HomeMy WebLinkAbout02-28-2018 Steering Committee Agenda Packet.pdf02/28/2018 Steering Committee Agenda Page 1 of 4
AGENDA
CALL TO ORDER
DECLARATION OF QUORUM: Clerk of the Board
PUBLIC COMMENTS: If you wish to address the Committee on any item, please complete a
Speaker’s Form (located at the table at the back of the room) and submit it to the Clerk of the Board or notify the Clerk of the Board the item number on which you want to speak. Speakers will be recognized by
the Chairperson and are requested to limit comments to three minutes.
REPORTS: The Committee Chairperson and the General Manager may present verbal reports on
miscellaneous matters of general interest to the Directors. These reports are for information only and require no action by the Directors.
CONSENT CALENDAR: The Consent Calendar Items are considered to be routine and will be
enacted, by the Committee, after one motion, without discussion. Any items withdrawn from the Consent
Calendar for separate discussion will be considered in the regular order of business.
1.APPROVAL OF MINUTES (Clerk of the Board)
RECOMMENDATION: Approve Minutes of the Regular Meeting of the SteeringCommittee held January 24, 2018.
NON-CONSENT:
2.ESTABLISH PROJECT NO. J-131 FOR 18350 MT. LANGLEY ST.(Rob Thompson)
RECOMMENDATION: Recommend to the Board of Directors to:
A. Establish 18350 Mt. Langley St. Building Purchase and Improvement Project, Project No. J-131, for the purchase and needed improvements of 18350 Mt.
Langley Street, Fountain Valley, with a budget of $11,000,000; and
Orange County Sanitation District Regular Meeting of the STEERING COMMITTEE
Wednesday, February 28, 2018 5:00 P.M. Administration Building Conference Rooms A & B
10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433
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B. Approve a supplemental appropriation of $11,000,000 from available reserves to the Net Capital Improvement Program Budgeted Outlays for FY 2017-18,
from $148,061,000 to $159,061,000.
3.PROPERTY MAINTENANCE SERVICES FOR 18350 MT. LANGLEY STREET, FOUNTAIN VALLEY (Lorenzo Tyner)
RECOMMENDATION: Recommend to the Board of Directors to: Approve a solesource agreement with The Muller Company for Property Management Services, forthe period March 1, 2018 through August 31, 2018, for a management fee of $4,200per month plus other incurred expenses, including two additional renewal periods ofsix months each.
INFORMATION ITEMS:
None.
CLOSED SESSION:
During the course of conducting the business set forth on this agenda as a regular meeting of the Board, the Chairperson may convene the Board in closed session to consider matters of pending real estate
negotiations, pending or potential litigation, or personnel matters, pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted.
Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation;
(c) employment actions or negotiations with employee representatives; or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Board during a permitted
closed session and are not available for public inspection. At such time as the Board takes final action on any of these subjects, the minutes will reflect all required disclosures of information.
CONVENE IN CLOSED SESSION.
(1) CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code Section 54956.8)
Property: 18350 Mt. Langley St. Fountain Valley, CA APN Nos. 156-154-08 and 156-163-17
10950 Virginia Cir. Fountain Valley, CA - APN No.156-165-05; 10870 Spencer Ave. Fountain Valley, CA - APN No.156-163-07; 18480 Pacific St. Fountain Valley, CA - APN No.156-165-04; 18430 Pacific St. Fountain Valley, CA - APN No.156-165-06; 18370 Pacific St. Fountain Valley, CA - APN No.156-165-08;
18429 Pacific St. Fountain Valley, CA - APN No.156-163-09; 18410 Bandilier Cir. Fountain Valley, CA - APN No.156-163-10; 18368 Bandilier Cir. Fountain Valley, CA - APN No.156-163-11; 10700 Spencer St. Fountain Valley, CA - APN No.156-163-16; 10700 Spencer Ave. Fountain Valley, CA - APN No.156-154-07;
18386 Mt. Langley St. Fountain Valley, CA - APN No.156-154-06; 18385 Bandilier Cir. Fountain Valley, CA - APN No.156-163-12; 18401 Bandilier Cir. Fountain Valley, CA - APN No.156-163-13; 18424 Mt. Langley St. Fountain Valley, CA - APN No.156-154-05;
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18435 Bandilier Cir. Fountain Valley, CA - APN No.156-163-14; 18475 Bandilier Cir. Fountain Valley, CA - APN No.156-163-15;
10725 Ellis Ave. Fountain Valley, CA - APN No.156-154-04; and 10540 Talbert Ave. Fountain Valley, CA - APN No.156-151-03
Agency negotiators: General Manager, Jim Herberg; Assistant General Manager, Bob Ghirelli; Director of Finance and Administrative Services, Lorenzo Tyner; Director
of Engineering, Rob Thompson; Engineering Managers, Kathy Millea and Jeff Mohr; CIP Project Manager, Tom Grant; Kevin Turner and John Gallivan, Cushman and Wakefield.
Negotiating parties:
K & A Investments LP, APN Nos. 156-154-08 & 156-163-17
Valley Business Park, APN Nos. 156-165-05, 156-165-06, 156-163-07; DK-USA LLC, APN No.156-165-04; Fountain Valley Industrial Parcel 13, APN No.156-165-08; Sukut Real Properties LLC, APN Nos. 156-163-09, 156-163-10, 156-163-11;
The Ins Trust Shabtai, Nevon, APN No. 156-163-16;
The Ins Trust, APN No. 156-154-07; Fountain Valley Star LLC, APN No. 156-154-06; TN Sheet Metal Inc., APN No. 156-163-12; 18401 Bandilier LLC, APN No. 156-163-13;
Phone Lilly Lin-Lin TR, APN No. 156-154-05;
JDK Partners, APN No. 156-163-14; Chandler Real Properties, APN No. 156-163-15; Ellis Avenue LLC, APN No. 156-154-04; and SFII Fountain Valley LLC, APN No. 156-151-03
Under negotiation: Instruction to negotiator will concern price and terms of payment.
(2) CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION
Significant exposure to litigation (Government Code Section 54956.9(2))
Claim of Carlos Quiroz.
RECONVENE IN REGULAR SESSION.
CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION:
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY:
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ADJOURNMENT: To the Steering Committee meeting scheduled for Wednesday, March 28, 2018 at
5:00 p.m.
Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board’s office at (714) 593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested.
Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted outside the main gate of the Sanitation District’s Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, and on the Sanitation District’s website at www.ocsd.com, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item, including any public records distributed less than 72 hours prior to the meeting to all, or a majority of the Board of Directors, are available for public inspection in the office of the Clerk of the Board.
Agenda Description: The agenda provides a brief general description of each item of business to be considered or discussed. The recommended action does not indicate what action will be taken. The Board of Directors may take any action which is deemed appropriate.
NOTICE TO DIRECTORS: To place items on the agenda for a Committee or Board Meeting, items must be
submitted to the Clerk of the Board 14 days before the meeting.
Kelly A. Lore Clerk of the Board (714) 593-7433 klore@ocsd.com
For any questions on the agenda, Committee members may contact staff at:
General Manager Jim Herberg (714) 593-7300 jherberg@ocsd.com Assistant General Manager Bob Ghirelli (714) 593-7400 rghirelli@ocsd.com Director of Engineering Rob Thompson (714) 593-7310 rthompson@ocsd.com Director of Environmental Services Jim Colston (714) 593-7450 jcolston@ocsd.com Director of Finance and Administrative Services Director of Human Resources
Lorenzo Tyner
Celia Chandler
(714) 593-7550
(714) 593-7202
ltyner@ocsd.com
cchandler@ocsd.com Director of Operations & Maintenance Ed Torres (714) 593-7080 etorres@ocsd.com
01/24/2018 Steering Committee Minutes Page 1 of 4
MINUTES OF THE STEERING COMMITTEE
Orange County Sanitation District Wednesday, January 24, 2018 at 5:00 p.m.
A regular meeting of the Steering Committee of the Orange County Sanitation District was called to order by Chair Sebourn on Wednesday, January 24, 2018 at 5:02 p.m. in the Administration Building of the Orange County Sanitation District.
A quorum was declared present, as follows:
COMMITTEE MEMBERS PRESENT:
Greg Sebourn, Board Chair David Shawver, Board Vice-Chair Chad Wanke, Administration Committee Chair
John Withers, Operations Committee
Chair Ellery Deaton, Member-At-Large Tim Shaw, Member-At-Large
COMMITTEE MEMBERS ABSENT:
Donald Wagner, Member-At-Large
STAFF PRESENT:
Jim Herberg, General Manager Bob Ghirelli, Assistant General Manager Celia Chandler, Director of Human Resources
Jim Colston, Director of Environmental
Services Rob Thompson, Director of Engineering Ed Torres, Director of Operations & Maintenance
Lorenzo Tyner, Director of Finance &
Administrative Services Kelly Lore, Clerk of the Board Jennifer Cabral Mike Dorman
Dean Fisher
Al Garcia Ted Gerber Mark Kawamoto Mark Manzo
Tina Knapp
Kathy Millea Jeff Mohr Ddaze Phuong Roya Sohanaki
Jim Spears
OTHERS PRESENT: Brad Hogin, General Counsel
PUBLIC COMMENTS:
No public comments were provided.
ITEM NO. 1
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REPORTS:
• Chair Sebourn announced that Administration Committee Chair Wanke and
Operations Committee Chair Withers will be attending the CASA Conference on January 25-26 on behalf of the Board of Directors.
• GWRS Steering Committee/OCSD Wastewater Ordinance Discussion General Manager Jim Herberg introduced Director of Environmental Services Jim Colston who provided information regarding a recent meeting of the GWRS Joint Steering Committee Meeting where the subject of AB 967: Disposal of
Human Remains via Water Cremation was discussed at length. A recommendation from the Committee was proposed to OCSD to modify the Wastewater Ordinance to prohibit the receipt of hydrolysate through the sewer system.
After Committee discussion, this item was referred to the Legislative and Public Affairs Committee for further review. CONSENT CALENDAR:
1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve Minutes of the Regular Meeting of the Steering Committee held on December 20, 2017. AYES: Deaton; Sebourn, Shaw; Shawver; Wanke; and Withers
NOES: None ABSTENTIONS: None ABSENT: Wagner NON-CONSENT:
2. LABOR COMPLIANCE PROGRAM MANUAL AND RESOLUTION (Rob Thompson) Mr. Herberg provided a brief overview of this item.
MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 18-01, entitled: “A Resolution of the Board of Directors of the Orange County Sanitation District to Approve and Adopt the Labor Compliance Policies and Procedures Manual Dated January 24, 2018 to be Utilized During the Construction of Grant Funded Projects”.
AYES: Deaton; Sebourn, Shaw; Shawver; Wanke; and Withers
NOES: None ABSTENTIONS: None ABSENT: Wagner
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3. RESTRUCTURING OF GENERAL MANAGER’S OFFICE (Jim Herberg) Mr. Herberg provided an overview of his restructuring plan. The Chairman and
Vice-Chairman both stated their support. MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to:
A. Create a second Assistant General Manager position with responsibility
for the Operations and Maintenance (O&M) and Engineering Departments; and appoint one of the existing department heads to assume these additional responsibilities, while maintaining their current responsibilities; and
B. Upon the retirement of the existing Assistant General Manager, appoint one of the existing department heads to that position, overseeing the Finance & Administrative Services and Environmental Services departments. The resulting department head vacancy will remain
unfilled.
AYES: Deaton; Sebourn, Shaw; Shawver; Wanke; and Withers
NOES: None
ABSTENTIONS: None ABSENT: Wagner
4. GENERAL MANAGER’S FY 2017-2018 WORK PLAN MID-YEAR UPDATE
(Jim Herberg) Mr. Herberg provided highlights of the Mid-Year update and the Cost Savings memo provided with this item.
MOVED, SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and File the General Manager’s Fiscal Year 2017-2018 Work Plan Mid-Year Update and Cost Savings Measures Memo.
AYES: Deaton; Sebourn, Shaw; Shawver; Wanke; and Withers
NOES: None
ABSTENTIONS: None ABSENT: Wagner INFORMATION ITEMS:
None.
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CLOSED SESSION: CONVENED IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE
SECTIONS 54957(b)(1): The Committee convened in closed session at 5:25 p.m. to discuss one item. Item No. CS-1 was not heard. Confidential minutes of the Closed Session have been prepared in accordance with the above Government Code Section and are maintained
by the Clerk of the Board in the Official Book of Confidential Minutes of Board and Committee Closed Session Meetings. RECONVENED IN REGULAR SESSION:
The Committee reconvened in regular session at 5:37 p.m. CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION:
General Counsel Brad Hogin did not provide a report.
OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY:
None.
ADJOURNMENT: Chair Sebourn declared the meeting adjourned at 5:38 p.m. to the next Steering
Committee meeting to be held on Wednesday, February 28, 2018 at 5:00 p.m. Submitted by:
_____________________ Kelly A. Lore, MMC Clerk of the Board
Page 1 of 3
STEERING COMMITTEE Meeting Date 02/28/18 To Bd. of Dir. 02/28/18
AGENDA REPORT Item Number 2 Item Number
Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: ESTABLISH PROJECT NO. J-131 FOR 18350 MT. LANGLEY ST.
GENERAL MANAGER'S RECOMMENDATION A. Establish 18350 Mt. Langley St. Building Purchase and Improvement Project, Project No. J-131, for the purchase and needed improvements of 18350 Mt.
Langley Street, Fountain Valley, with a budget of $11,000,000; and B. Approve a supplemental appropriation of $11,000,000 from available reserves to the Net Capital Improvement Program Budgeted Outlays for FY 2017-18, from $148,061,000 to $159,061,000.
BACKGROUND On September 27, 2017, the Orange County Sanitation District’s (Sanitation District) Board of Directors approved the purchase of the Property at 18350 Mt. Langley Street in
Fountain Valley for $10,150,000. Per the purchase and sale agreement, staff arranged for completion of a Facility Condition Assessment and Recommendations report. This effort included physical inspection, a Phase 1 Environmental Site Assessment Report, and an ALTA/NSPS Land Title Survey. This due diligence process revealed that some necessary life safety improvements were required. To address identified issues, a
negotiated reduction of the purchase price to $9,750,000 was agreed upon. Staff anticipates necessary improvements of $500,000 which has been included in the requested supplemental appropriation above. The balance of the requested project budget is for the inspections, survey, design of necessary improvement, and legal fees associated with the purchase.
RELEVANT STANDARDS
• Ensure the public’s money is wisely spent
• 1, 5, 20 year planning horizons PROBLEM
A capital project is required to collect all the costs and properly capitalize the purchase and necessary improvements of the building and the associated fees.
Page 2 of 3
PROPOSED SOLUTION Approve establishment of a capital project for the purchase and related purchase costs
and necessary improvements of the 18350 Mt. Langley property. Related purchase costs
to date have amounted to approximately $80,000 with additional expenses anticipated to close the sale. TIMING CONCERNS
Per the Purchase and Sale Agreement, the Sanitation District is required to fund escrow within 30 days of notification from the seller. This notice was received February 9, 2018 and the acquisition is expected to be completed in March 2018.
RAMIFICATIONS OF NOT TAKING ACTION
Per the Purchase and Sale Agreement, the Sanitation District is obligated to fund the purchase of property.
PRIOR COMMITTEE/BOARD ACTIONS
September 2017 - Approved a Standard Offer, Agreement, and Escrow Instructions for Purchase of Real Estate (Purchase Agreement) with K&A Investments LP for Property at 18350 Mt. Langley Street, Fountain Valley, in a form approved by General Counsel, for
$10,150,000, and authorized the General Manager and General Counsel to execute and
approve various related documents and reports. ADDITIONAL INFORMATION
N/A
CEQA The Sanitation District’s Board of Directors has not approved any particular use of this
property. The Sanitation District will perform all environmental review required under the
California Environmental Quality Act prior to any use other than its current status as an office building. FINANCIAL CONSIDERATIONS
This item was not included in the FY 2017-18 Budget, but will be incorporated into the upcoming Proposed Budget for Fiscal Years 2018-19 and 2019-20 for any residual outlays following the initial acquisition in March 2018. This cost will be offset by the following savings:
• The planned sale of the real property at 7311 Doig Drive in Garden Grove, with an estimated value of $6 million to $8 million.
Page 3 of 3
•Avoiding up to $1 million in charges to Headworks Rehabilitation at Plant No. 1, ProjectNo. P1-105, related to relocation and interim office space for approximately 30
Sanitation District employees currently housed in trailers that must be demolished for
a new power building in that project.
•Net income in the range of $400,000 per year based on current occupancy.
Since these savings will be realized after the current fiscal year, staff is requesting a supplemental appropriation of $11,000,000 from reserves, of which approximately $122 million has been earmarked for the Capital Improvement Program.
ATTACHMENT
The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the
complete agenda package:
N/A
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STEERING COMMITTEE Meeting Date 02/28/18 To Bd. of Dir. 02/28/18
AGENDA REPORT Item Number 3 Item Number
Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: PROPERTY MANAGEMENT SERVICES FOR 18350 MT. LANGLEY
STREET, FOUNTAIN VALLEY GENERAL MANAGER'S RECOMMENDATION Approve a sole source agreement with The Muller Company for Property Management
Services, for the period March 1, 2018 through August 31, 2018, for a management fee of $4,200 per month plus other incurred expenses, including two additional renewal periods of six months each. BACKGROUND
On September 27, 2017, the Board of Directors approved the purchase of property at 18350 Mt. Langley Street in Fountain Valley. The property is scheduled to close escrow on March 12, 2018. The property is occupied by commercial tenants and is managed by The Muller Company, a property management company. Some of the tenant leases
extend out to 2021. Orange County Sanitation District (Sanitation District) is anticipating using this property for staff offices, but may continue to lease unneeded space to commercial tenants. RELEVANT STANDARDS
• Protection of Orange County Sanitation District assets
PROBLEM
Although the Sanitation District will own and eventually occupy the Mt. Langley property, the need to professionally manage the property utilizing services such as maintenance, security and repairs currently exists. At present, the Sanitation District does not employ
staff with this scope of commercial property management expertise. PROPOSED SOLUTION For a short-term basis, engage the firm currently managing the property until a permanent
property management strategy has been developed. TIMING CONCERNS Per the Purchase and Sale Agreement, the Sanitation District is required to fund and
close escrow within 30 days of notification from the seller. The Sanitation District received
Page 2 of 2
notice on February 9, 2018. Escrow is scheduled to close March 12, 2018. Upon escrow closing, the Sanitation District will assume responsibility for management of the property.
RAMIFICATIONS OF NOT TAKING ACTION
The Sanitation District will lose continuity of care of the property and of services to existing tenants while developing the permanent property management strategy.
PRIOR COMMITTEE/BOARD ACTIONS
September 27, 2017 - Approved a Standard Offer, Agreement and Escrow Instructions for and Authorized General Manager and General Counsel to Execute any and all Instruments Related to the Transaction of Purchase of Real Estate (Purchase Agreement)
with K&A Investments LP for Property at 18350 Mt. Langley Street, Fountain Valley.
ADDITIONAL INFORMATION
Monthly expenses for services such as utility bills and repair work will vary month to
month. All expenses will be reviewed and approved by Sanitation District staff.
CEQA
N/A
FINANCIAL CONSIDERATIONS
The property management costs will be offset by rents collected on the commercial leases.
ATTACHMENT
The following attachment(s) in attached in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package:
•Management Agreement
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MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made and entered into as of
February 28, 2018 by and between ORANGE COUNTY SANITATION DISTRICT, a county
sanitation district duly organized and existing pursuant to Section 4700 et. seq. of the Health &
Safety Code of the State of California (hereinafter called "Owner"), and THE MULLER
COMPANY, a California corporation (hereinafter called "Manager").
WITNESSETH
WHEREAS, Owner is the owner of that certain real property addressed as 18350 Mt
Langley, Fountain Valley, California, commonly known as Fountain Valley Business Center, (the
"Property");
WHEREAS, the Property includes an office building and surface parking; and
WHEREAS, Owner desires to appoint Manager to manage and operate the Property and
Manager desires to accept such appointment, all upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, for and in consideration of the promises and mutual covenants and
agreements contained in this Agreement and the fees to be paid under this Agreement, Owner
and Manager hereby agree as follows:
ARTICLE I
Establishment of Hiring; Term
1.1 Exclusive Hiring. Owner hereby appoints Manager, in the capacity of an
independent contractor, as the sole and exclusive manager for the Property, and Manager
hereby accepts such appointment. This Agreement is not one of agency by manager for owner,
but one with Manager engaged with respect to the functions undertaken by or assigned to
Manager under this Agreement independently in the business of managing properties on its own
behalf, as an independent contractor.
1.2 Term of Agreement. The term of this Agreement will be for an initial term of
six (6) months and two renew Options with six (6) month term each to be exercised at the
discretion of the Owner upon written notice by Owner of renewal at least thirty (30) days prior
to the end of the Initial Term. Notwithstanding the foregoing: (i) if Manager defaults in the
performance of any of Manager's obligation under this Agreement, and such default is not cured
within thirty (30) days after written notice thereof is received by Manager (or, if such default is
non-monetary and of such a nature that it cannot be reasonably cured within such 30-day
period, Manager fails to commence the curing of such default within such 30-day period and
fails to thereafter diligently prosecute such cure to completion), then Owner may thereupon
terminate this Agreement for cause by giving written notice of such termination to Manager,
such termination to be effective as of the effective date specified in such termination notice; and
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(ii) Manager may terminate this Agreement at any time with or without cause by giving Owner at
least thirty (30) days' prior written notice. The Initial Term shall commence once Owner obtains
legal title to the Property.
1.3 Furthermore, Owner reserves the right to terminate this Agreement for its
convenience, with or without cause, in whole or in part, by giving at least thirty (30) day’s prior
written notice to the Manager.
1.4 Cooperation. Owner and Manager shall consult and meet with each other to
the extent necessary or appropriate to enable Manager to perform its duties under this
Agreement or as requested by either party. Each party shall cooperate fully in all matters
relating to the management, operation, maintenance and repair of the Property and the defense
of any claim, action or proceeding relating thereto or to this Agreement, and both parties shall
promptly respond to all requests for information by the other party, including furnishing all
documents and services relating thereto required by Owner in connection with the operation of
the Property. Any time the consent of Manager or Owner is required under this Agreement,
such consent shall not be unreasonably withheld, conditioned or delayed, and whenever this
Agreement grants Manager or Owner the right to take action, exercise discretion or make a
determination, Manager and Owner shall act reasonably and in good faith unless a different
standard is expressly set forth in this Agreement.
ARTICLE II
Services to be Performed by Manager
2.1 Employment of Personnel. Manager shall employ such personnel as may be
necessary, in Manager's sole but good faith discretion, for Manager to (i) accomplish the
efficient and successful operation and management of the Property, and (ii) properly perform
Manager's obligations under this Agreement, which may include, without limitation, employing
one (1) or more on-site managers. Such personnel shall in every instance be deemed
employees of Manager and not of Owner, and Owner shall have no right to supervise or direct
any of such employees. Manager shall fully comply with all applicable laws and regulations
having to do with workers’ compensation, social security, unemployment insurance, hours of
labor, wages, working conditions and other employer-employee related subjects in connection
with the Property. All reasonable salaries, wages, and other compensation of personnel
employed by Manager under this Agreement, including so-called fringe benefits (but excluding
bonuses), medical and health insurance, federal and state unemployment taxes, pension plans,
social security taxes, workmen's compensation insurance and the like shall be paid by Manager
and reimbursed to Manager by Owner on a pro rata basis of the time such employee has
allocated to the Property and where such employee services were required to properly,
adequately, safely and economically manage, operate, and maintain the Property, and provided
that such employees have been identified by position and compensation enumerated on a
schedule provided to Owner by Manager and approved by Owner, or as set forth in the
Approved Budget (as defined below).
2.2 Service Contracts. Manager shall make in Manager's name as agent for
Owner, contracts for utilities and other services such as water, electricity, gas, telephone,
vermin extermination, trash removal, heating, ventilating, and air conditioning maintenance,
security, and other services deemed by Manager or Owner to be necessary or advisable for the
operation, maintenance, or repair of the Property in accordance with this Agreement. All such
contracts shall (i) be in the name of the Manager as agent for owner; (ii) be made expressly
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assignable, at Owner’s option, to Owner or Owner’s nominee, (iii) include a provision for
cancellation thereof by Owner or Manager effective upon 30 days’ written notice; and (iv) shall
provide all contractors provide evidence of adequate and sufficient insurance for the services
being proved. Manager shall also place orders in Manager’s name as agent for Owner for such
equipment, tools, appliances, materials, and supplies as are reasonable and necessary, in
Manager's sole but good faith discretion, to properly maintain, manage, operate, or repair the
Property in accordance with this Agreement. In entering into any contracts contemplated by this
Agreement, Manager shall use commercially reasonable efforts to include as a condition thereof
the right of Owner or Manager, as the case may be, to terminate such contract on thirty (30)
days' prior written notice. Manager may obtain goods or services for the Property from direct or
indirect affiliates of Manager, its officers, directors, shareholders, or employees (collectively,
“Manager Affiliated Parties’), but only if such goods and services are of at least equal quality
and of no higher prices than comparable goods and services obtainable from unaffiliated parties
and such goods and services are otherwise competitive with comparable goods and services
and Owner provides written consent of such contacts with Manager Affiliated Parties and after
disclosing to Owner the relationship of Manager to the Manager Affiliated Parties.
2.3 Contracts in excess of $5,000.00 shall be procured as follows:
(a) For contracts for goods and services with the value $50,000 or less
Manager shall obtain three competitive Bids or Proposals as applicable.
(b) For construction contracts with value equal or greater than $35,000 all
contracts must be competitively bid and the award provided to the lowest,
responsive, responsible Bidder.
(c) Sole Source contracts may be initiated provided that the following
conditions are met:
1. Goods or Services are of a unique nature based on their quality,
durability, availability, fitness or qualifications for a particular use; or only
available from one source. Written justification must be provided to Owner
for approval prior to proceeding with the sole source contract
Owner approval must be obtained by Manager prior to proceeding with all new
contracts.
2.4 Maintenance and Repair of Property. To the extent funds of Owner are
available, Manager shall make all repairs and perform all maintenance on the buildings, grounds
and other improvements of the Property necessary, in Manager's sole but good faith discretion,
to maintain the Property in a manner comparable to similar office buildings in the vicinity of the
Property, but only to the extent the cost of such work does not exceed $5,000.00; otherwise,
prior written approval from Owner shall be required. Notwithstanding the foregoing, Manager
shall also perform or furnish any and all emergency repairs or services necessary, in Manager's
sole but good faith discretion, for the preservation of the Property or to avoid the suspension of
any service to the Property or danger to life or property. Emergency repairs or services may be
made or furnished by Manager without Owner's prior written approval, but only if it is not
reasonably feasible to secure such prior approval. In any event, with respect to any emergency
repair or service which costs more than $5,000.00, only, Manager shall, not later than two (2)
business days after performing or furnishing such emergency repair or service, notify Owner of
the details and cost thereof.
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2.5 Tenant Relations. Manager shall use commercially reasonable efforts to
make itself fully familiar with the terms and provisions of all leases for space within the Property,
and to the extent funds are available shall use commercially reasonable efforts to perform all
delegable duties of Owner as landlord under each such lease, so that such lease shall remain in
full force and effect, with no default by Owner, and shall use commercially reasonable efforts to
enforce the full performance of all obligations of the tenant under each such lease (including,
without limitation, the tenant's obligation to deliver estoppel certificates, subordination and
attornment agreements, financial statements and other documents required under such lease).
Manager shall maintain business-like relations with tenants, receive requests, complaints and
the like, from tenants and shall use reasonable efforts to respond and act upon the foregoing in
reasonable fashion.
2.6 Collection of Moneys. Manager shall use commercially reasonable efforts to
collect all rent and other charges due from tenants, licensees and other occupants of the
Property and such other rents and charges as shall otherwise be due to Owner in connection
with Owner's ownership of the Property. Owner authorizes Manager to request, demand,
collect, receive and deposit all such rent and other charges and to institute proceedings in the
name of, and as an expense reimbursable by, Owner for the collection thereof and for the
dispossession of tenants and other persons from the Property, and such expense may include
the engaging of counsel for any such matter. However, no unlawful detainer action shall be filed
by Manager without prior written approval of Owner. In connection with any of the foregoing,
Manager may settle, compromise, or release any action, claim, or demand of Owner, provided
that Owner's prior written consent shall be required for the settlement, compromise, or release
of any claim for which the amount at issue exceeds $5,000.00. All moneys collected by
Manager shall be forthwith deposited in the Operating Account (as defined below).
2.7 Compliance with Legal Requirements. Manager shall use commercially
reasonable efforts to comply with any and all laws, ordinances, rules, regulations, orders, or
other requirements affecting the Property of any federal, state, county, or municipal authority
having jurisdiction thereover, and orders of the Board of Fire Underwriters or other similar
bodies. Manager, however, shall not take any such action as long as Owner is contesting, or
has affirmed in writing to Manager its intention to contest and promptly institutes proceedings
contesting, any such order or requirement, except that if failure to comply promptly with any
such order or requirement would or could expose Manager to criminal liability, Manager shall
have the right, but not the obligation, to cause compliance with such order or requirement.
However, before any election by Manager to comply with such order or requirement, Manager
shall provide Owner written notice of its intent to do so and Owner or Manager shall have the
right to immediately terminate this Agreement. Owner agrees to pay all expenses incurred by
Manager, including, without limitation, reasonable attorneys' fees for counsel (not exceeding a
rate of $250 per hour) employed to represent Manager or Owner, with respect to any
proceeding or suit involving an alleged violation by Manager or Owner, or both, of any orders or
requirements of any federal, state, county, or municipal authority or orders of the Board of Fire
Underwriters or other similar bodies (unless Manager is finally adjudicated to have personally
and not in a representative capacity violated such order or requirement), but nothing contained
herein shall require Manager to employ counsel to represent Owner in any such proceeding or
suit.
2.8 Construction Management and Supervision. Manager shall provide the "CM
Services" set forth in Exhibit "A" attached hereto and made a part of this Agreement.
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2.9 Leasing Services. Manager shall endeavor to secure and retain tenants for
the Property. All leasing activity, whether for retention of existing tenants or obtaining of new
tenants, shall be conducted in accordance with the Approved Budget (as defined below) and the
applicable terms and conditions set forth in this Agreement. Manager agrees to cooperate with
any third party brokers ("Outside Brokers") in leasing space at the Property; leasing
commissions to such Outside Brokers shall be paid by Manager (following payment of same by
Owner to Manager) with respect to leases hereunder; if such leasing commission to be paid to
an Outside Broker is set forth in the Approved Budget, then such leasing commission shall not
require the approval of Owner (otherwise such leasing commission shall require Owner's prior
written approval).
2.10 Notices. Manager shall promptly deliver to Owner all notices received from
any mortgagee, trustee, ground lessor, governmental or official entity, or any other party with
respect to the Property. Manager may sign and serve in the name of Owner any and all notices
only required in connection with the proper performance by Manager of the services required to
be performed by Manager under this Agreement.
ARTICLE III
Budgets/Reports
3.1 Process for Approval of Annual Operating Budget. Within thirty (30) days
after the commencement of the Initial Term of this Agreement, Manager shall submit to Owner,
for Owner's approval (which approval shall not be unreasonably withheld, conditioned or
delayed), a current operating budget for the Property from the date of the commencement of the
initial Term of this Agreement through June 30, 2018, which proposed budget shall reflect
thereon projections of all receipts and operating costs and expenses, capital expenditures, and
replacement reserves that Manager, in the exercise of good business judgment, believes will be
received or necessary to be incurred, as the case may be, to operate the Property through June
30, 2018.
3.2 Within sixty days from the initial Term of this Agreement, Manager shall
submit to Owner for Owner’s approval (which approval shall not be unreasonably withheld,
conditioned or delayed) a proposed operating budget for the Property for the fiscal year of July
1, 2018 through June 30, 2019. Such proposed budgets and projections shall be submitted by
Manager solely as estimates, without warranty of their accuracy or attainability. Manager may
not employ any person, to assist Manager with the preparation of such budget. If Manager has
not received written approval or disapproval of Manager's proposed operating budget within
thirty (30) days after submittal thereof by Manager, the proposed operating budget submitted by
Manager shall be automatically deemed approved by Owner. If written disapprovals are
received by Manager, Manager shall promptly revise the proposed operation budget to
incorporate any comments thereto proposed by Owner with which Manager agrees and the
parties shall consult with each other in order to mutually agree upon an acceptable final
operating budget. The approved and/or deemed approved operating budget shall be referred to
herein as the "Approved Budget". If, as of July 1 of each fiscal year, a proposed operating
budget has not yet been finalized, then Owner and Manager shall continue to proceed under the
prior fiscal year's Approved Budget until the current fiscal year's operating budget is agreed
upon by Owner and Manager, except that all ordinary reimbursable expenses included in such
prior year's Approved Budget (other than taxes, insurance and utilities, which shall be at the
actual costs thereof) shall be increased by five percent (5%). If an Approved Budget has not
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been agreed upon by March 31st then ether party upon 30-days’ written notice may terminate
this Agreement.
3.3 Expenditures and Liabilities Which Are in Addition to Items on the Approved
Budget. Manager shall secure the written approval of Owner (which approval shall be in the
sole discretion of Owner) prior to making any expenditure or incurring any liability or obligation
not reflected on the Approved Budget; provided, however, that Manager shall not be required to
secure the written approval of Owner if such expenditure does not increase any line item by
more than five percent (5%) of the line item amount reflected on the Approved Budget.
3.4 Records; Reporting and Audit.
(a) Records. All statements, receipts, invoices, checks, leases, contracts,
worksheets, financial statements, books and records, and all other instruments and
documents relating to or arising from the operating or management of the Property
shall be maintained by Manager, and Owner and Manager shall have the right to
inspect and to copy all such items, at such party's expense, at all reasonable times,
and from time to time, during the term of this Agreement and for a reasonable time
thereafter not to exceed three (3) years. Upon the termination of this Agreement, all
of such books, records and other information shall be the property of and be
promptly delivered (without warranty) to Owner in readily accessible and readable
form; provided, however, that Manager or its representatives shall have the right to
inspect such books, records, and other information and to make copies thereof
during the three (3) year period referred to in the preceding sentence at the offices
of Owner upon reasonable advance notice to Owner.
(b) Monthly Reports. On or before the twentieth (20th) day of each month
during the term of this Agreement, Manager shall deliver to Owner an operating
report for the Property (on a cash and not an accrual method) for the preceding
calendar month.
(c) Audit. Owner retains the reasonable right to access, review, examine,
and audit, any and all books, records, documents and any other evidence of
procedures and practices that Owner determines are necessary to discover and
verify that Manager is in compliance with all requirements under this Agreement.
Manager shall include the SANITATION DISTRICT’s right as described above, in
any and all of their subcontracts, and shall ensure that these rights are binding upon
all Subconsultants.
Owner retains the right to examine Manager’s books, records, documents and any
other evidence of procedures and practices that the Owner determines are
necessary to discover and verify all costs, of whatever nature, which are claimed to
have been incurred, or anticipated to be incurred or to ensure CONSULTANT’s
compliance with all requirements under this Agreement during the term of this
Agreement and for a period of three (3) years after its termination.
Manager shall maintain complete and accurate records in accordance with
generally accepted industry standard practices and the Owner’s policy. Manager
shall make available to Owner for review and audit, all property related accounting
records and documents, and any other financial data within 15 days after receipt of
notice from Owner. Upon Owner’s request, Manager shall submit exact duplicates
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of originals of all requested records to Owner. If an audit is performed, Manager
shall ensure that a qualified employee of the Manager will be available to assist
Owner’s auditor in obtaining all accounting records and documents, and any other
financial data as they relate to the property and services provided under this
Agreement.
(d) No Liability for Returns Required by Law. Manager shall not be
responsible or liable for preparing or filing any forms, reports, or returns that may be
required by law relating to any personnel employed by Owner in connection
therewith. Manager, and not Owner, however, shall be responsible for any forms,
reports, or returns that may be required by law relating to any of Manager's
employees.
ARTICLE IV
Expenses, Operating Account
4.1 Expense of Owner. Everything done by Manager under the provisions of this
Agreement shall be done as an independent contractor of Owner. Unless otherwise provided
herein, Owner shall not be obligated to reimburse Manager for (a) any expense for office
equipment or office supplies of Manager (unless and only to the extent incurred and used in the
promotion and leasing of the Property and/or the collection of income or payment of expenses
for the Property); (b) any overhead expenses of Manager incurred in its general offices in
excess of the pro rata portions of overhead expenses attributable to the Property; (c) any
salaries or wages allocable to time spent on projects other than the Property; or (d) any salaries,
wages, and expenses for any personnel other than personnel located at the Property site and/or
personnel spending a portion of their working hours (to be charged on a pro rata basis) at the
Property site specifically performing Manager's duties under this Agreement. All payments to be
made by Manager under this Agreement shall be payable, or if otherwise paid by Manager,
reimbursable, from funds deposited in the Operating Account. Manager shall not be obligated
to make any advance to or for the account of Owner or to pay any sums except out of funds
held in the Operating Account, nor shall Manager be obligated to incur any liability or obligation
for the account of Owner without assurance satisfactory to Manager that the necessary funds
for the discharge thereof have been or will be promptly provided by Owner. Owner shall at all
times provide Manager, free of charge, with an appropriate management office at the Property.
4.2 Separation of Owner's Moneys. Manager shall establish and maintain in a
banking or other financial institution reasonably approved by Owner whose deposits are insured
by the Federal Deposit Insurance Corporation or Federal Savings and Loan Insurance
Corporation, a separate bank or similar account in the name of Owner for the deposit of moneys
of Owner received with respect to the Property (the "Operating Account"). Manager shall also
establish such other special bank or similar accounts as may be reasonably required by Owner,
or as required under the law. If and only if the funds are to be used for an item set forth in the
Approved Budget, or as otherwise provided for by this Agreement, funds may be withdrawn
through authorized signature cards from all accounts upon the sole signature of Manager or any
of the following persons, on behalf of Manager: Tim Gooch, George Derrington, Tammy Le, or
Jenny Blanchart (“Authorized Persons”). Manager shall immediately notify all financial
institutions if any of the Authorized Persons are no longer employed by Manager and cause
them to be removed as a signatory to withdraw funds. Manager’s authority to withdraw funds
may be terminated at any time by Owner upon three (3) days written notice to Manager. In the
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vent of such termination, Owner will assume full liability for all existing financial obligations
incurred by the Manager for the Property incurred prior to the termination and in accordance
with this Agreement.
4.3 Manager Disbursements. Manager shall, from the available good funds
collected and deposited in the Operating Account, cause to be disbursed regularly and
punctually the following amounts (in the following order of priority (1) the amounts which Owner
from time to time advises Manager are to be paid for any loans secured by mortgages on the
Property, incurred before or after this Agreement becomes affective, including amounts which
Owner from time to time advises Manager are due under any mortgage for interest and
amortization of principal and for allocation to reserves or escrow funds; (2) the amounts
payable to Manager pursuant to this Agreement; and (3) the amounts otherwise due and
payable as operating expenses of the Property. Owner shall at all times maintain in the
Operating Account a balance equal to the highest projected monthly expenditures as
determined by the applicable Approved Budget for the Property. In addition, Owner shall within
five (5) business days after Manager's written request, deposit such additional funds as
Manager reasonably determines are needed to effect any authorized disbursements to be made
by Manager pursuant to the terms of this Agreement. In the event Owner fails to deposit the
amount of such expenses and fees, Manager shall be under no obligation to advance any funds
to meet the obligations for which the additional funds have been requested and shall not incur
any liability in connection therewith. However, Manager may elect to advance funds to pay such
expenses and shall in such event be entitled to reimbursement upon demand from Owner
therefor. Any funds remaining at the end of each calendar month during the term of this
Agreement in the Operating Account (in excess of the balance required to be maintained in
such account) shall be disbursed or transferred as generally or specifically directed from time to
time by Owner. Within fifteen (15) days after Manager's receipt of written request by Owner (but
no more often than once during each calendar month during the term of this Agreement),
Manager shall provide Owner with a list of the disbursements made by Manager during such
month and if so requested by Owner, invoices supporting the disbursement. Unless otherwise
provided for in the Approved Budget, Owner, and not Manager, shall be responsible for the
payment of all real estate taxes and other impositions levied by appropriate authorities.
ARTICLE V
Management and Other Fees
5.1 Management Fee. Owner shall pay to Manager, as compensation for
Manager's management services, on a monthly basis, a management fee (the "Management
Fee") in an amount equal $2,000.00 per month.
5.2 Compensation for Tenant Finish Work and Capital Improvements. For
services which it performs in overseeing and/or managing the completion of tenant finish work
and construction of capital improvements within the Property, Owner shall pay Manager the fees
described on Exhibit "A" attached hereto in accordance with the terms and conditions set forth
on Exhibit "A" attached hereto.
5.3 Leasing Commissions. For services which it performs in connection with the
leasing of the Property, Owner shall pay Manager the fees described on Exhibit "B" attached
hereto in accordance with the terms and conditions set forth on Exhibit "B" attached hereto.
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5.4 Additional Services. It is expressly agreed that in the event Owner requires
Manager to perform or undertake additional services which are of an extraordinary nature or
which are not customarily performed (or which are performed less frequently) by property
management companies managing projects comparable to the Property located in the vicinity of
the Property, Owner shall pay to Manager additional fee(s) for such additional services, and the
amount of such additional fee(s) shall be reasonably and mutually agreed upon by Owner and
Manager.
ARTICLE VI
Insurance/Indemnity
6.1 Insurance. Owner shall maintain in full force and effect insurance policies
with respect to the Property, including any personal property of Owner, issued by insurance
companies which have an A.M. Best General Policyholder's Service rating of not less than "A-
VIII" which are licensed, or approved to do business, in the state in which the Property is
located. Such insurance policies shall provide the following coverages:
(a) Property Insurance. "All Risk" property insurance including fire,
sprinkler leakage if applicable and water damage in an amount not less than the full
replacement cost of the Property, with an agreed value endorsement sufficient to
prevent Owner from becoming a co-insurer in any loss under the policy. The
policies of insurance carried in accordance with this Section 6.1(a) shall contain (i) a
replacement cost endorsement without deduction for depreciation or obsolescence,
(ii) coverage for building ordinance, increased cost of construction, sinkhole
(subsidence) and pollution clean-up resulting from insured peril, and (iii) a waiver of
subrogation clause;
(b) Flood Insurance. If at any time the Property or any part thereof is within
a 100 year Flood Zone or an area designated "flood zone" pursuant to the National
Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973 (42
U.S.C. 4001 4128) or any amendments or supplements thereto or substitutions
therefor (collectively, the "National Flood Insurance Program"), flood insurance (to
the extent available at commercially reasonably rates) in such total amount as
Owner may from time to time reasonably require but in an amount not less than the
maximum available under the National Flood Insurance Program with a deductible
not exceeding $10,000, and which shall in any event comply with the National Flood
Insurance Program as set forth in the legislation;
(c) Earthquake Insurance. Earthquake insurance on the Property for not
less than the maximum probable loss if located in UBC Seismic Zones 3 and 4;
(d) Liability Insurance. Commercial General and Excess Liability
Insurance, written on an occurrence basis, including blanket contractual liability,
products and completed operations and personal injury coverage, notice of
occurrence, knowledge of occurrence, unintentional errors and omissions, pollution
from hostile fire, building heating equipment with a combined single limit for any one
occurrence of Fifteen Million Dollars ($15,000,000) or such higher limit as Manager
may from time to time reasonably request. Such requirement may be satisfied by a
layering of Commercial General Liability, Umbrella and Excess Liability policies, but
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in no event will the liability insurance be written for an amount less than Fifteen
Million Dollars ($15,000,000) combined single limit for bodily injury and property
damage liability;
(e) Boiler Insurance. Boiler and Machinery Breakdown Direct Damage
Insurance and third party liability coverage (if not covered under the Commercial
General Liability Policy) with full comprehensive coverage on a repair and
replacement basis for all HVAC equipment, electrical equipment, boilers and
machinery which form a part of the Property, including building ordinance Business
Interruption Coverage for Loss of Rental Income in connection therewith in
accordance with Section 6.1(d) above;
(f) Builder's Risk Insurance. During the course of any construction or
repair of improvements or during the course of restoration on the Property (other
than tenant installation), Builder's Risk Insurance on a completed value basis and
on a non-reporting form against "all risks of physical loss," including flood (if
available at commercially reasonable rates), earthquake (if available at
commercially reasonable rates), collapse, transit and off-site coverage (if available
at commercially reasonable rates), during construction of such improvements or
restoration, with deductibles satisfactory to Owner, covering the total replacement
cost value of work performed and the equipment, supplies and materials furnished
(unless such equipment, supplies and materials are required to be insured by
contractors or vendors) and rent loss insurance for a period not less than twelve
(12) months or the construction period, whichever is the greater, in an amount
satisfactory to Owner. Such policy of insurance shall include coverage for building
ordinance, increased cost of construction, sinkhole (subsidence) and pollution
clean-up resulting from an insured peril, and shall contain a "permission to occupy"
endorsement, a waiver of coinsurance or an agreed amount endorsement and an
agreement by the insurer that following a loss, the insurer will pay to the insured
(i) the full value of the loss provided Owner is required to or elects to rebuild or
(ii) the actual cash value of the loss in the event Owner is not required to or does
not elect to rebuild; AND
(g) Other Insurance. Such other insurance with respect to the Property, in
such amounts as Owner (or any lender in connection with a Financing) from time to
time may require against such other insurable hazards which at the time are
commonly insured against in respect of property similar to the Property.
6.2 Manager's Insurance. Manager shall, at the expense of Manager, maintain in
full force and effect insurance policies with respect to Manager and the employees of Manager
issued by insurance companies which have an A.M. Best General Policyholder's Service rating
of not less than "A-VIII," which are licensed and approved and authorized to do business in the
state in which the Property is located. Such policies shall provide the following coverage:
(a) Worker's Compensation Insurance. Worker’s Compensation Insurance
as required by the Labor Code of the State of California, including Employer’s
Liability Insurance with a minimum limit of $1,000,000.00. Such Worker’s
Compensation Insurance shall be endorsed to provide for a waiver of subrogation in
favor of OCSD. A statement on an insurance certificate will not be accepted in lieu
of the actual endorsements unless your insurance carrier is State of California
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Insurance Fund (SCIF and the endorsement numbers 2570 and 2065 are
referenced on the certificate of insurance.
(b) Automobile Liability Insurance. Comprehensive automobile liability
insurance covering owned, non-owned, and hired vehicles in an amount not less
than Five Million Dollars ($5,000,000) combined single limit for bodily injury and
property damage. Such requirements may be satisfied by layering of
comprehensive automobile liability, umbrella and excess liability policies, but in no
event shall the comprehensive automobile liability policy be written for an amount
less than One Million Dollars ($1,000,000) combined single limit for bodily injury and
property damage.
(c) Errors and Omissions, Fidelity Bond and Cyber Liability Insurance.
Fidelity bond and computer crime insurance with an annual limit of a minimum of
One Million Dollars ($1,000,000).
(i) Errors and Omissions Coverage (professional liability coverage)
in an amount of not less than $1.0 (one) million per occurrence throughout
the term of this Agreement
(ii) A fidelity bond or crime insurance, in content acceptable to
OCSD, shall be carried in the amount of $1 (one) million dollars.
(iii) If the Manager provides services related to information
technology, the Manager must maintain third-party Cyber Liability insurance
with limits of not less than $1.0 million per occurrence covering claims
involving technology professional liability, privacy liability where applicable
(including but not limited to loss of OCSD employee information), security
liability where applicable (including but not limited to technology attacks via
hackers or viruses, and cyber extortion threats), media liability where
applicable (including but not limited to libel, slander and copyright
infringement from content created by the Vendor), and damage to or
destruction of electronic information or media.
(d) Commercial Liability Insurance. Commercial General Liability Insurance
written on an occurrence basis providing the following minimum limits of liability
coverage: $5.0 million per occurrence with $5.0 million aggregate separate for this
contract. Said insurance shall include coverage for the following hazards:
Premises-Operations, blanket contractual liability (for this Agreement), products
liability/completed operations (including any product manufactured or assembled),
broad form property damage, blanket contractual liability, independent contractors
liability, personal and advertising injury, mobile equipment, cross liability and
severability of interest clauses. A statement on an insurance certificate will not be
accepted in lieu of the actual additional insured endorsement(s). If requested by
OCSD and applicable, XCU coverage (Explosion, Collapse and Underground) and
Riggers Liability must be included in the General Liability policy and coverage must
be reflected on submitted Certificate of Insurance.
(e) Umbrella Excess Liability The minimum limits of general liability and
automotive liability insurance required, as set forth above, shall be provided for
either a single policy of primary insurance, or a combination of policies of primary
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and umbrella excess coverage. Umbrella excess liability coverage shall be issued
with limits of liability which, when combined with the primary insurance, will equal
the minimum limits for general liability and automotive liability.
(f) Additional Insured Endorsements Each policy of insurance obtained,
except Worker’s Compensation Coverage and Errors and Omissions Coverage,
shall name OCSD, its Directors, officers, agents, consultants, and employees for
this contract, and all public agencies from whom permits will be obtained and their
Directors, officers, agents and employees, as determined by OCSD, as additional
insured on said policies. No exclusionary language or limitations shall be applicable
to any additional insured that are not applicable to the named insured. In addition,
insurance afforded by the additional insured endorsement shall apply as primary
insurance, and other insurance maintained by OCSD shall be excess only and not
contributing with insurance provided under said policies. If this coverage is not
provided within the coverage form (insurance policy) it shall also be endorsed as
primary and non-contributory coverage.
(g) Proof of Coverage The Vendor shall furnish OCSD with original
certificates and amendatory endorsements effecting coverage. Said policies and
endorsements shall conform to the requirements herein stated. All certificates and
endorsements are to be received and approved by OCSD before work commences.
OCSD reserves the right to require complete, certified copies of all required
insurance policies, including endorsements, affecting the coverage required, at any
time. The following are approved forms that must be submitted as proof of
coverage:
Certificate of Insurance ACORD Form 25 or other equivalent
Certificate of Insurance form.
Additional Insured (GL) (ISO Form) CG2010 11 85 or
The combination of (ISO Forms) CG 2010 10 01 and CG 2037 10 01
All other Additional Insured endorsements must be submitted for
approval by OCSD, and OCSD may reject alternatives that provide
different or less coverage to OCSD.
Additional Insured (Auto) Submit endorsement provided by carrier
for OCSD approval.
Waiver of Subrogation State Compensation Insurance Fund
Endorsement No. 2570 or equivalent.
Cancellation Notice State Compensation Insurance Fund
Endorsement No. 2065 or equivalent.
(h) Period of Coverage Insurance coverage is required during the period of
this contract.
(i) Cancellation Notice. Each insurance policy required herein shall be
endorsed to state that coverage shall not be cancelled by either party, except after
thirty (30) days’ prior written notice. The ACORD Form shall state the required thirty
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(30) days’ written notification. Policy shall not terminate, nor shall it be cancelled
nor the coverage reduced, until thirty (30) days after written notice is given to OCSD
except for non payment of premium which shall require not less than ten (10) days
written notice to OCSD. Should there be changes in coverage or an increase in
deductible or SIR amounts, the Vendor and its insurance broker/agent shall send
to OCSD a certified letter which includes a description of the changes in coverage
and/or any increase in deductible or SIR amounts. The certified letter must be sent
to the attention of Risk Management, Div. 260, and shall be received by OCSD not
less than thirty (30) days prior to the effective date of the change(s) if the change
would reduce coverage or increase deductibles or SIR amounts or otherwise reduce
or limit the scope of insurance coverage provided to the OCSD.
(j) Insurance Carrier Rating The insurers must have an A- (A minus), or
better, policyholder’s rating, and a financial rating of Class VIII, or better, in
accordance with the most current A.M. Best Rating. OCSD recognizes that State
Compensation Insurance Fund has withdrawn from participation in the A.M. Best’s
rating process. Nevertheless, OCSD will accept State Compensation Insurance
Fund for the required policy of Worker’s Compensation Insurance, subject to
OCSD’s option, at any time during the term of this contract, to require a change in
insurer, upon twenty (20) days written notice. OCSD will also require Vendor to
substitute any insurer whose rating drops below levels herein specified. Said
substitution shall occur within twenty (20) days of written notice to Vendor by OCSD
or its agent.
(k) Primary Insurance All liability policies shall contain a Primary and Non
Contributory Clause. Any other insurance maintained by OCSD shall be excess
and not contributing with the insurance provided by Vendor
(l) Separation of Insured All liability policies shall contain a “Separation of
Insured” clause.
(m) Non Limiting (if applicable). Nothing in this document shall be construed
as limiting in any way, nor shall it limit the indemnification provision contained in the
Agreement, or the extent to which Vendor may be held responsible for payments of
damages to persons or property.
(n) Deductibles and Self Insured Retentions Any deductible and/or self
insured retention must be declared to OCSD on the Certificate of Insurance. All
deductible and/or self insured retentions require approval by OCSD. At the option
of OCSD, either: the insurer shall reduce or eliminate such deductible or self-
insured retention as respects OCSD; or the Vendor shall provide a financial
guarantee satisfactory to OCSD guaranteeing payment of losses and related
investigations, claim administration and defense expenses.
(o) Defense Costs Liability policies, except for Errors and Omissions
Coverage, shall have a provision that defense costs for all insureds and additional
insureds are paid in addition to and do not deplete any policy limits
(p) Limits Are Minimums If Manager maintains higher limits than any
minimums shown above, OCSD requires and shall be entitled to coverage for the
higher limits maintained by Vendor.
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6.3 Blanket Insurance. Manager may effect any coverage required of Manager
under Section 6.2 above under a blanket insurance policy, provided that the protection afforded
under any policy of blanket insurance hereunder shall be no less than that which would have
been afforded under a separate policy or policies relating only to the Property.
6.4 Policies.
(a) Owner Named Insured. All of the insurance policies maintained under
Section 6.1 shall name Owner as the insured and shall also include Manager as an
additional insured or loss payee, as its interest may appear.
(b) Owner and Manager Named Insured. The insurance maintained under
Section 6.1(d) (Liability Insurance) shall name Manager as an insured, and the
insurance maintained under Section 6.2(b) (Automobile Insurance), Section 6.2(c)
(Fidelity Bond Insurance) and Section 6.2(d) (Commercial Liability Insurance) shall
name Owner, if requested, as an insured and such other parties in interest as
Owner or Manager may reasonably specify from time to time as additional insureds
or loss payees, as their respective interests might appear.
(c) Terms of Policies. All insurance policies maintained pursuant to this
Agreement shall provide that (i) no cancellation, material change or reduction
thereof shall be effective until at least thirty (30) days after receipt by Owner and
Manager of written notice thereof; and (ii) all losses covered by the required
insurance shall be payable notwithstanding any act of negligence of Manager or any
tenant or their partners, members, stockholders, directors, officers, employees or
agents which might, absent such agreement, result in a forfeiture of all or part of
such insurance payment and notwithstanding ( (1) any foreclosure or other action or
proceeding taken pursuant to the provision of any financing instruments
encumbering the Property or (2) any change in title or ownership of the Property. In
the event of any financing secured by the Property, all insurance shall comply with
the terms of such financing.
(d) Self Insurance. It is understood that Owner is a large public agency that
has a program of insurance and self-insurance with regard to its properties. Orange
County Sanitation District will arrange for insurance or self-insurance on the
Property, as its Board or management shall approve from time to time, and which
may include insurance or self-insurance for property, flood, earthquake, business
interruption, excess liability, workers compensation, boiler & machinery, builder’s
risk, pollution liability and perhaps others. Owner will from time to time, as
reasonably requested by Manager, provide certificates of insurance and letters of
self-insurance describing the insurance and self-insurance carried by Owner.
Variations of Owner’s actual insurance program from the requirements defined in
the Agreement shall not constitute a default under this Agreement, but shall be
deemed to be an election by Owner to self-insure for any risks or liabilities. Upon
the full execution of this Agreement, Owner shall provide Manager with a
description of the process by which a claim may be made under Owner’s self-
insurance program. All of Owner’s insurance obligations undertaken with respect to
self-insured risks shall survive the expiration or earlier termination of the
Agreement.
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(e) Evidence of Renewal and Premium Payment. Owner and Manager
shall furnish to each other, upon request, prior to the expiration date of each
insurance policy required to be maintained under this Article VI, certificates of
insurance of the renewal thereof.
6.5 Claims. In the event of a loss related to the Property under any of the
insurance policies described in Sections 6.1, Section 6.2(b), Section 6.2(c) and Section 6.2(d),
Manager shall, at Owner's expense, promptly and timely after Manager learns of such loss, file
a claim on behalf of Owner (and Manager or any other party to the extent Manager or such
other party is also an insured party) and use commercially reasonable efforts to monitor such
claim on behalf of such insured party and cooperate fully with any appointed representatives,
consultants and adjusters retained by or on behalf of the insurance companies' interests.
6.6 Subrogation. Owner and Manager each waive any right of recovery against
the other (and the respective officers, directors, partners, members and employees of each), for
any loss or damage covered by any policy of property insurance applicable to the Property,
whether due to the negligence of Owner or Manager or their agents, contractors, officers,
directors, partners, members or employees. If any property insurance policy provides that a
waiver of subrogation may only be granted by endorsement, the party maintaining such policy
shall secure an endorsement providing the waiver of subrogation.
6.7 Indemnity. Neither Manager (nor any employee, agent, director, officer, or
owner thereof (collectively, the "Manager Partners")) shall be liable, responsible, or accountable
in damages or otherwise to Owner for any acts performed by Manager or any of the Manager
Partners in good faith. Manager shall be liable for, and shall indemnify, defend and hold
harmless Owner from and against, any and all claims, losses, damages, liabilities, costs and
expenses, including reasonable attorneys' fees (collectively, "Claims") arising out of any actions
of Manager not within the scope of its duties under this Agreement and proximately caused by
the negligence or willful misconduct of Manager, except (i) to the extent such losses are of the
type insured, or are required to be insured by Owner under this Agreement, (ii) any latent defect
on the Property; or (iii) Owner’s failure to cooperate in any repairs or remediating any defects to
the Property after such conditions are discovered and brought to the attention of Owner. Owner
shall be liable for, and shall indemnify, defend and hold harmless Manager and the Manager
Partners, from and against any and all Claims arising out of or resulting from (i) the acts or
omissions of Manager in connection with the performance of Manager's duties under this
Agreement, and (iii) from the acts or omissions of Owner and its directors and officers, except
that the foregoing indemnity obligation of Owner shall not apply in the case of the acts or
omissions of Manager or any other Manager Partner which (a) are a breach by Manager under
this Agreement, (b) are beyond the scope of authority conferred upon Manager under this
Agreement, , or (c) constitute gross negligence, fraud, malfeasance, breach of fiduciary duty,
willful, reckless or criminal misconduct. The provisions of this Section 6.7 shall survive the
expiration or termination of this Agreement.
ARTICLE VII
Obligations Upon Termination
7.1 Survival of Obligations. Upon termination of this Agreement, each party shall
continue to be fully liable for its obligations which have accrued up to and including the
termination date and shall promptly pay to the other party all amounts due to such other party
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1297106.1
under the terms of this Agreement. Such payment shall be made as soon after the effective
date of termination as such amounts are determinable. Upon such payment, neither party shall
have any further claim or right against the other, except as expressly provided in this
Agreement.
7.2 Obligations Upon Termination. In the event of termination of this Agreement,
upon the effective date of such termination, Manager shall (i) surrender and deliver to Owner all
rent and other income of the Property and other moneys of Owner then held by Manager and/or
in any bank account (including, without limitation, the Operating Account) in excess of
compensation or reimbursements owed Manager by Owner, including without limitation any fees
payable or reimbursement of expenses due and payable to Manager, (ii) deliver to Owner as
received by Manager any moneys or other property due Owner under this Agreement but
received after such effective date of termination, and (iii) deliver to Owner (without warranty)
copies of all records regarding the Property, keys and all other materials, property and supplies
pertaining to the Property and/or this Agreement in the possession of Manager to allow Owner
to fully operate, maintain, and manage the Property.
ARTICLE VIII
Miscellaneous
8.1 No Assignment by Manager. Without the prior written consent of Owner,
Manager shall not have the right to assign, transfer, or convey any of its rights, title, or interest
under this Agreement, nor shall it have the right to delegate any of the obligations or duties
required to be kept or performed by it under this Agreement.,.
8.2 Successors and Assigns. Subject to the terms and conditions of Section 8.1
above, this Agreement shall be binding upon and shall inure to the benefit of the parties to this
Agreement and their respective permitted successors and assigns.
8.3 No Agency. Manager is an independent contractor and, as such, shall be
solely responsible for all of its employees, for the supervision of all persons performing services
in connection with the performance of all of Manager's obligations under this Agreement and/or
relating to the Property, and for determining the manner and time of performance of all acts
under this Agreement. Nothing contained in this Agreement shall be deemed or construed to
create a partnership or joint venture between Owner and Manager or to cause Manager to be
responsible in any way for the debts or obligations of Owner or any other party (but nothing
contained herein shall affect Manager's responsibility to transmit payments for the account of
Owner as provided in this Agreement), it being the intention of the parties that the only
relationship under this Agreement is one of independent contractor , and Manager shall not
represent to anyone that its relationship to Owner is other than that set forth herein.
8.4 Notices. All notices, demands, consents, approvals, and requests given or
required to be given by either party to the other under this Agreement shall be in writing, shall
be sent by (a) United States mail, postage prepaid, return receipt tracked or confirmed, or (b)
delivered by a nationally recognized overnight courier or (c) delivered personally: (i) to Manager
at the appropriate address set forth below in this Section 8.4, or to such other place as Manager
may from time to time designate in a notice to Owner; or (ii) to Owner at the addresses set forth
below in this Section 8.4, or to such other place as Owner may from time to time designate in a
notice to Manager . Any notice, demand, consent, approval, and/or request will be deemed
given (a) on the date which is seventy-two (72) hours after it is mailed as provided in this
672502.03/LA 237009-00007/8-8-12/dlb/dbs -17-
1297106.1
Section 8.4, (b) upon the date personal delivery is made or rejected, or (c) on the date which is
one (1) business day after it is sent by nationally recognized overnight courier, as the case may
be.
If to Owner: Orange County Sanitation District
10844 Ellis Avenue
Fountain Valley, CA 92708
Attention: Ann M. Crafton
Principal Staff Analyst
With a copy to:
Bradley R. Hogin, Esq.
Woodruff, Spradlin & Smart, APC
555 Anton Boulevard, Suite 1200
Costa Mesa, CA 92626-7670
If to Manager: The Muller Company
18881 Von Karman Avenue, Suite 400
Irvine, CA 92612
Attention: Jenny Blanchart
8.5 Security Deposits. Owner agrees to indemnify, defend and hold harmless
Manager from and against any and all Claims with respect to any use, detention, or
misapplication by Owner of tenants' security deposits.
8.6 Remedies. Notwithstanding anything herein to the contrary, Manager shall
not be liable to Owner and Owner shall not be liable to Manager under this Agreement for any
damages (other than actual damages) such as, without limitation, any lost profits, loss of
business, consequential, special, or other similar damages. Prior to any recovery against
Manager or Owner under this Agreement, Manager or Owner, as the case may be, must be
given written notice and a reasonable opportunity to cure any default or other condition which is
the basis for such recovery.
8.7 Captions. The captions of this Agreement are inserted only for the purpose
of convenient reference and do not define, limit or prescribe the scope or intent of this
Agreement or any part hereof.
8.8 No Waiver. The failure of a party hereto to seek redress for breach, or to
insist upon the strict performance of any covenant, agreement, provision or condition of this
Agreement, shall not constitute a waiver thereof, and such party shall have all remedies
provided herein and by applicable law with respect to any subsequent act which would have
originally constituted a breach.
8.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
8.10 No Third Party Beneficiaries. Neither this Agreement nor any part of this
Agreement nor any service, relationship, or other matter alluded to herein shall inure to the
benefit of any third party (specifically including any lenders, tenants, or contractors), to any
trustee in bankruptcy, to any assignee for the benefit of creditors, to any receiver by reason of
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1297106.1
insolvency, to any other fiduciary or officer representing a bankruptcy or insolvent estate of
either party, or to the creditors or claimants of such an estate. Without limiting the generality of
the foregoing sentence, it is specifically understood and agreed that insolvency or bankruptcy of
either of Owner (including any partners thereof) or Manager shall at the option of the other void
all rights of such insolvent or bankrupt party under this Agreement (or so many of such rights as
the other party shall elect to void).
8.11 Subordination. Manager’s rights hereunder are all expressly subordinate,
junior, and inferior to any ground lease, mortgage, or deed of trust now or hereafter placed upon
the Property and to any and all advances to be made thereunder and to the interest thereon and
to all renewals, replacements, and extensions thereof.
8.12 Attorneys’ Fees. If either party to this Agreement brings any action to enforce
its terms, the prevailing party shall be entitled to receive reasonable attorneys’ fees and costs
from the other party.
8.13 Change of Manager Status. If there is any dissolution, termination of
corporate status, suspension in any licenses required to carry out Manager’s duties as provided
in this Agreement, change in control (i.e. sale of stock, sale of company, merger, sale of
substantially all the assets, etc.), or any of the of the current Executive Team (as set forth in the
2/13/18 proposal) leaves the employment of Manager, Owner shall be provided immediate
written notice of such change and Owner shall have the right to terminate this Agreement by
delivery of a written notice of termination to Manager within 30 days from receipt of Manager’s
notice.
8.14 Validity. If any term or provision of this Agreement or the application thereof
to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of
this Agreement, or the application of such term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and be enforced to the fullest extent
permitted by law.
8.15 Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the matters herein contained and any agreement hereafter
made shall be ineffective to effect any change or modification, in whole or in part, unless such
agreement is in writing and signed by the party against whom enforcement of the change or
modification is sought.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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1297106.1
Consultant: THE MULLER COMPANY
Jenny Blanchart
18881 Von Karman Avenue
Suite 400
Irvine, CA 92612
ORANGE COUNTY SANITATION DISTRICT
Dated: By: __________________________________
Gregory C. Sebourn, PLS
Chair, Board of Directors
Dated: By: __________________________________
Kelly A. Lore
Clerk of the Board
Dated: By: __________________________________
Marc Dubois
Contracts, Purchasing and
Materials Manager
THE MULLER COMPANY
Dated:By: ___________________________________
______________________________________
Print Name and Title of Officer
______________________________________
IRS Employer’s I.D. Number
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1297106.1
EXHIBIT "A"
CM SERVICES AND FEES
(a) Construction Management Fee. Manager shall be entitled to a fee (the
"Construction Management Fee") for oversight, conformity, coordination and supervision of the
design and build out of tenant improvements made in conjunction with new leases, extensions
or renewals of existing leases or expansions of the leased space under existing leases, and
construction projects authorized by the Owner that take place during the term of the Agreement
(each, an "Improvement Project"). For Improvement Projects where the construction costs for
the Improvement Project exceed Five Thousand Dollars ($5,000), Owner shall pay Manager a
Construction Management Fee in an amount equal to five percent (5%) of the hard construction
costs for such Improvement Project.
(b) Minor Improvement Projects. Notwithstanding anything to the contrary, no
Construction Management Fee will be paid for any Improvement Projects where either (i) the
scope of such Improvement Project is limited to paint and carpet or (ii) the construction costs
are Five Thousand Dollars ($5,000) or less.
(c) Construction Management Services. As part of Manager's construction
management services with respect to Improvement Projects, Manager shall, at Owner's
expense, use commercially reasonable efforts to manage, arrange, supervise and coordinate,
subject to the approval and direction of Owner, the design, construction and planning services
of such Improvement Project, which services shall include the following:
(i) Arranging, supervising and coordinating the preparation of feasibility,
architectural, engineering, environmental and other studies as may be required;
(ii) Arranging for the preparation and submission to Owner for approval and,
following approval by Owner, monitoring compliance with:
A. Plans and specifications, such plans and specifications to be
prepared by one or more independent consultants approved by Owner, setting
forth the scope of the Improvement Project and methods of construction to be
used in the Improvement Project;
B. A budget setting forth estimated costs of the design and
construction of the Improvement Project; and
C. A list of proposed contractors, consultants and other professionals
to be employed in the design and construction of the Improvement Project.
(iii) Arranging, supervising and coordinating the design, construction and
planning services necessary to complete the Improvement Project, which actions shall
be subject to the approval and direction of Owner, including the following:
A. Coordinating with the consultants and other professionals on
matters relating to the plans and specifications and any modifications thereto;
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1297106.1
B. Coordinating with contractors to prepare cost estimates of the
Improvement Project and reviewing and advising Owner with respect to all bid
documents;
C. Preparing and negotiating design and construction contracts and
other Contracts, if required, for the supply of services and materials necessary to
design, construct and complete the Improvement Project;
D. Reviewing and negotiating all change orders for the Improvement
Project which change orders shall be submitted to Owner for its approval;
E. Reviewing applications for payment submitted by consultants,
contractors and suppliers in connection with the design, construction and
completion of the Improvement Project, and submission of such applications to
Owner for approval of payment;
F. Preparing applications to municipal, other governmental, quasi-
governmental and private authorities for Permits, including building permits,
inspections and approvals, which applications shall be submitted to Owner for
Owner's approval, and upon approval thereof by Owner, shall be submitted by
Manager to the applicable authority;
G. Supervising and coordinating construction of the Improvement
Project;
H. Coordinating and supervising the obtaining and maintenance of all
Permits and other authorizations necessary for the Improvement Project; and
I. Recording and reporting to Owner the progress of the construction
of the Improvement Project.
(iv) Causing complete and accurate files, books of account and other records
of all construction costs and expenses of the Improvement Project incurred by Owner to
be prepared and maintained in accordance with generally accepted accounting
principles.
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1297106.1
EXHIBIT "B"
LEASING COMMISSIONS
Owner shall pay Manager a Leasing Commission (i) for each New Tenant (as defined below) who
executes an Occupancy Lease (as defined below) during the term of the Agreement (each, a "New
Tenant Lease"), (ii) for each tenant who extends the term of its Occupancy Lease during the term of
the Agreement (an "Extension"), and (iii) for each tenant who expands the space leased by such
tenant under its Occupancy Lease during the term of the Agreement (an "Expansion"), which
Extension or Expansion (as the case may be) shall be pursuant to (A) the exercise by such tenant of
its extension or expansion rights under the Occupancy Lease, and/or (B) an Amendment to an
Occupancy Lease entered into by Owner and such tenant. All leasing commissions shall be paid from
the Operating Account and all leases (i.e. New Tenant Lease, Extension, or Expansion) shall be
signed by Owner.
The term "New Tenant" shall mean a tenant who has not previously entered an Occupancy Lease
then in effect for space at the Property. The term "Occupancy Lease" shall mean a lease of space at
the Property, executed and delivered by Owner (or Owner's predecessor, as applicable) and a tenant.
The term "Amendment to an Occupancy Lease" shall mean an amendment to an Occupancy Lease
executed and delivered by Owner and a tenant. The term "Gross Rentals" shall mean the annual
base rental rate stipulated in the Occupancy Lease or Amendment to Occupancy Lease (including
stipulated increases, if any) multiplied by the rentable square footage of the leased space subject to
the New Tenant Lease, Extension or Expansion (as applicable), the total of which shall then be
multiplied by the period comprising the Basic Term.
For each Occupancy Lease or Amendment to Occupancy Lease, the "Basic Term" shall be the initial
term of such New Tenant Lease, Expansion or Extension (i.e., the term of the New Tenant Lease,
Expansion or Extension without regard to any option to extend); and provided that if an Occupancy
Lease or Amendment to Occupancy Lease contains an express option in favor of the tenant to cancel
or terminate the New Tenant Lease, Expansion or Extension (herein a "Tenant Termination Option"),
the "Basic Term" shall initially include only that portion of the term of such New Tenant Lease,
Expansion or Extension which is not subject to cancellation by exercise of such Tenant Termination
Option; provided, however, if such Tenant Termination Option is waived by the tenant (or otherwise
lapses) during the term of the Agreement, then the Leasing Commission applicable to the remainder
of the initial term of such New Tenant Lease, Expansion or Extension shall become payable to
Manager within thirty (30) days after the date such Tenant Termination Option is waived by such
tenant (or otherwise lapses). Notwithstanding the foregoing, should an Occupancy Lease or
Amendment to Occupancy Lease for any such New Tenant Lease, Expansion or Extension contain a
Tenant Termination Option which is conditioned upon the tenant paying a cancellation penalty to the
landlord therefor and such cancellation penalty includes the amount of all unamortized Leasing
Commissions payable to Manager with respect to such New Tenant Lease, Expansion or Extension,
then Owner will pay Manager all of the Leasing Commissions due hereinabove with respect to such
New Tenant Lease, Expansion or Extension as if no such Tenant Termination Option existed.
Fifty percent (50%) of the applicable Leasing Commission will be paid to Manager within thirty
(30) days after all of the following have occurred: (i) if an Occupancy Lease or Amendment to
Occupancy Lease is entered into with respect to such New Tenant Lease, Extension or Expansion,
the execution of the Occupancy Lease or Amendment to Occupancy Lease by all parties; (ii) the
tenant's payment of any security deposit and prepaid rent applicable to such New Tenant Lease,
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1297106.1
Extension or Expansion if provided for in the Occupancy Lease or Amendment to Occupancy Lease
and delivery of any Occupancy Lease or Amendment to Occupancy Lease guaranty, letter of credit
and other security documents that are due on Occupancy Lease or Amendment to Occupancy Lease
execution; (iii) if an Occupancy Lease or Amendment to Occupancy Lease is entered into in
accordance with such New Tenant Lease, Extension or Expansion, the delivery of the fully executed
Occupancy Lease or Amendment to Occupancy Lease by Owner (or Manager on behalf of Owner) to
tenant; (iv) the expiration of any contingencies effecting the validity of the Occupancy Lease or
Amendment to Occupancy Lease for such New Tenant Lease, the Extension or Expansion; and
(v) Owner's receipt of a factually correct invoice from Manager for all Leasing Commissions due for
the subject Occupancy Lease or Amendment to Occupancy Lease. The balance of the applicable
Leasing Commission will be paid within thirty (30) days after the commencement date of the New
Tenant Lease, Extension or Expansion.
The Leasing Commission is as set forth below and the percentage set forth below shall equal the
percentage of Gross Rentals required to be paid by (x) each New Tenant under its New Tenant
Lease over the Basic Term of such New Tenant Lease, and (y) each tenant of any Extension or
Expansion over the Basic Term of such applicable Extension or Expansion:
I. New Tenant Leases No Outside Broker:
4.0% of Gross Rentals for years 1 to 5 of the Basic Term
2.0% of Gross Rentals for years 6 to 10 of the Basic Term
Outside Broker:
Lesser of (i) 1.0% of Gross Rentals for years 1 to 5 of the
Basic Term / 0.50% of Gross Rentals for years 6 to 10 of the
Basic Term or (ii) the net of 5.0% of Gross Rentals for the
Basic Term minus any leasing commission payable to any
Outside Broker (if applicable).
II. Extension/Expansion No Outside Broker:
2.5% of Gross Rentals for years 1 to 5 of the Basic Term
1.25% of Gross Rentals for years 6 to 10 of the Basic Term
Outside Broker:
Lesser of (i) 1.0% of Gross Rentals for years 1 to 5 of the
Basic Term / 0.5% of Gross Rentals for years 6 to 10 of the
Basic Term or (ii) the net of 5.0% of Gross Rentals minus any
leasing commissions payable to any Outside Broker or any
Listing Broker (if applicable).
1290735.1
555 AN T O N B O U L E V A R D, SU I T E 12 0 0
C O S T A ME S A , CA 9 2 6 26-7 6 70
(714) 558-7000
MEMORANDUM
TO: Hon. Chair and Members of the Orange County Sanitation District Steering
Committee
FROM: Bradley R. Hogin, Esq.
General Counsel
DATE: February 21, 2018
RE: Closed Session Items
The Steering Committee will hold a closed session on February 28, 2018 for the purpose
of conferring with its negotiators regarding the purchase of real property. The negotiating parties
and properties are as follows: K & A Investments LP, APN Nos. 156-154-08 & 156-163-17; Valley
Business Park, APN Nos. 156-165-05, 156-165-06, 156-163-07; DK-USA LLC, APN No.156-165-
04; Fountain Valley Industrial Parcel 13, APN No.156-165-08; Sukut Real Properties LLC, APN
Nos. 156-163-09, 156-163-10, 156-163-11; The Ins Trust Shabtai, Nevon, APN No. 156-163-16;
The Ins Trust, APN No. 156-154-07; Fountain Valley Star LLC, APN No. 156-154-06; TN Sheet
Metal Inc., APN No. 156-163-12; 18401 Bandilier LLC, APN No. 156-163-13; Phone Lilly Lin-
Lin TR, APN No. 156-154-05; JDK Partners, APN No. 156-163-14; Chandler Real Properties,
APN No. 156-163-15; Ellis Avenue LLC, APN No. 156-154-04; and SFII Fountain Valley LLC,
APN No. 156-151-03. The District’s negotiators are Jim Herberg, Bob Ghirelli, Lorenzo Tyner,
Rob Thompson, Kathy Millea and Jeff Mohr, Tom Grant, Kevin Turner and John Gallivan,
Cushman and Wakefield. Said closed session will be held pursuant to authority of California
Government Code Section 54956.8.
Respectfully submitted,
By: ___________________________
Bradley R. Hogin, General Counsel
1297912.1
555 ANTON B OULEVARD, SUITE 1200 C OSTA MESA, CA 92626-7670
(714) 558-7000 MEMORANDUM
TO: Hon. Chair and Members of the Orange County Sanitation District Steering
Committee
FROM: Bradley R. Hogin, Esq. General Counsel
DATE: February 21, 2018
RE: Closed Session Items
The Steering Committee desires to hold a closed session on February 28, 2018 for the purpose of conferring with its legal counsel regarding anticipated litigation. Existing facts and circumstances reflect a significant exposure to litigation against the District. The closed session
will be held pursuant to the authority of California Government Code Section 54956.9(d)(2).
The facts and circumstances are as follows: The District received a claim from an employee Carlos Quiroz.
Respectfully submitted,
By: _________________________ Bradley R. Hogin, General Counsel
ORANGE COUNTY SANITATION DISTRICT
Agenda
Terminology
Glossary
Glossary of Terms and Abbreviations
AQMD Air Quality Management District
ASCE American Society of Civil Engineers
BOD Biochemical Oxygen Demand
CARB California Air Resources Board
CASA California Association of Sanitation Agencies
CCTV Closed Circuit Television
CEQA California Environmental Quality Act
CIP Capital Improvement Program
CRWQCB California Regional Water Quality Control Board
CWA Clean Water Act
CWEA California Water Environment Association
EIR Environmental Impact Report
EMT Executive Management Team
EPA US Environmental Protection Agency
FOG Fats, Oils, and Grease
gpd gallons per day
GWRS Groundwater Replenishment System
ICS Incident Command System
IERP Integrated Emergency Response Plan
LOS Level Of Service
MGD Million Gallons Per Day
NACWA National Association of Clean Water Agencies
NPDES National Pollutant Discharge Elimination System
NWRI National Water Research Institute
O & M Operations & Maintenance
OCCOG Orange County Council of Governments
OCHCA Orange County Health Care Agency
OCSD Orange County Sanitation District
OCWD Orange County Water District
OOBS Ocean Outfall Booster Station
OSHA Occupational Safety and Health Administration
PCSA Professional Consultant/Construction Services Agreement
PDSA Professional Design Services Agreement
POTW Publicly Owned Treatment Works
ppm parts per million
PSA Professional Services Agreement
RFP Request For Proposal
RWQCB Regional Water Quality Control Board
Glossary of Terms and Abbreviations
SARFPA Santa Ana River Flood Protection Agency
SARI Santa Ana River Interceptor
SARWQCB Santa Ana Regional Water Quality Control Board
SAWPA Santa Ana Watershed Project Authority
SCADA Supervisory Control And Data Acquisition
SCAP Southern California Alliance of Publicly Owned Treatment Works
SCAQMD South Coast Air Quality Management District
SOCWA South Orange County Wastewater Authority
SRF Clean Water State Revolving Fund
SSMP Sewer System Management Plan
SSO Sanitary Sewer Overflow
SWRCB State Water Resources Control Board
TDS Total Dissolved Solids
TMDL Total Maximum Daily Load
TSS Total Suspended Solids
WDR Waste Discharge Requirements
WEF Water Environment Federation
WERF Water Environment & Reuse Foundation
WIFIA Water Infrastructure Finance and Innovation Act
WIIN Water Infrastructure Improvements for the Nation Act
WRDA Water Resources Development Act
Activated sludge process – A secondary biological wastewater treatment process where bacteria reproduce at a high rate with the introduction of excess air or oxygen and consume
dissolved nutrients in the wastewater.
Benthos – The community of organisms, such as sea stars, worms, and shrimp, which live on,
in, or near the seabed, also known as the benthic zone.
Biochemical Oxygen Demand (BOD) – The amount of oxygen used when organic matter
undergoes decomposition by microorganisms. Testing for BOD is done to assess the amount of organic matter in water.
Biogas – A gas that is produced by the action of anaerobic bacteria on organic waste matter in a digester tank that can be used as a fuel.
Biosolids – Biosolids are nutrient rich organic and highly treated solid materials produced by the wastewater treatment process. This high-quality product can be recycled as a soil amendment on farmland or further processed as an earth-like product for commercial and home gardens to improve and maintain fertile soil and stimulate plant growth.
Glossary of Terms and Abbreviations
Capital Improvement Program (CIP) – Projects for repair, rehabilitation, and replacement of assets. Also includes treatment improvements, additional capacity, and projects for the support
facilities.
Coliform bacteria – A group of bacteria found in the intestines of humans and other animals, but also occasionally found elsewhere, used as indicators of sewage pollution. E. coli are the most common bacteria in wastewater.
Collections system – In wastewater, it is the system of typically underground pipes that receive and convey sanitary wastewater or storm water.
Certificate of Participation (COP) – A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues.
Contaminants of Potential Concern (CPC) – Pharmaceuticals, hormones, and other organic wastewater contaminants.
Dilution to Threshold (D/T) – The dilution at which the majority of people detect the odor becomes the D/T for that air sample.
Greenhouse Gases (GHG) – In the order of relative abundance water vapor, carbon dioxide, methane, nitrous oxide, and ozone gases that are considered the cause of global warming
(“greenhouse effect”).
Groundwater Replenishment System (GWRS) – A joint water reclamation project that
proactively responds to Southern California’s current and future water needs. This joint project between the Orange County Water District and the Orange County Sanitation District provides 70 million gallons per day of drinking quality water to replenish the local groundwater supply.
Levels Of Service (LOS) – Goals to support environmental and public expectations for
performance.
N-Nitrosodimethylamine (NDMA) – A N-nitrosamine suspected cancer-causing agent. It has
been found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide with extra ultra-violet treatment.
National Biosolids Partnership (NBP) – An alliance of the National Association of Clean Water Agencies and Water Environment Federation, with advisory support from the US Environmental Protection Agency. NBP is committed to developing and advancing environmentally sound and
sustainable biosolids management practices that go beyond regulatory compliance and promote public participation to enhance the credibility of local agency biosolids programs and improved communications that lead to public acceptance.
Plume – A visible or measurable concentration of discharge from a stationary source or fixed facility.
Glossary of Terms and Abbreviations
Publicly Owned Treatment Works (POTW) – A municipal wastewater treatment plant.
Santa Ana River Interceptor (SARI) Line – A regional brine line designed to convey 30 million gallons per day of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean for disposal, after treatment.
Sanitary sewer – Separate sewer systems specifically for the carrying of domestic and industrial
wastewater. Combined sewers carry both wastewater and urban runoff.
South Coast Air Quality Management District (SCAQMD) – Regional regulatory agency that
develops plans and regulations designed to achieve public health standards by reducing emissions from business and industry.
Secondary treatment – Biological wastewater treatment, particularly the activated sludge process, where bacteria and other microorganisms consume dissolved nutrients in wastewater.
Sludge – Untreated solid material created by the treatment of wastewater.
Total Suspended Solids (TSS) – The amount of solids floating and in suspension in wastewater.
Trickling filter – A biological secondary treatment process in which bacteria and other microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in
wastewater as it trickles over them.
Urban runoff – Water from city streets and domestic properties that carry pollutants into the storm drains, rivers, lakes, and oceans.
Wastewater – Any water that enters the sanitary sewer.
Watershed – A land area from which water drains to a particular water body. The Orange County
Sanitation District’s service area is in the Santa Ana River Watershed.