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Home My WebLink AboutAgenda Packet - March 24, 2008 - UB i i I�h Y y ` � i AZUSA x il I4 Y1 4'L'AT[! I I } I I f AGENDA REGULAR MEETING OF . AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL I �POWELL ELEMENTARY SCHOOL MARCH 24, 2008 11035 E. MAUNA LOA AVENUE '6:30 P.M. AZUSA, CA 91702 AZUSA UTILITY BOARD KEITH HANKS CHAIRPERSON ANGEL A. CARRILLO IOSEPH R. ROCHA VICE CHAIRPERSON BOARD MEMBER ;ORIEL E. MACIAS ROBERT GONZALES ! BOARD MEMBER BOARD MEMBER I 16:30 P.M. Convene to Regular Meeting of the Azusa Utility Board and Azusa City Council I • Call to Order • Pledge to the Flag • Roll Call I I A. PUBLIC PARTICIPATION 1, j i 1. (P ersowGroup.shaii be allowed to speak without interruption up to 8ve (5)minutes maximum time, subject to compliance with applicable meeting rules. Questions to the speaker or responses to the speaker's questions or comments shall be handled after the speaker has I completed his/her comments. Public Participation will be limited to sixty(60)minutes time.) i • i I 1 r � I II4 � The Consent Calendar maybe adopted with one vote, and ifso adopted the printed recommended action will be enacted. /f Staff or Councilmembers wish to address any item on the Consent Calendar individually, it will be considered as a SPEC/AL CALL/TEM. B. CONSENT CALENDAR I. Minutes. Recommendation: Approve minutes of regular meeting on February 25, 2008 as written. B--1. Feb Minutes.doc 2. Award of Contract for Project WVF-243,Water Treatment Plant Mains and Sewer Force Main:to Ken Thompson, Incorporated. Recommendation: Approve the award of contract for Project WVF- 243, Installation of Water Treatment Plant Water Mains and Sewer Force Main in Daybreak Drive and San Gabriel Canyon Drive to Ken Thompson, Incorporated In amount of$1,580,876. am B-2.wTP TransUne.doc 3. Award of Contract for Project W-245, Water Main Replacement, to Miramontes Construction Company. Incorporated. Recommendation: Approve the award of contract for Project W-245 for water main installation in First, McKinley, Paramount, Roosevelt and Virginia Street, Barbara Drive, and an alley west of Barbara Drive to Miramontes Construction, Incorporated in amount of $485,061.50. B-3. Bid Award-Const-W-245. 4. Approval of Contract for Inspection Services for Prosect WVF-243 to SA Associates, Incorporated. Recommendation: Approve a Professional Services Agreement contract in amount of $60,000 to SA Associates to provide inspection services on Project WVF-243, Installation of Water Treatment Plant Water Mains and Sewer Force Main in Daybreak Drive and San Gabriel Canyon Drive. B4.InspSvc for - W-243.doc 5. Approval of Contract for Inspection Services for Project W-245 to D. Wren and Associates. Incorporated. Recommendation: Approve a Professional Services Agreement in amount of$21,000 to D. Wren 8-Associates Incorporated to provide inspection services on Project W-245, Water Main Replacement in First, McKinley, Paramount, Roosevelt and Virginia Street, Barbara Drive, and an alley west of Barbara Drive. B-S. InspSvc for W-245.doc 2 002 6. ApprovlI of Contract Amendment with Athens Services to Change Index Date Used for Rate I Adjustment Purposes. Recommendation: Approve the following resolution: A RESOLUTION OF THE AZUSA UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA, AMENDINGI AGREEMENT WITH ATHENS SERVICES TO CHANGE ANNIVERSARY DATE OF CONSUMER PRICE. I INDEX. r I AthensA"ndrmt.DC l t 7. Approval of Local Capacity Product Confirmation Agreements. Recommendation: Authorize the 1 procurement of local capacity products from Reliant Energy; NRG, and Coral Power in fulfillment of 11 City's resource adequacy obligations to the California Independent System Operator and authorize the Mayor to execute the Confirmation Agreements. 1Kai I B-7. Local Capacity Purchases.doc I 8. Approval of Resolution Amending Azusa Light &Water Rules and Regulations Regarding Fees for New Stieet Light Fixtures in Rosedale Development. Recommendation: Approve the following resolution: li A RESOLUTION OF THE AZUSA UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA, AMENDING THE STREET LIGHTING SCHEDULE INCLUDED IN AZUSA LIGHT & WATER'S RULES AND REGUiTIONS GOVERNING ELECTRIC AND WATER SERVICES:, I B-B. Rosedale Street Lights!DOC , I I ' I C. SCHEDULED ITEMS I it. Reductilon in Replacement Water Cost Adiustment Factor. Recommendation: Authorize staff to reduce Replacement Water Cost Adjustment Factor by ($0.1957) per hundred cubic feet of water effective April 1, 2008, to reflect reduced purchased water costs from the Metropolitan Water District for January and February. i C-1. � Water-RWCAF.doc i i f I I 3 003 w 2. Approval of Resolution Amendin¢ Electric Fund Budeet in Amount of $450,000 for Participation in New Lodi Development Project. Recommendation: Approve the following resolution: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, AMENDING THE FISCAL YEAR 2007-2008 OPERATING BUDGET FOR THE ELECTRIC UTILITY TO PAY FOR COST OF PARTICIPATION IN LODI #2 PROJECT. C-2. BudAmend-Lodl.doc 3. Approval of a Short-tem Loan to Azusa Land Partners (ALP) in Amount Not-to-Exceed $5 Million . Recommendation: Approve a short-tem loan in amount not-to-exceed $5 million to Azusa Land Partners, and authorize the City Manager.to execute all necessary documents. C-3.ALP Loan Agnt.doc RECESS_ REGULAR UTILITY BOARD MEETING AND CONVENE JOINT MEETING OF THE AZUSA REDEVELOPMENT AGENCY, CITY COUNCIL,AND UTILITY BOARD. D. PUBLIC HEARING - ON LOAN FROM ELECTRIC FUND TO REDEVELOPMENT AGENCY FOR PROTECT RELATED ACTIVITIES ON PORTION OF PROPERTY LOCATED AT THE NORTHWEST CORNDER OF ARROW HIGHWAY AND AZUSA AVENUE. RECOMMENDED ACTION: Open Public Hearing and consider loan in amount of $5.3 million from Electric Fund to Redevelopment Agency and then close public hearing and adopt the following resolutions: (j I. A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA REQUESTING A LOAN FROM AZUSA LIGHT &WATER FOR PURPOSES OF THE MERGED REDEVELOPMENT PROJECT AREA. �1 2. A RESOLUTION OF THE UTILITY BOARD OF THE CITY OF AZUSA AUTHORIZING A LOAN FOR PURPOSES OF THE MERGED REDEVELOPMENT PROJECT AREA. 3. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPROVING APPROPRIATION AMENDMENTS FOR FISCAL YEAR 2007-08 PURSUANT TO SECTION 2-450 OF THE AZUSA MUNICIPAL CODE. CAW,4. A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA APPROVING C�1 ' APPROPRIATION AMENDMENTS FOR FISCAL YEAR 2007-08 PURSUANT TO SECTION 2-450 OF THE AZUSA MUNICIPAL CODE. D-1.Agency Loan.doc RECESS JOINT MEETING AND RECONVENE REGULAR UTILITY BOARD MEETING. 4 004 i I E. STAFF REPORTS/COMMUNICATIONS I. Monthly Update on Water Shortage Declaration (Verbal) Z. Monthly Update on Water Treatment Plant Project I E2. WTP-Update.pdf 3. Quarterly Fuel Cost Adjustment for San Juan Source (, r � 1 1 / E-3. Sa'n Juan V/ FCA.DOC 14. Garnet Wind Project Progress Report I EA Ga rriet Wlnd Progress Report.DOC I F. DIRECTOR'S COMMENTS j I. Approval of Letter to Representative Hilda Solis thanking her for meeting with SCPPA members i regarding Green House Gases and other items. I t j. Intergvtl-Ucdoc 4 2. Proclamation proclaiming April 21 to April 25, 2008 as West Nile Virus and Mosquito And Vector Control Awareness Week (Verbal) 1 3. Approval of Letters to U.S. Senators Barbara Boxer and Diane Feinstein, and U.S. Representative David! Dreier to request their support to secure $1 million funding for the Water Supply Reliability Program f j as part of the Fiscal Year 2009 Energy and Water_ opriations bill. r � I F-3.WSRP-Ur.doc 4. jCertific to of2weoaYMn to Daniel Noriega for his participation in American•ldo[ 0/1 v� 00.5 I t' t G. CLOSED SESSION ITEM I. Real Property Negotiations (Gov. Code Sec. 54956.8) Address: 819 N. Angeleno Avenue Negotiating Parties: Federico Rios City Negotiators: City Manager Delach and Public Works Director James Makshanoff Under Negotiations: Price and Terms of Payment H. ADIOURNMENT I. Adjournment. `,in compliance with the Americans with Disabilities Act, ifyou need special assistance to participate in a city meeting,please contact the City Clerk at 626-812-5229. Notification three (3) working days prior to the meeting or time when special services are needed will assist staff in assuring that reasonable arrangements can he made to provide access to the meeting" 6 006 i ., Nam I ii MORE: Miaffil ii 11; AZUSA LIGHT R WATER I / CITY OF AZUSA 1 MINUTES OF THE REGULAR I MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL MONDAY, MARCH 24, 2008 — 6:32 P.M. j i t Thel Utility Board Members of the City of Azusa met in regular session, at the above date and time, at Powell Elementary School, located at 1035 E. Mauna Loa Avenue, Azusa, California. I Chairman Hanks called the meeting to order. Call to Order ROLL CALL I' Roll Call PRESENT: BOARD MEMBERS: GONZALES, CARRILO, MACIAS, HANKS, ROCHA ABSENT: BOARD MEMBERS: NONE I ALSO PRESENT: Also Present I E City Attorney Ferre, City Manager Delach, Director of Utilities Hsu, Director of Resource Management Tang, Assistant to the Utilities Director Kalscheuer, Assistant Director of Water j Operations Anderson, Azusa Police Captain Streets, Economic Development Director Coleman, I City Clerk Mendoza , Deputy City Clerlc Toscano. I Public Particinatron Pub Part NolI None. The CONSENT CALENDAR consisting of Items B-1 through B-8, was approved by motion of Consent Cal Board Member Macias, seconded by Board Member Carrillo and unanimously carried with the Approved exception items B-2, B-4, B-5, B-6, and B-8, which were considered under the Special Call B2, 4, 5, 6 & portion of the Agenda. 8 Spec Call I The Minutes if the regular meeting of February 25, 2008, were approved as written. Min Al I 2. SPECIAL CALL ITEM. Spec Call I I i 3. Approval wasIgiven to award the contract for Project W-245 for water main installation in Proj W-245 First, McKinley, Paramount, Roosevelt and Virginia Street, Barbara Drive, and an alley west of Miramontes Barbara Drivel to Miramontes Construction, Incorporated in the amount of $485,061.50. Construction 4. SPECIAL CALL ITEM. Spec Call 5. SPECIAL CALI ITEM. Spec Call i 6. SPECIAL CALL ITEM. Spec Call 7. Authorization was given for the procurement of local capacity products from Reliant Energy, Procure prod NRG, and Coral Power in fulfillment of City's resource adequacy obligations to the California Reliant Independent System Operator and to authorize the Mayor to execute the Confirmation Energy NRG Agreements. Coral Pwr i 8. ! SPECIAL CALL ITEM. Spec Call! I � Special Call Items Special Call Items Assistant Director iof Water Operation Anderson responded to question regarding the size of water Dir Wtr i mains and sewer force mains for project W-243, stating that the 2,350 LF Main is 18 inches and Operation the 465 LF of sewer force main is 6 inches. Anderson Moved by Board Member Rocha, seconded by Board Member Carrillo and unanimously carried to Proj W-243 approve the award of contract for Water Project W-243, Installation of Water Treatment Plant Ken Water Mains and iSewer Force Main in Daybreak Drive and San Gabriel Canyon Drive to Ken Thompson Thompson, Incorporated in amount of $1,580,876. Board Member Carrillo addressed items regarding professional services contracts for inspection Carrillo services questioning why SA was selected for W-243 over Wren &Associates as bids were the Comments same amount. Assistant Director of Water Operations Anderson responded that the project has sensl itive areas and SA Associates has additional engineering background. Moved by Board I ember Rocha, seconded by Board Member Carrillo and unanimously carried to Prof sys agmt approve Professional Services Agreement in amount of$21,000 to D.•Wren &ASSOCIates Inc. to Wren & provide inspection services on Project W=245, Water Main Replacement in First, McKinley, Assoc Paramount, Roosevelt and Virginia Street, Barbara Drive, and an alley west of Barbara Drive. Moved by Board Member Rocha, seconded by Board Member Carrillo and unanimously carried to Prof sys agmt approve a Professional Services Agreement contract in amount of $60,000 to SA Associates to SA Associates provide inspection services on Project WVF-243, Installation of Water Treatment Plant Water Mains and Sewer Force Main in Daybreak Drive and San Gabriel Canyon Drive. Board Member Macias addressed item regarding amendment to Athens Services agreement to Macias change index date asking if there is an increase to rate payers due to the change. Questions Assktant.to the Utilities Director Kalscheuer responded stating that the rate will be calculated, Response] presented, mailed oto property owners and customers, and presented at a council meeting to be Kalscheuef considered and approved. Director of Utilities Hsu advised that it would probably benefit the &Hsu customers due to the time of the adjustment. ° I + Board Member Rccha offered a Resolution entitled: A RESOLUTION 6F THE AZUSA UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA, Res. 08-C21 AMENDING AGREEMENT WITH ATHENS SERVICES TO CHANGE ANNIVERSARY DATE OF Amend Agmt CONSUMER PRId INDEX. Athens 03/24/08 PAGE TWO I ° I I Moved by Board Member Rocha, seconded by Board Member Carrillo to waive further reading and adopt. Resolution passed and adopted by the following vote of the Board Members: AYES: B OARD MEMBERS: GONZALES, CARRILLO, MACIAS, ROCHA, HANKS NOES: BOARD MEMBERS: NONE ABSENT: BOARD MEMBERS: NONE Board Member Rolcha addressed item regarding fees for new street light fixtures at the Rosedale Rocha Development questioning who would be paying the fee; staff responded that the Association Comments would be paying the fee not the homeowners. Board Member Rocha offered a Resolution entitled: I A RESOLUTION OF THE AZUSA UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA, Res. 08-C22 AMENDING THE STREET LIGHTING SCHEDULE INCLUDED IN AZUSA LIGHT 8-WATER'S RULES Amend Street AND REGULATIO S GOVERNING ELECTRIC AND WATER SERVICES. Light sched Moved by Board Member Rocha, seconded by Board Member Carrillo to waive further readingand adopt. Resolutions passed and adopted by the following vote of the Board Members:, j � I AYES: BOARD MEMBERS: GONZALES, CARRILLO, MACIAS, ROCHA, HANKS NOES: BOARD MEMBERS: NONE ABSENT: BOARD MEMBERS: NONE I I SCHEDULED -----IS Sched Items I Reduction in Replacement Water Cost Adjustment Factor. Director of Utilities Hsu addressed the Dir of Utill iteM stating that Azusa has been adjusting the RWCAF every two months since it began Comments purchasing water at the higher cost back in July from Metropolitan Water District, but due to the increased rainfall and a rise in the water table the City stopped purchasing from MWD towards the endlof January. The costs for January will be recovered over a two month period and the RWCAF will be reduced in sApril and May. ; Mo ed by Board Member Macias, seconded by Board Member Gonzales and unanimously carried Reduce 1 to authorize staff to reduce Replacement Water Cost Adjustment Factor by ($0.1957)per hundred RWCAF cubic feet of water effective April 1, 2008, to reflect reduced purchased water costs from the Approved Mee Iropolitan Water District for January and February. y f i Approval of Resolution Amending Electric Fund Bud-get in Amount of$450,000 for Participation in Dir of Util'; Nevi Lodi Development Project. Director of Utilities Hsu addressed the item stating that the Comments project was approved at the November 2007 Utility Board Meeting; the appropriation was subject to approval of all participants in the project to sign, now need to authorize a budget amendment to pay for the project. Aftef additional comments, Board Member Rocha offered a Resolution entitled: I ! A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, AMENDING THE Res. 08-C23 FISCAL YEAR 2007L2008 OPERATING BUDGET FOR THE ELECTRIC UTILITYTO PAY FOR COSTOF Budget I PARTICIPATION IN LODI #2 PROJECT. Amend Lodi #2 Project j 03/24/08 PAGE THREE Moved by Board Member Rocha, seconded by Board Member Carrillo to waive further reading and adopt. Resolution passed and adopted by the following vote of the Board Members: AYES: BO D MEMBERS: GONZALES, CARRILLO, MACIAS, ROCHA, HANKS NOES: BOARD MEMBERS: NONE ABSENT: BOARD MEMBERS: NONE I . Approval of a Short-tem Loan to Azusa Land Partners (ALP) in Amount Not-to-Exceed $5 Million. City Mgr 8. City: Manager Delach addressed the item stating that it is a short term loan, but is really an Dir of Util advance of money that the City will owe ALP for reservoirs they are building and will assist them Comments with their current cash Flow needs. Director of Utilities Hsu responded to questions that the Short-Term loans may be 60-90 days, and there is no interest because it is an advance on funds the City will Loan Azusa have to pay ALP for the reservoirs they are building for the City; it will help them complete the Land Partners projects and it will also help the City. He noted the importance of the completion of the waterlines, reservoirs and pump station, etc. Moved by Board Member Rocha, seconded by Board Member Macias and unanimously carried to Loan to ALP approve a short-tem loan in amount not-to-exceed $5 million to Azusa Land Partners, and approved, authorize the City Manager to execute all necessary documents. TH I UTILITY BOARD CONVENED JOINTLY WITH THE AZUSA REDEVELOPMENT AGENCY AND Convene Jntly CITY COUNCIL AT 7:00 P.M. TO CONSIDER THE FOLLOWING: w/CRp PUBLIC HEARING - ON LOAN FROM ELECTRIC FUND TO REDEVELOPMENT AGENCY FOR Pub Hrg I PROJECT RELATED ACTIVITIES ON PORTION OF PROPERTY LOCATED AT THE NORTHWEST Loan from CORNER OF ARROW HIGHWAY AND AZUSA AVENUE. Elect fund I Economic and Co immunity Development Director Coleman addressed the Hearing stating that the B. Coleman action would authorize a loan from the Electric Fund Balance to the Agency in the'amount of Comments $5,300,000 allowing the acquisition of 17525 East Arrow Highway for redevelopment purposes. j ThelCity of Azusa has submitted an application to the Los Angeles County Local Agency Formation Commission (LAFCO) for the annexation of the property. He responded to question posed that it i does not include the furniture store on the corner and the balance remaining in the electric fund I would 22 million; there is an emergency recall of the loan if needed. There was clarification on the resolutions that the project/affected fund would be "Electric Fund Balance", not reserve. I TheClMayor/Chairman Rocha declared the Hearing open. There was no proof of publication Hrg open 3 regwred for the Public Hearing. I Mr. Terry Ernest addressed the Hearing stating that the property has been in escrow for two and a T. Ernest halfyears and hewould like to close. Comments Il I Moved by Director/Councilmember Hanks, seconded by Director Councilmember Gonzales and Hrg closed unanimously carried to close the Public Hearing. Director Hanks off ered a Resolution entitled: A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA REQUESTING A Res. 08-R15 LOAN FROM AZUSA LIGHT & WATER FOR PURPOSES OF THE MERGED REDEVELOPMENT Requesting PROJECT AREA. Loan from L&W Moved by Director' Hanks, seconded by Director Carrillo to waive further reading and adopt. Res lution passedi and adopted by the following vote of the Agency Board Members: 03/24/08 PAGE FOUR f I 1 . AYES: DIRECTORS: GONZALES, CARRILLO, MACIAS, HANDS, ROCHA NOES: DIRECTORS: NONE ABSENT: DIRECTORS: NONE f I Board Member Gi nzales offered a Resolution entitled: A RESOLUTION OF THE UTILITY BOARD OF THE CITY OF AZUSA AUTHORIZING A LOAN FOR Res. 08-C24 PURPOSES OF THE MERGED REDEVELOPMENT PROJECT AREA. Authorizing Loan Moved by Board Member Gonzales, seconded by Board Member Carrillo to waive further reading and adopt. Resolution passed and adopted by the following vote of the Utility Board Members: AYES: B ARD MEMBERS: GONZALES, CARRILLO, MACIAS, HANKS, ROCHA NOES: BOARD MEMBERS: NONE ABSENT: BOARD MEMBERS: NONE I I Councilmember Hanks offered a Resolution entitled: I A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPROVING APPROPRIATION Res. 08-C25 AMENDMENTS FOR FISCAL YEAR 2007-08 PURSUANT TO SECTION 2-450 OF THE AZUSA Approving MUNICIPAL CODE. Appropriation Amendment Moved by Councilmember Hanks, seconded by Councilmember Gonzales to waive further reading an I adopt. Resolution passed and adopted by the following vote of,the Council: AYES: COUNCILMEMBERS: GONZALES, CARRILLO, MACIAS, HANKS, ROCHA NOES: COUNCILMEMBERS: NONE ABSENT: C OUNCILMEMBERS: NONE i } Director Hanks offered a Resolution entitled: A RESOLUTION OF THE REDEVELOPMENT AGENCYOFTHE CITY OF AZUSA APPROVING Res. 08-R16 APPROPRIATION AMENDMENTS FOR FISCALYEAR 2007-08 PURSUANT TO SECTION 2-450 OF Approving THE AZUSA MUNICIPAL CODE. Appropriation Amendment Mol ed by Direct I r Hanks, seconded by Director Macias to waive further reading and adopt. Re lution passe and adopted by the following vote of the Agency Board Members: AYES: DIRECTORS: GONZALES, CARRILLO, MACIAS, HANKS, ROCHA NOES: DIRECTORS: NONE ABSENT: DIRECTORS: NONE ! THE REDEVELOPMENT AGENCY AND CITY COUNCIL ADJOURNED AND THE UTILITY BOARD CRA/Cncll MEI TING CONTIi UED. Adjourned r � , STAFF REPORTS/COMMUNICATIONS Staff Rpts Director of Utilities Hsu provided an update on the water shortage declaration stating that J. Hsu I effective April 1st the City will revert to Phase II of the and as of May 1, 2008; the City will revert to Wtr shortage Phalse I, conservation and detailed the key well elevations at Well No. 8E. He responded to Update questions posed by Board Members regarding water conservation. 03/24/08 PAGE FIVE f 1 � , Director of Utilities Hsu provided the Monthly Update on Water Treatment Plant Project stating WTP Update that they are about 56.11% complete. Director of Utilities Hsu provided the Quarterly Fuel Cost Adjustment for San Juan Source stating San Juan & that there is a Fuel Cost Adjustment charge of $1,761,154 which will amount to an average Pwr Res { residential customer increase of.about $5 per month for the next three months. lly Director of Utilities Hsu presented Garnet Wind Project Progress Report which included pictures of Garnet Wind theibeginning Phase I of the project. Director of Resource Management Tang addressed the item Project stating that the first turbines are onsite and being erected and the interconnection agreement with Edison were filed land that part should be done by the beginning of summer. i i I � i DIRECTOR'S COMMENTS Dir Cmts i Moved by Board Member Carrillo, seconded by Board Member Rocha and unanimously carried to Letter to approve Letter to iRepresentative Hilda Solis, as amended, i.e.date, Mayor Pro-Tem, thanking her H. Solis for(meeting with SCPPA members regarding Green House Gases and other items. (III Discussion was held regarding the options for selection of the Chairperson of the Utility Board and Selection-of Assistant to the Utilities Director Kalscheuer was directed to look into the matter. Chair UB' r Moved by Board Member Rocha, seconded by Board Member Gonzales and unanimously carried Proc for West to approve a proclamation proclaiming April 21 to April 25, 2008 as West Nile Virus and Mosquito Nile Virus And Vector Control Awareness Week. Board Member Macias noted that there is about four feet Awareness of standing wateri on Ninth Street east of Pasadena at a Flood Control Canal along the railroad tracks. City Manager Delach responded that they are working on getting the retention basin fully connected with tie San Gabriel Valley Mosquito Abatement District.- Moved by Board Member Carrillo,seconded by Board Member Gonzales and unanimously carried Letters to to approve Letters to U.S. Senators Barbara Boxer and Diane Feinstein, and U.S. Representative Congress David Dreier to request their support to secure $1 million funding for the Water Supply Reliability Water Appro Program as part of the Fiscal Year 2009 Energy and Water Appropriations bill. Bill Moved by Board Member Carrillo, seconded by Board Member Gonzales and unanimously carried Cert of Re c to approve Proclamation to Daniel Noriega for his participation in American Idol. D. Noriega j Director of Utilities Hsu announced that at the last SCPPA, Southern California Public Power Dir of Util Authority, meeting there were advised that greenhouse gas blue making passed the California Comments Utility Commission; SCPPA is urging all members conduct a grass roots campaign to get customers educated to help lobby for it. He stated that he would like to set up a large customer meeting on May 1"or May 8'and asked Board Members to let him know what it convenient for them. Board Member Carrillo provided a legislative update on a Senate Bill stating that it is pushing to Carrillo eliminate the alternative daily cover away from making the AB 939 requirements and asked if staff Comments had sent a letter with regard to this. Assistant to the Utilities Director Kalscheuer responded that they have along with other Bills. Mr. Carrillo asked that a Legislative Update be placed on the nett Utility Board Meeting Agenda for discussion. He stated that the San Gabriel Valley Council of Government is opposed to it and the cities are in support of the opposition. He referred to j Phase 1 and Phase II of the drought and asked if options are still available to residents such as astr10 turf instead of grass. Board Member Rocha suggested that information be provided at the upcoming Azusa Beautiful program to be held at City Hall. I� 4 + 03/24/08 PAGE SIX i I � 1 , 11211111 2 1=0 MW P 7_LJS.A 110MT R''/:ATTR AGENDA REGULAR MEETING OF AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL POWELL ELEMENTARY SCHOOL MARCH 24, 2008 1035 E. MAUNA LOA AVENUE 6:30 P.M. AZUSA, CA 91702 AZUSA UTILITY BOARD KEITH HANKS CHAIRPERSON ANGEL A. CARRILLO IO R. MOCHA VICE CHAIRPERSON BOAARDRD MEMBER ROBERT GONZALES ORIEL E. MACIAS BOARD MEMBER BOARD MEMBER 6:30 P.M. Convene to Regular Meeting of the Azusa Utility Board and Azusa City Council • Call to Order • Pledge to the Flag Roll Call A. PUBLIC PARTICIPATION 1. (person/Group shall be allowed to speak without interruption up to Nve (5) minutes maximum time, subject to compliance with applicable meeting rules. Questions to the speaker or responses to the speaker's questions or comments shall be handled alter the speaker has completed his/her comments. public participation will be limited to sixty(60)minutes time.). The Consent Calendar maybe adopted with one vote, and if so adopted the printed recommended action will be enacted. if Staff or Councilmembers wish to address any item on the Consent Calendar individual/y, it will be considered as a SPEC/AL CALL /TEM. B. CONSENT CALENDAR I. Minutes. Recommendation: Approve minutes of regular meeting on February 25, 2008 as written. 2. Award of Contract for Protect WVF-243,Water Treatment Plant Mains and Sewer Force Main. to Ken Thomason, Incorporated: Recommendation: Approve the award of contract for Project WVF- 243, Installation of Water Treatment Plant Water Mains and Sewer Force Main in Daybreak Drive and San Gabriel Canyon Drive to Ken Thompson, Incorporated in amount of$1,580,876. 3. Award of Contract for Protect W-245, Water Main Replacement, to Miramontes Construction Company, Incorporated. Recommendation: Approve the award of contract for Project W-245 for water main installation in First, McKinley, Paramount, Roosevelt and Virginia Street, Barbara Drive, and an alley west of Barbara Drive to Miramontes Construction, Incorporated in amount of$485,061.50. 4. Approval of Contract for Inspection Services for Project WW-243 to SA Associates, Incorporated. Recommendation: Approve a Professional Services Agreement contract in amount of $60,000 to SA Associates to provide inspection services on Project Vi/VF-243, Installation of Water Treatment Plant Water Mains and Sewer Force Main in Daybreak Drive and San Gabriel Canyon Drive. 5. Approval of Contract for Inspection Services for Protect W-245 to D. Wren and Associates. Incorporated. Recommendation: Approve a Professional Services Agreement in amount of $21,000 to D. Wren &Associates Incorporated to provide inspection services on Project W-245, Water Main Replacement in First, McKinley, Paramount, Roosevelt and Virginia Street, Barbara Drive, and an alley west of Barbara Drive. 6. Approval of Contract Amendment with Athens Services to Change Index Date Used for Rate Adiustment Purposes. Recommendation: Approve the following resolution: A RESOLUTION OF THE AZUSA UTILITY BOARD/CIN COUNCIL OF THE CITY OF AZUSA, AMENDING AGREEMENT WITH ATHENS SERVICES TO CHANGE ANNIVERSARY DATE OF CONSUMER PRICE INDEX. 7. Approval of Local Capacity Product Confirmation Agreements. Recommendation: Authorize the procurement of local capacity products from Reliant Energy, NRG, and Coral Power in fulfillment of City's resource adequacy obligations to the California Independent System Operator and authorize the Mayor to execute the.Confirmation Agreements. 8. Approval of Resolution Amending Azusa Light &Water Rules and Regulations Regarding Fees for New Street Light Fixtures in Rosedale Development. Recommendation: Approve the following resolution: A RESOLUTION OF THE AZUSA UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA, AMENDING THE STREET LIGHTING SCHEDULE INCLUDED IN AZUSA LIGHT & WATER'S RULES AND REGULATIONS GOVERNING ELECTRIC AND WATER SERVICES. 2 C. SCHEDULED ITEMS I. Reduction in Replacement Water Cost Adjustment Factor. Recommendation: Authorize staff to reduce Replacement Water Cost Adjustment Factor by ($0.1957) per hundred cubic feet of water effective April 1, 2008, to reflect reduced purchased water costs from the Metropolitan Water District for January and February. 2. Approval of Resolution Amending Electric Fund Budeet in Amount of $450,000 for Participation in New Lodi Development Project. Recommendation: Approve the following resolution. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, AMENDING THE FISCAL YEAR 2007-2008 OPERATING BUDGET FOR THE ELECTRIC UTILITY TO PAY FOR COST OF PARTICIPATION IN LODI #2 PROJECT. 3. Approval of a Shorttem Loan to Azusa Land Partners (ALP) in Amount Not-to-Exceed $5 Million . Recommendation: Approve a short-tem loan in amount not-to-exceed $5 million to Azusa Land Partners, and authorize the City Manager to execute all necessary documents. RECESS REGULAR UTILITY BOARD MEETING AND CONVENE JOINT MEETING OF THE AZUSA REDEVELOPMENT AGENCY, CITY COUNCIL,AND UTILITY BOARD. D. PUBLIC HEARING - ON LOAN FROM ELECTRIC FUND TO REDEVELOPMENT AGENCY FOR PROJECT RELATED ACTIVITIES ON PORTION OF PROPERTY LOCATED AT THE NORTHWEST CORNDER OF ARROW HIGHWAY AND AZUSA AVENUE. RECOMMENDED ACTION: Open Public Hearing and consider loan in amount of $5.3 million from Electric Fund to Redevelopment Agency and then close public hearing and adopt the following resolutions: I. A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA REQUESTING A LOAN FROM AZUSA LIGHT &WATER FOR,PURPOSES OF THE MERGED REDEVELOPMENT PROJECT AREA. 2. A RESOLUTION OF THE UTILITY BOARD OF THE CITY OF AZUSA AUTHORIZING A LOAN FOR PURPOSES OF THE MERGED REDEVELOPMENT PROJECT AREA. 3. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPROVING APPROPRIATION AMENDMENTS FOR FISCAL YEAR 2007-08 PURSUANT TO SECTION 2-450 OF THE AZUSA MUNICIPAL CODE. 4. A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA APPROVING APPROPRIATION AMENDMENTS FOR FISCAL YEAR 2007-08 PURSUANT TO SECTION 2-450 OF THE AZUSA MUNICIPAL CODE. RECESS JOINT MEETING AND RECONVENE REGULAR UTILITY BOARD MEETING. 3 E. STAFF REPORTS/COMMUNICATIONS Monthly Update on Water Shortage Declaration (Verbal) 2. Monthly Update on Water Treatment Plant Project 3. Quarterly Fuel Cost Adjustment for San Juan Source 4. Garnet Wind Project Progress Report F. DIRECTOR'S COMMENTS I. Approval of Letter to Representative Hilda Solis thanking her for meeting with SCPPA members . regarding Green House Gases and other items. 2. Proclamation proclaiming April 21 to April 25, 2008 as West Nile Virus and Mosquito And Vector Control Awareness Week (Verbal) 3. Approval of Letters to U.S. Senators Barbara Boxer and Diane Feinstein, and U.S. Representative David Dreier to request their support to secure $1 million funding for the Water Supply Reliability Program as part of the Fiscal Year 2009 Energy and Water Appropriations bill. 4. Certificate of Recognition to Daniel Norlega for his participation in American Idol G. CLOSED SESSION ITEM . Real Property Negotiations (Gov. Code Sec. 54956.8) Address: 819 N. Angeleno Avenue Negotiating Parties: Federico Rios City Negotiators: City Manager Delach and Public Works Director James Makshanoff Under Negotiations: Price and Terms of Payment H. ADIOURNMENT I. Adjournment. '%n compliance with the Americans with Disabilities Act, if you need special assistance to participate in a city meeting,please contact the City Clerk at 626-811-5229. Notification three (3) working days prior to the meeting or time when special services are needed will assist staff in assuring that reasonable arrangements can be made to provide access to the meeting." 4 Assistant to the Utilities Director Kalscheuer responded stating that a recycling booklet which will Kalscheuer contain information on conservation i.e. artificial turf and irrigation systems, etc.will be going out Response, to,residents soon.I He also displayed and provided a magnet with information regarding Athen's j Services. Board Member Rocha asked about the status of the re-opening of Sierra Madre and City Manager Rocha DelAch responded that it is schedule for March 31Mr. Rocha also expressed concern to Comments Captain Streets about school children who will be crossing Sierra Madre going to Hodge School where there are no crossing guards. Captain Streets responded stating that they will be evaluating and educating people on the driving course and officers will be available to help. I I t CLOSED SESSION Closed Sess I 1 It was consensus of Board Members to recess to Closed Session at 7:55 p.m. to discuss the Recess foll wing: Real Property Negotiations (Gov. Code Sec. 54956.8) Address: 819 N. Angeleno Avenue Negotiating Parties: Federico Rios City Negotiators: City Manager Delach and Public Works Director James Makshanoff Under Negotiations: Price and Terms of Payment f Thel Board Members reconvened at 8:08 p.m. There was no reportable action taken. Reconvened No report It was consensus of Board Members to adjourn. Adjourn I I TIME OF ADJOU M MENT: 8:09 P.M. 4 3 I l r SECRETARY i i NEXT RESOLUTION NO. 08-C26. j f i 4 1 i f 03/2',4/08 PAGE SEVEN r sl 1 - - all AZUSA lI4 Nl t 8'Atl t I I CITY OF AZUSA MINUTES OF THE REGULAR MEETING OF THE AZUSA I UTILITY BOARD/CITY COUNCIL MONDAY, FEBRUARY 25, 2008 -6:33 P.M. The Utility Board Members of the City of Azusa met in regular session, at the above date and time, at Azusa Light and Water Conference Room, located at 729'N. Azusa Avenue, Azusa, California. I vice Chairman'Carrillo called the meeting to order. € Call to Order ROLL CALL Roll.Call I I PRESENT: BOARD MEMBERS: GONZALES, CARRILO, MACIAS, ROCHA 'ABSENT: BOARD MEMBERS: HANKS i I s ALSO PRESENT: !' Also Present, 4 City Attorney Ferre, City Manager Detach, Director of Resource'Management Tang, Assistant to I the Utilities Director Kalscheuer, Director of Public Works/Assistant City Manager Makshanoff, Assistant Azusa Police Chief Garcia, Finance Controller Aguilar, Library Director Tovar, Director of Recreation and Family Services Jacobs, Director of Information Technology Graf, Administrative I Services Dire&or - Chief Financial Officer Kreimeier, City Clerk Mendoza, Deputy City Clerk IToscano. I Public Participation Pub Part I Mr. Mike Lee(thanked Board Member Rocha for the Banner celebration over the weekend for Nathan Ashlock and Jerry Sisneros (Mayor's Grandson); he stated that Norms will be opening in West Covina ri placing the Steak Corral. 1 The CONSENT CALENDAR consisting of Items B-I through B-5, was approved by motion of Consent Cali Board Member Carrillo, seconded by Board Member Gonzales and unanimously* carried with the Approved exception Items B-2, through B-5, which were considered under the Special Call portion of the 132-5 Spec Agenda. i Call s1 p� 1. The Minuites of the regular meeting of January 28, 2008, were approved as written. Min Appvd 1 067 1 I I � I 2. SPECIAL CALL ITEM. Spec Call 3. SPECIAL CALL ITEM. Spec Call 4. SPECIAL CALL ITEM. Spec Call 5. SPECIAL CALL ITEM. Spec Call Special Call Items Special Call Items Approval of SSC Chance Order No. 10. Director of Resource Management Tang responded to B. Tang questions stating that the existing waterline is between 25-30 years and because of the Response construction to be done for the water treatment plant,the City will be paying the costs associated with the additional work. Moved by Board Member Rocha,seconded by Board Member Gonzales and unanimously* carried SSC Change to approve a change to SSC Construction Incorporated contract in amount of $22,693.21 for Order additional work required to relocate an existing 30-inch waterline owned by American Water approved Company. _Approval to Solicit Bids for Water Prosect W-243, Water Treatment Plant Water Main and Rocha Approval to.solicit Bids for Water Project W445,Water Main Replacements In various Streets Questions to be resurfaced as part of Year 5 Pavement Management Program. Board Member Rocha B. Tang addressed items B-3 and B-4, referring to the fiscal impact of each Item asking that the references Response to current balances budget be removed from the items; he also voiced concern regarding the reference to a possible budget amendment being proposed. Director of Resource Management Tang responded stating that the intent was to be all encompassing with full transparency, but understood the concern. Board Member Gonzales also addressed item B-4, asking about the status of First Street. Staff responded that the current First Street project is being done by the County, Gas Company will also be working there and the City will follow with water main project and lastly pavement management. Moved by Board Member Rocha,seconded by Board Member Gonzales and unanimously* carried Project W- to approve to advertise and solicit bids for Project W-243, installation of two water mains in 243 Daybreak Drive and San Gabriel Canyon Drive and sewer force main in Daybreak Drive, near the Approved Water Treatment Plant. Moved by Board Member Rocha,seconded by Board Member Gonzales and unanimously* carried Project W- to approve to advertise and solicit bids for Project W-245,water main replacement in First Street, 245 Barbara Street, et. al. and replacement of water services. Approved Director of Resource Management Tang addressed item B-5, stating that the item deals with the B. Tang alleged overcharges in 2000-2001 California energy crisis. He stated that the City sold into a response to centralized market and got paid market price; the California Parties filed lawsuits and complaints B-5 Budget that have lasted years and thousands of dollars have been spent in legal fees; the City has decided Amendment to negotiate a settlement. Board Member Rocha offered a Resolution entitled: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA,AMENDING THE Res. 08-C12 FISCAL YEAR 2007-2008 OPERATING BUDGET FOR THE ELECTRIC UTILITY TO PAY FOR COST OF Budget SETTLEMENT WITH CALIFORNIA PARTIES. (Settlement Agreement with California Parties in the Amend amount of $560,000). Settlement California 02/25/08 PAGE TWO Partners ao$ a- iMoved by Board Member Rocha, seconded by Board Member Gonzales to waive further reading 'and adopt. Resolution passed and adopted by the following vote of the Board Members: i i AYES: BOARD MEMBERS: GONZALES, CARRILLO, MACIAS, ROCHA NOES: BOARD MEMBERS: NONE ABSENT: BOARD MEMBERS: HANKS Sched Items ;Scheduled Items i ;Approval of Funding Request by California Resource Connections(CRC) in amount of$15.500 Litter Cleanup for Litter Clean-up Program and Backyard CompostinnJGardening Workshop. Composting I � Assistant to the Utilities Director Kalscheuer addressed the item stating that in August 2007, a C. Kalscheuer ,MOU was approved with California Resource Connections (CRC) which was a two phase MOU, Comments (first was $52,500 to make improvements to the Taylor House and the other was $10,000 for II "environmental programs". This item is for the environmental portion; CRC has requested 1$15,500 for two programs (1) a river education and clean up event in April to coincide with IAzusa's Clean; Green, More Beautiful Azusa Celebration and (2) a compost and gardening ,workshop to bel held in September 2008 at the Taylor house. Ms. Suzanne Avila addressed the issue, introduced Jane Beesley of the Rivers and Mountains S. Avila Conservancy, and thanked all for attending the grand opening of the Headquarter at the old EI Comments Encanto site of Saturday. Moved by Board Member Rocha,seconded by Board Member Gonzales and unanimously* carried Funding to to approve proposed funding request by CRC in amount of $15;500; approve a budget CRC appropriation for fiscal year 2008-2009 in amount of $8,175 using AB 939 Fee Revenue to pay approved for Composting/Gardening Workshop; and authorize use of budgeted Beverage Recycling Clean up & Container Grant funds in amount of$7,325 to pay for the Litter Clean-up Program this fiscal year. Composting I Support of Sel ate Bill 691 (Calderon l- Requirements for Recycling of Non-Ferrous Metal_ Senate Bill 691 Assistant to the Utilities Director Kalscheuer addressed the issue stating that SB 691 was C. Kalscheuer introduced to combat the problem of theft of non-ferrous metals such as copper pipes or conduit Comments and fire hydrants, by requiring recycling centers who pay for such metals to require payment by check and obtain identifying information from those individuals and keep the information on file f for a two year Iperiod. f Moved by Board Member Gonzales, seconded by Board Member Carrillo and unanimously* Ltr of Support carried to adopt a support position on SB 691 and authorize staff to send letters to legislators SB 691 I advocating the City's position. Staff Reports/(Communications Staff Rpts fkDirector of Resource Management Tang provided the Monthly Update on Water Shortage B. Tang Declaration, stating that as of the end of December the canyon basin water level was 60 feet Wtr shortage below normalj as of end January it was 40 feet and as of today it is about 23 feet below. He Update stated that customers have conserved water by 10%in November, and 20%in December; he also distributed article regarding impacts to water imports and discussion was held on water conservation. Il 02/25/08 PAGE THREE I 009 I� i i The Monthly Update on Water Treatment Plant was presented but there was no discussion held WTP Update on the item. The San Juan Environmental Project and Lodi #2 Project and Monthly Power Resources Update San Juan & were presented, but not discussed. Pwr Res Director of Resource Management Tang addressed item regarding the Alley Litter/Clean Up B. Tang Options, presenting options for discussion. It was noted that some of the items of concern are Alley Litter/ already implemented but need to be advertised. Other areas of concern consist of alley Clean Up sweeping, education-code enforcement, concentration of trash, illegally parked cars, signs taken Options from alleys, etc. It was suggested that staff look into the feasibility of the alleys being swept once a month, concentrate on areas of concern, those with trash, bulky items, graffiti, look into the cost, and conduct a public awareness campaign. Additional discussion was held. Director of Resource Management Tang presented the Offsite Meeting Update, stating that staff B. Tang is looking into having the March 24"meeting at Powell Elementary school; the June meeting will Offsite be changed to May,at Magnolia,due to summer vacation, and the meeting in October at Hodge Quarterly Elementary. Meetings Directors Comments Dir Cmts Placement of Gladstone High School Football Boosters on permitted list of entities Gladstone authorized to sell fireworks in Azusa. Football fireworks City Attorney Ferre addressed the issue citing an ordinance adopted in January of 2006, stating City Attorney that if one of the permittees does not choose to obtain a permit for the year; the number of Comments permittees is reduced. If an organization wants to retain the permit, but would not be using it for that yearthey were to pay for the permit. Ms. Joanne Gomez, President of the Gladstone High Football Booster Club addressed the issue J. Gomez stating that she did sign up in 2007, but didn't have time to get the parents together and Comments organized; she was new and didn't know about the ordinance governing fireworks. Mr. Albert Sanchez advised that the Football Boosters have had a Fireworks stand since the 70's A. Sanchez and 80's and the last time was in 2006; last year due to a lack of communication, they did not Comments know about the ordinance. City Attorney Ferre advised that since they did not hold the spot, it was dropped off the list; and City Attorney in order to expand the list the ordinance would have to be amended. City Manager Delach advised that he would check to see if the Gladstone Football Boosters tried City Manger to pull the permit, if they paid for last year's permit and if it would be considered an attempt to Comments save the spot. Staff will look into the issue. Discussion was held regarding to process of the creation of the ordinance and meetings held. Mr. Sam Perdomo, Principal of Gladstone High school addressed the issue presenting a S. Perdomo Scholarship Mentoring Program at Gladstone High, noting the need for funds and asking if Praise Comments Chapel dropped off the list, if they could take their place. 02/25/08 PAGE FOUR 010 I City Attorney Ferre advised that the permit is non transferable as it states in the ordinance. City Attorney. .City Manager Delach provided options as follows: place holder-give to boosters, request that the City Manger ordinance come back and be brought back up to twenty-three permits. City Attorney Ferre Comments ,advised staff to look into the facts and see if something can be done based on the facts, or introduce a new ordinance to add another spot; explore and come back at the March 17, 2008 Council meeting. i !Board Member Rocha advised that he received the paperwork from the National Arbor Day Rocha j 'Foundation, stating that the City of Azusa has received the Tree City USA Designation for the Comments '.fourth year in row. iBoard Member Rocha advised that tenants of an apartment complex at 565 E. Arrow Highway Rocha :received a notice stating that it would be a breech of the contract if they smoke in their individual Comments apartments. They wanted to know if the landlord was able to impose that requirement, they cite !Civil Code 827 Ito become effective April 1, 2008; they would not be able to smoke anywhere in ,the area. City Attorney Ferre advised that he would look into the matter. It was consensus of Board Members to adjourn. Adjourn !TIME OF ADJOURNMENT: 7:51 P.M. I 4 II 'SECRETARY i I I j I , NEXT RESOLUTION NO. 08-C/3. I y l I I ' C I � 3 02/25/08 PAGE FIVE Oil i I , I I :A�LI,Sr'1 i j I 40 NMI CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL +, FROM: . ! JOSEPH F. HSU, DIRECTOR OF UTILITIES ? � DATE: MARCH 24, 2008 SUBJECT: AWARD OF CONTRACT FOR PROJECT W-243, WATER TREATMENT PLANT WATER MAINS AND SEWER FORCE MAIN IN DAYBREAK DRIVE AND SAN I GABRIEL CANYON DRIVE IN THE CITY OF AZUSA. RECOMMENDATION It is recommended that the Azusa Utility Board/City Council approve the award of contract for Water Project W-243, installation of 4,000 LF of 24-inch Main; 2,350 LF Main; and 465 LF of sewer force main in San Gabriel Canyon Road and Daybreak Drive, and appurtenances to Ken Thompson, Inc. in amount of $1,580,876. BACKGROUND Azusa Light &Water is currently building a new membran4 water filtration plant at its Canyon Filtration)Plant site. This project installs the waterlines that will provide raw water to the Water ? Treatment Plant for treatment and transmit treated water to the Water System for distribution. j Also a part of this project is a sewage force main that will carry wastewater from the new i Water Treatment Plant to the existing sanitary sewer in San Gabriel Canyon Boulevard. f Advertisement for Bids for this project was approved at the February 25, 2008 Utility Board meeting.! Bids were publicly opened March 18, 2008. Twelve contractors submitted bids. The bids submitted were as follows: I j Contractor Bid j Ken Thompson, Inc. $1,580,876.00 I Trautwein Const. $1 ,891 ,054.00 Gentry Bros., Inc. $1 ,914,155.00 T.A.Rivard, Inc. $1 ,939,242.25 C. P. Const, Co. $1 ,982,337.50 Albert W. Davies $2,023,842.00 BnB Engineering $2,090,000.00 J. A. Salazar Const. $2,217,765.00 Herman Weissker $2,225,156.69 f I Majich Bros. $2,342,780.00 j Miramontes Const. $2,593,387.50 j Minako America $4,029,355.00 I I 012 l i r I FISCAL IMPACT The fiscal impact of this item is $1,580,876. This project was included in the Canyon Filtration Plant Capital Improvement Project approved budget, account 32-80-000-721- 7130/72107B-7130, 2-80-000-721- 7130/72107B-7130, and will be funded from the 2006 Revenue Bond Proceeds. Prepared by: Chet Anderson, Assistant Director - Water Operations 013 it 3__ 11�kj FAM =10AZUSA T1T R 1 i CONSENT CALENDAR I ' I TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL j t FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES ' DATE: MARCH 24, 2008 SUBJECT: AWARD OF CONTRACT FOR PROJECT W-245;'WATER MAIN REPLACEMENT IN { FIRST, MCKINLEY, PARAMOUNT, ROOSEVELT AND VIRGINIA STREET, BARBARA iDRIVE, AND AN ALLEY WEST OF BARBARA DRIVE ALL IN THE CITY OF AZUSA. RECOMMENDATION It is recommended that the Azusa Utility Board/City Council approve the award of contract for Water Project W-245 installation of 555 LF of 12-inch; 256LF of 10-inch; 1094 LF of 8-inchLF; and 406 LF of 6-inch Distribution Main and appurtenances in First, McKinley, Paramount, Roosevelt and Virginia Streets, Barbara Drive, and an alley west of Barbara Drive to Miramontes Construction Co., Inc. in amount of $485,061.50. I BACKGROUND { The Water Division has a program of replacing water mains that are experiencing problems i with leaks and that are, for various reasons, experiencing Flow and pressure problems. The j mains to be replaced by this project have leak problems requiring constant repair and excessive staff time to make the repairs. Also, the mains to be replaced are in.streets designated by Public Works as streets to be resurfaced this year. This project will allow the Water Division to lessen the probability of leaks within the newly paved streets. I, I Advertisement for Bids for this project was approved at the February 25, 2008 Utility Board meeting. Bids were publicly opened March 18, 2008. Six contractors submitted bids. The bids j submitted were as follows: j Contractor Bid Miramontes Const. $485,061.50 J. A. Salazar Const. $566,468.00 { T.A. Rivard, Inc. $584,790.99 4John T. Malloy, Inc. $647,710.80 Gentry Bros., Inc. $586,408.90 C.P. Const., Inc. $589,245.80 + Ma'ich Bros., Inc. $658,660.20 i Minako America $1,241,691.000 i I �' 1 FISCAL IMPACT The fiscal impact of this item is $485,061.50. Funding will be provided through approved Capital Improvement Project budget account 32-80-000-721-7130/721076-7130. Prepared by: Chet Anderson, Assistant Director - Water Operations 015 I l i aHusT t CXI 6 SA CONSENT CALENDAR I TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL I FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES` V f W C; DATE: MARCH 24, 2008 SUBJECT: APPROVAL OF A PROFESSIONAL SERVICES CONTRACT WITH SA ASSOCIATES INC. TO PERFORM INSPECTION SERVICES ON PROJECT W-243 INSTALLATION OF WATER TREATMENT PLANT WATER MAINS AND SEWER FORCE MAIN IN ff DAYBREAK DRIVE AND SAN GABRIEL CANYON DRIVE IN THE CITY OF AZUSA. t RECOMMENDATION It is recommended that the City Council approve a Professional Services Contract in the amount of $60,000 to SA Associates to provide inspection services on Project W-243. f BACKGROUND i 4 A construction contract for Project W-243, Installation of Water Treatment Plant Water Mains I' and Sewer Force Main in the City of Azusa, is being proposed for award and will require inspection. SA Associates Inc has inspected past projects for the Water Division and is recommended for Project W-243 if it is approved. Four consultants were requested to submit i letter proposals for this project and 3 consultants responded: SA Associates, $60,000; D. Wren &Associates, $60,000; Civiltec Engineering, $83,200.' 4 I FISCAL IMPACT i The fiscal impact of this item is $60,000. A budget item for this project has been approved by the Board in the FY 2007-2008 Capital Improvement Project Budget under account 32-80- 000-721-7130/72107B-7130. f Prepared by: Chet F. Anderson, Assistant Director- Water Operations I 4 �I moor -- v _ AZUSACFL 8 M'Li Fi CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES- DATE: MARCH 24, 2008 �� j SUBJECT: APPROVAL OF A PROFESSIONAL SERVICES CONTRACT WITH D. WREN ASSOCIATES INC. TO PERFORM INSPECTION SERVICES ON PROJECT W-245 ! WATER MAIN REPLACEMENT IN FIRST, MCKINLEY, PARAMOUNT, ROOSEVELT AND VIRGINIA STREETS, BARBARA DRIVE, AND AN ALLEY WEST OF BARBARA DRIVE ALL IN THE CITY OF AZUSA. RECOMMENDATION It is recommended that the City Council approve a Professional Services Contract in the amount of $21,000 to D. Wren &Associates Inc. to provide inspection services on Project W- 245. BACKGROUND A construction contract for Project W-245, Water Main Replacement Project to facilitate pavement replacement on various streets in the City of Azusa, is being proposed for award and will require inspection. D. Wren 8. Associates Inc has inspected past projects for the Water Division and is being recommended for Project W-245 if it is approved. Four consultants were requested to submit letter proposals for this project and 3 consultants I responded: D. Wren & Associates, $21,,000; SA Associates, $23,000; Civiltec. Engineering, $31 ,200. FISCAL IMPACT The fiscal impact of this item is $21 ,000. A budget item for,this project has been approved by the Board in the FY 2007-2008 Capital Improvement Project Budget Account 32-80-000-721- ! 7130/721078-7130. I` Prepared by: Chet F. Anderson, Assistant Director- Water Operations I 017 ;i GHT & 'A I16Bi t 8' A CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES/, fid/ j DATE: MARCH 24, 2008 �� 1 SUBJECT: APPROVAL OF RESOLUTION AMENDING AGREEMENT WITH ATHENS SERVICES TO CHANGE INDEX DATE USED FOR RATE ADJUSTMENT PURPOSES RECOMMENDATION It is recommended that the Azusa Utility Board/City Council adopt resolution to amend Agreement with Athens Services to change annual Consumer Price Index date from April 1 to January 1. i' BACKGROUND iProposition 218 was a Constitutional initiative approved by voters in 1996 which imposed new requirements on cities for the adoption of fees, assessments and taxes. Because of relatively recent court rulings regarding Proposition 218, the City Attorney's Office advised staff that trash rate adjustments now need to be considered following a 45-day notice mailed to affected property owners. fIn Azusa, trash rates are adjusted, in part, by applying the annual percentage change in the Consumer Price Index (CPI) to refuse rates. However, because the anniversary date of.the CPI change is set in the contract with Athens for April 1 and the new rates are to go into effect by July 1, it is difficult to complete the annual rate adjustment calculation and provide the 45-day notice prior to July 1 . Therefore, staff and Athens are recommending that the kannual Index date be changed to January 1 for purposes of rate adjustment calculations. Because the effective date of the new rates will not change, staff is recommending that a full 12 months be used to determine the percentage change in the CPI for the first adjustment following this amendment. This change in the CPI date is set forth in the attached agreement amendment to enable compliance with public notice requirements of Proposition''218. FISCAL IMPACT I None. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities a O �I RESOLUTION NO. A RESOLUTION OF THE AZUSA UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA, AMENDING AGREEMENT WITH ATHENS SERVICES TO CHANGE ANNIVERSARY DATE OF CONSUMER PRICE INDEX. WHEREAS, the City of Azusa entered into an Agreement with Athens Services on October 2, 2000; and WHEREAS, the Agreement uses an anniversary date of April 1 for changes in the Consumer Price Index ("CPP') to adjust rates for refuse services; and WHEREAS, recent court rulings regarding Proposition 218 require that a 45- day notice be provided to affected property owners of pending rate adjustments; and WHEREAS, the current anniversary date of April 1 does not provide enough time to calculate rate adjustments effective July 1, given the new property owner notification requirement. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY ADOPT THE FOLLOWING: SECTION 1. Adoption of Amendments. The Amendment to the Agreement with Athens Services as set for in attachment to this resolution as Exhibit "A" is hereby adopted. SECTION 2. Document Execution. The City Clerk shall certify adoption of this resolution and obtain executed amendment from Athens Services. PASSED, APPROVED AND ADOPTED this 24th day of March. Joseph R. Rocha Mayor ATTEST: Vera Mendoza City Clerk 019 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. Ij CITY OF AZUSA ) 4 I, Vera Mendoza, City Clerk of the City of Azusa, do hereby certify that the foregoing Resolution No. was duly introduced and adopted at a regular meeting of the Azusa Utility Board/City Council on the 24th day of March 2008, by the following vote, to wit: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: i Vera Mendoza City Clerk I ffl I f f f I. 020 EXHIBIT "A" AMENDMENT NO. 10 This tenth amendment to the Exclusive Franchise Agreement is entered into this 24th day of March 2008, by and between the City of Azusa, a municipal corporation ("City") and Arakelian Enterprises, Inc., a California Corporation ("Contractor"). Effective March 24, 2008, Section 5.01 B(ii) shall read as follows: "(ii) CPI Adjustments - Processing cost component shall be adjusted by changes in the CPI. The base for computing the adjustment is the index figure available for the month of January (the Index Date), as shown in the CPI. December 31 of each year following the index date shall be the rate modification date. The annual index change between the index date and rate modification date shall be the basis for computing the percentage increase or decrease applied to the rate. For example, assuming the base figure on the index date is 100 and the index figure on the rate modification date is 103, the percentage to be applied to the specified rate component is 103/100 - I = .03. A three (3) percent increase would be applied to the per ton MRF Processing cost. After each annual rate change, the percentage change in the index between January and December shall be used to make the followingyear's adjustment. As soon as possible after the rate modification date, City shall send to Contractor a comparative statement setting out: (1) the index value for the Index date; (2) the index value on the rate modification date; (3) the net percentage change; and (4) the increase or decrease in the fees which may be charged for the ensuring year commencing on or after July 1. The Contractor shall work with the City to check all rate adjustment calculations and come to agreement on proposed changes in sufficient time to allow a 45 day public notice to all refuse customers of City Council meeting at which approval of the new rates will be considered." IN WITNESS WHEREOF, the parties have executed this Amendment No. 10 as of the date first set out herein. Date: Date: CITY OF AZUSA ARAKELIAN ENTERPRISES, INC. A Municipal Corporation d.b.a. ATHENS SERVICES Joe Rocha, Mayor ATTEST: Vera Mendoza, City Clerk I APPROVED AS TO FORM: I I Best Best &Krieger, LLP City Attorney E I i I i I' I r 4 022 a � i AZUSA CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL i FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES ^� DATE: MARCH 24, 2008 v SUBJECT: LOCAL CAPACITY PRODUCT CONFIRMATION AGREEMENTS RECOMMENDATION It is recommended that the Utility Board/City Council authorize the procurement of local capacity products from Reliant Energy (Reliant), NRG, and Coral Power in fulfillment of City's resource adequacy obligations to the California Independent System Operator (CAISO) and authorize the Mayor to execute the Confirmation Agreements (Agreements) once the execution copies are prepared. BACKGROUND: I I The Utility Board established a Resource Adequacy (RA) program for the City in April 2006 to i ensure adequate power resources to serve our customers and in partial fulfillment to 4 California Independent System Operator's (CAISO) tariff requirements at that time. i The City's RA program among other requirements dictates that the City procure sufficient electric power capacity plus 15% for reserve margin ahead of time to ensure adequate supply I of electricity. The CAISO's tariff dictates where such electric power capacity should be located 4 to ensure that electric power can be delivered to serve customer consumption without encountering transmission bottleneck problems. The City has entered Into various capacity 4 purchase agreements (Reliant Energy, Dynegy, and Pasadena) for calendar year 2008 in full compliance of City's RA program and CAISO Tariff requirements. I , In February of this year, the CAISO further revised and 'refined its tariff requirements with respect to the location of the capacity needed to ensure system reliability. It is expected that the new CAISO requirements will become effective in January 2009 and lasting through December 2010. The new requirements represent about fifty percent increase in City's capacity obligation and requires granularity of the location of capacity. In response to CAISO's new requirements, staff issued an informal request for proposals on March 3, 2008 for capacity products for 2009 and 2010; the request for proposal is attached herein. Four out of six entities responded to the RFP with various terms and conditions. The kl following three capacity products are the most cost effective proposals from the RFP: 023 A. Two-year 15 MW capacity product (2009-2010) from NRG for Los Angeles Basin capacity location B. One-year 10 MW capacity product (2010) from Reliant Energy for Big Creek/Ventura capacity location C. Two-year 10 MW non-summer month capacity (2009-2010) from Coral Power for Los Angeles Basin capacity location It should be noted that the proposed purchases of the above local capacity products satisfy City's capacity requirement in 2009-2010 based on CAISO's requirements as we know them today. To the extent CAISO further revises its tariff requirement, which it has done at least three times in the past 12 months, we will need to reevaluate our portfolio and adjust/supplement it accordingly. Compliance with the Resource Adequacy program shows that Azusa Light & Water is a responsible municipal utility carrying out its part to ensure resource adequacy and system reliability. Noncompliance could result in substantially higher cost exposure to the CAISO if CAISO had to provide backstop power procurement on our behalf. Therefore, compliance with CAISO's tariff requirement is in the public interest and makes economic sense. FISCAL IMPACT The purchase of the aforementioned local capacity products will cost about $367,500 in fiscal year 2008-09; $909,000 in fiscal year 2009-10; and $541,500 in fiscal year 2010-1 I. Funds will be budgeted in the respective FY to pay for the purchases. Prepared by: Bob Tang, Assistant Director of Resource Management R. ®I�! Coral_LAR NRG_LAR Reliant Final Capaaty.doc Capacity.doc (03.17.08).doc 024 ii Shell Trading Coral Power,L.L.C. 909 Fannin,Plaza Level 1 Houston,TX 77010 713.767.5400 March 12,2008 Mr. Bob Tang Deal No. City of Azusa Facsimile: 626.334.3163 Phone: 626.812.5214 4 CONFIRMATION AGREEMENT (Standard Capacity Product Confirmation) i This Confirmation Agreement ("Confirmation') is entered into as of March 12, 2008 ("Effective Date") and shall provide the terms and conditions representing the negotiated transaction("Transaction")between Coral Power, L.L.C. ("Coral") and City of Azusa ("Azusa"), either one a "Party" or together the "Parties", in which the Seller agrees to sell to Buyer the product described below ("Capacity"). The { definitions and provisions contained in the tariffs and/or protocols of the California Independent System f Operator ("CAISO") as amended from time to time ("Tariff') shall apply to this Confirmation and are incorporated by reference. Master Western System Power Pool Agreement dated March 16, 2007 as amended from time to Agreement: time (the "WSPP Agreement"). Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the WSPP Agreement. Buyer: Azusa Seller: Coral I Product: A resource-adequacy product, also known as"Capacity',defined as the qualified and deliverable capacity from the Specific Resource(s)identified below which,up to the . Contract Quantity,can be counted toward meeting Buyer's local resource-adequacy requirements("LAR") iu addition to-Buyer s`systeh resource-adequacy requirements as described in Decisions 04-01-050,04-10-035,05-10-042,06-06-064 and 06-07-031 of the California Public Utilities Commission("CPUC") in effect as of the Effective Date of this Confirmation. LAR means local area reliability, which is any program of localized resource adequacy requirements established by the CPUC pursuant to CPUC decisions. This Confirmation does not confer to Buyer any right to delivery of the Contract Quantity of energy associated with the Capacity except that Buyer may include such Contract Quantity in Buyer's resource-adequacy demonstrations as Capacity during the Delivery Period. Specifically,unless otherwise agreed as between the Parties in writing,Buyer shall have no rights under this Confirmation to purchase energy and/or ancillary services in the Contract Quantity from the Specific Resource. Specific Indigo Unit # 1 at SCE Indigo Substation located near Palm Springs, CA; provided, Resource: however, that if capacity from such unit(s) will not be counted toward meeting resource adequacy requirements in a given month during the Delivery Period due to a scheduled outage, Seller shall designate a substitute resource that is capable of providing such capacity no later than ten (10) Business Days before Buyer's month-ahead showing for k such month is due to the CPUC. If Specific Resource unit becomes subject to Path 26 counting rules, Seller shall substitute with a Specific Resource unit with the same f Capacity attributes as originally set forth in this Confirmation Agreement. Delivery January 1,2009, through and including,December 31,2010 Period: Contract $ 1.50 per kW-Month fPrice: 1r S I� 625 f t Existing SP15 CAISO Zone LAR Region L.A. Basin (if any, as of Confirmation Effective date Contract Contract Quantity is per this Table for the Delivery Period hereof: Quantity: JAN IFEB IMAR APR IMAY IJUN JUL JAUG ISEP JOCT INOV IDEC 2009 110 110 110 10 10 10 0 10 10 10 110 110 2010 110 110 110 110 10 10 10 10 10 10 110 110 026 Seller's Seller makes the following additional covenants,warranties and representations: Additional a. Seller is duly licensed and certificated by all applicable jurisdictional regulatory Covenants & agencies and bodies, and as such holds the necessary authorities, to participate in the Warranties. CAISO markets. b. Seller meets the credit requirements necessary to participate in the CAISO market. c. The Contract Quantity is owned or controlled by Seller for each Specific Resource specified above. d. The Specific Resource has been registered with and/or certified by the CAISO as qualifying capacity to the Delivery Location(s); provided, that if the Specific Resource(s) is (are) are not so registered and/or certified, Seller will take all reasonable steps to assure that the Specific Resource(s) is (are) registered and/or certified prior to the commencement of the Delivery Period in the amount no less than the Contract Quantity of Capacity sold under this Confirmation. e. The amount of the Capacity sold under this Confirmation is unencumbered by any i other sale, any assignment,or any rights conferred to any party other than the Buyer. f. Unless the Specific Resource is out of service due to a forced outage as defined in the definition of Unit Firm in the Confirmation, or is out for planned maintenance as approved by the CAISO,or conditions constituting force majeure arise,Seller will: i. Make the Contract Quantity available, to the extent required by the CAISO to the CAISO consistent with the terms of the CAISO tariff for every hour of the Delivery Period, provided, that prior to the j implementation of the CAISO's Market Redesign and Technology Update proposal, if the CAISO denies Seller's request for a waiver of any commitment of the unit for the next operating day, Seller shall commit the Specific Resource for each hour of the next j operating day and self-schedule or submit bids in an amount no less than the Contract Quantity into the CAISO's markets as required by the CAISO during that next operating day;and, ii. Dispatch the Specific Resource in an amount not less than the Contract Quantity of megawatts in the CAISO's market for energy and / or ancillary services pursuant to any schedules and instructions of the CAISO issued in accordance with the terms of the CAISO tariff. iii. Comply with the Must Offer Obligations as specified in the CAISO tariff as amended from time to time during the term of this Confirmation. i' I. g. Seller shall not commit any portion of the Contract Quantity, including but not limited to the sale or scheduling of firm energy to any party outside the CAISO control area, until all obligations to Buyer and/or CAISO under the contract and/or the CAISO tariff have been met or are extinguished. Seller will maintain or cause to have maintained the Specific Resource using "Good Utility Practice"as defined in the CAISO tariff. Buyer's Buyer makes the following additional covenants, warranties and representations: (a) Additional Buyer holds the necessary authorities to participate in the CAISO markets; and (b) Buyer Covenants & meets the credit requirements necessary to participate in the CAISO markets. `- Warranties Meeting Seller will make all commercially reasonable efforts to ensure the Product meets the Resource- resource-adequacy requirements of the CAISO; provided, that such commercially Adequacy reasonable actions shall not include any obligation that the Seller, or Seller's supplier, l Requirements: undertake capital improvements, facility enhancements, or the construction of new ! facilities unless otherwise agreed in writing. k I i i 027 Mutual Where necessary to modify this Confirmation to conform its terms and conditions to Cooperation changes in circumstances or regulations affecting the benefits of the bargain struck by the to Preserve Parties,the Parties agree to negotiate in good faith to modify this Confirmation so as to the Benefits of address such circumstances or regulations while preserving the benefits of the bargain the Bargain struck by the Parties. Indemnity Seller agrees to indemnify Buyer for any monetary penalties assessed by the CAISO against against the Buyer for Buyer's failure to meet the requirements of the CAISO related to the Penalties: Buyer's obligation to submit an approved resource-adequacy demonstration to the extent any such penalties were the direct result of Seller not fulfilling any of its obligations under this Confirmation; provided, where Buyer is in breach of this Confirmation, Seller's obligations to perform under this Confirmation and/or to indemnify the Buyer for any monetary penalties are waived. Notices: All written notices under this Confirmation shall be deemed properly sent if delivered in person or sent by fax, or by registered or certified mail, postage prepaid to the persons specified below: For notices other than Confirmations: To Azusa: City of Azusa To Coral: Coral Power,L.L.C. 729 North Azusa Avenue 4445 EastGate Mall,Ste. 100 P.O.Box 9500 San Diego,California 92121 Azusa,CA 91702-9500 Attn: Joseph Valatka, Senior Commercial Advisor Attn: Bob Tang Phone: 858-526-2151;Fax: 858-320-1570 Phone: 626.812.5214;Fax 626.334.3163 For Confirmations: To:Phone: 626.12.5214 To Coral:Phone: 858-320-1500 Payments: All payments shall be made by electronic wire transfer as follows: To Azusa: Wells Fargo Bank To Coral: Citibank ABA No. 121000248 ABA No. 021000089 Account No. 4950041244 Account No. 30603873 Attn: Attn: Choice of THIS CONFIRMATION SHALL BE GOVERNED BY AND CONSTRUED IN Law: ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. Assignment: Coral shall have the right to assign this Confirmation to an affiliate of equal or greater creditworthiness. Buyers Buyer may re-sell all or a portion of the Product delivered to Buyer hereunder. In case of Resale: re-sell by Buyer of the Product to a third party, Seller shall cooperate with Buyer at no later than fifteen (15)Business Days before the relevant deadline for any applicable RAR Showing, that the third party Buyer is re-selling the Product to will be credited with the RA Capacity hereunder for the Delivery Period in Seller's Supply Plan. Mobile-Sierra Absent the agreement of all Parties to the proposed change, the standard of review for Provision: changes to any portion of this Confirmation or any transaction entered into hereunder proposed by a Party, a non-party or the Federal Energy Regulatory Commission acting sua sponte shall be the "public interest" standard of review set forth in United Gas Pipeline Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348(1956) ("Mobile-Sierra"doctrine). No Challenge; Neither Party will exercise any of its respective rights under Section 205 or Section 206 of Defense of the Federal Power Acts to challenge or seek to modify any of the rates or other terms and Agreement: conditions of this Confirmation or any transactions entered into hereunder. A fax copy of either Party's signature will be considered an original for all purposes under this Confirmation, and each Party will provide its original signature upon request. Except to the extent otherwise explicitly provided in this Confirmation, no amendment to this Confirmation will be valid or given any effect unless signed by both Parties. This Confirmation and the terms of the WSPP Agreement that are not inconsistent with this Confirmation, set forth the terms of the transaction which the Parties have entered into and shall constitute the entire 028 i agreement between the Parties relating to the contemplated purchase and sale of the Product. Notwithstanding any contrary provision in the WSPP Agreement, any conflict between this Confirmation and the WSPP Agreement shall be resolved in favor of this Confirmation. This Confirmation supersedes all prior agreements and understandings (whether written or oral) regarding the subject matter of this Confirmation, and may not be contradicted by any prior or contemporaneous oral or written agreement unless explicitly authorized herein. Notwithstanding anything contained in the WSPP Agreement to the contrary, this Confirmation shall only be effective when executed by both Parties. IN WITNESS WHEREOF, the Parties have signed this Confirmation to be effective as of the Effective Date. I City of Azusa Coral Power,L.L.C. By By — Name: Name: — j Title: Title:' Date: Dater — k � I f r t t r 1 , Ik . f r i 1 029 DRAFT CONFIDENTIAL 3/19/20083111/4008 Confirmation for Resource Adequacy Capacity Product for CAISO Resources (Contingent Firm RA Product) This confirmation ("Confirmation") executed as of April _, 2008 ("Confirmation Effective Date"), confirms the negotiated transaction ("Transaction") between the City of Azusa, California ("Buyer") and NRG Power Marketing Inc. ("Seller"), each individually a "Party" and together the "Parties", in which Seller agrees to provide to Buyer the right to the resource adequacy capacity product described herein ("Product'). This Confirmation is under the Western System Power Pool Agreement, dated May 8, 2007 (the "WSPP Agreement'). In the event of a conflict between the provisions of this Confirmation and the provisions of the WSPP Agreement, the provisions of this Confirmation shall govern. 1. Definitions 1.1. "Applicable Laws" means any law, rule, regulation, order, decision,judgment, or other legal or regulatory determination by any Governmental Body having jurisdiction over one or both Parties or this Transaction, including without limitation, the Tariff. 1.2. "Buyer" has the meaning specified in the introductory paragraph hereof. 1.3. "CAISO" means the California Independent System Operator, or its successor. 1.4. "CAISO Control Area" has the meaning specified in the Tariff. 1.5. "CAISO Controlled Grid" has the meaning specified in the Tariff. 1.6. "Capacity Replacement Price" means (a) the price paid for any Replacement Capacity purchased by Buyer pursuant to Section 5.3 hereof, plus costs reasonably incurred by Buyer in purchasing such Replacement Capacity, or (b) absent a purchase of any Replacement Capacity, the market price for such Designated RA Capacity not provided at the Delivery Point. The Buyer shall determine such market prices in a commercially reasonable manner. 1.7. "Confirmation" has the meaning specified in the introductory paragraph hereof. 1.8. "Confirmation Effective Date" has the meaning specified in the introductory paragraph hereof. 1.9. "Contingent Firm RA Product'has the meaning specified in Section 3.2 hereof. 1.10. "Contract Price" means, for any Monthly Delivery Period the RA Capacity Price for such period as set forth in Section 4.4 hereof. 1.11. "Contract Quantity" means the total Unit Contract Quantity. 1.12. "CPUC" means the California Public Utilities Commission or any successor thereto. Page 1 of.13 00 DRAFT CONFIDENTIAL 3/19120083111 Q.,o'^^Q 1.13. "CPUC Decisions" means CPUC Decisions 04-01-050, 04-10-035, 05-10-042, 06-06- 064, 06-07-031 and subsequent decisions related to resource adequacy, as may be amended from time to time by the CPUC. 1.14. "Delivery Period" has the meaning specified in Section 4.1 hereof. 1.15. "Delivery Point" has the meaning specified in Section 4.2 hereof. i 1.16. "Designated RA Capacity" means the amount of RA Capacity that Seller provides to Buyer pursuant to this Confirmation that is certified for inclusion in RAR Showings and if applicable LAR Showings, in each case as determined pursuant to Article 7 hereof. Designated RA Capacity shall include those attributes associated with the capacity identified in Article 2 and Article 3 hereof. f 1.17. "Force Majeure" means an event or circumstance which prevents one Party from performing its obligations under this Transaction, which event or circumstance was not anticipated as of the date the Transaction was agreed to, which is not within the reasonable control of, or the result of the negligence of, the claiming Party, and to the extent that, by the exercise of due diligence, the claiming Party is unable to overcome or avoid or cause to be avoided. Force Majeure shall not be based on (i) the loss of Buyer's- markets; (ii) Buyer's inability economically to use or resell the Product purchased hereunder; or (iii) Seller's ability to sell the Product at a price greater than the Contract Price. ! 1.18. "Forced Outage" means an outage that is designated "forced" according to CAISO's outage coordination rules and procedures. 1.19. "GADS" means the Generating Availability Data System, or its successor. 1.20. "Governmental Body" means any federal, state, local, municipal or other government; f' any governmental, regulatory or administrative agency, commission or other authority lawfully exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; and any court or governmental tribunal. 1.21. "LAR" means local area reliability, which is any program of localized resource adequacy requirements established for jurisdictional LSE's by the CPUC pursuant to the CPUC Decisions, or.by another LRA having jurisdiction over the LSE. LAR may k also be known as local resource adequacy, local RAR, or local capacity requirement in f other regulatory proceedings or legislative actions. I f ' r i Page 2 of 13 !, 031 DRAFT CONFIDENTIAL 3/19/2008344121M 1.22. "LAR Attributes" means, with respect to the Unit, any and all resource adequacy attributes (or other locational attributes related to system reliability), as may be identified from time to time by the CPUC, CAISO, LRA, or other Governmental Body having jurisdiction, associated with the physical location or point of electrical interconnection of the Unit within the CAISO Control Area, that can be counted toward LAR, but exclusive of any RAR Attributes which are not associated with where in the CAISO Control Area the Unit is physically located or electrically interconnected. For clarity, it should be understood that the LAR Attributes associated with the Unit by virtue of its location or point of electrical interconnection may change as the CAISO, LRA, or other Governmental Body, defines new or re-defines existing local areas and such change will not result in a change in payments made pursuant to this transaction. 1.23. "LAR Showings" means the LAR compliance showings (or similar or successor showings) an LSE is required to make to the CPUC (and, to the extent authorized by the CPUC, to the CAISO) pursuant to the CPUC Decisions, or to an LRA having jurisdiction over the LSE. 1.24. "LRA" means a Local Regulatory Authority, as defined in the Tariff. 1.25. "LSE" means load-serving entity. LSEs may be an investor-owned utility, an electric service provider, a community aggregator or community choice aggregator, or a municipality serving load in the CAISO Control Area (excluding exports). 1.26. "Maintenance Outage" has the meaning specified in the NERC/GADS Protocols. 1.27. "Monthly Delivery Period" means each calendar month during the Delivery Period. 1.28. Monthly RA Capacity Payment" has the meaning specified in Section 4.4 hereof. "NERC/GADS Protocols" means the North American Electric Reliability Council (NERC) Generating Availability Data System (GADS) protocols, as may be updated from time to time. 1.29. "Outage Schedule" has the meaning specified in Section 7. 1.30. "Planned/Scheduled Outage" means any outage, including Maintenance Outages, that are designated "Approved Planned" in the CAISO SLIC System. 1.31. "Product' has the meaning specified in the introductory paragraph hereof. 1.32. "RA Capacity" means the qualifying and deliverable capacity of the Unit for RAR and LAR purposes for the Delivery Period, as determined by the California Independent System Operator ("CAISO"), or other Governmental Body authorized to make such determination under Applicable Laws. RA Capacity encompasses both the RAR Attributes and LAR Attributes of the capacity provided by the Unit. 1.33. "RAR" means the resource adequacy requirements established for LSEs by the CPUC pursuant to the CPUC Decisions, or by an IRA or other Governmental Body having jurisdiction. Page 3 of 13 032 DRAFT CONFIDENTIAL 3/19/20083/1112o�,°^"8 1.34. "RAR Attributes" means, with respect to a Unit, any and all resource adequacy attributes, as may be identified from time to time by the CPUC, LRA, or Governmental Body having jurisdiction that can be counted toward RAR, exclusive of any LAR Attributes. 1.35. "RAR Showings" means the RAR compliance showings (or similar or successor showings) an ISE is required to make to the CPUC (and/or, to the extent authorized by the CPUC, to the CAISO), pursuant to the CPUC Decisions, or to an LRA having jurisdiction 1.36. "Replacement Capacity" has the meaning specified in Section 5.3 hereof. j 1.37. "Replacement Unit" means a generating unit meeting the requirements specified in Section 5.2 hereof. 1.38. "Resource Top Down Category" means the resource classification as described in CPUC Decision 05-10-042, and as may be amended from time to time by the CPUC. i 1.39. "RMR Agreement" has the meaning specified in Section 8.2.B hereof. r 1.40. "Scheduling Coordinator" or "SC" has the meaning defined in the Tariff. t 1.41. "Seller"has the meaning specified in the introductory paragraph hereof. 1.42. "SLIC System" means the scheduling and logging system for the CAISO, which is a web-enabled interface for transmission and generation owners and operators to communicate outage information to the CAISO. 1.43. "Supply Plan" means the supply plans, or similar or successor filings, that each Scheduling Coordinator representing RA Capacity submits to the CAISO, LRA, or other Governmental Body, pursuant to Applicable Laws, in order for that RA Capacity to count for its RAR Attributes or LAR Attributes. I , j 1,44. "Tariff' means the tariff and protocol provisions of the CAISO, as amended or k supplemented from time to time. i 1.45. "Transaction" has the meaning specified in the introductory paragraph hereof. 1.46. "Unit" or "Units" shall mean the generation assets described in Article 2 hereof (including any Replacement Unit(s)), from which RA Capacity is provided by Seller to Buyer. f 1.47. "Unit Contract Quantity" means the quantity of RA Capacity for a Unit as of the Confirmation Effective Date, as specified in Section 4.3 hereof. { i}. I t i Page 4 of 13 033 I r r i DRAFT CONFIDENTIAL 3/19/2008'^'�.,'n.,.,'""8 2. Unit Information Name of Units and CAISO Resource IDs: Path 26 LAR Region Net Oualified Capacity Unit Name Resource Name (NOC) ELSEGN_7_UNIT 3 EL SEGUNDO GEN STA.UNIT 3 South LA Basin 335,000 kw Unit SCID: NRGI -Resource Top Down Category: 4 3. Resource Adequacy Capacity Product During the Delivery Period, Seller shall provide the Product to Buyer pursuant to the terms of this Confirmation. The Product shall (a) include both RAR Attributes and, if any, LAR Attributes, and (b) be a Contingent Firm RA Product as described in Section 3.2 below. The Product does not confer to Buyer any right to the electrical output from the Units, other than the right to include the Designated RA Capacity associated with the Contract Quantity in RAR Showings, LAR Showings if applicable, and any other capacity or resource adequacy markets or proceedings as specified in this Confirmation. Specifically, no energy or ancillary services associated with any Unit is required to be made available to Buyer as part of this Transaction, and Buyer shall not be responsible for compensating Seller for Seller's commitments to the CAISO required by this Confirmation. Seller retains the right to sell any RA Capacity from a Unit in excess of that Unit's Contract Quantity, and any RAR Attributes or LAR Attributes not otherwise sold under this Confirmation. 3.1. RAR and LAR Attributes Seller shall provide Buyer with the Designated RA Capacity and the RAR Attributes and, if any, LAR Attributes from each Unit associated with such Designated RA Capacity, as expressed in megawatts ("MWs"). For each Monthly Delivery Period, a Unit's Designated RA Capacity shall be determined pursuant to Article 7 below, provided that the total amount of Designated RA Capacity from all Units shall not exceed the Contract Quantity. 3.2. Contingent Firm RA Product Seller shall provide Buyer with Designated RA Capacity from the Units in the amount of the Contract Quantity, unless Seller is excused from performance because of Planned Outages, or Forced Outages, or Force Majeure. If, for any Monthly Delivery Period, the Designated RA Capacity is insufficient to provide the full amount of the Contract Quantity for such period solely as a result of Planned Outages, Forced Outages, or Force Majeure, resulting in adjustments to RA Page 5 of 13 034 ii DRAFT CONFIDENTIAL 3/19120083""�ov.m1^09 Capacity of the Unit at the time of the RAR Showings and, if applicable, LAR Showings pursuant to Article 7 below, Seller's obligation to provide Designated RA Capacity from the Units shall be excused. If Seller's failure to provide Buyer with Designated RA Capacity is not excused as provided herein, then Seller shall provide Buyer with Designated RA Capacity from one or more Replacement Units pursuant to Section 5.2 hereof. If Seller fails to provide Buyer with replacement Designated RA Capacity from Replacement Units pursuant to Section 5.2, then as Buyer's sole and exclusive remedy for such failure, (a) Seller shall be liable for damages pursuant to Section 5.4 hereof, or (b) Seller shall indemnify Buyer for penalties or fines pursuant to Section t 5.5 hereof if Seller is not able to replace the Designated RA Capacity. For clarity, if, for any Monthly Delivery Period, the Designated RA Capacity is insufficient to provide the full amount of the Contract Quantity for such period as a result of a Planned Outage, a Forced Outage or a Force Majeure, Seller shall be excused from performing hereunder throughout such an outage or event and shall have no obligation to provide Buyer with replacement Designated RA Capacity from Replacement Units pursuant to Section 5.2 with respect thereto, or to pay Buyer any damages i pursuant to Section 5.4 or indemnify Buyer for any penalties pursuant to Section 5.5 in connection II therewith. €4 4. Delivery and Payment { 4.1. Delivery Period: January 1, 2009 through December 31, 2010, inclusive. I r, 4.2. Delivery Point: The Delivery Point for the Unit shall be the Los Angeles Basin Local Area of the CAISO Control Area t4.3. Unit Contract Quantity: for each Monthly Delivery Perii od shall be: I! Unit Contract Quantity (MWs)' ,Month_; January 15 February 15 March 15 April 15 May 15 i June 15 July 15 I August 15 I September 15 October 15 November 15 December 15 I 4.4.RA Capacity Payments Buyer shall pay $3.4167 per kW-month (the "Contract Price") for each MW of the Designated RA Capacity the GoRtraet Quantity delivered by Seller. Page 6 of 13 035 i a. DRAFT CONFIDENTIAL 3/19/200831141:2^^9 4.5 Allocation of Other Payments and Costs Seller may retain any revenues it may receive from the CAISO or any other third party with respect to the Unit for (a) start-up, shut-down and minimum load costs, (b) capacity revenue for ancillary services, (c) energy sales, and (d) any other revenues not related to the RAR Attributes or LAR Attributes. If a centralized capacity market develops within the CAISO region, Buyer will have exclusive rights to offer, bid or otherwise submit Designated RA Capacity provided to Buyer pursuant to this Confirmation for resale in such market, and retain and receive any and all related revenues. In the event of such offer, bid, submission, or resale, Buyer shall remain obligated to Seller for all payments and other performance required of Buyer hereunder. 5. Seller's Failure to Provide Contract Quantity 5.1. Notices and Filings If the Unit will not be available to provide Designated RA Capacity in accordance terms of this Agreement in the full amount of the Contract Quantity for any RAR and/or LAR Showings for the Delivery Period, Seller shall, no later than the earlier of (a) twenty (20) Business Days from the loss of any Designated RA Capacity, or (b) fifteen (15) Business Days before the relevant deadline for such RAR and/or LAR Showing, notify Buyer of the Designated RA Capacity of the Unit which can be included in such Showings (provided that if Seller becomes aware of a loss of any Designated RA Capacity within fifteen (15) Business Days of such deadline, Seller shall notify Buyer as soon as reasonably practicable). Seller shall, on a timely basis, submit, or cause the Unit's Scheduling Coordinator to submit, Supply Plans to identify and confirm the Designated RA Capacity of the Unit sold to Buyer. Seller shall cause the Unit's Scheduling Coordinator to certify to Buyer, no later than the earlier of (a) twenty (20) Business Days from the Confirmation Effective Date, or (b) fifteen (15) Business Days before the relevant deadline for any applicable RAR or LAR Showing, that Buyer will be credited with the Designated RA Capacity for the Delivery Period in the Unit's Scheduling Coordinator's Supply Plan. Seller shall indemnify and hold harmless Buyer from any costs, monetary penalties or fines Buyer may incur in the event the Unit's Scheduling Coordinator fails to timely submit Supply Plans that identify Buyer's right to the Designated RA Capacity purchased hereunder. 5.2. RA Capacity from Replacement Units If Seller is required to provide Designated RA Capacity from one or more Replacement Units pursuant to Section 3.2, Seller shall, at no cost to Buyer, provide Buyer with replacement RA Capacity from one or more Replacement Units, such that the total amount of Designated RA Capacity provided to Buyer from the Unit and all Replacement Units equals the Contract Quantity. The designation of any Replacement Unit by Seller shall be subject to Buyer's prior written approval, which shall not be unreasonably withheld. For the year-ahead RAR and/or LAR Showings, the Unit and any Replacement Units must provide to Buyer, in the aggregate, RAR Attributes and LAR Attributes equivalent to those that were to be provided by the Unit as agreed to by Page 7 of 13 036 DRAFT CONFIDENTIAL 3/19/200831110009 the Parties under this Agreement. For monthly RAR Showings made by Buyer, the Unit and any Replacement Units must provide to Buyer, in the aggregate, RAR Attributes equivalent to those that were to be provided by the Unit under this Agreement. Specifically, for monthly RAR Showings, Seller may provide Replacement Units outside the local RA area identified in this Confirmation, T provided that such Replacement Units help satisfy Buyer's monthly RAR, up to the Contract Quantity. Seller shall identify Replacement Units meeting the above requirements no later than the earlier of (x) twenty (20) Business Days from the loss of any Designated RA Capacity, or (y) fifteen (15) Business Days before the relevant deadline for Buyer's RAR Showing and/or LAR Showing. Once Seller has identified in writing any Replacement Units that meet the requirements of this Section, any such Replacement Unit shall be automatically deemed to be a Unit for purposes of this Confirmation until Seller notifies Buyer, in writing, of the availability of the original Unit. For purposes of this Confirmation, Seller shall be deemed to have failed to provide Buyer with Designated RA Capacity in the full amount of the Contact Quantity if the Unit and Replacement Units providing such Designated i RA Capacity do not in the aggregate provide to Buyer the RAR Attributes and LAR Attributes . contracted for pursuant to this Confirmation. i 5.3 Purchase of Replacement Capacity If Seller fails to provide any portion of Designated RA Capacity from Replacement Units as required by Section 5.2 hereof, and is not otherwise excused from performance hereunder because of a Planned Outage, a Forced Outage, or Force Majeure, Buyer may, but shall not be required to, replace any Designated RA Capacity not provided by Seller with capacity (such replacement capacity being referred to as "Replacement Capacity") having equivalent RAR and LAR Attributes compared to the Designated RA Capacity not provided by Seller. Buyer may enter into purchase transactions with one or more other parties to replace Designated RA Capacity not provided by Seller. Additionally, Buyer i may enter into one or more arrangements to repurchase its obligation to sell and deliver the Product to another party, and such arrangements shall be considered to be the procurement of Replacement Capacity. Buyer shall act in a commercially reasonable manner in purchasing any Replacement Capacity. i 5.4 Damages for Failure to Deliver I If Seller is required to provide Buyer with Designated RA Capacity from the Units (including one or more Replacement Units provided by Seller pursuant to Sections 3.2 hereof), and fails to do so in the full amount of the Contract Quantity pursuant to Section 5.2 hereof, then Seller shall pay to Buyer as damages an amount equal to the positive difference, if any, between (a) the sum of(i) the Capacity Replacement Price for each Replacement Capacity transaction entered into by Buyer times its applicable RA Capacity quantity, plus (ii) absent a purchase of Replacement Capacity, each Capacity Replacement Price times the Designated RA Capacity not provided by Seller (adjusted for any quantity purchased by Buyer in (i) above), and (b) the Designated RA Capacity not provided for each Monthly Delivery Period multiplied by the Contract Price for that month. If Seller fails to pay those damages, then Buyer may offset those damages owed it against any future amounts it may owe to Seller under this Confirmation. I j 5.5 Indemnities for Failure to Deliver Designated RA Capacity Seller agrees to indemnify Buyer for any monetary penalties or fines assessed against Buyer by the CPUC and/or the CAISO, or an LRA having jurisdiction, resulting from: (a) Seller's failure to provide Buyer with any portion of the Designated RA Capacity pursuant to Sections 3.2, and 5.2 (including, I I Page 8 of 13 037 DRAFT CONFIDENTIAL 3/19/200832008 without limitation, meeting the time requirements for designating any Replacement Units); (b) Seller's failure to provide notice of the non-availability of any portion of the Designated RA Capacity as required under Section 5.1 hereof; or (c) any other failure by Seller to perform its obligations under this Confirmation. With respect to the foregoing, the Parties shall use commercially reasonable efforts to minimize such penalties and fines, provided that in no event shall Buyer be required to utilize or change its utilization of its owned or controlled assets or market positions to minimize these penalties and fines. Seller will have no obligation to Buyer under this Section 5.5 in respect of the portion of Contract Quantity for which Seller has paid damages pursuant to Section 5.4 hereof. 6 CAISO Offer Requirements: During the Delivery Period, Seller shall either schedule or cause the Unit's Scheduling Coordinator to schedule with, or make available to, the CAISO the Unit's available Designated RA Capacity in compliance with the Tariff, and shall perform all, or cause the Unit's Scheduling Coordinator, owner, or operator, as applicable, to perform all obligations under the Tariff that are associated with the sale of Designated RA Capacity hereunder. Buyer shall have no liability for the failure of Seller or the failure of the Unit's Scheduling Coordinator, owner or,operator to comply with such Tariff provisions, including any penalties or fines imposed on Seller or the Unit's Scheduling Coordinator, owner, or operator for such noncompliance. 7 Counting Resources During Planned/Scheduled Outages In the event of a Planned/Scheduled Outage, the Unit's Designated RA Capacity will be deemed to be adjusted under the following circumstances: Time Adjustment to the Unit's Designated RA Capacity at the Time of Period Showing Summer Any month where days of Planned/Scheduled Outages exceed 25% of May days in the month, the Unit's Designated RA Capacity will be equal to through zero (0) for the month. If Planned/Scheduled Outages are less than or September equal to 25%, the Unit's Designated RA Capacity will be deemed to equal the Contract Quantity. Non- (i) For Planned/Scheduled Outages less than 1 week, the Unit's Summer Designated RA Capacity will be deemed to equal the Contract Quantity Months October (ii) For Planned/Scheduled Outages 1 week to 2 weeks, inclusive, the through Unit's Designated RA Capacity will be calculated using the following April formula: Ll [1 - (days of Planned/Scheduled Outage/days in month) - 0.25] * Unit's Designated RA Capacity (iii) For Planned/Scheduled Outages over 2 weeks, the Designated RA Capacity will be deemed to equal zero for that month. Page 9 of 13 038 I DRAFT CONFIDENTIAL 3/19/2008'/"x,1112008 8 Other Buyer and Seller Covenants 8.1 Buyer and Seller shall, throughout the Delivery Period, take all commercially . reasonable actions and execute any and all documents or instruments reasonably necessary to ensure Buyer's right to the use of the Contract Quantity for the sole benefit of Buyer's RAR,and LAR if applicable. Such commercially reasonable actions shall include,'without limitation: A. Cooperating with and providing, and in the case of Seller causing the Unit's Scheduling Coordinator, owner or operator to cooperate with and provide, requested supporting documentation to the CAISO, the CPUC, or any other Governmental Body responsible for administering RAR and/or LAR under Applicable Laws, to certify or qualify the Contract Quantity as RA Capacity and Designated RA Capacity. Such actions shall include, without limitation, providing information requested by the CPUC, or by an LRA having jurisdiction to demonstrate for each month of the Delivery Period the ability to deliver the Contract 1 Quantity from the Unit to the CAISO Controlled Grid for the minimum hours required to ` qualify as RA Capacity, and providing information requested by the CPUC, CAISO or other Governmental Body having jurisdiction to administer RAR or LAR to demonstrate that the Contract Quantity can be delivered to the CAISO Controlled Grid, pursuant to "deliverability" standards established by the CAISO, or other Governmental Body having jurisdiction to administer RAR and/or LAR; and r' B. Negotiating in good faith to make necessary amendments, if any, to this Confirmation to conform this Transaction to subsequent clarifications; revisions or decisions rendered by the CPUC, FERC, or other Governmental Body having jurisdiction to administer RAR or LAR, so as to maintain the benefits of the bargain struck by the Parties. f8.2 Seller represents, warrants and covenants to Buyer that, throughout the Delivery Period: A. Seller owns, or has the exclusive right to the RA Capacity sold under this Confirmation from the Unit, and shall furnish Buyer, CAISO, CPUC, jurisdictional LRA, or other Governmental Body having jurisdiction to administer RAR and/or LAR with such evidence fk as may reasonably be requested to demonstrate such ownership or exclusive right; B. No portion of the Contract Quantity has been committed by Seller to any third party in order to satisfy RAR or LAR or analogous obligations in CAISO markets, other than pursuant to an RMR Agreement between the CAISO and either Seller or the Unit's owner I or operator; C. No portion of the Contract Quantity has been committed by Seller in order to satisfy RAR and/or LAR or analogous obligations in any non-CAISO market; D. The Unit is connected to the CAISO Controlled Grid, is within the CAISO Control Area, and is under the control of CAISO; E. In the event Seller has rights to the energy output of the Unit, and Seller or the Unit's I Scheduling Coordinator schedules energy from the Unit for export from the CAISO Control Area, or commits energy to another entity in a manner that could result in scheduling i energy from the Unit for export from the CAISO Control Area, it shall do so only as t Page 10 of 13 1 039 DRAFT CONFIDENTIAL 3/191200$3/-11(3009 allowed by, and in accordance with, Applicable Laws and such exports may, if allowed by the Tariff, be curtailed by the CAISO; F. The owner or operator of the Unit is obligated to maintain and operate the Unit using ".`Good Utility Practice," as defined in the Tariff, and General Order 167 as outlined by the CPUC in the Enforcement of Maintenance and Operation Standards for Electric Generating Facilities Adopted May 6, 2004, if applicable to the Unit, and is obligated to abide by all Applicable Laws in operating such Unit, ron vided that the owner or operator of the Unit is not required to undertake capital improvements, facility enhancements, or the construction of new facilities; G. The owner or operator of the Unit is obligated to comply with Applicable Laws, including the Tariff, relating to RA Capacity and RAR and LAR; H. With respect to the RA Capacity provided under this Confirmation, Seller shall, and the Unit's SC is obligated to, comply with Applicable Laws, including the Tariff, relating to RA Capacity and RAR and LAR; I. Seller has notified the SC of the Unit that Seller has transferred the Designated RA Capacity to Buyer, and the SC is obligated to deliver the Supply Plans in accordance with the Tariff; and J. Seller has notified the Unit's SC that Buyer is entitled to the revenues set forth in Section 4.6 of this Confirmation, and SC is obligated to promptly deliver those revenues to Buyer, along with appropriate documentation supporting the amount of those revenues. 9 Confidentiality. Either Party may disclose the transfer of the Designated RA Capacity under this Transaction to any Governmental Body having jurisdiction, the CPUC, the CAISO or any LRA having jurisdiction in order to support its RAR and/or LAR Showings, if applicable, and Seller may disclose the transfer of the Designated RA Capacity under this Transaction to the SC of the Unit in order for such SC to timely submit accurate Supply Plans; provided, that each disclosing Party shall, to the extent possible, use reasonable efforts to limit the ability of any such applicable Governmental Body, CAISO, LRA or SC to further disclose such information 10. Credit. As of the date this Confirmation, both Parties agree that neither Party will be required to post collateral associated to credit exposure; since no liquid forward markets exist for the transacted product. Page 11 of 13 040 DRAFT CONFIDENTIAL 3/19/200831114:2009 I 11. Buyers Resale of Product Buyer may resell all or a portion of the Product delivered to Buyer hereunder. In the event of such resale, Buyer shall remain obligated to Seller for payments and other performance required of Buyer hereunder, if Buyer's purchaser fails to perform. 12. Notices Unless otherwise provided in this Confirmation, any notice or request ("Notice") shall be in writing to the address provided below and delivered by hand delivery, United States mail, overnight courier service or facsimile. Notice by facsimile or hand delivery shall be effective at the close of business on the day received, if the entire document was received during business hours on a Business Day, and otherwise shall be effective at the close of business on the next Business Day after it was sent for "next-day delivery" or its equivalent by a nationally-recognized overnight courier or personally delivered. Notice by overnight courier service shall be effective on the next Business Day after it was sent. Notice by United States mail shall be effective on the day it was received. A Party may change its address by providing Notice of same to the other Party in accordance with this Article 12. To Buyer: City of Azusa 213 East Foothill Blvd. Azusa, CA 91702 Attention: Mr. Bob Tang Direct: (626) 812-5214 Fax: I To Seller: ' I NRG Power Marketing Inc. 211 Carnegie Center Princeton, NJ 08540 Attention: Contract Administration Direct: 609-524-4543 I. Fax: 609-524-4540 I i t 1 Page 12 of 13 041 DRAFT CONFIDENTIAL 3/19/2008 "' nne 13. Miscellaneous Provisions 13.1 Waiver. The failure of either Party to enforce or insist upon compliance with or strict performance of any of the terms or conditions of this Confirmation, or to take advantage of any of its rights there under, shall not constitute a waiver or relinquishment of any such terms, conditions, or rights, but the same shall be and remain at all times in full force and effect. No provision of this Confirmation shall be waived except in a writing signed by the waiving Party. 13.2 Rate Changes. 13.2.1 The terms and conditions and the rates for service specified in this Confirmation shall remain in effect for the term of the transaction described herein. Absent the Parties' written agreement, this Confirmation shall not be subject to change by application of either Party pursuant to Section 205 or 206 of the Federal Power Act. 13.2.2 Absent the agreement of all parties to the proposed change, the standard of review for changes to this Confirmation whether proposed by a Party, a non-party, or the Federal Energy Regulatory Commission acting sua sponte shall be the "public interest" standard of review set forth in United Gas Pipe Line v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) (the "Mobile-Sierra doctrine"), or such other standard of review permissible to preserve the intent of the parties pursuant to this Section 13.2.2 to uphold the sanctity of contracts without modification. 13.3 Relationship of the Parties. This Confirmation shall not be interpreted to create an association,joint venture, or partnership between the Parties or to impose any partnership obligation or liability upon either Party. Neither Party shall have any right, power, or authority to enter into any agreement or undertaking for, or act on behalf of, or to act as an agent or representative of, the other Party. 13.4 Severability. In the event any of the terms, covenants, or conditions of this Confirmation, or the application of any such terms, covenants, or conditions, shall be held invalid, illegal, or unenforceable by any court or administrative body having jurisdiction, all other terms, covenants, and conditions of the Confirmation and their application not adversely affected thereby shall remain in force and effect; provided, however, that Buyer and Seller shall negotiate in good faith to attempt to implement an equitable adjustment in the provisions of this Confirmation with a view toward effecting the purposes of this Confirmation by replacing the provision that is held invalid, illegal, or unenforceable with a valid provision the economic effect of which comes as close as possible to that of the provision that has been found to be invalid, illegal or unenforceable. 13.5 Complete Agreement; Amendments. The terms and provisions contained in this Confirmation and the WSPP Agreement constitute the entire agreement between Buyer and Seller with respect to the Product and shall supersede all previous communications, representations, or agreements, either verbal or written, between Buyer and Seller with respect to the sale of the Product. This Confirmation may be amended, changed, modified, or altered, provided that such amendment, change, modification, or alteration shall be in writing and signed by both Parties hereto. Page 13 of 13 042 DRAFT CONFIDENTIAL 3119/20083/1112008 13.6 BindingEffect.ffect. This Confirmation, as it may be amended from time to time pursuant to this Article, shall be binding upon and inure to the benefit of the Parties hereto and their respective successors-in-interest, legal representatives, and assigns permitted hereunder. i 13.7 Headings. Captions and headings used in this Confirmation are for ease of reference only and do not constitute a part of this Confirmation. 13.8 Counterparts. This Confirmation may be executed in any number of counterparts, and each executed counterpart shall have the same force and effect as an original instrument. } 4 13.9 Governing Law. The interpretation and performance of this Confirmation and each of its { provisions shall be governed and construed in accordance with the laws of the State of California f without regard its conflicts of laws provisions. r } } 3 ACKNOWLEDGED AND AGREED TO AS OF April , 2008, to be effective as of the Confirmation Effective Date. G } NRG Power Marketing Inc. City of Azusa, California p By: By: Name: Name: Title: Title: I { k i i �6 f f I 043 Page 14 of 13 CONFIRMATION LETTER BETWEEN RELIANT ENERGY SERVICES, INC. AND CITY OF AZUSA This confirmation letter ("Confirmation") confirms the Transaction between Reliant Energy Services, Inc. ("Seller') and City of Azusa ("Buyer"), each individually a 'Party' and together the "Parties", dated as of March 17, 2008 (the "Confirmation Effective Date") in which Seller agrees to provide to Buyer the right to the resource adequacy capacity product described herein (the "Product"). This Transaction is governed by the Western Systems Power Pool Agreement (Effective Version: March 16, 2007) to which both Seller and Buyer are members along with any amendments and annexes thereto (the "Master Agreement"). Capitalized terms used but not otherwise defined in this Confirmation have the meanings ascribed to them in the Master Agreement and the Tariff. ARTICLE 1 DEFINITIONS 1.1 "Applicable Laws" means any law, rule, regulation, order, decision, judgment, or other legal or regulatory determination by any Governmental Body having jurisdiction over one or both Parties or this Transaction, including without limitation, the Tariff. 1.2 "Buyer" has the meaning specified in the introductory paragraph hereof. 1.3 "CAISO" means the California Independent System Operator, or its successor. 1.4 "CAISO Control Area" has the meaning specified in the Tariff. 1.5 "CAISO Controlled Grid" has the meaning specified in the Tariff. 1.6 "Capacity Replacement Price" means (a)the price paid for any Replacement Capacity purchased by Buyer pursuant to Section 5.3 hereof, plus costs reasonably incurred by Buyer in purchasing such Replacement Capacity, or (b) absent a purchase of any Replacement Capacity, the market price for such Designated RA Capacity not provided at the Delivery Point. The Buyer shall determine such market prices in a commercially reasonable manner. For purposes of Section 4.16a of the Master Agreement, "Capacity Replacement Price" shall be deemed to be the "Replacement Price." 1.7 "Confirmation" has the meaning specified in the introductory paragraph hereof. 1.8 "Contingent Firm RA Product" has the meaning specified in Section 3.3 hereof. 1.9 "Contract Price" means, for any Monthly Delivery Period, the product of the RA Capacity Flat Price and the Price Shape Factor for such period. 1.10 "Contract Quantity" means the total Unit Contract Quantity for all Units. 1.11 "CPUC" means the California Public Utilities Commission or any successor thereto. 1.12 "CPUC Decisions" means CPUC Decisions 04-01-050, 04-10-035, 05-10-042, 06-06-064, 06-07- 031 and subsequent decisions related to resource adequacy, as may be amended from time to time by the CPUC. 1.13 "Delivery Point" has the meaning specified in Section 4.2 hereof. 1.14 "Designated RA Capacity" means, for each Unit, the amount of RA Capacity that Seller provides to Buyer pursuant to this Confirmation that is certified for inclusion in RAR Showings and if applicable LAR Showings, in each case as determined pursuant to Section 3.1 hereof. 1 044 �i Designated RA Capacity shall include those attributes associated with the capacity identified in Article 2 and Article 3 hereof. 1.15 "Confirmation Effective Date" has the meaning specified in the introductory paragraph hereof. 1.16 "Firm RA Product" has the meaning specified in the Section 3.2 hereof. 1.17 "Forced Outage" means an outage that is designated `forced" according to CAISO's outage coordination rules and procedures. 1.18 "Governmental Body" means any federal, state, local; municipal or other government; any governmental, regulatory or administrative agency, commission or other authority lawfully exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; and any court or governmental tribunal. 1.19 "LAR" means local area reliability, which is any program of localized resource adequacy requirements established for jurisdictional LSE's by the CPUC pursuant to the CPUC Decisions, or by another LRA having jurisdiction over the LSE. LAR may also be known as local resource adequacy, local RAR, or local capacity requirement in other regulatory proceedings or legislative actions. 1.20 "LAR Attributes" means, with respect to a Unit, any and all resource adequacy attributes (or other locational attributes related to system reliability), as may be identified from time to time by the CPUC, CAISO, LRA, or other Governmental Body having jurisdiction, associated with the I physical location or point of electrical interconnection of the Unit within the CAISO Control Area, that can be counted toward LAR, but exclusive of any RAR Attributes which are not associated j with where in the CAISO Control Area the Unit is physically located or electrically interconnected. For clarity, it should be understood that the LAR Attributes associated with a Unit by virtue of its location or point of electrical interconnection may change as the CAISO, LRA, or other Governmental Body, defines new or re-defines existing local areas and such change will not result in a change in payments made pursuant to this transaction. 1.21 "LAR Showings" means the LAR compliance showings (or similar or successor showings).an LSE j is required to make to the CPUC (and, to the extent authorized by the CPUC, to the CAISO) pursuant to the CPUC Decisions, or to an LRA having jurisdiction over the LSE. 1.22 "LRA" means a Local Regulatory Authority, as defined in the Tariff. 1.23 "LSE" means load-serving entity. LSEs may be an investor-owned utility, an electric service provider, a community aggregator or community choice aggregator, or a municipality serving load in the CAISO Control Area (excluding exports). 1.24 "Maintenance Outage" has the meaning specified in the NERC/GADS Protocols. 1.25 . "Master Agreement" has the meaning specified in the introductory paragraph hereof. 1.26 "Monthly Delivery Period" means each calendar month during the Period of Delivery. 1.27 "Monthly RA Capacity Payment" has the meaning specified in Section 4.4 hereof. 1.28 "NERC/GADS Protocols" means the North American Electric Reliability Council (NERC) Generating Availability Data System (GADS) protocols, as may be updated from time to time. 1.29 "Non-Excusable Event" means an event which prevents Buyer's ability to use Designated RA Capacity for its RAR Showing or LAR Showing as a result of Seller's (a) negligence, (b) failure to perform its obligations under this Confirmation, including, without limitation, the failure to cause the owner, operator or SC of a Unit to comply with the operations and maintenance standards ! specified in Section 8.2(f), or(c) failure to comply, or cause the owner, operator or SC of the Units to comply, with the Tariff with respect to the Units providing RAR Attributes and LAR Attributes, as applicable. 1.30 "Period of Deliver/' has the meaning specified in Section 4.1 hereof. i i I` 2 045 i' 1.31 "Planned/Scheduled Outage" means any outage, including Maintenance Outages, that are designated "Approved Planned" in the SLIC System. 1.32 "Price Shape Factor" means the Price Shape Factor specified in the Monthly Payment Price Shape Table in Section 4.4 hereof. 1.33 "Product" has the meaning specified in the introductory paragraph hereof. 1.34 "Prorated Percentage of Unit Factor" means the percentage of RA Capacity, as specified in Article 2 hereof,from the Unit that is dedicated to Buyer pursuant to this Confirmation. 1.35 "RA Availability" means, for each Unit, expressed as a decimal value rounded to the nearest hundredth, (a) the Unit's RA Capacity, divided by (b) the Unit's CAISO Net Qualifying Capacity shown in Article 2, provided that a Unit's RA Availability shall not exceed 1.00. 1.36 "RA Capacity" means the qualifying and deliverable capacity of the Unit for RAR and LAR purposes for the Period of Delivery, as determined by the CAISO, or other Governmental Body authorized to make such determination under Applicable Laws. RA Capacity encompasses both the RAR Attributes and LAR Attributes of the capacity provided by a Unit. 1.37 "RA Capacity Flat Price" means the price specified in the RA Capacity Flat Price Table in Section 4.4 hereof. 1.38 "RAR" means the resource adequacy requirements established for LSEs by the CPUC pursuant to the CPUC Decisions, or by an LRA or other Governmental Body having jurisdiction. 1.39 "RAR Attributes" means, with respect to a Unit, any and all resource adequacy attributes, as may be identified from time to time by the CPUC, LRA, or Governmental Body having jurisdiction, that can be counted toward RAR, exclusive of any LAR Attributes. 1.40 "RAR Showings" means the RAR compliance showings (or similar or successor showings) an LSE is required to make to the CPUC (and/or, to the extent authorized by the CPUC, to the CAISO), pursuant to the CPUC Decisions, or to an LRA having jurisdiction. 1.41 "Replacement Capacity" has the meaning specified in Section 5.3 hereof. 1.42 "Replacement Unit" means a generating unit meeting the requirements specified in Section 5.2 hereof. 1.43 "Resource Top Down Category" means the resource classification as described in CPUC Decision 05-10-042, and as may be amended from time to time by the CPUC. 1.44 "RMR Agreement" has the meaning specified in Section 8.2(b) hereof. 1.45 "Scheduling Coordinator" or "SC" has the meaning defined in the Tariff. 1.46 "Seller" has the meaning specified in the introductory paragraph hereof. 1.47 "SLIC System" means the scheduling and logging system for the CAISO, which is a web-enabled interface for transmission and generation owners and operators to communicate outage information to the CAISO. 1.48 "Supply Plan" means the supply plans, or similar or successor filings, that each Scheduling Coordinator representing RA Capacity submits to the CAISO, LRA, or other Governmental Body, pursuant to Applicable Laws, in order for that RA Capacity to count for its RAR Attributes or LAR Attributes. 1.49 "Tariff' means the tariff and protocol provisions of the CAISO, as amended or supplemented from time to time. 1.50 "Transaction" has the meaning specified in the introductory paragraph hereof. 1.51 "Unit" or "Units" shall mean the generation assets described in Article 2 hereof (including any Replacement Units), from which RA Capacity is provided by Seller to Buyer. 3 046 1.52 "Unit Contract Quantity" means the quantity of RA Capacity for a Unit as of the Confirmation Effective Date, as specified in Section 4.3 hereof. ARTICLE 2 UNIT INFORMATION' ` I Unit: Ormond Beach Generating Station Unit 1 Location: Oxnard, CA i CAISO Resource ID: ORMOND_7_UNIT 1 I i. SCID: NES1 CAISO Net Qualifying Capacity as determined by CAISO for such Unit: 741.27 MWs Prorated Percentage of Unit Factor: .013 I,• Resource Type: Natural Gas Conventional Steam Turbine Resource Top Down Category (1, 2, 3 or 4): 4 Point of interconnection with the CAISO Controlled Grid ("Substation"): Moor Park Current CAISO Zone (NP15, ZP26, or SP1 5) in which Substation resides: SP-15 LAR Region (if any, as of Confirmation Effective Date): Big Creek/Ventura Deliverability restrictions, if any, as described in most recent CAISO deliverability assessment: None known by Seller as of the Confirmation Effective Date. Run Hour Restrictions: None ARTICLE 3 RESOURCE ADEQUACY CAPACITY PRODUCT During the Period of Delivery, Seller shall provide the Product to Buyer pursuant to the terms of this Confirmation. The Product shall (a) include both RAR Attributes and, if any, LAR Attributes, and (b) be either a Firm RA Product or a Contingent Firm RA Product, as selected below. The Product does not confer to Buyer any right to the electrical output from the Units, other than the right to include the Designated RA Capacity associated with the Contract Quantity in RAR Showings, LAR Showings if applicable, and any other capacity or resource adequacy markets or proceedings as specified in this Confirmation. Specifically, no energy or ancillary services associated with any Unit is required to be made available to Buyer as part of this Transaction and Buyer shall not be responsible for compensating Seller for Seller's commitments to the CAISO required by this Confirmation. Seller retains the right to sell any RA Capacity from a Unit in excess of that Unit's Contract Quantity, and any RAR Attributes or LAR Attributes not otherwise sold under this Confirmation. 3.1 RAR and LAR Attributes Seller shall provide Buyer with the Designated RA Capacity and the RAR Attributes and, if any, LAR Attributes from each Unit associated with such Designated RA Capacity, as expressed in MWs. For each Monthly Delivery Period, a Unit's Designated RA Capacity shall be equal to the product of (x) the Unit's ' To be repeated for each Unit if more than one. 4 047 RA Capacity, and (y) the Unit's Prorated Percentage of Unit Factor, subject to adjustments for Planned/Scheduled Outages at the time of the RAR Showings and, if applicable, LAR Showings, if any, as determined pursuant to Article 7 below; provided that the total amount of Designated RA Capacity from all Units shall not exceed the Contract Quantity. 3.2 f 1 Firm RA Product Seller shall provide Buyer with Designated RA Capacity from the Units in the amount of the Contract Quantity. If, for any Monthly Delivery Period, the Designated RA Capacity is insufficient to provide the full amount of the Contract Quantity for such period solely as a result of Planned/Scheduled Outages resulting in adjustments to RA Capacity of a Unit at the time of the RAR Showings and, if applicable, LAR Showings pursuant to Article 7 below, Seller shall provide Buyer with Designated RA Capacity from one or more Replacement Units pursuant to Section 5.2 hereof. If Seller fails to provide Buyer with replacement Designated RA Capacity from Replacement Units pursuant to Section 5.2, as Buyer's sole and exclusive remedy for such failure, (a) Seller shall be liable for damages pursuant to Section 5.4 hereof, or (b) Seller shall indemnify Buyer for penalties or fines pursuant to Section 5.5 hereof if Seller is not able to replace the Designated RA Capacity. For clarity, if, for any Monthly Delivery Period, the Designated RA Capacity is insufficient to provide the full amount of the Contract Quantity for such period as a result of a Forced Outage or a Force Majeure, Seller shall have no obligation to provide Buyer with replacement Designated RA Capacity from Replacement Units pursuant to Section 5.2 with respect thereto, or to pay Buyer any damages pursuant to Section 5.4 or indemnify Buyer for any penalties pursuant to Section 5.5 in connection therewith. 3.3 f X 1 Contingent Firm RA Product Sefler shall provide Buyer with Designated RA Capacity from the Units in the amount of the Contract Quantity. If the Designated RA Capacity is insufficient to provide the full amount of the Contract Quantity because of a Non-Excusable Event, Seller shall provide Buyer with Designated RA Capacity from one or more Replacement Units pursuant to Section 5.2 hereof. In such case, if Seller fails to provide Buyer with replacement Designated RA Capacity from Replacement Units pursuant to Section 5.2, as Buyer's sole and exclusive remedy for such failure, (a) Seller shall be liable for damages pursuant to Section 5.4 hereof, or (b) Seller shall indemnify Buyer for penalties or fines pursuant to Section 5.5 hereof. For clarity, if the Units provide less than the full amount of the Contract Quantity for any reason other than a Non-Excusable Event, Seller is not obligated to provide Buyer with replacement Designated RA Capacity or to indemnify Buyer for penalties or fines pursuant to Section 5.5 hereof. ARTICLE 4 DELIVERY AND PAYMENT 4.1 Period of Delivery , The Period of Delivery shall be: January 1;2010 through December 31, 2010, inclusive. 4.2 Delivery Point The Delivery Point for each Unit shall be the CAISO Control Area and, if applicable, the LAR region in which the Unit is electrically interconnected. 5 048 4.3 Unit Contract Quantity2 The Contract Quantity of each Unit for each Monthly Delivery Period shall be: Unit Contract Quantity(MWs) Month ,� M1Ns January 10 February 10 I March_ 10 April 10 May 10 1 June 10 10 July August 10 September 10 �. October 10 V, November 10 December 10 If any portion of the Unit Contract Quantity of any Unit providing a Contingent Firm RA Product is not countable in Buyer's RAR Showings or, if applicable, LAR Showings after the Confirmation Effective Date for reasons other than a Non-Excusable Event, the Unit Contract Quantity shall be adjusted to the product of the Unit's (a) RA Capacity following adjustment, and (b) Prorated Percentage of Unit Factor, provided that the resulting Unit Contract Quantity shall not exceed the original Unit Contract Quantity on the Confirmation Effective Date. 4.4 Monthly RA Capacity Payment I' In accordance with the terms of Section Nine of the Master Agreement, Buyer shall make a Monthly RA j Capacity Payment to Seller for each Unit, in arrears, following each Monthly Delivery Period. Each Unit's Monthly RA Capacity Payment shall be equal to the product of (a) the applicable Contract Price for that Monthly Delivery Period, (b) the Designated RA Capacity for the.Monthly Delivery Period, and (c) 1,000. The final product of this Monthly RA Capacity Payment calculation shall be rounded to the nearest penny (i.e., two decimal places). Each Monthly RA Capacity Payment may be subject to reduction in accordance with Section 4.5 hereof. } To be repeated for each Unit fi more than one. s 049 RA CAPACITY FLAT PRICE TABLE ContractRA`Capacity.Flat Price' Year ($/kW-month) 2010 $3.40 The respective monthly Price Shape Factor, set forth in the Monthly Payment Price Shape Factor Table below, shall apply throughout the entire Period of Delivery. MONTHLY PAYMENT PRICE SHAPE FACTOR TABLE Pnce sfiaoi .;ContractMonth ` ` a -*ar ice, pactor Jan 100% Feb 100% Mar 100% Apr 100% May 100% Jun 100% Jul 100% Aug 100% . Sep 100% Oct 100% Nov 100% Dec 100% 4.5 Reduction of Monthly RA Capacity Payment(Contingent Firm RA Product only) For any Contingent Firm RA Product, the Monthly RA Capacity Payment for each Unit shall be reduced by its RA Availability Adjustment, which is calculated as follows: (a) When the Unit's RA Availability for the Monthly Delivery Period is greater than or equal to 80 percent, the Unit's RA Availability Adjustment shall be zero. (b) When the Unit's RA Availability is greater than or equal to 50 percent, but less than 80 percent, the Unit's RA Availability Adjustment shall be equal to: (0.80- RA Availability) ' 0.50 'the applicable Contract Price for that Monthly Delivery Period ' Unit Contract Quantity' 1,000. (c) When the Unit's RA Availability is less than 50 percent, the Unit's RA Availability Adjustment shall be equal to: (0.80 - 0.50) " 0.50) + ((0.50 - RA Availability) " 1.00))'the applicable Contract Price for that Monthly Delivery Period ' Unit Contract Quantity' 1,000. The final product of this RA Availability Adjustment calculation shall be rounded to the nearest penny(i.e., two decimal places). The RA Availability Adjustment for each Unit shall be subtracted from the Monthly 050 RA Capacity Payment determined in Section 4.4 to determine the amount due to the Seller for Designated RA Capacity provided hereunder from each Unit. In no case shall a Unit's Monthly RA Capacity Payment be less than zero. 4.6 Allocation of Other Payments and Costs Seller may retain any revenues it may receive from the CAISO or any other third party with respect to any Unit for (a) start-up, shut-down and minimum load costs, (b) capacity revenue for ancillary services, (c) energy sales, and (d) any revenues for black start or reactive power services. However, Buyer shall be entitled to receive and retain all revenues associated with and arising from the Designated RA Capacity of any Unit during the Period of Delivery (including any capacity or availability revenues from RMR Agreements for any Unit, and Reliability Capacity Services Tariff capacity payments, but excluding payments described in clauses (a) and (b) above). In accordance with Section 4.4 of this Confirmation and Section Nine of the Master Agreement, all such revenues received by Seller, a Unit's SC, owner, or operator shall be remitted to Buyer, and Seller shall indemnify Buyer for any such revenues that Buyer f does not receive, and Seller shall pay such revenues to Buyer if the Unit's SC, owner, or operator fails to remit those revenues to Buyer. If Seller fails to pay such revenues to Buyer, Buyer may offset any amounts owing to it for these revenues against any future amounts it may owe to Seller under this Confirmation. If a centralized capacity market develops within the CAISO region, Buyer will have exclusive rights to offer, bid or otherwise submit Designated RA Capacity provided to Buyer pursuant to this Confirmation for re-sale in such market, and retain and receive any and all related revenues. i ARTICLE 5 SELLER'S FAILURE TO DELIVER CONTRACT QUANTITY 5.1 Notices and Filings If the Units will not be available to provide Designated RA Capacity in the full amount of the Contract Quantity for any RAR and/or LAR Showings for the Period of Delivery, Seller shall, no later than the earlier of (a) twenty (20) Business Days after the loss of any Designated RA Capacity, or (b) fifteen (15) Business Days before the relevant deadline for such RAR or LAR Showing, notify Buyer of the Designated RA Capacity of each Unit which can be included in such Showings. Seller shall, on a timely basis, submit, or cause each Unit's Scheduling Coordinator to submit, Supply Plans to identify and i confirm.the Designated RA Capacity of each Unit sold to Buyer. Seller shall cause the Unit's Scheduling Coordinator to certify to Buyer, no later than the earlier of (a) twenty (20) Business Days after the I Confirmation Effective Date, or (b) fifteen (15) Business Days before the relevant deadline for any applicable RAR or LAR Showing, that Buyer will be credited with the Designated RA Capacity for the Period of Delivery in the Unit's Scheduling Coordinator's Supply Plan. Seller shall indemnify and hold harmless Buyer from any costs, monetary penalties or fines Buyer may incur in the event any Unit's Scheduling Coordinator fails to timely submit Supply Plans that identify Buyer's right to the Designated RA Capacity purchased hereunder. If Seller fails to pay those costs, monetary penalties or fines, or fails to reimburse Buyer for those, monetary penalties or fines, then Buyer may offset any amounts owing to it under this Section 5.1 against any future amounts it may owe to Seller under this Confirmation. 5.2 RA Capacity from Replacement Units If Seller is required to provide Designated RA Capacity from one or more Replacement Units pursuant to Sections 3.2 or 3.3, Seller shall, at no cost to Buyer, provide Buyer with replacement RA Capacity from one or more Replacement Units, such that the total amount of Designated RA Capacity provided to Buyer from all Units and Replacement Units equals the Contract Quantity. The designation of any Replacement Unit by Seller shall be subject to Buyer's prior written approval, which shall not be unreasonably withheld. For clarity, in the aggregate all Units and Replacement Units must provide to Buyer RAR Attributes and LAR Attributes equivalent to those that were provided by the original Units and that were sold under this Confirmation. Seller shall identify Replacement Units meeting the above requirements no later than the earlier of twenty (20) Business Days after the loss of any Designated RA Capacity, or fifteen (15) Business Days before the relevant deadline for Buyer's RAR Showing and/or LAR Showing. Once Seller has identified in writing any Replacement Units that meet the requirements of this Section 5.2, any such s 051 i Replacement Unit shall be automatically deemed to be a Unit for purposes of this Confirmation until Seller notifies Buyer, in writing, of the availability of the original Units. For purposes of this Confirmation, Seller shall be deemed to have failed to provide Buyer with Designated RA Capacity in the full amount of the Contact Quantity if the Units and Replacement Units providing such Designated RA Capacity do not in the aggregate provide to Buyer the RAR Attributes and LAR Attributes contracted for pursuant to this Confirmation. 5.3 Purchase of Replacement Capacity If Seller fails to provide any portion of Designated RA Capacity from Replacement Units as required by Section 5.2 hereof, Buyer may, but shall not be required to, replace any Designated RA Capacity not provided by Seller with capacity(such replacement capacity being referred to as "Replacement Capacity") having equivalent RAR and LAR Attributes compared to the Designated RA Capacity not provided by Seller. Buyer may enter into purchase transactions with one or more other parties to replace Designated RA Capacity not provided by Seller. Additionally, Buyer may enter into one or more arrangements to repurchase its obligation to sell and deliver the Product to another party, and such arrangements shall be considered to be the procurement of Replacement Capacity. Buyer shall act in a commercially reasonable manner in purchasing any Replacement Capacity. 5.4 Damages for Failure to Deliver If Seller is required to provide Designated RA Capacity from one or more Replacement Units pursuant to Sections 3.2 or 3.3, and fails to do so pursuant to Section 5.2 hereof, then, for purposes of determining the damages due to Buyer under Section 21 of the Master Agreement, Seller shall pay to Buyer an amount equal to the positive difference, if any, between (a)the sum of (i)the Capacity Replacement Price for each Replacement Capacity transaction entered into by Buyer times its applicable RA Capacity quantity, plus (ii) absent a purchase of Replacement Capacity, each Capacity Replacement Price times the Designated RA Capacity not provided by Seller (adjusted for any quantity purchased by Buyer in (i) above), and (b) the Designated RA Capacity not provided for each Monthly Delivery Period multiplied by the Contract Price for that month. If Seller fails to pay those damages, then Buyer may offset those damages owed it against any future amounts it may owe to Seller under this Confirmation. 5.5 Indemnities for Failure to Deliver Designated RA Capacity Seller agrees to indemnify Buyer for any monetary penalties or fines assessed against Buyer by the CPUC or the CAISO, or an LRA having jurisdiction, resulting from: (a) Seller's failure to provide Buyer with any portion of the Designated RA Capacity pursuant to Sections 3.2, 3.3, and 5.2 (including, without limitation, meeting the time requirements for designating any Replacement Units); (b) Seller's failure to provide notice of the non-availability of any portion of the Designated RA Capacity as required under Section 5.1 hereof; or (c) any other failure by Seller to perform its obligations under this Confirmation. With respect to the foregoing, the Parties shall use commercially reasonable efforts to minimize such penalties and fines, provided that in no event shall Buyer be required to utilize or change its utilization of its owned or controlled assets or market positions to minimize these penalties and fines. Seller will have no obligation to Buyer under this Section 5.5 in respect of the portion of Contract Quantity for which Seller has paid damages pursuant to Section 5.4 hereof. If Seller fails to pay those penalties or fines, or fails to reimburse Buyer for those penalties and fines, then Buyer may offset the cost of those penalties and fines against any future amounts it may owe to Seller under this Confirmation. ARTICLE 6 CAISO OFFER REQUIREMENTS During the Period of Delivery, Seller shall either schedule or cause the Unit's Scheduling Coordinator to schedule with, or make available to, the CAISO each Unit's Designated RA Capacity in compliance with the Tariff, and shall perform all, or cause the Unit's Scheduling Coordinator, owner, or operator, as applicable, to perform all obligations under the Tariff that are associated with the sale of Designated RA Capacity hereunder. Buyer shall have no liability for the failure of Seller or the failure of any Unit's 9 052 II Scheduling Coordinator, owner or operator to comply with such Tariff provisions, including any penalties or fines imposed on Seller or the Unit's Scheduling Coordinator, owner, or operator for such noncompliance. ARTICLE 7 PLANNED/SCHEDULED OUTAGES In the event of a Planned/Scheduled Outage, the Unit's Designated RA Capacity will be deemed to be adjusted under the following circumstances: Time Period Adjustment to the Unit's Designated RA Capacity at the Time of Showing Summer Any month where days of Planned/Scheduled Outages exceed 25%of days in the May through month, the Unit's Designated RA Capacity will be equal to zero (0) for the month. If September Planned/Scheduled Outages are less than or equal to 25%, the Unit's Designated i RA Capacity will be deemed to equal the Contract Quantity. f ;. Non-Summer (i) For Planned/Scheduled Outages less than 1 week, the Unit's Designated RA ' Months Capacity will be deemed to equal the Contract Quantity IOctober through April (ii) For Planned/Scheduled Outages 1 week to 2 weeks, the Unit's Designated RA Capacity will be calculated using the following formula:. [t - (days of Planned/Scheduled Outage/days in month) -0.25[ ' Unit's Designated RA Capacity (iii) For Planned/Scheduled Outages over 2 weeks, the Designated RA Capacity will I be deemed toequal zero for that month. ARTICLE 8 j OTHER BUYER AND SELLER COVENANTS 8.1 Buyer and Seller shall, throughout the Period of Delivery, take all commercially reasonable actions and execute any and all documents or instruments reasonably necessary to ensure Buyer's right to the use of the Contract Quantity for the sole benefit of Buyer's RAR and LAR if applicable. Such commercially reasonable actions shall include, without limitation: (a) Cooperating with and providing, and in the case of Seller causing each Unit's Scheduling Coordinator, owner or operator to cooperate with and provide, requested supporting documentation to the CAISO, the CPUC, or any other Governmental Body responsible for administering RAR and/or LAR under Applicable Laws, to certify or qualify the Contract Quantity as RA Capacity and Designated RA Capacity. Such actions shall include, without limitation, providing information requested by the CPUC, or by an LRA having jurisdiction, to demonstrate for each month of the Period of Delivery the ability to deliver the Contract Quantity from each Unit to the CAISO Controlled Grid for the minimum hours required to qualify as RA Capacity, and providing information requested by the CPUC, CAISO or other Governmental Body having jurisdiction to administer RAR I or LAR to demonstrate that the Contract Quantity can be delivered to the CAISO j. Controlled Grid, pursuant to "deliverability" standards established by the CAISO, or other Governmental Body having jurisdiction to administer RAR and/or LAR; and (b) Negotiating in good faith to make necessary amendments, if any, to this Confirmation to conform this Transaction to subsequent clarifications, revisions or decisions rendered by io 053 f I the CPUC, FERC, or other Governmental Body having jurisdiction to administer RAR or LAR, so as to maintain the benefits of the bargain struck by the Parties. 8.2 Seller represents, warrants and covenants to Buyer that, throughout the Period of Delivery: (a) Seller owns or has the exclusive right to the RA Capacity sold under this Confirmation from each Unit, and shall furnish Buyer, CAISO, CPUC or other jurisdictional LRA, or other Governmental Body with such evidence as may reasonably be requested to demonstrate such ownership or exclusive right; (b) No portion of the Contract Quantity has been committed by Seller to any third party in order to satisfy RAR or LAR or analogous obligations in CAISO markets, other than pursuant to an RMR Agreement between the CAISO and either Seller or the Unit's owner or operator; (c) No portion of the Contract Quantity has been committed by Seller in order to satisfy RAR or LAR, or analogous obligations in any non-CAISO market; (d) Each Unit is connected to the CAISO Controlled Grid, is within the CAISO Control Area, and is under the control of CAISO; (e) In the event Seller has rights to the energy output of any Unit, and Seller or the Unit's Scheduling Coordinator schedules energy from the Unit for export from the CAISO Control Area, or commits energy to another entity in a manner that could result in scheduling energy from the Unit for export from the CAISO Control Area, it shall do so only as allowed by, and in accordance with, Applicable Laws and such exports may, if allowed by the Tariff, be curtailed by the CAISO; (f) The owner or operator of each Unit is obligated to maintain and operate each Unit using "Good Utility Practice," as defined in the Tariff, and, if applicable, General Order 167 as outlined by the CPUC in the Enforcement of Maintenance and Operation Standards for Electric Generating Facilities Adopted May 6, 2004, and is obligated to abide by all Applicable Laws in operating such Unit, rop vided that the owner or operator of any Unit is not required to undertake capital improvements, facility enhancements, or the construction of new facilities; (g) The owner or operator of each Unit is obligated to comply with Applicable Laws, including the Tariff, relating to RA Capacity, RAR and LAR; (h) If Seller is the owner of any Unit, the aggregation of all amounts of LAR Attributes and RAR-Attributes that Seller has sold, assigned or transferred for any Unit does not exceed that Unit's RA Capacity; (i) With respect to the RA Capacity provided under this Confirmation, Seller shall, and each Unit's SC is obligated to, comply with Applicable Laws, including the Tariff, relating to RA Capacity, RAR and LAR; (j) Seller has notified the SC of each Unit that Seller has transferred the Designated RA Capacity to Buyer, and the SC is obligated to deliver the Supply Plans in accordance with the Tariff; and (k) Seller has notified each Unit's SC that Buyer is entitled to the revenues set forth in Section 4.6 of this Confirmation, and such SC is obligated to promptly deliver those revenues to Buyer, along with appropriate documentation supporting the amount of those revenues. ARTICLE 9 CONFIDENTIALITY Notwithstanding Section 30.1 of the Master Agreement, the Parties agree that either Party may disclose the sale of the Designated RA Capacity under this Confirmation to any Governmental Body, the CPUC, the CAISO or any LRA having jurisdiction in order to support its LAR or RAR Showings, if applicable, and 11 054 �I i Seller may disclose the transfer of the Designated RA Capacity under this Transaction to the SC of each Unit in order for such SC to timely submit accurate Supply Plans; provided, that each disclosing Party shall, to the extent reasonable, use reasonable efforts to limit the ability of any such applicable Governmental Body, CAISO, LRA or SC to further disclose such information. I i ARTICLE 10 BUYER'S RE-SALE OF PRODUCT Buyer may re-sell all or a portion of the Product delivered to Buyer hereunder. ARTICLE 11 CALIFORNIA CLIMATE ACTION REGISTRY In accordance with CPUC Rulemaking 06-04-009, upon modification of the protocols of the California k Climate Action Registry to allow generation facility-specific registration, Seller shall promptly (i) register with the California Climate Action Registry and (ii) send Buyer notice of such registration. ARTICLE 12 i COLLATERAL REQUIREMENTS [INTENTIONALLY LEFT BLANK] Article 13 i WSPP Agreement Amendments 13. WSPP Agreement Amendments: For purposes of this Transaction only, the Master Agreement shall be amended as follows: I F (a) Sections 22.1(d) and 27 of the Master Agreement shall not apply to either Party with respect to this Transaction. (b) The following phrase is inserted at the beginning of Section 37: "On the date of entering into this Confirmation,'. i i (c) Section 24 of the Master Agreement is deleted and replaced with the following: 'This Master Agreement and any Confirmationjshall be governed by and construed, enforced and performed in accordance with the laws of the State of California, without regard to principles of conflicts of law or contrary provisions of the Master Agreement, if any. i' f (d) Subsections 34.1 and 34.2 of the Master Agreement are hereby deleted and replaced with the following: ( t 34.1 Waiver of Jury Trial. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION, CLAIM OR PROCEEDING RELATING TO THIS AGREEMENT, PROVIDED, HOWEVER, THE PARTIES DO. NOT WAIVE JURY TRIAL IF ANY PROCEEDING RELATED TO THIS AGREEMENT IS BROUGHT IN THE STATE OF TEXAS." The rest of Section 34 of the Master Agreement shall be re-numbered accordingly. f (e) LIMITATION OF DAMAGES. FOR BREACH OF ANY PROVISION OF THIS CONFIRMATION AGREEMENT FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, THE EXPRESS REMEDY OR MEASURE OF DAMAGES 12 055 PROVIDED IS THE SOLE AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT AND THE AGREEMENT FOR THE BREACH, LIABILITY FOR THE BREACH IS LIMITED AS SET FORTH IN THE PROVISION AND ALL OTHER REMEDIES FOR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED IN THIS AGREEMENT FOR A PARTICULAR BREACH, LIABILITY FOR THE BREACH IS LIMITED TO DIRECT DAMAGES ONLY, THE DIRECT DAMAGES ARE THE SOLE AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT FOR THE BREACH, AND ALL OTHER REMEDIES FOR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. NEITHER PARTY IS LIABLE FOR ANY OTHER TYPE OF DAMAGE, INCLUDING INCIDENTAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES OF ANY NATURE (INCLUDING DAMAGES ASSOCIATED WITH LOST PROFITS, BUSINESS INTERRUPTION AND LOSS OF GOODWILL) ARISING AT ANY TIME, WHETHER IN TORT (INCLUDING THE SOLE OR CONTRIBUTORY NEGLIGENCE OF EITHER PARTY OR ANY RELATED PERSON), WARRANTY, STRICT LIABILITY, CONTRACT OR STATUTE, UNDER ANY INDEMNITY PROVISION, OR OTHERWISE. (f) Section 41 "Witness"of the Master Agreement shall become Section 42 and the following "Standard of Review" Section substituted in its place: 'The Parties agree as follows: From the date of entering into a Transaction under this Master Agreement and throughout the term of such Transaction, the Parties each warrant and covenant as follows: (i) Absent the agreement of all Parties to the proposed change, the standard of review for changes to any section of this Master Agreement (including all Transactions and/or Confirmations) specifying the rate(s) or other material economic terms and conditions agreed to by the Parties herein, whether proposed by a Party, a non-party or FERC acting sua sponte, shall be the "public interest" standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956)( the "Mobile-Sierra" doctrine). (ii) The Parties, for themselves and their successors and assigns, (i) agree that this "public interest" standard shall apply to any proposed changes in any other documents, instruments or other agreements executed or entered into by the Parties in connection with this Master Agreement and (ii) hereby expressly and irrevocably waive any rights they can or may have to the application of any other standard of review, including the "just and reasonable" standard." ACKNOWLEDGED AND AGREED TO AS OF MARCH 17, 2008: RELIANT ENERGY SERVICES, INC. CITY OF AZUSA By: By: Name: Name: Title: Title: Date: Date: 13 X56 . , lI4XT A 'NATFA CONSENT CALENDAR , TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD i AND AZUSA CITY COUNCIL i FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: MARCH 24, 2008 SUBJECT: APPROVAL OF RESOLUTION AMENDING AZUSA LIGHT &WATER RULES AND REGULATIONS REGARDING FEES FOR NEW STREET LIGHT FIXTURES LOCATED IN THE ROSEDALE DEVELOPMENT RECOMMENDATION It is recommended that the Azusa Utility Board/City Council adopt a resolution to amend Azusa Light &Water's Rules &Regulations Schedule SL-1 to include three types of new high- pressure sodium street lights located in the Rosedale development. i BACKGROUND i 4 The Monrovia Nursery Specific Plan authorized three new street light designs and decorative requirements for the Rosedale development. The decorative poles and luminaries, furnished and installed by Azusa Land Development, require a higher'wattage than are currently in Schedule SL-1. Once installed, they will be owned and maintained by the Utility. Azusa Light &Water conducted an engineering study that considered the energy charge and amortized capital cost to determine the cost per lamp per month. The amended fee schedule is i attached and will be imposed on the Community where service is provided. FISCAL IMPACT In addition to the fees included in attached, there will be additional cost to Light &Water. When all 264 street lights are installed the state electric energy 'surcharge will be $3.65 per month and the Public Benefits charges will be $43.85 per month. i Prepared by: Karen Vanca, Assistant Director - Customer Care &Solutions r e 057 RESOLUTION NO. A RESOLUTION OF THE AZUSA UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA, AMENDING THE STREET LIGHTING SCHEDULE INCLUDED IN AZUSA LIGHT & WATER'S RULES AND REGULATIONS GOVERNING ELECTRIC AND WATER SERVICES. WHEREAS, pursuant to Section 78-37 of the Azusa Municipal Code, the City Council may from time to time establish and amend its Electric Rate Schedule included in Azusa Light & Water's Rules and Regulations concerning new utility services; and WHEREAS, the Utility Board/City Council is empowered to impose reasonable charges for street light fixtures; and WHEREAS, Azusa Light & Water proposes to implement the following additions to the current Electric Rate Schedule in its Rules and Regulations: 1. Electric Rate Schedule, Schedule SL-1 to add three new High- Pressure Sodium street light rates. NOW, THEREFORE, THE UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, DOES FIND AND DECLARE THAT: SECTION 1. Adoption of Amendments. The City Council hereby adopts the amendment to the Electric Rate Schedule included in Azusa Light & Water's Rules and Regulations as set forth in Exhibit "A" which is attached to this Resolution and made a part hereof. SECTION 2. Effective Date. The amendments to the Electric Rate Schedule included in Azusa Light & Water's Rules and Regulations shall become effective on March 25, 2008. PASSED, APPROVED AND ADOPTED this 24th day of March. Joseph R. Rocha Mayor 058 ATTEST: i t Vera Mendoza ' City Clerk { STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. ; CITY OF AZUSA ) i I � I I, Vera Mendoza, City Clerk of the City of Azusa, do hereby certify that the foregoing Resolution No. was duly introduced and adopted at a regular meeting of the Azusa Utility Board/City Council on the 24th day of March 2008, by the following vote, to wit: r AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: r i Vera Mendoza City Clerk I j i,. r f I r i l I ; i i I r 459 EXHIBIT "A" Proposed Changes to Rules and Regulations Changes to take effect March 25, 2008, text to be added are highlighted in underline. Text that is not highlighted is current and is being provided for context and reference. ELECTRIC RATE SCHEDULE Amendment to SCHEDULE SL-I STREET LIGHTING SERVICE DEPARTMENT-OWNED LIGHTING DISTRICTS Rates: Avg kWh per Month Per Lamp per Month Incandescent 4,000 Lumen (30OW) 104 $14.02 Mercury Vapor 7,000 Lumen (175M 60 $14.40 11,000 Lumen (250W) 86 $18,59 20,000 Lumen (400W) 138 $25,47 High-Pressure Sodium 9,500 Lumen (1 OOW) 35 $13.05 9,500 Lumen (2-100 W) 70 $29.38 14.000 Lumen (I SOW- 14') 52 $22.23 14,000 Lumen (I SOW- 28' 52 $26.53 22,000 Lumen (220W) 76 $18.14 25,500 Lumen (250W) 86 $19.41 060 C"01 ;T t16NT 0. SA I I AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES fi. DATE: MARCH 24, 2008 ! SUBJECT: REDUCTION IN REPLACEMENT WATER COST ADJUSTMENT FACTOR f RECOMMENDATION It is recommended that the Utility Board/City Council authorize staff to reduce the { Replacement Water Cost Adjustment Factor by ($0.1957) per hundred cubic feet of water I effective April 1, 2008, to reflect reduced purchased water costs from the Metropolitan Water I District for January and February. I BACKGROUND J I The existing water rates of the Azusa Water Utility include an annual adjustment factor called I the "Replacement Water Cost Adjustment Factor (RWCAF)" which is a charge applied to each `` one hundred cubic feet (ccf) of water sold. At the outset of this fiscal year, the RWCAF was initially set at $0.1306 per ccf and was intended to continue throughout fiscal year 2007- 2008, however, due to extraordinary drought conditions, replenishment water from local districts has not been available for purchase and so the water utility has had to purchase j water supplied by the Metropolitan Water District or MWD at a much higher rate. I I Rather than wait until fiscal year end to re-calculate the RWCAF for next fiscal year, Azusa Light &Water has been adjusting the RWCAF every two months since we started purchasing water at the higher cost back in July. Currently, the RWCAF stands at $0.5236 per ccf which is to continue until the end of March 2008. Due to increased local rainfall and a rise in the water table in the Canyon Basin, the City stopped purchasing water from MWD toward the end of January. This reduced our purchased water costs over this past 2 months and thus we are now in a position to lower the RWCAF. Staff recommends recovering our January costs over two months and then lower the RWCAF to $0.1306 for the month of June. The incrementally higher purchased water cost in January f was $255,617. By allocating this cost over a 2 month period, the RWCAF can be reduced to f $0.3279 per ccf in April and May, resulting in a reduction of about $3.52 per household per I month. i I i FISCAL IMPACT The effective period of two months is appropriate for this incremental adjustment since residential customers outside the City are billed every two months. The total cost recovered thru this adjustment will be about $255,600 over the next two months, assuming consumption is about 10% lower than it was last year during this same time. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities uffi RWCAF.xIs .062 l INCREMEN1fAL INCREASE IN WATER COST TO AZUSA LIGHT &WATER -COST RECOVER FOR PURCHASED WATER COST DUE TO 2007-2008 DROUGHT PURCHASES r i Incremental $ Month Acre Feet Azusa's % $146.41/AF fJul-07 1733.80 40% $ 101,538.26 Aug-07 1813.10 t 40% $ 106,182.39 i Sep-07 1842.40 r 40% $ 107,898.31 I, Oct-07 1961.60 40% $ 114,879.14 Nov-07 2013.20 75% $ 221,064.46 Dec-07 2000.00• 75% $ 219,615.00 Jan-08 1745.9 100% $ 255,617.22 t Total r $1,126,794.79 f I 1i COST RECOVERY A 2008 , 2008 Extension Water Consumption April May Total City of Azusa- ccf 408,596 402,783 811,379 Azusa Valley- ccf 308.501 319.992 628,493 Total 717,097 722,775 1,439,872 If Conservation Discount of 10% 645,387 650,498 1,295,885 4 Incremental Purchased Water Costsl'I $127,808.61 ± $127,808.61 $255,617.22 (3) RWCAF per ccf I?1 $0.1980 $0.1965 $0.1973 Baseline Annual Amount is $0.1306 Total Required to Recover MWD Costs $0.3279 Current Gros RWCAF Due to Prior Increases to Baseline $0.5236 j Net Increase Required to Pay for Incremental Cost Increase ($0.1957) i I ' The incremental costs to purchase water from MWD in January 2008 was$255,617.22. f Since no costs were incurred in February,the January costs are to be recovered over two imonths. Incremental costs are divided by total projected sales in ccfs to determine RWCAF. I ill RWCAF stands for Replacement Water Cost Adjustment Factor and is a rate for one per hundred cubic feet(ccf) of water. - j j 13i Additional RWCAF for April 2008 and May 2008 period. Ilff I i I ' j r I f' {i 063 I ' I i _WOW AZUSA r + int • warry i r j l 4 AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD ` AND AZUSA CITY COUNCIL i I � FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES \ a DATE: MARCH 24, 2008 I SUBJECT: BUDGET AMENDMENT- PARTICIPATION IN LODI #2 PROJECT r RECOMMENDATION It is recommended that the Utility Board/City Council adopt the attached resolution authorizing a budget amendment of $450,000 to pay for the costs under Lodi #2 Project lplanning and development agreement. BACKGROUND _. 1 The Utility Board/City Council approved city's participation in the planning and development I{ phase of Lodi #2 Project at November 2007's Utility Board meeting with an approved budget of $450,000 for the initial phase of the development. The Lodi #2 Project is a combined cycle natural gas electric generating facility being developed by the Northern California Power Agency. Last week, the planning and development agreement was finally executed by all project participants. The requested budget amendment will enable us to fully participate in the planning and development activities. FISCAL IMPACT A budget amendment of $450,000 is needed to pay for the planning and development under Phase 2.A of Lodi #2 Project. Funds are available from Electric Utility fund balances for this budget item. I Prepared by: I Bob Tang, Assistant Director of Resource Management I I L Resolutlon.doc , � 0-64 I � I RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, AMENDING THE FISCAL YEAR 2007-2008 OPERATING BUDGET FOR THE ELECTRIC UTILITY TO PAY FOR COST OF PARTICIPATION IN LODI#2 PROJECT WHEREAS, the adopted Fiscal Year 2007-2008 Operating Budget for the Electric Utility as amended, included $33.56 million to pay for purchased power cost; and WHEREAS, the City Council approved city's participation in Phase 2A planning and development activities of Lodi #2 Project, a combined cycled natural gas fired electric generating facility being developed by Northern California Power Agency ("NCPA") on November 26, 2007; and WHEREAS, the Lodi#2 Project planning and development agreement has been executed by all project participants; and WHEREAS, Azusa Municipal Code Section 2-450 requires that all budget amendments between $100,000 and $1 million be approved by resolution; and WHEREAS, the estimated costs to the city under the planning and development agreement is $450,000. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA, DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. That the Electric Utility Fiscal Year 2007-2008 Operating Budget is hereby amended in the amount of$450,000 to pay for the planning and development costs of Lodi #2 Project, budget expense account number 33-40-775-550-6590. SECTION 4. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED AND ADOPTED THIS 24th day of March, 2008. Joseph Rocha, Mayor ATTEST: Vera Mendoza, City Clerk 06O STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES CITY OF AZUSA ) 4 I HEREBY CERTIFY that the foregoing Resolution was duly.adopted by the Utility Board/City Council of the City of Azusa at a regular meeting of the Azusa Light & Water Utility Board on the 24th day of March, 2008. I AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: r ABSENT: COUNCILMEMBERS: f Vera Mendoza, City Clerk • r i I r r E f i r f 4 ! r i r I r r 666 �, f I NMI!03 AZUSA •-cn) s wcru 1 AGENDA ITEM I i TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD I AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES Vl DATE: MARCH 24, 2008 `' SUBJECT: APPROVAL OF A LOAN FROM THE CITY TO AZUSA LAND PARTNERS 1 1, RECOMMENDATION I It is recommended that the Azusa City Council/Utility Board approve a short-term loan in an amount not to exceed $5 million to Azusa Land Partners (ALP), and authorize the City Manager to execute all the necessary documents when execution copies are available following approval of all documents by the City Attorney's Office. The substantially completed documents are attached for your reference. BACKGROUND As you are aware, due to the temporary fiscal challenges faced by Azusa Land Partners (ALP), there has been a slow down or stoppage of construction activities in the Rosedale Project. Some projects where work has stopped are very critical to the integrity of the City's public infrastructure. These projects include water reservoirs, transmission lines, pump stations, and storm drainage systems. 4 The approved Development Agreement with ALP includes construction of water reservoirs with sufficient capacity to fulfill the needs of the Rosedale Development and satisfy the needs of Azusa Light &Water's system storage requirements. As stipulated in the Agreement, each parry is responsible for its proportional share of the cost; ALP is to pay for the installations and Azusa Light &Water is to reimburse ALP for its share of the cost within 30 days of the reservoir and other facilities being placed into service. The estimated amount of reimbursement by Azusa Light &Water is approximately $6 million, assuming no substantial change orders are encountered during the reminder of the project. , , 067 1 However, due to the financial difficulties ALP is experiencing, the City proposes to loan ALP $5 million so that it can complete construction and installation of critical projects which are specifically listed in the attachment to the Loan Agreement. This advanced funding would be deducted from any reimbursement amounts owed to ALP through the Development- Agreement for these facilities. Staff believe that this action is necessary to finish the projects critical to the integrity of the City's public infrastructure and secure the work performed to date. Loan will only be disbursed as progress payments to the respective contractors for the amount of work to be completed. FISCAL IMPACT The amount of loan can be funded out of the Water Capital Improvement Project Budget for the reservoir project, which has the 2006 Water Revenue Bond proceeds as its funding source. Prepared by: ). Hsu Attachment ALP Const Loan ALP Draw Agr.DOC ALP-Prom Note.DOC ALP Const Agr.DOC Loan-Exhibit A.PDF 063 ti i CONSTRUCTION LOAN AGREEMENT THIS CONSTRUCTION LOAN AGREEMENT dated 2008 is made and executed between Azusa Land Partners, LLC, a Delaware limited liability company ("Borrower') and the City of Azusa, a public corporation ("Lender") on the following terms and conditions. RECITALS A. Borrower is constructing several Projects, as defined below, as required by that certain Development Agreement by and between the Lender and Monrovia Nursery Company which was assigned to and assumed by the Borrower ("Development Agreement"). B. Works on the Projects has been initiated,but the Borrower now needs financing to complete the Projects. C. Financing for the Projects shall be provided to the Borrower by the Loan in the original principal amount of up to $5,000,000 ("Lender Loan"), which shall be evidenced by the Note, as defined below. j D. The Loan will be governed by the terms and conditions of this Agreement and the Related Documents, including a Draw Agreement. E. Borrower acknowledgers and agrees that as of the date of this Agreement, the Lender is not in default of any term or condition of the Development Agreement. i AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: s TERM. This Agreement shall be effective as of and shall continue in full force and effect until such time as all of Borrower's Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement. REIMBURSEMENT AUTHORITY. The following person currently is authorized, except as provided in this paragraph, to request Reimbursements, as defined below, and authorize payments under the until Lender receives from Borrower written notice of revocation of his authority: Dan O'Bannon, Chief Financial Officer of the Borrower. LOAN. The Loan shall be in an amount not to exceed the principal sum of U.S. $5,000,000 and shall bear interest pursuant to the terms of this Agreement and the Related Documents. Borrower agrees that if the Loan is not paid when due pursuant to the terms of the Note, the Lender may offset any amounts due to Borrower by Lender pursuant to the terms and conditions of the Development Agreement. Borrower shall use the Loan Funds solely for the following specific purposes: [to be supplied by Borrower] The Loan amount shall be 1 060 j. subject at all times to all maximum limits and conditions set forth in this Agreement or in any of the Related Documents. PROJECTS DESCRIPTION. The word 'Projects' as used in this Agreement means the construction and completion of all Improvements contemplated by the Development Agreement, including the installation of equipment and fixtures, landscaping, and all other work necessary to make the Projects usable and complete for the intended purposes. The Improvements include the following work: The work itemized on those line items depicted on Exhibit A attached hereto and incorporated herein by reference. The word 'Property" as used in this Agreement means the Real Property described in Exhibit B attached hereto and incorporated herein by reference which is to be transferred to the Lender pursuant to the Development Agreement, as well as all other real property, together with all relevant Improvements, all equipment, fixtures, and other articles of personal property now or subsequently attached or affixed to the Real Property as well as all other real property, together with all accessions, parts, and additions to, all replacements of, and all substitutions for any of such property, and all proceeds (including insurance proceeds and refunds of premiums) from any sale or other disposition of such property. FEES AND EXPENSES. Whether or not the Projects shall be consummated, Borrower shall assume and pay upon demand all out-of-pocket expenses incurred by Lender in connection with the preparation of loan documents and the making of the Loan, including without limitation the following (A) all closing costs, loan fees, and disbursements; (B) all expenses of Lender's legal counsel; and (C) all title examination fees, title insurance premiums, appraisal fees, survey costs, required fees, and filing and recording fees, if any. NO CONSTRUCTION PRIOR TO RECEIPT OF CERTAIN DOCUMENTS. Borrower will not permit any work or materials to be furnished in connection with the Projects until (A) Borrower has signed the Related Documents; and (B) Lendet has been provided evidence, satisfactory to Lender, that Borrower has obtained all insurance required under this Agreement or any Related Documents. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any loan, and at all times any Indebtedness exists: Organization. Borrower is a limited liability company which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Delaware. Borrower is duly authorized to transact business in California, having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign partnership in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains an office at 19 Corporate Plaza Dr., Newport Beach, CA 92660. Unless Borrower has designated otherwise in writing, the principal office is the office at which Borrower keeps its books 2 070 i I and records including its records concerning the Projects. Borrower will notify Lender prior to any change in the location of Borrower's principal office address or any change in Borrower's name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower's business activities. Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Authorization. Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duty authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any prevision of (a) Borrower's articles or operating agreements, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties. fFinancial Information. If financial statements are required by Lender, each of Borrower's financial statements supplied to Lender truly and completely disclose Borrower's financial t condition as of the date of the statements. Borrower has no material contingent obligations except as disclosed in such financial statements. Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their Irespective terms. r Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to the Real Property free and clear of all security interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5)years. Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that (1) During the period of Borrower's ownership of the Real Property, there has been no unlawful use or generation, manufacture, storage, treatment, disposal release or threatened release deny Hazardous Substances by any person on, under, about or from any of the Real Property, (2) Borrower has no knowledge of; or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any unlawful use or generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on,under, about or from the Real Property by any prior owners or occupants of any of the Real Property; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Real Property shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substances on, under about or from any of the Real Property; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its i 3 071 l agents to enter upon the Real Property to make such inspections and tests as Lender may deem appropriate to determine compliance of the Real Property with this section of the Agreement Any inspections or tests make by Lender shall be at Borrower's expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence in investigating the Real Property for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties and expenses which Lender may directly or indirectly sustain or suffer from a breach of this section of the Agreement or as a consequence of any unlawful use or generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Real Property. The provisions of this section of the Agreement, including the obligation to indemnify, shall survive the payment lithe indebtedness and this termination, expiration or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest or in any of the Real Property, whether by foreclosure or otherwise. Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing. Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contorted by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided. Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms. Title to Property. Borrower has, or on the data of first disbursement of Loan proceeds will have, good and marketable title to the Real Property free and clear of all defects, liens, and encumbrances, excepting only liens for taxes, assessments, or governmental charges or levies not yet delinquent or payable without penalty or interest, and such liens and encumbrances as may be approved in writing by the Lender. Projects Costs. The Projects costs are true and accurate estimates of the costs necessary to complete the Improvements in a good and workmanlike manner according to the Plans and Specifications presented by Borrower to Lender, and Borrower shall take all steps necessary to prevent the actual cost of the Improvements from exceeding the Projects costs. Utility Services. All utility services appropriate to the use of the Projects after completion of construction are available at the boundaries of the Real Property. 4 072 i Compliance with Governing Authorities. Borrower has examined and is familiar with all the easements, covenants, conditions, restrictions, reservations, building laws, regulations, zoning ordinances, and federal, state, and local requirements affecting the Projects. The Projects will at all times and in all respects conform to and comply with the requirements of such easements, covenants, conditions, restrictions, reservations, building law:, regulations, zoning ordinances, and federal, state, and local requirements. Survival of Representations and Warranties. Borrower understands and agrees that in making the Loan, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by $ Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the making of the Loan and delivery to Lender of the Related Documents, shall be continuing in nature, and shall remain in full force and affect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to C occur. f CONDIiTIONS PRECEDENT TO EACH REIMBURSEMENT. Lender's obligation to jmake the initial Reimbursement and each subsequent Reimbursement under this Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement and in the Related Documents. 1 sApproval of Contractors, Subcontractors, and Materialmen. Lender shall have approved a list of all contractors employed in connection with the construction of the Improvements, showing the name, address, and telephone number of each contractor, a general description of the nature of the work to be done, the labor and materials to be supplied, the names of materialmen, if known, and the approximate dollar value of the labor, work, or materials with respect to each contractor or materialman. Lender shall have the right to communicate with any person to verify the facts disclosed by the list or by any application for any Reimbursement, or for any other purpose. Plans, Specifications, and Permits. Lender shall have received and accepted a complete set of written Plans and Specifications setting forth all Improvements for the Projects, and Borrower shall have furnished to Lender copies of all permits and requisite approvals of any governmental body necessary for the construction and use of the Projects. Construction Contracts. Borrower shall have furnished in form and substance satisfactory to Lender an executed copy of each of the Construction Contracts. Related and Support Documents. Borrower shall provide to Lender in form satisfactory to Lender the following support documents for the Loan: Assignment of Construction Contracts and any completion guaranty or other guaranty executed by the Contractors in favor of the Bon-ower. r - Budget and Schedule of Estimated Reimbursements. Lender shall have approved detailed f budget and cash flow projections of total Projects costs and a schedule of the estimated . amount and time of disbursements of each Reimbursement. Borrower's Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the consummation of s 073 i the Projects and duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. hi addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, in their sole discretion, may require. Bond. If requested by Lender, Borrower shall have furnished a performance and payment bond in an amount equal to 100% of the amount of the Construction Contracts, as well as a materialmen's and mechanics' payment bond, with such riders and supplements as Lender may require, each in form and substance satisfactory to Lender, naming the General Contractors as principal and Lender as an additional obligee. Any required bonds and the contracts which they cover must be duly recorded or filed in accordance with California Civil Code Section 3235, if required by Lender. Plans and Specifications. If requested by Lender, Borrower shall have assigned to Lender on Lender's forms the Plans and Specifications for the Projects. Environmental Report. If requested by Lender, Borrower shall have furnished to Lender, at Borrower's expense, an environmental report and certificate on the Property in form and substance satisfactory to Lender, prepared by an engineer or other expert satisfactory to Lender stating that the Real Property complies with all applicable provisions and requirements of the "Hazardous Substances"paragraph set forth in this Agreement. Soil Report. If requested by Lender, Borrower shall have famished to under, at Borrower's expanses, a soil report for the Real Property in form and substance satisfactory to Lender, prepared by a registered engineer satisfactory to Lender stating that the Real Property is free from soil or other geological conditions that would preclude its use or development as contemplated without extra expense for precautionary, corrective or remedial measures. Survey. If requested by Lender, Borrower shall have furnished to Lender a survey of recent date, prepared and certified by a qualified surveyor and providing that the Improvements, if constructed in accordance with the Plans and Specifications, shall he wholly within the boundaries of the Real Property without encroachment or violation of any zoning ordinances, building codes or regulations, or setback requirements, together with such other information as Lender in its sole discretion may require. Insurance. Unless waived by Lender in writing, Borrower shall have delivered to Lender the following insurance policies or evidence thereof. (a) an all risks course of construction insurance policy(builder's risk),with extended coverage covering the Improvements issued in an amount and by a company acceptable to Lender, containing a loss payable or other endorsement satisfactory to Lender insuring tender as mortgagee, together with such other endorsements as may be required by Lendei, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to Lender (b) owners and General Contractor general liability insurance, public liability and workmen's compensation insurance; (c) flood insurance if required by Lender or applicable law; and (d) all other insurance required by this Agreement or by the Related Documents. Workers' Compensation Coverage. Provide to Lender proof of the General Contractor's compliance with all applicable workers' compensation laws and regulations with regard to all work performed on the Projects. 6 074 It j Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document. Satisfactory Construction. All work usually done at the stage of construction for which disbursement is requested shall have been done in a good and workmanlike manner and all materials and fixtures usually famished and installed at that stage of construction shall have been furnished and installed, all in compliance with the Plans and Specifications. Borrower shall. also have furnished to Lender such proofs as Lender may require to establish the progress of the work, compliance with applicable laws, freedom of the Property from liens, and the basis for the requested disbursement in addition to the requirements of the Draw Agreement. Certification. Borrower shall have famished to Lender a certification by an engineer, architect, or other qualified inspector acceptable to Lender that the construction of the Improvements has complied and will continue to comply with all applicable statutes, ordinances, codes, regulations, and similar requirements. Lien Waivers. Borrower shall have obtained and attached to each application for a Reimbursement, including the Reimbursement to cover final payment to the General Contractors, executed acknowledgments of payments 'of all sums due and releases of mechanic's and materialmen's liens, satisfactory to Lender, from any party having lien rights, which acknowledgments of payment and releases of liens shall cover all work, labor, equipment, materials done, supplied, performed, or furnished prior to such application for a Reimbursement. No Event of Default. There shall not exist at the time of any Reimbursement a condition r would constitute an Event of Default under this Agreement or under an I which wo gr Y Related Document. DISBURSEMENT OF LOAN FUNDS. The following provisions relate to the disbursement of funds from the Loan Fund. Application for Reimbursements. Each application shall be stated on a Draw Agreement in the form attached hereto as Exhibit C and incorporated herein by reference, executed by Borrower, and supported by such evidence as Lender shall reasonably require. Borrower shall apply only for disbursement with respect to work actually done by the General Contractors and for materials and equipment actually iricorporated into the Projects. Each application for a Reimbursement shall be deemed a certification of Borrower that as of the date: of such application, all representations and warranties contained in the Agreement are true and correct, and that Borrower is in compliance with all of the provisions of this Agreement. Payments. At the sole option of Lender, Reimbursements maybe paid in the joint names of Borrower and the General Contractors subcontractor(s), or supplier(s) in payment of sums f due under the Construction Contracts. At its sole option, Lender may directly pay the General Contractors and any subcontractors or other parties the sums due under the Construction Contracts. Borrower appoints Lender as its attorney-in-fact to make such payments. This power shall be deemed coupled with an interest, shall be irrevocable, and shall survive an Event of Default under this Agreement. 7 075 i Projected Cost Overruns. If Lender at any time determines in its sole discretion that the amount in the Loan Fund is insufficient, or will be insufficient,to complete fully and to pay for the Projects,then within twenty(20)days after receipt of a written request from Lender,Borrower shall deposit in the Loan Fund an amount equal to the deficiency as determined by Lender. The judgment and determination of Lender under flys section shall be final and conclusive. Any such amounts deposited by Borrower shall be disbursed prior to any Loan Funds. Final Payment to General Contractors. Upon completion of the Projects and fulfillment of the Construction Contracts to the satisfaction of Lender and provided sufficient Loan Funds are available, Lender shall make a Reimbursement to cover the final payment due to the General Contractors following the posting of the completion notice, as provided under applicable law. Construction shall not be deemed complete for purposes of final disbursement unless and until Lender shall.have received all of the following: (1) Evidence satisfactory to Lender that all work under the Construction Contracts requiring inspection by any governmental authority with jurisdiction has been duly inspected and approved by such authority, and that all parties performing work have been paid,or will be paid, for such work; (2) A certification by an engineer, architect, or .other qualified inspector acceptable to Lender that the Improvements have been completed substantially in accordance with the Plans and Specifications and the Construction Contracts and that direct connection has been made to all utilities set forth in the Plans and Specifications; and (3) Acceptance of the completed Improvements by Lender and Borrower. Construction Default. If Borrower fails in any respect to comply with the provisions of this Agreement or if construction ceases before completion regardless of the reason, Lender, at its option, may refuse to make further Reimbursements, may accelerate the indebtedness under the terms of the Note, and without thereby impairing any of its rights, powers, or privileges, may enter into possession of the construction site and perform or cause to be performed any and all work and tabor necessary to complete the Improvements, substantially in accordance with the Plans and Specifications. Damage or Destruction. If any of the Improvements is damaged or destroyed by casualty of any nature, within sixty (60) days thereafter Borrower shall restore the Improvements to the condition in which they were before such damage or destruction with funds other than those in the Loan Fund. Lender shall not be obligated to make disbursements under this Agreement until such restoration has been accomplished. Upon Lender's approval, Borrower shall be entitled to use insurance proceeds for such restoration. Adequate Security. When any event occurs that Lender determines may endanger completion of the Projects or the fulfillment of any condition or covenant in this Agreement, Lender may require Borrower to furnish, within ten (10) days after delivery of a written request, adequate security to eliminate, reduce, or indemnify Lender against, such danger. In addition, upon such occurrence, Lender in its sole discretion may advance funds or agree to undertake to advance funds to any party to eliminate, reduce, or indemnify Lender against, such danger or to complete the Projects. All sums paid by Lender pursuant to such agreements or undertakings shall be for Borrower's account and shall be without prejudice to Borrower's rights, if any, to receive such funds from the party to whom paid. All sums 8 x}7'6 EI - f expended by Lender in the exercise of its option to complete the Projects or protect Lender's interests shall be payable to Lender on demand together with interest from the date of the Reimbursement at the rate applicable to the Loan. In addition, any Reimbursement of funds under this Agreement, including without limitation direct disbursements to the General Conlractors or other parties in payment of sums due under the Construction Contracts, shall be deemed to have been expended by or on behalf of Borrower. CESSATION OF REIMBURSEMENTS. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Reimbursements or to disburse Loan proceeds if; (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower's financial condition or in the financial condition of any Guarantor; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's ! guaranty of the Loan or any other loan with Lender. LIMITATION OF RESPONSIBILITY. 'Me making of any Reiniburwrient by Lender shall not constitute M or be interpreted as either(A)an approval or acceptance by Lender of the work done through the date of i the Reimbursement, or (B) a representation or indemnity by Lender to any party against any deficiency or defect in the work or against any breach of any contract. Inspections and approvals of the Plans and Specifications, the Improvements, the workmanship and materials used in the Improvements, and the exercise of any other right of inspection, approval, or inquiry granted to Lender in this Agreement are acknowledged to be solely for the protection of Lender's interests, and under no circumstances shall they be construed to impose any responsibility or liability of any nature whatsoever on Lender to any party. Neither Borrower nor any contractor, subcontractor, materialman, laborer, or any other person shall rely, or have any right to rely, upon Lender's determination of the appropriateness of any Reimbursement. No disbursement or approval by Lender shall constitute a representation by Lender as to the nature of the Projects,its construction,or its intended use for Borrower or for any other person, nor: shall it constitute an indemnity by Lender to Borrower or to any other person against any deficiency or defects in the Projects or against any breach of any contract. AFFIRVIATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will: Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Bon-ower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor. ( Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable times. Financial Statements. Furnish Lender with such financial statements and other related information at such frequencies and in such detail as Lender may reasonably request. a 9 077 I Additional Information. Furnish such additional information and statements, lists of assets and liabilities, agings of receivables and payables, inventory schedules,budgets, forecasts, tax returns, and other reports with respect to Borrower's financial condition and business operations as Lender may request from time to time. Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements. Insurance. Maintain fire and other risk insurance, hail, federal crop insurance, public liability insurance, and such other insurance as Lender may reasonably require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender's loss payable or other endorsements as Lender may reasonably require. Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6)the expiration date of the policy. Loan Fees. Charges and Expenses. Whether or not the Projects is completed, Borrower also shall pay upon demand all out-of-pocket expenses incurred by Lender in connection with the preparation of loan documents and the making of the Loan, including, without limitation, all closing costs, fees, and disbursements, all expenses of Lender's legal counsel, and all title examination fees, title insurance premiums, appraisal fees, survey costs, required fees, and filing and recording fees. Loan Proceeds. Use all Loan proceeds may be made solely for the construction of the Improvements. Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties,income, or profits. Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement. 10 07T' r L , Inspection. Permit employees or agents of Lender at any reasonable time to inspect the Property and Borrower's other properties and to examine or audit Borrower's books, accounts, . and :records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense. I Compliance Certificates. Unless waived in writing liy Lender, provide Lender at least annually, with a certificate executed by Borrower's chief financial officer, or other officer or j person acceptable to Lender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate,no Event of Default exists under this Agreement. Construction of the Projects. Construction of the Projects has already commenced and Borrower shall cause the Improvements to be constructed and equipped in a diligent and orderly manner and in strict accordance with the Plans and Specifications approved by Lender, the Construction Contracts, and all applicable laws, ordinances, codes, regulations, and rights of adjoining or concurrent property owners Borrower agrees to complete the Projects for purposes of final payment to the General Contractors on or before September 15, 2008, ("Completion Date") regardless of the reason for any delay. Defects. Upon demand of Lender, promptly correct any defect in the Improvements or any departure from the Plans end Specifications not approved by Lender in writing before further { work shall be done upon the portion of the Improvements'affected. hl` Projects Claims and.Litigation. Promptly inform Lender of(1) all material adverse changes in the financial condition of the General Contractors, (2) any litigation and claims, actual or threatened, affecting the Projects or the General Contractors, which could materially affect the successful completion of the Projects or the ability of the General Contractors to complete the Projects as agreed; and (3) any condition or event which constitutes a breach or default under any of the Related Documents or any contract related to the Projects. If Payment of Claims and Removal of Liens. (1) Cause all claims for .labor done and materials and services furnished in connection with the Improvements to be ftilly paid and discharged in a timely manner, (2) diligently file or procure the filing of a valid notice of completion of the Improvements, or such comparable document as may be permitted under applicable lien laws, (3) diligently file or procure the filing of a notice of cessation, or such f comparable document as may be permitted under applicable lien laws, upon the happening of cessation of labor on the Improvements for a continuous period of thirty (30) days or more, I4 and (4) take all reasonable steps necessary to remove all claims of liens against the Real k Property, the Improvements or any part of the Real Property or Improvements, or any rights G' or interests appurtenant to the Real Property or Improvements. Upon Lender's request, Bon-ower shall make such demands or claims upon- or against laborers, materialmen, subcontractors, or other persons who have finnished or claim to have fumished labor, services, ior materials in connection with the Improvements, which demands or claims shall under the f laws of the State of California require diligent assertions of lien claims upon penalty of loss or waiver thereof. Borrower shall, within ten (10) days after the filing of any claim of lien that is f ' " I 11 ! 079 disputed or contested by Borrower,record or cause the General Contractors for the construction of the Improvements to record in the appropriate governmental office, a surety bond pursuant to California law sufficient to release the claim of lien and, within five (5) days of Lender's demand,make suitable provision by deposit of funds with Lender in an amount satisfactory to Lender or by bond satisfactory to Lender for the possibility that the contest will be unsuccessful. If Borrower fails to remove any lien on the Real Property or Improvements or provide a bond or deposit pursuant to this provision, Lender may pay such lien, or may contest the validity of the lien, and Borrower shall pay all costs and expenses of such contest, including Lender's reasonable attorneys' fees. Taxes and Claims. Pay and discharge when due all of Borrower's indebtedness, obligations, and claims that, if unpaid; might become a lien or charge upon the Property or Improvements; provided, however, that Borrower shall not be required to pay and discharge any such indebtedness, obligation, or claim so long as (1) its legality shall be contested in good faith by appropriate proceedings, (2) the indebtedness, obligation, or claim does not become a lien or charge upon the Real Property or Improvements, and (3) Borrower shall have established on its books adequate reserves with respect to the amount contested in accordance with GAAP. If the indebtedness, obligation, or claim does become a lien or charge upon the Real Property or Improvements, Borrower shall remove the lien or charge as provided in the preceding paragraph. Environmental Studies. Promptly conduct and complete, at Borrower's expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower. Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans. LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect the Projects or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower's behalf may (but shall ,not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Property and paying all costs for insuring, maintaining and preserving any Property. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. 12 080 f NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this i Agreement is in effect, Borrower shall not, without the prior written consent of Lender: Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and Indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower's assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower's accounts, except to Lender. Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell the Property out of the ordinary course of business. Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business. Modification of Contract. Make or permit to be made any modification of the Construction Contracts Liens. Create or allow to be created any lien or charge upon the Real Property or the Improvements. Agreements. Borrower will not enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower's obligations under this Agreement or in connection herewith. GENERAL PROJECTS PROVISIONS. The following'provisions relate to the construction and completion of the Projects: f Change Orders. All requests for changes in the Plans and Specifications, other than minor changes involving no extra cost, must be in writing, signed by Borrower, and delivered to Lender for its approval. Borrower will not permit the performance of any work pursuant to any change order or modification of the Construction Contracts or any subcontract without the written approval of Lender. Borrower will obtain any required permits or authorizations from governmental authorities having jurisdiction before approving or requesting a new change order. Purchase of Materials; Conditional Sales Contracts. No materials, equipment, fixtures, or articles of personal property placed in or incorporated into the Projects shall be purchased or installed under any Security Agreement or other agreement whereby the seller reserves or purports to reserve title or the right of removal or repossession, or the right to consider such items as personal property after their incorporation into the Projects, unless otherwise authorized by Lender in writing. s Lender's Right of Entry and Inspection. Lender and its agents shall have at all times the right of entry and free access to the Property and the right to inspect all work done, labor performed, and materials furnished with respect to the Projects. Lender shall have unrestricted access to and the right to copy all records, accounting books, contracts, S 13 081 i. subcontracts, bills, statements, vouchers, and supporting documents of Borrower relating in any way to the Projects. Lender's Right to Stop Work. If Lender in good faith determines that any work or materials do not conform to the approved Plans and Specifications or sound building practices, or otherwise depart from any of the requirements of this Agreement, Lender may require the work to be stopped and withhold disbursements until the matter is corrected. In such event, Borrower will promptly correct the work to Lender's satisfaction. No such action by Lender will affect Borrower's obligation to complete the Improvements on or before the Completion Date. Lender is under no duty to supervise or inspect the construction or examine any books and records. Any inspection or examination by Lender is for the sole purpose of protecting Lender's security and preserving Lender's rights under this Agreement. No default of Borrower will be waived by any inspection by Lender. In no event will any inspection by Lender be a representation that there has been or will be compliance with the Plans and Specifications or that the construction is free from defective materials or workmanship. Indemnity. Borrower shall Indemnify and hold Lender harmless from any and all claims asserted against Lender or the Property by any person, entity, or governmental body, or arising out of or in connection with the Real Property, Improvements, or Projects Lender shall be entitled to appear in any proceedings to defend itself against such claims, and all costs and expenses attorneys' fees incurred by Lender in connection with such defense shall be paid by Borrower to Lender. Lender shall, in its sole discretion, be entitled to settle or compromise any asserted claims against it, and such settlement shall be binding upon Borrower for purposes of this indemnification. All amounts paid by Lender under this paragraph shall be deemed an additional principal Reimbursement under the Loan, payable upon demand, and shall bear interest at the rate applicable to the Loan. Publicity. Lender may display a sign at the construction site informing the public that Lender is the construction lender for the Projects. Lender may obtain other publicity in connection with the Projects through press releases and participation in ground-breaking and opening ceremonies and similar events. Actions. Lender shall have the tight to commence, appear in, or defend any action or proceeding purporting to affect the rights, duties, or liabilities of the parties to this Agreement, or the disbursement of funds from the Loan Fund. In connection with this right, Lender may incur and pay reasonable costs, expenses and attorneys' fees. Borrower covenants to pay to Lender on demand all such expenses, together with interest from the date Lender incurs the expense at the rate specified in the Note, and Lender is authorized to disburse funds from the Loan Fund for such purposes. DEFAULT. Each of the following shall constitute an Event of Default under this Agreement: Payment Default. Borrower fails to make any payment when due under the Loan within ten (10) days of due date., Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of, the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. 14 082 li Environmental Default. Failure of any party to comply with or perform when due any term, obligation, covenant or condition contained in any environmental agreement executed in connection with the Loan. Default In Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's or any Grantor's property or Borrower's or any Grantor's ability to repay the Loan or perform their respective obligations under this Agreement or any of the Related Documents. False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or famished or becomes false:or misleading at any time thereafter. Death or Insolvency. The dissolution or termination of Borrower's existence as a going _ business or the death of any partner, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. IDefective Collateralization. This Agreement or any of the Related Documents ceases to be j in full force and effect (including failure of any collateral document to create a valid and perfi cted security Interest or lien) at any time and for any reason. c Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in en amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Breach of Construction Contracts. The Improvements are not constructed in accordance with. the Plans and Specifications or in accordance with the terms of the Construction Contracts. Cessation of Construction. Prior to the completion of construction of the Improvements and equipping of the Projects, the construction of the Improvements or the equipping of the Projects is abandoned or work thereon ceases for a period of more than ten (10) days for any reason, or the Improvements are not completed for purposes of final payment to the General I Contractors prior to the Completion Date,regardless of the reason for the delay. Transfer of Property. Sale, transfer, hypothecation, assignment, or conveyance of the Real Property or the Improvements or any portion thereof or interest therein by Borrower or any Borrower without Lender's prior written consent. Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or 15 083 i revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. In the event of a death, Lender, at its option, may, but shall not be required to, permit the Guarantor's estate to assume unconditionally the obligations arising under the guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of Default. Events Affecting General Partner of Borrower. Any of the preceding events occurs with respect to any. general partner of Borrower or any general partner dies or becomes incompetent Change in Ownership. The resignation or expulsion of any general partner or member with an ownership interest of thirty percent (30%) or more in Borrower. Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not been given a notice of a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after receiving written notice from Lender demanding cure of such default (1) cure the default within thirty(3.0) days; or (2) if the cure requires more than thirty (30) days, immediately initiate steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continue and complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. EFFECT OF AN EVENT OF DEFAULT; REMEDIES. Upon the occurrence of any Event of Default and at any time thereafter, Lender may at its option,but without any obligation to do so, and in addition to any other right Lender without notice to Borrower may have, do any one or more of the following without notice to Borrower: (a) Cancel this Agreement; (b) Institute appropriate proceedings to enforce the performance of this Agreement; (c) Withhold further disbursement of Loan Funds; (d) Expend funds necessary to remedy the default; (e) Take possession of the Property and continue construction of the Projects; (f) Accelerate maturity of the Note and/or Indebtedness and demand payment of all sums due under the Note and/or indebtedness; (g) Bring an action on the Note and/or Indebtedness; (h) Foreclose Lender's security agreement or Deed of Trust, if any, on the Property in any manner available under law; and (i) Exercise any other right or remedy which it has under the Note or Related Documents, or which is otherwise available at law or in equity or by statute. COMPLETION OF IMPROVEMENTS BY LENDER. If Lender takes possession of the Property, it may take any and all actions necessary in its judgment to complete construction of the Improvements, including but not limited to making changes in the Plans and Specifications, work, or materials and entering into, modifying or terminating any contractual arrangements, subject to Lender's right at any time to discontinue any work without liability. If Lender elects to complete the Improvements, it will not assume any liability to Borrower or to any other person for completing the Improvements or for the manner or quality of construction of the Improvements, and Borrower expressly waives any such liability. Borrower irrevocably appoints Lender as its attorney-in-fact, with full power of substitution, to complete the Improvements, at Lender's option, either in Borrower's name or in its own name. In any event, all sums expended by Lender in completing the construction of the Improvements will be considered to have been disbursed to Borrower. Any such sums that cause the principal amount of the Loan to exceed the face amount of the Note will be considered to be an additional Loan to Borrower, bearing interest at the Note rate. For these purposes, Borrower assigns to Lender all of its right, title and interest in and to the Projects Documents; however Lender will not have any obligation under the Projects 16 084 li i Documents unless Lender expressly hereafter agrees to assume such obligations in writing. Lender will have the right to exercise any rights of Borrower under the Projects Documents upon the occurrence of an Event of Default. Except as may be prohibited by applicable law, all of Lender's rights and remedies,whether evidenced by this Agreement or by any other writing, shall be cumulative and may be exercised singularly or concurrently. ADDITIONAL DOCUMENTS. Borrower shall provide Lender with the following additional documents: Articles or Agreement of Partnership. Borrower has provided or will provide Lender, if requested by the Lender, with a certified copy of Borrower's Articles or Operating Agreement, together with an appropriate company consent or agreement authorizing and designating one or more of the members to execute this Agreement, the Note and any and all Security Agreements directly or indirectly securing repayment of the same, and to consummate the borrowings and other transactions as contemplated under this Agreement, and to consent to the remedies following any default by Borrower as provided in this Agreement and in any Security Agreements. COST BREAKDOWN. All disbursements shall be based upon a detailed breakdown of the costs, as approved by Lender, of construction, improvements and any financing or development costs for which Borrower might request disbursement. Disbursements need not be made by Lender unless and until the revised cost breakdown is approved. Lender reserves the right to approve or disapprove any revised cost breakdown in its sole discretion. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement: Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or Injunction), appeals, and any anticipated post judgment collection services. Borrower also shall pay all court costs and such additional fees as may be directed by the court. ' Authority to File Notices. Borrower appoints and designates under as its attorney-In-fact to file for the record any notice that Lender deems necessary to protect its interest under this j Agreement. This power shall be deemed coupled with an interest and shall be irrevocable while any sum or performance remains due and owing under any of the Related Documents, i Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of California without regard i 17 485 to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of California. Indemnification of Lender. Borrower agrees to indemnify, to defend and to save and hold Lender harmless from any and all claims, suits, obligations, damages, losses, costs and expenses (including, without limitation, Lender's attorneys' fees, as well as Lender's architect's and engineering fees), demands, liabilities, penalties, fines and forfeitures of any nature whatsoever that may be asserted against or incurred by Lender, its officers, directors, employees, and agents arising out of, relating to, or in any manner occasioned by this Agreement and the exercise of the rights and remedies granted Lender under this Agreement. The foregoing indemnity provisions shall survive the cancellation of this Agreement as to all matters arising or accruing prior to such cancellation and the foregoing indemnity shall survive in the event that Lender elects to exercise any of the remedies as provided under this Agreement following default hereunder. Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation Interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation Interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any of Borrower's or any Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the 18 � E,I i offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement. Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower's rights under this Agreement or any interest therein, without the prior written consent of Lender. j Survival of Representations and Warranties. Borrower understands and agrees that in making the Loan, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by 'Lender, all such representations, warranties and covenants will survive the making of the Loan and delivery to Lender of the Related Documents, shall be continuing in nature, and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur. Time Is of the Essence. Time is of the essence in the performance of this Agreement. WAIVE JURY. TO THE EXTENT PERMITTED'BY APPLICABLE LAW, ALL PARTIES TO THIS AGREEMENT HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all jreferences to dollar amounts shall mean amounts in lawful money of the United States of I America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined In I this Agreement shall have the meanings attributed to such'terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined'in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement I Agreement. The word "Agreement" means this Construction Loan Agreement, as this Construction Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Construction Loan Agreement from time i to tine. Construction Contracts. The words "Construction Contracts" mean the contracts between Borrower and contractors for the Projects, and any subcontracts with subcontractors, materialmen, laborers, or any other person or entity for performance of wort: on the Projects or the delivery of materials to the Projects. 19 087 Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, at seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA'), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, at seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the California Health and Safety Code, Section 25100, at seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto. Event of Default. The words "Event of Default" mean any of the events of default set forth in this Agreement in the default section of this Agreement. GAAP. The word "GAAP" means generally accepted accounting principles. General Contractors. The term "General Contractors" means those contractors that have a direct contractual relationship with the Borrower. Grantor. The word "Grantor" means each and all of the persons or entities granting a Security Interest in any collateral for the Loan, including without limitation all Borrowers granting such a Security Interest. Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Loan and any guarantor under a completion guaranty agreement. Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or Infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also Includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos. Improvements. The word "Improvements" means all improvements to be constructed for the Projects contemplated by this Agreement. Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, Including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents. Loan. The word "Loan" means the loan or loans made to Borrower under this Agreement and the Related Documents as descried . 20 �� Loan Fund. The words "Loan Fund" mean the undisbursed proceeds of the Loan under this Agreement together with any equity funds or other deposits required from Borrower under this Agreement. Note. The word "Note" means the promissory note dated in the original principal amount of up to $5,000,000 from Borrower to Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the promissory note or agreement. I Permitted Liens. The words "Permitted Liens" mean (1) liens and security Interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested in, good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, `or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement tilled "indebtedness and Liens"; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower's assets. Plans and Specifications. The words 'Plans and Specifications" mean the plans and specifications for the Projects which have been submitted to and initialed by Lender, together with such changes and additions as may be approved by Lender in writing. Projects. The word "Projects" means the construction projects as described in the "Projects Description' section of this Agreement. Projects Documents. The words "Project Documents" mean the Plans and Specifications, all studies, data and drawings relating4o the Projects, whether prepared by or for Borrower, the Construction Contracts, and all other contracts and agreements relating to the Projects or the construction of the Improtvements. Property. The word "Property" means the property as described in the "Projects Description" section of this Agreement. Real Property. The words 'Real Property" mean the'real property to be transferred to the Lender pursuant to the Development Agreement, and the interests and rights, as further described In the "Projects Description" section of this Agreement. G Reimbursement. The word "Reimbursement" means a disbursement of Loan amounts I made, or to be made, to Borrower or on Borrower's behalf under the terms and conditions of this Agreement. Related Documents. The words 'Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan. 21 089 i Security Agreement. The words "Security Agreement' mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest. Security Interest. The words "Security Interest" mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise. BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS CONSTRUCTION LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. LENDER: CITY OF AZUSA By: BORROWER: AZUSA LAND PARTNERS, LLC By: 22 090 I EXHIBIT A to the Construction Loan Agreement Projects Description i i i E I rr 4' y f 1', I � I i 4 � 1 I I I �I 23 i. 1 Completion Non CFD Portion CFD Portion Area Sub Percentage Contras -Con Paid Balance Condaov Paid to Date Bel'Me Comments Bud et to Date to be Peld Budget ALP 13 C To Be Paid Sierra Madre (Utilides)Glendora 30' BNB 99% 2230 1,286,756 - 1,289,758 (0) 3,052,773 1,699,550 409,446 943,777 City 18- BNB 95% - Sub drain and Grading BNB 95% - 11)(1,000 - 100,000 Change order coming,have been advised SGVWD 30` BNB 99% - - BNB has not been paid over 5DOk Storm Drain BNB 95% - - Sewer BNB 95% - - Edison BNB 8D% 60,000 60,000 - wig cut into paving later ALW Addt Cade cost D% - 170,000 - - 170,000 Slope Stabilization on SM 0% 25,000 25,000 hydroseed with seed mix,no IRagation Conduct for liter and Xing 250% 25,000 26,000 Streets Domo Fast BNB 50%veil make - 20,000 - - 20.000 Estimated Change Order Rough AA 0%will make - 50,000 - - 50.000 Estimated Change Order Street Improvements AA 66% no 2221 - 1,082,364 240,985 - 841,379 Includes cap,stripping per old plan,AC walk path Contingency - 50,000 50,000 Street Lite Wesco 0%yes - 3D,000 30,000 Street Labor Fodrin 0% 22,000 22,01)0 - labor an not be pan of CFD Glendora Residence 0% 50,000 50,000 new tlrlvevraYs,landscaping,streetlight Engr Civil RBF 0% 81,000 81,000 Bridge Engr PSS6J 0% - 253,000 253,000 Engr Sails Pacific 0% - 274,216 155,216 119,000 SGVWD Improvements Driveway D% 51,000 51,000 - Bid at 51000 Parking Lot 0% 15,000 15,000 estimate Wets 50% 15,000 15,000 - eaWna(e Site Improvements 0% 75,000 75,000 - Gate,fence,Landscape Oran eBlossom/Old SM Wets g0%will Make - 15,000 - 15,000 will Issue as CO,T 8 M Fine Grade AA 0%wig Make - 15,000 - 15,000 will issue as CO,T 6 M Demo ONE 50%yes - 20,000 - 20,000 Curb/Pave/Sidewslk AA 0%wig Make - 142,000 - 142,000 have bid,Issue Change Order Sliest Lite Wesco 0%yes - 22,800 22,800 7light, plus change order Street Labor Fodrlll 0%no 12,000 12,000 laboran notbe patrol CFD Backbone Dye 0% 20,000 20,000 SUB-TOTAL SIERRA MADRE 1,666,766 1,286,756 370,000 6,378,162 1,940,535 564,662 2,872,956 Railroad and Bridges Bridges and Rail Herzog 30%yea 2341 - - 7,197,457 1,515,431 730,359 4,951,687 Professionals 75% - Misc and Change Ord 25%most - 3$0,000 350,000 SUB-TOTAL RAILROADAND BRIDGES - - - 7,547,467 1,515,431 730,369 6,301,667 I:Wlonmvia NuMgUeRs WorksheetM2008 CFD Draw Analysis FOR DISCUSSION PURPOSES ONLY-SUBJECT TO FURTHER REVIEW 1 of 3 as of 3!202008' Completion I on CFD Portion Area.._ Sub__ _._Percentage_ - .ConV ---Balance-- _Contract!- -Pald to Date - _._saianuy_. _ ._ ,-.__. .._-Oommerds--- Butl et to Data to be Paid Bud et B ALP B C To Be Paid Water System 1023 Purnp Station and 690 Tanks Tanks Construction Schuler 86% 2226 5,804.832 '"5,465;25@339,573 2,039,536 1,842,226 - 197,309 25%of balance to be paid relates to CFD M13C Change Orders 75,000 Pump Schuler 35% 2300 1,213,513 115,W2 1,087,511 426,359 116.002 310,369 26%01'balancetobe pa id relatesto CFD Change Orders 50.000 b0,000 - Sierra Marine Pump Station Bubalo 99% 2228 - - 1,273,150 1745,844 127,316 1023 Tank Superior 99% - - 0% - - Can Issue Change Order,base pave Dry Utilities 0% 2011.000 200,000 gas vAn not install, Civil a Soils 0% 25.000 25,000 move to CFD ALW Cable!Cost O% 150,000 150,000 Estimate Pavenrent in Tract 4,5 0% - 200,000 200,000 Access Road 0% - 150,000 150,000 Can Issue Change Order,Dasa pave 830 Transmission 75% 681,821 483,308 198,513 - Is the city goes to reimburse,us? 778 Transmission 75% 827,815 679,010 146,505 - MankowskiWater na0e 0% 50,000 50,000 - Estimates Ohemkaya Water Meter 0% 35,000 35.000 Meter purchase and on Ore iob SUB-TOTAL WATER SYSTEM 8,937,981 6,743,579 2,194,402 4,264,066 3,104,072 - 1,159,993 Storm Drain Complete Storm Drain Backbone Phase 1 and II - r4mmfi+ : i, 2,400,000 ;. iAOObffi�. 1,000,000 Wats Pac States 80% 579,000 579,000 Rough Grading needs to be cion too 0% 375,000 375,000 Clean Up,grade,storm,fence off w Pasadena Storm Dain Tie - .0%'- - - _ _ _7 - '370,000 -370,000 _can put in CFO- -. - -- -- Damo Dlka o% - 40,000 40,000 Can put in CFD Rail Support D% - - 65,000 85,000 can put in CFD Bid and Eng Support 0% 20,000 20,000 70% 150,000 150,000 bund spillway and access Road y:N 85.000 85,000 SUB-TOTAL STORM DRAIN 2,990,000 1,400,000 1,590,000 1,074,000 - 1,074,000 C) I:WonrcMa NurseryVerrs Worksheelst20D8 CFD DrawAnatyrasFOR DISCUSSION PURPOSES ONLY-SUBJECT TO FURTHER REVIEW 2 013 Completion Non CFD Portion CFD Portion Area Sub Percentage Contract ContracU Paid Balance Contract/ Paid to Date Balance Comments Bu et to Data to ba Paid Budget B ALP B Ci To Be Paid Deferred task/Payment 4,154,402 less "� Glendr)ta,q'esfd � I. (50,000) (50,000) complete driveways and landscaping Rgt�iYd�¢9,rr¢yNY. tV1 ` (400,000) (400,000) `� An¢ty9, (ghmt - (376,000) (375,000) RkR Ba5'15 (150,000) (160,000) G (65.000) (66.000) Jf�trd7ap�E a't (60,000) (60,000) RRR gle� 3� _ (260,000) (250,000) 1,350,00 Palm Drive Nlilcesl 50% - 125,000 125,000 Exist Concrete work,pace under Bridge ConduitlG2ding 0% 50,000 50,000 Retaining Wag at Palm Or 0%, 75,000 32000 43,000 to complete undercrossing Complete Dhamekaya 0% 85,OOD 85,000 Ret Wag on Monrovia,Parking lot Tie in Weft at Palm 0% 50,000 50,000 Storm drain Issue Phase 1/2 Paving 80% - - in CFD Other Jobs in CFD 0% - 110,000 110,000 All American movod In base in draw Sdrod Earthquake Study School Relmb 150,000 150,000 Pac Soils 50% 100,000 100,000 Grading 50% 200,000 200,000 Repair at Basins - 0% 250.000 250.000 all basin In Rosedale have gssurs Glean Up of Erosion devices 0% 50,000 50,000 throw away old bags and remove sift Stabilized Slopes and Pad 0% 60,000 60,000 Spray slope and pati to stabilize Job Safety Maim 0% 50,000 50,000 repair fencing,graffrd Street Sweeping 0% 20,000 20,000 streets rot tamed over Erosion Budget 0=9 0% 150,000 150,000 typical cost per normal rein fall Weed Abatement 08/09 30% 00,000 60,000 Over 700 lots plus lb ac of slope Ninth Street Basin Repair 0% 25,000 25,000 essum,dean out.re berm to protect edge Citrus Basin Repair 0% 20,000 20,000 dean silt out and erosion damage Cemetery Interim Repair 0% 20,000 20,000 pending we ever get permits from Glendora Tree Preservation to 12108 0% 82,000 82,000 booed and palm trees General Landscape Main 0% 100,000 100,000 - aodatlng material thoughout Repair Damage Landscp. 096 501 50,000 No maintenance since Mid Feb 2008 Complete Random Park 90% 525,000 380,000 145,000 Cost to finish park and V0 to CFD Project Onsite Overhead 0% 150,000 150,000 Supervision,Trailer,supplies,utgges,bins Unknown 3rd Party Req. 0% 50,000 50,000 City Requests from neighbors,act City Consultants 0% 50,000 50.000 Artionst Bruckner,others Garcia Trail O% 15,000 15,000 might need to dean up and hand grade Covine Canal Addl Movers m 0% 25,000 25,000 Not set up on plan this way Street Lights On Mc Neal 0% Need adeast 15 mr safety,or dose,42 ea Steel Lights on Vosberg O% Need atleast 20 for safety,or partial dose SUB-TOTAL MISCELLANEOUS M!143 1,992.000 412,000 1,580,000 685,000 - 685,000 GRAND TOTAL 15,676,737 9.842,335 6,734,402 18,948,674 6,560,038 1,295,021 11,093,616 Q co 1:1Monmvia NumerylJefrs Worksheets12008 CFD Draw Analysis FOR DISCUSSION PURPOSES ONLY-SUBJECT TO FURTHER REVIEW 3 of 3 I I EXHIBIT B f I' to the Construction Loan Agreement i Real Property description ! I h I i i S E f ! t , f � � I i I G I r , f fI 1 24 dg5 f; EXHIBIT C to the Construction Loan Agreement Draw Agreement ORANGE\13HOLDEN\44842.3 25 096 i i i DRAW AGREEMENT THIS DRAW AGREEMENT (this "Agreement') 'is made as of 2008, between AZUSA LAND PARTNERS, LLC, a Delaware limited liability company (the "Borrower") and THE CITY OF AZUSA, a public corporation, ("Lender") with reference to the following facts: f � 3 I I RECITALS c A. Borrower is constructing several improvement projects ("Projects") as required by that certain Development Agreement by and between the Lender and Monrovia Nursery Company which was assigned to and assumed by the Borrower("Development Agreement'). 13. Work on the Projects has been initiated, but the Borrower now needs financing to complete the Projects. C. Financing for the Projects shall be provided to the Borrower by a loan from the Lender :in the original principal amount of up to $5,000,000 ("Lender Loan"), which shall be evidenced by a Promissory Note ("Promissory Note"). D. The Lender Loan will be governed by the terms and conditions of a Construction Loan Agreement executed by the Borrower. F' I F. Borrower shall be responsible, during the construction period, to provide funds if and as need to pay for cost overruns and contingencies not otherwise funded by other sources of construction financing, in accordance with the requirements and procedures of the Construction Loan Al;reement. 1 F. The Lender and Borrower desire to enter into this Agreement solely to provide for the 4 disbursement of the Lender Loan. I AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: I , 1. Definitions. The following terms shall have the following meanings. Unless defined herein, capitalized terms shall have the meanings set forth in the Construction Loan Agreement. (a) "Category" shall mean any category of expense items shown on the Projects Budget. j (b) "Construction Contracts" shall mean the construction contracts entered into between the Borrower and the Contractors, and all exhibits and attachments thereto, as the same may be amended from time to time with the prior consent of the Lender. 097 (c) "Construction Monitor" shall mean such person or entity as Lender may designate from time to time to inspect the construction of the improvements to be constructed for the Projects ("Improvements") and to perform other services with respect thereto on behalf of Lender. (d) "Contractors" shall mean the Contractors which have or will have a direct contractual relationship with the Borrower and are approved in writing by the Lender. (e) "Disbursement Request' shall have the meaning set forth in Section 2(b). (f) "Impositions" shall mean all (i) real estate and personal property taxes and other taxes and assessments, water and sewer rates and charges and all other governmental charges and any interest or costs or penalties with respect thereto and charges for any easement or agreement maintained for the benefit the real property of the Projects, if any, to be transferred to the Lender pursuant to the Development Agreement ("Real Property"), general and special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature whatsoever which, with respect to any of the foregoing, at any time may be assessed, levied or imposed upon the Real Property, or the rent or income received therefrom, or any use or occupancy thereof, and (ii) other taxes, assessments, fees and governmental charges levied, imposed or assessed upon or against Borrower or any of its properties. (g) "Lender" shall mean the City of Azusa, a public corporation, and any assignee of or successor to its rights,powers and responsibilities. (h) "Lender Documents" shall mean and include the Construction Loan Agreement, and all- documents relating or attached to the Construction Loan Agreement, including without limitation, the Promissory Note. (i) "Plans" shall mean the final plans and specifications for the design, construction and equipping of the Improvements, representing complete construction documents as defined in the Development Agreement between the Borrower and the Lender, including all schematic and working drawings and, to the extent determined, designations of all manufacturers and model numbers of all equipment, as the same shall be approved by the Lender in accordance with this Agreement and the Lender Documents and as amended from time to time in accordance with this Agreement and the Lender Documents. 0) "Projects Budget' shall mean the development budget for the Projects approved by the Lender in writing, as amended from time to time with the approval of the Lender. (k) "Retainage" shall mean the retainage with respect to certain construction costs of the Improvements as provided in Section 5. 2. Draw Procedures. (a) The Lender Loan proceeds shall be disbursed as provided in this . Agreement. 2 098 I' (b) In addition to satisfaction of any procedures required by the terms of the Lender Documents for each disbursement of funds, to request that the Lender authorize disbursement of the Lender Loan, the Borrower shall submit to the Lender a disbursement request ("Disbursement Request") on a Standard AIA Form G702 and G703 or such other disbursement request .form that may be acceptable to the Lender, setting forth a detailed breakdown of the disbursement requested (the "Draw Summary"), including the requisition of the Contractors, not more frequently than once monthly. Concurrently with the Disbursement Request, Borrower shall also furnish to the Lender a copy of the Construction Monitor's inspection report or other documentation indicating the percentage of work complete pertaining to the Disbursement Request. Upon such request, the Lender may cause an inspection to be made of the progress of construction. If the Lender determines that construction is proceeding diligently in accordance with the Plans and otherwise in the manner required by this Agreement and if all conditions to such disbursement shall have been fulfilled, the Lender shall authorize the disbursement in a manner that has been mutually agreed to by the parties, on the basis of the pro rata percentage set forth in Section 5 of this Agreement. All disbursements shall be made approximately ten (10) days after receipt of all information required by the Lender to approve the requested disbursements. The Lender may also require verification of the information contained in the Disbursement Request by the Contractors, applicable subcontractors, the Construction'Monitor, and may require separate lien waivers and releases from all Contractors and; subcontractors covering all prior disbursements (except that lien waivers for the final disbursement shall cover all disbu-sements other than punchlist work). Notwithstanding the foregoing, each Disbursement f' Request shall be subject to the approval of the Lender, with respect to the Lender Loan, in accordance with this Agreement. 4 (c) Borrower shall pay all reasonable costs and expenses incurred by k the Lender hereunder upon demand by the Lender. After demand on the Borrower, the Lender may elect to authorize disbursements of the proceeds of the Lender Loan to pay, as and when due, any unpaid or unsatisfied fees, costs or other amounts owing hereunder to the Lender. (d) Borrower shall not agree to any change in the Plans without the consent of the Lender other than an individual change order which involves a budget adjustment of less than $25,000. I, (e) Any item in the Disbursement Request which is not specifically f approved in the time set forth in this Section 2 shall be deemed disapproved. On the basis of the progress of the work performed on the Projects and;the conditions precedent to,making disbursements contained in the Lender Documents, the Lender may disapprove all or part of a requested disbursement. In the event the Lender disapproves any portion of the amount i requested by Borrower in a Disbursement Request, the Lender shall promptly notify Borrower of the disapproved amount and the reason for such disapproval. (f) In the event any item shall be disapproved or deemed disapproved, the representatives of the Borrower and the Lender shall meet promptly and in good faith to jattempt to resolve the matter to their mutual satisfaction. ' jr 3 099 3. Disbursement Amounts. (a) The aggregate amount advanced for any Category shall be limited to the amount shown in the Projects Budget for such Category, taking into account any reallocation authorized by the Lender pursuant to this Agreement. (b) Subject to the terms of this Agreement, the Lender will authorize disbursements of the Lender Loan to defray actual and reasonable costs incurred and approved by the Lender and shown on the Projects Budget and labor performed on the Improvements and equipment and materials incorporated into the Improvements, since the date of the last disbursement less Retainage. 4. Cost Information. If the Borrower becomes aware of any change in the approved costs set forth in the Projects Budget which would increase, change, or cause a reallocation of the costs as shown on the Projects Budget, the Borrower shall immediately notify the Lender in writing and promptly submit a proposed revised Projects Budget to the Lender for approval. The Borrower shall have no right to receive further disbursements of the Lender Loan unless and until the revised Projects Budget is approved by the Lender, which approval shall not be unreasonably withheld but shall be subject to, among other things, the next sentence. 5. Conditions Precedent to Draw. The Lender shall determine whether or not the conditions precedent to its obligation to advance its loan have been satisfied or whether or not to waive, in its sole discretion, any condition precedent to its obligation to advance the Lender Loan which the Lender City Manager, or designee, determines has not been satisfied. As conditions precedent to approval of any Disbursement Request, each of the following conditions shall have been fulfilled to the satisfaction of the Lender, as applicable: (a) All representations and warranties contained in this Agreement and the Lender Documents shall be true and correct in all material respects; (b) All insurance coverage required to be maintained by the Borrower under the Lender Documents or by law shall be in full force and effect; (c) The Lender Documents shall be in full force and effect; (d) No Event of Default under the Lender Documents shall have occurred and be continuing; (e) Except to the extent waived the Lender City Manger, or designee, in their sole discretion, all governmental consents, licenses, permits and all other authorizations or approvals then required with respect to the construction of the Projects shall have been obtained and/or issued, or will be timely obtained; (f) The Lender shall have received copies .of notarized partial lien waiver forms executed by the Contractors and each appropriate subcontractors, supplier and materialman, including, without limitation, from all parties sending statutory notices to Contractors, notices to owners, or notices of nonpayment, specifying in each such partial lien waiver the amount paid in consideration of such partial release; 4 100 (g) Before any disbursements after the initial disbursement, the Borrower shall furnish to Lender a list (if not previously delivered) of all subcontractors employed in connection with the construction of the Projects, containing the name, address, and telephone number of each such subcontractors, a general statement of the nature of the . work to be done, the labor and materials to be supplied, the names of new materialmen, if known, and the approximate dollar value of such labor or work with respect to each. Lender shall have the right to make direct contact with each subcontractors and materialmen to verify the facts disclosed by said list or for any other purpose; (h) Copies of invoices or other acceptable documentation shall be submitted to substantiate Borrower's request for payment of construction costs, including"soft costs"'; (i) Lender shall have received a copy of the Construction Monitor's approval of Borrower's requisition for"hard costs"; Disbursements of the Lender Loan will be made on the basis of ninety percent (90%) of the cost of the work and materials in place on the Improvements, less the amount of previous disbursements. The percentage of disbursements held back during the course of construction of the Improvements shall be hereinafter referred to as "Retainage". There shall be no Retainage for the non-construction items and such disbursements will be made on the basis of one hundred percent (100%) of the cost of approved invoices for such items. However, disbursement for amounts shown in the Projects Budget, as construction profits shall be funded based on the percentage of construction completed. Disbursements will be made for materials stored on the Land provided (i) such materials are adequately identified, secured and insured; (ii) no materials are stored for a period exceeding forty-five (45) days; (iii) the Lender has a first priority lien on such materials; and (iv) the Lender has received and approved all invoices for materials to be stored on-site. No disbursement of the Lender will be made based on the cost of materials not stored on the Land (other than in accordance with Section 7) or for the cost of deposits required by manufacturers or fabricators of building materials, furnishings, fixtures or equipment for the Improvements. t 6. Conditions Precedent to Final Disbursement. Subject to any additional conditions set forth in the Lender Documents, the following conditions shall be satisfied prior to the final disbursement of the Lender Loan and the Retainage: (a) All conditions of Section 5 shall continue to be met as of the date of the release of the final disbursement and the Retainage; (b) Lender shall have received a certificate of Borrower and Contractors to the effect, inter alfa, that the Improvements have been completed substantially in accordance with the Plans approved by the Lender and all applicable building, fire, safety and similar codes and the matters in such certificate shall have been verified by the Construction Monitor; (c) Lender shall have received evidence that all Impositions which are due and payable for the current tax year have been paid in full; 5 101 i ' (d) Lender shall have received final lien releases and waivers from the Contractors and all subcontractors for the work performed under the Construction Contract; (e) Lender shall have received two (2) sets of detailed as-built plans and specifications for the Improvements. The plans shall be approved as such in writing by the Borrower and the Contractors. The Plans must include plans and specifications for architectural, structural, mechanical, plumbing, electrical and site development work (including storm drainage, utility lines and landscaping); and (f) Lender shall have received a copy of a satisfactory inspection report from the Construction Monitor and the Construction Monitor's written approval of the final draw request; 7. Draws for Stored Materials. Notwithstanding anything to the contrary contained in this Agreement, Borrower shall be entitled to submit a Disbursement Request to pay for costs actually incurred by Borrower for stored materials required in connection with the construction of the Improvements provided that the following conditions are satisfied, in addition to the conditions contained in Section 5: (i) such materials are in accordance with the Plans, (ii) such materials are securely stored in a locked or fenced area, properly inventoried, fully insured and clearly stenciled or otherwise marked to indicate that they are the property of Borrower, and if stored on-site shall be stored in a locked building or enclosure and reference is made to the location of such materials, (iii) such materials, if stored off-site, shall be stored in a bonded warehouse or with a Contractors, materialman or fabricator who bears the risk of loss until delivery and installation of such materials to the Land as part of the work in place, and who has supplied a bond securing such contractor's, materialman's, or fabricator's obligation to so deliver and install such materials, which bond shall be issued by a company, shall be in an amount and shall be in form and substance satisfactory to the Lender and shall name Lender as an obligee, and Borrower shall submit such financial information on the storer as the Lender may require, (iv)the bills of sales and contracts under which such materials are being provided shall be in form and substance satisfactory to the Lender,' (v) such materials are insured against casualty, vandalism, loss and theft in a manner satisfactory to the Lender, (vi) Borrower owns, or will own with the funding of the Disbursement Request, such materials free and clear of all liens and encumbrances of anynature whatsoever and establishes such ownership by evidence satisfactory to the Lender, (vii) Borrower executes and delivers to the Lender such additional security documents as the Lender shall deem necessary to create and perfect a first lien in such materials in favor of the Lender, (viii) the aggregate amount of disbursements for costs incurred by Borrower for such materials shall in no event at any time exceed the actual costs incurred by Borrower for such materials as verified by the Construction Monitor pursuant to the provisions of this Agreement, (ix) the types of materials for which the Lender will approve of the making of disbursements pursuant to this paragraph shall be limited to the following categories: hardware, railings, security screens and grating, electrical equipment, lumber, masonry brick, pre-cast concrete, doors, windows, and plumbing fixtures and (x) Borrower shall submit evidence satisfactory to the Lender that the materials, whether stored on-site or off-site are insured against damage or destruction for their full replacement value, and the Lender shall be designated as the loss payee on such insurance policies. 6 102 8. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party only (a) if served personally, (b) if'deposited in the United States first class mail, certified or registered,postage prepaid, or (c) if sent by overnight delivery service and a confirmation of receipt is obtained. If such notice, demand or other communication is served personally, service shall be conclusively deemed made at the time of such personal service. If . 1 such notice, demand or other communication is given by mail, such shall be conclusively deemed given seventy-two (72) hours after the deposit,thereof in the United States mail addressed to the party to whom such notice, demand or other,'communication is to be given at the following address set forth below. If such notice, demand,or other communication is sent by overnight delivery service, such shall be conclusively deemed given at the time confirmation of receipt is obtained, provided the overnight delivery is addressed to the party to whom such notice, demand or other communication is to be given at the address set forth below. i If to the Borrower: A 4 with copies to: I r , i l If to the City of Azusa: i City Manager I P.O. Box 1399 l Azusa, CA 91702 � I With a copy to: 1 Director of Utilities P.O. Box 9500 Azusa, CA 91702 i' Best Best & Krieger LLP 5 Park Plaza y Suite 1500 Irvine, CA 92614 i k 4 l 7 103 I�� i Any party hereto may change its address for the purpose of receiving notices, demands and other communications as herein provided by a written notice given in the manner aforesaid to the other party or parties hereto. 9. Governing Law. This Agreement shall be governed by, and construed in accordance with, the substantive laws of the State of California without regard to principles of conflicts of laws. 10. Headings. The headings used herein are for convenience only and do not limit or alter the terms of this Agreement or in any way affect the meaning or interpretation of this Agreement. 11. Successors and Assigns. All rights of each party shall inure to the benefit of its successors and assigns, and all obligations, liabilities, and duties of each party shall bind its successors and assigns. 12. Entire Agreement Amendment and Modification. This Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein, supersedes all prior agreements and understandings, both written and oral, between the parties in respect of the subject matter hereof and no changes, amendments, or alterations hereto shall be effective unless pursuant to written instrument executed by the Borrower and the Lender. Notwithstanding the foregoing sentence or any other provision of this Agreement, this Agreement does not supersede and shall not be deemed to amend any of the Lender Documents. Borrower and Lender anticipate modifications and supplements to this Agreement from time to time, in writing, signed by the Lender City Manager or designee, and the Borrower. 13. No Waiver of Strict Compliance. No waiver or failure of a party to insist upon strict compliance with any obligation, covenant, agreement, representation, warranty, or condition shall operate as a waiver of, or estoppel with respect to, any subsequent or other failure to comply with such obligation, covenant, agreement, representation, warranty, or condition, or with any other obligation, covenant, agreement, representation, warranty, or condition contained herein. Failure to exercise any right, power, or remedy shall not constitute a waiver of any obligations under this Agreement or constitute a modification of this Agreement. The making of this Agreement shall not waive or impair any other security a party may have or hereafter acquire for the payment of obligations under this Agreement, and the taking of any additional security it may have in the order it may deem proper. 14. Validity. The invalidity or unenforceability of any terms or provisions of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in fall force and effect, and, if any such unenforceable provision hereof is enforceable in any part or to any lesser extent, such provision shall be enforceable in all such parts and to the greatest extent permissible under applicable law. 15. Supervision of Construction. The Lender shall be under no obligation to perform any of the construction or complete the construction of the improvements on the 8 104 Property, or to supervise any construction on the Property, and shall not be responsible for inadequate or deficient Contractors, subcontractors, materials, equipment or supplies. The i Lender is not the agent for Borrower, nor is the Lender a partner or joint venturer with Borrower. The Lender shall not have any fiduciary duty or obligation to the Borrower. 16. Reservation of Rights. Nothing contained herein shall be construed as restricting, limiting, amending or modifying the rights of the parties in the Lender Documents, as they relate to defaults or remedies, including, inter alis,' the right of each party under its respective security instruments to foreclose on the Property, or to seek recourse under any f� guaranties. I 17. Termination of Agreement. This Agreement shall terminate when all of j the Lender Loan has been fully disbursed. i 18. Further Assurances. The parties hereto hereby agree to execute such other documents and to take such other action as may be reasonably necessary to further the purposes of this Agreement. r 19. Counterparts. This Agreement may be.signed by each party on a separate 4 signature; page, and when the executed signature pages are combined, shall constitute one single I4 instru=nt with the same effect as if all signatories had executed the same instrument. IN WITNESS WHEREOF, each party has executed this Agreement on the date first hereinabove written. AZUSA LAND PARTNERS, LLC, a Delaware limited liability corporation By: PLC LAND COMPANY a California corporation t By: I Dan O'Bannon, Vice President i By: FIELDSTONE COMMUNITIES I i I By. Executive Vice President I j I�! THE CITY OF AZUSA I I By: City Manager I i f s I. 9 105 I ' . I I PROMISSORY NOTE. $5,000,000 i Azusa, California , 2008 1. FUNDAMENTAL PROVISIONS. i The foll'.owing terms will be used as defined terns .in this Promissory Note (as it may be amended, modified, extended and renewed from time to time, this "Note"): Lender/Payee: CITY OF AZUSA, or the holder of this Note. i Borrowers/Makers: AZUSA LAND PARTNERS, , LLC, a Delaware limited liability company. I { i Principal Amount: FIVE MILLION DOLLARS ($5,000,000). { l Interest Rate: No interest will'be charged, except that in an Event of Default, the Lender may apply the Default Interest Rate to the Principal Amount outstanding as of the date of the default. Default interest Rate: Five percent (5.00%) per annum above the Prime Rate. Maturity Date: The sooner of (a) 180 days from the date of this Note or (b) [completion of the improvements? — need Development Agreement language] unless'the Maturity Date is accelerated as otherwise provided in this Note. Business Day: Any day of the year other than Saturdays, Sundays or any other day on which national Lenders are authorized or required to close. f l Loan Documents: The Construction Loan Agreement, the Note, the Draw Agreement, all other documents securing the repayment of the Note, guaranties, indemnity agreements and instruments executed by the Borrower and/or guarantor and/or indemnitor. i { G Loan: The loan from Lender to Borrower in the Principal Amount and evidenced by this Note and/or the Loan Documents. Prime Rate Means the variable rate of inierest ,per annum established by the Bank of America from time to time as its United States "prime rate." Such "prime rate" is set by Bank of America as a general reference I rate of interest, taking into account such factors as Bank of America may deem appropriate, it being understood that many of Bank of America commercial or other loans are priced in relation to such rate, f I 1 Loan No. 107 I that it is not necessarily the lowest or best rate actually charged to any customer and that Bank of America may make various commercial or other loans at rates of interest having no relationship to such rate. For purposes of this Note, the Prime Rate shall be the Prime Rate as of the opening of business on the date established as the effective date of any change in such"prime rate." Construction Loan Agreement: That certain Construction Loan Agreement of even date herewith between Borrower, as Borrower, and Lender. Advance: Any disbursement of Loan proceeds by Lender pursuant to the terms and provisions of this Note and/or any disbursement made pursuant to any of the Loan Documents. 2. PROMISE TO PAY. For value received, Borrower promises to pay to the order of Lender, at its office at or at such other place as the Lender hereof may from time to time designate in writing, the Principal Amount or the aggregate unpaid principal amount of all Advances made by Lender to the undersigned from time to time and remaining outstanding on the Maturity Date, whichever is less, together with accrued interest from the date of disbursement on the unpaid principal balance at the Interest Rate or the Default Interest Rate if applicable. 3. -INTEREST; PAYMENTS. (a) Absent an Event of Default hereunder or under any of the Loan Documents, each Advance made hereunder shall bear no interest. Throughout the term of this Note, interest assessed in the Event of Default shall be calculated on a 360-day year with respect to the unpaid balance of the Principal Amount and, in all cases, shall be computed.for the actual number of days elapsed. (b) All payments of principal and interest due hereunder shall be made (i) without deduction of any present and future taxes, levies, imposts, deductions, charges or withholdings, which amounts shall be paid by Borrower, and (ii) without any other set off, claim or defense or any kind or nature. (c) Payment of all unpaid principal, interest, and any other amounts due hereunder are due and payable on the Maturity Date. If any payment of principal and interest to be made by Borrower hereunder shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day. 2 Loan No. 108 4. PREPAYMENT. (a) Borrower may prepay the Loan, in whole or in part, at any time and from time to time. I I (b) In no event shall Borrower be entitled to re-borrow any amounts prepaid. I 5. LAWFUL MONEY. I Principal and interest are payable in lawful money of the United States of America. 6. APPLICATION OF PAYMENTS/LATE CHARGE. (a) Unless otherwise agreed to, in writing, or otherwise required by applicable law, payments will be applied first to accrued, unpaid interest, then to any unpaid collection costs, late charges and other charges, and any remaining amount to principal,provided, however, during the continuance of an Event of Default, as herein or in any other Loan Document, Lender reserves the right: to apply payments among principal, interest, late charges, collection costs and other charges in such order of priority as Lender shall from time to time determine in its sole discretion. All prepayments shall be applied to the indebtedness owing hereunder in such order and manner as Lender may from time to time determine in its sole discretion. (b) If any payment of interest and/or principal is not received by the holder hereof within ten (10) days of when such payment is due, then in addition to the remedies conferred upon the, holder hereof pursuant to the provisions of this Note and/or the Loan Documents, a late charge of five percent (5%) of the amount of the payment due will be due and owing by the Borrower and will be added to the delinquent amount to compensate the holder hereof for the costs, expenses, and damages of the holder related to the delinquency of the Borrower in making such payment, regardless of any notice and/or cure periods (if any). Acceptance of any late charge will not constitute a waiver of default with respect to the overdue payment, and will not prevent or delay Lender from exercising any of its rights of remedies available under this Note and/or the Loan Documents. (c) Upon the occurrence, and during the continuance, of an Event ,of Default, fincluding the failure to pay upon final maturity, Lender, may at its option and in its sole discretion: (i) increase the applicable Interest Rate on this Note to the Default Interest Rate, and/or (ii) add any unpaid accrued interest to principal and such sum will bear interest therefrom until paid at the Default Interest Rate. The undersigned acknowledges that, during the time that any amount is in default, Lender will incur losses that are impracticable, costly, and inconvenient to ascertain. Those losses include, without limitation, the ability to invest amounts then due at the current rate of return and the unavailability of liquid funds. The undersigned agrees that the interest payable hereunder represents a reasonable sum considering all of the circumstances existing on the date of the execution of this Note and represents a reasonable estimate of the losses Lender will incur by reason of late payment. The undersigned further agrees that proof of actual losses would be costly, inconvenient, impracticable, and extremely difficult to fix. ' I i Loan No. 3 109 Acceptance of the interest will not constitute a waiver of the default with respect to the overdue installment and will not prevent Lender from exercising any of the other rights and remedies available under this Note and/or the Loan Documents. Notwithstanding anything contained herein, the interest rate will not exceed the maximum rate permitted by applicable law. 7. SECURITY. This Note is secured, among other security, by the Collateral as that term is defined in the Loan and Security Agreement. 8. EVENTS OF DEFAULT. The occurrence of any of the following shall be deemed to be an event of default ("Event of Default") hereunder: (a) default in the payment of principal and/or interest, and/or any other sum advanced by Lender pursuant to the terms and provisions of this Note and/or the Loan Documents; and/or (b) if any event occurs that is an Event of Default under any of the Loan Documents; and/or (c) Borrower defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents; and/or (d) Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by the Note; and/or (e) The resignation or expulsion of any member with an ownership of twenty percent (20%) or more in Borrower. 9. REMEDIES Upon the occurrence, and during the continuance, of an Event of Default, then at the sole election and option of the holder hereof, the entire balance of principal together with all accrued interest thereon, and all other amounts payable by Borrower .under the Loan Documents shall, without demand or notice, immediately become due and payable. Upon the occurrence of an Event of Default (and so long as such Event of Default shall continue), the entire balance of principal hereof, together with all accrued interest thereon, all other amounts due under the Loan Documents, and any judgment for such principal, interest, and other amounts due under the Loan Documents shall bear interest at the Default Interest Rate, subject to the limitations contained in Section 14 hereof. No delay or omission on the part of the holder hereof in exercising any right 4 Loan No. 110 - or remedy under this Note and/or under any of the other Loan Documents hereof shall operate as a waiver of such right. l 10. WAIVER. ' I Borrower hereby waives diligence, demand for payment, presentment for payment, protest, notice of nonpayment, notice of protest, notice of intent to accelerate, notice of acceleration, notice of dishonor, and all other notices or demands of any kind (except notices specifically I provided for in the Loan Documents, if any). Borrower waives to the full extent permitted by law, the right to plead any and all statutes of limitations and/or any defenses relating to marshaling of assets as a defense. i k I 11. CHANGE, DISCHARGE, TERMINATION, OR WAIVER. No provision of this Note may be changed, discharged, terminated, or waived except in a writing signed by the party against whom enforcement of the change, discharge, termination, or waiver is sought. No failure on the part of the holder hereof to exercise and no delay by the holder hereof in exercising any right or remedy under this Note and/or the Loan Documents and/or under the law shall operate as a waiver thereof. I , !� 12. ?LTTORNEY'S FEES. l The undersigned agrees to pay all reasonable costs including, without limitation, reasonable {` attorney fees, incurred by the holder of this Note in enforcing payment, whether or not suit is filed, including, without limitation, all costs, attorney fees, and expenses incurred by the holder of this Note in connection with any bankruptcy, reorganization, arrangement, or other similar proceedings involving the undersigned that in any way affects the exercise by the holder of this Note of its rights and remedies under this Note. All costs incurred by the holder of this Note in any action undertaken .to obtain relief from the stay of bankruptcy statutes are specifically k included in those costs and expenses to be paid by the undersigned. Borrower will pay to Lender all attorney fees and other costs referred to in this Section 12 on demand, together with interest from the date of the demand at the Default Interest Rate until,paid. C. 13. SEVERABILITY'. I If any provision of this Note is unenforceable, the enforceability of the other provisions shall not be affected and they shall remain in full force and effect. I , t 14. INTEREST RATE LIMITATION. G Borrower hereby agrees to pay an effective rate of interest that is the sum of the interest rate provided for herein, together with any additional rate of interest resulting from any other charges of interest or in the nature of interest paid or to be paid in connection with the Loan, including, without limitation, and any fees to be paid by Borrower pursuant to the provisions of the Loan I Documents. Lender and Borrower agree that none of the terms and provisions contained herein II ` f ' I. 5 f t q Loan No. I t 1 I: or in any of the Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of State of California. In such event, if any holder of this Note shall collect monies which are deemed to constitute interest which would otherwise increase the effective interest rate on this Note to a rate in excess of the maximum rate permitted to be charged by the laws of the State of California, all such sums deemed to constitute interest in excess of such maximum rate shall, at the option of the holder, be credited to the payment of other amounts payable under this Note and/or the Loan Documents or returned to Borrower. 15. NUMBER AND GENDER. In this Note the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa. 16. HEADINGS. Headings at the beginning of each 'numbered section of this Note are intended solely for convenience and are not part of this Note. 17. CHOICE OF LAW; VENUE. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES. ANY DISPUTE INVOLVING ANY ISSUE REGARDING THIS NOTE MAY BE HEARD IN ANY APPROPRIATE COURT LOCATED IN EITHER ORANGE COUNTY, CALIFORNIA OR LOS ANGELES COUNTY, CALIFORNIA. 18. INTEGRATION. The Loan Documents contain the complete understanding and agreement of the holder hereof and Borrower and supersede all prior representations, warranties, agreements, arrangements, understandings, and negotiations. 19. BINDING EFFECT. The Loan Documents will be binding upon, and inure to the benefit of, the holder hereof, Borrower, and their respective successors and assigns. Borrower may not assign its obligations under the Loan Documents. 20. TIME OF THE ESSENCE. Time is of the essence with regard to each provision of the Loan Documents as to which time is a factor. 6 Loan No. - 112 �! 21. SURVIVAL. E The representations, warranties, and covenants of the Borrower in the Loan Documents shall survive the execution and delivery of the Loan Documents and the making of the Loan. 22. JURY WAIVER. i TO THE EXTENT PERMITTED BY LAW BORROWER AND LENDER (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY,. KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG BORROWER AND LENDER ARISING OUT OF OR INANY WAY RELATED TO THIS NOTE OR ANY OTHER RELATED DOCUMENT j OR LOAN DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER + LOAN DOCUMENTS. 1 i � 23. JOINT AND SEVERAL OBLIGATIONS. If this Note is signed by more than one party as Borrower; all obligations of Borrower herein shall be the joint and several obligations of each party executing this Note as Borrower. IN WITNESS WHEREOF, Maker has caused this Note to be properly executed as of the date first above written and have authorized this Note to be dated as of the day and year first above written. i. I "BORROWER" AZUSA LAND PARTNERS, LLC, a Delaware limited liability company Y f ' By: 1 i l f By: I I I If ORANGEIB HOLDENM44851.2 I I f 7 i 11. 3 Loan No. fah I ?I r U i IOINT PUBLIC HEARING ITEM TO: HONORABLE MAYOR/CHAIRPERSONS AND MEMBERS OF THE AZUSA CITY p COUNCIL, REDEVELOPMENT AGENCY BOARD, AND UTILITY BOARD FROM: BRUCE A. COLEMAN, ECONOMIC AND COMMUNITY DEVELOPMENT DIRECTOR VIA: F.M. DELACH, CITY MANAGER f DATE: MARCH 24, 2008 SUBJECT: CONSIDERATION OF BUDGET APPROPRIATION AMENDMENTS AND LOAN ADVANCE FROM AZUSA LIGHT &WATER TO THE REDEVELOPMENT AGENCY FOR ADMINISTRATIVE EXPENSES, PROPERTY ACQUISITIONS AND PROJECT ACTIVITIES RELATED TO A PORTION OF PROPERTY AT THE NORTHEAST CORNER OF ARROW HIGHWAY AND AZUSA AVENUE RECOMMENDATION It is recommended that the Azusa City Council, Redevelopment Agency Board, and Utility Board (1) open public hearing to consider attached resolutions which would: (a) authorize a loan from Azusa Light R Water's Electric Fund balance to the Redevelopment Agency of the City of Azusa ("Agency") in the amount of$5,300,000; and (b) approve budget amendments necessary to the effect said loan amount and authorize the expenditure thereof; and (2) close public hearing and adopt attached resolutions and promissory note. ' EXECUTIVE SUMMARY ` I This action would authorize a loan from the Electric Fund Balance to the Agency in the amount of $5,300,000 allowing the acquisition of 17525 East Arrow Highway for redevelopment purposes. This property is comprised of two parcels identified as:APN 8621-024-002 and APN 8621-024- 017. I BACKGROUND I• On May 7, 2007 the Redevelopment Agency Board ("Agency. Board") approved an exclusive negotiating agreement ("ENA") with Kendrew Development Company, LLC for the redevelopment of the northeast corner of Azusa Avenue and Arrow Highway.; The City of Azusa has submitted an application to the Los Angeles County Local Agency Formation Commission ("LAFCO") for the ' 1 annexation of the property. LAFCO has continued consideration of the City's annexation application until April 9, 2008. In order to move forward with the annexation and redevelopment I efforts, staff is recommending that the Agency purchase a majority of the property at this time,so that it may advance the revitalization of the south Azusa corridor. � I. I 114 �_ i Presently, the Agency Board is considering the acquisition of two parcels located on the northeast corner of Azusa Avenue and Arrow Highway for the purposes of eliminating blight and promoting future development of a commercial complex that would be consistent with the Agency's Redevelopment Plan and the City's General Plan. The Agency Board requires a $5,300,000 loan to continue its efforts to revitalize this important part of Azusa, which is the southern gateway into the community. The source of funding identified to continue these efforts is an interest-bearing loan to the Agency from the Azusa Electric Utility. The loan would be payable from the proceeds of a pending Redevelopment Agency Bond issue and/or Agency land sale proceeds, with interest accruing at the Local Agency Investment Fund ("LAIF") which has a current rate of 4.161%. Loan terms are summarized below: LOAN PROSECT/AFFECTED INTEREST TERM BORROW REPAYMENT AMOUNT FUND RATE FROM FUND SOURCE $5,300,000 Electric Fund LAIF Payable within Azusa Light Tax Increment, Balance (4.161%) one year, callable and Water: Bonds, Agency in the event of an Electric Fund Land Sale emergency, or if Balance Proceeds needed by Utility Board The Bond issue referenced above is currently proposed for winter of 2008. The loan would only accrue interest once loan proceeds are drawn, and not from the date of loan approval. As per City policy, the interest earned on Electric Fund balance is transferred into the Utility mitigation fund. The loan shall be callable in the event of an emergency or if needed by the Utility Board. Any unpaid amounts will accrue annually and be added to the principal; Any funds derived from the sale of properties acquired with these funds will first be pledged to payment of the loan. FISCAL IMPACT This proposed action will require a short term investment of Electric Funds in the form of a loan to the Redevelopment Agency. Interest shall be payable at the prevailing LAIF rate,which is currently 4.161% for the term of the loan. Because the budget appropriations necessary to effect the loan are above $1 million,.Azusa Municipal Code requires that the budget amendments be adopted by resolution at a public hearing. Attachments: I. A Resolution of the Redevelopment Agency of the City of Azusa Requesting A Loan from Azusa Light&Water for Purposes of the Merged Redevelopment Project Area and Authorizing the Chairperson to execute promissory note. 2. A Resolution of the Utility Board of the City of Azusa Authorizing A Loan to the Redevelopment Agency for Purposes of the Merged Redevelopment Project Area 3. A Resolution of the City Council of the City of Azusa Approving Budget Amendments For Fiscal Year 2007-08 pursuant to section 2-450 of the Azusa Municipal Code 4. A Resolution of the Redevelopment Agency of the City of Azusa Approving Appropriation Amendment For Fiscal Year 2007-08 pursuant to section 2-450 of the Azusa Municipal Code % Agency Loan UB Reso Apvg CC Reso Apvg Agency Reso Apvg Request.doc Loan.doc Appro.doc Appro.doc 115 r, RESOLUTION NO. A RESOLUTION OF .THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA REQUESTING A LOAN FROM AZUSA LIGHT&WATER FOR PURPOSES OF THE MERGED i REDEVELOPMENT PROJECT AREA. C, WHEREAS,the Redevelopment Agency of the City of Azusa("Agency")is authorized to undertake certain actions which are necessary and incidental to the carrying out of the Redevelopment Plan which has previously been adopted by the City of Azusa, for purposes of the Merged Redevelopment Project Area; and WHEREAS,the Agency has incurred and will continue to incur obligations for such purpose; and WHEREAS,the City of Azusa is authorized, pursuant to Section 33620, et. seq.,of the Health and Safety Code of the State of California to make loans to the Agency for the purposes of defraying said expenses; NOW,THEREFORE,BE IT RESOLVED by the Agency Members of the Redevelopment Agency of the City of Azusa that: Section 1. Pursuant to the provisions of said Section 33620,•et.seq.,of the California State Health and Safety Code, the Agency Members hereby authorize the Redevelopment Agency of the City of Azusa to request a Loan from Azusa Light&Water for purposes of the Merged Redevelopment Project. t Section 2. The Agency pledges to accept and administer any funds loaned to it pursuant to this request I� in accordance with the provisions of Section 33620, et. seq., of the Health and Safety Code. Section 3. The Agency requests that authorization for repayment of the loan shall be evidenced by a Note(in the form attached as Exhibit A)of the Agency containing the following terms,in addition to all usual and customary terms: f 1. LOAN PROJECT/AFFECTED INTEREST TERM_ BORROW REPAYMENT l AMOUNT FUND RATE FROM FUNDSOURCE $5,300,000 Electric Fund Reserve LAIF Payable within Azusa Light Tax Increment, one year, callable &Water: Bonds,Agency in the event of an Elec Land Sale emergency, or if erve Proceeds i needed by U...i Board j The loan listed herein is payable according to the terms of the Note. Payments will be made upon demand from the Azusa Light & Water to the Agency. Any unpaid amounts will accrue annually and be added to principal. The Note is payable from accumulated tax increment funds in excess of those pledged for payment of Agency bonded indebtedness, and/or from any other funds available to the Agency from which such payment may legally be made. The Note may be prepaid at any time without penalty. Section 4. The Chairperson of the Agency or his/her designee is hereby authorized and directed to execute, on behalf of the Agency, the Note to Azusa Light & Water in accordance with the provisions of Section 3 hereof i f Section 5. The Agency Secretary shall certify the adoptions of this Resolution. PASSED AND ADOPTED this day of 2008. Chairperson I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Redevelopment Agency of the City of Azusa at a regular meeting held on the_day of 12008. AYES: AGENCY MEMBERS: NOES: AGENCY MEMBERS: ABSTAIN: AGENCY MEMBERS: ABSENT: AGENCY MEMBERS: Secretary 117 EXHIBIT A PROMISSORY NOTE MERGED REDEVELOPMENT PROJECT AREA AZUSA, CALIFORNIA March 24, 2008 For value received, the REDEVELOPMENT AGENCY OF THE CITY OF AZUSA,a public body corporate and politic ("Agency"), promises to pay the AZUSA LIGHT & WATER, a municipal utility organized and existing under the laws of the State of California ("City"), the estimated sum of FIVE MILLION THREE HUNDRED THOUSAND DOLLARS AND NO/100 ($5,300,000), revised as necessary to reflect actual expenditures, with interest thereon from the date of actual receipt of loan proceeds as evidenced by warrant date of disbursement,at the annual interest rate equivalent to the Local Agency Investment Fund rate,currently 4.161%per annum,principal and interest payable annually. Any unpaid amounts will accrue annually and be added to principal. The Note is payable from tax increment revenues in excess of those pledged for Agency bonded indebtedness,property sales proceeds,bond proceeds designated to repay this note,and/or any other resources available to the Agency from which such payment may legally be made, allocated to and received by the Agency for the Merged Redevelopment Project Area. The term of the note shall be payable upon demand, unless extended by mutual consent of both parties. The interest earned by the Utility Fund Reserve shall be transferred into the Utility mitigation fund This note is issued in connection with the provision of funds to finance redevelopment activities of the Merged Redevelopment Project Area. The Merged Project provides for tax°increment financing in accordance with the provisions of the California Health and Safety Code. The Agency is authorized, with the consent of the Board of Directors, to undertake certain actions which are necessary and incidental to carrying out the Redevelopment Plan which has previously been adopted by the City of Azusa, for purposes of the Merged Redevelopment Project area. The Utility Board has authorized the loan for purposes of funding property acquisitions,administrative expenses and project related activities. This note is issued under the authority and pursuant to the Community Redevelopment Law, commencing with Section 33600 of the Health and Safety Code of the State of California, as amended. Each payment shall be credited first to principal due and the remainder to interest; and interest shall thereupon cease upon the principal so credited. Any unpaid interest shall accrue and be added to the outstanding principal balance. In.event of default in payment of any amount as herein provided, then the entire amount shall become due at the option of the City of Azusa. Principal and interest shall be payable in lawful money of the United States at Azusa, California. Demand, presentment for payment, protest and notice of protest are hereby waived. REDEVELOPMENT AGENCY OF THE CITY OF AZUSA i By: Chairperson i PROPERTY ACQUISITION/CBD 11$ i RESOLUTION NO. A RESOLUTION OF THE UTILITY BOARD OF THE CITY OF AZUSA AUTHORIZING A LOAN FOR PURPOSES OF THE MERGED REDEVELOPMENT PROJECT AREA WHEREAS, the Redevelopment Agency of the City of Azusa ("Agency") is undertaking certain actions which are necessary and incidental to carrying out the Redevelopment Plan which has previously been adopted by the City of Azusa; and WHEREAS, the Agency has incurred and will continue to incur obligations for such purpose; and WHEREAS, the City of Azusa is authorized,pursuant to Section 33620,et. seq.,of the Health and Safety Code of the State of California to make loans to the Agency for the purposes of defraying said expenses; NOW, THEREFORE, BE IT RESOLVED by the Utility Board of the City of Azusa that: Section 1. Pursuant to the provisions of said Section 33620, et. seq., of the Health and Safety Code, the Utility Board hereby authorizes to the Redevelopment Agency of the City of Azusa the following loan for the Merged Redevelopment Project. Section 2. The Agency shall accept and administer any funds loaned to it pursuant to this request in accordance with the provisions of Section 33620, et. seq., of the Health and Safety Code. Section 3. Such loan shall be evidenced by a Note of the Agency containing the following terms,in addition to all usual and customary terms; LOAN PROJECT/AFFECTED INTEREST TERM BORROW REPAYMENT AMOUNT FUND RATE FROM FUND SOURCE $5,300,000 Electric Fund Balance LAIF Payable within Azusa Light, Tax Increment, (4.161%) one year, & Water: Bonds, Agency callable in the Electric Land Sale event ofan Fund Proceeds emergency, or Balance if needed by Utility Board The loan listed herein is payable according to the terms of the Note. Payments will be made upon a demand made from the City to the Agency. Any unpaid amounts will accrue annually and be added to principal. The Note is payable from accumulated tax increment funds in excess of those pledged for payment of Agency bonded indebtedness,and/or from any other funds available to the Agency from which such payment may legally be made. The Note may be prepaid at any time without penalty. Section 4. The Utility Board of the City of Azusa is hereby authorized and directed to accept, on behalf of the Agency, the Note to the City of Azusa in accordance with the provision of Section 3 hereof. Section 5. The City Clerk shall certify the adoption of this Resolution. PASSED AND ADOPTED this day of , 2008. 1 Mayor i I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City of Azusa at a regular meeting thereof, held on the day of 1 12008. AYES: BOARD MEMBERS: ' NOES: BOARD MEMBERS: ABSTAIN: BOARD MEMBERS: ABSENT: BOARD MEMBERS: i' i City Clerk . 1 I 1 1 k 1 f � i 1 i i. E 1. i 120 Z Y RESOLUTION NO ". A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPROVING APPROPRIATION AMENDMENTS FOR FISCAL YEAR 2007-08 PURSUANT TO SECTION 2-450 OF THE AZUSA MUNICIPAL CODE WHEREAS, on June 18, 2007, the City Council passed Resolution No. 07-C44, adopting the Budget and approving the appropriations for the City of Azusa for the fiscal year commencing July 1 , 2007 and ending June 30, 2008; and WHEREAS, Section 2-450 of the Azusa Municipal Code requires that budget amendments over $1 million must be approved by resolution at a public hearing; and WHEREAS, certain appropriation amendments are, in fact, required as summarized below: Appropriation Amendment Summary: Appropriation of $5,300,000 to fund a loan to the Redevelopment Agency of the City of Azusa. NOW THEREFORE BE IT RESOLVED that the City Council of the City of Azusa does hereby approve the Budget Amendment and order the same to be recorded in the City's books of account and henceforth to be a part of said Budget as if adopted with the original thereof. ADOPTED AND APPROVED this day of March. 2008 MAYOR 1 HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof on the day of March, 2008 , by the following vote of City Council Members: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: CITY CLERK e RESOLUTION NO i A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA APPROVING APPROPRIATION AMENDMENTS FOR FISCAL YEAR 2007/08 PURSUANT TO SECTION 2-450 OF THE AZUSA MUNICIPAL CODE WHEREAS, on June 18, 2007, the Agency Members passed Resolution No. 07- R17, adopting the Budget and approving the appropriations for the Redevelopment Agency of the City of Azusa for the fiscal year commencing July 1', 2007 and ending June 30, 2008; and WHEREAS, Section 2-450 of the Azusa Municipal Code requires that budget amendments over $1 million be approved by resolution at a public hearing; and I WHEREAS, certain appropriation amendments are, in fact, required as summarized below: i Appropriation Amendment Summary: Appropriation of $5,300,000 to fund the administrative expenses, property acquisitions and project related i activities within the Merged Redevelopment Project Area. L NOW THEREFORE BE IT RESOLVED that the Agency Members of the Redevelopment Agency of the City of Azusa do hereby approve the Budget Amendment and order the same to be recorded in the Agency's books of account and henceforth to be a part of said Budget as if adopted with the original thereof. ; I ADOPTED AND APPROVED this day of March. 2008 � I I„ CHAIRMAN I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Agency I Members of the Redevelopment Agency of the City of Azusa at a regular meeting thereof on the _ day of March, 2008 , by the following vote of Agency Members: I 1 AYES: AGENCY MEMBERS: I f NOES: AGENCY MEMBERS: ABSTAIN: AGENCY MEMBERS: ' ABSENT: AGENCY MEMBERS: I I. SECRETARY 122 i' I 660 -- UNUMITED PRODUCTION 655 ____ _ ____________________________________-----------------------------------------_ 650 ____ ____________ _ ! 645 ----- ---------- ; _' _'_- __ '____-_--________-_-_____------------------------------I 640 635 _______________ _ __________ I 630 ——----------- ---------------------------------- ---------------- --------- ----------------—-----------f ----------—---------- --- -• ---------__"-W25 LIMITED TO 5-YEAR IU620 ------- ------------------ --- AVERAGE PRODUCTION -----_- ----J15 --------•----- ""------------------------------"" --------------------------'--- -- ------------�610 <605 __________ __________________________________ _________________________________ -----------_------------. ---- ! 2 0800 _ __________ ______ ___________________ x595 ---- -------- ----------------' —-—---------- ---- -----j -------------- t�1J1590 ---------------•------ '""" --'-'-' LIMITEDTOSAFEI---------- W585 _______________________________________________ - _______I YIELD ALLOCATION 580 --------------------------------------------------- --------"------------------------------- ---- -—-——-- 575 570 ___________________________________________________________________________ _________________ .____...... 585 ____________________________________ ___________ _ _ _ _____________________________ _ ___ ___ ------ 560 __________________..______-_________________-__ 555 ___________________________________________..________________________________________________________ .______-_____, 550 V < C C C ? 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CL UJ m § .. z , � / § z 2 w - i § § § 8 k § e z ae . , : � 4 { . § § § § k § / k $ s' � ) § 4 0. . � . , 123 {. . | f _ 3 - AZUSA INFORMATIONAL ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES ^�,/ DATE: MARCH 24, 2008 V SUBJECT: QUARTERLY FUEL COST ADJUSTMENT FOR SAN JUAN RESOURCE On July 26, 2004, the Utility Board approved a fuel cost adjustment mechanism for San Juan power plant. This mechanism is intended to credit customers with cost savings that are realized when our power plant operates reliably and replacement power costs are avoided, and conversely, allow the Utility to increase revenues to recover a portion of our replacement power costs when the San Juan resource experiences outages. This report encompasses replacement power costs incurred for the San Juan resource during the period of December 11, 2007 through March 10, 2008.. For reasons stated below, staff recommends that Fuel Cost Adjustment of 1.2 cents per kWh be assessed on customer electric billings for the period of April 1, 2008 through June 30, 2008. The availability of the San Juan unit #3 during the period of December 1 1, 2007 through March 10, 2008 was 42%, substantially below the budgeted availability of 85%. The low availabilit�r is due to the scheduled maintenance outage of the generating unit which commenced on January 25, 2008 and will continue until March 23, 2008. There is no electricity generation during the scheduled maintenance period. The average cost of replacement power during this reporting period was $65-7-17MWh as compared to the budgeted cost of $40/MWh, resulting in a net urge{ $2,107,703 or Fuel Cost Adjustment for the quarter, and when combined with the carry over crediffrom the previous quarter of $346,558 it resulted in a total FCA charge of $1,761,145. In order to avoid a rate shock to our customers, the maximum FCA charge per quarter is set at $750,000 or about 10% of the retail rate per the FCA mechanism. Any overage above $750,000 will be carried over to the following quarter for recovery. Thus, the FCA for the second quarter will be set at 1.2 cents/kWh. An average residential customer is expected to see an increase in the range of $5 per month or about 10% for the next three months. We further expect a FCA of similar magnitude to extend into the third quarter before tapering off in the fourth quarter of this year. Prepared by: Bob Tang, Assistant Director of Resource Management S) FCA Q208.xls 124 San Juan Fuel Cost Adjustment Calculation for Q2 2008 Dec 11-January February March (*) Actual SJ Output 27,460 0 0 Actual SJ Replac Energy Cost $642,498 $1,354,284 $504,041 $65.71 Maximum Output 37,440 20,880 7,200 Unavailable SJ Output 9,980 20,880 7,200 58.09% % Outage Rate 26.66% 100.00% 100.00% Base SJ Output @ 85% 31,824 17,748 6,120 Unavailable SJ Output 5,616 3,132 1,080 % Outage Rate 15.00% 15.00% 15.00% Base SJ Replac Energy Cost @$40/MWh $224,640 $125,280 $43,200 Actual - Base SJ Replac Energy Cost $417,858 $1,229,004 $460,841 San Juan Insurance Premium Recovery $0 $0 $0 San Juan Insurance Payout $0 $0 $0 Cumulative Quarterly Difference (CQD) $2,107,703 Q1 2008 Carry-Over -$346,558 If I(CQD)I<$100,000, then adjustment=0 If I(CQD)I>$750,000, then adjustment=+-$750,000 $750,000 or else adjustment= CQD April May June Forecast Retail Sales (MWh) 19,657 20,997 21,884 SJ FCA for Q2 2008 (cents/KWh) 1.20 (*) Through March 10th, 2008 iV C31 L AZUSA - INFORMATIONAL ITEM I TO: HONORABLE CHAIRPERSON AND MEMBERS'OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES^ DATE: MARCH 24, 2008 v � i t SUBJECT: GARNET WIND PROJECT PROGRESS REPORT Since Utility Board's approval of the long term power purchase agreement with Garnet Wind Project ("Project") in September 2007, the Project is making steady progress for the commencement of power generation. The following is a summary of progress made to date: i • The foundation work was completed at the end of February 2008; f • The first six turbines are onsite and being erected with an estimated in-service date of early summer; i • The remaining seven turbines are in route to California from Netherlands with estimated in-service date of late summer; • The Project interconnection agreements with Edison were riled with Federal Energy Regulatory Commission on March 6, 2008. The approval is expected within 60 days at the latest; and • The Project agreements with the California Independent System Operator are being worked on, and are expected to be filed within 30 days with FERC for approval. If everything proceeds as planned, we expect power generation to commence in early summer in time to serve our summer electric load. Attached are the latest construction pictures of the Project. Prepared by: Bob Tang, Assistant Director of Resource Management i. Attachment: i i 4 Garnet Phase 1 Beginning .pdf r 126 ren cgs a� e Is ®a } 77 , x Yr i� Fs r s� TQRj 11 As RA ( •.¢J�,�fL^..'_ a�t».,.._.�®.&:_ FE��"n arm"_ .�� v-m.�� .TG. - 1 't �a'Y ��..'a /' �h ? C' •_ tet_ Y '� � >, [J�. i.„ r FffIlet`�� w•- t a �{f't-i p y •�y- ° ,, r Y— aha +m r� .. �/_ r?-t-�P�„r,_R? .i,` C„ ,x..'t `-� w.'a�..vk s�'9-' `*m�. t:s.�.w ,"'�^'S r. '�. •>;�+. �y' a}.-"` f '--cLt... �+� ' i::� 'i,i w<rhrf.•4Fcr-wWr.' :r.+I - rr !»w 3 o- at -��'m skaafaty r€ ✓��i.FY,j�'/l..?3�E'P"Ems.P>E:.-}Rp��t.�'sY..S3e�� r W 3... !ti 53ir�*-.. m t � Urn MI PAM q x7,r�� < r4f�y�GSy-*_ - rte• moi^` lug roisx:',, aT L � - 'N •i �� r °I9 p Y egyy w a Eyrti➢1' 7 r��' ,.tiS`"9�/+ # - l fd t 1,'X�2yarr�x # ,� 2, @+- ��' r'a a..'titfy"'• wt � 9`,'7�..T`'-c• t+ me .7' x.+�,,.�y �," yQ.- ^+; ..f'�'�,.�' � ko 1 2 a y tSul. 3Yi` L4�, ap-j J y 2 A7USA (14X1 R WATER i DIRECTOR ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL , FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES^ ` I DATE: FEBRUARY 25, 2008 SUBJECT: LETTER TO CONGRESSWOMAN HILDA SOLIS, I Attached thank you letter was prepared for Utility Board's consideration to express appreciation to Congresswoman Hilda Solis for a recent meeting. See letter for details. ! Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities I itir-Sole;.doc f f � t 4 3 i I" I E S 1 fif i f 129 I" r P March 11, 2008 The Honorable Hilda L. Solis U.S. Congresswoman, 32"d District 1414 Longworth HOB Washington, DC 20515-0532 Dear Honorable Solis, On behalf of the City of Azusa, I would like to thank you for meeting with members and representatives of Southern California Public Power Authority(SCPPA) on Wednesday, February 26d'. As a SCPPA member, the City of Azusa was very pleased with your understanding of how federal greenhouse gas (GHG) legislation affects the electric rates of your constituents. The City of Azusa was also pleased with your sensitivity to the environment . and need to balance utility rate impacts with GHG emission reductions. We appreciated your encouragement to establish the IPP/San Juan coal facility as a demonstration project for carbon sequestration. The Gold Line was also briefly discussed at this meeting and your support of the light rail extension to our jurisdiction and beyond is also very much appreciated given the scarcity of sub-regional funding and investment Azusa has made in recent years along our rail corridor. On behalf of the City of Azusa, thank you again for meeting with us and for your ongoing support of Azusa's future. We are very fortunate to have you representing us in the U.S. Congress. Sincerely, Keith Hanks Mayor Pro-Tem/Utility Board Chairman City of Azusa cc: Azusa Mayor and Councilmembers Francis M. Delach, City Manager Joseph F. Hsu, Director of Utilities Phyllis Brown, SCPPA Jerry Jordan, Executive Director, California Municipal Utilities Association 130 II CRs 3 I Y 11b 'MI1tA ..Sr.+., 7w�7X�'~ AZUSA ° LIGHT t 'l.AM f E DIRECTOR ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS-OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES�f� DATE: MARCH 24, 2008 ° SUBJECT: WATER SUPPLY RELIABILITY PROGRAM FUNDING I RECOMMENDATION !, It is recommended that the Utility Board/City Council ratify request by Mayor to U.S. Senators and Representative to urge their support to secure $1 million in funding for the Water Supply Reliability Program as part of the Fiscal Year 2009 Energy and Water Appropriations bill. BACKGROUND 1 Attached letters were sent to U.S. Senators Barbara Boxer and Diane Feinstein, and U.S. Representative David Dreier on March 1 1 , 2008, to ask for their support to obtain $1 million in funding for a Water Supply Reliability Program being Jointly sponsored by the Raymond Basin Management Board, San Gabriel Valley Water Association, and Foothill Water Coalition. At this time, staff requests that the Utility Board adopt a motion to ratify the Mayor's position and request to our U.S. Senators and Representative for additional funding from the Energy and Water Appropriations bill. " FISCAL IMPACT There is no fiscal impact of ratifying this position/request. I . Prepared by: ° I Cary Kalscheuer, Assistant to the Director of Utilities I WSRP Letters.pdf f 3 131 The Canyon City—Gateway to the American Dream March 11,2008 The Honorable David Dreier 233 Cannon House Office Building Washington DC 20515 Dear Congressman Dreier: We want you to know that the Water Supply Reliability Program being sponsored by the Raymond Basin Management Board, San Gabriel Valley water Association and the Foothill Water Coalition has our strong support and that we ask that you do everything in your power to secure $1,000,000 in funding for the WSRP in the FY09 Energy and Water Appropriations bill, Corps of Engineers, General Investigations account. The Raymond Basin Management Board will be acting as the local sponsor for this regional project working in close alliance with the member agencies of the Foothill Water Coalition. In making this request, we are mindful that your support secured the authorization for the WSRP in the recently enacted Water Resources Development Act reauthorization. As we face the future challenges associated with water, it is clear to me that the solutions must be on a regional basis and that they must address both insufficient and interrupted supplies. Our local aquifers have 500,000 acre feet of storage space that can be filled through cooperation among the members of the Foothill Water Coalition.. Once this is accomplished, our entire region will have a degree of protection from drought, re- allocation of imported water, natural disaster, and terrorist attacks that is currently not possible. Thank you for your continued help and leadership in securing the $1,000,000 in the FY09 Energy and Water Appropriations bill, Corps of Engineers, General Investigations account,that will allow the WSRP to became a reality. Sincerely, Joseph R. Rocha Mayor cc: City Council Francis R. Delach, City Manager Joseph F. Hsu, Director of Utilities 132 E The Canyon City—Gateway to the American Dream March 11, 2008 The Honorable Barbara Boxer 112 Hart Senate Office Building Washington DC 20510 ! Dear Senator Boxer, We want you to know that the Water Supply Reliability:Program being sponsored by the Raymond Basin Management Board, San Gabriel Valley Water Association and the Foothill Water Coalition has our strong support and that we ask that you do everything in your power to secure $1,000,000 in funding for the WSRP in the FY09 Energy and Water Appropriations bill, Corps of Engineers, General Investigations account. The Raymond Basin Management Board will be acting as the local sponsor for this regional project working in close alliance with the member agencies of the Foothill Water Coalition. s In making this request, we are mindful that your support secured the authorization for the WSRP in the recently enacted Water Resources Development Act reauthorization. As we face the future challenges associated with water, it is clear to me that the solutions must be on a regional basis and that they must address both insufficient and .interrupted supplies. Our local aquifers have 500,000 acre feet of storage space that can be filled through cooperation among the members of the Foothill Water Coalition. Once this is accomplished, our entire region will have a degree of protection from drought, re- allocation of imported water, natural disaster, and terrorist attacks that is currently not possible. Thank you for your continued help and leadership in securing the $1,000,000 in the FY09 Energy and Water Appropriations bill, Corps of Engineers, General Investigations account,that will allow the WSRP to become a reality. i Sincerely, /0 �� Joseph R. Rocha Mayor cc: City Council Francis R. Delach, City Manager Joseph F. Hsu, Director of Utilities f 133 s The Canyon City—Gateway to the American Dream March 11, 2008 The Honorable Diane Feinstein 331 Hart Senate Office Building Washington DC 20510 Dear Senator Feinstein, We want you to know that the Water Supply Reliability Program being sponsored by the Raymond Basin Management Board, San Gabriel Valley Water Association and the Foothill Water Coalition has our strong support and that we ask that you do everything in your power to secure$1,000,000 in funding for the WSRP in the FY09 Energy and Water Appropriations bill, Corps of Engineers, General Investigations account. The Raymond Basin Management Board will be acting as the local sponsor for this regional project working in close alliance with the member agencies of the Foothill Water Coalition. . In making this request, we are mindful that your support secured the authorization for the WSRP in the recently enacted Water Resources Development Act reauthorization. As we face the future challenges associated with water, it is clear to me that the solutions must be on a regional basis and that they must address both insufficient and interrupted supplies. Our local aquifers have 500,000 acre feet of storage space that can be filled through cooperation among the members of the Foothill Water Coalition. Once this is accomplished, our entire region will have a degree of protection from drought, re- allocation of imported water, natural disaster, and terrorist attacks that is currently not possible. Thank you for your continued help and leadership in securing the $1,000,000 in the FY09 Energy and Water Appropriations bill, Corps of Engineers, General Investigations account, that will allow the WSRP to become a reality. Sincerely /9 16 Joseph R. Rocha Mayor cc: City Council Francis R. Delach, City Manager Joseph F. Hsu, Director of Utilities 134