association (NJPA). The NJPA contract number is 020923-CEC. The City of Watsonville is a Sourcewell Member, number 18533.

Staff therefore recommends that City Council authorize City Manager to execute a purchase order with Volvo Construction Equipment & Services for an amount not to exceed $200,000. This amount will cover the quoted cost for the two generators, which is $189,143.87, plus 6% contingency budget to account for adjustments to freight or tax at the time of shipping.

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7/5/2024 3:03:43 PM
C:\Program Files\eSCRIBE\TEMP\1534011208\1534011208,,,Report - Purchase Generators.docx STRATEGIC PLAN:

This purchase is consistent with strategic plan goal:
2-Infrastructure & Environment
FINANCIAL IMPACT:

Each generator will be paid out of the appropriate enterprise fund as follows:

There is sufficient budget available in the Solid Waste Enterprise Fund for the landfill generator in budget account 915-7855-14643.

There is sufficient budget available in the Sewer Enterprise Fund for the sewer collections generator in budget account 911-7813-15112.

ALTERNATIVE ACTION:

No reasonable alternatives are known at this time.

ATTACHMENTS AND/OR REFERENCES (If any):
1) Quote from Volvo Construction Equipment & Services

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Volvo Construction Equipment & Services
1944 Marina Blvd
San Leandro, CA 94577
Ph: (510) 357-9131
Fx: (510) 483-7287
X
X Net due 30 days
Year Hrs
2024 5 SUPER STANDARD,PG125WCU-3A-T4F
36% Sourcewell Discount
SUPER STANDARD,PG125WCU-3A-T4F
36% Sourcewell Discount
Factory and/or Delivery Freight
Pre-Delivery Inspection Charge (PDI)
Standard 12 3000 Hours
Finance Details:

Notes:

Scott Nadell
Lead time 12-15 Weeks from Reciept of Order
Customer
Standard Full Machine Warranty is for 1yr and runs concurrently with extended warranty. 1YR
$ 4,000.00
$ -
$ -
$ 162,792.54
“When operated in California, any off-road diesel vehicle may be subject to the California Air Resources Board In-Use Off-Road Diesel Vehicle Regulation. It therefore could be subject to retrofit or accelerated turnover requirements to reduce emissions of air pollutants. For more information, please visit the California Air Resources Board website at: http://www.arb.ca.gov/msprog/ordiesel/ordiesel.htm.” Cash Sale
Preventative Maintenance Contract:

Hours are estimated
PO No. 0
Sales Tax %
$ -
$ -
$ 7,700.00
Months $ 162,792.54
Non-Taxable Items:

TBD
Watsonville, CA 95076
(831) 818-8101
Contact:

TERMS:

VCES San Leandro
[email protected]
Invoice to:

Net due on receipt
PG125WCU

COLLECT
Installment plan
Sales Rep:

City of Watsonvillle
Contact:

Address: 500 Clearwater Lane
Ruben Tellez
Scott Nadell (Mobile: 619-778-6039)
Phone:

Ruben Tellez
500 Clearwater Lane
Watsonville, CA 95076
Address:
(831) 818-8101
FOB Point of Origin - Ship Via: Customer Delivery Address PREPAID Fax/Email:

Phone:

Fax/Email:

Ship to:
$ -
Standard warranty covers the full machine, bumper to bumper Warranty:
$ -
Subtotal:
$ (45,785.40)
Make Model Serial No.

Bobcat
Description
TBD $ 127,181.67
Unit ID
Total Price:

Expires:

Notes:

THIS ORDER NOT ACCEPTED OR BINDING UNTIL APPROVED BY AN OFFICER OF VOLVO CONSTRUCTION EQUIPMENT & SERVICES Freight and PDI is for TWO units Quote valid for 30 days Customer
Signature:

Date:

Machine subject to prior sale
Date:

Signature:
03/06/24
Title: Government Sales
VCES
Title:

THIS DOCUMENT IS A CONTRACT INCLUDING IMPORTANT TERMS AND CONDITIONS. I HAVE REVIEWED AND ACCEPT ALL TERMS AND CONDITIONS, INCLUDING WITHOUT LIMITATION, THOSE ON THE 2ND PAGE OF THIS CONTRACT. I HAVE READ THIS CONTRACT AND AUTHORIZE THE ENTRY OF THE ABOVE ORDER SUBJECT TO THE TERMS AND CONDITIONS HEREIN.

Tax exemption req. re-sellers permit
Downpayment/Credit:
$ -
$ -
Doc Fees:
$ (45,785.40)
$ -
Financing (see below)
$ -
$ -
$ -
Equipment Total:
$ -
Net Price:
$ 127,181.67
$ -
$ -
Total Price
03/06/24
City of Watsonvillle
[email protected]
Proposal/Retail Order

ACCEPTED DECLINED
SOURCEWELL CONTRACT 020923-CEC
SOURCEWELL MEMBER#: 18533
$ 189,143.87
$ 14,651.33
Trade-in Credit:
$ 11,700.00
Sales Tax $

9.000%
$ 174,492.54
Attachment 1

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Option No. Description
SUPER STANDARD,PG125WCU-3A-T4F
Unit Specifications/Options
Attachment 1

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Reference Sales Order No: TBD
Customer's Initials:

City of Watsonvillle
TERMS AND CONDITIONS – EQUIPMENT SALE

1. General: The Terms and Conditions of Sale outlined herein shall apply to the sale by Volvo Road Machinery, Inc. d/b/a Volvo Construction Equipment Services (hereinafter referred to as Company) of products, equipment and parts relating thereto (hereinafter referred to as Equipment). Unless prior written agreement is reached, it shall be understood that the Company’s proceeding with any work shall be in accordance with the terms and conditions outlined herein.

The Company hereby gives notice of its objection to any additional or different terms included in any purchase order or other form submitted by the Purchaser. Such additional or different terms shall not be included in this contract. The Company will comply with applicable laws and regulations as they may apply to the manufacture of the Equipment. Compliance with any local governmental laws or regulations relating to the location, use or operation of the Equipment, or its use in conjunction with other equipment, shall be the sole responsibility of the Purchaser.

2. Title and Risk of Loss: Title and risk of loss or damage to the Equipment shall pass to the Purchaser upon tender of delivery F.O.B. manufacturing facility unless otherwise agreed upon by the parties, except that a security interest in the Equipment shall remain in the Company, regardless of mode of attachment to realty or other property, until full payment has been made therefor. Purchaser agrees upon request to all things and acts necessary to perfect and maintain such security interest and shall protect Company’s interest by adequately insuring the Equipment against loss or damage from any cause wherein the Company shall be named as an additional insured.

3. Assignment: Neither party shall assign or transfer this contract without the prior written consent of the other party. The Company however shall be permitted to assign or transfer, without the prior written consent of the Purchaser, the Company’s right to receive all or any portion of the payment due from the Purchaser under this contract.

4. Delivery and Delays: Delivery dates shall be interpreted as estimated and in no event shall dates be construed as falling within the meaning of “time is of the essence”. The Company shall not be liable for any loss or delay due to war, riots, fire, flood, strikes, or other labor difficulty, acts of civil or military authority including governmental laws, order, priorities or regulations, acts of the Purchaser, embargo, car shortage, damage or delay in transportation, inability to obtain necessary labor or materials from usual sources, faulty forgoings or castings, or other causes beyond the reasonable control of the Company. In the event of delay in performance due to any such cause, the date of delivery or time for completion will be adjusted to reflect the actual length of time lost by reason of such delay. The Purchaser’s receipt of Equipment shall constitute a waiver of any claims for delay.

5. Taxes: The price does not include any present or future Federal, State, or local property, license, privilege, sale, use, excise, gross receipts or other like taxes or assessments which may be applicable to, measured by, or imposed upon or result from this transaction, or any services performed in connection therewith. Such taxes will be itemized separately to Purchaser, who shall make prompt payment to the Company. The Company will accept a valid exemption certificate from Purchaser, if applicable. If such exemption certificate is not recognized by the government taxing authority involved, Purchaser agrees to promptly reimburse the Company for any taxes covered by such exemption certificate which the Company is required to pay.

6. Set Offs: Neither Purchaser nor any affiliated company or assignee shall have the right to claim compensation or to set off against any amounts which become payable to the Company under this contract or otherwise.

7. Patents: The Company shall defend any suit or proceeding brought against the Purchaser and shall pay any adverse judgment entered therein so far as such suit or proceeding is based upon a claim that the use of the Equipment manufactured by the Company, and furnished under this contract, constitutes infringement of any patent of the United States of America, provided the Company is promptly notified in writing and given the authority, information and assistance by Purchaser for defense of same; and the Company shall, at its option, procure for the Purchaser the right to continue to use such Equipment, modify it so that it becomes non-infringing, replace the same with non-infringing equipment, or remove such Equipment and refund the purchase price. The foregoing shall not be construed to include any agreement by the Company to accept any liability whatsoever with respect to patents for inventions including more than the Equipment furnished hereunder, or patents for methods and processes to be carried out with the aid of the Equipment. The foregoing states the entire liability of the Company with regard to patent infringement.

8. Warranty: The Company warrants that new Equipment manufactured by it and delivered hereunder will be free of defects in material and workmanship for the periods of time specified in the applicable warranties of the Company for such Equipment, which are incorporated herein by reference.

The Purchaser shall be obligated to promptly report any failure to conform to the applicable warranty to the Company in writing within the applicable warranty period, whereupon the Company shall, at its option, correct such nonconformity by suitable repair to such Equipment or furnish a replacement part F.O.B. point of shipment, provided the Purchaser has stored, installed, maintained and operated such Equipment in accordance with good industry practices and has complied with specific recommendations of the Company. The Company shall not be liable for any repairs, replacements, or adjustments to the Equipment or any costs of labor performed by the Purchaser or others without the Company’s prior written approval. The effects of corrosion, erosion and normal wear and tear are specifically excluded from the Company’s warranty. Performance warranties, if any, are limited to those specifically stated within the Company’s proposal. Unless responsibility for meeting such performance warranties is limited to specified shop or field tests, the Company’s obligation shall be to correct in the manner and for the period of time provided in the applicable warranty. Accessories or equipment furnished by the Company, but manufactured by others, including, but not limited to, engines, tires, batteries, engine electrical equipment, hydraulic transmissions, and carriers, shall carry whatever warranty the manufacturers have conveyed to the Company and which can be passed on to the Purchaser. THE COMPANY MAKES NO OTHER WARRANTY OR REPRESENTATION OF ANY KIND WHATSOEVER, EXPRESSED OR IMPLIED, EXCEPT THAT OF TITLE, AND ALL IMPLIED

WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE HEREBY DISCLAIMED. Correction by the Company of nonconformities whether patent or latent, in the manner and for the period of time provided above, shall constitute fulfillment of all liabilities of the Company for such nonconformities, whether based on contract, warranty, negligence, indemnity, strict liability or otherwise with respect to or arising out of such Equipment. The Purchaser shall not operate Equipment which is considered to be defective, without first notifying the Company in writing of its intention to do so. Any such use of Equipment will be at the Purchaser’s sole risk and liability. ALL USED EQUIPMENT IS SOLD “AS IS, WITH ALL FAULTS.”

9. Limitations of Liability: THE REMEDIES OF THE PURCHASER SET FORTH HEREIN ARE EXCLUSIVE, AND THE TOTAL LIABILITY OF THE COMPANY WITH RESPECT TO THIS CONTRACT OR THE EQUIPMENT AND SERVICES FURNISHED HEREUNDER, IN

CONNECTION WITH THE PERFORMANCE OR BREACH THEREOF, OR FROM THE

MANUFACTURE, SALE, DELIVERY, INSTALLATION, REPAIR OR TECHNICAL DIRECTION

COVERED BY OR FURNISHED UNDER THIS CONTRACT, WHETHER BASED ON

CONTRACT, WARRANTY, NEGLIGENCE, INDEMNITY, STRICT LIABILITY OR OTHERWISE,

SHALL NOT EXCEED THE PURCHASE PRICE OF THE UNIT OF EQUIPMENT UPON WHICH SUCH LIABILITY IS BASED. THE COMPANY AND ITS SUPPLIERS SHALL IN NO EVENT BE LIABLE TO THE PURCHASER, ANY SUCCESSORS IN INTEREST OR ANY BENEFICIARY OR ASSIGNEE OF

THIS CONTRACT FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL OR

PUNITIVE DAMAGES ARISING OUT OF THIS CONTRACT OR ANY BREACH THEREOF, OR

ANY DEFECT IN, OR FAILURE OF, OR MALFUNCTION OF THE EQUIPMENT HEREUNDER,

WHETHER BASED UPON LOSS OF USE, LOST PROFITS OR REVENUE, INTEREST, LOST

GOODWILL, WORK STOPPAGE, IMPAIRMENT OF OTHER GOODS, LOSS BY REASON OF

SHUTDOWN OR NON-OPERATION, INCREASED EXPENSES OF OPERATION, COST OF PURCHASE OF REPLACEMENT POWER OR CLAIMS OF PURCHASER OR CUSTOMERS OF

PURCHASER FOR SERVICE INTERRUPTION, WHETHER OR NOT SUCH LOSS OR DAMAGE

IS BASED ON CONTRACT, WARRANTY, NEGLIGENCE, INDEMNITY, STRICT LIABILITY OR OTHERWISE.

10. Nuclear Liability: In the event that the Equipment sold hereunder is to be used in a nuclear facility, the Purchaser hereby releases and agrees to indemnify the Company and its suppliers for any nuclear damage, including loss of use, in any manner arising out of a nuclear incident, whether alleged to be due in whole or in part to the negligence or otherwise of the Company or its suppliers.

11. Governing Law: The rights and obligations of the parties shall be governed by the laws of the State of North Carolina excluding its conflicts of law principles. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this contract.

12. Execution: The Company shall not be bound by any contract or any modification thereto until approved in writing by an officer of the Company. The contract, when so approved, shall supersede all previous communications, either oral or written, with respect to the subject matter thereof.

TERMS AND CONDITIONS – EQUIPMENT RENTAL

1. Lessee agrees to rent the Equipment for the term and at the stipulated rental rates and to pay such rental when due irrespective of any claims, demands, set-offs, actions, suits or proceedings, that it may have or assert against Lessor.

2. From the time the Equipment is shipped from Lessor’s facility, until it is returned to Lessor’s designated facility, Lessee shall: (i) use the Equipment solely in the conduct of its business; (ii) use and preserve the Equipment in a careful, proper and lawful manner; (iii) at its own expense keep the Equipment in good repair, condition and working order and pay the cost of any and all parts and labor required for that purpose, using only parts manufactured or furnished by the manufacturer of the Equipment; (iv) not make any material alterations to the Equipment; (v) promptly notify Lessor of any loss of or damage to the Equipment; and (vi) assume the entire risk of loss of and damage to the Equipment, and injury or death to persons, from any cause whatsoever arising under this agreement.

3. Lessor may inspect the Equipment at all reasonable times.

4. Lessee shall report and pay to the appropriate authority any and all license fees, registration fees, assessments, charges and taxes, including penalty and interest, assessed against the Equipment due to rental or use thereof and reimburse Lessor upon request for any such amounts assessed against Lessor by reason of the rental or use of the Equipment, except for taxes payable in respect to Lessor’s income.

5. Lessee shall keep the Equipment at the address specified in this agreement, and not remove it therefrom without the Lessor’s prior written consent. Lessee shall not assign, sublet or pledge any of the Equipment or any interest in this agreement, and any attempt to do so shall constitute an act of default hereunder.

6. The Equipment shall at all times remain personal property of Lessor regardless of the degree of its annexation to any real property and shall not by reason of any annexation become a part thereof. Lessor shall retain a security interest in the Equipment in the event that the rental of the Equipment is held by a court to constitute a lease intended for security and Lessee agrees upon request to do all things and acts necessary to perfect and maintain such security interest.

7. Lessee, at its own expense, will maintain all risk insurance coverage on the Equipment for its full replacement value, and also such other insurance as Lessor may require, in amounts and under policies acceptable to Lessor, with loss payable to Lessee and Lessor as their respective interests may appear. Upon request of Lessor, Lessee shall furnish certificates of insurance evidencing such coverage. Each policy shall provide for thirty (30) days written notice to Lessor of the cancellation or material modification thereof.

8. Lessee shall promptly notify Lessor of each accident involving any Equipment, including time, place, nature of the accident or damage, and such other information as may be known; advise Lessor of all correspondence, papers, notices, or documents received; aid in the investigation and defense of all such claims; and assist in the recovery of damages, from third parties liable therefor.

9. In the event of damage to or loss, destruction or theft of the Equipment or any part thereof, Lessee shall pay to Lessor the full value of the Equipment at the time of such occurrence except to the extent that Lessor receives proceeds of insurance covering such Equipment. Such payment may, at Lessor’s option, be applied (i) to repair such Equipment, or (ii) to afford Lessee a pro rata reduction in the rental payments attributable to the lost or damaged Equipment, or (iii) to replace the Equipment with equipment of the same make and the same or later model.

10. LESSEE UNDERSTANDS THAT LESSOR MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE

EQUIPMENT, AND ALL IMPLIED WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF

MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE HEREBY DISCLAIMED.

11. LESSOR SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR

CONSEQUENTIAL DAMAGES OR LOSS (I) RESULTING FROM THE NON-DELIVERY, DELIVERY, MANUFACTURE, INSTALLATION, USE OR OPERATION OF THE EQUIPMENT,

OR FROM ANY DEFECTS IN, FAILURES, MALFUNCTIONS, REPAIRS, REPLACEMENTS OR

ALTERATIONS THEREOF, OR (II) WITHOUT LIMITATION, ANY OTHER LIABILITY OF ANY NATURE WITH RESPECT TO THE EQUIPMENT, OR THIS AGREEMENT OR ANY BREACH THEREOF OR ARISING OUT OF NEGLIGENCE. FURTHERMORE, LESSEE SHALL

INDEMNIFY AND HOLD HARMLESS LESSOR, ITS DIRECTORS, OFFICERS, EMPLOYEES,

AGENTS AND REPRESENTATIVES, FROM ANY AND ALL CLAIMS, ACTIONS, SUITS,

PROCEEDINGS, COSTS, EXPENSES, DAMAGES, AND LIABILITIES, INCLUDING ATTORNEYS’ FEES, ARISING OUT OF, CONNECTED WITH, OR RESULTING FROM, THIS AGREEMENT OR THE BREACH THEREOF.

12. Upon termination of this agreement, Lessee will, at its own cost and expense, promptly return the Equipment to Lessor in the same condition as received, reasonable wear and tear and normal depreciation excepted.

13. If Lessee breaches its obligation to pay rentals when due or any of the other terms of this agreement, or if Lessee becomes insolvent or ceases to do business as a going concern, or if the Equipment or any part of it is abused, illegally used or misused, or if Lessee makes an assignment for the benefit of creditors, or if a petition in bankruptcy or for arrangement or reorganization is filed by or against Lessee, or if property of Lessee is attached or a receiver is appointed for Lessee or any of Lessee’s’ property, or if Lessee is in default pursuant to the provisions of any other agreement by and between Lessor and Lessee, or whenever Lessor may deem the rentals or Equipment insecure, the Lessee hereby authorizes Lessor to enter, with or without legal process, any premises where the Equipment may be and take possession thereof, or at the request of Lessor, Lessee will assemble the Equipment and make the Equipment available to the Lessor, in whole or in part as requested, at such place or places designated by the Lessor. All remedies herein are cumulative and any or all such remedies may be exercised in lieu of or in addition to any remedies at law, in equity or under statute. If after default this agreement is placed with an attorney for collection of unpaid rentals or enforcement of any other right or remedy of Lessor, Lessee shall pay reasonable attorney’s fees. Waiver of any default shall not be a waiver of any other or subsequent default.

14. All notices required to be given hereunder shall be in writing and shall be deemed adequately given if sent by registered or certified mail to the other party at the registered address of such other party, or at such other place as either party may designate in writing to the other party.

15. The rights and obligations of the parties shall be governed by the laws of the State of North Carolina excluding its conflicts of law principles.

16. This document and any attachments hereto constitute the entire agreement of the parties with respect to the subject matter hereof. No variation or modification of this document and no waiver of any of its provisions or conditions shall be valid unless in writing and signed by both parties.

Attachment 1

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Reso No. (CM)
Meeting Date: 070924 SWZ ______ TV ______ PWU ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE AUTHORIZING THE PURCHASE OF TWO PORTABLE

GENERATORS FROM VOLVO CONSTRUCTION EQUIPMENT &

SERVICES, THROUGH THE PURCHASING AUTHORITY OF
SOURCEWELL, SOURCEWELL CONTRACT NUMBER 020923-CEC , IN
AN AMOUNT NOT TO EXCEED $200,000; AND AUTHORIZING AND

DIRECTING CITY MANAGER TO NEGOTIATE AND EXECUTE

PURCHASE ORDER INCLUDING ANY EXTENSIONS OR

AMENDMENTS THEREOF IN ORDER TO IMPLEMENT CONTRACT
(FUNDED FROM THE SOLID WASTE ENTERPRISE AND SEWER

ENTERPRISE FUND)
WHEREAS, bidding requirements and a reference to procedures for the purchase of supplies, equipment, and non-personal contractual services and the sale of personal property are set forth in Chapter 3-5 of the Watsonville Municipal Code and Section 3.2.1 of the City of Watsonville Administrative Rules and Regulations; and WHEREAS, subdivision (e) of § 3-5.210 exempts purchases made cooperatively with one (1) or more units of government through cooperative purchasing programs substantially the same as the City of Watsonville; and
WHEREAS, the City received a quote from Volvo Construction Equipment & Services, member of Sourcewell, through Sourcewell Contract Number 020923-CEC, for the purchase of two (2) portable generators, in an amount of $200,000; and WHEREAS, Sourcewell is a National Joint Powers Association (NJPA) that performs competitive procurements in a manner consistent with public purchasing requirements to allow public agencies to quickly procure equipment and materials.

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

1. Adopting a resolution approving the purchase of equipment does not meet CEQA’s definition of a “project,” because the action does not have the potential for

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Reso No. (CM)
Meeting Date: 070924 2
resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

2. This purchase is exempt from the purchasing procedures of Chapter 5 (Purchasing Procedures) of Title 3 (Finance) of the Watsonville Municipal Code as a purchase made cooperatively with one (1) or more units of government under subdivision (e) of § 3-5.210 of the Municipal Code.

3. The Council hereby authorizes the purchase of two (2) portable generators from Volvo Construction Equipment & Services, through the purchasing authority of Sourcewell, through Sourcewell Contract Number 020923-CEC, in an amount not to exceed $200,000 funded by the Solid Waste Enterprise Fund and Sewer Enterprise Fund.

4. That the City Manager is hereby authorized and directed to negotiate and execute said Purchase Order contract for and on behalf of the City of Watsonville, including any extensions or amendments thereof in order to implement this purchase. ********************************

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7/5/2024 3:05:38 PM
C:\Program Files\eSCRIBE\TEMP\1553580353\1553580353,,,Report - Purchase of Unleaded Aviation Fuel.docx Agenda Report
MEETING DATE: Tuesday, July 9, 2024
TO: City Council
FROM: AIRPORT DIRECTOR WILLIAMS

AIRPORT OPERATIONS MANAGER ROSAS
SUBJECT: APPROVAL OF MUNICIPAL AIRPORT PURCHASE ORDER FOR

SOLE SOURCE VENDOR OF UNLEADED AVIATION FUEL
RECOMMENDED ACTION:

It is recommended the City Council approve and authorize the Municipal Airport to issue a sole source purchase order, in the amount of $250,000.00, with Swift Fuels, LLC., of West Lafayette, Indiana to purchase unleaded aviation fuel for resale. The purchase order is valid effective July 1, 2024, expires June 30, 2025, and is funded via the Airport Enterprise Fund fuel expense account.

BACKGROUND:

The Federal Aviation Administration (FAA), Environmental Protection Agency (EPA) and industry have partnered to remove lead from aviation gasoline (AvGas) as AvGas emissions have become the largest contributor to the relatively low levels of lead emissions produced in this country. Over the last two- and one-half years the Municipal Airport has observed AvGas fuel purchases have been reduced 20% since the introduction of unleaded fuel at the airport.

DISCUSSION:

Owners and operators of more than 167,000 piston-engine aircraft operating in the United States rely on aviation gasoline (AvGas) to power their aircraft. AvGas is the only remaining lead-containing transportation fuel. Although lead in AvGas prevents engine damage, lead is a toxic substance that can be inhaled or absorbed in the bloodstream.

The FAA, EPA and industry are partnering to remove lead from AvGas. AvGas emissions have become the largest contributor to the relatively low levels of lead emissions produced in this country.

Over the last eight years the Municipal Airport has continued to monitor the development of high octane, unleaded fuel formulations. The result of these efforts has identified Swift Fuels, LLC as a supplier of operationally safe alternatives to leaded AvGas. Swift Fuels, LLC is the sole provider of unleaded aviation fuel that meets the American Society for Testing and Materials (ASTM) in the United States. There are no other sources for

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7/5/2024 3:05:38 PM
C:\Program Files\eSCRIBE\TEMP\1553580353\1553580353,,,Report - Purchase of Unleaded Aviation Fuel.docx unleaded aviation fuel meeting the ASTM standard. Swift Fuel UL94 has been approved by the FAA as an authorized fuel for certain models of piston powered aircraft.

The City of Watsonville is uniquely positioned to continue to provide unleaded aviation fuel for sale to based flight schools, aircraft owners, operators and transient pilots. The Municipal Airport will continue to offer AvGas as an option given the substantial number of aircraft that require such fuel.

The introduction of unleaded aviation fuel at the airport is estimated to reduce AvGas fuel purchases by as much as 20%.

STRATEGIC PLAN:

Approving the purchase order, and the subsequent purchase and resale of Swift Fuels, supports the Municipal Airport’s commitment to lessen general aviation’s environmental impact on the Airport, community and the City.

FINANCIAL IMPACT:

The fiscal impact of this proposed purchase order is net budget neutral, as the unleaded fuel purchased will substitute commensurate AvGas purchases for FY2024-2025.

ALTERNATIVE ACTION:

The City Council may choose not to issue the purchase order. Leaded AvGas sales will not be reduced.

ATTACHMENTS AND/OR REFERENCES (If any):

None.

Page 389 of 661 ends

Reso No. (CM)
Meeting Date: 071124 SWZ ______ TV ______ WMA ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING SOLE SOURCE PURCHASE FROM SWIFT
FUELS, LLC., A LIMITED LIABILITY COMPANY, FOR THE PURCHASE

OF UNLEADED AVIATION FUEL, IN AN AMOUNT NOT TO EXCEED
$250,000 FOR FISCAL YEAR 2024-2025 (FUNDED FROM THE

AIRPORT ENTERPRISE FUND)
WHEREAS, bidding requirements for the purchase of supplies, equipment and nonpersonal contractual services and the sale of personal property are set forth in Chapter 5 of Title 3 of the Municipal Code; and
WHEREAS, subdivision (c) of § 3-5.210 exempts supplies that is unique, available only from one (1) source, or sought to match existing equipment or supplies already in use (also known as a sole source purchase); and
WHEREAS, Swift Fuels, LLC., is the sole provider of unleaded aviation fuel in the United States, there are no other sources for unleaded aviation fuel.

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

1. Adopting a Resolution approving sole source purchase of aviation fuel does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

2. The Council finds that the purchase of unleaded aviation fuel is available from one source and is approved by the Federal Aviation Administration (FAA) as an authorized fuel for certain models of piston powered aircraft (also known as a sole source purchase).

3. This purchase is exempt from the purchasing procedures of Chapter 5 of

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Reso No. (CM)
Meeting Date: 070924 2
Title 3 of the Municipal Code as a sole source purchase under subdivision (c) of § 3-5.210 of the Municipal Code.

4. That this purchase from Swift Fuels, LLC., a limited liability company, in an amount not to exceed $250,000 for Fiscal Year 2024-2025, is hereby authorized.

5. The Sales Agreement between the City of Watsonville and Swift Fuels, LLC., a limited liability company, a copy of which is on file with the City Clerk, is hereby approved.

6. The City Manager is hereby authorized and directed to execute said Agreement for and on behalf of the City of Watsonville with minor revisions that may be approved by the City Manager and the City Attorney.
********************************

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7/5/2024 3:08:21 PM
C:\Program Files\eSCRIBE\TEMP\1581880855\1581880855,,,RESOLUTION APPROVING A 3-YEAR LEASE BETWEEN JOBY AVIATION COLLEGE, INC. AND THE CITY OF WATSONVILLE.docx
Agenda Report
MEETING DATE: Tuesday, July 9, 2024
TO: City Council
FROM: AIRPORT DIRECTOR WILLIAMS

ADMINISTRATIVE ANALYST AGUADO
SUBJECT: APPROVAL OF A THREE-YEAR LEASE TO JOBY AVIATION COLLEGE, INC. FOR PROPERTY LOCATED AT 170 AVIATION WAY
RECOMMENDED ACTION:

It is recommended the City Council approve a three (3) year aeronautical commercial lease for Airport property at 170 Aviation Way. Effective date is July 15, 2024, ending July 14, 2027.

BACKGROUND:

Joby Aviation College, Incorporated, is a subsidiary of Joby Aviation, a venture-backed aviation company, developing an electric vertical takeoff and landing (eVTOL) aircraft that it intends to operate as an air taxi service. Joby Aviation is headquartered in Santa Cruz, California, and has offices in San Carlos and Marina, California; and Munich, Germany. Joby Aviation College Incorporated is a Public Benefit Corporation whose mission is to remove barriers and increase access to aviation education and careers.

DISCUSSION:

Staff has negotiated terms for a monthly lease payment of Five Thousand Four Hundred Sixteen Dollars and Zero Cents ($5,416.00), approximately $0.75 per square foot per month for 6,709 square feet of office, hangar, and storage space; approximately $0.10 per square foot per month for 3,840 square feet of dedicated ramp space. As is standard airport leasehold practice the rent will adjust in July of each year in accordance with the consumer price index.

STRATEGIC PLAN:
2-Infrastructure & Environment
FINANCIAL IMPACT:

The Airport Enterprise Fund receives revenue during the lease term. There will be on-going positive financial impacts as part of the airport’s economic goals and objectives.

ALTERNATIVE ACTION:

Alternatives include not approving the lease which would result in property vacancy.

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Page 2 of 2 ends

None.

Page 393 of 661 ends

1 Reso No. ______ (CM)
Meeting Date: 070924 SWZ ______ TV ______ WMA ______
RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WATSONVILLE APPROVING A THIRTY-SIX (36) MONTH LEASE

BETWEEN THE CITY OF WATSONVILLE AND JOBY AVIATION
COLLEGE, INC. FOR THE USE OF CITY OWENED PROPERTY
LOCATED AT 170 AVIATION WAY, WATSONVILLE, CALIFORNIA,
COMMENCING ON JULY 15, 2024, AND ENDING ON JULY 14, 2027;

AND AUTHORIZING AND DIRECTING THE CITY MANAGER TO

EXECUTE SAME

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. That the four-year Lease, dated as of July 15, 2024, between the City of Watsonville and Joby Aviation College, Inc. for the use of City-owned property located at 170 Aviation Way, Watsonville, commencing on July 15, 2024, and ending on July 14, 2027, a copy of which Lease is attached hereto and incorporated herein by this reference, is fair and equitable and is hereby approved.

2. That the City Manager be and is hereby authorized and directed to execute such Lease for and on behalf of the City of Watsonville. ************************************

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P:\FORMS\AGREEMENT - ROUTING FORM UPDATED DECEMBER 2020.DOCX

CITY MANAGER /CITY ATTORNEY

SIGNATURE REQUEST ROUTING FORM
Include insurance documents, signed agreements, and all relevant documentation.

All documents must be signed by contractor/lessee and in Munis (if applicable) prior to routing to City Clerk.

Request:
 City Manager Signature  City Attorney Review/Approval  Notarization  Munis Approval NOT REQUIRED  IT Reviewed (if applicable) – THIS CONTRACT INVOLVES TECHNOLOGY, AN EMAIL FROM THE IT DIRECTOR APPROVING THE CONTRACT MUST ACCOMPANY THIS FORM.

All documents routed for signatures must be approved by Department Head.

Department Head Approval: _____________________________________ Date:_____________________ Signature
To be completed by initiating department: (PLEASE COMPLETE ENTIRELY) Staff Responsible:____________________ Department:________________________ Phone Ext: ___________ Contractor/Vendor Name: ______________________________________________________________________ Project Title: ________________________________________________________________________________ Original Contract Amount: $____________________ Changer Order/Amendment No(s) ____________________ Amendment Amount $ _____________________ Cumulative Total $____________________________________ Funding Source (Name of Acct. & Enterprise)______________________________________________________ Budget Account No(s): ________________________________________________________________________ Resolution No. (if any): _____________________ MUNIS Contract No. (if applicable): ______________________  Document is within CM signature authority up to $100,000 (cumulative) for professional services or Public projects meeting the amount set forth in subdivision (b) of California Public Contract Code Section 22032, except as otherwise provided by State legislation, the project shall be let to contract by formal bidding procedure.
 Insurance is up to date and included.
 (For Bids only) DIR Extract Form has been filled and attached (due within 5 days of award of contract by Council or within 5 days from City Manager signature of Quick Bid)  This is a form agreement prepared by City Attorney’s Office. (See http://intranet.ci.watsonville.ca.us/node/303)
 No changes were made; or
 Changes are described AND redlined version is attached.  This is not a form agreement prepared by City Attorney’s Office.

Previously prepared or reviewed by: ___________________________________  $10,000 to $100,000 complete memo stating quotes obtained, include names and amounts, if did not obtain any, explain reasons pursuant to WMC 3-5.530.  Sole Source (attach memo explaining reasons for sole source or list any other exemptions pursuant to (WMC 3-5.210)).

Description of project, scope of work or purchase (must be detailed, incomplete or deficient statements will be sent back):
___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________  Consultant Required to File FPPC Form 700 (Statement of Economic Interests) Alexandra Aguado Airport 3575 Joby Aviation College, Inc. Three-year Lease between Joby Aviation College, Inc. and City of Watsonville Three-year lease between Joby Aviation College, Inc, and City of Watsonville for property located at 170 Aviation Way.

DocuSign Envelope ID: BE19FEEE-6E75-4464-88D6-AECDA70C461E 7/3/2024 | 2:10 PM PDT
In Process

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LEASE BETWEEN CITY OF WATSONVILLE AND JOBY AVIATION COLLEGE, INC.

THIS REAL PROPERTY LEASE, "Lease", is made and entered into to be effective July 15, 2024, by and between the CITY OF WATSONVILLE, a municipal corporation, hereafter called "City" or "Landlord", and JOBY AVIATION COLLEGE, INC., hereafter called "Tenant." THE PARTIES AGREE AS FOLLOWS:

1. Premises.

Landlord does hereby rent and Tenant does hereby hire and take from Landlord that certain real property and improvements, commonly known and referred to as 170 Aviation Way, Watsonville, County of Santa Cruz, California, which consists of six thousand seven hundred nineteen (6,719) square feet, plus three thousand eight hundred forty (3,840) square feet of ramp space and a three thousand six hundred (3,600) square foot space for construction and use of a rotary wing/powered lift parking area (collectively, the "Premises"). The Premises areas are outlined in yellow on Exhibit "A". The tenant also has the right of ingress and egress to such Premises.

2. Term
INITIAL TERM.

The term of this Lease shall be thirty-six (36) months, with Occupancy commencing on July 15, 2024 and expiring on July 14, 2027, hereafter "Lease Term." Thereafter, this lease may be renewed upon mutual agreement of both parties. Should the lease be renewed for subsequent terms, Rent for any renewal may only be increased from the previous lease term by not more than the change in the Price Index for San Francisco-Oakland-Hayward, CA, all times, for the then immediately preceding 12-month period, as published by the US Government. This Agreement may be terminated at any time upon mutual written agreement of all of the Parties.

3. Rent.

WHERE PAID.

Notwithstanding any other provision of this Lease, all rents shall be paid by check payable to the City of Watsonville, to the Finance Department by delivering or mailing to Finance Department, City of Watsonville, 250 Main Street, Watsonville, California 95076, or by other mutually agreed-upon payment method. Said rent payment shall be due on the first (1st) day of each and every month during the Lease Term. Rent not received by the tenth (10th) of the month shall be assessed a ten percent (10%) late payment penalty. If commencement is not the first of the month, or if termination is not the last day of the month, rent will be prorated on a monthly basis for the fractional month during the month which this Lease commences or terminates. Upon termination other than for default, prepaid rent allocable to any period on or after the termination date shall be refunded.

OCCUPANCY LEASE TERM.

The agreed rent is Five Thousand Four Hundred Sixteen Dollars and Zero Cents ($5,416.00) per month (approximately $0.75 per square foot per month for 6,709 square feet of office, hangar, and storage space; approximately $0.10 per square foot per month for 3,840 square feet of dedicated ramp DocuSign Envelope ID: BE19FEEE-6E75-4464-88D6-AECDA70C461E In Process

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space). Tenant and Landlord agree to this rent without regard to whether per square foot rent is more or less than the prescribed amounts above (i.e. a rounding error).

4. Use.

The leased Premises shall be used to engage in the following purposes and such purposes only:
(a) To engage in Specialized Aviation Support Operation (SASO) per the Airport’s Minimum Commercial Standards, including but not limited to publicly available flight instruction and aircraft maintenance training, aircraft rental, aircraft maintenance, aviation education programs, aviation community programming, air charter or air taxi services, and aviation research & development activities.
(b) Any and all operations, events or other group activities are subject to published Airport regulations, City of Watsonville Municipal Code and Airport Minimum Commercial Standards. (c) The Tenant is permitted to sublet the premises subject to subsection (b) above.

5. Prohibited Uses.

The leased Premises shall not be used for any other use not expressly allowed in Section 4 of this Lease, including but not limited to:
(a) The sale of food and beverages to the public; provided, however that vending machines dispensing snacks and non-alcoholic beverages such as soft drinks and coffee may be allowed; and;
(b) No sale of aviation grade fuel, jet fuel, automobile or other fuel. (c) Manufacturing of aircraft.
(d) Operation of a scheduled air cargo service.
(e) The operation of a "Unicorn" radio communication system on the Common Traffic Advisory Frequency (CTAF)
(f) The operation of a maintenance or repair service on non-aviation related items, including but not limited to automobiles, motorized vehicles or boats (g) Any other use not expressly allowed in Section 4 of this Lease.

6. Improvements to Premises.

ALTERATIONS AND ADDITIONS.

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Tenant shall submit a written description of proposed improvements to the Airport Director together with two sketches drawn to scale. The Airport Director will review the proposal and provide written comments with a recommendation and forward the same to the City Community Development for review and permit compliance. No alterations or additions shall be made by Tenant without the approval of Landlord. Tenant shall obtain building permits as required by City Building Department and shall comply with all building and other codes. Tenant shall receive a Rental Abatement equal to 25% of the cost of improvements during the initial Lease Term. Should the lease be renewed for a subsequent term 25% of improvements during the prior term shall be applied as a credit to the renewed term. The total Rental Abatement shall not exceed $48,000 per term without the prior written approval of the Landlord.

ROTARY WING/POWERED LIFT PARKING AREA LICENSE AGREEMENT.

Subject to CalTrans approval, and following necessary updates to the Airport Layout Plan, Landlord and Tenant agree that Tenant shall be granted permission to construct a rotary wing/powered lift parking area, approximately 60 ft by 60 ft totaling no more than 3,600sq ft at the proposed location designated in attached Exhibit A. Further, Landlord and Tenant agree that Tenant shall be granted permission to construct a rotary wing/powered lift parking area, approximately ninety-seven (97) feet by ninety seven (97) feet, totaling no more than nine thousand five hundred (9,500) square feet at a mutually agreed upon location within the Airport parcels 015-221-01, 015-221-02. This rotary wing/powered lift parking area with Global Electric Aviation Charging System (GEACS) ground support equipment to support DC aircraft charging and terminal building to process passengers shall be constructed at the sole expense of Tenant and in accordance with Federal Aviation Administration existing Heliport Design Advisory Circulars and/or future Vertiport Design Advisory Circulars, or the most current versions thereof and Caltrans design standards/parameters. Planning, permitting and construction costs of this rotary/powered lift parking area shall be in accordance with the Alterations and additions noted in Section 6 above. Tenant shall have exclusive use of this space for the duration of the Lease Term. Should Tenant continue to lease the Premises after July 14, 2027, Tenant may continue the exclusive use of such Rotary Wing/Powered Lift Parking Area, for one year, at no charge. Providing however that Tenant may not charge others for occupancy of the Rotary Wing Parking Area. After the year of no charge, the parking is negotiated, and the lease will be amended to reflect that charge.

7. Conditions of Construction.

Before construction is commenced on the Premises, and before any building materials have been delivered to the Premises by Tenant or under Tenant's authority, Tenant shall comply with all the following conditions or procure Landlord's written waiver of the condition or conditions specified in the waiver:
(a) Provide Landlord with four (4) copies of plans and specifications and four (4) copies of site plan.

Landlord shall not unreasonably disapprove preliminary plans and specifications. (b) Notify Landlord of Tenant's intention to commence the work of improvement at least ten (10) days before commencement of any such work or delivery of any materials.

Landlord shall have the right to post and maintain on the Premises any notices of non-responsibility provided for under applicable law.

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(c) Furnish Landlord with a true copy of Tenant’s contract with the general contractor and with evidence of the general contractor's financial condition for Landlord's approval. The contract shall give Landlord the right but not the obligation to assume Tenant's obligations and rights under that contract if Tenant should default.
(d) Tenant shall comply with all applicable codes, ordinances, or regulations, and requirements for permits and approvals, including, but not limited to or restricted to a grading permit, building permit, zoning and planning requirements, and approvals from various governmental agencies and bodies having jurisdiction.
(e) Tenant shall require from the contractor: (i) certificates of insurance evidencing coverage for "Builder's risk", (ii) evidence of Worker's Compensation Insurance covering all persons employed in connection with the work and with respect to whom death or bodily injury claims could be asserted against Landlord or the Premises, and (iii) evidence that contractor has paid or caused to be paid all premiums for the coverage described in this sub-paragraph and premiums sufficient to assure maintenance of all insurance during the anticipated course of the work.

8. New Construction Completion Date.

Once work has begun on one area, Tenant shall with reasonable diligence prosecute all construction of improvements for completion and ready for use by a mutually agreed upon date; provided however, that the time for completion shall be extended for as long as Tenant shall be prevented from completing the construction by delays beyond Tenant's control; excluding reasons beyond Tenant’s control, failure to commence construction within two (2) months following issuance of a building permit, at Landlord's election exercised by five (5) days written notice, shall terminate this Lease.

9. Protection of Landlord against Cost or Claim.

Tenant shall pay or cause to be paid the total cost and expense of all works of improvements, as that phrase is defined in the mechanic's lien law in effect at the place of construction when the work begins. No such payment shall be construed as rent. Tenant shall not suffer or permit to be enforced against the Premises or any part of it any mechanic's, materiel man’s, contractor's, or sub-contractor's lien arising from any work of improvement, however it may arise. However, Tenant may in good faith and at Tenant's own expense contest the validity of any such asserted lien, claim, or demand, provided Tenant has furnished the bond required in California Civil Code Section 8424. Tenant shall defend and indemnify Landlord against all liability and loss of any type arising out of work performed on the Premises by Tenant, together with reasonable attorney's fees and all costs and expenses incurred by Landlord in negotiating, settling, defending, or otherwise protecting against such claims.

10. Notice of Completion.

On completion of the work of improvement, Tenant shall file or cause to be filed a notice of completion. Tenant hereby appoints Landlord as Tenant's attorney in fact to file the notice of completion on Tenant's failure.

11. Ownership of improvements During Term.

All buildings and improvements constructed on the Premises by Tenant as permitted or required by this Lease shall, during this Lease Term, be and remain the property of Tenant; provided, however, DocuSign Envelope ID: BE19FEEE-6E75-4464-88D6-AECDA70C461E In Process

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that Tenant shall have no right to waste, destroy, demolish or remove the improvements except as expressly provided in this Lease; and provided, further, that Tenant's rights and powers with respect to the improvements are subject to the terms and limitations of this Lease. Landlord and Tenant covenant for themselves, and all persons claiming under or through them, that the improvements are real property.

All buildings and improvements existing on the Premises, as of the date of this Lease are Landlord's property, free of all claims to or against them by Tenant or any third person.

12. Ownership of Improvements at Termination.

Except as specified in Section 13 of this Lease, all buildings and improvements placed or constructed on said Premises as part of said project, as well as any and all other alterations, additions, improvements, and fixtures, except furniture and trade fixtures, made or placed in or on said Premises by Tenant or any other person, shall be considered part of the real property of said Premises and on expiration or sooner termination of this Lease, or the exercised option, shall remain on said Premises and become the property of Landlord free and clear of any liens or encumbrances whatsoever and without the payment of any consideration therefore.

13. Removal of Fixtures.

At the normal expiration or sooner termination of the Lease Term, provided Tenant is not in default, T enant shall have the right to remove any and all furniture and trade fixtures, provided all resultant injuries to the Premises and remaining improvements, except for ordinary wear and tear, are remedied and Tenant complies with Landlord's reasonable requirements respecting the resultant appearance. Landlord will ensure that Tenant is provided access to the Premises to remove Tenant’s property, including applicable furniture and trade fixtures. Any such items not so removed within thirty (30) days of termination of this Lease shall become the property of Landlord free and clear of any liens or encumbrances whatsoever and without payment of consideration, therefore.

14. No Subordination.

Landlord shall not subordinate the fee title to the Premises to any security transaction to enable Tenant to obtain financing for the new improvements. The Premises are now and shall remain free and clear of any liens, encumbrances or other Tenant obligations to third person.

15. Utilities.

Tenant is responsible for, and shall pay for, all gas, heat, light, power, telephone service, and all other services supplied to the Premises, including installation and connection of such services from the main source thereof, including Landlord's meters, and shall hold harmless the Landlord therefore.

Landlord will provide notice to Tenant of any bills payable by Tenant that Landlord receives.

16. Possessory Interest Tax.

Pursuant to Section 107.6 of the State Revenue and Taxation Code, the Landlord hereby gives notice that the property interest to Tenant under this Lease may be subject to property taxation as a possessory interest and the Tenant acknowledges that it shall be subject to payment of property tax if a possessory interest tax is levied on the property interest.

17. Compliance with Rules Regulations and Law.

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In the use and occupancy of the Premises and in the conduct of all business, activities and transactions thereon, Tenant will comply with all applicable laws, ordinances, rules, regulations and orders of Landlord or any governmental subdivision, body or authority, including all federal, state and municipal laws and ordinances and all rules and regulations of the Federal Aviation Agency and the City of Watsonville rules and regulations concerning the operations of the Watsonville Municipal Airport and environs.

18. Storage of Materials and Equipment.

No materials, supplies, products, equipment or other personal property shall be stored or permitted to remain on any portion of the Leased Premises outside of Landlord approved buildings or structures without Landlord's prior written consent. Tenant shall store personal property items, supplies, materials and combustibles inside the buildings in a safe, neat and sanitary manner. Tenant shall provide or cause to be provided adequate enclosures, screened areas and/or suitable covered metal receptacles within the Leased Premises for the short-term accumulation and storage of solid waste, such as rubbish, trash, garbage, sludge, discarded machinery or parts and any other solid industrial wastes. Such enclosures and/or screened areas shall be designed in such a way as to reasonably prevent, odors, fumes, attraction of pests, and dispersal of wastes due to wind or water runoff and shall be serviced regularly by qualified waste removal and disposal services, as applicable.

19. Environmental Considerations.

No WARRANTY OF CURRENT CONDITION
Landlord makes no representation or warranty, express or implied, as to the physical condition of the Premises, including, but not limited to the condition of the exterior or interior of the structure, ground, soil, surface or groundwater, the geology, the presence of known and unknown faults, the presence of any Hazardous Substance or other kinds of contamination or pollutants of any kind in the air, soil, groundwater or surface water or the suitability of the Premises for the construction and use of the improvements thereon.
(a) Tenant shall not commit, or suffer to be committed, any waste upon the Premises, or any nuisance or other act or thing, which may disturb the quiet enjoyment of the use of Watsonville Airport or surrounding property. Tenant shall ensure that no untreated liquid waste from any type of operation will enter the airport storm drainage system or sanitary system. (b) Tenant shall at all times comply with all applicable laws, rules and regulations of federal, state or local governmental agencies, including, but not limited to, the City of Watsonville, Santa Cruz County, and responsible Regional Air and Water Quality Control Boards, the Environmental protection Agency, and any other agency with jurisdiction. Tenant shall further at all times comply with the Storm Water Pollution Prevention Program (SWPPP) requirements as outlined in Section 7-18.207 of the Watsonville Municipal Code Tenant shall not permit any activity which directly or indirectly produces objectionable or unlawful amounts or levels of air pollution (gases, particulate matter, odors, fumes, smoke, or dust), water pollution, noise, glare, heat emissions, electronic or radio interference with navigational and communication facilities for the operation of the Airport and for its use by aircraft, trash or refuse accumulation, vibration, prop-wash, or jet blast, or which is hazardous or dangerous by reason DocuSign Envelope ID: BE19FEEE-6E75-4464-88D6-AECDA70C461E In Process

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or risk of explosion, fire or harmful emission. Any waste oil storage tanks shall be in approved containers and in accordance with environmental and fire protection regulations. (c) Hazardous Substances. The term "Hazardous Materials" shall mean any toxic substance, hazardous substance, hazardous material, or hazardous waste, pollutant or contaminant which is or during the term of this Lease becomes regulated by any local governmental authority, the State of California, or the United States government, including, but not limited to any, material or substance which is defined as a "hazardous waste," "extremely hazardous waste" or "restricted hazardous waste" under local, State, or federal law and as determined by the Fire Department. Except in strict compliance with all government approvals, applicable laws and regulations pertaining to Hazardous Materials, and in accordance with the provisions of this Lease, Tenant shall not cause or permit the presence, use, handling, generation, emission, release, discharge, storage, or disposal of any Hazardous Materials on, under, in or about the Premises, excepting the presence of any Hazardous Materials on, under, in or about the Premises as of the date of this Lease or the migration to or seepage of Hazardous Materials from surrounding or adjacent property; and shall not cause or permit the transportation of any such materials.

20. Hazardous Materials to or from the Premises.

Tenant shall at all times notify Landlord of any Hazardous Materials present, used, generated, handled, emitted, released, discharged, stored or disposed of on or from the Premises.

Notwithstanding the foregoing, notice shall not be required for Hazardous Materials present on the Premises in reasonable quantities which are commonly used in machining facilities including, but not limited to, cleaning materials, motor oils, and hydraulic fluids provided such Hazardous Materials are used and disposed of in accordance with law, or for materials which are first designated as Hazardous Materials after expiration of the term of this Lease. Tenant shall also institute operating procedures designed to handle Hazardous Materials consistent with prudent industry practice, including evidence of a licensed agent removal service. Landlord shall have the right to inspect the Premises on 24-hours prior notice for compliance with the provisions of this Section.

INDEMNIFICATION BY LANDLORD.

Landlord shall indemnify, protect, defend, and hold harmless Tenant and Tenant's successors and assigns, officers, directors, employees, agents, subtenants and assignees, from and against all liability, and foreseeable consequential damages, penalties, expenses and costs of any required or necessary remediation, repair, removal, clean up or detoxification, of the Premises and surrounding properties, and from and against the preparation of any clean up, remediation, closure or other required plans, whether such action is required or necessary during or following the term of this Lease, to the full extent that the same is attributable to the use, handling, generation, emission, release, storage, discharge or disposal of hazardous material by Landlord, its agents, employees, and contractors.

INDEMNIFICATION BY TENANT.

Tenant shall indemnify, protect, defend, and hold harmless Landlord and Landlord's successors and assigns, officers, directors, employees, agents, subtenants and assignees, from and against all liability, and foreseeable consequential damages, penalties, expenses and costs of any required or necessary remediation, repair, removal, clean up or detoxification, of the Premises and surrounding DocuSign Envelope ID: BE19FEEE-6E75-4464-88D6-AECDA70C461E In Process

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properties, and from and against the preparation of any clean up, remediation, closure or other required plans, whether such action is required or necessary during or following the term of this Lease, to the full extent that the same is attributable to the use, handling, generation, emission, release, storage, discharge or disposal of hazardous material by Tenant, its agents, employees, and contractors.

INDEMNIFICATION SURVIVES LEASE.

The indemnification provisions of the foregoing shall survive the termination of this Lease.

21. Repairs and Maintenance of Premises.

LANDLORD'S OBLIGATIONS
Landlord shall maintain in good condition the exterior of the Premises, including outside walls, outside doors, outside windows, and roof, heating, electrical systems for the facility (excluding internal lights and fixtures as discussed in Tenant’s Obligations) except in the event that repairs or replacements are necessary thereto because of negligence or misconduct of the Tenant or if Tenant fails to notify Landlord in writing within five (5 ) business days of the need to repair.

TENANT'S OBLIGATIONS
Tenant shall maintain Premises, including, but not limited to, interior plumbing (i.e., sanitary sewer obstructions), interior walls, interior doors, interior hardware, alarms, internal lights and fixtures, etc., in as good order, condition and repair as they shall be upon the commencement of the term of this Lease. Any addition to the electrical system installed by Tenant shall remain the responsibility of the Tenant. Tenant shall keep drainage ditches and gutters free of debris.

22. Freedom from Liens.

Tenant shall not create or permit to be created or to remain, and covenants to remove and discharge promptly, at its cost and expense, all liens, claims, stop notices, encumbrances and charges upon the Premises, or Tenant's leasehold interest therein which arise out of the use or occupancy of the Premises by Tenant or anyone using or occupying the Premises with the consent or sufferance of Tenant, or by reason of labor or materials furnished or claimed to have been furnished to Tenant for any construction, alteration, addition or repair of any part of the Premises. Except as otherwise provided herein, Tenant shall give Landlord fifteen (15) days' notice prior to commencing any work on the Premises, so that Landlord shall have a reasonable time within which to post notices of nonresponsibility.

23. Holding Over.

If Tenant shall hold possession of the Premises after the term of this Lease, Tenant shall become a Tenant from month to month rental and upon the terms herein specified and shall continue to be such tenant until the tenancy shall be terminated by Landlord on thirty (30) days’ notice or until Tenant shall have given at least thirty (30) days' notice of Tenant's intention to terminate the tenancy. The provisions of this Lease, so far as applicable, shall govern such tenancy, except that the monthly rent for such tenancy shall be the same as the last full month’s rental rate.

24. Abandonment.

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Tenant shall not vacate or abandon the Premises at any time during the term thereof; if Tenant shall abandon, vacate or surrender the Premises or be dispossessed by process of law, or otherwise, any personal property belonging to Tenant and left on the Premises shall be deemed to be abandoned and at the option of Landlord shall become Landlord's property free from all claims of Tenant. The City will not sell or dispose of any of Tenant’s property while the parties are engaged in good faith negotiations or dispute resolution process. In the event Tenant abandons the Premises, Landlord shall have the option to terminate this Lease by giving Tenant notice of belief of abandonment pursuant to California Civil Code Section 1951.3 or Landlord has the remedy described in California Civil Code Section 1951.4, i.e., Landlord may continue the Lease after breach and abandonment and recover rent as it becomes due, if Tenant has the right to sublet or assign, subject to reasonable limitations as provided in paragraph 25.

25. Assignment or Subletting.

Tenant shall not assign or encumber any interest in this Lease or in the Premises, or sublease all or any part of the Premises, or allow any other person or entity (except Tenant’s authorized representatives or subsidiary) to occupy or use all or any part of the Premises, without Landlord’s written consent, and consent to one assignment or sublease shall not be construed as consent to any subsequent assignment or subleasing.

If Tenant is a corporation or partnership, any dissolution, merger, consolidation or other reorganization of Tenant or the sale or transfer of controlling percentage of the capital stock of Tenant or the sale of fifty-one percent (51 %) or more of the value of the assets of Tenant shall be deemed a voluntary assignment. The phrase "controlling percentage" means the ownership of and the right to vote stock possessing at least fifty-one percent (51 %) of the total combined voting power of all classes of Tenant's capital stock issued outstanding and entitled to vote for the election of directors. Landlord shall not unreasonably withhold consent, but Landlord may nevertheless condition consent upon such factors as the identity, reputation, financial worth and stability and operating ability of any proposed assignee or subtenant. Unless prior written consent of Landlord shall have been obtained, any transfer, or attempted assignment or transfer, of this Lease or any interest therein, or any subletting, either by voluntary or involuntary act of Tenant or by operation of law or otherwise, shall at the option of the Landlord terminate this Lease, and any such purported assignment, transfer or subletting without such consent shall be null and void.

A. ASSIGNMENT
I. Tenant shall not have the right to assign this Lease (other than a subsidiary) without the written consent of Landlord, which shall not be unreasonably withheld. If Tenant desires to assign the Lease,
Tenant shall comply with the following procedures:
(a) Tenant shall give Landlord at least sixty (60) days prior written notice of its desire to assign the Lease.
(b) Tenant shall simultaneously provide Landlord with the assignee's name, business organization, financial statement, payment schedules and other documentation as may be requested by Landlord.

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(c) Tenant shall provide Landlord with a true copy of the proposed assignment and the proposed assignee shall, in recordable form, expressly assume all the covenants and conditions of this Lease.
(d) Excluding any assignment to a subsidiary of the Tenant, Tenant shall pay Landlord at the time the request to assign is submitted, a deposit of Two Thousand Five Hundred Dollars ($2,500.00) to offset Landlord's reasonable expenses, including reasonable attorney’s fees, in evaluating and documenting the assignment. Landlord shall charge said deposit at the then current hourly rate for staff time charged to the Airport. Expenses shall not exceed the deposit and any balance of said deposit shall be refunded to Tenant.

2. Landlord and Tenant hereby deem it reasonable for the Landlord to refuse to consent to a proposed assignment in the following circumstances:
(a) Landlord may object to any proposed assignment if, in the Landlord's sole opinion, the proposed assignee is not a qualified assignee in terms of financial strength, business experience or reputation or the ability to operate the fixed base operation and provide the required services in a manner consistent with the purposes for which this Lease was granted. (b) Landlord may object on any other reasonable grounds. Landlord will provide timely notice to Tenant of any grounds for objection and endeavor, in good faith, to achieve consensus.

The effective date of the assignment shall not occur until sixty (60) days after the Tenant's notice of the proposed assignment unless, within that time, Landlord gives notice of a valid objection or refusal of consent as set forth herein. If Landlord gives notice of a valid objection and withholds consent, the Lease will not be assigned.

B. SUBLETTING
It is understood and agreed that, from time to time, Tenant may request Landlord’s permission to sublet portions of the Premises and Landlord shall not unreasonably withhold consent, provided:
(1) Each sublease made shall be subject and subordinate to the right of the Landlord and the provisions of each sublease shall conform to the provisions of this Lease as far as practicable. (2) The sublease does not affect an assignment of the Lease as prohibited elsewhere. (3) Tenant includes the following information with its request to sublease, the name, address, a true copy of the proposed sublease, and appropriate documentation as evidence the subtenant is qualified to conduct business on the Airport and such subtenant will provide the type of development and services required under the provisions of this Lease. (4) Subtenant provides insurance coverage(s) as appropriate, in accordance with Lease provision(s), INSURANCE, the same as if the subtenant were a lessee.

If Tenant is in the default of monetary obligations to Landlord pursuant to this Lease, Tenant immediately and irrevocably assigns to Landlord, as security for Tenant's obligations under this Lease, all rent from any subletting of all or a part of the Premises as permitted by this Lease, and Landlord, as assignee and as attorney-in-fact for Tenant, or a receiver for Tenant appointed on Landlord's application, may collect such rent and apply it toward Tenant’s obligations under DocuSign Envelope ID: BE19FEEE-6E75-4464-88D6-AECDA70C461E In Process

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this Lease; except that, until the occurrence of an act of default by Tenant, Tenant shall have the right to collect such rent. It is understood and agreed by the parties hereto that the above assignment provisions do not apply to heirs by will.

C. SUB-TENANT RENT
Tenant shall not receive from any person any rent for any portion of the Premises which exceeds the rent charged by Landlord for the same or similar area of the Premises, the purpose hereof is that Tenant shall not receive any rent for any portion of the Premises which exceeds the rent Landlord charges Tenant for the Premises. Tenant shall instead turn over any such rent to Landlord as additional rent.

Tenant may not receive from sub-tenants an amount greater than an amount paid to Landlord. Any greater amount if the property of the Landlord. For the avoidance of doubt, Tenant may charge a subtenant for any fees, taxes, assessments, or similar charges for which Tenant is responsible under this Lease.

26. Signs, Posters, Buildings and Towers.

No advertising signs, posters or similar devices shall be erected, displayed or maintained in, on, about or above the Premises or the structures thereon without a sign permit (as required) and the written approval of the Airport Manager.

No structures erected on the Premises shall exceed the height limit fixed by any City of Watsonville zoning ordinance or regulations of the Airport or Federal Aviation Authority.

Tenant in its operations shall not unreasonably interfere with the property, interests, operations or activities of the Landlord or of other tenants of Landlord.

27. Taxes.

Tenant will pay all fees, taxes, assessments and licenses levied, imposed or required by any governmental subdivision, body or authority on or in respect to any improvements or property placed on the Premises by Tenant or any person with its permission The use, occupancy or possessory rights of Tenant in the Premises (a) Any business, activity or transaction conducted thereon by Tenant; (b) City license and permits; and
(c) Commercial Operator Permit fee.

28. Waiver of Damages and Indemnification.

Landlord shall not be liable to Tenant for any injury or damage that may result to any person or property by or from any cause whatsoever, except as results from acts of the sole negligence on the part of Landlord, its agents, servants, employees or invitees. Without limiting the generality of the foregoing waiver, it is expressly extended to injury or damage caused by water leakage of any character from the roof(s), wall(s), basement or any part of the property, or caused by gas, oil, electricity or any other cause in or about the Premises or the building(s
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29. Security Deposit.

On execution of this Lease, Tenant shall deposit the sum of Five Thousand Four Hundred Sixteen Dollars and Zero Cents ($5,416.00) representing one (1) month's rent in cash as security for the faithful performance of the terms, covenants and conditions of this Lease.

If Tenant is in default, Landlord can use the security deposit or any portion of it, to cure the default or to compensate Landlord for all damages or loss sustained by Landlord resulting from Tenant's default if the notice requirements, if applicable, have been observed. Tenant shall immediately, on demand, pay to Landlord a sum equal to the portion of the security deposit expended or applied by Landlord as provided in this paragraph so as to maintain the security deposit in the sum initially deposited. Upon final accounting by Landlord, any balance of said deposit shall be refunded to Tenant.

30. Hold Harmless.
(a) Tenant the “Indemnifying Party” shall save, protect, indemnify, and hold harmless Landlord, its elective and appointive boards, commissions, officers, agents, and employees the “Indemnifying Party” from any and all third party claims, cost or liability of any kind allegedly suffered, incurred or threatened, including personal injury, death, property damage, inverse condemnation, or any combination of these, foreseeable or unforeseeable, arising directly or indirectly from: (I) the negligent or willful misconduct of Tenant, its subtenant(s), assignee(s), or any officer(s), agent(s) or employee(s) of one or more of them; or(2) the joint conduct of the Landlord and Tenant, excluding Landlord negligence or willful misconduct.

The above promise and agreement in this section is not conditioned or dependent on whether Tenant or Landlord has prepared, supplied or approved any plan(s) or specification(s) in connection with this Lease, or has insurance or other indemnification covering any of these matters, or that the alleged damage resulted partly from any negligent or willful misconduct of Landlord. (b) Non-Liability of Landlord for Damages. Except as otherwise provided herein, this Lease is made upon the express condition that absent negligence, bad faith or willful misconduct, Landlord is to be free from all liability and claim for damages by reason of any injury to any person or persons including, Tenant, or property of any kind whatsoever and to whomsoever belonging, including Tenant, from any cause or causes whatsoever while in, upon,
or in any way connected with the Premises during the term of this Lease or any extension hereof or any occupancy hereunder, Tenant hereby covenanting and agreeing to indemnify and save harmless Landlord from all liability, loss, cost, attorneys fees, and obligations on account of or arising out of any such injuries or losses however occurring.

31. Breach.
(a) By Tenant: In the event Tenant shall fail to comply with any material terms, covenants, Permits, and conditions of this Lease, Landlord shall have the right, after providing Tenant with 60 days’ notice and opportunity to cure, to forthwith declare this Lease terminated and ended, and said Lease shall thereupon terminate and end, and thereafter Tenant shall have no further right, title, estate or interest in this Lease or in or to any premises or facilities of the Airport, and Tenant shall thereupon pay to Landlord the amount of any and all damages arising out of, or resulting from, such breach of or default on the part of Tenant, DocuSign Envelope ID: BE19FEEE-6E75-4464-88D6-AECDA70C461E In Process

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and, in addition thereto, Landlord shall be entitled to such other legal remedy or redress as the law may provide in such instance.
(b) By Landlord: In the event Landlord fails to comply with any material terms of this Lease, including but not limited to providing quiet enjoyment of the premises in a habitable condition to Tenant, then, after 60 days’ notice and opportunity to cure, Tenant will be entitled to full rent abatement until Landlord has rectified such breach.

32. Insurance.
(a) During the rental term, Tenant, at Tenant's sole expense, shall secure and maintain in force such policies of insurance as will protect it from claims for damages or injury resulting from bodily injury, including death, and for the loss or damage to property of others which may arise from operations of this Lease. Such insurance shall contain statements that:
(i) these policies shall also apply to Landlord, as an Additional Named Insured. (ii) the insurance afforded by these policies applies severally as to each insured, except that the inclusion of more than one insured shall not operate to increase the limit of the company's liability, and the inclusion hereunder of any person or organization as an insured shall not affect any right which such person or organization would have as a claimant if not so included. (iii) the insurance shall be primary insurance over any other insurance carried by Landlord, which other insurance shall be considered excess only.
(iv) the above policies specifically include coverage indemnifying Landlord as set forth in this Lease;
(v) the policies may not be canceled, nor the coverage reduced until thirty (30) days after a written notice of such cancellation or reduction in coverage is delivered to Landlord at the address contained herein;
(vi) the insurance companies named herein waive any and all right of subrogation against Landlord.
(b) Such liability insurance shall be written with limits of at least Two Million Dollars ($2,000,000.00) combined single limits, and shall be written by companies acceptable to Landlord. The limit of liability insurance coverage shall be adjusted commensurate with inflation and other liability factors upon adoption of resolution of the City Council of City. Certificates of Insurance evidencing the above obligations shall be delivered to Landlord on prior commencement of operations covered by this agreement.
(c) Landlord, at Tenant's cost, shall cooperate fully with Tenant to maximize any recovery following an insured casualty. All policies of fire and extended coverage or other casualty insurance required by subparagraphs (e) and (g) below shall provide that proceeds thereunder shall be paid to Landlord and Tenant as their interests may appear.
(d) All policies required to be maintained by Tenant pursuant to the terms of this Lease shall be issued by companies authorized to do business in the State of California with a financial rating of at least "A" in the most recent edition of Best Insurance Reports. The tenant shall pay premiums DocuSign Envelope ID: BE19FEEE-6E75-4464-88D6-AECDA70C461E In Process

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therefore and shall deliver annually to City Certificates of Insurance that such policies are in effect. If Tenant fails or refuses to procure or maintain the insurance coverage required hereunder, or fails or refuses to furnish Landlord with proof that coverage has been procured and is in full force and paid for, Landlord shall have the right, at Landlord's election
and without notice to Tenant, but without any obligation to do so, to procure and maintain such coverage.

Tenant shall reimburse Landlord on demand for any premiums Landlord so pays in connection with such procurement.
(e) Fire Insurance: During the Lease Term, Tenant, at Tenant's sole expense, shall insure for fire and extended coverage risks of the leased Premises, personal property, improvements, and alterations in, on, or about the leased Premises. Such insurance shall be in an amount not less than eighty percent (80%) of insurable, full replacement cost of the leased Premises and improvements, and shall include vandalism and malicious mischief endorsements. Said fire insurance policies shall contain loss payable endorsements in favor of the parties as their respective interests may appear hereunder. The CITY OF WATSONVILLE shall be named as additional insured in such policy or policies. (f) Fire or Casualty:
(i) Destruction of Tenant Owned Building. In the event of extensive damage (greater than fifty percent (50%)) to or destruction of buildings or other improvements on the Leased Premises owned by Tenant as provided in Section 6 of this Lease ("Tenant Improvements"), Tenant shall determine whether to repair or replace the Tenant Improvements.

If it is determined to repair or replace the Tenant Improvements, the proceeds of any insurance policy paid on account of such damage or destruction shall be used to defer the cost of repairing or replacing the Tenant Improvements. Tenant shall complete all repairs within a reasonable time. If it is determined not to repair or replace the Tenant Improvements, Tenant may terminate this Lease upon written notice to Landlord within thirty (30) days of such damage or destruction. If Tenant terminates this Lease pursuant hereto, after deducting any proceeds payable to Tenant's lender pursuant to the following paragraph, the remaining proceeds of any insurance policy paid on account of such damage or destruction shall be distributed to Landlord and Tenant pursuant to the following formula: Landlord's share shall be the product of the amount of the remaining proceeds multiplied by a fraction, the numerator which is the number of months since the commencement date of this Lease until the date of the casualty causing such damage or destruction, and the denominator of which is four hundred and twenty (420). Tenant's share shall be the excess of the remaining proceeds after subtracting the Landlord's share. In the event of termination of the Lease pursuant to this Section 32 (e) (1), Tenant shall remove the Tenant Improvements and, restore the Landlord owned building to its prior condition at Tenant's sole cost and expense prior to the date of termination of the Lease.

All fire and extended coverage insurance policies ensuring the Tenant Improvements may have a loss payable clause in favor of any lender of Tenant, including, but not limited to, any mortgagee of Tenant, as such lender's interest may appear.
(ii) Destruction of Landlord Owned Premises. If during the term of this Lease the Landlord owned Premises, as provided in Section 11 of this Lease, shall be damaged or destroyed to the extent of fifty percent (50%) of its valuation or at a repair cost estimated by the City Building Official to exceed the sum of Twenty Five Thousand Dollars ($25,000.00) by fire, the elements, or any other cause, then DocuSign Envelope ID: BE19FEEE-6E75-4464-88D6-AECDA70C461E In Process

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this Lease shall, at Landlord's option, cease and become null and void from the date of such damage, or destruction, and Tenant shall immediately surrender the entire Premises to Landlord and shall pay rent only to the time of such surrender.

If the Landlord owned Premises shall be damaged by fire, or other cause, so as to be capable of being repaired within a reasonable time, Landlord shall have the option to repair the same and during the time that the repairs are being made, Landlord shall remit to Tenant a just and fair portion of the rent according to the nature of the damage sustained and according to the extent that Tenant is deprived of the use of the Landlord owned Premises. Should the estimated time to repair the damage exceed one hundred twenty (120) days, the Tenant may, at his option, terminate this Lease. In such event both parties shall be released from further obligations under the terms of this Lease. (f) Workers' Compensation: Tenant, at Tenant's sole expense, must obtain and maintain workers' compensation insurance covering all its employees, and said insurance must be kept in force during the entire term of this Lease.
(g) Notice: Each party hereto shall give to the other prompt and timely notice of any claim made or suit instituted coming to its knowledge which in any way directly, contingently or otherwise, affects or might affect either, and both shall have the right to participate in the defense of the same to the extent of its own interest.

33. Litigation Expenses.

If either party shall bring an action against the other by reason of the breach of any covenant, warranty or condition hereof, or otherwise arising out of this Lease, whether for declaratory or other relief, the prevailing party in such suit shall be entitled to its costs of suit and reasonable attorney fees, which shall be payable whether or not such an action is prosecuted to judgment. "Prevailing Party" within the meaning of this paragraph shall include without limitation a party who brings an action against the other after the other's breach or default, if such action is dismissed upon the other's breach or default, if such action is dismissed upon the other’s payment of the sums allegedly due or performance of the covenant's allegedly breached, or if the plaintiff obtains substantially the relief sought by it in the action.

34. Surrender of Premises.

Tenant agrees to surrender the Premises and any addition thereto at the termination of the tenancy herein created in the same condition as the Premises were in at the beginning of the tenancy or at the time of completion of the improvements as the case may be, reasonable use and wear thereof and damage by act of God or the elements excepted. The voluntary or other surrender of this Lease by Tenant or a mutual cancellation thereof shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subleases or sub tenancies, or may, at the option of Landlord, operate an assignment to Landlord of any or all such sublease or sub tenancies.

35. Waiver.

Any waiver, expressed or implied, by either party of any breach by the other party of any agreement, term or condition of this Lease shall not be, or be construed to be, a waiver of any subsequent breach of a like or other agreement, term of condition hereof; and the acceptance of rent hereunder shall not be, or be construed to be, a waiver of any breach of any agreement, term or condition of this Lease, except as to DocuSign Envelope ID: BE19FEEE-6E75-4464-88D6-AECDA70C461E In Process

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the payment of rent so accepted. The rights and remedies of either party under this Lease shall be cumulative and in addition to any and all other rights and remedies which either party has or may have.

36. Quiet Enjoyment.

Landlord covenants and warrants that upon Tenant's paying the rent and observing and performing all of the terms, covenants, and conditions on Tenant's part to be observed and performed hereunder, Tenant shall and may peaceably and quietly enjoy the Premises hereby demised, subject nevertheless to the terms and conditions of this Lease.

37. Notices.

All notices, consents, waivers or other communications which this Lease requires or permits either party to give to the other shall be in writing and shall be served personally or delivered by registered or certified mail, return receipt requested, made upon or addressed to the respective parties as follows:

To Landlord: To Tenant:

City Clerk Joby Aviation College, Inc.

City of Watsonville 333 Encinal Street
275 Main Street, Suite 400 Santa Cruz, CA 95060
Watsonville, CA 95076 Attn: Cody Cleverly
or such other address as may be contained in a notice from either party to the other given pursuant to this section. Notice of registered or certified mail shall be deemed to be given forty- eight (48) hours from the time of postmarking if mailed within the United States (excluding Alaska).

38. Recordation.

Neither Party, without the consent of the other, shall cause or permit the original nor any copy of this Lease to be recorded, filed or published in any public place.

39. Tenant to Assume All Unknown Expenses.

Notwithstanding the existence of a provision therefore in this Lease, Tenant shall assume, pay and be obligated for any and all costs and expenses reasonably associated with this Lease, the Premises, and Tenant’s operation, it being the intention of the parties for this to be a “triple net” lease to Landlord.

To the extent such costs and expenses payable by Tenant cannot be charged directly to, and paid by, Tenant, such costs will be paid by Landlord and reimbursed by Tenant upon Landlord noticing Tenant with reasonable documentation to support said costs.

40. Right of Landlord to Enter for Inspection.

On a quarterly basis and upon prior notice to Tenant at least three (3) days in advance, Landlord shall have the right to enter upon the Premises at all reasonable times during the term of this Lease for the purpose of conducting premise inspections to ensure preventive maintenance issues be identified early. Landlord will report to Tenant, issues requiring attention and if appropriate, provide estimated cost for services to address maintenance needs.

41. Nondiscrimination
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Tenant hereby covenants that Tenant in its use of the Premises and any and all structures, buildings and improvements located here on shall conduct the fixed base operation or any other activity hereafter authorized by the Landlord on the Premises on a non-exclusive and non-discriminatory basis in all respects with regard to any person, firm or group of persons. Tenant shall not act in any manner prohibited by Part 15 of the Federal Aviation Regulations and further agrees to be nondiscriminatory also with respect to price or cost of services or goods and in every other fashion.

42. Enforcement of Nondiscrimination Clause.

Landlord shall have the right to take such action against the Tenant as the United States Government may direct or request to enforce the terms of the preceding paragraph (41.

Nondiscrimination) on behalf of the United States Government or on behalf of any of its citizens or the Landlord itself.

43. Other Operations.

It is understood that the use authorized at the Watsonville Municipal Airport by this Lease is not given to Tenant exclusively but may be given to any other Tenant at the Airport at the sole discretion of the Landlord.

44. Condemnation.

If the whole or any substantial part of the Premises shall be taken by any paramount public authority under the power of eminent domain then the term of this Lease shall cease as to the part so taken from the date the possession of that part shall be taken for any public purpose, and from that day Tenant shall have the right either to cancel this Lease or to continue in the possession of the remainder of the Premises under the term herein provided, except that the square foot rental shall be reduced in proportion to the amount of the Premises taken. Damages awarded for such taking shall be apportioned between the Landlord and Tenant in a ratio relating to the number of years expired and remaining in the Lease Term between Landlord and Tenant respectively; provided, however, that Landlord shall not be entitled to any portion of the award made for loss of business installation or improvements belonging to Tenant.

45. Nondiscrimination- (FAA, MBE, DB Requirements).

The Tenant, for itself, its heirs, personal representatives, successors in interest, and assigns, as a part of the consideration for this Lease, 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 Premises for a purpose for which a Department of Transportation (DOT) program or activity is extended or for another purpose involving the provision of similar services or benefits, the Tenant shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to Title 49, Code of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in FederallyAssisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as such Regulations may be amended.

The Tenant for itself, its personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby further covenant and agree as a covenant running with the DocuSign Envelope ID: BE19FEEE-6E75-4464-88D6-AECDA70C461E In Process

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land that: (a) 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 facilities; (b) 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; (c) that the Tenant shall use the with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as such Regulations may be amended.

Tenant 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 Tenant may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar type of price reductions to volume purchasers.

Tenant shall insert the provisions of this section in any lease agreement or contract by which Tenant grants a right of privilege to any person, firm or corporation to render accommodations and/or services to the public on the Premises.

46. Remedy for Discrimination.

In the event of breach of any of the nondiscrimination covenants identified in Paragraph 48, Landlord shall have the right to terminate this Lease and to reenter and repossess the Premises and the facilities thereon, and hold the same as if this Lease had never been made or issued. The provision does not become effective until the procedures of 49 CFR Part 21 are followed and completed including expiration of appeal rights.

Non-compliance with paragraph 51 shall constitute a material breach thereof and in the event of such non-compliance Landlord shall have the right to terminate this Lease and the estate hereby created without liability therefore or at the election of the City or the United States either or both Governments shall have the right to judicially enforce paragraph 48.

47. Affirmative Action.

Tenant assures that it will undertake an affirmative action program as required by 14 CFR Part 152, Subpart E, to insure that no personal shall be on the grounds of race, creed, color, national origin, or sex be excluded from participating in any employment activities covered in 14 CFR, Subpart E. Tenant 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 such subpart. Tenant assures that it will require that its covered by such subpart. Tenant assures that it will require that its covered sub organizations provide assurances to the Tenant 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.

48. Subordination to Future FAA Agreements.

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This Lease shall subordinate to the provisions and requirements of any existing or future agreement between the Landlord and the United States, relative to the development, operation or maintenance of the Airport.

49. Notice to Federal Aviation Administration.

Tenant shall comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations in the event of future construction of a building planned for the Premises, or in the event of any planned modification or alteration of any present or future building or structure situated on the Premises.

50. Non-Exclusive Right.

It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308 of the Federal Aviation Act. For the sake of clarity, for the duration of the lease, Tenant will have uninterrupted and exclusive right to use and occupy the P remises.

51. Terms.

All the provisions of this Lease shall be deemed and construed to be "covenants" as though the words imported such covenants were used in each separate paragraph hereof, except when expressed as conditions.

52. Governing Law.

This Lease shall be construed and enforced in accordance with the laws of the State of California.

53. Binding Effect.

This Lease and the covenants and agreements herein contained shall bind and inure to the benefit of the parties hereof, their heirs, successors, executors, administrators, and when permitted assigns.

54. Time is of the essence.

Time is of the essence regarding this Lease.

55. Consent.

Whenever consent or approval of either party is required, that part shall not unreasonably withhold such consent or approval.

56. Corporate Status.

If either party is a corporation, that party shall deliver to the other party on execution of this Lease, a certified copy of a resolution of its governing body authorizing the execution of this Lease and naming the officers that are authorized to execute this Lease on behalf of the corporation.

57. Brokers.

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Each party represents that it has not had dealings with any real estate broker, finder, or other party, with respect to this Lease in any manner. Each party shall hold harmless the other party from all damages resulting from any claims that may be asserted against the other party by any broker, finder, or other person, with whom the other party has or purportedly has dealt.

58. Exhibits.

All exhibits referred to are attached to this Lease and incorporated by reference.

59. Entire Agreement.

This Lease contains the entire agreement of the parties, and by signing this Lease they agree that there is no other written or oral agreement, promise, or representation between them respecting the Premises. This Lease shall bind and inure to the benefit and advantage of the assigns of Landlord, and of the heirs, executors, administrators, and when permitted hereunder the assigns of Tenant.

IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and year first above written.
“City”

CITY OF WATSONVILLE,
a charter city and municipal corporation
By: _
Tamara Vides
Interim City Manager
“Tenant”
JOBY AVIATION COLLEGE, INC.

By:

Bonny Simi
President of Operations
ATTEST:

By:

Irwin I. Ortiz, City Clerk
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APPROVED AS TO FORM:

Samantha Zutler, City Attorney
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170 Aviation Way Exhibit “A”
Ramp Area
3,840 sq ft
Side Parking
Area 16 spaces
Parking
Spaces 14- 21
plus one ADA
Premises
6,719 sq ft
Dedicated Rotary Wing
Parking ~60’x60’
(Potential construction, approximate location)
Restricted
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7/3/2024 9:25:58 PM
C:\Program Files\eSCRIBE\TEMP\21255552111\21255552111,,,Report - Lease PV Arts Council .docx Agenda Report
MEETING DATE: Tuesday, July 9, 2024
TO: City Council
FROM: PARKS & COMMUNITY SERVICES DIRECTOR CALUBAQUIB
SR. ADMINISTRATIVE ANALYST ZAVALA

PROJECT MANAGER PERALTA
SUBJECT: LEASE BETWEEN THE CITY OF WATSONVILLE AND PAJARO

VALLEY ARTS COUNCIL FOR USE OF PROPERTY LOCATED AT
37 SUDDEN STREET
RECOMMENDED ACTION:

It is recommended that the City Council adopt a resolution approving a 5-year Lease between the City of Watsonville and Pajaro Valley Arts Council (PV Arts) for the use of City-Owned property located at 37 Sudden Street, commencing July 1, 2024, and ending June 30, 2029, authorizing the City Manager to execute the same and any amendments of a non-substantive nature subject to legal approval.

BACKGROUND:

The Pajaro Valley Arts Council Gallery and administration office is located within Emmett Courts Park at 37 Sudden Street. The property was deeded to the City in 1997 by Jim and Marjorie Peixoto whose interest was to locate and construct two 3-wall handball courts at the rear of the property. PV Arts was founded as a nonprofit 501(c)(3) in 1984.

Their mission is to create access to high-quality visual arts exhibits, foster cultural events, and promote art education in our community. PV Arts produces seven to eight exhibits each year with the support of staff and volunteers.

PV Arts has been leasing this property since 1997. During this time, PV Arts' Board of Directors and volunteers have completed facility improvements required by the City to meet the Americans with Disability Act (ADA) guidelines and requirements, as well as others initiated by PV Arts. PV Arts board members and volunteers contributed an extensive amount of expertise, labor, and materials to complete the facility improvements valued at $48,560.09 from 2012 to date.

PV Art’s last lease with the City of Watsonville for use of 37 Sudden Street terminated on May 31, 2017, and PV Arts has become a month-to-month tenant since then.

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7/3/2024 9:25:58 PM
C:\Program Files\eSCRIBE\TEMP\21255552111\21255552111,,,Report - Lease PV Arts Council .docx DISCUSSION:

PV Arts plays a significant and unique role in our community, invites cultural tourism through its very unique exhibits, supports and promotes local artists, and offers art education opportunities for youth. Residents and the general public can attend their gallery tours throughout the year.

PV Arts purchased the property known as the Porter Building, located at 280 Main Street in Watsonville from the City in July of 2022. In time, PV Arts plans to relocate their operations and Gallery to the Porter building. However, in order for that to occur the building must undergo extensive renovations and repairs estimated to take over 3 years to complete.

While the design and renovation work is completed, PV Arts would like to continue the use of 37 Sudden Street for their Gallery and administration office.

Based on the existing benefits to the community the following lease terms are recommended:

1. Term: Five (5) years beginning July 1, 2024

2. Rent: $1 per year for the duration of the term.

3. Lessee will be responsible for all utilities and routine building maintenance.

STRATEGIC PLAN:

The recommended action is consistent with the City’s Strategic Plan goals of:
 1-Economic Development (Downtown Revitalization) by creating place making art in the heart of downtown
 5-Public Safety (Youth Prevention Programs) by providing youth with a safe, positive environment through the development of a free arts center  6-Community Engagement & Well-Being (Parks and Community Services, Youth Activities & Programs) by engaging the community in the creation of large art Installation
FINANCIAL IMPACT:

There is no financial impact to the City by approving this lease agreement. The programming that will take place at 37 Sudden Street will continue being a great addition to City programs.

There is no significant alternate programming or use of this building.

ALTERNATIVE ACTION:

The City Council may choose not to approve the execution of this Lease.

ATTACHMENTS AND/OR REFERENCES (If any):

None

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Reso No. (CM)
Meeting Date: 070924 SWZ ______ TV ______ PCS ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING FIVE-YEAR LEASE BETWEEN THE CITY

OF WATSONVILLE AND PAJARO VALLEY ARTS COUNCIL, A

CORPORATION, FOR THE USE OF CITY OWNED PROPERTY LOCATED AT 37 SUDDEN STREET, WATSONVILLE, CALIFORNIA, COMMENCING ON JULY 1, 2024, AND ENDING JUNE 30, 2029, AND AUTHORIZING AND

DIRECTING THE CITY MANAGER TO EXECUTE SAME AND ANY

AMMENDMENTS OF A NON-SUBSTANTIVE NATURE SUBJECT TO

LEGAL APPROVAL

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. That the five-year Lease between the City of Watsonville and Pajaro Valley Arts Council, a corporation, for the use of City owned property located at 37 Sudden Street, Watsonville, California, commencing on July 1, 2024, and ending June 30, 2029, a copy of which Lease is attached hereto and incorporated herein by this reference, is fair and equitable and is hereby ratified and approved.

2. That the City Manager be and is hereby authorized and directed to execute said Lease and any amendments thereto of a non-substantive nature subject to legal approval on behalf of the City of Watsonville.
**************************************

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Lease Agreement/Pajaro Valley Arts Council Page 1 of 25 Rev.: 06-26-2024

COMMERCIAL PROPERTY LEASE AGREEMENT

BY AND BETWEEN

CITY OF WATSONVILLE, CALIFORNIA
AND

PAJARO VALLEY ARTS COUNCIL
This lease agreement (“Lease”) is dated ____________________________________ and is by and between the City of Watsonville, California, a chartered California municipal corporation (“City”) and Pajaro Valley Arts Council, a not for profit corporation (“Lessee”). City and Lessee may be referred to individually as a “Party” or collectively as the “Parties” or the “Parties to this Lease.” The City Manager serves as Contract Administrator for this Lease on behalf of the City Council.

RECITALS:

A. City owns the property at 37 Sudden Street, Watsonville, California, consisting of approximately 1,668 square feet within Emmett Courts Park.

B. City wishes to lease the Property to Lessee.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, stipulated and agreed, Lessee and City mutually agree as follows:

AGREEMENTS:

LEASE PROVISIONS

1. PREMISES AND PROJECT.

1.1 General. City hereby leases to Lessee, and Lessee hires from City, all that portion of that certain improved real property, 37 Sudden Street, Watsonville, California of approximately 1,668 square feet (the “Premises”), located within an approximately .266 acre parcel known as Emmett Courts Park(the “Project”), all as more particularly described or identified in Exhibit A attached hereto and incorporated herein by reference. The Project excludes, and Lessee is the sole owner of, the items identified on the Inventory of Fixtures set forth in Exhibit B attached hereto and incorporated herein by reference.

1.2 Pro Rata Share. Lessee’s pro rata share (“Pro Rata Share”) is percent (100%) which represents the percentage that the rentable area of the Premises bears to the total rentable area of the Project.

2. TERM; COMMENCEMENT DATE.

2.1 Lease Term. The term of this Lease shall be for Five years (the “Initial Term”), commencing at 12:01 am on July 1, 2024 (“Commencement Date”) and ending on June 30, 2029. Lessee shall, at the expiration of the term of this lease, or upon its earlier termination, surrender the Premises in as good condition as it is now at the date of this lease, reasonable wear DocuSign Envelope ID: B3935C1D-18FE-41E9-90C3-93FDF4CB4287

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and tear excepted. City shall have the right, upon the termination of the term or upon a breach, to enter the Premises and take possession of it.

3. RENT.

3.1 Base Rent. Lessee shall pay base rent (“Base Rent”) in the amount of $1 per year.

All rent, including Base Rent, shall be paid in lawful money of the United States of America without deduction or offset. Base Rent for initial term shall be payable on the Commencement Date, at a place (or places) as may be designated in writing from time to time by City.

3.1.1 Late Charge. Lessee acknowledges late payment by Lessee to City of rent will cause City to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impracticable to fix. Such costs include, without limitation, processing, accounting and late charges that may be imposed on City. Therefore, if City does not receive any installment of rent due from Lessee within ten (10) days after the date such rent is due, Lessee shall pay to City an additional sum of ten percent (10%) of the overdue rent as a late charge. The parties agree this late charge represents a fair and reasonable estimate of the costs City will incur by reason of late payment by Lessee. Acceptance of any late charge shall not constitute a waiver of Lessee’s default with respect to the overdue amount, nor prevent City from exercising any of the other rights and remedies available to City.

3.1.2 Rent. The term “Rent” as used in this Lease shall mean Base Rent and any other amounts owing from Lessee to the City pursuant to this Lease.

4. SECURITY DEPOSIT.

Lessee has tendered to City an amount of Zero Dollars ($0) as a security deposit. City may use these funds as are reasonably necessary to remedy any Lessee breach(s) or default(s) under this Lease, including without limitation in the payment of rent, to repair damages caused by Lessee, or expenses incurred to clean the Premises upon termination of tenancy. If any portion of the security deposit is used towards rent or damages at City’s sole discretion, Lessee agrees to reinstate said total security deposit upon receipt of five (5) days written notice. Any remaining balance of the security deposit shall be returned by City to Lessee at such time after termination of this Lease that all of Lessee’s obligations under this Lease have been fulfilled, reduced by such amounts as may be required by City to remedy defaults on the part of Lessee in the payment of Rent or other obligations of Lessee under this Lease, to repair damage to the Premises, or Project caused by Lessee and to clean the Premises. City may use and co-mingle the security deposit with other funds of City. Lessee hereby waives the provisions of the California Civil Code section 1950.7, and all other provisions of any laws, now or hereinafter in force, which restricts the amount or types of claim that a landlord may make upon a security deposit or imposes upon a landlord (or its successors) any obligation with respect to the handling or return of security deposits.

5. DUTIES OF LESSEE.

5.1 Lessee shall not use the image of the Premises or Project, the name of City or any other identifying sign or symbol associated with the Premises or Project or City to undertake any action or representation than those specifically assigned to Lessee as a duty under this Lease.

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5.2 Lessee shall protect and maintain the Premises. Lessee shall assume the responsibility for the guarding and safekeeping of all personal property located at the Premises.

5.3 Lessee shall not make any interior renovation or remodeling or make any major changes to the Premises or remove any objects, which are not the property of Lessee without the prior written consent of the City Manager or its designee.

6. USE OF PREMISES/COMMON AREAS.

6.1 Permitted Uses. Lessee shall use the Premises for the sole and exclusive purposes of the Pajaro Valley Arts Council for office space and conducting various arts exhibits, artist receptions, children’s art activities, performances of various types, including dance and music and for no other purpose. Without limiting the foregoing, Lessee agrees not to use or permit use of the Premises for any unlawful purpose, and not to commit or permit any waste or nuisance in or about the Premises. Lessee will not use Premises in a manner that increases the risk of fire, cost of fire insurance or improvements thereon. No unreasonable sign or placard shall be painted, inscribed or placed in or on or about the Premises or Project; and no tree or shrub thereon (if any) shall be destroyed or removed or other waste committed of said Premises or Project. No bicycles, motorcycles, automobiles or other mechanical means of transportation shall be placed anywhere on the Premises or Project except for areas (if any) identified by the City from time to time. No repair, storage, overhaul or modification of any motor vehicle shall take place on or about the Premises or Project. Lessee, at his/her expense, shall keep the Premises in as good condition as it was at the beginning of the term hereof, reasonable wear and tear excepted.

6.2 Prohibited Uses. Lessee shall not use Premises for any purpose not expressly permitted hereunder. Lessee shall not (i) create, cause, maintain or permit any nuisance or waste in, on or about the Premises or permit or allow the Premises to be used for any unlawful or immoral purpose, and (ii) do or permit to be done anything in any manner which unreasonably disturbs the users of the Project or the occupants of neighboring property. Specifically, and without limiting the above, Lessee agrees not to cause any unreasonable odors, noise, vibration, power emissions or other item to emanate from the Premises. No materials or articles of any nature shall be stored outside upon any portion of the Premises.

6.3 Condition, Use of Premises. At no cost to Lessee, City either has, or shall, supply, furnish, install, finish and deliver in warm vanilla shell, the Premises, in full compliance with all applicable laws, regulations and building codes applicable to new construction, disregarding variances and grandfathered/grandmothered rights, all at City’s sole cost and expense, and which shall comprise and is defined as the “Base Building”.

6.4 Overloading. Lessee shall not do anything on the Premises that will cause damage to the Premises, or the Project. Lessee shall not suffer or allow the Premises to be used in any manner that will harm or impair the structural strength of the Building nor to suffer or allow to be installed or operated on the Premises, or the Building, any machinery or apparatus whose weight or vibration would harm or impair the structural strength of the Premises or the Building. Lessee shall not place a load upon the floor or roof of the Premises without the City’s prior written consent, which consent may be conditioned on moving by skilled licensed handlers, or which exceeds the load per square foot which such floor or roof was designed to carry.

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that may be transmitted to the Building structure or to any leased space to such a degree as to be reasonably objectionable to the City or to any other tenants in the Building shall be placed and maintained by Lessee at its expense, in settings of cork, rubber, or spring-type vibration eliminators sufficient to eliminate such vibration or noise.

6.5 Common Areas.

6.5.1 The term “Common Areas” shall mean and refer to all areas within the exterior boundaries of the Premises which are now or hereafter made available for general use, convenience, and benefit of the City and other persons entitled to occupy space in the Project, including, without limiting the generality of the foregoing, outside lighting fixtures (if any), automobile parking areas (if any), driveways, sidewalks, landscaped and planted areas, and HVAC and plumbing systems and similar common areas, facilities, and systems. Lessee and its employees and invitees are, except as otherwise specifically provided in this Lease, authorized, empowered, and privileged to use the Common Areas in common with other persons during the Term of this Lease. City agrees to maintain and operate, or cause to be maintained and operated (except as hereinafter provided with reference to cost of maintenance), the Common Areas at all times for the benefit and use of the customers and patrons of Lessee, and of other lessees, owners, and occupants of the Project.

6.5.2 City shall keep or cause the Common Areas to be kept in a neat, clean, and orderly condition, and shall repair any damage to the facilities thereof, but all Common Area Expenses shall be charged and prorated in the manner hereinafter set forth. “Common Area Expenses” shall include, but not be limited to, all sums expended in connection with the Common Areas for all general maintenance and repairs, resurfacing, painting, restriping, cleaning, sweeping and janitorial services; maintenance and repair of sidewalks, curbs, and Project signs; sprinkler systems, planting and landscaping (if any); lighting and other utilities; directional signs; maintenance and repair of any fire protection systems, lighting systems, storm drainage systems and other utility systems outside of the Premises; all maintenance and repair costs and expenses, except as to cost of replacement of the roof, exterior walls, structural parts of the Premises and structural floor, and pipes and conduits outside the leased Premises in the Project that furnish the leased Premises with various utilities, incurred by the City; personnel to implement such services; real and personal property taxes and assessments on the improvements and land comprising the Project; any governmental imposition or surcharge imposed upon the City or assessed against any portion of the Common Areas; all costs and expense pertaining to any security alarm system for the lessees in the Project (if any); depreciation on maintenance and operating machinery and equipment (if owned) and rental paid for such machinery and equipment (if rented); and adequate public liability and property damage insurance on the Common Areas. In addition, the Common Area Expenses shall include a management fee of ten percent (10%) of the total of all other Common Area Expenses, adjusted from time to time as provided herein. The City may cause any or all of those services to be provided by an independent contractor or contractors.

6.5.3 From and after the Commencement Date, and throughout the term hereof, Lessee shall pay to the City, on the first day of each calendar month, the amount of $0.00 per square foot of the Premises, which as of the Commencement Date, equates to $0 per month, as the amount agreed upon by the parties to be Lessee’s share of the Common Area Expenses.

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6.5.4 Failure of Lessee to pay any of the charges as in this Section 6.6 required to be paid shall constitute a default under the terms hereof in like manner as failure to pay Base Rent when due.

6.5.5 The City shall at all times have the right and privilege of determining the nature and extent of the Common Areas, and of making such changes therein and thereto from time to time which in its sole discretion it deems to be desirable and in the best interest of all persons using the Common Areas, including without limitation the location and relocation of driveways, entrances, exits, automobile parking spaces (if any), installation of prohibited areas, landscaped areas, utilities, and all other facilities thereof.

6.5.6 Nothing contained herein shall be deemed to create any liability upon the City for any damage to motor vehicles of customers or employees or for loss of property from within such motor vehicles.

6.5.7 The City shall have the right to establish, and from time to time change, alter, and amend, and to enforce against Lessee and the other users of the Common Areas such reasonable rules and regulations (including the exclusion of employees’ parking therefrom) as the City in its sole discretion may deem necessary or advisable for the proper and efficient operation and maintenance of the Common Areas. The rules and regulations herein provided may include, without limitation, the hours during which the Common Areas shall be open for use.

6.5.8 City shall retain the sole and absolute discretion in the modification of the Common Areas, which may include the rearrangement, increase or decrease of the areas, and the manner in which the areas are utilized. City shall also have the right at any time and from time to time during the term hereof to exclude and restrain any person from use or occupancy thereof, excepting, however, bona fide customers, patrons, and service suppliers of Lessee, and other tenants of the City who make use of the Common Areas fully in accordance with the rules and regulations established by the City from time to time with respect thereto. The rights of Lessee hereunder in and to the Common Areas shall at all times be subject to the rights of the City, the other tenants of the Project to use the same in common with Lessee, and it shall be the duty of Lessee to keep all of the Common Areas free and clear of any obstructions created or permitted by Lessee or resulting from Lessee’s operation and permit the use of the Common Areas only for normal parking, ingress and egress by said customers, patrons, and service suppliers to and from the Project.

6.5.9 If in the sole discretion of the City unauthorized persons are using any of the Common Areas by reason of the presence of Lessee in the Premises, Lessee, upon demand of the City, shall enforce such rights against all such unauthorized persons by appropriate proceedings. Nothing herein shall affect the rights of the City at any time to remove any such unauthorized persons from said areas or to restrain the use of any of said areas by unauthorized persons.

7. MAINTENANCE AND REPAIRS.

7.1 Lessee’s Obligations. Lessee agrees at all times during the term hereof, at its own expense, to repair, replace and maintain in good and tenantable condition the Premises and every DocuSign Envelope ID: B3935C1D-18FE-41E9-90C3-93FDF4CB4287

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part thereof and including, without limitation, parking area, driveway, landscaping, roof, walls, glazing, plumbing, utility meters, pipes and conduits, all fixtures, air conditioning equipment and heating equipment, if any, exclusively serving the Premises and other equipment therein, including any equipment installed by Lessee which is part of said system, the storefront or storefronts, all signs, locks and closing devices, and all window sash, casement or frames, door and door frames, floor coverings, including carpeting, terrazzo or other special flooring, and all such items of repair, maintenance, allocation and improvement or reconstruction as may at any time or from time to time be required by a governmental agency having jurisdiction thereof.

Tenant will not place or suffer to be placed or maintained on any exterior door, roof, wall or window of the Leased Premises any sign, awning or canopy, or advertising matter or other thing of any kind, and will not place or maintain or permit, or suffer to be placed or maintained, any decoration, lettering or advertising matter on the glass of any window or door of the Leased Premises without first obtaining Landlord's written approval. In no event shall any: (a) neon, flashing or moving sign(s), or (b) sign( s) which shall interfere with the visibility of any sign, awning, canopy, advertising matter, or decoration of any kind of any other business or occupant of the Beach Street Garage of which the Leased Premises are a part, be permitted hereunder. Tenant further agrees to maintain any such sign, awning, canopy, decoration, lettering, advertising matter or other thing as may be approved in good condition and repair at all times. Lessee shall contract with a qualified service company for the monthly maintenance of the air conditioning equipment or heating, ventilating and air conditioning equipment, as the case may be, exclusively serving the Premises, with a copy of the service contract to be furnished to the City upon execution of this Lease and a copy of any subsequent contracts to be furnished from time to time during the term of this Lease provided that, at the City’s sole election, the City may so contract directly with a qualified service company, and Lessee shall promptly reimburse the City for the full cost of same.

Maintenance of all glass, both exterior and interior, is the sole responsibility of Lessee, and any glass broken shall be promptly replaced by Lessee with glass of the same kind, size and quality.

Upon surrender of the Premises, Lessee shall deliver the Premises to the City in good order, condition and state of repair, but shall not be responsible for damages resulting from ordinary wear and tear.

7.2 Lessee’s Failure to Maintain. If Lessee refuses or neglects to make repairs or maintain the Premises, or any part thereof, in a manner reasonably satisfactory to the City, the City shall have the right, upon giving Lessee reasonable written notice of its election to do so, to make such repairs or perform such maintenance on behalf of and for the account of Lessee. In such event the cost of such work shall be paid by Lessee as additional rent promptly upon receipt of an invoice therefor. In addition, the City shall include a management fee on the work that was completed by the City on behalf of the Lessee, in the amount of fifteen percent (15%) that may be adjusted from time to time as provided herein.

7.3 Waiver of Legal Rights. Lessee waives the benefits of any law existing now or at any time during the term of this Lease and any extension thereof or thereafter giving Lessee rights or remedies as a result of the physical condition of the Premises, or Project and, without limitation, Sections 1932, 1933, 1941, 1941.2, 1942 and 1942.1 of the Civil Code of California and all right to make repairs at the expense of the City or to terminate this Lease as provided in those Civil Code sections or otherwise, except as expressly provided herein.

8. HAZARDOUS MATERIALS.

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8.1 Compliance with Laws. Lessee shall not cause or permit any Hazardous Material (as defined below) to be brought upon, kept or used in or about the Premises or Project by Lessee, its agents, employees, contractors or invitees.

8.2 Termination of Lease. City shall have the right to terminate the Lease in City’s sole and absolute discretion in the event that (i) any anticipated use of the Premises by Lessee involves the generation or storage, use, treatment, disposal or release of Hazardous Material in a manner or for a purpose prohibited or regulated by any governmental agency, authority or Hazardous Materials laws; (ii) Lessee has been required by any lender or governmental authority to take remedial action in connection with Hazardous Material contaminating the Premises, if the contamination resulted from Lessee’s action or use of the Premises; or (iii) Lessee is subject to an enforcement order issued by any governmental authority in connection with the release, use, disposal or storage of a Hazardous Material on the Premises.

8.3 Assignment and Subletting. If (i) any anticipated use of the Premises by any proposed assignee or sublessee involves the generation or storage, use, treatment or disposal or release of Hazardous Material in a manner or for any purpose, (ii) the proposed assignee or sublessees has been required by any prior landlord, lender or governmental authority to take remedial action in connection with Hazardous Material contaminating a property, if the contamination resulted from such party’s action or use of the property in question, or (iii) the proposed assignee or sublessee is subject to an enforcement order issued by any governmental authority in connection with the release, use, disposal or storage of a Hazardous Material, then it shall not be unreasonable for City to withhold its consent to an assignment or subletting to such proposed assignee or sublessee.

8.4 Hazardous Materials Defined. The term “Hazardous Material(s)” shall mean any toxic or hazardous substance, material or waste or any pollutant or contaminant or infectious or radioactive material, including but not limited to, those substances, materials or wastes regulated now or in the future under any of the following statutes or regulations and any and all of those substances included within the definitions of “hazardous substances,” “hazardous waste,” “hazardous chemical substance or mixture,” “imminently hazardous chemical substance or mixture,” “ toxic substances,” “hazardous air pollutant,” “toxic pollutant” or “solid waste” in the (a) “CERCLA” or “Superfund” as amended by SARA, 42 U.S.C. Sec. 9601 et seq., (b) RCRA, 42 U.S.C. Sec. 6901 et seq., (c) CWA., 33 U.S.C. Sec. 1251 et seq., (d) CAA, 42 U.S.C. 78401 et seq., (e) TSCA, 15 U.S.C. Sec. 2601 et seq., (f) The Refuse Act of 1899, 33 U.S.C. Sec. 407, (g) OSHA, 29 U.S.C. 651 et seq. (h) Hazardous Materials Transportation Act, 49 U.S.C. Sec. 1801 et seq., (i) USDOT Table (40 CFR Part 302 and amendments) or the EPA Table (40 CFR Part 302 and amendments), (j) California Superfund, Cal. Health & Safety Code Sec. 25300 et seq., (k) Cal. Hazardous Waste Control Act, Cal. Health & Safety Code Section 25100 et seq., (l) Porter-Cologne Act, Cal. Water Code Sec. 13000 et seq., (m) Hazardous Waste Disposal Land Use Law, Cal. Health & Safety Code Sec. 25220 et seq., (n) “Proposition 65,” Cal. Health and Safety Code Sec. 25249.5 et seq., (o) Hazardous Substances Underground Storage Tank Law, Cal. Health & Safety Code Sec. 25280 et seq., (p) California Hazardous Substance Act, Cal.

Health & Safety Code Sec. 28740 et seq., (q) Air Resources Law, Cal. Health & Safety Code Sec. 39000 et seq., (r) Hazardous Materials Release Response Plans and Inventory, Cal. Health & Safety Code Secs. 25500-25541, (s) TCPA, Cal. Health and Safety Code Secs. 25208 et seq., and (t) regulations promulgated pursuant to said laws or any replacement thereof, or as similar terms are defined in the federal, state and local laws, statutes, regulations, orders or rules.

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Hazardous Materials shall also mean any and all other substances, materials and wastes which are, or in the future become regulated under applicable local, state or federal law for the protection of health or the environment, or which are classified as hazardous or toxic substances, materials or wastes, pollutants or contaminants, as defined, listed or regulated by any federal, state or local law, regulation or order or by common law decision, including, without limitation, (i) trichloroethylene, tetracholoethylene, perchloroethylene and other chlorinated solvents, (ii) any petroleum products or fractions thereof, (iii) asbestos, (iv) polychlorinated biphenyls, (v) flammable explosives, (vi) urea formaldehyde, and (vii) radioactive materials and waste.

8.5 City’s Right to Perform Tests. At any time prior to the expiration of the Lease Term, City shall have the right to enter upon the Premises in order to conduct tests of water and soil and to deliver to Lessee the results of such tests to demonstrate that levels of any Hazardous Materials in excess of permissible levels has occurred as a result of Lessee’s use of the Premises.

Lessee shall be solely responsible for and shall indemnify, protect, defend and hold City harmless from and against all claims, costs and liabilities including actual attorneys’ fees and costs arising out of or in connection with any removal, remediation, cleanup, restoration and materials required hereunder to return the Premises and any other property of whatever nature to their condition existing prior to the appearance of the Hazardous Materials. The testing shall be at Lessee’s expense if City has a reasonable basis for suspecting and confirms the presence of Hazardous Materials in the soil or surface or groundwater in on, under, or about the Premises or the Project, which has been caused by or resulted from the activities of Lessee, its agents, employees, contractors or invitees.

8.6 Hazardous Materials Indemnity. Lessee shall indemnify, defend (by counsel reasonably acceptable to City), protect and hold the City harmless from and against any and all claims, liabilities, penalties, forfeitures, losses and/or expenses, including, without limitation, diminution in value of the Premises or Project, damages for the loss or restriction on use of the rentable or usable space or of any amenity of the Premises or Project, damages arising from any adverse impact or marketing of the Premises or Project and sums paid in settlement of claims, response costs, cleanup costs, site assessment costs, attorneys’ fees, consultant and expert fees, judgments, administrative rulings or orders, fines, costs of death of or injury to any person or damage to any property whatsoever (including, without limitation, groundwater, sewer systems and atmosphere), arising from, or caused or resulting, either prior to or during the Lease Term, in whole or in part, directly or indirectly, by the presence or discharge in, on, under or about the Premises or Project by Lessee, Lessee’s agents, employees, licensees or invitees or at Lessee’s direction, of Hazardous Material, or by Lessee’s failure to comply with any Hazardous Materials Law, whether knowingly or by strict liability. Lessee’s indemnification obligations shall include, without limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary Hazardous Materials management plan, investigation, repairs, cleanup or detoxification or decontamination of the Premises or Project, and the presence and implementation of any closure, remedial action or other required plans, and shall survive the expiration of or early termination of the Lease Term. For purposes of the indemnity provided herein, any acts or omissions of Lessee or its employees, agents, customers, sublessees, assignees, contractors or subcontractors of Lessee (whether or not they are negligent, intentional, willful or unlawful) shall be strictly attributable to Lessee.

9. UTILITIES.

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Lessee shall pay prior to delinquency, and shall indemnify and hold the City harmless from, all costs incurred in installation, hook-up, delivery, and repair of all utilities and services whatsoever supplied to or consumed by Lessee on the Premises including, but not limited, to gas, water, sewer, electricity, telecommunications service, janitorial, garbage pickup and disposal, onPremises landscaping installation and maintenance (if any) and other public utilities. City shall not be responsible for providing any utilities or services to Lessee whatsoever, and shall not be liable to Lessee for any interruption or failure of any utility services to the Premises from any cause whatsoever, nor shall such interruption or failure constitute a constructive eviction or give rise to a right of rent offset or abatement or affect the obligations of Lessee under this Lease in any other way whatsoever.

10. ALTERATIONS.

10.1 Alterations. Lessee shall not make any alterations to the Premises without the prior written consent of the City which consent shall not be unreasonably withheld. City shall be deemed to have reasonably withheld or withdrawn consent unless each and every proposed alteration (i) shall not, individually or in the aggregate, lessen the fair market value of the Premises or materially affect the usefulness of the Premises, either for Lessee’s business or the business of potential successor tenants, (ii) be accompanied by all final plans and specifications with any deviation therefrom constituting a separate alteration subject to this Section 10, (iii) be constructed by a California licensed contractor and under the direction of a California licensed architect satisfactory to the City, and (iv) once consented to by the City, shall be completed expeditiously in a good and workmanlike manner, with first class quality materials, and in compliance with all applicable legal and insurance requirements, (v) shall be constructed in strict compliance with the additional conditions set forth in Section 10.4 hereof, and (vi) shall become a “Lessee Improvement” and part of the Premises and subject to this Lease, provided, at the City’s option, Lessee shall remove any such alteration and restore the Premises to their condition prior to the making of same, normal wear and tear excepted, upon the expiration or earlier termination of the term hereof. The City shall exercise its option by 30 days’ notice given no later than 30 days after such expiration or termination and, if Lessee has not so removed and restored within 30 days after the City gives said notice, Lessee shall pay the City upon demand the reasonable rental value of the Premises during the period beginning with the date immediately following said 30 days after the City gives its notice and ending with the date upon which the removal and restoration is completed and the City may, but shall not be obligated to, remove such alteration and restore the Premises and Lessee also shall pay the City its cost of same upon demand.

10.2 Required Alterations. Subject to Section 10.1 above, Lessee shall, at its sole cost, make any alteration, addition, or change to the Premises of any sort, substantial or insubstantial, ordinary or extraordinary, foreseeable or unforeseeable, whether structural or otherwise, as may be required by law due to the existence of, or Lessee’s use or occupancy of, the Premises or as a result of Lessee’s application for any permit or governmental approval, provided that the City may elect to make same, in which case Lessee shall reimburse the City promptly upon demand for all costs of the City’s making same.

10.3 Security for Completion. Before commencing any proposed alteration, Lessee, if requested by the City, shall furnish to the City security reasonably satisfactory to the City guaranteeing to the City the completion of the proposed alteration within a reasonable time, free DocuSign Envelope ID: B3935C1D-18FE-41E9-90C3-93FDF4CB4287

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and clear of all liens and, if available, all encumbrances, chattel mortgages, conditional bills of sale, security agreements and other claims and charges (other than those, if any, permitted hereunder) and in accordance with any plans and specifications theretofore approved by the City and, if required under any City encumbrance, by the City’s lender.

10.4 Additional Conditions. Lessee further covenants and agrees that no alterations will be made except in compliance with, and Lessee hereby covenants that it will comply with, each of the following provisions:

10.4.1 Before any alterations are begun, Lessee shall procure, at its own sole cost and expense, all necessary permits from all governmental authorities and shall, on demand, deliver photocopies thereof to the City;

10.4.2 All alterations shall be made in compliance and conformity with all applicable laws;

10.4.3 In making any alterations, Lessee shall not violate the terms or conditions of any insurance policy obtained or required pursuant to the provisions of this Lease affecting or relating to the Premises or any part thereof;

10.4.4 Promptly after the completion of any alterations, Lessee shall procure, at Lessee’s own sole cost and expense, all permits of governmental authorities for the completed alterations as may be required by any applicable laws, if any, and, on demand, shall promptly deliver photocopies thereof to the City; and

10.4.5 Lessee shall pay all costs, expenses and liabilities arising out of, in connection with, or by reason of, any alterations, and shall keep the Premises and Project free and clear of all liens, claims and encumbrances in any way arising out of, in connection with, or by reason of, any alterations.

10.5 No City Contribution. The City shall not be required to make any contribution to the cost of any alterations or any part thereof, and Lessee covenants that the City shall not be required to pay any cost, expense or liability arising out of or in connection with or by reason of any alterations and shall indemnify and hold the City harmless from and against, and shall reimburse the City upon demand for, all such costs, expenses and liabilities (including, without limitation, reasonable attorneys’ fees and disbursements).

10.6 Notice. If Lessee makes any alterations to the Premises as provided in this Section 10, the alterations shall not be commenced until ten (10) days after the City has received written notice from Lessee stating the date the installation of the alterations is to commence so that the City can post and record an appropriate notice of nonresponsibility at the Premises.

10.7 Manner; Cost. Any alterations by Lessee shall be made in a manner that will not interfere with the quiet enjoyment of the other tenants in the Project. Lessee shall pay prior to delinquency all cost for construction done by it or caused by it to be done on the Premises as permitted by this Lease. Lessee shall also reimburse the City upon demand for all costs the City incurs in reviewing any proposed alteration, including without limitation, architect, engineer and legal fees. Upon completion of any such work, Lessee shall have recorded in the office of the County Recorder of Santa Clara County a Notice of Completion as required or permitted by law.

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10.8 Mechanic’s Liens. Lessee shall keep the Premises, and the Project free and clear of all mechanic’s liens resulting from construction done by or for Lessee.

10.9 Trade Fixtures. Lessee shall have the right at any time, and from time to time during the term of this Lease, at Lessee’s sole cost and expense, to install in or on the Premises such items, herein called “trade fixtures,” for use in Lessee’s trade or business as Lessee may, in its reasonable discretion, deem advisable, except that all such Lessee’s trade fixtures, furniture, furnishings, signs, and other personal property not permanently affixed to the Premises must be new when installed in, or attached to, the Premises. (All items identified on the Inventory of Fixtures, Exhibit B, shall be subject to all provisions of this Lease governing fixtures.) Any and all such trade fixtures shall remain the property of Lessee, and may be removed by Lessee at any time or times prior to the expiration or sooner termination of this Lease so long as Lessee is not in default hereunder, so long as Lessee shall immediately replace the same with similar personal property of comparable or better quality, except that Lessee shall not be obligated to replace such personal property at the expiration or earlier termination of this Lease, and Lessee shall immediately repair all damage caused by such removal and restore the Premises to substantially the condition they were in prior to the installation of such fixtures so that no trace remains of their presence at the Premises. At all times during the term of this Lease, Lessee shall maintain such trade fixtures in a good, first class condition.

10.10 Removal. Any trade fixtures described in this Section 10 that are not removed from the Premises by Lessee on the date of expiration or sooner termination, regardless of cause, of this Lease shall be deemed abandoned by Lessee and shall automatically become the property of the City and Lessee shall hold City harmless as to all claimants with respect to same.

10.11 Insurance. In the event that Lessee shall make any permitted improvements to the Premises under the provisions of this Section 10, Lessee agrees to carry such insurance as the City may reasonably request covering any such improvements, it being expressly understood and agreed that none of such improvements shall be insured by the City under the insurance it may carry upon the Project, nor shall the City be required to reconstruct any such improvements under any circumstances whatsoever, notwithstanding the provisions of Section 13.

11. TAXES.

11.1 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes, license fees and public charges assessed or levied against Lessee or or Lessee’s Improvements, trade fixtures, furnishings, equipment and other personal property.

11.2 Assessments and Special Taxes. As a municipal corporation, City’s fee interest in the Project is exempt from the 1% general property tax levy and therefore property taxes will not be levied and will not be passed through to lessee or other tenants of the Project during City’s ownership of the Project. However, if and to the extent the Project or portion thereof is subject to special taxes or assessments, Lessee shall pay Lessee’s share of all such assessment and special taxes, if any, (other than possessory interest taxes on Lessee’s leasehold interest which shall be paid 100% by Lessee) which become due and payable to City on or before the later of ten (10) days prior to the delinquency thereof or three (3) days after the date on which Lessee receives a copy of the special tax or assessment bill and notice of City’s determination hereunder. Lessee’s liability to pay special taxes and assessments shall be prorated on the basis DocuSign Envelope ID: B3935C1D-18FE-41E9-90C3-93FDF4CB4287

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of a three hundred sixty-five (365) day year to account for any fraction or portion of a tax year included in the Lease term at the commencement or expiration of the Lease.

11.3 Revenue and Taxation Code Notice; Possessory Interest Taxes. Lessee specifically acknowledges it is familiar with §107.6 of the California Revenue and Taxation Code, realizes that a possessory interest subject to property taxes may be created, agrees to pay any such tax in full and without proration, and hereby waives any rights Lessee may have under said California Revenue and Taxation Code §107.6. City shall have no obligation to pay any possessory interest tax. No such possessory interest tax or any other tax payable by Lessee shall in any way reduce or substitute for the rent, charges or fees required to be paid as a condition of this Lease or as otherwise required by City.

12. HOLD HARMLESS/INDEMNIFICATION.

12.1 Indemnification. To the extent permitted by law, Lessee agrees to protect, defend, hold harmless and indemnify City, its City Council, commissions, officers, agents, volunteers, and employees from and against any claim, injury, liability, loss, cost, and/or expense or damage, however same may be caused, including all costs and reasonable attorney’s fees in providing a defense to any claim arising therefrom for which City shall become legally liable arising from Lessee’s negligent, reckless, or wrongful acts, errors, or omissions with respect to or in any way connected with this Lease. Lessee shall give City immediate notice of any claim or liability hereby indemnified against.

12.2 Waiver of Claims. Lessee waives any claims against City for injury to Lessee’s business or any loss of income therefrom, for damage to Lessee’s property, or for injury or death of any person in or about the Premises or the Project, from any cause whatsoever, except to the extent caused by City’s active negligence or willful misconduct.

13. DAMAGE, DESTRUCTION AND TERMINATION.

13.1 Uninsured Risks. If, during the Term of this Lease, the Premises is totally or partially destroyed from a risk not covered by the insurance described in Section 19.2, the City, at its option, may elect to terminate this Lease by giving notice to Lessee or may elect to restore the same. However, as to destruction which was caused by an act or omission of Lessee, its employees, agents, invitees or permittees, Lessee shall reimburse the City the full cost of the restoration of the Premises, and all leasehold improvements therein under any circumstances. If the City elects to restore the Premises, Lessee shall be entitled to a proportionate reduction of rent while such repairs are being made. Such reduction shall be in an amount which bears the same proportion to the Base Rent as the floor area of that portion of Premises which has been damaged or is otherwise unusable by Lessee, bears to the total floor area of the Premises, except that if the damage or destruction is to more than 50% of the square footage of the Premises and Lessee ceases to occupy the Premises, such proportionate reduction shall be 100%.

13.2 Insured Risks.

13.2.1 If, during the Term of this Lease, the Premises is totally or partially destroyed from a risk covered by insurance described in Section 19.2, the City shall forthwith repair the same to substantially the same condition they were in immediately prior to the DocuSign Envelope ID: B3935C1D-18FE-41E9-90C3-93FDF4CB4287

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destruction and to the extent of proceeds received under such insurance, provided such repairs can be made within ninety (90) days under then existing law. Such destruction shall in no way annul or void this Lease, except that Lessee shall be entitled to a proportionate reduction of rent while such repairs are being made, including but not limited to the foregoing ninety days, such proportionate reduction to be equal to, and granted upon the City’s receipt of, the proceeds received by the City from any rental interruption insurance maintained by Lessee. Such reduction shall be in an amount which bears the same proportion to the minimum monthly rent as the floor area of that portion of the Premises which has been damaged or is otherwise unusable by Lessee bears to the total floor area of the Premises. If such repairs cannot be made in 90 days, the City may, at its option, make same within a reasonable time, this Lease continuing in full force and effect and the rent being proportionately reduced as aforesaid. In the event that the City does not so elect to make such repairs which cannot be made in 90 days, or such repairs cannot be made under such then existing law, this Lease shall terminate.

13.2.2 Notwithstanding any other provision of this Lease, if, at any time during the term of this Lease, the Premises is totally or partially destroyed and (i) the total cost to repair the Premises exceeds One Hundred Thousand Dollars($100,000), or (ii) twenty percent (20%) of the Project is damaged or destroyed (and whether or not any portion of the Premises is also damaged or destroyed), the City may elect to terminate this Lease by written notice to Lessee.

Determination of the extent of damage or destruction and the time for effectuating repair shall be made by the City based upon written appraisals and insurance adjustment reports, and shall be final and binding on the Parties.

13.3 Extent of Obligation. Notwithstanding the foregoing, the City shall not be required to repair, reconstruct, or restore damage or destruction by fire or other cause to any portion of the Premises constructed by or for Lessee, and Lessee shall at its sole cost and expense fully restore or replace its stock in trade, trade fixtures, furniture, furnishings, equipment, and other personal property. Lessee shall commence all such replacement and restoration work promptly following the occurrence of any such damage or destruction, and shall diligently prosecute such work to completion. Lessee hereby waives any statutory rights of termination which may arise by reason of any partial or total destruction of the Premises or any part thereof.

Upon termination of the Lease under any of the provisions of this Section 13, the Parties shall be released thereby from any further obligations hereunder except for obligations which, prior to the date of such termination, had already accrued, and except as provided in the following sentence.

In the event of such a termination, all proceeds from Lessee’s insurance which pertain to alterations or improvements to the Premises which would otherwise become the property of the City upon expiration or termination of this Lease shall be disbursed and paid to the City.

13.4 Force Majeure/Excusable Delay. Except as provided in this Lease, any act of City or Lessee required by this Lease to be done within a specified time shall be subject to Excusable Delay. Lessee’s obligation to pay Rent, however, is not excused by this Section. “Excusable Delay” means prevention, delay or stoppage due to strikes, lockouts, labor disputes, Acts of God, inability to obtain labor, materials or reasonable substitutes, governmental restrictions, governmental regulation, governmental controls, judicial orders, enemy, or hostile governmental actions, civil commotion, fire or other casualty, and other causes beyond the reasonable control of Lessee or City (excepting, however, City’s or Lessee’s financial inability), which shall excuse the performance by City or Lessee for a period equal to the prevention, delay or stoppage, except the obligations imposed with regard to rent to be paid by Lessee pursuant to DocuSign Envelope ID: B3935C1D-18FE-41E9-90C3-93FDF4CB4287

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this Lease. In the event any work performed by Lessee or Lessee’s contractors results in a strike, lockout, and/or labor dispute, the strike, lockout, and/or labor dispute shall not excuse the performance by Lessee of the provisions of this Lease.

13.5 Waiver. City and Lessee waive the provisions of any statutes which relate to termination of leases when leased property is destroyed and agree that such event shall be governed by the terms of this Lease.

14. SIGNS.

Lessee shall not construct, maintain or place any signs, advertising or other exterior decoration (collectively, “Signs”) upon the exterior of the Premises or Project, or modify any existing Signs, without prior written consent of City. Any Sign that Lessee has the right to place, construct or maintain shall comply with all laws at all times during the term of this Lease, and Lessee shall obtain any approval required by such law. City makes no representation with respect to Lessee’s ability to obtain such approval.

15. ASSIGNMENT AND SUBLETTING.

15.1 City’s Consent Required. Lessee shall not assign this Lease, nor any interest therein, and shall not sublet or encumber the Premises or any part thereof, nor any right or privilege appurtenant thereto, nor allow or permit any other person(s) to occupy or use the Premises, or any portion thereof, without the prior written consent of City, such consent not to be unreasonably delayed, withheld, or denied. This Lease shall be binding upon any permitted assignee or successor of Lessee. Consent by City to one assignment, subletting, occupation or use by another person shall not be deemed to be consent to any subsequent assignment, subletting, occupation or use by another person. No assignment, subletting, or encumbrance by Lessee shall release it from or in any way alter any of Lessee’s obligations under this Lease. Any assignment, subletting, encumbrances, occupation or use contrary to the provisions of this Lease shall be void and shall constitute breach of this Lease. City may assign any of its rights hereunder without notice to Lessee.

15.2 No Release of Lessee. No subletting or assignment as approved by City shall release Lessee of Lessee’s obligation or alter the primary liability of Lessee to pay the rent and to perform all other obligations by Lessee hereunder. The acceptance of rent by City from any other person shall not be deemed to be a waiver by City of any provision hereof. In the event of default by any approved assignee or other successor of Lessee in the performance of any of the terms hereof, City may proceed directly against Lessee without the necessity of exhausting remedies against such assignee or successor.

16. DEFAULTS; REMEDIES.

16.1 Defaults. The occurrence of any one or more of the following events shall constitute a material default or breach of this Lease by Lessee:

16.1.1 Abandonment of the Premises by Lessee as defined by California Civil Code § 1951.3;
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16.1.2 Failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due, where such failure shall continue for a period of ten (10) business days after written notice thereof from City to Lessee. In the event City serves Lessee with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes, such Notice to Pay Rent or Quit shall also constitute the notice required by this subparagraph;

16.1.3 Failure by Lessee to observe or perform any of the covenants, conditions or provisions of this Lease in any material respect to be observed or performed by Lessee where such failure shall continue for a period of thirty (30) days after written notice thereof from City to Lessee; provided, however, that if the nature of Lessee’s default is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commenced such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion;

16.1.4 Making by Lessee of any general arrangement or assignment for the benefit of creditors; Lessee’s becoming a “debtor” as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days); the appointment of a bankruptcy trustee or receiver to take possession of all or substantially all of Lessee’s assets located at or on the Premises or of Lessee’s interest in this Lease where possession is not restored to Lessee within thirty (30) days; or the attachment, execution or other judicial seizure of all or substantially all of Lessee’s assets located at or on the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within thirty (30) days.

16.2 Remedies. In the event of any material default or breach by Lessee, City may at any time thereafter, following any notice required by statute, and without limiting City in the exercise of any right or remedy which City may have by reason of such default or breach:

16.2.1 Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises and all alterations to City. In such event, City shall be entitled to recover from Lessee all damages incurred by City by reason of Lessee’s default including, but not limited to, the cost of recovering possession of the Premises and alterations, expenses of reletting, including necessary renovation and alteration of the Premises and alterations, reasonable attorneys’ fees, the worth at the time of the award of the unpaid rent that had been earned at the time of termination of this Lease and the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of such award exceeds the amount of such rental loss for the same period that Lessee proves could be reasonably avoided.

16.2.2 Maintain Lessee’s right to possession, in which case this Lease shall continue in effect whether or not Lessee shall have abandoned the Premises. In such event, City shall be entitled to enforce all of City’s rights and remedies under this Lease, including the right to recover rent as it becomes due hereunder.

16.2.3 Pursue any other remedy now or hereafter available to City under the laws or judicial decisions of the State of California.

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16.3 No Relief from Forfeiture after Default. Lessee waives all rights of redemption or relief from forfeiture under California Code of Civil Procedure §§ 1174 and 1179, and any other present or future law, in the event Lessee is evicted or City otherwise lawfully takes possession of the Premises by reason of any default or breach of this Lease by Lessee.

17. INTEREST ON PAST-DUE OBLIGATIONS.

Except as expressly provided herein, any amount due City when not paid when due shall bear interest at the lesser of ten percent (10%) per year or the maximum rate then allowable by law from the date due.

18. CITY’S ACCESS.

18.1 Access for Inspection. City and City’s agents shall have the right to enter the Premises at reasonable times, upon not less than twenty-four (24) hours prior notice to Lessee or less in case of an emergency), for the purpose of inspecting same, showing same to prospective purchasers, lenders, lessees or others, and making such alterations, repairs, improvements or additions to the Premises as City may deem necessary. City may at any time place on or about the Premises any ordinary “For Sale” signs and City may at any time during the last one hundred twenty (120) days of the term hereof place on or about the Premises any ordinary “For Lease” signs, all without rebate of rent or liability to Lessee.

18.1.1 City will conduct Premises inspections on a quarterly basis to identify maintenance issues that require attention. City will provide to Lessee a report specifying such maintenance issues as are identified that are Lessee’s responsibility under this Lease, and if appropriate, City will provide the estimated cost for services to perform the maintenance.

18.2 No Warranty. Except as otherwise stated in this Lease, Lessee hereby acknowledges that neither the City nor any employees or agents of the City has made any oral or written warranties or representations to Lessee relative to the condition or use by Lessee of said Premises and Lessee acknowledges that Lessee assumes all responsibility regarding the Occupational Safety and Health Act, the legal use and adaptability of the Premises and compliance with all applicable laws and regulations in effect during the term of this Lease.

18.3 Security Measures. City shall have the right to require a reasonable security system, device, operation or plan be installed and implemented to protect the Premises or any alterations. Should City, in its sole discretion, require Lessee to install such a security system, Lessee agrees to bear the sole cost and expense of any security system, device, operation or plan and the installation and implementation thereof. Lessee shall obtain City’s prior approval before installing or implementing any security system, device, operation or plan.

19. INSURANCE.

19.1 Lessee Insurance. Lessee’s responsibility for the Premises begins immediately upon the Commencement Date and Lessee, at its sole cost and expense, and at no cost to City, shall provide and maintain in full force and effect during the entire term of this Lease insurance coverage in an amount(s) and in a form acceptable to City as set forth in Exhibit C attached hereto and incorporated herein by reference. Said policies shall be maintained with respect to Lessee’s employees, if any, and all vehicles operated on the Premises. The policies shall include DocuSign Envelope ID: B3935C1D-18FE-41E9-90C3-93FDF4CB4287

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the required endorsements, certificates of insurance and coverage verifications as described in Exhibit C. Lessee also agrees to secure renter’s liability insurance.

19.2 Fire Insurance on Project. City shall maintain insurance (or self-insurance through City’s joint pool coverage plan) covering the Project.

20. CONTRACT FOR ADMINISTRATIVE SERVICE.

To the extent that this Lease is a contract for administrative services, the City Council entered into such agreement upon recommendation of the City Manager pursuant to Section 1108 of the City’s Charter. The policy decision with respect to the services was made by the City Council and not by the City Manager.

21. DISPUTE RESOLUTION.

21.1 Unless otherwise mutually agreed to or as provided in Section 21.5, any controversies between Lessee and City regarding the construction or application of this Lease, and claims arising out of this Lease or its breach shall be submitted to mediation within thirty (30) days of the written request of one Party after the service of that request on the other Party.

21.2 The Parties may agree on one mediator. If they cannot agree on one mediator, the Party demanding mediation shall request the Superior Court of Santa Clara County to appoint a mediator. The mediation meeting shall not exceed one day (eight (8) hours). The Parties may agree to extend the time allowed for mediation under this Lease.

21.3 The costs of mediation shall be borne by the Parties equally.

21.4 Except as provided in Section 21.5, mediation under this section is a condition precedent to filing an action in any court. In the event of litigation arising out of any dispute related to this Lease, the Parties shall each pay their respective attorney’s fees, expert witness costs and cost of suit, regardless of the outcome of the litigation.

21.5 Nothing in this Section shall require the City to mediate any eviction, unlawful detainer, or other exercise of remedies following the expiration of the Term of this Lease as provided in Section 2 or any termination of this Lease under Section 16.

22. PAYMENTS/PARTIAL PAYMENTS.

Payments shall be effective upon receipt. City may apply any payment received from Lessee at any time against any obligation due and owing by Lessee under this Lease, regardless of any statement appearing on or referred to in any remittance from Lessee or any prior application of such payments. Acceptance by City of a partial payment of rent or other charges shall not be considered or construed to waive any right of City or affect any notice of legal proceedings, unless both Parties shall agree otherwise in writing. The receipt by City of a partial payment of any amount due to City endorsed as payment in full will be deemed to be a partial payment only, and any endorsements or statements on the check or any letter accompanying the check shall not be deemed an accord and/or satisfaction, and, notwithstanding said endorsements, City may accept and deposit said check without prejudice to its right to recover the balance. Lessee’s obligation (without prior notice or demands) to pay rent and all other amounts due hereunder DocuSign Envelope ID: B3935C1D-18FE-41E9-90C3-93FDF4CB4287

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shall be absolute and unconditional, and not subject to any abatement, set off, defense, recoupment or reduction.

23. NON-LIABILITY OF OFFICIALS AND EMPLOYEES OF THE CITY.

No official or employee of City shall be personally liable for any default or liability under this agreement.

24. NON-DISCRIMINATION.

Lessee covenants it shall not discriminate based upon race, color, creed, religion, sex, marital status, age, handicap, national origin or ancestry in any activity pursuant to this agreement.

25. CONFLICT OF INTEREST.

Lessee shall at all times avoid conflict of interest or appearance of conflict of interest in performance of this agreement.

26. MEMORANDUM OF LEASE.

Lessee shall not record this Lease or a memorandum thereof, or any other reference to this Lease, without the prior written consent of the City. Lessee, upon the request of the City, shall execute and acknowledge a Memorandum of Lease for recording in the official records of Santa Clara County. Upon termination or expiration of this Lease, Lessee shall execute and record a quitclaim deed as to its leasehold interest.

27. ESTOPPEL CERTIFICATE.

Lessee shall, from time to time, upon at least ten (10) days prior written notice from City, execute, acknowledge and deliver to City a statement in writing (i) certifying this Lease is unmodified and in full force and effect, or, if modified, stating the nature of the modification and certifying that the Lease, as modified, is in full force and effect, and the date to which the rental and other charges, if any, have been paid; and, (ii) acknowledging that there are not to Lessee’s knowledge, any defaults, or stating if any defaults are claimed, any statement may be relied upon by any prospective purchaser or encumbrancer of the Project.

28. LIENS.

Lessee agrees at its sole cost and expense to keep the Premises, and Project free and clear of any and all claims, levies, liens, encumbrances or attachments.

29. VACATING.

Upon termination of the tenancy, Lessee shall completely vacate the Premises, and Project, including the removal of any and all of its personal property and fixtures (whether or not identified on the Inventory of Fixtures (Exhibit B). Before departure, Lessee shall return keys and the Premises (including Lessee Improvements) to City the same condition in which it was received. Lessee shall allow City to inspect the Premises to verify the condition of the Premises and its contents.

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30. ABANDONMENT.

Lessee’s absence from the Premises for three (3) consecutive days, without prior notice, during which time rent or other charges are delinquent, shall be deemed abandonment of the Premises and a material default by Lessee entitling City to the remedies in Section 16 above, including the right to terminate this Lease. In the event of such termination, City shall be authorized to enter and take possession and to remove and dispose of the property of Lessee and its employees, agents, contractors and invitees without any liability whatsoever to City.

31. PROPRIETARY AND GOVERNMENTAL ROLES; ACTIONS BY CITY.

Except where clearly and expressly provided otherwise in this Lease, the capacity of the City in this Lease shall be as owner and lessor of property only (“Proprietary Capacity”), and any obligations or restrictions imposed by this Lease on the City shall be limited to that capacity and shall not relate to, constitute a waiver of, supersede or otherwise limit or affect its governmental capacities, including enacting laws, inspecting structures, reviewing and issuing permits, and all of the other legislative and administrative or enforcement functions pursuant to federal, state or local law (“Governmental Capacity”). When acting in its Proprietary Capacity, discretionary actions may be undertaken by the City Manager or other designees as designated by the City Manager to the extent otherwise provided for in this Lease. In addition, nothing in this Lease shall supersede or waive any discretionary or regulatory approvals required to be obtained from the City under applicable law, nor guarantee that the City, in its Governmental Capacity, will grant any particular request for a license, permit or other regulatory approval. Lessee understands that the City may grant or deny such request in its sole discretion, and may impose such terms and conditions as it deems consistent with that discretion and applicable laws.

32. HOLDOVER.

Lessee has no right to retain possession of the Premises or any portion thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over after the expiration of the term without executing a new lease, then such holding over shall be construed as a tenancy from month-to-month, subject to all conditions, provisions and obligations of this Lease insofar as they are applicable to a month-to-month tenancy, except that the Base Rent portion of the rent shall be increased to 150% of the amount of the Base Rent payable immediately prior to the expiration or termination of the Lease, as the case may be. Nothing contained herein shall be construed as consent of City to any holding over by Lessee.

33. NOTICES.

All notices to the Parties shall, unless otherwise requested in writing, be sent to City addressed as follows:

City of Watsonville
Attention: City Clerk
275 Main St. Suite 400
Watsonville, CA 95076
And to Lessee addressed as follows:

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Board President
Pajaro Valley Arts Council
37 Sudden Street
Watsonville, CA 95077
Notices may be served upon Lessee in person or by first class mail or by certified mail to Lessee whether or not said mailing is accepted by Lessee. If notice is sent via facsimile, a signed, hard copy of the material shall also be mailed. The workday the facsimile was sent shall control the date notice was deemed given if there is a facsimile machine generated document on the date of transmission. A facsimile transmitted after 1:00 P.M. on a Friday shall be deemed to have been transmitted on the following Monday. These addresses shall be used for service of process.

34. TIME.

Time shall be of the essence in this Lease.

35. MISREPRESENTATIONS.

Any statements submitted to City in the Application to Rent by Lessee (if applicable) are considered inducements to execute this Lease. Misrepresentations shall entitle City to terminate this Lease at any time.

36. AMENDMENTS.

It is mutually agreed that no oral Leases have been entered into and that no alteration or variation of the terms of this Lease shall be valid unless made in writing and signed by the Parties to this Lease.

37. INDEPENDENT LEGAL ADVICE.

Each Party represents and warrants to the other the following: they have carefully read this Lease, and in signing this Lease, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Lease, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Lease; and, they have freely signed this Lease without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Lease, and without duress or coercion, whether economic or otherwise.

38. SERVICE CHARGE.

A service charge of twenty dollars ($20.00) will be made for each check that must be resubmitted for payment.

39. SIGNING AUTHORITY.

If this Lease is not signed by all Lessees named herein, the person actually signing warrants that he/she has the authority to sign for the others.

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40. CHANGE OF LOCKS.

Lessee may install new locks on all exterior doors. Lessee shall advise City of such action and shall provide City with keys to said locks. Lessee shall also deliver to City the old locks with keys. Upon termination, Lessee shall leave new locks that shall become the property of City.

41. CAPTIONS/RECITALS.

The captions of the various sections, paragraphs and subparagraphs of this Lease are for convenience only and shall not be considered or referred to in resolving questions of interpretation. All of the recitals of this Lease, and the defined terms set forth therein, are incorporated into and made a part of this Lease by this reference.

42. REPAIRS.

Except as expressly provided in this Lease, City shall have no obligation to repair or maintain the Premises or any alterations thereto or facilities placed therein. Lessee expressly waives the benefit of any statute now or hereinafter in effect which would otherwise afford Lessee the right to make repairs at City’s expense or to terminate this Lease because of City’s failure to keep Premises in good order, condition and repair. Lessee shall not call on City to make any improvements or repairs to said property of any kind whatsoever.

43. SURRENDER OF LEASE NOT MERGER.

The voluntary or other surrender of this lease by Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of City, terminate all or any existing subleases or subtenancies, or may, at the option of City, operate as an assignment to it of any and all such subleases or subtenancies.

44. INTEGRATED DOCUMENT; AMENDMENTS.

This Lease, including any exhibits attached hereto, embodies the entire agreement between City and Lessee and its terms and conditions. No other understanding, agreements, conversations or otherwise, with any officer, agent or employee of City prior to execution of this Lease shall affect or modify any of the terms or obligations contained in any documents comprising this Lease. Any such verbal agreement shall be considered as unofficial information and in no way binding upon City. This Lease may be modified only by a written amendment duly executed by the Parties to this Lease, pursuant to Section 37 entitled “Amendments.” All agreements with City are subject to approval of the City Council before City shall be bound thereby.

45. WAIVER.

Waiver by City of one or more conditions of performance or any breach or condition under this Lease shall not be construed as a waiver(s) of any other condition of performance or subsequent breaches or conditions. The subsequent acceptance by a Party of the performance of any obligation or duty by another Party shall not be deemed to be a waiver of any term or condition of this Lease. The exercise of any remedy, right, option or privilege hereunder by City shall not preclude City from exercising the same or any and all other remedies, rights, options and DocuSign Envelope ID: B3935C1D-18FE-41E9-90C3-93FDF4CB4287

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privileges hereunder and City’s failure to exercise any remedy, right, option or privilege at law or equity, or otherwise which City may have, shall not be construed as a waiver.

46. INTERPRETATIONS.

In construing or interpreting this Lease, the word “or” shall not be construed as exclusive and the word “including” shall not be limiting. The Parties agree that this Lease shall be fairly interpreted in accordance with its terms without any strict construction in favor of or against any other Party.

47. SEVERABILITY CLAUSE.

If any provision of this Lease is held to be illegal, invalid or unenforceable in full or in part, for any reason, then such provision shall be modified to the minimum extent necessary to make the provision legal, valid and enforceable, and the other provisions of this Lease shall not be affected thereby.

48. GOVERNING LAW.

This Lease shall be governed and construed in accordance with the statutes and laws of the State of California.

49. VENUE.

In the event that suit shall be brought by any Party to this Lease, the Parties agree that venue shall be exclusively vested in the state courts of the County of Santa Clara.

50. COMPLIANCE WITH LAWS.

Lessee shall not use the Premises or permit anything to be done in or about the Premises which will in any way conflict with any law, statute, zoning restriction, ordinance or governmental law or rule, regulation, or requirement, including any Hazardous Materials laws or regulations, of any duly constituted public authorities now in force or which may hereafter be enacted or promulgated, or which will subject City to any liability for injury to any person or property by reason of any business operation being conducted in or about the Premises. To the extent required due to Lessee’s specific use of the Premises, alterations of the Premises made by Lessee, or as a result of Lessee’s application for permits or authorizations, Lessee shall, at its sole cost and expense, promptly comply with all applicable laws, statutes and ordinances, governmental rules, regulations, orders, permits, licenses, approvals, authorizations, federal and state disability laws, and other requirements including the Americans with Disabilities Act (“ADA”) of 1990 (42 U.S.C. 12101 et seq.), together with any amendment thereto or regulations promulgated under any of the foregoing, and any state or local ordinances or codes enacted pursuant thereto, and with all requirements of any board or fire insurance underwriters or other similar bodies, now or hereafter constituted, relating to or affecting the condition, use, or occupancy of the Premises by Lessee, any improvements or alterations made by, on behalf of, or for Lessee, or any other Lessee acts or omissions. The final judgment of any court of competent jurisdiction or the admission of Lessee in any action against Lessee, whether City be a party thereto or not, that Lessee has violated any laws shall be conclusive of that fact as between City and Lessee. Lessee, within ten (10) days after receipt, shall provide City with copies of any DocuSign Envelope ID: B3935C1D-18FE-41E9-90C3-93FDF4CB4287

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notices it receives regarding a material violation or alleged material violation of any Laws.

Lessee shall also cause its agents, contractors, subcontractors, employees, customers, and subtenants to comply with all applicable laws.

51. COUNTERPARTS; ELECTRONIC SIGNATURES.

This Lease may be executed in counterparts, each of which shall be deemed to be an original, but both of which shall constitute one and the same instrument; and, the Parties agree that signatures on this Lease, including those transmitted electronically by email or facsimile, shall be sufficient to bind the Parties.

52. ACCESSIBILITY; DISABILITY LAWS.

52.1 The Premises have not undergone an inspection by a Certified Access Specialist.

52.2 “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.”

52.3 Since compliance with the ADA and other federal and state disability laws (collectively, “Disability Laws”) is dependent upon Lessee’s specific use of the Premises, City makes no warranty or representation as to whether or not the Premises comply with Disability Laws. In the event that Lessee’s use of the Premises requires modifications or additions to the Premises in order to be in compliance with Disability Laws, Lessee agrees to make any such necessary modifications and/or additions at Lessee’s sole cost and expense.

53. OFAC COMPLIANCE.

Lessee represents and warrants to City that Lessee is not a party with whom City is prohibited from doing business pursuant to the regulations of the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury, including those parties named on OFAC’s Specially Designated Nationals and Blocked Persons List. Lessee is currently in compliance with, and shall at all times during the term of this Lease remain in compliance with, the regulations of OFAC and any other governmental requirement relating thereto. In the event of any violation of this section, City shall be entitled to immediately terminate this Lease and take such other actions as are permitted or required to be taken under law or in equity. LESSEE

SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS CITY FROM AND AGAINST

ANY AND ALL CLAIMS, DAMAGES, LOSSES, RISKS, LIABILITIES AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COSTS) INCURRED BY CITY ARISING FROM OR RELATED TO ANY BREACH OF THE FOREGOING CERTIFICATIONS. These indemnity obligations shall survive the expiration or earlier termination of this Lease.

54. NO BROKERAGE.

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City is represented in this transaction by Self (“City’s Agent”). Brokerage fees, commissions or other payments owed to City’s Agent, if any, in connection with this Lease transaction shall be paid by City per the terms of a separate agreement between City and City’s Agent. Lessee represents and warrants to City that Lessee is represented in this transaction by Self (“Lessee’s Agent”). Fees, if any, payable to Lessee’s Agent, if applicable, shall be paid pursuant to separate agreement(s) between City’s Agent and Lessee’s Agent or between Lessee and Lessee’s Agent.

Lessee shall indemnify and defend City from and against any claims made by Lessee’s Agent or any other person or entity purporting to represent Lessee in this transaction for any finder’s fee, brokerage fee, commission or other payment claiming through Lessee or its affiliates with respect to the execution of this Lease or the consummation of the transaction contemplated hereby.
[Remainder of page intentionally left blank]
[Signatures on next page]
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Lease Agreement/Pajaro Valley Arts Council Page 25 of 25 Rev.: 06-26-2024
CITY OF WATSONVILLE, CALIFORNIA, a chartered California municipal corporation
“CITY"
Dated: ________________________
By:

Tamara Vides
Interim City Manager
ATTEST:

Irwin Ortiz
City Clerk
APPROVED AS TO FORM:

Samantha W. Zutler
City Attorney
“LESSEE”
PAJARO VALLEY ARTS COUNCIL, a corporation
Dated: _________________________
By:

Name: Miriam Anton
Title: Executive Director
Local Address: 37 Sudden Street. Watsonville, CA 95076
Email Address: [email protected]
Telephone: ( 831 ) 722-3062
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Lease Agreement/Pajaro Valley Arts Council Exhibit A Page 1 of 1 Rev.: 06-26-2024

COMMERCIAL PROPERTY LEASE AGREEMENT

BY AND BETWEEN

CITY OF WATSONVILLE, CALIFORNIA
AND

PAJARO VALLEY ARTS COUNCIL

EXHIBIT A

DESCRIPTION/SITE PLAN OF PREMISES

AND PROJECT
The highlighted portion of 37 Sudden Street. Watsonville, California DocuSign Envelope ID: B3935C1D-18FE-41E9-90C3-93FDF4CB4287

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Lease Agreement/ Pajaro Valley Arts Council Exhibit B Page 1 of 1 Rev.: 06-26-2024

COMMERCIAL PROPERTY LEASE AGREEMENT

BY AND BETWEEN

CITY OF WATSONVILLE, CALIFORNIA
AND

PAJARO VALLEY ARTS COUNCIL

EXHIBIT B

INVENTORY OF FIXTURES
The City shall provide the premises without any furniture, fixtures or equipment of any kind.

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Lease Agreement/ Pajaro Valley Arts Council Exhibit C Page 1 of 2 Rev.: 06-26-2024

COMMERCIAL PROPERTY LEASE AGREEMENT

BY AND BETWEEN

CITY OF WATSONVILLE, CALIFORNIA
AND

PAJARO VALLEY ARTS COUNCIL

EXHIBIT C

INSURANCE REQUIREMENTS
Lessee shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the Lessee’s operation and use of the leased premises. The cost of such insurance shall be borne by the Lessee.

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

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

2. Workers’ Compensation Insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limits of no less than $1,000,000 per accident for bodily injury or disease. (This applies to lessees with employees).

3. Property insurance against all risks of loss to any tenant improvements or betterments, at full replacement cost with no coinsurance penalty provision.

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

B. OTHER INSURANCE PROVISIONS:

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

1. Additional Insured Status: The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Lessee including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can DocuSign Envelope ID: B3935C1D-18FE-41E9-90C3-93FDF4CB4287

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Lease Agreement/ Pajaro Valley Arts Council Exhibit C Page 2 of 2 Rev.: 06-26-2024
be provided in the form of an endorsement to the Lessee’s insurance (at least as broad as ISO Form CG 20 10).

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

3. Legal Liability Coverage: The property insurance is to be endorsed to include Legal Liability Coverage (ISO Form CP 00 40 04 02 or equivalent) with a limit equal to the replacement cost of the leased property.

4. Notice of Cancellation: Each insurance policy required above shall provide that coverage shall not be canceled, except with thirty (30) days’ prior written notice to the City.

5. Waiver of Subrogation: Lessee hereby grants to City a waiver of any right to subrogation which any insurer of said Lessee may acquire against the City by virtue of the payment of any loss under such insurance. Lessee agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer.

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

7. Self-Insured Retentions: Self-insured retentions must be declared to and approved by the City. The City may require the Lessee to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.

8. Verification of Coverage: Lessee shall furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to City before occupying the premises. However, failure to obtain the required documents prior to the work beginning shall not waive the Lessee’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements, required by these specifications, at any time.

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

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C:\Program Files\eSCRIBE\TEMP\14491464371\14491464371,,,RESOLUTION APPROVING LICENSE AGREEMENT WITH CRUZIO FOR USE OF ANTENNA SPACE LOCATED AT 275 MAIN STREET.docx
Agenda Report
MEETING DATE: Tuesday, July 9, 2024
TO: City Council
FROM: INNOVATION & TECHNOLOGY DIRECTOR GILL

SENIOR ADMINISTRATIVE ANALYST ZAVALA
SUBJECT: RESOLUTION APPROVING LICENSE AGREEMENT WITH CRUZIO FOR USE OF ANTENNA SPACE LOCATED AT 275 MAIN STREET
RECOMMENDED ACTION:

Staff recommends the City Council adopt a resolution approving a five (5) year license agreement, with three five-year options to extend, of wireless antenna space on the roof top of Civic Plaza Penthouse located at 275 Main Street, to The Internet Store, Inc. DBA Cruzio, Cruzio Internet, Cruzioworks, Cruzio Media and Santa Cruz Fiber; authorizing the Interim City Manager to execute the License Agreement and any Amendments thereto; and finding the action not subject to review under the California Environmental Quality Act.

BACKGROUND:

The City of Watsonville has been in a long agreement with The Internet Store, Inc., a California corporation, d/b/a Cruzio, Cruzio Internet, Cruzioworks, Cruzio Media and Santa Cruz Fiber, since 2011.

Currently the City holds a trade agreement with Cruzio entered upon on 12/06/2016 in which Cruzio provides the City with a 1 gbps internet service at its Civic Plaza in return for use of antenna space at the Civic Plaza Penthouse roof space and rack space at its data center. It also allows Cruzio the option to set up equipment in the City’s communications tower located at Fire Station 2. The City and Cruzio also hold a 10 year “Site Contract” that also duplicates Cruzio’s use of the Penthouse rooftop and Fire Station 2 tower and data center set to expire on 12/31/2026.

DISCUSSION:

The current trade and site agreement have overlapping terms and do not clearly establish each party’s rights and responsibilities. The proposed license agreement will terminate and replace both agreements. Establishing a market rate for the use of the City’s space that follows the State of California telecom lease rate guidelines while also allowing the City to purchase services from Cruzio as needed at market rate.

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This would also allow the Airport the opportunity to enter into it’s own agreement with Cruzio for use of the Fire Station 2 tower at a future date.

Key terms proposed:
 5-year license agreement with 3 five-year options to extend.  $21,373.00 annual license fee.
 Annual increase to reflect the State of California telecom lease rate guidelines  Every 5 years the annual rate will be adjusted to market rate as per the State of California telecom lease rate guidelines.
 This new license agreement will terminate both existing Trade and Site agreements.

California Environmental Quality Act (CEQA):

Approval of the License agreement with The Internet Store, Inc., a California corporation, d/b/a Cruzio, Cruzio Internet, Cruzioworks, Cruzio Media and Santa Cruz Fiber does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. Additionally, any installation of the wireless equipment would be exempt from review under CEQA Guidelines section 15303 (Class 3-New Construction).

STRATEGIC PLAN:
3-Infrastructure & Environment - This assignment is consistent with Strategic Plan objectives of improving and maintaining our infrastructure.

FINANCIAL IMPACT:

The License agreement would provide annual revenue of $21,373.

ALTERNATIVE ACTION:

Alternatives include not approving the license agreement.

ATTACHMENTS AND/OR REFERENCES (If any):

None

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1 Reso No. ______ (CM)
Meeting Date: 070924 SWZ ______ TV ______ IT ______
RESOLUTION NO. ___________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WATSONVILLE APPROVING A FIVE-YEAR LICENSE WITH THREE (3) FIVE YEAR OPTION

TERMS BETWEEN THE CITY OF WATSONVILLE AND THE INTERNET
STORE, INC., A CALIFORNIA CORPORATION, DBA CRUZIO, CRUZIO

INTERNET, CRUZIOWORKS, CRUZIO MEDIA AND SANTA CRUZ FIBER, FOR USE OF THE CIVIC PLAZA’S PENTHOUSE ROOFTOP SPACE AND DATA CENTER AT 275 MAIN STREET, WATSONVILLE, CALIFORNIA, AND

AUTHORIZING AND DIRECTING THE CITY MANAGER TO EXECUTE SAME

AND ANY AMENDMENTS THERETO OF A NON-SUBSTANTIVE NATURE
SUBJECT TO LEGAL APPROVAL; AND FINDING THE ACTION NOT

SUBJECT TO REVIEW UNDER THE CALIFORNIA ENVIRONMENTAL

QUALITY ACT
WHEREAS, the City of Watsonville has been in a long agreement with The Internet Store, Inc., a California corporation, d/b/a Cruzio, Cruzio Internet, Cruzioworks, Cruzio Media and Santa Cruz Fiber, since 2011; and
WHEREAS, the City holds a trade agreement with Cruzio entered upon on 12/06/2016 in which Cruzio provides the City with a 1 gbps internet service at its Civic Plaza in return for use of antenna space at the Civic Plaza Penthouse roof space and rack space at its data center and allows Cruzio the option to set up equipment in the City’s communication’s tower located at Fire Station 2; and
WHEREAS, the City and Cruzio also hold a 10 year “Site Contract” that also duplicates Cruzio’s use of the Penthouse rooftop and Fire Station 2 tower and data center, which is set to expire on 12/31/2026; and
WHEREAS, City staff recommend entering into a License Agreement to replace both the trade and site agreements.

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

1. Adopting a Resolution approving a five-year License agreement with The

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2 Reso No. ______ (CM)
Meeting Date: 070924
Internet Store, Inc., a California corporation, d/b/a Cruzio, Cruzio Internet, Cruzioworks, Cruzio Media and Santa Cruz Fiber is not subject to review under the California Environmental Quality Act (CEQA) as it does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. Additionally, any installation of the wireless equipment would be exempt from review under CEQA Guidelines section 15303 (Class 3-New Construction).

2. That the five-year License agreement between the City of Watsonville and The Internet Store, Inc., a California corporation, d/b/a Cruzio, Cruzio Internet, Cruzioworks, Cruzio Media and Santa Cruz Fiber, for use of the civic plaza’s penthouse rooftop space and data center at 275 Main Street, Watsonville, California, a copy of which License agreement Is attached hereto and incorporated herein by this reference, is fair and equitable and is hereby ratified and approved.

3. That the City Manager be and is hereby authorized and directed to execute said License agreement for the original term, and if properly exercised, the three (3) five-year option terms, and any amendments thereto of a non-substantive nature subject to legal approval on behalf of the City of Watsonville. ******************************************

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4888-9678-9146 v1
1 CITY OF WATSONVILLE

LICENSE AGREEMENT
LICENSEE: The Internet Store, Inc., a California
corporation, d/b/a Cruzio, Cruzio Internet, Cruzioworks, Cruzio Media and Santa Cruz Fiber
877 Cedar Street Suite 150
Santa Cruz, CA 95060
CITY: CITY OF WATSONVILLE
275 Main Street Suite 400
Watsonville, CA 95076
SITE: City of Watsonville Civic Center
275 Main Street
Watsonville, CA 95076
TERM OF LICENSE: 5-year term

COMMENCEMENT DATE OF
LICENSE:

August 1, 2024
ANNUAL RENT: $21,373 subject to increase as provided below CITY CONTRACT NUMBER:

DocuSign Envelope ID: 643A02A0-85F2-46D9-ADC0-BC1DAB30E2B9

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2 CITY OF WATSONVILLE LICENSE AGREEMENT
Basic License Terms - Reference Pages
LICENSOR: City of Watsonville
CITY’S ADDRESS FOR
NOTICES:

City Clerk
City of Watsonville
275 Main St. Suite 400
Watsonville, CA 95076
CITY’S ADDRESS FOR RENT: City of Watsonville
Finance Department
250 Main Street
Watsonville, CA 95076
LICENSEE: The Internet Store, Inc., a California
corporation, d/b/a Cruzio, Cruzio Internet, Cruzioworks, Cruzio Media and Santa Cruz Fiber (“Cruzio”)
LICENSEE’S ADDRESS FOR
NOTICES:
877 Cedar Street Suite 150
Santa Cruz, CA 95060
Attn: Legal Department
LICENSEE’S TELEPHONE NO.: 1-866-862-4404
PREMISES: (1) a portion of the property known as “275 Main Street, Watsonville, CA”
(see Exhibit “A” for additional description)
RENTABLE AREA: (1) 275 Main Street:

Exterior space for the mounting of wireless distribution components on the rooftop enclosure area known as the
“Penthouse Equipment Building” and interior space for the installation of networking gear, cabling and related equipment.

USE: Wireless Telecommunications Service Distribution
DocuSign Envelope ID: 643A02A0-85F2-46D9-ADC0-BC1DAB30E2B9

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4888-9678-9146 v1
3 ANTENNA SPACE: (1) 275 Main Street:

Twenty-nine wireless distribution components, including fiber cabling on the rooftop enclosure area known as the “Penthouse Equipment Building.

EQUIPMENT SPACE: 275 Main Street:

Equipment Space/Rack Space ( not to exceed 2’width x 2’ depth, 7’ height) within the City’s First Floor Data Center also known as Minimum Point of Entry (MPOE)

SCHEDULED
COMMENCEMENT DATE: August 1, 2024
TERM OF LICENSE: 5-year term
TERMINATION DATE: May be terminated by either party upon thirty (30) days prior written notice
RENT: (a) Annual rent of $21,373/year which includes the current 29 antennae at Civic Plaza roof, Rack space at Civic Plaza penthouse and rack space at Civic Plaza’s Minimum Point of Entry (MPOE). Calculated using the State of California
Department of General Services Telecom Lease Rate Guideline as follows: Rack Space (penthouse and MPOE) = $11,017/year and $10,356 for the 29 antenna’s at their noted rate (exhibit B) for a total of $21,373/year.
(b) Annual Increase: Three percent (3%) over existing rent (c) Every 5 years the annual rate will be adjusted to market rate using the California Department of General Services’ Telecom Lease Rate Guidelines
TERMINATION: As provided in Section 10
OPTION TO EXTEND: 3 options for 5-year extension
ROAD REPAIRS: Not applicable
UTILITIES: Provided by Licensee
HOLDING OVER: Rent shall be increased to 150% of the existing rent at expiration of the term.

INSURANCE: Workers’ Compensation - To meet Labor Code of the State of California including Employer’s Liability with limits of $250,000 each accident/disease/policy limit.

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4 Commercial General Liability with limits of one million dollars per occurrence for bodily injury and property damage and one million dollars ($1,000,000) general aggregate; and
Commercial Automobile Liability in the amount of one million dollars ($1,000,000) combined single limit each accident for bodily injury and property damage.

EXHIBITS: “A” Legal Description, Attached
“B” Location of Premises, Site Information & Equipment, Attached
The Reference Pages are incorporated into and made a part of this License. In the event of any conflict between any information on the Reference Pages and this License, this License shall control. This License includes the foregoing Exhibits all of which are made a part of this License.

DocuSign Envelope ID: 643A02A0-85F2-46D9-ADC0-BC1DAB30E2B9

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4888-9678-9146 v1
5 LICENSE AGREEMENT
This License Agreement (this “License”) is entered into as of August 1, 2024, by and between the City of Watsonville, a California charter city and municipal corporation (“CITY”) and The Internet Store, Inc., a California corporation, d/b/a Cruzio, Cruzio Internet, Cruzioworks, Cruzio Media and Santa Cruz Fiber (“LICENSEE”).

RECITALS
WHEREAS, CITY is the record owner of certain real property and improvements located in the County of Santa Cruz, at: (1) 275 Main Street: Watsonville, CA 95076 (“Civic Center Plaza”). The property is more fully described and/or depicted in the attached Exhibit “A1” to this Agreement (hereinafter collectively referred to as “the Site”); WHEREAS, LICENSEE desires to use a portion of the existing CITY communication sites (“Sites”), including space within Civic Center Plaza and on the rooftop enclosure area located at Civic Center Plaza in the area known as the “Penthouse Equipment Building” as legally described on Exhibit A and ,for LICENSEE’s communications system equipment (“Equipment”); and
WHEREAS, LICENSEE is a federally-licensed telecommunications provider that desires an agreement for the joint use and lease of a portion of City’s Properties; and WHEREAS, LICENSEE shall construct, install, maintain and operate Network Distribution Equipment and related backhaul connections and antenna,(the “Network Distribution Equipment”), and appurtenances thereto on a portion of City’s Properties (the “Sites”) for the sole purpose of providing telecommunications service(s) to customers, including but not limited to residents and businesses within range of its transmission facilities as set forth in this Agreement;
WHEREAS, CITY is willing to permit said use of the Site subject to certain conditions; and
WHEREAS, portions of the Site are currently excess to the CITY’s needs.

NOW, THEREFORE, in consideration of the execution of this License, the parties mutually agree to the following conditions.

1. DEFINITIONS:

A. “License” means this non-exclusive License Agreement and any relevant Documents (as defined in Paragraph 3.C. below), including any Exhibits and/or Attachments, all of which are made a part of this License; provided that LICENSEE shall have exclusive use of the Premises, as defined hereinbelow, pursuant to the terms and conditions hereof.

B. "Premises" refers to the Antenna Space, the Equipment Space, utility connections between the Antenna Space, Equipment Space, and the nearest appropriate DocuSign Envelope ID: 643A02A0-85F2-46D9-ADC0-BC1DAB30E2B9

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6 utilities provider and, if any, access to the Antenna Space and Equipment Space from a public right-of-way.

C. “The Site”. The Sites are described as a portion of the Properties. The specific locations of the Site are more particularly described in and/or depicted on the attached Exhibit “B”.

D. Permitted Use. The Sites may be used by LICENSEE solely for the Permitted Use, pursuant to the terms and conditions of this Agreement. In particular, LICENSEE may use the Sites as a telecommunications network distribution equipment site, which shall house LICENSEE’s Network Distribution Equipment and Improvements, as detailed below, for furnishing telecommunication services that LICENSEE is legally authorized to provide during the Term of this Agreement. LICENSEE shall not use the Sites for any purpose other than specified in this Agreement without the written consent of CITY . Additionally, LICENSEE may install and maintain backhaul connections, wires, cables, and antennae that are needed in the operation of the telecommunication network distribution equipment Ingress, egress, and LICENSEE’s Permitted Use shall not interfere with the CITY’s use of the Properties
E. “Improvements” (when applicable) refers individually or collectively to the LICENSEE’s communications system and related equipment, cabling, and antenna(s) currently existing at the Sites and depicted and described on Exhibit B attached hereto and any additional antennas, related equipment and cabling as may be approved by the CITY. Changes to this License, including any exhibits, will require approval by the Watsonville City Council and must be in an agreement or writing executed by LICENSEE and CITY.

2. LICENSE TO USE.

CITY hereby gives permission, terminable as hereinafter provided, to LICENSEE to enter the Site and use the Premises for the purpose of installing and maintaining, operating and repairing the Improvements for the term herein provided. LICENSEE shall not be permitted to enter the Site or use the Premises for any other purpose, except by prior written permission of CITY.

3. LICENSEE IMPROVEMENTS.

A. Acknowledgement of Responsibility
LICENSEE acknowledges that the Site has been identified by CITY as being essential to CITY’s fulfilling its mission of public safety and well-being, and the necessity for CITY and LICENSEE’s diligence in safeguarding and restricting access to the Site and protecting CITY property, of all kinds, at said Site.

LICENSEE warrants that it will not disturb or tamper with any CITY equipment, to include, but not limited to, electronic, electrical, LPG, buildings, towers, DocuSign Envelope ID: 643A02A0-85F2-46D9-ADC0-BC1DAB30E2B9

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7 grounding systems, antennas, feed lines, etc., at the Site, except as otherwise permitted hereunder.

LICENSEE shall be liable for all claims, demands, actions, and causes of action to the extent caused by the negligence or otherwise wrongful conduct on the part of any agent, contractor, or employee of LICENSEE to the extent arising from LICENSEE’s installation/maintenance or operation of LICENSEE’s Improvements on the Site, except to the extent caused by CITY or its agents, contractors or employees. Further, LICENSEE shall release, remise, and forever discharge CITY of and from any and all claims, demands, actions, and causes of action, except to the extent caused by the intentional acts or negligence of CITY or CITY’s agents, contractors or employees, which LICENSEE may acquire by reason of LICENSEE’s installation/maintenance or operation of LICENSEE’s Improvements on the Site.

B. Requirements, Limitations, and Installation Conditions – This License is subject to the limitations, requirements and installation conditions as set forth below:

1. Installation: LICENSEE may construct, install, place, use and operate on the Sites the Network Distribution Equipment and such backhaul connections, wires, cables, antennae, supporting structures, and/or related equipment further described in Exhibit “B” in accordance with the plans and the telecommunications network distribution equipment diagrams as depicted on the attached as Exhibit “C” (the “Improvements”). For any and all Improvements to be constructed by Cruzio, the design, location, and color of the Improvements, including but not limited to, the Network Distribution Equipment, wires, cables and antennae must be approved by the City. LICENSEE will observe standard safety practices when performing any work or installing Improvements. LICENSEE agrees to install, maintain, and operate its Improvements in accordance with the highest standard prevailing in the communications industry.

2. Notwithstanding the foregoing, once the initial Equipment is installed, LICENSSEE shall not make any material alterations thereto (or to the Premises structure itself) without obtaining the prior written approval of CITY, which approval shall not be unreasonably withheld, conditioned or delayed, except that LICENSSEE may perform routine repairs and maintenance, and replace equipment with equipment of the same general type that meets or exceeds the same technical specifications of the original equipment, uses the same RF frequencies, does not occupy materially more physical space and consumes no additional electrical power. LICENSSEE shall immediately notify CITY in writing of such modifications and the date that the modifications are completed.

3. Any Improvements and Modifications to equipment owned by LICENSEE shall be performed at LICENSEE sole cost and expense. LICENSEE shall notify CITY in writing sixty (60) days in advance of any planned modification(s) to equipment.

DocuSign Envelope ID: 643A02A0-85F2-46D9-ADC0-BC1DAB30E2B9

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4888-9678-9146 v1
8 4. This contract will cover all items in Exhibit B. Lessee will update City with additions, removals, or replacement of items to the list.

5. Photo and physical review will be performed by CITY on an annual basis, if additional equipment is found and not documented or amended to contract, LICENSEE shall either (i) remove such additional equipment within thirty (30) days of receipt of written notice of same, or (ii) amend Exhibit B to this License to include any such equipment and commence payments therefor in accordance with Section 6 of this License..

6. LICENSEE shall remove the Equipment prior to the end of this agreement.

7. Access: In the event LICENSEE requires the use of a crane or other heavy equipment vehicle, in connection with any installation, maintenance or repair at the Premises, LICENSEE must provide written notice of site access three (3) business days prior to the desired access date, provided that advanced notice shall not otherwise be required for routine maintenance and repair activities at the Site or any installation that does not require a crane or other heavy equipment.

LICENSEE shall give CITY notice as soon as reasonably possible in the event of an emergency.

Emergency access may be coordinated through the IT Help Desk at 831- 768-3434 or [email protected]. Except in the case of an emergency whereby LICENSEE may access the Premises at any time as reasonably necessary for the emergency, LICENSEE may only access the site Monday through Friday between the hours of 9:30 am to 4:00 pm. For the purposes hereof, an emergency shall be deemed to be LICENSEE’s inability to transmit signals from, or receive signals at, the Site or a situation that reasonably appears to present an imminent risk of bodily injury or property damage. 3.Equipment Changes:

C. Subject to LICENSEE’s right to use the Site granted herein, CITY retains the right to make any improvements to the Site as reasonably deemed necessary by the CITY. Nothing contained in this Agreement shall be deemed or construed in any way to limit CITY’s authority to exercise any right or power concerning the utilization of the Site, subject to LICENSEE’s rights to use the Site pursuant to this License. LICENSEE’s use of the Premises shall be subordinate to the CITY’s use of the antenna space.

D. Additional Controlling Documents – The Sites may be subject to leases, licenses, and/or right-of-way grants/temporary use permits secured by the CITY from other governmental or private agencies (collectively, the “Documents”). LICENSEE acknowledges its interest in the License will be subject to the Documents and is responsible for any related costs to the extent incurred directly by CITY due to LICENSEE’s use of the Site. LICENSEE will be furnished with copies of Documents and any amendments thereto.

DocuSign Envelope ID: 643A02A0-85F2-46D9-ADC0-BC1DAB30E2B9

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Watsonville City CouncilJuly 9, 2024

Watsonville City Council
July 9, 2024