HomeMy WebLinkAbout00 2022-10-13 Agenda Packet - excluding Item 3ACITY OF PALM DESERT
PALM DESERT CITY COUNCIL (CC),
SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY (SA),
AND HOUSING AUTHORITY (HA) MEETING
(VIRTUAL MEETING)
REGULAR MEETING AGENDA
Thursday, October 13, 2022
3:00 p.m. Closed Session
4:00 p.m. Regular Session
Pursuant to Assembly Bill 361, this meeting may be conducted by teleconference, and there will be
no in-person access to the meeting location.
WATCH THE MEETING LIVE: Watch the City Council meeting live at the City’s website
www.cityofpalmdesert.org, under the “Council Agenda” link at the top of the homepage, or on the
City’s YouTube Channel.
OPTIONS FOR PARTICIPATING IN THIS MEETING: To participate by email, internet, or phone,
please see the detailed instructions on the last page of this agenda.
AGENDA Thursday, October 13, 2022
City Council, Successor Agency to the Palm Desert
Redevelopment Agency, and Housing Authority Meeting
Page 2 of 7
CLOSED SESSION: 3:00 P.M.
CALL TO ORDER
PUBLIC COMMENT FOR CLOSED SESSION ITEMS ONLY: This time has been set aside for
members of the public to address the City Council on items contained only on the Closed
Session Agenda within the three-minute time limit. Speakers may utilize one of the three options
listed on the last page of this agenda.
RECESS TO CLOSED SESSION
CLOSED SESSION AGENDA
A. Closed Session Meeting Minutes: September 29, 2022
B. Conference with Legal Counsel regarding Significant Exposure to Litigation pursuant
to Government Code Section 54956.9(d)(2):
Two (2) matters that, under the existing circumstances, the City Attorney believes create
significant exposure to litigation.
4:00 P.M. REGULAR MEETING
CALL TO ORDER
ROLL CALL
PLEDGE OF ALLEGIANCE: Councilmember Nestande
INSPIRATION/INVOCATION: Councilmember Quintanilla
AWARDS, PRESENTATIONS, AND APPOINTMENTS:
A. PALM SPRINGS INTERNATIONAL AIRPORT COMMISSION UPDATE
B. ROSEMARY “ROSIE” CASALS DAY PROCLAMATION
CITY MANAGER COMMENTS
MAYOR/COUNCILMEMBER REPORTS AND REQUESTS FOR ACTION
NONAGENDA PUBLIC COMMENTS: This time has been set aside for the public to address
the City Council on issues that are not on the agenda for up to three minutes. Speakers may
utilize one of the three options listed on the last page of the agenda. Because the Brown Act
does not allow the City Council to act on items not listed on the agenda, members may briefly
respond or refer the matter to staff for a report and recommendation at a future meeting.
AGENDA Thursday, October 13, 2022
City Council, Successor Agency to the Palm Desert
Redevelopment Agency, and Housing Authority Meeting
Page 3 of 7
1. CONSENT CALENDAR: All matters listed on the Consent Calendar are considered routine
and may be approved by one motion. The public may comment on any items on the Consent
Agenda within the three-minute time limit. Individual items may be removed by the City
Council for a separate discussion.
A. APPROVAL OF CITY COUNCIL, SUCCESSOR AGENCY, AND HOUSING
AUTHORITY MINUTES
RECOMMENDATION: Approve the Minutes of September 29, 2022.
B. APPROVAL OF FINDINGS RELATIVE TO AB361 – REMOTE TELECONFERENCING
RECOMMENDATION: Find that the State of California continues in a Governor-declared
state of emergency to combat the COVID epidemic, that state and local health officials
are recommending social distancing, and that the City may continue to employ remote
teleconferencing.
C. ADOPT ORDINANCE NO. 1386 AMENDING TITLE 2 (ADMINISTRATION AND
PERSONNEL) OF THE PALM DESERT MUNICIPAL CODE ADDING CHAPTER 2.22
ESTABLISHING THE ARCHITECTURAL REVIEW COMMISSION (2nd reading)
RECOMMENDATION: Waive further reading and adopt Ordinance No. 1386.
D. ADOPT ORDINANCE NO. 1387 AMENDING ORDINANCE NOS. 1374§1 AND 1258§1
AND REVISING CHAPTER 24.04.060 (INVASIVE PLANT SPECIES) OF THE PALM
DESERT MUNICIPAL CODE RELATING TO PROHIBITED LANDSCAPE MATERIALS
FOR DEVELOPMENT DESIGN AND INSTALLATION (2nd reading)
RECOMMENDATION: Waive further reading and adopt Ordinance No. 1387.
E. APPROVE AMENDMENT NO. 1 TO CONTRACT NO. C41690 WITH HR GREEN
PACIFIC, INC., EXTENDING THE TERM FOR AN ADDITIONAL YEAR IN AN ANNUAL
AMOUNT NOT TO EXCEED $590,000
RECOMMENDATION:
1. Approve Amendment No. 1 to Contract No. C41690 with HR Green extending the
contract for an additional year in an annual amount not to exceed $590,000.
2. Authorize the City Manager to execute all documents to effectuate the intent of the
agreement.
F. ADOPT A RESOLUTION APPROVING FINAL PARCEL MAP NO. 37848
RECOMMENDATION: Adopt a Resolution approving Final Parcel Map No. 37848.
AGENDA Thursday, October 13, 2022
City Council, Successor Agency to the Palm Desert
Redevelopment Agency, and Housing Authority Meeting
Page 4 of 7
G. APPOINTMENT OF CITY COUNCIL LIAISON TO THE CIVIC ENGAGEMENT
COMMITTEE
RECOMMENDATION: Ratify the appointment of Councilmember Kelly to serve as the
City Council liaison to the Civic Engagement Committee.
H. APPOINTMENT OF CITY COUNCIL MEMBER TO THE BOARD OF DIRECTORS FOR
PRIORITY ONE COACHELLA VALLEY
RECOMMENDATION: Ratify the appointment of Councilmember Kelly to serve on the
Board of Directors for Priority One Coachella Valley.
I. RECEIVE AND FILE AN INFORMATIONAL ITEM RELATED TO WIND FENCING
AROUND VACANT PARCELS
RECOMMENDATION: Receive and file an informational item related to wind fencing
around vacant parcels.
CONSENT ITEMS HELD OVER: Items removed from the Consent Calendar for separate
discussion are considered at this time.
2. ACTION CALENDAR: The public may comment on individual Action Items within the three-
minute time limit. Speakers may utilize one of the three options listed on the last page of the
agenda.
A. JOINT CONSIDERATION FOR APPROVAL OF ACTIONS RELATED TO THE
CONVEYANCE OF THE PARCELS IDENTIFIED AS APN 694120028 AND A
PORTION OF APN 694120029, AND APPROVING LOANS IN THE AGGREGATE
AMOUNT OF $6,755,000 FROM THE HOUSING AUTHORITY’S LOW AND
MODERATE INCOME HOUSING ASSET FUND FOR THE CONSTRUCTION OF 239
AFFORDABLE HOUSING UNITS AND 2 MANAGER’S UNITS PURSUANT TO A
DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT (Joint Item Housing
Authority Board)
RECOMMENDATION: Waive further reading and adopt jointly a City Resolution and
Housing Authority Resolution to:
1. Approve the conveyance by the City of Palm Desert of a 10-acre parcel identified as
APN 694-120-028 and a 0.49-acre parcel identified as a portion of
APN 694-120-029 (Property) in two parts and approving loans in the amount of
$6,000,000, and $755,000 from the Housing Authority’s Low and Moderate Income
Housing Asset Fund to Palm Communities pursuant to a Disposition, Development
and Loan Agreement (DDLA), substantially as to form and its exhibits, for the
purchase of the Property and construction of 239 affordable housing units and two
manager units in two phases.
2. Authorize the Director of Finance to appropriate $6,755,000 from Unobligated
Housing Fund balance to the appropriate budget line item.
AGENDA Thursday, October 13, 2022
City Council, Successor Agency to the Palm Desert
Redevelopment Agency, and Housing Authority Meeting
Page 5 of 7
3. Authorize City/Authority, Mayor/Chairman, staff, and legal counsel to execute and
record agreements and documents as described in the DDLA, or which are otherwise
deemed necessary or proper to effectuate the City Council and Authority resolutions,
including the conveyance of the Property, the Authority’s funding commitment, and
related actions for the project as set forth in the DDLA.
4. Authorize Palm Communities to submit an application, including the DDLA, to the
California Debt Allocation Committee for an allocation of four percent (4%) tax-exempt
bonds, Tax Credit Allocation Committee for an allocation of Federal tax credits and
for an allocation of State tax credits, and Riverside County Housing Authority for an
allocation of project-based vouchers.
3. PUBLIC HEARINGS: The public may comment on individual Public Hearing Items within the
three-minute time limit. The applicant or appellant will be provided up to five minutes to make
their presentation. Speakers may utilize one of the three options listed on the last page of
this agenda.
A. ADOPT A RESOLUTION UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY
ACT (CEQA) AND APPROVE A PRECISE PLAN, TENTATIVE PARCEL MAP, AND
ENVIRONMENTAL ASSESSMENT FOR THE DEVELOPMENT OF A 241UNIT
MULTIFAMILY (AFFORDABLE HOUSING) DEVELOPMENT, A HOUSING DENSITY
BONUS, AND RELATED IMPROVEMENTS ON A 10.49ACRE PARCEL LOCATED
AT THE NORTHWEST CORNER OF GERALD FORD DRIVE AND THE EXTENSION
OF TECHNOLOGY DRIVE
RECOMMENDATION:
1. Find no further environmental review is required for the project under CEQA pursuant
to Section 15183 (Projects Consistent with a Community Plan, General Plan, or
Zoning) of Title 14 of the California Code of Regulations (State CEQA Guidelines).
2. Approve Precise Plan 22-0003, Tentative Parcel Map 38366, and Environmental
Assessment 22-0003 for the development of a 241-unit multi-family (affordable
housing) development, a housing density bonus, and related improvements on a
10.49-acre site located at the northwest corner of Gerald Ford Drive and the extension
of Technology Drive, subject to findings and Conditions of Approval.
B. APPROVE FIVE POWER PURCHASE AGREEMENTS WITH FOREFRONT POWER
FOR THE CIVIC CENTER PHOTOVOLTAIC PROJECT (PROJECT NO. 77714)
RECOMMENDATION:
1. Adopt a Resolution finding that the projects will result in net cost savings to the City
over the life of each 20-year contract, and that the projects are statutorily exempt from
CEQA evaluation.
2. Authorize the City Manager to execute the Power Purchase Agreements for
Photovoltaic Systems at the Civic Center, Parkview Office Complex, the Aquatic
Center, Entrada Del Paseo (Artists Center), and the Desert Willow Academy.
3. Authorize the City Manager to negotiate non-monetary changes and clarifications to
the agreements, in consultation with the City Attorney, as may be required to carry out
the intent of the agreements.
AGENDA Thursday, October 13, 2022
City Council, Successor Agency to the Palm Desert
Redevelopment Agency, and Housing Authority Meeting
Page 6 of 7
4. INFORMATION ITEMS
None.
ADJOURNMENT
AGENDA Thursday, October 13, 2022
City Council, Successor Agency to the Palm Desert
Redevelopment Agency, and Housing Authority Meeting
Page 7 of 7
THREE OPTIONS FOR PARTICIPATING IN THE MEETING
OPTION 1: PARTICIPATE BY EMAIL
Send your comments by email to: CouncilMeetingComments@cityofpalmdesert.org.
E-mails received prior to noon on the day of the City Council meeting will be made part of the record and
distributed to the City Council. This method is encouraged because it will give Councilmembers the
opportunity to reflect upon your input. Emails will not be read aloud at the meeting.
OPTION 2: PARTICIPATE LIVE VIA ZOOM
1. Access via www.cityofpalmdesert.org/zoom and click “Launch Meeting,” or
2. Access www.zoom.us, click “Join Meeting” and enter Webinar ID 833 6744 9572.
OPTION 3: PARTICIPATE LIVE VIA TELEPHONE
1. Dial any of the following: (669) 900-9128 or (213) 338-8477 or (669) 219-2599.
2. Enter the Meeting ID: 833 6744 9572 followed by #.
3. Indicate that you are a participant by pressing # to continue.
4. You will hear audio of the meeting in progress. Remain on the line if the meeting has not started.
5. During the meeting, press *9 to add yourself to the queue and wait for the Mayor or City Clerk to
announce your name/phone number. Press *6 to unmute your line and limit your comments to three
minutes.
___________________________________________________________________________
PUBLIC NOTICES
Agenda Related Materials: Pursuant to Government Code §54957.5(b)(2) the designated office for
inspection of records in connection with this meeting is the Office of the City Clerk, Palm Desert Civic
Center, 73-510 Fred Waring Drive, Palm Desert. Staff reports for all agenda items considered in open
session, and documents provided to a majority of the legislative bodies are available for public inspection
at City Hall and on the City’s website at www.cityofpalmdesert.org by clicking “Council Agenda” at the
top of the page.
Americans with Disabilities Act: It is the intention of the City of Palm Desert to comply with the
Americans with Disabilities Act (ADA) in all respects. If, as an attendee or a participant at this meeting,
or in meetings on a regular basis, you will need special assistance beyond what is normally provided,
the city will attempt to accommodate you in every reasonable manner. Please contact the Office of the
City Clerk, (760) 323-8204, at least 48 hours prior to the meeting to inform us of your needs and to
determine if accommodation is feasible.
___________________________________________________________________________
AFFIDAVIT OF POSTING
I, Niamh M. Ortega, Deputy City Clerk of the City of Palm Desert, do hereby certify, under penalty of
perjury under the laws of the State of California, that the foregoing agenda for the Palm Desert City
Council, Successor Agency for the Palm Desert Redevelopment Agency, and Housing Authority, was
posted on the City Hall bulletin board and City website www.palmdesert.org no less than 72 hours prior
to the meeting.
/s/ Níamh M. Ortega
Deputy City Clerk
[This page has intentionally been left blank.]
Thursday, September 29, 2022
Minutes of the Regular Meeting of the Palm Desert City Council (CC),
Successor Agency to the Palm Desert Redevelopment Agency (SARDA),
and Housing Authority (HA)
Pursuant to Assembly Bill 361, this meeting was conducted by teleconference and there was no
in-person public access to the meeting location.
CALL TO ORDER:
A Regular Meeting of the Palm Desert City Council was called to order by Mayor Harnik on
Thursday, September 29, 2022, at 3:05 p.m.
ROLL CALL:
Present: Councilmembers Kathleen Kelly, Gina Nestande, Karina Quintanilla; Mayor Pro
Tem Sabby Jonathan; and Mayor Jan Harnik
Absent: None.
PLEDGE OF ALLEGIANCE:
Mayor Pro Tem Jonathan led the Pledge of Allegiance.
INSPIRATION/INVOCATION:
Mayor Harnik offered words of inspiration.
REPORT OF CLOSED SESSION:
The Regular Closed Session of the City Council of September 29, 2022, was called to order by
Mayor Harnik at 3:05 p.m., with all members present.
The meeting convened in Closed Session to discuss the following items as listed on the Regular
Closed Session Meeting Agenda:
A.CLOSED SESSION MEETING MINUTES: September 15, 2022
B.CONFERENCE WITH REAL PROPERTY NEGOTIATOR, Pursuant to Government Code
Section 54956.8:
1.Property Description: Desert Willow Lot Pad B, Desert Willow Drive, south of Desert
Willow Clubhouse (APN 620-400-008, 023)
Agency: City of Palm Desert
City Negotiator: Todd Hileman/Martin Alvarez/Eric Ceja
Negotiating Parties: Desert Wave Ventures, LLC
Under Negotiation: Price and Terms
Item IA - 1
CC, SARDA, & HA Meeting Minutes September 29, 2022
City of Palm Desert Page 2
ALL ACTIONS ARE DRAFT PENDING APPROVAL OF THE FINAL MINUTES
2.Property Description: 45653 Portola Avenue (APN 627-351-010)
Agency: City of Palm Desert
City Negotiator: Todd Hileman/Eric Ceja/Jessica Gonzales
Negotiating Parties: To Be Determined
Under Negotiation: Price and Terms
C.CONFERENCE WITH LEGAL COUNSEL – MATTERS CREATING SIGNIFICANT
EXPOSURE TO LITIGATION, Pursuant to Government Code Section 54956.9(d)(2):
Two (2) matters that, under the existing circumstances, the City Attorney believes creates
significant exposure to litigation.
City Attorney Hargreaves reported that relative to Closed Session Item B1 the City Council
authorized an extension of the Purchase & Sale Agreement with Desert Wave Ventures, LLC,
through December 31, 2022, by a vote of 4-1, with Councilmember Quintanilla voting no.
Relative to Closed Session B2, City Attorney Hargreaves noted that Mayor Harnik recused herself
from the discussion due to a conflict of interest regarding the proximity of the subject property to
her residence.
PRESENTATIONS:
A.FIRE PREVENTION AND MINI-MUSTER MONTH PROCLAMATION
Mike Lewis, a volunteer with the Mini-Muster, thanked the City Council for its support and
received praise for the program from the City Council.
B.REGIONAL YMCA CONCEPT PRESENTATION
Brian Rigby, GRO Director of Design, narrated a presentation and responded to Council
inquiries regarding a planned regional YMCA project for the North Sphere Regional Park.
Paula Simonds, CEO of Family YMCA of the Desert, addressed the City Council and
responded to additional inquiries.
Dorian Whitney, a Cathedral City resident, expressed concern about the lack of public
transit in the area of the proposed project.
CITY MANAGER'S COMMENTS:
A.CITY OF PALM DESERT’S 50TH ANNIVERSARY UPDATE – PUBLIC AFFAIRS
Public Affairs Manager Soule provided an update of various upcoming events that will
incorporate the 50th Anniversary including the planting of 50 trees at the Civic Center Park
in honor of Arbor Day and the annual Art & Essay Contest with the theme, “50 Years of
Palm Desert – Looking Back.” He also shared additional unrelated events taking place in
and around Palm Desert.
Item IA - 2
CC, SARDA, & HA Meeting Minutes September 29, 2022
City of Palm Desert Page 3
ALL ACTIONS ARE DRAFT PENDING APPROVAL OF THE FINAL MINUTES
MAYOR/COUNCILMEMBER REPORTS AND REQUESTS FOR ACTION:
Councilmember Quintanilla reported on her attendance at various meetings and provided
information on services provided to non-profit businesses by the Regional Access Project
Foundation.
Mayor Pro Tem Jonathan reported on the activities of the Coachella Valley Association of
Governments’ Homelessness Committee; requested staff agendize a review of options residents
currently have for choosing carbon-free electrical power, to include a presentation by Desert
Community Energy (DCE) providing updated information and historical data, and a discussion
and recommendations about how to proceed. The request was supported by Councilmember
Quintanilla.
Councilmember Kelly requested staff agendize a preliminary discussion regarding whether to
proceed with the agenda item related to carbon-free electrical power and DCE. The request was
supported by Mayor Harnik.
During the course of discussion, the City Council sought clarification from the City Attorney and
City Clerk related to the procedures for agendizing an item and related parliamentary procedures.
City Clerk Note: On September 30, 2022, Mayor Pro Tem Jonathan submitted in writing his
withdrawal of the agenda item related to carbon-free electrical power and DCE. On October 3,
2022, Councilmember Kelly withdrew her request for a preliminary discussion on the same topic.
Councilmember Kelly reported Sunline Transit Agency’s will expand its on-demand ride services
to the north sphere area; commended the Palm Desert Area Chamber of Commerce for its annual
Business Awards dinner, noting that Information Technology Manager Von Helf was selected as
Employee of the Year.
Mayor Harnik reported on the FIND Food Bank fundraiser; noted the in-person City Council
meetings will resume starting October 27, 2022; urged the public to log on to the Riverside County
Transportation Commission’s website and sign up to show support for the Coachella Valley Rail
Project.
NONAGENDA PUBLIC COMMENTS:
Dorian Whitney, a Cathedral City resident, spoke on traffic and pedestrian safety and requested
Highway 111 and other three-lane roads be reduced from three lanes to two lanes.
1. CONSENT CALENDAR:
MOTION BY COUNCILMEMBER NESTANDE, SECOND BY COUNCILMEMBER KELLY,
CARRIED 5-0, to approve the consent calendar with the exclusion of Items 1A and 1E, noting
Mayor Harnik’s abstention on Item 1C(2).
A. APPROVAL OF CITY COUNCIL, SUCCESSOR AGENCY, AND HOUSING
AUTHORITY MINUTES
This item was excluded from the Consent Calendar. Please refer to page 5 of these
minutes for a summary of that action.
Item IA - 3
CC, SARDA, & HA Meeting Minutes September 29, 2022
City of Palm Desert Page 4
ALL ACTIONS ARE DRAFT PENDING APPROVAL OF THE FINAL MINUTES
B. APPROVAL OF WARRANTS
MOTION BY COUNCILMEMBER NESTANDE, SECOND BY COUNCILMEMBER
KELLY, CARRIED 5-0, to approve the warrants issued for the period of September 6
through September 16, 2022.
C. APPLICATIONS FOR AN ALCOHOLIC BEVERAGE LICENSE FOR:
1. CCRC SOCIAL CLUB LLC DBA SEGOVIA OF PALM DESERT, 39905 VIA SCENA
MOTION BY COUNCILMEMBER NESTANDE, SECOND BY COUNCILMEMBER
KELLY, CARRIED 5-0, to receive and file the Alcoholic Beverage License application
for CCRC Social Club.
2. SOTTOVOCE GROUP LIMITED LIABILITY COMPANY, 73545 EL PASEO, STE 1320
MOTION BY COUNCILMEMBER NESTANDE, SECOND BY COUNCILMEMBER
KELLY, CARRIED 4-0-1 (HARNIK ABSTAINING), to receive and file the Alcoholic
Beverage License application for Sottovoce Group Limited Liability Company.
D. APPROVE AMENDMENT NO. 1 AND AMENDMENT NO. 2 TO CONTRACT NO.
C39600 FOR THE SOLID WASTE, RECYCLING, AND ORGANICS CONSULTING
SERVICES AGREEMENT BETWEEN THE CITY OF PALM DESERT AND HF&H
CONSULTANTS, LLC
MOTION BY COUNCILMEMBER NESTANDE, SECOND BY COUNCILMEMBER
KELLY, CARRIED 5-0, to:
1. Approve Amendment No. 1 to Contract No. C39600 with HF&H Consultants, LLC, to
increase compensation by $15,000 for the current three-year contract to a not to
exceed amount of $338,000.
2. Approve Amendment No. 2 to Contract No. C39600 with HF&H Consultants, LLC, to
extend the contract for a one-year term effective January 1, 2023, for an amount not
to exceed $85,000.
3. Authorize the City Manager to execute said amendments and any other documents
necessary to effectuate the contract.
E. APPROVE THE PURCHASE OF ANZA-BORREGO BY ARTIST CHRISTOPHER PUZIO
FROM THE 2021/2022 EL PASEO SCULPTURE EXHIBITION IN THE AMOUNT OF
$25,000 (CONTRACT NO. C44160)
This item was excluded from the Consent Calendar. Please refer to page 5 of these
minutes for a summary of that action.
F. APPROVE THE HOMELESSNESS TASKFORCE BYLAWS
MOTION BY COUNCILMEMBER NESTANDE, SECOND BY COUNCILMEMBER
KELLY, CARRIED 5-0, to approve the revised Homelessness Taskforce Bylaws.
Item IA - 4
CC, SARDA, & HA Meeting Minutes September 29, 2022
City of Palm Desert Page 5
ALL ACTIONS ARE DRAFT PENDING APPROVAL OF THE FINAL MINUTES
G. APPROVAL OF PURCHASE OF ADDITIONAL DATA STORAGE SERVER NODE
MOTION BY COUNCILMEMBER NESTANDE, SECOND BY COUNCILMEMBER
KELLY, CARRIED 5-0, to authorize City Manager to purchase a VxRail Node addition
from [RE]Design Group for $85,785.28.
H. AWARD CONTRACT NO. C44170 TO GREAT WESTERN INSTALLATIONS, INC., OF
LOGAN, UTAH FOR THE PARK PLAYGROUND IMPROVEMENTS PROJECT FOR AN
AMOUNT NOT TO EXCEED $90,000 PER FISCAL YEAR (PROJECT NO. 94123)
MOTION BY COUNCILMEMBER NESTANDE, SECOND BY COUNCILMEMBER
KELLY, CARRIED 5-0, to:
1. Award a 57-month contract to Great Western Installations, Inc., of Logan, Utah, for the
Park Playground Improvements Project for an amount not to exceed $90,000 per fiscal
year.
2. Authorize the City Manager or designee to review and approve written contract
amendments and change order requests for unanticipated conditions per Section
3.30.170 of the Palm Desert Municipal Code, and up to three (3) one-year contract
extensions based on a staff recommendation.
3. Authorize the City Manager to execute the agreement.
I. AWARD CONTRACT NO. C44180 TO COURTMASTER SPORTS, INC., OF NORTH
PALM SPRINGS, CALIFORNIA, FOR THE SPORT COURTS RESURFACING
PROJECT FOR AN AMOUNT NOT TO EXCEED $75,000 PER FISCAL YEAR
(PROJECT NO. 94623)
MOTION BY COUNCILMEMBER NESTANDE, SECOND BY COUNCILMEMBER
KELLY, CARRIED 5-0, to:
1. Award a 57-month contract for the Sport Courts Resurfacing Project to Courtmaster
Sports, Inc., of North Palm Springs, California, for an amount not to exceed $75,000
per fiscal year.
2. Authorize the City Manager or designee to review and approve written contract
amendments and change order requests for unanticipated conditions per Section
3.30.170 of the Palm Desert Municipal Code; and up to three, one-year contract
extensions based on staff’s recommendation.
3. Authorize the City Manager to execute the agreement.
EXCLUDED CONSENT CALENDAR:
A. APPROVAL OF CITY COUNCIL, SUCCESSOR AGENCY, AND HOUSING
AUTHORITY MINUTES
MOTION BY COUNCILMEMBER QUINTANILLA, SECOND BY COUNCILMEMBER
JONATHAN, CARRIED 5-0, to approve the minutes of August 25 and September 15,
2022, with an amendment to the September 15, 2022, discussion under Item 2B related
to the City Council seeking clarification from the City Attorney and City Clerk related to
procedures for requesting an agenda item.
Item IA - 5
CC, SARDA, & HA Meeting Minutes September 29, 2022
City of Palm Desert Page 6
ALL ACTIONS ARE DRAFT PENDING APPROVAL OF THE FINAL MINUTES
E. APPROVE THE PURCHASE OF ANZA-BORREGO BY ARTIST CHRISTOPHER PUZIO
FROM THE 2021/2022 EL PASEO SCULPTURE EXHIBITION IN THE AMOUNT OF
$25,000 (CONTRACT NO. C44160)
MOTION BY MAYOR PRO TEM JONATHAN, SECOND BY COUNCILMEMBER
QUINTANILLA, FAILED 2-3 (WITH COUNCILMEMBERS KELLY AND NESTANDE AND
MAYOR HARNIK VOTING NO), to:
1. Approve the purchase of Anza-Borrego by artist Christopher Puzio from the
2021/2022 El Paseo Sculpture Exhibition in the amount of $25,000, exclusive of taxes,
for inclusion in Palm Desert’s permanent public art collection, and store the artwork
until a suitable location is determined.
2. Issue a Request for Proposals for the roundabout at San Pablo Avenue and Magnesia
Falls Drive.
MOTION BY COUNCILMEMBER KELLY, SECOND BY COUNCILMEMBER
NESTANDE, CARRIED 3-2 (WITH MAYOR PRO TEM JONATHAN AND
COUNCILMEMBER QUINTANILLA VOTING NO), to:
1. Approve the purchase of Anza-Borrego by artist Christopher Puzio from the 2021/2022
El Paseo Sculpture Exhibition in the amount of $25,000, exclusive of taxes, for
inclusion in Palm Desert’s permanent public art collection.
2. Authorize the City Manager to execute subject contract.
2. ACTION CALENDAR:
A. INTRODUCE ORDINANCE NO. 1386 AMENDING TITLE 2 (ADMINISTRATION AND
PERSONNEL) OF THE PALM DESERT MUNICIPAL CODE ADDING CHAPTER 2.22
ESTABLISHING THE ARCHITECTURAL REVIEW COMMISSION
Planning Manager Lua narrated a PowerPoint presentation and responded to City Council
inquiries.
MOTION BY COUNCILMEMBER QUINTANILLA, SECOND BY COUNCILMEMBER
KELLY, CARRIED 5-0, to waive further reading and pass to second reading Ordinance
No. 1386 amending Title 2 (Administration and Personnel) of the Palm Desert Municipal
Code adding Chapter 2.22 establishing the Architectural Review Commission.
B. ORDINANCE NO. 1387 AMENDING ORDINANCE NOS. 1374 § 1 AND 1258 § 1,
REVISING CHAPTER 24.04.060 (INVASIVE PLANT SPECIES) OF THE PALM DESERT
MUNICIPAL CODE RELATING TO PROHIBITED LANDSCAPE MATERIALS FOR
DEVELOPMENT DESIGN AND INSTALLATION
Community Services Manager Chavez presented the staff report and responded to City
Council inquiries.
MOTION BY COUNCILMEMBER KELLY, SECOND BY COUNCILMEMBER
NESTANDE, CARRIED 5-0, to waive further reading and pass to second reading
Ordinance No. 1387 revising Chapter 24.04.060 (Invasive Plant Species) of the Palm
Desert Municipal Code.
Item IA - 6
CC, SARDA, & HA Meeting Minutes September 29, 2022
City of Palm Desert Page 7
ALL ACTIONS ARE DRAFT PENDING APPROVAL OF THE FINAL MINUTES
C. AWARD CONTRACT NO. C4190 TO INTERWEST CONSULTING GROUP, INC., OF
PERRIS, CALIFORNIA, FOR DESIGN AND ENGINEERING SERVICES OF LUPINE
PLAZA IN THE AMOUNT OF $562,135 (PROJECT NO. 81022)
Economic Development Director Ceja and Public Works Deputy Director Bowman
narrated a PowerPoint presentation and responded to City Council inquiries.
Monica McIlroy, a Palm Desert resident, voiced her opposition to the Lupine Plaza project.
Cathy Green, Palm Desert business representative, voiced her opposition to the project
and suggested spending the funds elsewhere.
Paul Goodman, Palm Desert business representative, voiced his opposition to the project.
Samuel Heaton, CODA Gallery director, voiced his opposition to the closure of Lupine
Lane.
During the course of discussion, the City Council discussed whether staff should evaluate
design alternative for the street closure as noted in the staff report.
Following discussion, MOTION BY COUNCILMEMBER JONATHAN, SECOND BY
COUNCILMEMBER NESTANDE, CARRIED 3-2 (WITH COUNCILMEMBER KELLY AND
MAYOR HARNIK VOTING NO), to:
1. Award a Contract to Interwest Consulting Group, Inc., of Perris, California, for design
and engineering services of Lupine Plaza in the amount of $562,135 limiting the
contract to Design No. 1, with direction to explore value engineering alternatives and
the feasibility of a public restroom.
2. Authorize the City Manager or designee to review and approve written contract
amendment requests per Section 3.30.170 of the Palm Desert Municipal Code.
3. Authorize the City Manager or designee to execute the agreement and any documents
necessary to effectuate the actions taken herewith.
D. AWARD CONTRACT NO. C4200 TO HERMANN DESIGN GROUP OF PALM DESERT,
CALIFORNIA, FOR DESIGN SERVICES OF GREENS/TEE BOX RENOVATION AND
TURF REDUCTION AT DESERT WILLOW GOLF RESORT IN THE AMOUNT OF
$305,100 (PROJECT NO. 85421)
Project Manager Nickerson presented the staff report and responded to City Council
inquiries.
MOTION BY COUNCILMEMBER KELLY, SECOND BY COUNCILMEMBER
NESTANDE, CARRIED 5-0, to:
1. Award a Contract to Hermann Design Group of Palm Desert, California, for design
services of Greens/Tee Box Renovations and Turf Reduction at Desert Willow Golf
Resort in the amount of $305,100.
2. Authorize the City Manager or designee to review and approve written contract
amendment requests per Section 3.30.170 of the Palm Desert Municipal Code.
3. Authorize the City Manager or designee to execute the agreement and any documents
necessary to effectuate the actions taken herewith.
Item IA - 7
CC, SARDA, & HA Meeting Minutes September 29, 2022
City of Palm Desert Page 8
ALL ACTIONS ARE DRAFT PENDING APPROVAL OF THE FINAL MINUTES
3. PUBLIC HEARINGS:
A. RESOLUTION NO. 202280: APPROVE AN AMENDMENT TO GENERAL PLAN
AMENDMENT 210002 (GPA 210002) FOR READOPTION OF THE CITY’S 6TH CYCLE
HOUSING ELEMENT (20212029) IN ACCORDANCE WITH THE CALIFORNIA
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT (HCD)
GUIDELINES
Housing Manager Gonzales and Planning Manager Lua narrated a PowerPoint
presentation and responded to City Council inquiries.
Mayor Harnik opened and closed the public hearing, there being no one desiring to speak.
MOTION BY COUNCILMEMBER KELLY, SECOND BY COUNCILMEMBER
NESTANDE, CARRIED 5-0, to adopt Resolution No. 2022-80 approving General Plan
Amendment (GPA 21-0002), readopting the City’s 6th Cycle Housing Element of the
General Plan in accordance with the California Department of Housing and Community
Development (HCD) guidelines.
B. RESOLUTION NO. 202281: APPROVE A PROPOSED PLAN FOR BOND ISSUANCE
BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY FOR THE VITALIA
APARTMENT PROJECT LOCATED ON THE SOUTH SIDE OF GERALD FORD DRIVE,
EAST OF THE PALM DESERT SHERIFF STATION, IDENTIFIED AS THE
APPROXIMATE +/11.94 ACRE PORTION OF APN 694310006
Housing Manager Gonzales presented the staff report and responded to City Council
inquiries.
Mayor Harnik opened and closed the public hearing, there being no one desiring to speak.
MOTION BY MAYOR PRO TEM JONATHAN, SECOND BY COUNCILMEMBER KELLY,
CARRIED 5-0, to:
1. Conduct the public hearing under the requirements of Tax and Equity Fiscal
Responsibility Act (“TEFRA”) and the Internal Revenue Code of 1986, as amended
(the “Code”) in connection with the proposed issuance in one or more series of
revenue bonds by the California Municipal Finance Authority (the “CMFA”), a joint
exercise of powers authority and public entity of the State of California, in an amount
not to exceed $62,000,000 (the “Bonds”), to finance the acquisition, construction,
improvement and equipping of the 269-unit Vitalia Apartments, a multifamily rental
housing project located at the south side of Gerald Ford Drive, west of Portola Road
(a portion of APN 694-310-006), Palm Desert, California (the “Project”) and receive
public comments.
2. Adopt Resolution No. 2022-81 approving the issuance of the Bonds by CMFA for the
benefit of Palm Desert Pacific Associates, a California Limited Partnership (the
"Borrower") a partnership of which Pacific West Communities, Inc. (the "Developer")
or a related person to the Developer is the general partner, to provide for the financing
of the Project. Such adoption is solely for the purposes of satisfying the requirements
of TEFRA, the Code and California Government Code Sections 6500 et seq.
Item IA - 8
CC, SARDA, & HA Meeting Minutes September 29, 2022
City of Palm Desert Page 9
ALL ACTIONS ARE DRAFT PENDING APPROVAL OF THE FINAL MINUTES
C. RESOLUTION NO. 202282: APPROVE A PROPOSED PLAN FOR BOND ISSUANCE
BY THE CALIFORNIA STATEWIDE COMMUNITIES' DEVELOPMENT AUTHORITY
FOR THE GERALD FORD APARTMENT PROJECT LOCATED AT 75580 GERALD
FORD DRIVE, PALM DESERT
Housing Manager Gonzales presented the staff report and responded to City Council
inquiries.
Mayor Harnik opened and closed the public hearing, there being no one desiring to speak.
MOTION BY COUNCILMEMBER QUINTANILLA, SECOND BY COUNCILMEMBER
KELLY, CARRIED 5-0, to:
1. Conduct the public hearing under the requirements of Tax and Equity Fiscal
Responsibility Act (“TEFRA”) and the Internal Revenue Code of 1986, as amended
(the “Code”) in connection with the proposed issuance in one or more series of
revenue bonds by the California Statewide Communities Development Authority
(“CSCDA”), a joint exercise of powers authority and public entity of the State of
California, in an amount not to exceed Fifty-Five Million Dollars $55,000,000 (the
“Bonds”), to finance the acquisition, construction and development of the 150-unit
Gerald Ford Apartments, a multifamily rental housing project located at located at
75580 Gerald Ford Drive, Palm Desert, California (the “Project”) and receive public
comments.
2. Adopt Resolution No. 2022-82 approving the issuance of the Bonds by CSCDA for the
benefit of Gerald Ford Apartments, LP, a California Limited Partnership (the
"Borrower") a partnership of which Western National Group (the "Developer") or a
related person to the Developer is the general partner, to provide for the financing of
the Project. Such adoption is solely for the purposes of satisfying the requirements of
TEFRA, the Code and California Government Code Sections 6500 et seq.
INFORMATION ITEMS:
None.
ADJOURNMENT:
The City Council adjourned at 7:24 p.m.
Respectfully submitted,
Niamh M. Ortega
Deputy City Clerk/Assistant Secretary
ATTEST:
Anthony J. Mejia, MMC
City Clerk/Secretary
APPROVED BY CITY COUNCIL: __/__/2022
Item IA - 9
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Page 1 of 1
CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: October 13, 2022
PREPARED BY: Robert Hargreaves, City Attorney
REQUEST: MAKE FINDINGS TO SUPPORT THAT THE STATE OF CALIFORNIA
CONTINUES IN A GOVERNOR-DECLARED STATE OF EMERGENCY
AND THAT THE CITY MAY CONTINUE TO EMPLOY REMOTE
TELECONFERENCING
RECOMMENDATION:
Find that the State of California continues in a Governor-declared state of emergency to combat
the COVID epidemic, that state and local health officials are recommending social
distancing, and consequently that the City Council and its other Brown-Act bodies may continue to
employ remote teleconferencing under Government Code Section 54953(e).
BACKGROUND/ANALYSIS:
AB 361 (Government Code Section 54953(e)) provides that a local agency may employ remote
teleconferencing upon a finding by the governing board that certain circumstances exist, among
those that there is a Governor-declared emergency and state or local officials are recommending
social distancing. The City Council will need to make those findings each month in which it continues
to implement remote teleconferencing.
The alternative is to revert to the preexisting Brown Act standards for teleconferencing which require
that: (1) all teleconferencing locations be identified on the agenda; (2) agendas be posted at all
teleconferencing locations; (3) all teleconferencing locations be open to the public; and (4) a majority
of the City Council participate from locations within the City.
FINANCIAL IMPACT:
There is no direct fiscal impact associated with this item.
REVIEWED BY:
City Attorney: Robert W. Hargreaves, City Attorney
City Manager: Todd Hileman, City Manager
Item 1B-1
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CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: October 13, 2022
PREPARED BY: Niamh M. Ortega, Deputy City Clerk
REQUEST: SECOND READING AND ADOPTION OF ORDINANCE NO. 1386
AMENDING TITLE 2 (ADMINISTRATION AND PERSONNEL) OF THE
PALM DESERT MUNICIPAL CODE ADDING CHAPTER 2.22
ESTABLISHING THE ARCHITECTURAL REVIEW COMMISSION
RECOMMENDATION:
Waive the second reading of the ordinance text in its entirety and read by title only; and adopt
Ordinance No. 1386.
BACKGROUND/ANALYSIS:
On September 29, 2022, the City Council introduced Ordinance No. 1386 for first reading. This
report provides for the City Council to waive further reading and adopt the ordinance. The
ordinance shall be effective 30 days from adoption.
FINANCIAL IMPACT:
There is no direct financial impact associated with this action.
REVIEWED BY:
City Clerk: Anthony Mejia
City Manager: Todd Hileman
ATTACHMENTS:
1.Ordinance No. 1386
Item 1C-1
ORDINANCE NO. 1386
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT, CALIFORNIA, AMENDING TITLE 2 (ADMINISTRATION AND
PERSONNEL) OF THE PALM DESERT MUNICIPAL CODE, ADDING
CHAPTER 2.22 ESTABLISHING THE ARCHITECTURAL REVIEW
COMMISSION
WHEREAS, Title 2 (Administration and Personnel) of the Palm Desert Municipal
Code (PDMC) establishes provisions for the City of Palm Desert (“City”) Commissions;
and
WHEREAS, the City Council of the City of Palm Desert desires to enact this
Ordinance to make such updates, clarifications, and revisions to the PDMC; and
WHEREAS, the City Council of the City of Palm Desert finds that all the recitations
are true and correct and does constitute the findings and considerations of the Council in
this case.
THE CITY COUNCIL OF THE CITY OF PALM DESERT DOES HEREBY ORDAIN
AS FOLLOWS:
SECTION 1. Recitals. The City Council finds that the above recitals are true and
correct and, accordingly, are incorporated as a material part of this Ordinance.
SECTION 2. Amendment to PDMC. Addition of PDMC Chapter 2.22 Architectural
Review Commission (ARC) is hereby added to the PDMC as follows:
2.22 Architectural Review Commission (ARC)
2.22.010 Architectural Review Commission established.
The Architectural Review Commission (“ARC”) is hereby established for the
following purpose and shall have the following responsibilities:
A.Purpose. The ARC reviews the building architecture and landscape design
of commercial, office, industrial, and residential development, deviations, or otherwise
as stated in the municipal code and modifications to previously approved projects to
assure compatibility with the City's policies and objectives.
B.Responsibilities.
1.Review and make recommendations to the Planning Commission for
precise plans, development plans, conditional use permits, variances, and planned
community developments, and/or as otherwise indicated in Section 25.60.070;
2.Conduct final approval for design review and sign design review
Item 1C-2
Ordinance No. 1386 Page 2
pursuant to Chapter 25.68 and/or as otherwise indicated in Section 25.60.070;
3. Recognize the interdependence of land values and aesthetics and
provide a method by which the City may implement this interdependence to its
benefit;
4. Ensure the architectural design of buildings or structures and
landscaping of developed areas and open spaces are visually harmonious with
surrounding development and the natural environments;
5. Promote high-quality aesthetics and visual interest when considering
developments to attain the most desirable use of land and improvements; and
6. Encourage the development of private and public property in
harmony with the desired character of the City and in conformance with the
guidelines provided in Title 25 (Zoning) with due regard for the public and private
interests involved.
The provisions set forth in Chapter 2.34 shall apply to this commission, except as
otherwise required by state law. If there is any conflict or inconsistency between the
provisions of this chapter and those in Chapter 2.34, the provisions of this chapter will
control.
2.22.020 Membership
A. ARC shall consist of seven (7) regular members.
B. At all times, the Commission shall strive to maintain a membership
composition that includes the following professionals:
1. Architect, three (3) members.
2. Landscape Architect/Designer, one (1) member.
And may include three (3) members from the following:
3. Development Industry professional.
4. Member of the public who represents the community at large and is
knowledgeable in the design, landscape, or architectural field.
5. Nonresident with professional expertise as an Architect or
Landscape Architect/Designer.
C. Secretary.
The Director of Development Services or designee shall serve as the official
Item 1C-3
Ordinance No. 1386 Page 3
secretary to the ARC.
2.22.030 Meetings
A. Regular Meetings
The ARC may hold two (2) regular meetings per month at such time and place as
fixed by resolution.
B. Disqualification of members for interest in properties.
1. Any ARC member who is employed to execute a plan, building, or
structure of any kind requiring Commission approval or who will take part in the
competition for any such building or structure shall be disqualified from voting,
recuse oneself, and step down from proceedings on that item.
2. Projects associated with Commission members before the ARC shall
be filed under the same rules, procedures, and guidelines as all other projects as
set forth in Chapter 25 of the municipal code.
SECTION 3. California Environmental Quality Act (CEQA). The City Council
hereby finds and determines that this Ordinance is exempt from CEQA pursuant to State
CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that the
Ordinance would not have the potential or possibility of causing a significant effect on the
environment. Specifically, the proposed changes to the PDMC are primarily procedural
and administrative in nature. Moreover, the changes are technical in nature and do not
allow for a specific development. In reviewing the Ordinance, the City Council has
exercised its independent judgment and has reviewed and considered the Ordinance in
light of all testimony received, both oral and written. Therefore, based upon the entire
administrative record, the City Council hereby determines that no further environmental
review is required for the Ordinance.
SECTION 4. Severability. If any section, subsection, clause, or phrase of this
Ordinance or any part thereof is for any reason held to be invalid, unconstitutional, or
unenforceable by the decision of any court of competent jurisdiction, such decision shall
not affect the validity of the remaining portion of the Ordinance. The City Council declares
that it would have passed each section, subsection, paragraph, sentence, clause, or
phrase thereof, irrespective of the fact that any one or more section, subsection,
sentence, clause, or phrase would be declared invalid, unconstitutional, or unenforceable.
Item 1C-4
Ordinance No. 1386 Page 4
SECTION 5. Publication. The City Clerk of the City of Palm Desert, California, is
hereby directed to publish this Ordinance in The Desert Sun, a newspaper of general
circulation, published, and circulated in the City of Palm Desert, California, and shall be
in full force and effective thirty (30) days after its adoption.
ADOPTED ON OCTOBER 13, 2022.
JAN C. HARNIK
MAYOR
ATTEST:
ANTHONY J. MEJIA
CITY CLERK
I, Anthony J. Mejia, City Clerk of the City of Palm Desert, California, do hereby
certify that Ordinance No. 1386 is a full, true, and correct copy, and was introduced at a
regular meeting of the Palm Desert City Council on September 29, 2022, and adopted at
a regular meeting of the City Council held on October 13, 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of Palm Desert, California, on _________________.
ANTHONY J. MEJIA
CITY CLERK
Item 1C-5
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CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: October 13, 2022
PREPARED BY: Niamh M. Ortega, Deputy City Clerk
REQUEST: SECOND READING AND ADOPTION OF ORDINANCE NO. 1387
AMENDING ORDINANCE NOS. 1374 § 1 AND 1258 § 1, REVISING
CHAPTER 24.04.060 (INVASIVE PLANT SPECIES) OF THE PALM
DESERT MUNICIPAL CODE RELATING TO PROHIBITED LANDSCAPE
MATERIALS FOR DEVELOPMENT DESIGN AND INSTALLATION
RECOMMENDATION:
Waive the second reading of the ordinance text in its entirety and read by title only; and adopt
Ordinance No. 1387.
BACKGROUND/ANALYSIS:
On September 29, 2022, the City Council introduced Ordinance No. 1387 for first reading. This
report provides for the City Council to waive further reading and adopt the ordinance. The
ordinance shall be effective 30 days from adoption.
FINANCIAL IMPACT:
There is no direct financial impact associated with this action.
REVIEWED BY:
City Clerk: Anthony Mejia
City Manager: Todd Hileman
ATTACHMENTS:
1.Ordinance No. 1387
Item 1D-1
ORDINANCE NO. 1387
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT,
CALIFORNIA, AMENDING CHAPTER 24.04.060 (INVASIVE PLANT SPECIES)
AS RELATED TO PROHIBITED LANDSCAPE MATERIALS FOR
DEVELOPMENT DESIGN AND INSTALLATION
WHEREAS, in 2022 and 2013, the City Council approved Ordinance No. 1374 §1,
and Ord. 1258 §1, respectively, (Chapter 24.04.060 of the Municipal Code) which
prohibited invasive plants invasive noxious weeds from landscape design; and
WHEREAS, the Code references the California Invasive Plant Inventory and
USDA invasive noxious weeds database; and
WHEREAS, staff have determined that additional local plants are invasive,
noxious, or otherwise detrimental to the maintenance of landscaped areas of the City.
Amending the Ordinances would prohibit
THE CITY COUNCIL OF THE CITY OF PALM DESERT DOES HEREBY ORDAIN
AS FOLLOWS:
SECTION 1. Recitals. The City Council finds that the above recitals are true and
correct and, accordingly, are incorporated as a material part of this Ordinance.
SECTION 2. CEQA. The City Council finds that this Ordinance is not subject to the
California Environmental Quality Act (CEQA) pursuant to Section 15060(c)(2) (the activity
will not result in a direct or reasonably foreseeable indirect physical change in the
environment) because this ordinance is merely clarifying existing law and making minor
changes to the City’s existing Municipal Code and pursuant to 15060(c)(3) (the activity is
not a project as defined in Section 15378) of the CEQA Guidelines, California Code of
Regulations, Title 14, Chapter 3, because these clarifications and minor modifications to
the City’s Municipal Code have no potential for resulting in physical change to the
environment, directly or indirectly.
SECTION 3. Amendment to Municipal Code. Chapter 24.04.060 of the City of
Palm Desert, California, Municipal Code shall be amended and restated to read as
follows:
24.04.060 Invasive, noxious, and nuisance plant species.
A. Purpose and Intent. The purpose of this Section 24.04.060 is to; (1) preserve
the public health and safety, (2) protect public and private property from the damaging
spread of invasive, noxious and nuisance plants and; (3) to protect indigenous plants
and wildlife.
Item 1D-2
Ordinance No. 1387 Page 2
B. Definitions: As used in this Section, the following terms shall have the meanings
indicated:
Invasive Plant Species – An “invasive plant species” is any plant species that is:
(1) non-native to the ecosystem under consideration; and (2) whose introduction
may cause or causes economic or environmental harm or harm to human health.
For the purposes of this Chapter, Invasive Plant Species include any plant
species listed on the California Invasive Plant Inventory and/or the U.S.
Department of Agriculture Invasive and Noxious Plant Database, regardless of
rating (watch, limited, moderate or high).
Noxious Plant Species – A “noxious plant species” is any plant species that is
injurious to agricultural crops, natural habitats/ecosystems, and/or humans and
livestock. For the purposes of this Chapter, Noxious Plant Species include any
plant species designated by the weed control regulations in the federal Noxious
Weed Control and Eradication Act of 2004 and identified on a regional district
noxious plant species control list.
Nuisance Plant Species – A “nuisance plant species” is any plant species that is
either: (1) not designated as “noxious” or “invasive” in this Section 24.04.060, but
may cause or causes a threat to public health and safety or (2) is designated as
“noxious” or “invasive” but requires special attention to avoid potential threats to
public health and safety. Nuisance Plant Species include, but are not limited to,
the following species: Washingtonia robusta, Dalbergia sissoo and Euphorbia
tirucalli.
C. Prohibitions. All plant species categorized as “invasive”, “noxious”, and
“nuisance” are hereby prohibited within the City’s jurisdiction. This prohibition
includes, but is not limited to, the following:
(1) Plant species categorized as “invasive”, “noxious”, or “nuisance”
are prohibited from use in landscape design plans as outlined in Section
24.04.050 of Title 24 of the Palm Desert Municipal Code.
(2) Plant species categorized as “invasive”, “noxious”, or “nuisance”
shall not be installed on City property, including parks, parkway areas, and rights
of way.
(3) Plant species categorized as “invasive”, “noxious”, or “nuisance”
shall not be installed on private property.
D. Violations and Penalties. Any new development that plants or replants a species
categorized as “invasive”, “noxious”, or “nuisance” within the City’s jurisdiction
shall be in violation of this Section 24.04.060 and shall be subject to the
enforcement and penalties set forth in Section 24.04.140 of Title 24 of the Palm
Desert Municipal Code.
Item 1D-3
Ordinance No. 1387 Page 3
SECTION 4. Severability. If any section, subsection, clause or phrase of this
Ordinance or any part thereof is for any reason held to be invalid, unconstitutional, or
unenforceable by the decision of any court of competent jurisdiction, such decision shall
not affect the validity of the remaining portion of the Ordinance. The City Council declares
that it would have passed each section, subsection, paragraph, sentence, clause, or
phrase thereof, irrespective of the fact that any one or more section, subsection,
sentence, clause or phrase would be declared invalid, unconstitutional or unenforceable.
SECTION 5. Publication. The City Clerk of the City of Palm Desert, California, is
hereby directed to publish this Ordinance in the Desert Sun, a newspaper of general
circulation, published and circulated in the City of Palm Desert, California, and shall be in
full force and effective thirty (30) days after its adoption.
ADOPTED ON October 13, 2022.
________________________________
JAN C. HARNIK
MAYOR
ATTEST:
_________________________________
ANTHONY J. MEJIA
CITY CLERK
Item 1D-4
Ordinance No. 1387 Page 4
I, Anthony J. Mejia, City Clerk of the City of Palm Desert, California, do hereby
certify that Ordinance No. 1387 is a full, true, and correct copy, and was introduced at a
regular meeting of the Palm Desert City Council on September 29, 2022, and adopted at
a regular meeting of the City Council held on October 13, 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of
the City of Palm Desert, California, on _____________ ____.
ANTHONY J. MEJIA
CITY CLERK
Item 1D-5
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CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: October 13, 2022
PREPARED BY: Eric Ceja, Director of Economic Development
REQUEST: APPROVE AMENDMENT NO. 1 TO CONTRACT NO. C41690 WITH HR
GREEN PACIFIC, INC., EXTENDING THE TERM FOR AN ADDITIONAL
YEAR IN AN ANNUAL AMOUNT NOT TO EXCEED $590,000
RECOMMENDATION:
1. Approve Amendment No. 01 to Contract No. C41690 with HR Green extending the contract for
an additional year in an annual amount not to exceed $590,000.
2.Authorize the City Manager to execute all documents to effectuate the intent of the agreement.
BACKGROUND/ANALYSIS:
On June 24, 2021, the City of Palm Desert approved a Professional Services Agreement (Contract
No. C41690) with HR Green Pacific, Inc., for on-call support services with the City’s Development
Services and Public Works Departments. The contract was approved for an initial term of one-year,
with up to two (2) additional one-year extensions. City staff is seeking formal approval of Amendment
No. 1 of the contract from the City Council.
FINANCIAL IMPACT:
The not to exceed amount for services is $590,000. Funds for this purpose have been included in
the 2022/23 Financial Plan in Account No.(s): 110-4420-430900 and 110-4470-430900.
REVIEWED BY:
Department Director: Eric Ceja
Finance Director: Veronica Chavez
Assistant City Manager: Chris Escobedo
City Manager: Todd Hileman
Attachment:
1. Original Contract
2.Contract Amendment No. 1
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,-------. '.
HRGreen8
PACIFIC
TRANSPORTATION +
WATER +
GOVERNMENTAL SERVICES
LAND DEVELOPMENT +
ENVIRONMENTAL +
CONSTRUCTION
t>HRGREEN.COM
Item 1E-97
CITY OF PALM DESERT Page | 1
On-Call Support Services for Development Services and Public Works, Project No. 800-22
Fee Proposal
BUILDING PLAN CHECK FEES:
Based upon our review of your RFP, fee schedules, and other available data, we propose a sliding fee
structure to provide off-site Building Plan Check whole building review.
BUILDING PLAN REVIEW FEE SCHEDULE
City
Monthly Fees Collected
HR Green Compensation
Based on % of Fees
Collected
< $25,000 70%
>$25,001 - $200,000 65%
>$200,001 60%
Partial Plan Check** 40%
Our compensation will not exceed 70 % of the fees collected by the City for whole reviews.
**This shall assume that plans require no more than 50% of review.
NOTES / ASSUMPTIONS:
▪ Plan check services will include up to a third review for approval of the plans. Additional reviews
beyond three will be completed based on using the applicable on-site hourly rates as final
approved by the City.
▪ Compensation from the percentage of fees collected models shown above will include all direct
HR Green employee costs, benefits, corporate overhead and directly related expenses.
▪ Expedited plan check services can be offered @ 150% plan review fees subject to City approval.
▪ HR Green provides a detailed monthly billing for all services provided. We will work with the City to
assure that the invoices are provided in a format acceptable to the City.
▪ Our fees/rates shall remain valid for at least one (1) year from the effective date of the contract
and may be adjusted annually thereafter based by no more than the CPI for Riverside County, or
as negotiated and agreed to by the City.
Item 1E-98
CITY OF PALM DESERT Page | 2
On-Call Support Services for Development Services and Public Works, Project No. 800-22
CIVIL ENGINEERING PLAN REVIEW AND SURVEYING SERVICES:
Percentage of City Fee Collected: HR Green Pacific, Inc. understands that all fees are on a project by
project basis. All miscellaneous and reimbursable fees are included in the fees and there will be no
additional fees. This table shall be adjusted to reflect the current City Fee.
Description of Fee City Fee HRG Percentage of City Fee
Subdivision Improvement Projects (Tract/Parcel Maps)
Final Map $1,253 + $125/Lot 70% ($877.10 + $95.50/Lot)
Precise Grading Plan $1,628 (Up to 8 Lots)
$78/Lot over 8
70% ($1,139.60 Up to 8 Lots)
70% ($54.60/Lot over 8)
Hydrology Report $352/Acre 70% ($246.40/Acre)
SWPPP/NPDES $176 70% ($123.20)
PM10 $78 70% ($54.60)
Half Street Improvement Plan $891/1000 LF 70% ($623.70/1000 LF)
Full Street Improvement Plan $1,550/1000 LF 70% ($1,085.00/1000 LF)
Storm Drain Plan $1,550/1000 LF 70% ($1,085.00/1000 LF)
Signing & Striping Plan $1,110 70% ($777.00)
Traffic Signal Plan $1,480 70% ($1,036.00)
3 or Less Checks (Initial & 2 Corrections)* $388/Per Check 70% ($271.60/Per Check)
Revision $155/hour Hourly (See Rate Table Below)
Commercial/Industrial/Multi-Family Projects (PP, CUP, HDP, DP, Misc., etc.)
Mass/Rough/Precise Grading Plan $853 (First 3 Acres)
$310 (Each Acre Over 3)
70% ($597.10 First 3 Acres)
70% ($217.00 Each Acres Over 3)
Hydrology Report $352/Acre 70% ($246.40/Acre)
SWPPP/NPDES $176 70% ($132.00)
PM10 $78 70% ($54.60)
Half Street Improvement Plan $891/1000 LF 70% ($623.70/1000 LF)
Item 1E-99
CITY OF PALM DESERT Page | 3
On-Call Support Services for Development Services and Public Works, Project No. 800-22
Full Street Improvement Plan $1,550/1000 LF 70% ($1,085.00/1000 LF)
Storm Drain Plan $1,550/1000 LF 70% ($1,085.00/1000 LF)
Signing & Striping Plan $1,110 70% ($777.00)
Traffic Signal Plan $1,480 70% ($1,036.00)
3 or Less Checks (Initial & 2 Corrections)* $388/Per Check 70% ($271.60/Per Check)
Revision $155/hour Hourly (See Rate Table Below)
Single Family Grading
Plan Check $698 70% ($488.60)
3 or Less Checks (Initial & 2 Corrections)* $388/Per Check 70% ($271.60/Per Check)
Record Document Review
Easement Hourly (See Rate Table Below)
Certificate of Compliance Hourly (See Rate Table Below)
Certificate of Correction Hourly (See Rate Table Below)
General Vacation Hourly (See Rate Table Below)
Summary Vacation Hourly (See Rate Table Below)
Lot Line Adjustment Hourly (See Rate Table Below)
Misc./Special Technical Reports Hourly (See Rate Table Below)
****If desired, HR Green can provide Expedited Reviews at 1.15 the standard fee
Note: *Any plan checks greater than 3 are performed on an hourly basis per the agreed to hourly rate
schedule.
Additional Services and Hourly Rates
▪ Survey Research and Field Survey Services: The HR Green team will provide services by or
under the direction of our licensed land surveyors at the hourly rates provided below.
▪ City Surveyor Services: Our HR Green licensed land surveyor can sign and stamp maps and
other survey documents that were not reviewed by the HR Green team at the following Lump
Sum Rates:
Parcel/Tract Maps: $1,000/map
Other Survey Documents: $500/document
Item 1E-100
CITY OF PALM DESERT Page | 4
On-Call Support Services for Development Services and Public Works, Project No. 800-22
ALL OTHER HOURLY, AS-NEEDED SERVICES OR
ADDITIONAL WORK
HR Green Pacific, Inc. 2021 Fee Schedule
Personnel Classification Hourly Billing Rate Prevailing Wage Rate
Principal-in-Charge/Program Manager $220-300
Project Manager / Senior Manager $185-220
Services Manager $180-200
Civil Plan Check Manager $180-225
Senior Professional/Project Engineer $170-220
Traffic Engineer $180-220
Professional Engineer $155-190
Associate Engineer $140-175
Assistant Engineer $120-155
Environmental Associate (NPDES) $130-175
Senior Civil Plan Checker $170-200
Civil Plan Checker $145-185
Map Checker $150-200
Public Works Technician $100-130
Transportation Manager $160-200
Transportation Planner $130-180
Senior Design Engineer $165-220
CAD Designer/ Reviewer / Inspector $140-180
Code Enforcement Officer $100-135
Building and Safety Official $175-210
Senior Building Plan Check Engineer $125-185
Building Plan Check Engineer $130-155
Senior Building Plan Checker $125-175
Building Plan Checker $ 95-135
Senior Building Inspector $115-150
Building Inspector (Combination) $100-140
Management Analyst $125-155
Permit Technician $ 85-115
Construction Manager $155-210
Construction/Public Works Inspector $ 95-155 $135-170
Administrative $ 85-125
Item 1E-101
CITY OF PALM DESERT Page | 5
On-Call Support Services for Development Services and Public Works, Project No. 800-22
Notes:
1. Other classifications are available based upon the needs of the agency.
2. All general engineering tasks will be negotiated on a case by case basis using the hourly rates
provided for personnel assigned to the contract.
Professional Reimbursement / Hourly and Overtime Rates: The hourly billing rates include the cost of
salaries of the HR Green employees, plus sick leave, vacation, holiday and other fringe benefits. The
percentage added to salary costs includes indirect overhead costs and fee (profit). All employees classified
as “non-exempt” by the U.S. Department of Labor will be compensated at 1.5 times salary, as per state and
Federal wage and hour for overtime hours. Billing rates will be calculated accordingly for overtime hours.
Prevailing Wage: Please note that for prevailing wage projects the total project cost can be higher than
HR Green would otherwise charge. For prevailing wage projects, the billing rates for straight time will be
as shown above. Overtime, weekend, holiday, and other special pay rates defined by the State of
California Department of Industrial Relations Group II “Construction Inspector and Field Soils and
Materials Tester” will be multiples of the straight hourly rates shown. Overtime and Saturday work will be
billed at 1.5 times that shown above. Sunday and State Holidays will be billed at 2.0 times that shown
above. The rates provided are based on the prevailing wage determination at the time of the proposal. In
years marked with a double asterisk (**) by the Department of Industrial Relations , the rates will be
adjusted on the effective dates established by the State and pursuant to the pre-determined escalation
rates.
Direct/Reimbursable Expenses and Subconsultants: Reimbursement for direct expenses, as listed
below, incurred in connection with the work, will be at cost plus 15% percent for items such as:
a. Maps, photographs, reproductions, printing, equipment rental and special supplies for those costs
not included in percentage of fees services.
b. Subconsultants and other outside services, if needed.
c. Specific telecommunications and delivery charges.
d. Special fees, insurance, permits, and licenses applicable to the work.
e. Outside computer processing, computation, and proprietary programs purchased for the work.
f. Mileage and vehicle costs directly related to agency services, as negotiated with the City of Palm
Desert.
g. Travel expenses (e.g., hotel, meals, transportation, etc.).
Our fees/rates shall remain valid for at least one (1) year from the effective date of the contract and may
be adjusted annually thereafter based by no more than the CPI for Riverside County, or as negotiated
and agreed to with the City.
Item 1E-102
CITY OF PALM DESERT Page | 6
On-Call Support Services for Development Services and Public Works, Project No. 800-22
SUBCONSULTANTS
Holistic System Integration Solutions
Item 1E-103
CITY OF PALM DESERT Page | 7
On-Call Support Services for Development Services and Public Works, Project No. 800-22
Petra Geosciences, Inc.
Professional Services (Engineers, Geologists, Environmental Scientists)
Assistant $ 125.00/hr.
Staff $ 135.00/hr.
Senior Staff $ 160.00/hr.
Project $ 172.00/hr.
Senior Project $ 192.00/hr.
Associate $ 208.00/hr.
Senior Associate $ 215.00/hr.
Principal $ 230.00/hr.
President/Senior Principal (Review and Consultation) $ 255.00/hr.
Fault Hazard Specialist $ 220.00/hr.
Senior Fault Hazard Specialist $ 245.00/hr.
In-house Legal Advisor $ 230.00/hr.
Forensic Services (Engineers, Geologists, Environmental Scientists)
Senior Project/ Project (Review, Analysis, Consultation) $ 300.00/hr.
Senior Project/ Project (Depositions, Hearings, Mediation and Trials; in 4-Hour Increments) $ 350.00/hr.
Senior Associate/Associate (Review, Analysis, Consultation) $ 350.00/hr.
Senior Associate/Associate (Depositions, Hearings, Mediation and Trials; in 4-Hour Increments) $ 400.00/hr.
Senior Principal/Principal (Review, Analysis, Consultation) $ 425.00/hr.
Senior Principal/Principal (Depositions, Hearings, Mediation and Trials; in 4-Hour Increments) $ 475.00/hr.
Technical Services
Engineering Technician $ 94.00/hr.
Associate Engineering Technician $ 98.00/hr.
Senior Engineering Technician $ 104.00/hr.
Supervising Engineering Technician $ 135.00/hr.
Field Technician (Prevailing Wage Projects) $ 130.00/hr.
Laboratory Technician $ 110.00/hr.
Senior Laboratory Technician $ 120.00/hr.
Laboratory Manager $ 140.00/hr.
Draftsperson $ 120.00/hr.
Support Services
Outside Consultants (Corresponding to in-house levels) In-House Rate
Drilling/Backhoe/Dozer/CPT/Equipment Rental Cost + 20%
Client Requested Accounting $ 85.00/hr.
Word Processing, Technical Editing, Project Administration $ 75.00/hr.
Field Services Communications Charges 1% of Invoice
Laboratory Tests See attached rates
Company Owned Equipment Usage See attached rates
Copy Rate $ 0.35/sheet
Postage and Shipping Cost + 20%
PDF File Transmittal $ 25.00/file
CD/Flash Drive File Transmittal $ 30.00/file
NOTE: Travel time to field job sites is charged on a portal to portal basis at the appropriate hourly rate. Overtime for non-
registered professionals and technicians is $50.00 over the hourly rate. A minimum of two hours will be charged for
all personnel for each field visit.
Item 1E-104
CITY OF PALM DESERT Page | 8
On-Call Support Services for Development Services and Public Works, Project No. 800-22
Soil Testing
Moisture Content Determination (ASTM 2216) $ 13.00
Moisture Content/Density – Rings (ASTM D2937) $ 17.00
Organic Content (ASTM D2974) $ 80.00
Atterberg Limits (ASTM D4318) $ 175.00
Atterberg Limits - Non-Plastic $ 45.00
Shrinkage Limit (ASTM D4943) $ 75.00
Specific Gravity – Coarse Aggregates (ASTM C127) $ 95.00
Specific Gravity – Fine Aggregates (C128) $ 100.00
Specific Gravity – Soils (ASTM D854) $ 105.00
Sand Equivalent (ASTM D2419) $ 105.00
Sieve Analysis - Wash Over #200 (ASTM D1140) $ 75.00
Sieve Analysis - Coarse or Fine, no Wash (ASTM C136) $ 155.00
Sieve Analysis - Coarse and Fine, with Wash (ASTM C136) $ 165.00
Sieve Analysis - Aggregate Base (ASTM C136) $ 185.00
Hydrometer - with Fine Sieve (ASTM D422) $ 235.00
Hydrometer - with Coarse and Fine Sieves (ASTM D422) $ 260.00
Maximum Density/Optimum Moisture - 4" Mold (ASTM D1557) $ 245.00
Maximum Density/Optimum Moisture - 6" Mold (ASTM D1557) $ 270.00
Maximum Density/Optimum Moisture, with Rock Correction (ASTM D1557/D4718) $ 295.00
Maximum Density/Optimum Moisture - Single Check Point $ 105.00
Maximum Density/Optimum Moisture (CTM 216) $ 250.00
Maximum Density/Optimum Moisture – Soil Cement (ASTM D558) $ 298.00
pH (CTM 643) $ 44.00
Resistivity (CTM 643) $ 84.00
Soluble Sulfate Content (CTM 417) $ 70.00
Soluble Chloride Content (CTM 422) $ 70.00
Expansion Index (ASTM D4829) $ 135.00
Consolidation - 10 Points (ASTM D2435) $ 220.00
Consolidation - 10 Points + One Rebound/Recompression Loop (ASTM D2435) $ 250.00
Consolidations - Time Readings for One Load (ASTM D2435) $ 75.00
Swell/Collapse Potential - Single Load (ASTM D4546) $ 130.00
Swell/Collapse Potential - 8 Points (ASTM D4546) $ 225.00
Sample Remolding (One Ring) $ 25.00
Sample Remolding (Set of Three Rings) $ 65.00
Direct Shear (ASTM D3080) $ 285.00
Direct Shear - Reshear (ASTM D3080) $ 395.00
Unconfined Compression of Soils/ Rock (ASTM D2166 / D7012) $ 150.00
Unconfined Compression of Soil Cement/Lime, Chemical Grouts (ASTM D 1633/D5102/D4219) $ 65.00
Point Load Strength Index of Rock (ASTM D5731) $ 115.00
Permeability - Falling Head (ASTM D2434) $ 365.00
Concrete Cylinder Compression (ASTM C39) $ 25.00
Concrete Flexural Beams {6”x 6” x 18”} (ASTM C78) $ 85.00
Laboratory Technician $ 110.00/hr.
Senior Laboratory Technician $ 120.00/hr.
Laboratory Manager $ 140.00/hr.
Item 1E-105
CITY OF PALM DESERT Page | 9
On-Call Support Services for Development Services and Public Works, Project No. 800-22
Equipment
Nuclear Gauge $ 8.00/day
Sand Cone $ 25.00/day
Moisture Sampling Probe/Drive Tubes $ 8.00/day
Percolation/Infiltration Equipment $ 35.00/day
Digital Manometer $ 35.00day
Flame/Photo-Ionization Detector (FID/PID) $ 35.00/day
Inclinometer/Vibration Monitoring Device $ 50.00/day
Purging Pump $ 25.00/day
Augering/Sampling Equipment $ 40.00/day
Concrete Sampling Testing Equipment $15.00/day
Item 1E-106
CITY OF PALM DESERT Page | 10
On-Call Support Services for Development Services and Public Works, Project No. 800-22
Terra Nova Planning & Re search
Staff Member Hourly Rate
Principal Planner $ 195.00
Senior Planner $ 160.00
Associate Planner $ 140.00
Assistant Planner $ 115.00
Graphic Design Specialist $ 65.00
Administrative Assistant $ 45.00
Photocopies
(8.5” X 11” BW) $ 0.15 ea.
(8.5” X 11” Color) $ 0.30 ea.
(11” X 17” BW) $ 0.30 ea.
(11” X 17” Color) $ 0.60 ea.
Large Format Plots
BW $ 1.00/SF
Color $ 5.00/SF
Telephone Toll Charges Cost
FAX Transmittals Cost
Reproduction, Special photographic services,
document printing, aerial photogrammetry, postage, etc. Cost
Item 1E-107
CITY OF PALM DESERT Page | 11
On-Call Support Services for Development Services and Public Works, Project No. 800-22
Dennis Janda, Inc.
Item 1E-108
CITY OF PALM DESERT Page | 12
On-Call Support Services for Development Services and Public Works, Project No. 800-22
Azarvand ’s Building Department Services
CASp Reviewer / Principal Consultant $95.00/hour
Reimbursables and Mileage will be billed at cost + 15%.
Item 1E-109
Contract No. C41690
AMENDMENT NO. 1 TO THE ON-CALL ENGINEERING SERVICES
BETWEEN THE CITY OF PALM DESERT AND HR GREEN PACIFIC INC.
1. Parties and Date.
This Amendment No.1 to the On-Call Engineering Services is made and entered into as of
this 14th day of June, 2022, by and between the City of Palm Desert (“City”) and HR Green Pacific,
Inc. a with its principal place of business at 260 Corona Pointe Court, #305, Corona, CA 92879
(“Consultant”). City and Consultant are sometimes individually referred to as “Party” and collectively
as “Parties.”
2. Recitals.
2.1 Agreement. The City and Consultant have entered into an agreement entitled “On-
Call Engineering Services” dated 24th day of June, 2021 (“Agreement” or “Contract”) for the purpose
of retaining the services of Consultant to provide on-going and on-call engineering services for the
City in an annual amount not to exceed $590,000.
2.2 Amendment. The City and Consultant desire to amend the Agreement to extend the
term of the agreement for an additional one (1) year in accordance with the provisions for the term of
the contract contained in Section 3.1.2, which allows for a maximum of two (2) one (1) year
extensions. This Amendment No. 1 of the contract is to execute the first one-year extension to the
contract.
2.3 Amendment Authority. This Amendment No. 1 is authorized pursuant to Section 3.1.2
“Term” of the Agreement.
3. Terms.
3.1 Section 3.1.2 “Term” of the Agreement is hereby amended in its entirety to read as follows:
The term of this Agreement shall be from July 1, 2021 through June 30, 2023 unless earlier terminated
as provided herein. The City shall have the unilateral option, at its sole discretion, to renew this
Agreement automatically for no more than one (1) additional one-year term. Consultant shall
complete the Services within the term of this Agreement, and shall meet any other established
schedules and deadlines.
3.2 Continuing Effect of Agreement. Except as amended by this Amendment No.1, all
other provisions of the Agreement remain in full force and effect and shall govern the actions of the
parties under this Amendment No. 1. From and after the date of this Amendment No. 1, whenever
the term “Agreement” or “Contract” appears in the Agreement, it shall mean the Agreement as
amended by this Amendment No. 1.
3.3 Adequate Consideration. The Parties hereto irrevocably stipulate and agree that they
have each received adequate and independent consideration for the performance of the obligations
they have undertaken pursuant to this Amendment No. 1.
3.4 Severability. If any portion of this Amendment No. 1 is declared invalid, illegal, or
otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue
Item 1E-110
Contract No. C41690
Page 2 of 3
Revised 11-2-20
BBK 72500.00001\32445060.1
in full force and effect.
3.5 Counterparts. This Amendment No. 1 may be executed in duplicate originals, each of
which is deemed to be an original, but when taken together shall constitute but one and the same
instrument.
[SIGNATURES ON FOLLOWING PAGE]
Item 1E-111
Contract No. C41690
Page 3 of 3
Revised 11-2-20
BBK 72500.00001\32445060.1
SIGNATURE PAGE FOR AMENDMENT NO. 1 TO ON-CALL ENGINEERING SERVICES
BETWEEN THE CITY OF PALM DESERT
AND HR GREEN PACIFIC INC.
IN WITNESS WHEREOF, the Parties have entered into this Amendment No. 1 to the On-
Call Engineering Services contract as of the day and year first above written.
CITY OF PALM DESERT
Approved By:
By:
L. Todd Hileman
City Manager
Attested By:
By:
Anthony J. Mejia
City Clerk
Approved As To Form:
By:
Best Best & Krieger LLP
City Attorney
HR Green Pacific, Incorporated
By:
Name: George A. Wentz
Its: Vice-President
QC
Insurance ID: _____________
__________ __________
Item 1E-112
Page 1 of 1
CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: October 13, 2022
PREPARED BY: Christina Canales, Land Development Technician
REQUEST: ADOPT A RESOLUTION APPROVING FINAL PARCEL MAP NO. 37848
RECOMMENDATION:
Adopt a Resolution approving Final Parcel Map No. 37848.
BACKGROUND/ANALYSIS:
On October 20, 2020, the Planning Commission approved Tentative Parcel Map 37848 by
Resolution No. 2781, a request by Lane Design Build (Hermosa Beach, California) to convert an
existing four-unit apartment building, located at 73305 and 73315 Royal Palm Drive, into four (4)
condominium units. Parcel Map 37848 eliminates the lot lines between two (2) existing lots and
creates one (1) condo parcel.
The Final Parcel Map No. 37848 conforms to all application requirements of the Subdivision Map
Act and the City’s ordinances. The Final Map has been deemed technically correct by the City
Engineer, and the Conditions of Approval in Resolution No. 2781 have been satisfied. This
project site has existing site improvements and does not require the applicant to construct
additional offsite infrastructure.
Strategic Plan:
This action has no impact on the Strategic Plan.
FINANCIAL IMPACT:
There is no financial impact associated with this action.
REVIEWED BY:
Department Director: Chris Escobedo
Finance Director: Veronica Chavez
Assistant City Manager: Chris Escobedo
City Manager: Todd Hileman
ATTACHMENTS:
1. Resolution
2.Conditions of Approval
3. Tentative Parcel Map 37848
4.Final Parcel Map 37848
Item 1F-1
RESOLUTION NO. 2022-____
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT, CALIFORNIA, APPROVING THE FINAL SUBDIVISION MAP
OF PARCEL MAP 37848.
WHEREAS, Parcel Map conforms to the requirements of the Subdivision Map Act
and City Ordinances; and
WHEREAS, the Final Subdivision Map of Parcel 37848, has met the Conditions of
Approval for this project.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm
Desert, California, as follows:
SECTION 1. That the foregoing Recitals are true and correct and are incorporated
herein by this reference.
SECTION 2. The Final Subdivision Map of Parcel 37848, City of Palm Desert,
California, is hereby approved as the official map of said tract, subject to the conditions
of the Tentative Map.
SECTION 3. The Director of Development Services is directed to process the
Tract Map for recording upon receipt of the required payment of all fees and receipt of all
necessary agreements.
ADOPTED ON OCTOBER 13, 2022.
JAN C. HARNIK
MAYOR
ATTEST:
ANTHONY J. MEJIA
CITY CLERK
Item 1F-2
Resolution No. 2022-____ Page 2
I, Anthony J. Mejia, City Clerk of the City of Palm Desert, hereby certify that
Resolution No. 2022-__ is a full, true, and correct copy, and was duly adopted at a regular
meeting of the City Council of the City of Palm Desert on October 13, 2022, by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of Palm Desert, California, on ________________.
ANTHONY J. MEJIA
CITY CLERK
Item 1F-3
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Item 1F-8
Item 1F-9
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Item 1F-13
Item 1F-14
Page 1 of 1
CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: October 13, 2022
PREPARED BY: Anthony J. Mejia, City Clerk
REQUEST: APPOINTMENT OF CITY COUNCIL LIAISON TO THE CIVIC
ENGAGEMENT COMMITTEE
RECOMMENDATION:
Ratify the appointment of Councilmember Kelly to serve as City Council liaison to the Civic
Engagement Committee.
BACKGROUND/ANALYSIS:
On January 27, 2022, the City Council adopted Resolution No. 2022-04 establishing a Civic
Engagement Committee. The Committee is comprised of no more than 12 members with two
Councilmembers serving as liaisons. The purpose of the Committee is to promote civic
education and engagement to help residents better understand local government, foster a
positive sense of community, and prepare the next generation of local government leaders.
Over the past several months, the City Council recruited, interviewed, and appointed seven
members to the newly formed Committee. Staff is now preparing to convene the Committee’s
inaugural meeting in late October or early November and requested that the Mayor nominate
the Committee’s liaisons. Mayor Harnik nominates Councilmember Kelly to serve as the liaison
to the Committee, and the City Council is requested to ratify the nomination. Furthermore, the
Mayor recommends that the City Council postpone the appointment of the second liaison until
after the election.
FINANCIAL IMPACT:
There is no fiscal impact associated with this action.
REVIEWED BY:
City Clerk: Anthony J. Mejia
Finance Director: Veronica Chavez
Assistant City Manager: Chris Escobedo
City Manager: Todd Hileman
Item 1G-1
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Page 1 of 1
CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: October 13, 2022
PREPARED BY: Níamh M. Ortega, Deputy City Clerk
REQUEST: APPOINTMENT OF COUNCILMEMBER KELLY TO THE PRIORITY ONE
COACHELLA VALLEY BOARD OF DIRECTORS
RECOMMENDATION:
Ratify the appointment of Councilmember Kelly to serve on the Priority One Coachella Valley
Board of Directors.
BACKGROUND/ANALYSIS:
On March 12, 2020, the City Council established a 501(c)(4) organization, later identified as
Priority One Coachella Valley (P1CV), for the implementation of City and regional future strategic
initiatives, including securing a four-year, stand-alone California State University campus in Palm
Desert. Section 3.2.1 of the bylaws for P1CV specify that three Directors shall be appointed to
the P1CV Board by the City of Palm Desert. The City Council appointed the City Manager and
two Councilmembers, Mayor Harnik and Mayor Pro Tem Jonathan.
With Mayor Pro Tem Jonathan’s recent resignation from the P1CV Board, Mayor Harnik has
nominated Councilmember Kelly to fill the position, and the City Council is requested to ratify the
nomination.
FINANCIAL IMPACT:
There is no fiscal impact associated with this action.
REVIEWED BY:
City Clerk: Anthony J. Mejia
Finance Director: Veronica Chavez
Assistant City Manager: Chris Escobedo
City Manager: Todd Hileman
Item 1H-1
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Page 1 of 2
CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: October 13, 2022
PREPARED BY: Ryan Gayler, Senior Project Manager
Andy Ramirez, Deputy Director of Public Works
REQUEST: RECEIVE AND FILE AN INFORMATIONAL ITEM RELATED TO WIND
FENCING AROUND VACANT PARCELS
RECOMMENDATION:
Receive and file an informational item related to wind fencing around vacant parcels.
BACKGROUND/ANALYSIS:
On August 25, 2022, the City Council awarded a contract to furnish and install six-foot high
screened wind fencing at seven locations establishing the North Sphere Wind Fence Project.
Some concern was voiced that the project could establish a precedent that could lead to
residents requesting additional fencing at other locations. As part of the motion, a Council
request was made to clarify the City’s policy regarding the City funding the installation of wind
fence around vacant parcels.
The City does not have an official policy addressing the installation of wind fencing around
undisturbed or re-naturalized lots. However, the following practices are currently being observed
by the City:
1.Any development or project with a grading element is required to install a six-foot chain
link fence with screening around the property. The developer or property owner is
responsible for ensuring adherence to the dust control plan.
2.Following guidance by the South Coast Air Quality Management District, the City’s code
enforcement division does not cite the owner of an undisturbed or re-naturalized lot for
blowing sand.
The City Attorney advised staff that the City does not have the authority to cite or charge an in-
lieu fee to the property owner of an undisturbed vacant parcel and compel the owner to construct
a fence to prevent or reduce sand blowing off the property.
Over the years, the City has installed wooden slat fencing as part of various capital improvement
projects at locations prone to wind blowing sand into the street. For instance, on the southwest
corner of Portola Avenue and Frank Sinatra Drive, wind fencing was installed in the right-of-way
along the west side of Portola Avenue to reduce the impact of sand blowing in the street from
the adjacent property. In a similar situation, the property owner gave permission for the City to
install two rows of wind fencing on the north side of Dinah Shore Drive, west of Miriam Way to
Key Largo Drive.
Item 1I-1
City of Palm Desert
Informational Item – North Sphere Wind and Sand Issues
Page 2 of 2
There are similarities between the North Sphere Wind Fence Project and these instances from
the past when the City funded the installation of wind fencing. The City identifies locations where
sand reduces the travel lanes creating unsafe conditions, or where sand blankets a street
multiple times per week causing hardship for the street maintenance crews. These locations are
candidates for fencing due to the financial and productivity burdens on staff. The difference
between the current project and past projects is that the fence has been upgraded from wooden
slats to a six-foot chain link fence with screening. Unless Council directs otherwise, staff will
continue to monitor where sand reduces the travel lanes creating unsafe conditions or where
sand blankets streets multiple times per week causing hardship. Additionally, the attached map
provides an outline of where new development in the north sphere is planned or under
construction. Once a development begins the grading operation, the developer will install wind
fencing in accordance with standard requirements and to comply with particulate matter 10
(PM10) dust control mitigation measures.
Strategic Plan:
The proposed solution will further the goals of the strategic plan by providing a safe, efficient,
and reliable transportation system for residents and visitors.
FINANCIAL IMPACT:
There is no financial impact associated with this action.
REVIEWED BY:
Department Director: Martin Alvarez
Finance Director: Veronica Chavez
Assistant City Manager: Chris Escobedo
City Manager: Todd Hileman
Attachment: North Sphere Development Map
Item 1I-2
FRANK SINATRA DR
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North Sphere Projects
• •
VICINITY MAP
Commercial Projects
Approved
Under Review
Residential Projects
Approved
Under Review
Under Construction
Item 1I-3
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CITY OF PALM DESERT AND PALM DESERT HOUSING AUTHORITY
STAFF REPORT
MEETING DATE: October 13, 2022
PREPARED BY: Jessica Gonzales, Housing Manager
REQUEST: JOINT CONSIDERATION FOR APPROVAL OF ACTIONS RELATED TO
THE CONVEYANCE OF THE PARCELS IDENTIFIED AS APN 694-120-
028 AND A PORTION OF 694-120-029 AND APPROVING LOANS IN THE
AGGREGATE AMOUNT OF $6,755,000 FROM THE AUTHORITY’S LOW
AND MODERATE INCOME HOUSING ASSET FUND FOR THE
CONSTRUCTION OF 241 UNITS PURSUANT TO A DISPOSITION,
DEVELOPMENT AND LOAN AGREEMENT
RECOMMENDATION:
Waive further reading and adopt jointly, City Resolution No. 2022-_____ and Authority
Resolution No. HA-_____:
1. Approving the conveyance by the City of Palm Desert (“City”) of a 10-acre parcel identified
as APN 694-120-028 and a 0.49-acre parcel identified as a portion of APN 694-120-029
(collectively, the “Property”) in two parts and approving loans in the amount of $6,000,000,
and $755,000 from the Authority’s Low and Moderate Income Housing Asset Fund (“Housing
Asset Fund”) to Palm Communities (“Developer”) pursuant to a Disposition, Development
and Loan Agreement, substantially in the form attached hereto (“DDLA”) and its exhibits, for
the purchase of the Property and construction of 241 units consisting of 239 affordable
housing units and two manager units in two phases (“Project”); and
2. Authorizing the Director of Finance to appropriate $6,755,000 from Unobligated Housing
Asset Fund balance to the appropriate budget line item; and
3. Authorizing City/Authority, Mayor/Chairman, City Manager/Executive Director, staff, and
legal counsel to execute and record agreements and documents as described in the DDLA,
or which are otherwise deemed necessary or proper to effectuate the City Council and
Authority resolutions, including the conveyance of the Property, the Authority’s funding
commitment and related actions for the Project as set forth in the DDLA; and
4. Authorizing Palm Communities to submit an application, including the DDLA, to the California
Debt Allocation Committee (“CDLAC”) for an allocation of four percent (4%) tax-exempt
bonds (“Tax-Exempt Bonds”), Tax Credit Allocation Committee (“TCAC”) for an allocation of
Federal tax credits (“Federal Tax Credits”) and TCAC for an allocation of State tax credits
(“State Tax Credits”), and Riverside County Housing Authority (“County”) for an allocation of
project-based vouchers (“Project Based Vouchers” or “PVBs”).
Item 2A-1
City of Palm Desert and Housing Authority
DDLA – Palm Communities
Page 2 of 5
BACKGROUND/ANALYSIS:
The City entered into a new Exclusive Negotiation Agreement (“ENA”) on July 15, 2022, with
Palm Communities for the purpose of negotiating the terms and conditions of an agreement for
the sale of the Property, which is located on the north side of Gerald Ford Drive between Cook
Street and Portola Road, to Palm Communities for the construction of a 100% affordable multi-
family apartment community project that will consist of 239 affordable units with 2 on-site
manager units in two phases. The ENA has a 90 day term and expires October 13, 2022.
As a result of extensive negotiations attached for the City Council and Authority Board
consideration is the proposed DDLA among the City, Authority and Palm Communities.
Adoption of the resolutions will approve the DDLA with Palm Communities, which provides for
the conveyance of the Property in two phases and loan commitments in the amounts of
$6,000,000 (for Phase I) and $755,000 (for Phase II) from the Authority’s Low and Moderate
Income Housing Asset Fund (the “Loans”), pursuant to the terms and conditions of the DDLA.
The DDLA requires the City to sell the Phase I and II sites to Palm Communities for a total of
$3,425,000. The DDLA also provides (i) for two Loans totaling $6,755,000 from the Authority to
Palm Communities for the Project, (ii) authorizes Palm Communities to submit applications to
CDLAC and TCAC, for an allocation of Tax-Exempt Bonds, the automatically awarded four
percent (4%) Federal Tax Credits and the competitively awarded State Tax Credits, and
applications to the County for sixty (60) Project Based Vouchers and a total of approximately
$9,900,000 in loans (“County Loans”), (iii) and authorizes the City/Authority’s staff and legal
counsel to proceed to execute and record any agreements and documents deemed necessary
for the conveyance of the Property and the financing and construction of the Project.
If the Tax-Exempt Bonds, Federal Tax Credits, State Tax Credits, County Loans and Project
Based Vouchers are awarded to Palm Communities, the Property owned by the City will be sold
in two Phases, subject to satisfaction of the conditions to closing for each Phase, which are
typical closing conditions for a DDLA. Conditions to the closing of the sale of the first Phase
include the recording of a parcel map creating the two parcels, one for each phase, and recording
of certain easements (which may occur at the close of escrow) for access over a portion of
adjacent property owned by the City (providing access to Phase I, and access to remove sand
adjacent to a future boundary wall between Phases I and II), and for access by Phase II to the
common facilities located on Phase I, for the benefit of any future owner of Phase II subject to a
reasonable maintenance cost reimbursement agreement). The attached City Council and
Authority resolutions approve the DDLA, including the exhibits attached thereto, substantially in
the form presented to the City Council and Authority Board at this meeting (“DDLA Documents”)
and authorize staff and officers of the City and Authority to finalize, execute and record the DDLA
Documents, as applicable, and any other agreements and documents necessary to implement
the DDLA Documents at the closing of each applicable escrow.
Project. The Project will be operated for a period of fifty-five (55) years following the date of
completion of construction and obtaining a certificate of occupancy for each phase of the Project
to provide rental housing affordable to persons and families of low and extremely low income in
Item 2A-2
City of Palm Desert and Housing Authority
DDLA – Palm Communities
Page 3 of 5
accordance with the affordability restrictions contained in the DDLA Documents and in
accordance with the four percent (4%) Tax-Exempt Bonds, Federal Tax Credits, State Tax
Credits County Loans and Project Based Vouchers being used to finance the Project. To the
extent necessary, the Authority will subordinate the deed of trust securing each Loan (as
described below) to the liens and encumbrances of the Project’s construction and permanent
lenders. However, the City and Authority will not subordinate their interests in the Density Bonus
Housing Agreements (described below) or the LMIHAF Housing Agreements (described below)
to such liens or encumbrances.
Project:
The project contractor will be an affiliate of the Developer. In lieu of requiring multiple bids from
third party contractors, City staff has confirm that the contract price with the affiliated contractor
is reasonable and the DDLA requires, as a condition to closing, that the Developer provide to
the Authority the primary construction lender’s cost analysis, or, alternatively, that the
Developer pay for a City obtained cost review.
Density Bonus Housing Agreements: In order to develop the 241-unit Project, the approved
entitlements include the use of the City’s Density Bonus Ordinance, which also allows for fewer
parking spaces to be included in the Project than required by the City’s Municipal Code. The
Density Bonus provision was able to be used by the Project because at least 20% of the units
will be restricted to Very-Low Income households. The Density Bonus Housing Agreements have
a term of fifty-five (55) years.
Authority Loan Terms. The Authority Loans shall be used to fund the acquisition of the Property
and the payment of fees and costs reasonably approved by the City related to the development
of the Project in two phases. The Phase I Loan shall be in the principal amount of $6,000,000
and Phase II Loan shall be in the principal amount of $755,000, and each Loan have a term of
fifty-five (55) years commencing as of the effective date of the Loan Agreement, bear simple
interest at three percent (3%) per annum and will be repaid from a proportional share of fifty
percent (50%) of the Project’s residual receipts and the loans will be due and payable at the end
of the loan term.
LMIHAF Housing Agreements: There will be a housing agreement for each phase of the Project
and the housing agreements, together, will restrict all units, except for two on-site manager’s
units in the Project for rental at affordable rents to individuals and families with incomes that do
not exceed the following percentages of the area median (AMI) income for Riverside County
adjusted for family size (AMI): 72 units restricted to 30% of the AMI or less (approximately 30%
of the units), 121 units restricted to 59% of the AMI or less (approximately 50% of the units), and
46 units restricted to 80% of the AMI or less (approximately 20% of the units). One two-bedroom
unit and one three-bedroom unit will be set-aside for the onsite managers.
Palm Communities has submitted a financial assistance request to secure the site and assist
with the construction of the Project in two phases. Total development costs for both Phase I and
Phase II, including direct and indirect costs, are estimated at $129,966,000. The Project is
intended to be funded and developed by leveraging multiple funding sources including Tax-
Exempt Bond proceeds, four percent (4%) Federal Tax Credits, State Tax Credits, County
Loans, sixty (60) County Project Based Vouchers, deferred developer fees and the Loans.
Item 2A-3
City of Palm Desert and Housing Authority
DDLA – Palm Communities
Page 4 of 5
In order to evaluate Palm Communities’ funding request, the Authority engaged the services of
Keyser Marston Associates, Inc. (“KMA”), a state-wide provider of affordable housing consulting
services, to provide technical assistance related to determining whether or not the Project's pro
forma projections, feasibility and the request for the Loans were reasonable.
In evaluating Palm Communities’ request for the Loans to secure the site and assist with the
construction of the Project in two phases, KMA conducted a detailed review of the Developer's
pro forma. The Project's assumptions, methodologies, and calculations were reviewed and
evaluated for reasonableness and accuracy. KMA presented its analysis in a financial gap
analysis memorandum, which is attached to this staff report.
A recently awarded affordable housing project, approved by the City in August 2021 that is to
close escrow soon is the Vitalia Apartments project of 269 units with a requested total of
$6,030,000 of Authority assistance, or $22,400 per unit in assistance. Another recent project,
approved in July 2022 is the Urban Housing Community (UHC) project of 176 units with a
requested total of $7,235,000 of Authority assistance, or $41,100 per unit. In comparison, Palm
Communities is requesting $6,755,000 of Authority assistance, or $28,000 per unit.
Financial Gap Calculation* Phase I Phase II Totals
Total Development Costs
(Less) Available Outside Funding
Sources
$70,785,000
($64,785,000)
$59,181,000
($58,426,000)
$129,966,000
($123,211,000)
Financial Gap
Per Unit
$6,000,000
$49,600
$755,000
$6,300
$6,755,000
$28,000
*KMA Financial Gap Analysis Calculation for both phases.
KMA concludes in their financial gap analysis memorandum:
1. Estimated development costs of both phases, provided by Palm Communities, are
reasonable given the Project scope of work, federal prevailing wage requirements, and
current market conditions.
2. Based on KMA’s knowledge of competitiveness of the various proposed funding sources,
if Phase I does not receive 30 PBVs and a $4,400,000 loan from the County this year, it
is unlikely that the CDLAC application will be successful in the first round of 2023. This
means that in order for the Project to go forward, Phase I would need to find another
funding source for the County loan and/or Project Based Vouchers and be successful in
the second CDLAC round of 2023, when there are typically fewer State Tax Credits
available. If Phase I is not successful in the second CDLAC round, then the entire DDLA
expires.
By making the Loans to Palm Communities, the Authority will benefit from a 55-year affordable
restricted community available to extremely low and low income households. Therefore, staff
requests approval of the actions described herein in order to allow Palm Communities to meet
the deadline to submit a tax credit application and pursue the other funding sources identified. If
the City Council and Board approve such request and Palm Communities is awarded the Tax
Credits and State Tax Credits, staff and legal counsel will finalize the DDLA Documents, which
Item 2A-4
City of Palm Desert and Housing Authority
DDLA – Palm Communities
Page 5 of 5
were provided in substantial form at this meeting, and any other documents deemed necessary
or proper for the conveyance of the Property and the financing and construction of the Project.
Strategic Plan:
One of the priorities of the City of Palm Desert’s (“City”) Envision Palm Desert Strategic Plan, as
part of Land, Use, Housing and Open Space, is to facilitate development of high-quality housing
for people of all income levels. This request meets that objective by diversifying the City’s
housing stock for lower income households.
FINANCIAL IMPACT:
An appropriation from the Authority’s Low and Moderate Income Housing Asset Fund will be
necessary to fund the requested Loans in an amount not to exceed $6,000,000 for Phase I and
$755,000 for Phase II, or $28,000 per unit. Funds are available from the Authority’s Housing
Asset Fund unobligated fund balance. This transaction will not impact the City's General Fund.
The above-identified funding will only be provided upon Palm Communities’ satisfaction of the
DDLA terms and conditions contained therein, including, but not limited to, providing proof,
satisfactory to the Authority, that the Developer has financing commitments from all other
sources of financing necessary to fund the applicable phase is permit ready.
REVIEWED BY:
Department Director: Eric Ceja
City Attorney Robert Hargreaves
Special Counsel: Bruce W. Galloway
Finance Director: Veronica Chavez
Assistant City Manager: Chris Escobedo
City Manager/Executive
Director:
Todd Hileman
ATTACHMENTS:
1. City Resolution
2. Authority Resolution
3. KMA Memorandum
(Palm Villas at Millennium (Phases 1 and 2)- Financial Gap Analysis, dated October 3,
2022).
4. Disposition, Development and Loan Agreement
Item 2A-5
RESOLUTION NO. ____
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT APPROVING A “DISPOSITION, DEVELOPMENT AND LOAN
AGREEMENT” REGARDING “PALM VILLAS AT MILLENIUM” AMONG
THE CITY, AS SELLER, THE PALM DESERT HOUSING AUTHORITY,
AS LENDER, AND PALM COMMUNITIES, A CALIFORNIA
CORPORATION, AS BUYER/ BORROWER/DEVELOPER, IN
CONNECTION WITH APPROXIMATELY 10.49 ACRES OF PROPERTY
OWNED BY THE CITY, AND TAKING RELATED ACTIONS
RECITALS:
A. The City of Palm Desert (“City”) owns that approximately ten and half (10.49) acre
site located in the City of Palm Desert as more particularly described in Exhibit A to the
form of Disposition, Development and Loan Agreement (“DDLA”). by and among the City,
the Palm Desert Housing Authority (“Authority”) and Palm Communities (“Developer”)
attached hereto as Exhibit “A” (the “Property”). The DDLA contemplates that City shall
process a Parcel Map to divide the Property into a Phase I Parcel and Parcel II Parcel.
B. The Property has been declared exempt surplus land by the City Council of the
City under Government Code Section 54221(f)(1)(A) and the City Council has concluded,
based on the Developer's site plan and proposed affordability, that the proposed Project
(described below) meets the affordability and design requirements of Government Code
Section 37364. The California Department of Housing and Community Development has
confirmed such exemption in writing.
C. The City and the Developer entered into an Exclusive Negotiating Agreement (the
"ENA") on July 15, 2022, to negotiate the terms and the conditions for the development
of the Property.
D. The DDLA contemplates that the Developer construct, in two phases, two hundred
forty-one (241) units of housing, two hundred thirty-nine (239) of which shall be made
available to and occupied by low-income households and extremely low-income
households, and two (2) of which shall be on-site manager’s units; however, under the
terms of the DDLA, it is possible that the Developer would only acquire the Phase I Parcel
and complete the Phase I development described below.
E. The DDLA contemplates that the Developer shall construct one hundred twenty-
one (121) units on the Phase I Parcel, with one hundred twenty (120) of the units restricted
to Extremely-Low Income Households and Low Income Households, at affordable rents,
and the other unit used as an on-site manager’s unit.
F. The DDLA contemplates, assuming that the Developer acquires the Phase II
Parcel, that the Developer shall construct one hundred twenty (120) units on the Phase
II Parcel, with one hundred nineteen (119) of the units restricted to Extremely-Low Income
Households and Low Income Households, at affordable rents, and the other unit used as
an on-site manager’s unit.
Item 2A-6
RESOLUTION NO.
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12812-0001\2726242v1.doc
G. The DDLA contemplates that, concurrently with the conveyance of the Phase I
Parcel to the Developer, the Developer and City shall grant to each other reciprocal
recorded easements over the Phase I and Phase II Parcels for ingress and egress, and
that in such recorded easement(s), the Developer grants the City and any subsequent
owner of the Phase II Parcel reasonable rights to use the Phase I common area facilities
upon the completion of the Phase II Development (the "Phase I and Phase II Access
Easement").
H. The DDLA contemplates that, concurrently with the conveyance of the Phase I
Parcel to the Developer, the City shall grant (i) an easement over Parcel 9, an adjacent
City-owned parcel, to allow ingress and egress to the Phase I Parcel through the Phase
II Parcel; and (ii) an access easement over Parcel 9 to allow the Developer and the Phase
II Parcel owner to clear any accumulated sand adjacent to a future boundary wall
between Phase I and a Phase II.
J. Developer has applied for and received a density bonus (including reduced parking
and increased density) for both the Phase I Development and the Phase II Development
pursuant to City Resolution No. 2022-24.
K. The City has determined in City Resolution 2022-24 that the proposed project does
not require additional review under the California Environmental Quality Act.
L. The City Council desires to adopt this Resolution to approve the Developer’s
purchase of the Property from the City pursuant to the Disposition, Development and
Loan Agreement by and among the City, the Developer and the Palm Desert Housing
Authority, as lender, attached hereto as Exhibit “A” (the “DDLA”), including the Housing
Agreements for Phase I and Phase II attached thereto (as exhibits) which constitute
density bonus agreements, for purchase prices of $1,970,539 for the Phase I Parcel and
$1,464,461 for the Phase II Parcel, subject to the conditions to closing and closing
deadlines in the DDLA and the post-closing deadlines for construction.
M. The DDLA requires as a condition to each closing of a sale of a Phase that the
Authority make the applicable secured residual receipts loan for each phase described in
the DDLA; each such secured loan is to provide that failure to comply with the Schedule
of Performance attached to the DDLA shall be a default under the applicable loan.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT
DOES HEREBY RESOLVE, DETERMINE, AND ORDER AS FOLLOWS:
SECTION 1. The above recitals are true and correct and are a substantive part of
this Resolution.
SECTION 2. In accordance with Government Code Section 37364, the City
Council hereby finds that the Property can be used to provide housing affordable to
persons and families of low or moderate income and that this use is in the City’s best
interests.
Item 2A-7
RESOLUTION NO.
-3-
12812-0001\2726242v1.doc
SECTION 3. The DDLA in the form attached hereto as Exhibit “A” is hereby
approved. The City Manager of the City is hereby authorized to execute and deliver the
DDLA, for and in the name of the City, in substantially such form, with changes therein as
the City Manager may approve (such approval to be conclusively evidenced by the
execution and delivery thereof).
SECTION 4. The members of the City Council and the officers and staff of the City
are hereby authorized, jointly and severally, to take any other such actions as they deem
necessary or proper to effectuate the purposes of this Resolution and the DDLA, and all
actions previously taken are hereby ratified and confirmed. The City Manager of the City
is authorized to execute, deliver and record, on behalf of the Authority, all documents
contemplated by the DDLA.
SECTION 5. The City Clerk shall certify to the adoption of this Resolution and the
same shall take effect and be in force.
PASSED, APPROVED, AND ADOPTED this _____ day of ___________, 2022.
AYES:
NOES:
ABSENT:
ABSTAIN:
JAN C. HARNIK
MAYOR
ATTEST:
ANTHONY J. MEJIA, CITY CLERK
Item 2A-8
EXHIBIT “A”
FORM OF DDLA
(Attached.)
Item 2A-9
Item 2A-10
RESOLUTION NO. HA-________
A RESOLUTION OF THE PALM DESERT HOUSING AUTHORITY
APPROVING A “DISPOSITION, DEVELOPMENT AND LOAN
AGREEMENT” REGARDING “PALM VILLAS AT MILLENIUM” AMONG
THE AUTHORITY, AS LENDER, THE CITY OF PALM DESERT, AS
SELLER, AND PALM COMMUNITIES, A CALIFORNIA CORPORATION,
AS BUYER/BORROWER/DEVELOPER, APPROPRIATING FUNDS IN
CONNECTION THEREWITH, AND TAKING RELATED ACTIONS
RECITALS:
A. Pursuant to AB X1 26 (enacted in June 2011) and the California Supreme
Court’s decision in California Redevelopment Association, et al. v. Ana Matosantos, et
al., 53 Cal. 4th 231 (2011), the former Palm Desert Redevelopment Agency (the “Former
Agency”) was dissolved as of February 1, 2012, the Successor Agency to the Palm
Desert Redevelopment Agency (the “Successor Agency”), as the successor entity to the
Former Agency, was constituted, and a board of the Successor Agency (the “Board”)
was established.
B. AB X1 26 added Part 1.8 (commencing with Section 34161) and Part 1.85
(commencing with Section 34170) to Division 24 of the California Health and Safety Code
(“HSC”) (such Parts 1.8 and 1.85, including amendments and supplements enacted after
AB X1 26, being referred to herein as the “Dissolution Act”).
C. Pursuant to HSC Section 34176(b), the City Council of the City of Palm
Desert (the “City”) adopted Resolution No. 2012-07, electing for the City to not retain the
responsibility for performing housing functions previously performed by the Former
Agency, and determining that all of the assets, as allowed by law, and all rights, powers,
liabilities, duties, and obligations associated with the housing activities of the Former
Agency, including unexpended funds that are to be used for low income housing, be
transferred to the Palm Desert Housing Authority (the “Authority”).
D. Palm Communities, a California corporation (the “Developer”) intends to
acquire approximately 10.49 acres of land from the City of Palm Desert in two parts (the
“Property”) and proposes to construct thereon a 241-unit multi-family residential
apartment community for households with incomes up to 80% of the area median income
in two phases, referred to as “Phase I” and “Phase II”, as well as access and sand
maintenance easements (the “Project”); however, it is possible that the Developer would
acquire the Phase I land and then not later acquire the Phase II land. The Property and
easements, and the Phases of the Project, are more particularly described in the
Disposition, Development and Loan Agreement attached hereto as Exhibit “A”
(“DDLA”).
E. The Developer has submitted a funding request to the Authority to make
loans to the Developer in the amounts of $6,000,000 for Phase I and $755,000 for Phase
II (the “Loans”) to assist the Developer in the acquisition and development of the Project;
Item 2A-11
RESOLUTION NO. _______
-2-
12812-0001\2726238v1.doc
$1,970,539 of the Phase I loan would be disbursed by the Authority to the City, as seller,
upon the closing of the sale of the Phase I land to the Developer to pay the purchase
price for the Phase I land under the DDLA, and the remainder of the Phase I loan would
be disbursed to pay for costs of the improvements on the Phase I land (pari passu with
disbursements of the construction loan proceeds of the senior construction lender); all of
the loan for Phase II would be disbursed to the City, as seller, upon the closing of the sale
of the Phase II land by City to Developer to pay a portion of the purchase price for the
Phase II land under the DDLA. The Project is intended to be funded by leveraging
multiple funding sources, including tax credits, deferred developer fees and the Loans.
G. The Authority, as the housing successor to the Former Agency, wishes to
approve the DDLA (and the documents attached as exhibits thereto, including promissory
notes for Loans, deeds of trust for the loans, housing agreements for each phase
restricting the households by income levels and rents permitted for each phase, (as
required by applicable law), which includes deadlines for closing of the loans/land
purchases (June 30, 2024 for the Phase I land and loan; June 30, 2025 for the Phase II
land and loan) and for completion of the improvements thereon.
NOW, THEREFORE, THE PALM DESERT HOUSING AUTHORITY DOES
HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. The above recitals, and each of them, are true and correct and are a
substantive part of this Resolution.
Section 2. The DDLA, in the form attached hereto as Exhibit “A”, is hereby
approved. The Executive Director of the Authority is hereby authorized to execute and
deliver, for and in the name of the Authority, the DDLA in substantially such form, with
such changes thereto as the Executive Director, in consultation with the Authority legal
counsel, may deem appropriate or necessary and consistent with the purposes of this
Resolution (such approval to be conclusively evidenced by the execution and delivery
thereof).
Section 3. The Developer is hereby authorized to submit, an application,
including the DDLA, to the California Tax Credit Allocation Committee for tax credits as
contemplated by the DDLA.
Section 4. The Director of Finance is hereby authorized to appropriate
$6,000,000 and $755,000 from the Unobligated Housing Asset Fund Balance to the
appropriate budget line item(s).
Section 5. The DDLA does not bind the Authority to make the Loans unless the
applicable tax credits and other debt and equity necessary to complete the improvements
on a Phase shall have been awarded/committed, and all other conditions described in the
DDLA to the closing for the applicable Phase shall have been satisfied.
Section 6. The members of this Board and the officers and staff of the Authority
are hereby authorized, jointly and severally, to do all things which they may deem
necessary or proper to effectuate the purposes of this Resolution and the DDLA, including
Item 2A-12
RESOLUTION NO. _______
-3-
12812-0001\2726238v1.doc
the exhibits thereto, including negotiating and preparing agreements and documents, and
any such actions previously taken are hereby ratified and confirmed. The Executive
Director of the Authority is authorized to execute, deliver and record, on behalf of the
Authority, all documents contemplated by the DDLA.
Section 7. The Secretary shall certify to the adoption of this Resolution and the
same shall take effect and be in force.
PASSED, APPROVED and ADOPTED ON THIS ___ day of ____ 2022, by the
following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
[JAN C. HARNIK], CHAIRMAN
ATTEST:
ANTHONY J. MEJIA, SECRETARY
PALM DESERT HOUSING AUTHORITY
Item 2A-13
EXHIBIT “A”
FORM OF DDLA
(Attached.)
Item 2A-14
777 SOUTH FIGUEROA STREET, SUITE 1480 LOS ANGELES, CALIFORNIA 90017 PHONE 213.622.8095
2209011:PD;JLR
WWW.KEYSERMARSTON.COM 17166.009.001
ADVISORS IN:
Real Estate
Affordable Housing
Economic Development
BERKELEY
Debbie M. Kern
David Doezema
LOS ANGELES
Kathleen H. Head
James A. Rabe
Gregory D. Soo-Hoo
Kevin E. Engstrom
Julie L. Romey
Tim R. Bretz
SAN DIEGO
Paul C. Marra
MEMORANDUM
To: Jessica Gonzales, Senior Management Analyst
Palm Desert Housing Authority
From: Julie Romey
Date: October 3, 2022
Subject: Palm Villas at Millennium (Phases I & II) – Financial Gap Analysis
At the request of the Housing Authority (Authority) in the City of Palm Desert (City),
Keyser Marston Associates, Inc. (KMA) prepared a financial gap analysis to reflect the
Palm Communities (Developer) proposal to develop a 241 unit affordable apartment
project (Project) on the City-owned 10.49-acre site located on the north side of Gerald
Ford Drive between Cook Street and Portola Road (Site). The Project will be constructed
in two phases and as such, the Site will be provided in two separate conveyances.
As the Site is owned by the City, the Developer proposes to purchase the Site from the
City at the fair market value based on an appraisal and construct the Project with financial
assistance from the Palm Desert Housing Authority, acting as the Housing Successor
(collectively referred to as “Authority”).
EXECUTIVE SUMMARY
The City and the Developer have been working on entitling the Site and negotiating the
deal terms for the Project since 2020. While the Project description and financing stack
has evolved over that time, the current proposal received by the Authority details a
financial assistance request to secure the Site and assist with the construction of the
Project in two phases. The financial request is to be $6,755,000, or $28,000 per unit, from
the Authority’s Low- and Moderate-Income Housing Asset Fund (LMIHAF) in exchange for
72 units to be restricted to extremely-low income (ELI) households, 121 units restricted
to household earning up to 59% of the Riverside County Area Median Income (AMI), and
46 units to be restricted to households earning up to 80% AMI. Two units will be
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unrestricted and set-aside for two onsite managers. The anticipated non-Authority
funding sources are as follows:
KMA performed a financial gap analysis on the entire Project (Phases I and II) and
concluded the following:
1. KMA concluded that the development costs for both phases, estimated at
$539,000 per unit (including land) by the Developer are reasonable given the
Project scope of work, federal prevailing wage requirements, and current market
conditions. Assuming the above-mentioned funding sources are provided to the
Project, KMA concludes that the Phase I will have a $6,000,000 financial gap and
Phase II will have a $755,000 financial gap, which is equal to the Developer’s
request for financial assistance from the Authority and equates to approximately
$28,000 per unit.
2. KMA also points out that the proposed general contractor is a related party to the
Developer. As such, it is recommended that the Authority include provisions in the
Agreement that encourage cost competitiveness prior to each phase closing on
the land.
3. Based on KMA’s knowledge of the competitiveness of the various proposed
funding sources, if Phase I does not receive an allocation from the County this
year, it is unlikely that the CDLAC application will be successful in the first round
of 2023. This means that in order for the Project to go forward, Phase I would need
to find another funding source in-lieu of the County loan and/or project based
vouchers (PBV) to be successful in the second CDLAC round of 2023, when there
are typically fewer State Tax Credits available. If Phase I is not successful in the
second CDLAC round, then the entire Agreement expires.
Funding Source Allocation Entity Status Estimated Amount
Tax-Exempt Bonds (TEB)California Debt Allocation
Committee (CDLAC)
Competitive Process
(Approximately Two
Awards/Year)
$84,342,000
Federal Low Income Housing Tax
Credits (Federal Tax Credits)
Tax Credit Allocation Committee
(TCAC)
Automatically awarded with
TEBs
$55,224,000 (Net
Equty)
State Tax Credits TCAC
Competitive Process
(Approximately Two
Awards/Year - Varies)
$27,153,000 (Net
Equity)
TUMF Fee Waiver Coachella Valley Association of
Governments (CVAG)Procedural $1,586,000
County Loan Riverside Housing Authority
Competitive Process
(Approximately One
Award/Year)
$9,900,000
Deferred Developer Fee N/A N/A $5,271,000
Project Based Vouchers Riverside Housing Authority
Competitive Process
(Approximately One
Award/Year)
60 PBVs
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4. The financial assistance will be provided as two separate residual receipts loans
that will be subordinated to the construction and permanent lenders and will have
a 55-year term and a 3% simple interest rate. The annual payments will be made
from a proportional share of 50% of the residual receipts and the loans will be due
and payable at the end of the loan term.
5. The proposed financial assistance request meets the LMIHAF income targeting
requirements on a project basis.1 However, between now and the end of Fiscal
Year 2024/25, the Authority needs to commit an additional $15,000,000 in
LMIHAF, with all of the units restricted at or below 59% AMI in order for the
Authority, which acts as the Housing Successor, to be in compliance with State law
by the end of the reporting term.
6. The affordability restrictions that will be placed on the Project by the Authority in
exchange for the financial assistance are in accordance with California Health and
Safety Code (H&SC) Section 50053:
a. The following are the restrictions that will be placed on the Site by the
Authority, excluding two (2) onsite manager units:
b. The affordability restrictions will remain in place for 55 years from
Certificate of Occupancy (COO).
c. The regulatory agreement will not be subordinated to the construction and
permanent lenders.
BACKGROUND STATEMENT
The Site is a portion of property originally purchased by the City in 2006 using bond
proceeds from the former-Palm Desert Redevelopment Agency (Agency). The land was
acquired for purposes of developing an affordable multi-family housing project and a
regional park on the adjoining property. While there will not be a regional park developed
on the adjoining property as originally envisioned, the remaining portion of the property
may be still developed as a smaller park.
1 If only Phase I proceeds, the $6,000,000 Phase I expenditure will still meet the LMIHAF income targeting
requirements.
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The City’s Site includes two parcels, a 10-acre parcel and a 0.49-acre portion of the
adjoining parcel. Prior to conveyance, the City will merge the two parcels and create two
separate parcels: a 6.02-acre parcel (Phase I Parcel) and a 4.47-acre parcel (Phase II
Parcel). The Site has a land use designation of Town Center Neighborhood (TCN) in the
General Plan and a zoning designation of Planning Residential (PR-22) in Planning Area 8
High Density (10 acres) and Open Space in Planning Area 9 (0.49 acres) within the
Millennium Palm Desert Specific Plan. On March 10, 2022, the City Council adopted the
2021-2029 Housing Element for the 6th Cycle, which allocates that the Site provide a
minimum of 240 units for affordable housing.
In July 2022, the City and Developer entered into an Exclusive Negotiation Agreement
(ENA), with a 90 day term through October 13, 2022. On August 16, 2022, the Planning
Commission approved the proposed Project. However, it was recommended that the
Developer adjust the Project to include a swimming pool and shade structures. The pro
forma reviewed by KMA includes the requested features. The Project will also include
noise abatement features. In order to develop the 241 unit Project, the approved
entitlements included the use of the City’s Density Bonus Ordinance, which also allowed
for fewer parking spaces to be included in the Project than required by the City’s
Code. The Density Bonus provision was able to be used by the Project as at least 20% of
the units will be restricted to Very-Low Income households.
On May 27, 2021, the City Council adopted Resolution No. 2021-27 declaring 10-acres of
real property located on the north side of Gerald For Drive between Cook Street and
Portola Avenue (Property) as exempt surplus land under Government Code Section
54221(f)(1)(A), because the City intended to transfer the Property to the Developer for
the development of an affordable housing project pursuant to Government Code Section
37364. On March 10, 2022, the City Council adopted Resolution No. 2022-24 declaring
an additional 0.49-acre portion of an adjoining City-owned parcel (APN 694-120-029)
(Additional Property) upon request of the Developer to proceed with the development of
the Project. The proposed Site includes the Property and Additional Property and the
Developer will use the Site to develop the Project pursuant to Government Code Section
37364 to provide housing affordable to persons and families of low income (up to 50% to
60% of Riverside County Area Median Income (AMI)). HCD has provided a finding that
the 10.49-acre Site qualifies as exempt surplus land under Government Code Section
564221(f)(1)(A).
The KMA financial analysis is supported by a pro forma analysis, which is organized as
follows at the end of this memorandum:
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Appendix A Phase I Pro Forma Analysis
Appendix B Phase II Pro Forma Analysis
Appendix C SB 341 Income Targeting Analysis
The following summarizes the tables in Appendices A and B.
Table 1 Estimated Development Costs
Table 2 Stabilized Net Operating Income
Table 3 Financial Gap Analysis
Table 4 Cash Flow Analysis
PROJECT DESCRIPTION
The proposed scope of development can be described as follows:
1. The Site is comprised of 520,106 square feet of land area and was a portion of a
larger parcel consisting of 24.7 acres. The present zoning for the Site is Planned
Residential (P.R.) with a designated zoning allowance for 20 units per acre, or 238
units. The Developer received approval for entitlements that include using the
City’s Density Bonus Ordinance. Prior to closing, the City’s Site will be subdivided
as follows:
2. The Site is vacant and no environmental remediation is expected to be required.
However, the Developer is including noise mitigation measures by providing a
solid block masonry fence on the north and south property lines. Additional noise
mitigation features will be transparent panels on the balconies facing the street.
In response to water drainage issues, the Project will include improvements to the
WQMP water retention basins.
3. The Project will include 241 rental housing units, which equates to a density of 23
units per acre, in 14 two- and three-story buildings with the following unit mix:
Land Area Phase I Phase II Total Project
Land Area (Sf)262,231 194,713 456,944
Acres 6.02 4.47 10.49
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4. The gross building area (GBA) for the Type V buildings is 248,171 square feet,
which equates to a FAR of 0.54, and includes the following:
5. A total of 350 surface parking spaces will be provided, which equates to a 1.45
spaces per unit parking ratio. A minimum of 241 parking spaces will be covered.
6. The Project amenities will be located in a centralized recreation area and include:
7. The targeted population will be extremely-low, very-low and low income families
as well as seniors. One two-bedroom unit and one three-bedroom unit will be set-
aside for two onsite managers.
a. The proposed affordability restrictions for the LMIHAF income targeting
purposes are as follows:
b. Due to the entitlements, the Project is restricted as follows to be able to
utilize the City’s Density Bonus Ordinance:
Gross Building Area (Sf) Phase I Phase II Total Project
Residential Living Area 98,188 97,005 195,193
Leasing/Services Area 3,781 0 3,781
Common Area / Circulation 24,325 24,872 49,197
Total Gross Building Area 126,294 121,877 248,171
FAR 0.48 0.63 0.54
Surface Parking Spaces Phase I Phase II Total Project
Total Parking Spaces 177 173 350
Parking Ratio (Spaces/Unit) 1.46 1.44 1.45
Phase I Phase II
Leasing Office BBQ Area
Community Room Laundry Facilities
Tot Lot Shade Structures
Laundry Facilities
Swimming Pool
Shade Structures
Project Amenities
LMIHAF Income Targeting Phase I Phase II Total Project
<-30% AMI Units 36 36 72
>30% & <60% AMI Units 61 60 121
60% to 80% AMI Units 23 23 46
Total City Restricted Units 120 119 239
% <30% AMI 30% 30% 30%
% >30% & <60% AMI 51% 50% 51%
60% to 80% AMI 19% 19% 19%
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8. The proposed affordability restrictions that the City can receive Regional Housing
Needs Assessment (RHNA) credit for are as follows:
9. The Project will be managed by a professional third-party firm, most likely ConAm
Management Corporation.
10. Onsite services are proposed to be provided by Central Valley Coalition, a third-
party service provider. The tenant services will include adult education classes
such computer training, home buyer education, GED, resume building, ESL,
nutrition, exercise, health information/awareness, art, parenting, on-site food
cultivation and preparation, and smoking cessation classes. Individualized health
and wellness services such as crisis intervention, practical counseling and
emotional support, cleanliness and hygiene assessment, government and
insurance entitlements, and physical and mental assessment will be provided as
well.
11. The following summarizes the projected timeline for the Project. Development
from entitlements approval to Permanent Loan Conversion of Phase II is
anticipated to take approximately 33 months. It should be noted that if Phase I
does not receive a tax-exempt bond allocation from CDLAC by the end of 2023,
the Agreement between the City and Developer will expire.
Density Bonus Restrictions Phase I Phase II Total Project
Very-Low Income Units 12 11 23
Density Bonus Restricted Units 12 11 23
As % of Total Units 10% 9% 10%
RHNA Credit Phase I Phase II Total Project
Extremely-Low Income Units 43 43 86
Very-Low Income Units 0 0 0
Low Income Units 77 76 153
Moderate Income Units 0 0 0
Unrestricted Units 1 1 2
Total RHNA Credit 121 120 241
As % of Total Units 100% 100% 100%
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FINANCIAL ANALYSIS
KMA reviewed the Developer’s updated pro forma submitted on September 27, 2022 to
assist in evaluating the proposed Project. While KMA reviewed both phases of the
Project, this analysis will concentrate on Phase I, as it will be applying for tax-exempt
bonds first. However, where there are important differences in the assumptions of Phase
I and Phase II, KMA will point the differences out. Both detailed pro forma analyses are
located in Appendices A and B at the end of this memorandum.
Estimated Development Costs (Appendices A & B – Table 1)
KMA reviewed the Developer’s development cost estimates and found the estimates to
be reasonable and are described as follows:
Land Acquisition Costs
Both parcels of the Site are owned by the City and need to be sold at the fair market value
of the Site. In June 2022, CBRE updated an earlier appraisal to include the 0.49-acre parcel
and arrived at a fair market value of approximately $7.50 per square foot, or $3,425,000.
Since the Project will be conveyed to the Developer in two phases once all funding sources
have been secured for each phase, the purchase price to be paid to the City is allocated
as follows:
Phase I Phase II
Entitlements Secured
DDA Executed
ENA Expires
SLA Exemption Approved by HCD
County PBV Application Submitted October 2022 Spring 2023
County Loan Application Submitted October 2022 Spring 2023
County PBV Award December 2022 June 2023
County Loan Award December 2022 June 2023
CDLAC/TCAC (State & Fed) Applications Submitted March 2023 July 2023
Estimated CDLAC/TCAC (State & Fed) Award June 2023 September 2023
All Funding Secured September 2023 December 2023
Land Conveyance / Construction Loan Closing December 2023 March 2024
Construction Completion / COO Issued December 2024 March 2025
Permanent Loan Closing March 2025 June 2025
October 13, 2022
October 13, 2022
September 22, 2022
October 13, 2022
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Direct Costs
The direct cost estimates assume that the Project will be subject to Federal Davis Bacon
prevailing wage requirements.
1. The Project is required to provide significant offsite improvements, estimated at
$4,487,000, which will all be constructed and financed in Phase I.2 It should be
noted that the offsite infrastructure budget is significantly higher than the offsite
improvements required for the Vitalia and UHC projects that have recently been
approved by the City. These improvements include sidewalk from Western Phase
I property line across Phase II over to Dinah Shore and construction of access road
through Phase II to allow resident and emergency vehicles ingress. These
assumptions should be verified by City Staff.
2. The Site improvements, including the covered surface parking lots, a swimming
pool, shade coverings, onsite drainage improvements, as well as the inclusion of a
block wall surrounding the Project for noise abatement, are estimated at $23 per
square foot of land area and $44,000 per unit.
3. The Project also includes mandatory solar improvements, which are estimated at
$6,900 per unit. This estimate is lower than the $9,200 per unit estimated made
by UHC.
4. The building shell costs, including the community building, are estimated at
approximately $255 per square foot of residential living area or $262,600 per unit.
These estimates are within 6% of the UHC estimates that also include prevailing
wages.
5. Furnishings, fixtures and equipment (FF&E) for the Project are estimated at
$140,000 for the common areas, or approximately $1,000 per unit. It should be
noted that this estimate assumes that the ELI units will not be furnished as they
are not considered permanent supportive housing (PSH) units.
6. The Developer estimated the contractor fees and general requirements allowance
at approximately 14% of the construction costs, which is the maximum allowed by
TCAC and the same as the UHC estimate. It should be noted that the general
contractor is likely to be Multi-Family Builders, Inc., which is owned by the
President of the Developer. Thus, it is recommended that the City and Authority
2 If the Developer receives a refund from the City for a portion of the offsite improvements, the Developer
will be required to reduce the Phase I Authority Loan by that amount
Phase I Phase II Total Project
Purchase Price $1,966,000 $1,459,000 $3,425,000
Per Unit $16,200 $12,200 $14,200
Per Acre $326,578 $326,398 $326,501
Per Sf Land $7.50 $7.49 $7.50
Item 2A-23
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incorporate competitive price procedures in the Agreement. It should be noted
that while the Vitalia developer is also the GC and Tax Credits are involved, the
Vitalia contractor fees are 8% instead of the maximum 14%.
7. The construction insurance is estimated at 1% of the construction costs.
8. The direct cost contingency allowance is estimated at 5% of other direct costs.
However, given the estimated time until the general contractor agreement can be
entered into and the current high increase in material prices, KMA notes that this
level of contingency may not be sufficient for Phase II.
The following summarizes the direct cost estimates by Phase:
Given the high inflationary environment as well as continued supply chain issues, it is very
difficult to predict construction costs for projects that likely won’t start construction until
approximately one-and-a-half to two years from now. It is highly likely that the current
Phase II estimates will be understated, causing the need for the Developer to seek more
funding sources.
Indirect Costs
The following summarizes the Developer’s indirect cost assumptions for Phase I:
1. Architecture, engineering, and consulting costs are estimated at 3% of direct costs.
This estimate is within the typical range for similar projects.
2. The Developer estimated the permits and fees at $29,240 per unit. This estimate
should be verified by City Staff. It should be noted that this estimate includes the
waived TUMF fees that will be provided by CVAG. Therefore, the net permits and
fees are approximately $22,700 per unit.
Direct Cost Estimates Phase I Phase II Total Project
Offsite Improvements (Allowance)$4,487,000 $0 $4,487,000
Onsite Improvements ($/Sf Land)$23 $23 $10,604,000
Extraordinary Costs ($/Unit)$6,900 $6,900 $1,663,000
Residential Shell Costs ($/Sf Res.)$251 $249 $61,093,000
Community Building ($/Sf Comm Bldg)$579 $0 $2,190,000
FF&E ($/Unit)$579 $583 $140,000
Contractor Fees (% of Const. Costs)14% 14% $11,205,000
Construction Ins/Bonds (% of Const. Costs)1% 1% $912,000
Contingency Allowance (% of Other Directs)5% 5% $4,608,000
Total Direct Costs $53,620,000 $43,282,000 $96,902,000
Per Unit $443,100 $360,700 $402,100
Per Sf GBA $425 $355 $390
Item 2A-24
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3. The taxes, insurance, legal and accounting costs are estimated at 2% of direct
costs. This estimate is considered appropriate for a project of this size.
4. The Developer estimated an allowance of $50,000 for marketing and leasing costs
per phase.
5. The Phase I Developer Fee is estimated at $5,437,000, which is the maximum fee
allowed by TCAC for a new construction, TEB project. The Developer Fee is based
on approximately 15% of the eligible basis less the Developer Fee. It should be
noted that TCAC also requires that any amount over $2,500,000 plus $20,000
times the number of units over 100, to be deferred or contributed as equity. The
Phase II Developer Fee is estimated at $5,077,000.
6. The contingency allowance for each phase is estimated at $500,000, which is 4%
of the other indirect costs.
The following summarizes the indirect cost estimates for both phases.
Financing Costs
The following summarizes the Developer’s financing cost assumptions:
1. Interest during construction is estimated, based on $44,951,000 in TEBs for Phase
I and $39,391,000 for Phase II, a 5.27% interest rate, a 14-month development
period and a 62% average outstanding balance.
2. The financing fees are estimated based on the following:
a. Construction Loan fees are set at 1.11 points for Phase I and 1.13 points
for Phase II;
b. Permanent loan fees are set at 0.59 points for Phase I and 0.58 points for
Phase II;
c. Issuance costs are estimated at 0.51 points for Phase I and 0.58 points for
Phase II; and
d. The TCAC fees are estimated based on the following:
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i. A $2,000 application fee;
ii. A 1% of one year of gross tax credits; and
iii. A $410 per unit monitoring fee.
3. Capitalized reserves included in the budget are as follows:
a. The capitalized operating reserves are estimated three months of
operating expenses and debt services payments.
b. A $75,000 reserve for the limited partner asset management fee, based on
$5,000 per year over the 15-year compliance period provided for in each
phase.
c. While the Phase I and Phase II will both include 30 PBVs each, the
Developer’s lender will not require a transition reserve to be funded.
The total financing costs are estimated below. It should be noted that in an increasing
interest rate environment, these estimates can be difficult to project.
Total Development Costs
The total development costs for Phase I are estimated at $70,785,000 and $59,181,000
for Phase II. It should be noted that Phase II’s estimated development costs are 16% lower
than the Phase I estimates due to the front loading of the offsite improvements and
community amenities.
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KMA also compared the proposed cost estimates to those provided by the most recent
two projects approved by the Authority: Vitalia and The Crossings (UHC). Since the UHC
project and the proposed Project require the payment of prevailing wages, it is difficult
to compare the proposed Project to the Vitalia project, which does not have this
requirement. As Vitalia is preparing to close escrow, their cost estimates are much more
certain than the UHC and proposed Project, which are still in the process of competing
for funding sources. While UHC has estimated total development costs at $581,900 per
unit, most of the higher cost estimates are due to the land costs and financing
assumptions.
Stabilized Net Operating Income (Table 2)
The Project’s proposed funding sources include TEBs, Federal and State Tax credits,
County funds and LMIHAF funds from the Authority. Each of the funding sources have
income and rent requirements as well as the Project’s use of the Density Bonus Ordinance
and the SLA requirements. Income limits are published for households that are qualified
to reside in the units that have received assistance from these sources. The rent
standards for the TCAC and CDLAC funds are based on rents published annually by TCAC.
The rent standards for the Authority’s LMIHAF funds, the Density Bonus Ordinance and
SLA requirements are provided in H&SC Section 50053. It should be noted that the County
income and rent restrictions will be determined later.
The Developer will be required to adhere to the strictest of the standards imposed by the
funding sources for a period of 55 years. The following summarizes the affordability
restrictions as proposed:3
3 One three-bedroom unit in Phase I and one two-bedroom unit in Phase II will be set-aside as onsite
manager units and will be unrestricted units.
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Achievable Rental Income
The Project rents must adhere to the most restrictive of the requirements imposed by the
funding sources and regulatory agreements. The rents used in this analysis are based on
the 2022 rents published by TCAC and income information published by HCD. The
maximum allowable rents, which are net of the 2022 utility allowances, are estimated as
follows:4
4 The rents are net of the current Riverside County Housing Authority monthly utility allowances as
follows: $76/1-bdrm units, $102/2-bdrm units, and $130/3-bdrm units (published July 1, 2022). The
tenant paid utilities will be all electric (cooking, heating, water heating, basic and air conditioning).
Item 2A-28
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The maximum rental income that can be generated by the Phase I restricted units is
$2,270,728 and $1,258,032 for Phase II. The Developer plans to apply to the County for
30 PBVs for each Phase that will bridge the gap between the restricted rent and 110% of
the Fair Market Rents, which is set as of November 2022, to be $1,216 for one-bedroom
units, $1,529 for two-bedroom units and $2,108 for three-bedroom units. The estimated
PBV overhang is estimated at $373,452 for each phase, or approximately $1,037 per PBV
unit per month. It should be noted that the PBV contracts are for 20 years and it is not
guaranteed that the County will renew the contracts at the end of the initial term.
As such, after including $12 per unit per month for miscellaneous income, the total
potential Gross Income is $1,662,180 and $1,649,334, for Phases I and II, respectively.
2022 Rent Restrictions
One-
Bedroom
Units
Two-
Bedroom
Units
Three-
Bedroom
Units
One-
Bedroom
Units
Two-
Bedroom
Units
Three-
Bedroom
Units
30% AMI TCAC / ELI HCD 15 Units 21 Units 0 Units 15 Units 21 Units 0 Units
TCAC Rent $495 $594 $495 $594
Authority Rent $492 $590 $492 $590
Applicable Gross Rent $492 $590 $492 $590
(Less) Utility Allowance ($76) ($102)($76) ($102)
Applicable Net Rent $416 $488 $416 $488
Vouchers Yes Yes Yes Yes
30% AMI TCAC / 59% Low HCD 0 Units 0 Units 7 Units 0 Units 0 Units 7 Units
TCAC Rent $686 $686
Authority Rent $1,341 $1,341
Applicable Rent $686 $686
(Less) Utility Allowance ($130)($130)
Applicable Net Rent $556 $556
Vouchers N/A N/A
60% AMI TCAC / 59% Low HCD 0 Units 54 Units 0 Units 0 Units 53 Units 0 Units
TCAC Rent $1,188 $1,188
Authority Rent $1,160 $1,160
Applicable Rent $1,160 $1,160
(Less) Utility Allowance ($102)($102)
Applicable Net Rent $1,058 $1,058
Vouchers No No
60% AMI TCAC / Low HCD 0 Units 0 Units 23 Units 0 Units 0 Units 23 Units
TCAC Rent $1,373 $1,373
Authority Rent $1,364 $1,364
Applicable Rent $1,364 $1,364
(Less) Utility Allowance ($130)($130)
Applicable Net Rent $1,234 $1,234
Vouchers N/A N/A
Item 2A-29
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Estimated Net Operating Income (NOI)
The Project’s effective gross income (EGI) for Phase I is $1,579,071 and $1,566,867 for
Phase II based on a vacancy and collection allowance equal to 5% of gross potential
income.
The Developer and KMA estimate the residential operating expenses based on the
following assumptions:
1. General operating expenses are estimated at $5,228 per unit for Phase I and
$5,238 per unit for Phase II, which are reasonable for a project of this size. The
TCAC minimum for operating expenses is $4,700 per family unit.
2. Property taxes are estimated at $6,975 and $6,917 per year from Phase I and
Phase II, respectively, based on the assumption that the Project will be exempt
from property taxes.
3. A budget of $25,000 per year is available for onsite tenant services for both
phases, totaling $50,000 per year for tenant services.
4. The County monitoring fee is estimated at $100 per affordable unit, or $12,000
and $11,900 annually.
5. An annual bond fee of $5,000 is included in each Phase.
6. The replacement reserves are estimated at $325 per unit per year, which is higher
than the minimum requirement for TCAC at the Developer’s lender and investor’s
request.
The following summarizes the estimated stabilized NOI for each phase:
Potential Funding Sources (Appendices A & B - Table 3)
The Developer plans have the first phase of the Project to apply for the competitive TEBs
and State Tax Credits in the March 2023 CDLAC round and to the County for PBVs and
loan funds in the Fall 2022 round. Once Phase I has been funded, the Developer plans to
Item 2A-30
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submit Phase II for the various funding sources. The following summarizes the potential
funding sources based on the current status of various funding sources:
Tax-Exempt Bonds / Permanent Loan
The Developer anticipates structuring the bonds so that approximately $44,951,000 in
tax-exempt bonds will be issued for Phase I.
Based on a $858,170 NOI, Phase I is estimated to support a $12,092,000 permanent loan.
The assumptions used to estimate the loan are a 1.15 debt coverage ratio, a 5.15%
interest rate and a 35 year amortization term. The annual debt service payment is
estimated at $746,235. Therefore, the $44,951,000 in tax-exempt will be reduced by
$32,859,000 at permanent loan conversion, if not before, as the equity investor provides
their contributions to the Project.
Historically, the State of California’s affordable housing TEBs allocation has been
undersubscribed and therefore, as long as the Project meets various State and IRS
requirements, TEB were allocated to projects in a timely fashion. Recently, due to the
influx of permanent supportive housing projects requesting bond allocations, the State’s
bond allocation has been oversubscribed. Thus, obtaining a TEB allocation is now a
competitive process.
The Project is eligible to receive full points on the CDLAC application and is expected to
have a competitive CDLAC tie-breaker score. However, it is unknown at this time how
many applications will be submitted in the first CDLAC round of 2023.
Federal Tax Credit Equity
Once the Project receives a TEB allocation from CDLAC, the 4% Federal Tax Credits are
automatically awarded to the Project. The following summarizes the anticipated Tax
Credit equity to be generated by the Project:
Item 2A-31
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While the Developer’s equity rate assumption at $0.87 per Federal Tax Credit is at the
lower end of the range typically projected recently, it does take into account that the
investor will also purchase the State Tax Credits, which are less desirable.
State Tax Credit Equity
The State of California offers an allocation of State Tax Credits of approximately
$500,000,000 a year in two rounds to new construction projects financed with TEBs.
However, by round two, there is typically only $100 million to $200 million available.
The following summarizes the anticipated State Tax Credit equity to be generated by the
Project.
The Developer’s equity rate assumption of $0.75 per State Tax Credit is considered
reasonable for State Tax Credits. The allocation of the State Tax Credits also uses the
CDLAC/TCAC application and tie-breaker scores.
County Loan
The County is to issue a NOFA in October for PBVs and funding source allocations. KMA
was unable to review the NOFA to determine how competitive either Phase will be as well
as specific affordability and targeted population requirements that may be included in
the NOFA. The following summarizes what both Phases are estimated to apply for from
the County. It should be noted that if any of these funds are not awarded to Phase I, the
phase will not likely be competitive for a CDLAC allocation, which will jeopardize the
entire Project.
Item 2A-32
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Deferred Developer Fee
TCAC requires that any developer fee over $2,500,000 plus $20,000 per unit over 100
units, be either deferred or contributed as equity to the Project. As such, the Developer
proposes to defer the following to be repaid from project cash flow over the first 15 years
of operations.
Total Available Outside Funding Sources
Therefore, the following sources have been identified as potential funding sources for the
Project.
It should be noted that there are several other funding sources that the Developer can
pursue. However, they will require going through additional competitive processes that
could lengthen the timeline for the Project. However, if the Project does not receive a
CDLAC allocation for Phase I in the last round of 2023, then the City can decide to
terminate the Agreement.
Also, the further out, the more difficult it is to predict how likely Phase II is to be funded
by December 2024. The State and County regularly make changes to their regulations and
scoring for the various funding sources. However, it is likely to be more difficult to fund
the second phase of the Project since the Authority’s funding is only $755,000, which will
lower the Phase’s competitiveness under any scoring method. To increase the CDLAC
scores, the Developer can seek other funding sources to assist in making the Project more
competitive.
Item 2A-33
Jessica Gonzales, Palm Desert Housing Authority October 3, 2022
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Financial Gap Calculation (Appendices A & B - Table 3)
When the estimated development costs are compared to the potential funding sources
from lenders, the State, and County, both Phases have a financial gap that needs to be
filled for the Project to be feasible.
The following provides the financial gap calculation for both phases:
LMIHAF INCOME TARGETING ANALYSIS (APPENDIX C)
Section 34176.1 of the California Health and Safety Code has restricted how the LMIHAF
monies are to be allocated to extremely-low and low income households over a five year
period.
Section 34176.1(a)(3)(B) requires that the Authority allocate at least 30% of the LMIHAF
expended for development of rental housing affordable to and occupied by households
earning 30% or less of AMI (Extremely-Low Income) and Section 34176.1(a)(3)(C) requires
that no more than 20% of the LMIHAF expended for development of rental housing
affordable to and occupied by households earning between 60% and 80% of AMI (Low
Income).
These income tests are applied over five-year periods with the second period being Fiscal
Year 2020/21 to 2024/25. Since the Authority was in compliance with these provisions in
the first income test period through 2019/20, the second testing period does not have
any additional requirements. It should be noted that the requirements do not need to be
met on a project-by-project basis.
Penalties will be applied if the Authority fails to comply with the ELI minimum 30%
requirement in any five-year period. If this occurs, the remaining LMIHAF will need to be
spent on households earning 30% AMI or less until the Authority demonstrates
compliance with the ELI requirement. Penalties will also be applied if the Authority
exceeds the 20% cap on LI expenditures during any five-year period. Specifically, if the
Authority fails to meet this requirement during the five-year period, in each following
Item 2A-34
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fiscal years the Authority will be prohibited from spending any LMIHAF funds on LI units
until the Authority demonstrates compliance with the Low Income requirement.
According to the City’s staff, the Authority is in compliance with both the ELI and LI tests
for the previous five-year period.
Extremely-Low Income Test
A portion of the total $6,755,000 of the LMIHAF assistance needs to be allocated to the
72 ELI units, or 30% of the Project, as illustrated in Appendix C. As shown in the following
table, prior to this Project, the Authority has entered into commitments to fund two
projects in Fiscal Years 2020/21 and 2021/22, totaling $13,265,000 in LMIHAF assistance,
of which $5,696,309 has been allocated to ELI units.
Therefore, if the Authority agrees to commit $6,755,000 to the Project, of which
$2,028,000 will be attributable to ELI units, the Authority will have exceeded the
minimum ELI targeting test.
Low Income Test
A total of 46 units in the Project will include units restricted to households earning 60%
to 80% AMI, which equates to $1,296,000 in LMIHAF assistance will be attributed to 60%
to 80% AMI households. Therefore, the following summarizes the current status of the
low income test:
FY 2020/21 - FY 2024/25
Income Test Period
Extremely-Low Income
Expenditures
Total LMIHAF Development
Expenditures
FY 2020/21 $1,829,326 $6,030,000
FY 2021/22 3,866,983 7,235,000
FY 2022/23 2,028,000 6,755,000
FY 2023/24 0 0
FY 2024/25 0 0
Total Expenditures to Date $7,724,309 $20,020,000
As a % of Total Expenditures 39%100%
Minimum Requirement 30%N/A
Item 2A-35
Jessica Gonzales, Palm Desert Housing Authority October 3, 2022
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Therefore, if the Authority agrees to commit $6,755,000 to the Project, as proposed, the
Authority will have exceeded the maximum 60% to 80% AMI targeting test.
LMIHAF Income Targeting Conclusions
Based on the analysis above, at least an additional $15,000,000 in LMIHAF needs to be
committed by the Authority by the end of Fiscal Year 2024/25 and none of the assistance
can be attributed to LI units for the Authority in order to finish the five-year term in
compliance with the SB 341 income targeting requirements.
SUMMARY OF PROPOSED DEAL TERMS
The following summarizes the proposed deal terms:
1. The City agrees to sell the Site to the Developer for the fair market value, which is
set at $3,425,000.
2. The Housing Authority will provide the Project with two loans totaling $6,755,000
loan from LMIHAF proceeds, with the following loan terms:
a. A 3.00% simple interest rate;
b. A term of 57 years (two years for the construction period and 55 years
from the date of recordation of the COO for the Project).
c. An annual payment of 50% of residual receipts with the payments
beginning after the $2,524,000 (Phase I) and $2,685,000 (Phase II) deferred
developer fees are repaid.
d. The loan will be due and payable at the end of the term.
e. The loan will be secured with a second trust deed, subordinated only to
the construction and permanent loans and bonds.
3. The affordability restrictions associated with the Authority’s contribution of
LMIHAF proceeds will be as follows:
FY 2020/21 - FY 2024/25
Income Test Period Low Income Expenditures
Total LMIHAF Development
Expenditures
FY 2020/21 $4,200,674 $6,030,000
FY 2021/22 1,455,316 7,235,000
FY 2022/23 1,296,000 6,755,000
FY 2023/24 0 0
FY 2024/25 0 0
Total Expenditures to Date $6,951,990 $20,020,000
As a % of Total Expenditures 35%100%
Maximum Requirement 20%N/A
Item 2A-36
Jessica Gonzales, Palm Desert Housing Authority October 3, 2022
Palm Villas – Financial Gap Analysis Page 23
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a. Phase I LMIHAF affordability restrictions:
i. 15 one-bedroom units and 21 two-bedroom units will be restricted
to H&SC Sections 50106 and 50053.
ii. 54 two-bedroom units and 7 three-bedroom units will be restricted
to 59% AMI per H&SC Sections 50079.5 and 50053.
iii. 23 three-bedroom units will be restricted to H&SC Sections
50079.5 and 50053.
b. Phase II LMIHAF affordability restrictions:
i. 15 one-bedroom units and 21 two-bedroom units will be restricted
to H&SC Sections 50106 and 50053.
ii. 53 two-bedroom units and 7 three-bedroom units will be restricted
to 59% AMI per H&SC Sections 50079.5 and 50053.
iii. 23 three-bedroom units will be restricted to H&SC Sections
50079.5 and 50053.
c. The affordability restrictions are to be placed on the units for no less than
55 years from Certificate of Occupancy (COO).
d. While the Authority’s Deed of Trust will be subordinated to the
construction and permanent lender and bonds, the Authority will not allow
the regulatory agreement to be subordinated to the construction and
permanent loans. This will insure that the Authority’s affordability
restrictions remain in place even if there is a foreclosure event.
4. The Project will have until December 2023 to close escrow on the Phase I parcel
and the Authority Phase I Loan, which are conditioned by the Project receiving
commitments from all of the proposed outside funding sources. Phase II must
close escrow by June 2025.
KMA also recommends the following additional deal terms be included in the Affordable
Housing Agreement that will be drafted at a later date:
1. The following should be included in the allowable residual receipts and operating
expenses definitions:
a. A minimum annual replacement reserve deposit of $325 per unit,
increasing with CPI per annum.
b. A maximum property management fee of approximately $50 per unit per
month, increasing with CPI per annum.
c. The total general partner asset management fees (for the administrative
and managing general partners) should be limited to $25,000 per year,
increasing with CPI. In contrast, the Developer’s pro forma indicates these
fees will total $35,000 per year with escalations.
Item 2A-37
Jessica Gonzales, Palm Desert Housing Authority October 3, 2022
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2. The Authority should require measures to be taken to ensure the construction
costs at time of closing are reasonable and competitive given that the proposed
contractor is a related party.
CASH FLOW ANALYSIS (APPENDICES A & B – TABLE 5)
KMA also conducted a cash flow analysis to estimate the present value of the debt service
payments to the Authority. The following describes the basic cash flow assumptions:
1. Year 1 is based on the pro forma rent and expense assumptions presented in the
stabilized NOI analysis (Table 2).
2. Additional revenue and expense assumptions are as follows:
a. The projected residential income and miscellaneous income are estimated
to increase at 2.5% per year.
b. A 5% vacancy and collection allowance.
c. The general operating expenses, social services and replacement reserves
are increased at 3.5% per year.
d. The property taxes are increased at 2.0% per year.
e. Annual debt service is estimated to be $746,235 and $739,548 for Phases
I and II, respectively, for 35 years.
f. The priority distributions are categorized as follows:
i. Managing General Partner Asset Management Fee - $15,000 per
year for 55 years, increasing with inflation;
ii. Deferred Developer Fee – the $2,555,000 (Phase I) and $2,716,000
(Phase II) deferred fees will be paid back with available cash flow
and will not include an interest rate.
iii. Administrative General Partner Asset Management Fee - $10,000
per year for 55 years, increasing with inflation.
g. The annual residual receipts payments to the Authority are based on the
total $6,755,000 Authority Loan with a 55-year term, 3.0% simple interest
rate and annual payments in the form of 50% of residual receipts
generated. The 50% share will be split proportionally with other soft
lenders, such as the County. The splits for Phase I will be 28.85% to the
Authority and 21.15% to the County. However, in Phase II, the Authority
will only receive 6.04%m, while the County will receive 43.96% of the
residual receipts.
Item 2A-38
Jessica Gonzales, Palm Desert Housing Authority October 3, 2022
Palm Villas – Financial Gap Analysis Page 25
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The following summarizes the projected proceeds from cash flow to the Authority:
CONCLUSIONS
Based on the KMA analysis of the Developer’s proposal, the $6,755,000 proposed
financial assistance request is considered to be reasonable. The City will gain 239
affordable housing units for RHNA purposes. However, if the Project is not awarded the
proposed County, CDLAC and Tax Credit allocation awards at the beginning of 2023, it is
unlikely that either phase will proceed.
Attachments
Item 2A-39
APPENDIX A
PHASE I FINANCIAL GAP ANALYSIS
Item 2A-40
APPENDIX A- TABLE 1
ESTIMATED DEVELOPMENT COSTS
PALM VILLAS AT MILLENNIUM - PHASE I
PALM DESERT, CALIFORNIA
I.Acquisition Costs 1
Purchase Price 2 262,231 Sf Land $7.50 /Sf Land $1,966,000
Closing Costs 3 0% of Purchase Price 0
Total Acquisition Costs 121 Units $16,200 /Unit $1,966,000
II.Direct Costs 1, 4
Offsite Improvements 5 $4,487,000
Onsite Improvements 6 262,231 Sf Land $23 /Sf Land 6,079,000
Extraordinary Costs 7 121 Units $6,900 /Unit 835,000
Residential Shell Costs 122,513 Sf Residential $251 /Sf Residential 30,703,000
Community Building 3,781 Sf Comm Bldg $579 /Sf Comm Bldg 2,190,000
FF&E - Project 121 Units $579 /Unit 70,000
Contractor Fees 14% of Construction Costs 6,201,000
Construction Insurance/Bonds 1% of Construction Costs 505,000
Contingency Allowance 5% of Other Direct Costs 2,550,000
Total Direct Costs 121 Units $443,140 /Unit $53,620,000
III.Indirect Costs 1
Architecture, Engineering & Consulting 3% of Direct Costs $1,802,000
Permits & Fees 8 121 Units $29,240 /Unit 3,538,000
Taxes, Insurance, Legal & Accounting 2% of Direct Costs 835,000
Marketing Costs 121 Units $413 /Unit 50,000
Developer Fee 9 $60,408,426 Net Eligible Basis 9% of Net EB 5,437,000
Contingency Allowance 4% of Other Indirect Costs 500,000
Total Indirect Costs $12,162,000
IV. Financing Costs
1
Tax-Exempt Bonds Interest During Const.10 $44,951,127 Loan Amount 5.27% Interest $1,708,000
Financing Fees
Construction Loan $44,951,127 Loan Amount 1.11 Points 500,000
Permanent Loan $12,091,568 Loan Amount 0.59 Points 71,000
Issuance Costs $44,951,127 TE Bonds 0.51 Points 229,000
TCAC Fees 86,000
Capitalized Reserves
Operating Reserve 3 Months $122,261 Op Exp + DS/Month 367,000
Limited Partner Asset Management Fee 15 Year(s)$5,000 /Year 75,000
Transition Reserve 0 Year(s)$373,452 Subsidy/Year 0
Total Financing Costs $3,036,000
V. Total Development Costs 121 Units $585,000 /Unit $70,784,000
1
2
3
4
5
6
7
8
9
10
Based on Developer's 9/27/22 pro forma estimates.
Based on appraisal dated 6/30/22, in which CBRE, Inc established the land value at $7.50 per square foot of land area.
Costs included in Taxes, Insurance, Legal and Accounting category.
Construction costs include federal Davis Bacon wages and escalation for a December 2023 construction start.
Costs include required sidewalks and access roads for both Phase I and Phase II.
Costs include 177 parking spaces, a swimming pool and shade structures. Phase II's share of the costs are included in Phase I.
Costs include required solar improvements.
Based on Developer estimate and includes $796,000 TUMF fees. City staff should verify estimates.
Based on maximum developer fee allowed by TCAC for TEB projects.
Assumes a 14-month development period and an average outstanding balance of 62%.
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Fin Gap PF; jlr; 10/3/2022 Item 2A-41
APPENDIX A- TABLE 2
STABILIZED NET OPERATING INCOME
PALM VILLAS AT MILLENNIUM - PHASE I
PALM DESERT, CALIFORNIA
I. Project Income
1
Manager's Unit (3-bdrm)1 Unit(s)$0 /Unit/Mo $0
30% AMI TCAC / ELI HCD /Unit/Mo
1-Bedroom Units 15 Unit(s)$416 /Unit/Mo 74,880
2-Bedroom Units 21 Unit(s)$488 /Unit/Mo 122,976
3-Bedroom Units 0 Unit(s)$552 /Unit/Mo 0
30% AMI TCAC / 59% Low HCD
1-Bedroom Units 0 Unit(s)$419 /Unit/Mo 0
2-Bedroom Units 0 Unit(s)$492 /Unit/Mo 0
3-Bedroom Units 7 Unit(s)$556 /Unit/Mo 46,704
60% AMI TCAC / 59% Low HCD
1-Bedroom Units 0 Unit(s)$891 /Unit/Mo 0
2-Bedroom Units 54 Unit(s)$1,058 /Unit/Mo 685,584
3-Bedroom Units 0 Unit(s)$1,211 /Unit/Mo 0
60% AMI TCAC / Low HCD
1-Bedroom Units 0 Unit(s)$907 /Unit/Mo 0
2-Bedroom Units 0 Unit(s)$1,078 /Unit/Mo 0
3-Bedroom Units 23 Unit(s)$1,234 /Unit/Mo 340,584
Gross Potential Income - Base Rents 121 Units $875 /Unit/Mo $1,270,728
Gross Potential Income - PBV Overhang 2 30 Unit(s)$1,037 /Unit/Mo 373,452
Miscellaneous Income 121 Units $12 /Unit/Mo 18,000
Gross Potential Income $1,662,180
(Less) Vacancy & Collection - Base Rents 3 5% of GPI (63,536)
(Less) Vacancy & Collection - PBV Overhang 3 5% of GPI (18,673)
(Less) Vacancy & Collection - Misc. Income 3 5% of GPI (900)
Effective Gross Income $1,579,071
II.Operating Expenses 3
General Operating Expenses 121 Units $5,228 /Unit $632,601
Property Taxes 6,975
Social Programs 121 Units $207 /Unit 25,000
County Monitoring Fee 120 Aff Units $100 /PSH Unit 12,000
Bond Issuer Fee 121 Units $41 /Unit 5,000
Annual City Fee 121 Units $0 /Unit 0
Replacement Reserves 121 Units $325 /Unit 39,325
Total Operating Expenses $720,901
III. Net Operating Income $503,391 Base NOI $354,779 PBV Overhang $858,170
1
2
3
Rents are based on the lesser of the 2022 TCAC and HCD rent limits. The restrictions also meet the SLA and Density Bonus restrictions. Assumes the Riverside Housing
Authority Utility Allowances for Energy Efficient Apartments dates 7/1/22 and includes electric space heating & water heating and basic electricity. Monthly allowances
are estimated at $76/1-bdrm units, $102/2-bdrm units and $130/3-bdrm units.
Based on Developer's pro forma dated 9/27/22.
The PBV Contract rents are based on the Riverside Housing Authority chart effective 10/1/22 and are $2478/3-bdrm units, net of the appropriate utility allowances.
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Fin Gap PF; jlr; 10/3/2022 Item 2A-42
APPENDIX A- TABLE 3
FINANCIAL SURPLUS / GAP ANALYSIS
PALM VILLAS AT MILLENNIUM - PHASE I
PALM DESERT, CALIFORNIA
I.Proposed Funding Sources 1
A. Permanent Loan - Base Income 1.15 DCR $437,731 Debt Service $7,093,000
5.15% Int Rate 35 Amort. Term
B. Permanent Loan - Subsidy Income 1.15 DCR $308,504 Debt Service $4,999,000
5.15% Int Rate 35 Amort. Term
C. Federal Tax Credit Equity $34,239,622 Gross TC 87.99% Equity Rate $30,128,000
Tie-Breaker Score
D. State Tax Credit Equity $19,753,628 Gross TC Requested 74.99% Equity Rate $14,813,000
E. Waived TUMF Fees
2 $796,000
F. County Loan 120 Aff Units $36,667 /PSH Unit $4,400,000
G. Deferred Developer Fee $5,437,000 Developer Fee 47% Deferred $2,555,000
Total Proposed Funding Sources $64,784,000
II.Financial Surplus / (Gap) Calculation
Total Proposed Funding Sources $64,784,000
(Less) Total Development Costs (See Appendix A - Table 1)(70,784,000)
Financial Surplus / Gap ($6,000,000)
III. City Assistance Funding Sources
Land - Pre-2012 $0
Land - City 0
Waived Fees 0
LMIHAF - Land Purchase 0
LMIHAF Assistance 6,000,000
HOME Assistance 0
In-Lieu Fee Assistance 0
Total City Assistance $6,000,000
1
2
Based on Developer's 9/27/22 pro forma assumptions.
Assumes TUMF fees will be waived by Coachella Valley Association of Governments (CVAG).
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Fin Gap PF; jlr; 10/3/2022 Item 2A-43
APPENDIX A - TABLE 4
CASH FLOW ANALYSIS
PALM VILLAS AT MILLENNIUM - PHASE I
PALM DESERT, CALIFORNIA
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
I. Project Income
Gross Potential Income - Base Rents 102.5% /Year $1,270,728 $1,302,496 $1,335,059 $1,368,435 $1,402,646 $1,437,712 $1,473,655 $1,510,496 $1,548,259 $1,586,965 $1,626,639
Gross Potential Income - PBV Overhang 102.5% /Year 373,452 382,788 392,358 402,167 412,221 422,527 433,090 443,917 455,015 466,390 478,050
Miscellaneous Income 102.5% /Year 18,000 18,450 18,911 19,384 19,869 20,365 20,874 21,396 21,931 22,480 23,042
Gross Potential Income $1,662,180 $1,703,735 $1,746,328 $1,789,986 $1,834,736 $1,880,604 $1,927,619 $1,975,810 $2,025,205 $2,075,835 $2,127,731
(Less) Vacancy & Collection - Base Rents 5.0% of PGI (63,536) (65,125) (66,753) (68,422) (70,132) (71,886) (73,683) (75,525) (77,413) (79,348) (81,332)
(Less) Vacancy & Collection - PBV Overhang 5.0% of PGI (18,673) (19,139) (19,618) (20,108) (20,611) (21,126) (21,654) (22,196) (22,751) (23,320) (23,903)
(Less) Vacancy & Collection - Misc. Income 5.0% of PGI (900)(923)(946)(969)(993)(1,018)(1,044)(1,070)(1,097)(1,124)(1,152)
Effective Gross Income $1,579,071 $1,618,548 $1,659,011 $1,700,487 $1,742,999 $1,786,574 $1,831,238 $1,877,019 $1,923,945 $1,972,043 $2,021,344
II. Operating Expenses
General Operating Expenses 103.5% /Year $632,601 $654,742 $677,658 $701,376 $725,924 $751,332 $777,628 $804,845 $833,015 $862,170 $892,346
Property Taxes 102.0% /Year 6,975 7,115 7,257 7,402 7,550 7,701 7,855 8,012 8,172 8,336 8,502
Social Programs 103.5% /Year 25,000 25,875 26,781 27,718 28,688 29,692 30,731 31,807 32,920 34,072 35,265
County Monitoring Fee 100.0% /Year 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000
Bond Issuer Fee 100.0% /Year 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Annual City Fee 100.0% /Year 0 0 0 0 0 0 0 0 0 0 0
Replacement Reserves 103.5% /Year 39,325 40,701 42,126 43,600 45,126 46,706 48,340 50,032 51,784 53,596 55,472
Total Operating Expenses $720,901 $745,433 $770,821 $797,096 $824,289 $852,430 $881,555 $911,697 $942,891 $975,174 $1,008,585
III. Net Operating Income $858,170 $873,115 $888,190 $903,391 $918,710 $934,143 $949,683 $965,323 $981,054 $996,869 $1,012,759
(Less) Debt Service (746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)
IV. Available Cash Flow $111,935 $126,880 $141,955 $157,156 $172,476 $187,909 $203,448 $219,088 $234,819 $250,634 $266,524
(Less) Asset Management Fee - LP 103.0% /Year 0 0 0 0 0 0 0 0 0 0 0
(Less) Asset Management Fee - Managing GP 103.0% /Year (10,000) (10,300) (10,609) (10,927) (11,255) (11,593) (11,941) (12,299) (12,668) (13,048) (13,439)
(Less) Deferred Developer Fee (101,935) (116,580) (131,346) (146,228) (161,220) (176,316) (191,508) (206,789) (222,151) (237,586) (253,085)
Deferred Developer Fee Balance $2,555,000 $2,453,065 $2,336,485 $2,205,138 $2,058,910 $1,897,689 $1,721,373 $1,529,866 $1,323,076 $1,100,925 $863,339 $610,254
(Less) Asset Management Fee - Administrative GP 0 0 0 0 0 0 0 0 0 0 0
Annual Payment 103.0% /Year 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 13,439
AMF Balance 10,000 20,300 30,909 41,836 53,091 64,684 76,625 88,923 101,591 114,639 128,078
V. Cash Flow Available for Distribution $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
VI. City Loan
Beginning Balance $6,000,000 $6,180,000 $6,360,000 $6,540,000 $6,720,000 $6,900,000 $7,080,000 $7,260,000 $7,440,000 $7,620,000 $7,800,000
Simple Interest 3.00% Interest 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000
(Less) Residual Receipts Payment 28.85% of RR 0 0 0 0 0 0 0 0 0 0 0
Ending Balance $6,180,000 $6,360,000 $6,540,000 $6,720,000 $6,900,000 $7,080,000 $7,260,000 $7,440,000 $7,620,000 $7,800,000 $7,980,000
Nominal Payments (55 Years)$15,862,000
PV of Payments 6.00% Disc Rate $1,438,000
VII. County Loan
Beginning Balance $4,400,000 $4,532,000 $4,664,000 $4,796,000 $4,928,000 $5,060,000 $5,192,000 $5,324,000 $5,456,000 $5,588,000 $5,720,000
Simple Interest 3.00% Interest 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000
(Less) Residual Receipts Payment 21.15% of RR 0 0 0 0 0 0 0 0 0 0 0
Ending Balance $4,532,000 $4,664,000 $4,796,000 $4,928,000 $5,060,000 $5,192,000 $5,324,000 $5,456,000 $5,588,000 $5,720,000 $5,852,000
Nominal Payments (55 Years)$11,632,000
PV of Payments (6.00% Discount Rate)6.00% Disc Rate $1,055,000
VIII. Cash Flow to Developer $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Cash Flow; jlr; 10/3/2022 Item 2A-44
APPENDIX A - TABLE 4
CASH FLOW ANALYSIS
PALM VILLAS AT MILLENNIUM - PHASE I
PALM DESERT, CALIFORNIA
I. Project Income
Gross Potential Income - Base Rents 102.5% /Year
Gross Potential Income - PBV Overhang 102.5% /Year
Miscellaneous Income 102.5% /Year
Gross Potential Income
(Less) Vacancy & Collection - Base Rents 5.0% of PGI
(Less) Vacancy & Collection - PBV Overhang 5.0% of PGI
(Less) Vacancy & Collection - Misc. Income 5.0% of PGI
Effective Gross Income
II. Operating Expenses
General Operating Expenses 103.5% /Year
Property Taxes 102.0% /Year
Social Programs 103.5% /Year
County Monitoring Fee 100.0% /Year
Bond Issuer Fee 100.0% /Year
Annual City Fee 100.0% /Year
Replacement Reserves 103.5% /Year
Total Operating Expenses
III. Net Operating Income
(Less) Debt Service
IV. Available Cash Flow
(Less) Asset Management Fee - LP 103.0% /Year
(Less) Asset Management Fee - Managing GP 103.0% /Year
(Less) Deferred Developer Fee
Deferred Developer Fee Balance
(Less) Asset Management Fee - Administrative GP
Annual Payment 103.0% /Year
AMF Balance
V. Cash Flow Available for Distribution
VI. City Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 28.85% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments 6.00% Disc Rate
VII. County Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 21.15% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments (6.00% Discount Rate)6.00% Disc Rate
VIII. Cash Flow to Developer
Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23
$1,667,305 $1,708,988 $1,751,713 $1,795,505 $1,840,393 $1,886,403 $1,933,563 $1,981,902 $2,031,450 $2,082,236 $2,134,292 $2,187,649
490,001 502,251 514,808 527,678 540,870 554,392 568,251 582,458 597,019 611,945 627,243 642,924
23,618 24,208 24,813 25,434 26,069 26,721 27,389 28,074 28,776 29,495 30,232 30,988
$2,180,924 $2,235,447 $2,291,333 $2,348,617 $2,407,332 $2,467,516 $2,529,203 $2,592,434 $2,657,244 $2,723,675 $2,791,767 $2,861,562
(83,365) (85,449) (87,586) (89,775) (92,020) (94,320) (96,678) (99,095) (101,572) (104,112) (106,715) (109,382)
(24,500) (25,113) (25,740) (26,384) (27,043) (27,720) (28,413) (29,123) (29,851) (30,597) (31,362) (32,146)
(1,181)(1,210)(1,241)(1,272)(1,303)(1,336)(1,369)(1,404)(1,439)(1,475)(1,512)(1,549)
$2,071,878 $2,123,675 $2,176,767 $2,231,186 $2,286,966 $2,344,140 $2,402,743 $2,462,812 $2,524,382 $2,587,492 $2,652,179 $2,718,483
$923,578 $955,904 $989,360 $1,023,988 $1,059,827 $1,096,921 $1,135,314 $1,175,050 $1,216,176 $1,258,742 $1,302,798 $1,348,396
8,673 8,846 9,023 9,203 9,387 9,575 9,767 9,962 10,161 10,364 10,572 10,783
36,499 37,777 39,099 40,467 41,884 43,350 44,867 46,437 48,063 49,745 51,486 53,288
12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000
5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
0 0 0 0 0 0 0 0 0 0 0 0
57,413 59,423 61,503 63,655 65,883 68,189 70,576 73,046 75,602 78,248 80,987 83,822
$1,043,163 $1,078,949 $1,115,985 $1,154,314 $1,193,982 $1,235,035 $1,277,523 $1,321,495 $1,367,002 $1,414,100 $1,462,843 $1,513,289
$1,028,715 $1,044,726 $1,060,782 $1,076,872 $1,092,984 $1,109,105 $1,125,221 $1,141,317 $1,157,380 $1,173,392 $1,189,336 $1,205,194
(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)
$282,480 $298,491 $314,547 $330,638 $346,749 $362,870 $378,986 $395,083 $411,145 $427,157 $443,101 $458,960
0 0 0 0 0 0 0 0 0 0 0 0
(13,842) (14,258) (14,685) (15,126) (15,580) (16,047) (16,528) (17,024) (17,535) (18,061) (18,603) (19,161)
(268,637) (284,234) (57,383) 0 0 0 0 0 0 0 0 0
$341,616 $57,383 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
0 0 (170,863)(15,126)(15,580)(16,047)(16,528)(17,024)(17,535)(18,061)(18,603)(19,161)
13,842 14,258 14,685 15,126 15,580 16,047 16,528 17,024 17,535 18,061 18,603 19,161
141,920 156,178 0 0 0 0 0 0 0 0 0 0
$0 $0 $71,616 $300,386 $315,590 $330,776 $345,929 $361,034 $376,075 $391,035 $405,895 $420,638
$7,980,000 $8,160,000 $8,340,000 $8,499,341 $8,592,692 $8,681,656 $8,766,240 $8,846,453 $8,922,309 $8,993,825 $9,061,027 $9,123,942
180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000
0 0 (20,659)(86,650)(91,036)(95,416)(99,787)(104,144)(108,483)(112,798)(117,085)(121,338)
$8,160,000 $8,340,000 $8,499,341 $8,592,692 $8,681,656 $8,766,240 $8,846,453 $8,922,309 $8,993,825 $9,061,027 $9,123,942 $9,182,604
$5,852,000 $5,984,000 $6,116,000 $6,232,850 $6,301,307 $6,366,548 $6,428,576 $6,487,399 $6,543,026 $6,595,472 $6,644,753 $6,690,891
132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000
0 0 (15,150)(63,543)(66,759)(69,972)(73,177)(76,373)(79,554)(82,719)(85,862)(88,981)
$5,984,000 $6,116,000 $6,232,850 $6,301,307 $6,366,548 $6,428,576 $6,487,399 $6,543,026 $6,595,472 $6,644,753 $6,690,891 $6,733,910
$0 $0 $35,808 $150,193 $157,795 $165,388 $172,964 $180,517 $188,037 $195,517 $202,948 $210,319
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Cash Flow; jlr; 10/3/2022 Item 2A-45
APPENDIX A - TABLE 4
CASH FLOW ANALYSIS
PALM VILLAS AT MILLENNIUM - PHASE I
PALM DESERT, CALIFORNIA
I. Project Income
Gross Potential Income - Base Rents 102.5% /Year
Gross Potential Income - PBV Overhang 102.5% /Year
Miscellaneous Income 102.5% /Year
Gross Potential Income
(Less) Vacancy & Collection - Base Rents 5.0% of PGI
(Less) Vacancy & Collection - PBV Overhang 5.0% of PGI
(Less) Vacancy & Collection - Misc. Income 5.0% of PGI
Effective Gross Income
II. Operating Expenses
General Operating Expenses 103.5% /Year
Property Taxes 102.0% /Year
Social Programs 103.5% /Year
County Monitoring Fee 100.0% /Year
Bond Issuer Fee 100.0% /Year
Annual City Fee 100.0% /Year
Replacement Reserves 103.5% /Year
Total Operating Expenses
III. Net Operating Income
(Less) Debt Service
IV. Available Cash Flow
(Less) Asset Management Fee - LP 103.0% /Year
(Less) Asset Management Fee - Managing GP 103.0% /Year
(Less) Deferred Developer Fee
Deferred Developer Fee Balance
(Less) Asset Management Fee - Administrative GP
Annual Payment 103.0% /Year
AMF Balance
V. Cash Flow Available for Distribution
VI. City Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 28.85% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments 6.00% Disc Rate
VII. County Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 21.15% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments (6.00% Discount Rate)6.00% Disc Rate
VIII. Cash Flow to Developer
Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 Year 30 Year 31 Year 32 Year 33 Year 34 Year 35
$2,242,340 $2,298,399 $2,355,859 $2,414,755 $2,475,124 $2,537,002 $2,600,427 $2,665,438 $2,732,074 $2,800,376 $2,870,385 $2,942,145
658,997 675,472 692,359 709,668 727,410 745,595 764,235 783,341 802,924 822,997 843,572 864,662
31,763 32,557 33,371 34,205 35,060 35,937 36,835 37,756 38,700 39,668 40,659 41,676
$2,933,101 $3,006,428 $3,081,589 $3,158,629 $3,237,594 $3,318,534 $3,401,497 $3,486,535 $3,573,698 $3,663,041 $3,754,617 $3,848,482
(112,117) (114,920) (117,793) (120,738) (123,756) (126,850) (130,021) (133,272) (136,604) (140,019) (143,519) (147,107)
(32,950) (33,774) (34,618) (35,483) (36,370) (37,280) (38,212) (39,167) (40,146) (41,150) (42,179) (43,233)
(1,588)(1,628)(1,669)(1,710)(1,753)(1,797)(1,842)(1,888)(1,935)(1,983)(2,033)(2,084)
$2,786,446 $2,856,107 $2,927,509 $3,000,697 $3,075,715 $3,152,607 $3,231,423 $3,312,208 $3,395,013 $3,479,889 $3,566,886 $3,656,058
$1,395,590 $1,444,436 $1,494,991 $1,547,316 $1,601,472 $1,657,523 $1,715,537 $1,775,581 $1,837,726 $1,902,046 $1,968,618 $2,037,519
10,999 11,219 11,443 11,672 11,906 12,144 12,387 12,634 12,887 13,145 13,408 13,676
55,153 57,083 59,081 61,149 63,289 65,504 67,797 70,170 72,626 75,168 77,799 80,522
12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000
5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
0 0 0 0 0 0 0 0 0 0 0 0
86,755 89,792 92,935 96,187 99,554 103,038 106,645 110,377 114,240 118,239 122,377 126,660
$1,565,497 $1,619,530 $1,675,450 $1,733,324 $1,793,220 $1,855,210 $1,919,365 $1,985,762 $2,054,479 $2,125,597 $2,199,201 $2,275,377
$1,220,948 $1,236,577 $1,252,059 $1,267,373 $1,282,494 $1,297,398 $1,312,058 $1,326,446 $1,340,534 $1,354,291 $1,367,685 $1,380,681
(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)(746,235)
$474,713 $490,342 $505,824 $521,138 $536,259 $551,163 $565,823 $580,212 $594,300 $608,057 $621,450 $634,446
0 0 0 0 0 0 0 0 0 0 0 0
(19,736) (20,328) (20,938) (21,566) (22,213) (22,879) (23,566) (24,273) (25,001) (25,751) (26,523) (27,319)
0 0 0 0 0 0 0 0 0 0 0 0
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
(19,736)(20,328)(20,938)(21,566)(22,213)(22,879)(23,566)(24,273)(25,001)(25,751)(26,523)(27,319)
19,736 20,328 20,938 21,566 22,213 22,879 23,566 24,273 25,001 25,751 26,523 27,319
0 0 0 0 0 0 0 0 0 0 0 0
$435,242 $449,686 $463,949 $478,006 $491,833 $505,404 $518,692 $531,666 $544,298 $556,555 $568,403 $579,808
$9,182,604 $9,237,054 $9,287,336 $9,333,505 $9,375,619 $9,413,744 $9,447,954 $9,478,331 $9,504,966 $9,527,957 $9,547,412 $9,563,450
180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000
(125,550)(129,717)(133,831)(137,886)(141,875)(145,790)(149,623)(153,365)(157,009)(160,545)(163,962)(167,252)
$9,237,054 $9,287,336 $9,333,505 $9,375,619 $9,413,744 $9,447,954 $9,478,331 $9,504,966 $9,527,957 $9,547,412 $9,563,450 $9,576,197
$6,733,910 $6,773,839 $6,810,713 $6,844,570 $6,875,454 $6,903,412 $6,928,499 $6,950,776 $6,970,308 $6,987,168 $7,001,436 $7,013,196
132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000
(92,070)(95,126)(98,143)(101,117)(104,042)(106,912)(109,723)(112,468)(115,140)(117,733)(120,239)(122,652)
$6,773,839 $6,810,713 $6,844,570 $6,875,454 $6,903,412 $6,928,499 $6,950,776 $6,970,308 $6,987,168 $7,001,436 $7,013,196 $7,022,545
$217,621 $224,843 $231,974 $239,003 $245,917 $252,702 $259,346 $265,833 $272,149 $278,277 $284,202 $289,904
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Cash Flow; jlr; 10/3/2022 Item 2A-46
APPENDIX A - TABLE 4
CASH FLOW ANALYSIS
PALM VILLAS AT MILLENNIUM - PHASE I
PALM DESERT, CALIFORNIA
I. Project Income
Gross Potential Income - Base Rents 102.5% /Year
Gross Potential Income - PBV Overhang 102.5% /Year
Miscellaneous Income 102.5% /Year
Gross Potential Income
(Less) Vacancy & Collection - Base Rents 5.0% of PGI
(Less) Vacancy & Collection - PBV Overhang 5.0% of PGI
(Less) Vacancy & Collection - Misc. Income 5.0% of PGI
Effective Gross Income
II. Operating Expenses
General Operating Expenses 103.5% /Year
Property Taxes 102.0% /Year
Social Programs 103.5% /Year
County Monitoring Fee 100.0% /Year
Bond Issuer Fee 100.0% /Year
Annual City Fee 100.0% /Year
Replacement Reserves 103.5% /Year
Total Operating Expenses
III. Net Operating Income
(Less) Debt Service
IV. Available Cash Flow
(Less) Asset Management Fee - LP 103.0% /Year
(Less) Asset Management Fee - Managing GP 103.0% /Year
(Less) Deferred Developer Fee
Deferred Developer Fee Balance
(Less) Asset Management Fee - Administrative GP
Annual Payment 103.0% /Year
AMF Balance
V. Cash Flow Available for Distribution
VI. City Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 28.85% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments 6.00% Disc Rate
VII. County Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 21.15% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments (6.00% Discount Rate)6.00% Disc Rate
VIII. Cash Flow to Developer
Year 36 Year 37 Year 38 Year 39 Year 40 Year 41 Year 42 Year 43 Year 44 Year 45 Year 46 Year 47
$3,015,698 $3,091,091 $3,168,368 $3,247,577 $3,328,767 $3,411,986 $3,497,285 $3,584,718 $3,674,336 $3,766,194 $3,860,349 $3,956,857
886,278 908,435 931,146 954,425 978,285 1,002,742 1,027,811 1,053,506 1,079,844 1,106,840 1,134,511 1,162,874
42,718 43,786 44,880 46,002 47,152 48,331 49,539 50,778 52,047 53,349 54,682 56,049
$3,944,694 $4,043,312 $4,144,394 $4,248,004 $4,354,204 $4,463,059 $4,574,636 $4,689,002 $4,806,227 $4,926,383 $5,049,542 $5,175,781
(150,785) (154,555) (158,418) (162,379) (166,438) (170,599) (174,864) (179,236) (183,717) (188,310) (193,017) (197,843)
(44,314) (45,422) (46,557) (47,721) (48,914) (50,137) (51,391) (52,675) (53,992) (55,342) (56,726) (58,144)
(2,136)(2,189)(2,244)(2,300)(2,358)(2,417)(2,477)(2,539)(2,602)(2,667)(2,734)(2,802)
$3,747,459 $3,841,146 $3,937,175 $4,035,604 $4,136,494 $4,239,906 $4,345,904 $4,454,552 $4,565,915 $4,680,063 $4,797,065 $4,916,992
$2,108,833 $2,182,642 $2,259,034 $2,338,100 $2,419,934 $2,504,632 $2,592,294 $2,683,024 $2,776,930 $2,874,122 $2,974,717 $3,078,832
13,949 14,228 14,513 14,803 15,099 15,401 15,709 16,023 16,344 16,671 17,004 17,344
83,340 86,257 89,276 92,400 95,634 98,981 102,446 106,031 109,743 113,584 117,559 121,674
12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000
5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
0 0 0 0 0 0 0 0 0 0 0 0
131,093 135,682 140,431 145,346 150,433 155,698 161,147 166,787 172,625 178,667 184,920 191,392
$2,354,215 $2,435,808 $2,520,253 $2,607,649 $2,698,100 $2,791,712 $2,888,596 $2,988,866 $3,092,641 $3,200,044 $3,311,200 $3,426,242
$1,393,244 $1,405,338 $1,416,921 $1,427,955 $1,438,394 $1,448,194 $1,457,308 $1,465,685 $1,473,274 $1,480,020 $1,485,865 $1,490,750
0 0 0 0 0 0 0 0 0 0 0 0
$1,393,244 $1,405,338 $1,416,921 $1,427,955 $1,438,394 $1,448,194 $1,457,308 $1,465,685 $1,473,274 $1,480,020 $1,485,865 $1,490,750
0 0 0 0 0 0 0 0 0 0 0 0
(28,139) (28,983) (29,852) (30,748) (31,670) (32,620) (33,599) (34,607) (35,645) (36,715) (37,816) (38,950)
0 0 0 0 0 0 0 0 0 0 0 0
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
(28,139)(28,983)(29,852)(30,748)(31,670)(32,620)(33,599)(34,607)(35,645)(36,715)(37,816)(38,950)
28,139 28,983 29,852 30,748 31,670 32,620 33,599 34,607 35,645 36,715 37,816 38,950
0 0 0 0 0 0 0 0 0 0 0 0
$1,336,967 $1,347,372 $1,357,217 $1,366,459 $1,375,053 $1,382,954 $1,390,110 $1,396,472 $1,401,984 $1,406,591 $1,410,233 $1,412,849
$9,576,197 $9,370,534 $9,161,869 $8,950,364 $8,736,193 $8,519,543 $8,300,614 $8,079,621 $7,856,792 $7,632,374 $7,406,627 $7,179,829
180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000
(385,664)(388,665)(391,505)(394,171)(396,650)(398,929)(400,993)(402,828)(404,418)(405,747)(406,798)(407,553)
$9,370,534 $9,161,869 $8,950,364 $8,736,193 $8,519,543 $8,300,614 $8,079,621 $7,856,792 $7,632,374 $7,406,627 $7,179,829 $6,952,276
$7,022,545 $6,871,725 $6,718,704 $6,563,600 $6,406,542 $6,247,665 $6,087,117 $5,925,055 $5,761,648 $5,597,074 $5,431,526 $5,265,208
132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000 132,000
(282,820)(285,021)(287,104)(289,059)(290,877)(292,548)(294,062)(295,407)(296,574)(297,548)(298,319)(298,872)
$6,871,725 $6,718,704 $6,563,600 $6,406,542 $6,247,665 $6,087,117 $5,925,055 $5,761,648 $5,597,074 $5,431,526 $5,265,208 $5,098,336
$668,484 $673,686 $678,608 $683,229 $687,527 $691,477 $695,055 $698,236 $700,992 $703,295 $705,117 $706,424
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Cash Flow; jlr; 10/3/2022 Item 2A-47
APPENDIX A - TABLE 4
CASH FLOW ANALYSIS
PALM VILLAS AT MILLENNIUM - PHASE I
PALM DESERT, CALIFORNIA
I. Project Income
Gross Potential Income - Base Rents 102.5% /Year
Gross Potential Income - PBV Overhang 102.5% /Year
Miscellaneous Income 102.5% /Year
Gross Potential Income
(Less) Vacancy & Collection - Base Rents 5.0% of PGI
(Less) Vacancy & Collection - PBV Overhang 5.0% of PGI
(Less) Vacancy & Collection - Misc. Income 5.0% of PGI
Effective Gross Income
II. Operating Expenses
General Operating Expenses 103.5% /Year
Property Taxes 102.0% /Year
Social Programs 103.5% /Year
County Monitoring Fee 100.0% /Year
Bond Issuer Fee 100.0% /Year
Annual City Fee 100.0% /Year
Replacement Reserves 103.5% /Year
Total Operating Expenses
III. Net Operating Income
(Less) Debt Service
IV. Available Cash Flow
(Less) Asset Management Fee - LP 103.0% /Year
(Less) Asset Management Fee - Managing GP 103.0% /Year
(Less) Deferred Developer Fee
Deferred Developer Fee Balance
(Less) Asset Management Fee - Administrative GP
Annual Payment 103.0% /Year
AMF Balance
V. Cash Flow Available for Distribution
VI. City Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 28.85% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments 6.00% Disc Rate
VII. County Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 21.15% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments (6.00% Discount Rate)6.00% Disc Rate
VIII. Cash Flow to Developer
Year 48 Year 49 Year 50 Year 51 Year 52 Year 53 Year 54 Year 55
$4,055,779 $4,157,173 $4,261,103 $4,367,630 $4,476,821 $4,588,742 $4,703,460 $4,821,047
1,191,946 1,221,744 1,252,288 1,283,595 1,315,685 1,348,577 1,382,292 1,416,849
57,451 58,887 60,359 61,868 63,415 65,000 66,625 68,291
$5,305,175 $5,437,805 $5,573,750 $5,713,093 $5,855,921 $6,002,319 $6,152,377 $6,306,186
(202,789) (207,859) (213,055) (218,382) (223,841) (229,437) (235,173) (241,052)
(59,597) (61,087) (62,614) (64,180) (65,784) (67,429) (69,115) (70,842)
(2,873)(2,944)(3,018)(3,093)(3,171)(3,250)(3,331)(3,415)
$5,039,916 $5,165,914 $5,295,062 $5,427,439 $5,563,125 $5,702,203 $5,844,758 $5,990,877
$3,186,591 $3,298,122 $3,413,556 $3,533,030 $3,656,686 $3,784,670 $3,917,134 $4,054,234
17,691 18,045 18,406 18,774 19,149 19,532 19,923 20,321
125,932 130,340 134,902 139,623 144,510 149,568 154,803 160,221
12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000
5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
0 0 0 0 0 0 0 0
198,091 205,024 212,200 219,627 227,314 235,270 243,505 252,027
$3,545,305 $3,668,531 $3,796,063 $3,928,055 $4,064,660 $4,206,041 $4,352,364 $4,503,803
$1,494,611 $1,497,384 $1,498,999 $1,499,384 $1,498,465 $1,496,162 $1,492,394 $1,487,074
0 0 0 0 0 0 0 0
$1,494,611 $1,497,384 $1,498,999 $1,499,384 $1,498,465 $1,496,162 $1,492,394 $1,487,074
0 0 0 0 0 0 0 0
(40,119) (41,323) (42,562) (43,839) (45,154) (46,509) (47,904) (49,341)
0 0 0 0 0 0 0 0
$0 $0 $0 $0 $0 $0 $0 $0
(40,119)(41,323)(42,562)(43,839)(45,154)(46,509)(47,904)(49,341)
40,119 41,323 42,562 43,839 45,154 46,509 47,904 49,341
0 0 0 0 0 0 0 0
$1,414,373 $1,414,739 $1,413,874 $1,411,706 $1,408,156 $1,403,144 $1,396,585 $1,388,391
$6,952,276 $6,724,284 $6,496,186 $6,268,338 $6,041,115 $5,814,916 $5,584,610 $5,349,287
180,000 180,000 180,000 180,000 180,000 174,447 167,538 160,479
(407,992)(408,098)(407,848)(407,223)(406,199)(404,753)(402,861)(5,509,766)
$6,724,284 $6,496,186 $6,268,338 $6,041,115 $5,814,916 $5,584,610 $5,349,287 $0
$5,098,336 $4,931,141 $4,763,870 $4,596,781 $4,430,151 $4,264,272 $4,095,381 $3,922,811
132,000 132,000 132,000 132,000 132,000 127,928 122,861 117,684
(299,194)(299,272)(299,089)(298,630)(297,879)(296,819)(295,432)(4,040,495)
$4,931,141 $4,763,870 $4,596,781 $4,430,151 $4,264,272 $4,095,381 $3,922,811 $0
$707,187 $707,369 $706,937 $705,853 $704,078 $701,572 $698,293 ($8,161,870)
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Cash Flow; jlr; 10/3/2022 Item 2A-48
APPENDIX B
PHASE II FINANCIAL GAP ANALYSIS
Item 2A-49
APPENDIX B- TABLE 1
ESTIMATED DEVELOPMENT COSTS
PALM VILLAS AT MILLENNIUM - PHASE II
PALM DESERT, CALIFORNIA
I.Acquisition Costs 1
Purchase Price 2 194,713 Sf Land $7.50 /Sf Land $1,459,000
Closing Costs 3 0% of Purchase Price 0
Total Acquisition Costs 120 Units $12,200 /Unit $1,459,000
II.Direct Costs 1, 4
Offsite Improvements 5 $0
Onsite Improvements 6 194,713 Sf Land $23 /Sf Land 4,525,000
Extraordinary Costs 7 120 Units $6,900 /Unit 828,000
Residential Shell Costs 121,877 Sf Residential $249 /Sf Residential 30,390,000
Community Building 0 Sf Comm Bldg $0 /Sf Comm Bldg 0
FF&E - Project 120 Units $583 /Unit 70,000
Contractor Fees 14% of Construction Costs 5,004,000
Construction Insurance/Bonds 1% of Construction Costs 407,000
Contingency Allowance 5% of Other Direct Costs 2,058,000
Total Direct Costs 120 Units $360,683 /Unit $43,282,000
III.Indirect Costs 1
Architecture, Engineering & Consulting 4% of Direct Costs $1,803,000
Permits & Fees - Residential 8 120 Units $29,250 /Unit 3,510,000
Taxes, Insurance, Legal & Accounting 2% of Direct Costs 737,000
Marketing Costs 120 Units $417 /Unit 50,000
Developer Fee 9 $49,771,250 Net Eligible Basis 10% of Net EB 5,077,000
Contingency Allowance 4% of Other Indirect Costs 500,000
Total Indirect Costs $11,677,000
IV. Financing Costs
1
Tax-Exempt Bonds Interest During Const.10 $39,390,630 Loan Amount 5.27% Interest $1,502,000
Financing Fees
Construction Loan $39,390,630 Loan Amount 1.13 Points 444,000
Permanent Loan $11,983,214 Loan Amount 0.58 Points 70,000
Issuance Costs $39,390,630 TE Bonds 0.58 Points 227,000
TCAC Fees 80,000
Capitalized Reserves
Operating Reserve 3 Months $121,328 Op Exp + DS/Month 364,000
Limited Partner Asset Management Fee 15 Year(s)$5,000 /Year 75,000
Transition Reserve 0 Year(s)$373,452 Subsidy/Year 0
Total Financing Costs $2,762,000
V. Total Development Costs 120 Units $493,200 /Unit $59,180,000
1
2
3
4
5
6
7
8
9
10
Costs include BBQ area, shade structures, and X parking spaces.
Costs include required solar improvements.
Based on Developer estimate and includes $796,000 TUMF fees. City staff should verify estimates.
Based on maximum developer fee allowed by TCAC for TEB projects.
Assumes a 14-month development period and an average outstanding balance of 62%.
Based on Developer's 9/27/22 pro forma estimates.
Based on appraisal dated 6/30/22, in which CBRE, Inc established the land value at $7.50 per square foot of land area.
Costs included in Taxes, Insurance, Legal and Accounting category.
Construction costs include federal Davis Bacon wages and escalation for a December 2023 construction start.
All offsite improvements will be completed in Phase I.
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Fin Gap PF-II; jlr; 10/3/2022 Item 2A-50
APPENDIX B- TABLE 2
STABILIZED NET OPERATING INCOME
PALM VILLAS AT MILLENNIUM - PHASE II
PALM DESERT, CALIFORNIA
I.Project Income 1
Manager's Unit (2-bdrm)1 Unit(s)$0 /Unit/Mo $0
30% AMI TCAC / ELI HCD /Unit/Mo
1-Bedroom Units 15 Unit(s)$416 /Unit/Mo 74,880
2-Bedroom Units 21 Unit(s)$488 /Unit/Mo 122,976
3-Bedroom Units 0 Unit(s)$552 /Unit/Mo 0
30% AMI TCAC / 59% Low HCD
1-Bedroom Units 0 Unit(s)$419 /Unit/Mo 0
2-Bedroom Units 0 Unit(s)$492 /Unit/Mo 0
3-Bedroom Units 7 Unit(s)$556 /Unit/Mo 46,704
60% AMI TCAC / 59% Low HCD
1-Bedroom Units 0 Unit(s)$891 /Unit/Mo 0
2-Bedroom Units 53 Unit(s)$1,058 /Unit/Mo 672,888
3-Bedroom Units 0 Unit(s)$1,211 /Unit/Mo 0
60% AMI TCAC / Low HCD
1-Bedroom Units 0 Unit(s)$907 /Unit/Mo 0
2-Bedroom Units 0 Unit(s)$1,078 /Unit/Mo 0
3-Bedroom Units 23 Unit(s)$1,234 /Unit/Mo 340,584
Gross Potential Income - Base Rents 120 Units $874 /Unit/Mo $1,258,032
Gross Potential Income - PBV Overhang 2 30 Unit(s)$1,037 /Unit/Mo 373,452
Miscellaneous Income 120 Units $12 /Unit/Mo 17,850
Gross Potential Income $1,649,334
(Less) Vacancy & Collection - Base Rents 3 5% of GPI (62,902)
(Less) Vacancy & Collection - PBV Overhang 3 5% of GPI (18,673)
(Less) Vacancy & Collection - Misc. Income 3 5% of GPI (893)
Effective Gross Income $1,566,867
II.Operating Expenses 3
General Operating Expenses 120 Units $5,238 /Unit $628,570
Property Taxes 6,917
Social Programs 120 Units $208 /Unit 25,000
County Monitoring Fee 119 Aff Units $100 /Aff Unit 11,900
Bond Issuer Fee 5,000
Annual City Fee 120 Units $0 /Unit 0
Replacement Reserves 120 Units $325 /Unit 39,000
Total Operating Expenses 120 Units $5,970 /Unit $716,387
III. Net Operating Income 495,701 Base NOI 354,779 PBV NOI $850,480
1
2
3
Rents are based on the lesser of the 2022 TCAC and HCD rent limits. The restrictions also meet the SLA and Density Bonus restrictions. Assumes the Riverside Housing
Authority Utility Allowances for Energy Efficient Apartments dates 7/1/22 and includes electric space heating & water heating and basic electricity. Monthly
allowances are estimated at $76/1-bdrm units, $102/2-bdrm units and $130/3-bdrm units.
The PBV Contract rents are based on the Riverside Housing Authority chart effective 10/1/22 and are $2478/3-bdrm units, net of the appropriate utility allowances.
Based on Developer's pro forma dated 9/27/22.
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Fin Gap PF-II; jlr; 10/3/2022 Item 2A-51
APPENDIX B- TABLE 3
FINANCIAL SURPLUS / GAP ANALYSIS
PALM VILLAS AT MILLENNIUM - PHASE II
PALM DESERT, CALIFORNIA
I.Proposed Funding Sources 1
A. Permanent Loan - Base Income 1.15 DCR $431,044 Debt Service $6,984,000
5.15% Int Rate 35 Amort. Term
B. Permanent Loan - Subsidy Income 1.15 DCR $308,504 Debt Service $4,999,000
5.15% Int Rate 35 Amort. Term
C. Federal Tax Credit Equity $28,521,090 Gross TC 87.99% Equity Rate $25,096,000
Tie-Breaker Score
D. State Tax Credit Equity $16,454,475 Gross TC Requested 74.99% Equity Rate $12,340,000
E. Waived TUMF Fees
2 $790,000
F. County Loan 119 Affordable Units $46,200 /Aff Units $5,500,000
G. Deferred Developer Fee $5,077,000 Developer Fee 53% Deferred $2,716,000
Total Proposed Funding Sources $58,425,000
II.Financial Surplus / (Gap) Calculation
Total Proposed Funding Sources $58,425,000
(Less) Total Development Costs (See Appendix B - Table 1)(59,180,000)
Financial Surplus / Gap ($755,000)
III. City Assistance Funding Sources
Land - Pre-2012 $0
Land - City $0
Waived Fees $0
LMIHAF - Land Purchase 0
LMIHAF Assistance 755,000
HOME Assistance 0
In-Lieu Fee Assistance 0
Total City Assistance $755,000
1
2
Based on Developer's 9/27/22 pro forma assumptions.
Assumes TUMF fees will be waived by Coachella Valley Association of Governments (CVAG).
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Fin Gap PF-II; jlr; 10/3/2022 Item 2A-52
APPENDIX B - TABLE 4
CASH FLOW ANALYSIS
PALM VILLAS AT MILLENNIUM - PHASE II
PALM DESERT, CALIFORNIA
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
I. Project Income
Gross Potential Base Rental Income 102.5% /Year $1,258,032 $1,289,483 $1,321,720 $1,354,763 $1,388,632 $1,423,348 $1,458,931 $1,495,405 $1,532,790 $1,571,110 $1,610,387
Gross Potential PBV Subsidy Income 102.5% /Year 373,452 382,788 392,358 402,167 412,221 422,527 433,090 443,917 455,015 466,390 478,050
Miscellaneous Income 102.5% /Year 17,850 18,296 18,754 19,222 19,703 20,196 20,701 21,218 21,748 22,292 22,850
Gross Potential Income $1,649,334 $1,690,567 $1,732,832 $1,776,152 $1,820,556 $1,866,070 $1,912,722 $1,960,540 $2,009,553 $2,059,792 $2,111,287
(Less) Vacancy & Collection Allowance - GPRI 5.0% of PGI (62,902) (64,474) (66,086) (67,738) (69,432) (71,167) (72,947) (74,770) (76,639) (78,555) (80,519)
(Less) Vacancy & Collection Allowance - PBV 5.0% of PGI (18,673) (19,139) (19,618) (20,108) (20,611) (21,126) (21,654) (22,196) (22,751) (23,320) (23,903)
(Less) Vacancy & Collecton Allowance - Misc Inc. 5.0% of PGI (893)(915)(938)(961)(985)(1,010)(1,035)(1,061)(1,087)(1,115)(1,142)
Effective Gross Income $1,566,867 $1,606,039 $1,646,190 $1,687,345 $1,729,528 $1,772,767 $1,817,086 $1,862,513 $1,909,076 $1,956,803 $2,005,723
II. Operating Expenses
General Operating Expenses 103.5% /Year $628,570 $650,570 $673,340 $696,907 $721,299 $746,544 $772,673 $799,717 $827,707 $856,676 $886,660
Property Taxes 102.0% /Year 6,917 7,055 7,196 7,340 7,487 7,637 7,790 7,945 8,104 8,266 8,432
Social Programs 103.5% /Year 25,000 25,875 26,781 27,718 28,688 29,692 30,731 31,807 32,920 34,072 35,265
County Monitoring Fee 100.0% /Year 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900
Bond Issuer Fee 100.0% /Year 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Annual City Fee 100.0% /Year 0 0 0 0 0 0 0 0 0 0 0
Replacement Reserves 103.5% /Year 39,000 40,365 41,778 43,240 44,753 46,320 47,941 49,619 51,356 53,153 55,013
Total Operating Expenses $716,387 $740,765 $765,995 $792,105 $819,127 $847,093 $876,035 $905,988 $936,987 $969,068 $1,002,270
III. Net Operating Income $850,480 $865,274 $880,195 $895,240 $910,401 $925,674 $941,051 $956,525 $972,089 $987,734 $1,003,452
(Less) Debt Service (739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)
IV. Available Cash Flow $110,932 $125,726 $140,647 $155,692 $170,853 $186,126 $201,503 $216,977 $232,541 $248,186 $263,904
(Less) Asset Management Fee - LP 103.0% /Year 0 0 0 0 0 0 0 0 0 0 0
(Less) Asset Management Fee - MGP 103.0% /Year (10,000) (10,300) (10,609) (10,927) (11,255) (11,593) (11,941) (12,299) (12,668) (13,048) (13,439)
(Less) Deferred Developer Fee (100,932) (115,426) (130,038) (144,764) (159,598) (174,533) (189,562) (204,678) (219,873) (235,139) (250,465)
Deferred Developer Fee Balance $2,716,000 $2,615,068 $2,499,642 $2,369,604 $2,224,839 $2,065,241 $1,890,708 $1,701,146 $1,496,468 $1,276,595 $1,041,456 $790,991
(Less) Asset Management Fee - AGP 0 0 0 0 0 0 0 0 0 0 0
Annual Payment 103.0% /Year 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 13,439
AMF Balance 10,000 20,300 30,909 41,836 53,091 64,684 76,625 88,923 101,591 114,639 128,078
V. Cash Flow Available for Distribution $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
VI. City Loan
Beginning Balance $755,000 $777,650 $800,300 $822,950 $845,600 $868,250 $890,900 $913,550 $936,200 $958,850 $981,500
Simple Interest 3.00% Interest 22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650
(Less) Residual Receipts Payment 6.04% of RR 0 0 0 0 0 0 0 0 0 0 0
Ending Balance $777,650 $800,300 $822,950 $845,600 $868,250 $890,900 $913,550 $936,200 $958,850 $981,500 $1,004,150
Nominal Payments (55 Years)$1,781,000
PV of Payments 6.00% Disc Rate $230,000
VII. County Loan
Beginning Balance $5,500,000 $5,665,000 $5,830,000 $5,995,000 $6,160,000 $6,325,000 $6,490,000 $6,655,000 $6,820,000 $6,985,000 $7,150,000
Simple Interest 3.00% Interest 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000
(Less) Residual Receipts Payment 43.96% of RR 0 0 0 0 0 0 0 0 0 0 0
Ending Balance $5,665,000 $5,830,000 $5,995,000 $6,160,000 $6,325,000 $6,490,000 $6,655,000 $6,820,000 $6,985,000 $7,150,000 $7,315,000
Nominal Payments (55 Years)$12,975,000
PV of Payments (6.00% Discount Rate)6.00% Disc Rate $1,674,000
VIII. Cash Flow to Developer $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Cash Flow-II; jlr; 10/3/2022 Item 2A-53
APPENDIX B - TABLE 4
CASH FLOW ANALYSIS
PALM VILLAS AT MILLENNIUM - PHASE II
PALM DESERT, CALIFORNIA
I. Project Income
Gross Potential Base Rental Income 102.5% /Year
Gross Potential PBV Subsidy Income 102.5% /Year
Miscellaneous Income 102.5% /Year
Gross Potential Income
(Less) Vacancy & Collection Allowance - GPRI 5.0% of PGI
(Less) Vacancy & Collection Allowance - PBV 5.0% of PGI
(Less) Vacancy & Collecton Allowance - Misc Inc. 5.0% of PGI
Effective Gross Income
II. Operating Expenses
General Operating Expenses 103.5% /Year
Property Taxes 102.0% /Year
Social Programs 103.5% /Year
County Monitoring Fee 100.0% /Year
Bond Issuer Fee 100.0% /Year
Annual City Fee 100.0% /Year
Replacement Reserves 103.5% /Year
Total Operating Expenses
III. Net Operating Income
(Less) Debt Service
IV. Available Cash Flow
(Less) Asset Management Fee - LP 103.0% /Year
(Less) Asset Management Fee - MGP 103.0% /Year
(Less) Deferred Developer Fee
Deferred Developer Fee Balance
(Less) Asset Management Fee - AGP
Annual Payment 103.0% /Year
AMF Balance
V. Cash Flow Available for Distribution
VI. City Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 6.04% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments 6.00% Disc Rate
VII. County Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 43.96% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments (6.00% Discount Rate)6.00% Disc Rate
VIII. Cash Flow to Developer
Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23
$1,650,647 $1,691,913 $1,734,211 $1,777,566 $1,822,005 $1,867,556 $1,914,244 $1,962,101 $2,011,153 $2,061,432 $2,112,968 $2,165,792
490,001 502,251 514,808 527,678 540,870 554,392 568,251 582,458 597,019 611,945 627,243 642,924
23,421 24,006 24,606 25,222 25,852 26,498 27,161 27,840 28,536 29,249 29,981 30,730
$2,164,069 $2,218,171 $2,273,625 $2,330,466 $2,388,727 $2,448,446 $2,509,657 $2,572,398 $2,636,708 $2,702,626 $2,770,191 $2,839,446
(82,532) (84,596) (86,711) (88,878) (91,100) (93,378) (95,712) (98,105) (100,558) (103,072) (105,648) (108,290)
(24,500) (25,113) (25,740) (26,384) (27,043) (27,720) (28,413) (29,123) (29,851) (30,597) (31,362) (32,146)
(1,171)(1,200)(1,230)(1,261)(1,293)(1,325)(1,358)(1,392)(1,427)(1,462)(1,499)(1,537)
$2,055,866 $2,107,262 $2,159,944 $2,213,942 $2,269,291 $2,326,023 $2,384,174 $2,443,778 $2,504,873 $2,567,495 $2,631,682 $2,697,474
$917,693 $949,812 $983,056 $1,017,463 $1,053,074 $1,089,932 $1,128,079 $1,167,562 $1,208,427 $1,250,722 $1,294,497 $1,339,804
8,600 8,772 8,948 9,127 9,309 9,496 9,685 9,879 10,077 10,278 10,484 10,694
36,499 37,777 39,099 40,467 41,884 43,350 44,867 46,437 48,063 49,745 51,486 53,288
11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900
5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
0 0 0 0 0 0 0 0 0 0 0 0
56,939 58,932 60,994 63,129 65,339 67,625 69,992 72,442 74,978 77,602 80,318 83,129
$1,036,632 $1,072,193 $1,108,997 $1,147,086 $1,186,506 $1,227,302 $1,269,524 $1,313,220 $1,358,444 $1,405,246 $1,453,684 $1,503,815
$1,019,234 $1,035,069 $1,050,947 $1,066,856 $1,082,785 $1,098,721 $1,114,650 $1,130,558 $1,146,429 $1,162,248 $1,177,998 $1,193,659
(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)
$279,686 $295,521 $311,399 $327,308 $343,237 $359,173 $375,102 $391,010 $406,881 $422,700 $438,450 $454,111
0 0 0 0 0 0 0 0 0 0 0 0
(13,842) (14,258) (14,685) (15,126) (15,580) (16,047) (16,528) (17,024) (17,535) (18,061) (18,603) (19,161)
(265,844) (281,263) (243,884) 0 0 0 0 0 0 0 0 0
$525,147 $243,884 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
0 0 (52,830)(133,160)(15,580)(16,047)(16,528)(17,024)(17,535)(18,061)(18,603)(19,161)
13,842 14,258 14,685 15,126 15,580 16,047 16,528 17,024 17,535 18,061 18,603 19,161
141,920 156,178 118,034 0 0 0 0 0 0 0 0 0
$0 $0 $0 $179,023 $312,078 $327,079 $342,045 $356,961 $371,811 $386,578 $401,244 $415,789
$1,004,150 $1,026,800 $1,049,450 $1,072,100 $1,083,946 $1,087,761 $1,090,671 $1,092,678 $1,093,785 $1,093,996 $1,093,315 $1,091,749
22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650
0 0 0 (10,804)(18,834)(19,740)(20,643)(21,543)(22,439)(23,331)(24,216)(25,094)
$1,026,800 $1,049,450 $1,072,100 $1,083,946 $1,087,761 $1,090,671 $1,092,678 $1,093,785 $1,093,996 $1,093,315 $1,091,749 $1,089,306
$7,315,000 $7,480,000 $7,645,000 $7,810,000 $7,896,293 $7,924,088 $7,945,289 $7,959,909 $7,967,972 $7,969,506 $7,964,547 $7,953,141
165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000
0 0 0 (78,707)(137,205)(143,800)(150,380)(156,937)(163,466)(169,958)(176,406)(182,801)
$7,480,000 $7,645,000 $7,810,000 $7,896,293 $7,924,088 $7,945,289 $7,959,909 $7,967,972 $7,969,506 $7,964,547 $7,953,141 $7,935,340
$0 $0 $0 $89,511 $156,039 $163,539 $171,023 $178,481 $185,906 $193,289 $200,622 $207,895
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Cash Flow-II; jlr; 10/3/2022 Item 2A-54
APPENDIX B - TABLE 4
CASH FLOW ANALYSIS
PALM VILLAS AT MILLENNIUM - PHASE II
PALM DESERT, CALIFORNIA
I. Project Income
Gross Potential Base Rental Income 102.5% /Year
Gross Potential PBV Subsidy Income 102.5% /Year
Miscellaneous Income 102.5% /Year
Gross Potential Income
(Less) Vacancy & Collection Allowance - GPRI 5.0% of PGI
(Less) Vacancy & Collection Allowance - PBV 5.0% of PGI
(Less) Vacancy & Collecton Allowance - Misc Inc. 5.0% of PGI
Effective Gross Income
II. Operating Expenses
General Operating Expenses 103.5% /Year
Property Taxes 102.0% /Year
Social Programs 103.5% /Year
County Monitoring Fee 100.0% /Year
Bond Issuer Fee 100.0% /Year
Annual City Fee 100.0% /Year
Replacement Reserves 103.5% /Year
Total Operating Expenses
III. Net Operating Income
(Less) Debt Service
IV. Available Cash Flow
(Less) Asset Management Fee - LP 103.0% /Year
(Less) Asset Management Fee - MGP 103.0% /Year
(Less) Deferred Developer Fee
Deferred Developer Fee Balance
(Less) Asset Management Fee - AGP
Annual Payment 103.0% /Year
AMF Balance
V. Cash Flow Available for Distribution
VI. City Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 6.04% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments 6.00% Disc Rate
VII. County Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 43.96% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments (6.00% Discount Rate)6.00% Disc Rate
VIII. Cash Flow to Developer
Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 Year 30 Year 31 Year 32 Year 33 Year 34 Year 35
$2,219,937 $2,275,435 $2,332,321 $2,390,629 $2,450,395 $2,511,655 $2,574,446 $2,638,807 $2,704,777 $2,772,397 $2,841,707 $2,912,749
658,997 675,472 692,359 709,668 727,410 745,595 764,235 783,341 802,924 822,997 843,572 864,662
31,498 32,286 33,093 33,920 34,768 35,637 36,528 37,442 38,378 39,337 40,320 41,329
$2,910,432 $2,983,193 $3,057,773 $3,134,217 $3,212,573 $3,292,887 $3,375,209 $3,459,590 $3,546,079 $3,634,731 $3,725,600 $3,818,740
(110,997) (113,772) (116,616) (119,531) (122,520) (125,583) (128,722) (131,940) (135,239) (138,620) (142,085) (145,637)
(32,950) (33,774) (34,618) (35,483) (36,370) (37,280) (38,212) (39,167) (40,146) (41,150) (42,179) (43,233)
(1,575)(1,614)(1,655)(1,696)(1,738)(1,782)(1,826)(1,872)(1,919)(1,967)(2,016)(2,066)
$2,764,911 $2,834,034 $2,904,884 $2,977,506 $3,051,944 $3,128,243 $3,206,449 $3,286,610 $3,368,775 $3,452,995 $3,539,320 $3,627,803
$1,386,697 $1,435,232 $1,485,465 $1,537,456 $1,591,267 $1,646,961 $1,704,605 $1,764,266 $1,826,016 $1,889,926 $1,956,074 $2,024,536
10,907 11,126 11,348 11,575 11,807 12,043 12,284 12,529 12,780 13,035 13,296 13,562
55,153 57,083 59,081 61,149 63,289 65,504 67,797 70,170 72,626 75,168 77,799 80,522
11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900
5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
0 0 0 0 0 0 0 0 0 0 0 0
86,038 89,050 92,167 95,392 98,731 102,187 105,763 109,465 113,296 117,262 121,366 125,614
$1,555,696 $1,609,390 $1,664,961 $1,722,473 $1,781,994 $1,843,595 $1,907,349 $1,973,330 $2,041,617 $2,112,291 $2,185,434 $2,261,133
$1,209,215 $1,224,643 $1,239,924 $1,255,034 $1,269,950 $1,284,648 $1,299,100 $1,313,280 $1,327,158 $1,340,704 $1,353,886 $1,366,669
(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)(739,548)
$469,667 $485,095 $500,376 $515,486 $530,402 $545,100 $559,552 $573,732 $587,610 $601,156 $614,338 $627,121
0 0 0 0 0 0 0 0 0 0 0 0
(19,736) (20,328) (20,938) (21,566) (22,213) (22,879) (23,566) (24,273) (25,001) (25,751) (26,523) (27,319)
0 0 0 0 0 0 0 0 0 0 0 0
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
(19,736)(20,328)(20,938)(21,566)(22,213)(22,879)(23,566)(24,273)(25,001)(25,751)(26,523)(27,319)
19,736 20,328 20,938 21,566 22,213 22,879 23,566 24,273 25,001 25,751 26,523 27,319
0 0 0 0 0 0 0 0 0 0 0 0
$430,195 $444,439 $458,500 $472,354 $485,976 $499,341 $512,421 $525,186 $537,608 $549,654 $561,291 $572,483
$1,089,306 $1,085,993 $1,081,820 $1,076,799 $1,070,941 $1,064,262 $1,056,776 $1,048,500 $1,039,454 $1,029,659 $1,019,136 $1,007,911
22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650 22,650
(25,963)(26,823)(27,671)(28,507)(29,330)(30,136)(30,925)(31,696)(32,446)(33,173)(33,875)(34,550)
$1,085,993 $1,081,820 $1,076,799 $1,070,941 $1,064,262 $1,056,776 $1,048,500 $1,039,454 $1,029,659 $1,019,136 $1,007,911 $996,011
$7,935,340 $7,911,206 $7,880,809 $7,844,230 $7,801,560 $7,752,902 $7,698,367 $7,638,082 $7,572,185 $7,500,826 $7,424,172 $7,342,401
165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000
(189,134)(195,397)(201,579)(207,670)(213,659)(219,534)(225,285)(230,897)(236,359)(241,655)(246,771)(251,691)
$7,911,206 $7,880,809 $7,844,230 $7,801,560 $7,752,902 $7,698,367 $7,638,082 $7,572,185 $7,500,826 $7,424,172 $7,342,401 $7,255,710
$215,097 $222,220 $229,250 $236,177 $242,988 $249,671 $256,210 $262,593 $268,804 $274,827 $280,645 $286,242
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Cash Flow-II; jlr; 10/3/2022 Item 2A-55
APPENDIX B - TABLE 4
CASH FLOW ANALYSIS
PALM VILLAS AT MILLENNIUM - PHASE II
PALM DESERT, CALIFORNIA
I. Project Income
Gross Potential Base Rental Income 102.5% /Year
Gross Potential PBV Subsidy Income 102.5% /Year
Miscellaneous Income 102.5% /Year
Gross Potential Income
(Less) Vacancy & Collection Allowance - GPRI 5.0% of PGI
(Less) Vacancy & Collection Allowance - PBV 5.0% of PGI
(Less) Vacancy & Collecton Allowance - Misc Inc. 5.0% of PGI
Effective Gross Income
II. Operating Expenses
General Operating Expenses 103.5% /Year
Property Taxes 102.0% /Year
Social Programs 103.5% /Year
County Monitoring Fee 100.0% /Year
Bond Issuer Fee 100.0% /Year
Annual City Fee 100.0% /Year
Replacement Reserves 103.5% /Year
Total Operating Expenses
III. Net Operating Income
(Less) Debt Service
IV. Available Cash Flow
(Less) Asset Management Fee - LP 103.0% /Year
(Less) Asset Management Fee - MGP 103.0% /Year
(Less) Deferred Developer Fee
Deferred Developer Fee Balance
(Less) Asset Management Fee - AGP
Annual Payment 103.0% /Year
AMF Balance
V. Cash Flow Available for Distribution
VI. City Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 6.04% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments 6.00% Disc Rate
VII. County Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 43.96% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments (6.00% Discount Rate)6.00% Disc Rate
VIII. Cash Flow to Developer
Year 36 Year 37 Year 38 Year 39 Year 40 Year 41 Year 42 Year 43 Year 44 Year 45 Year 46 Year 47
$2,985,568 $3,060,207 $3,136,712 $3,215,130 $3,295,509 $3,377,896 $3,462,344 $3,548,902 $3,637,625 $3,728,565 $3,821,780 $3,917,324
886,278 908,435 931,146 954,425 978,285 1,002,742 1,027,811 1,053,506 1,079,844 1,106,840 1,134,511 1,162,874
42,362 43,421 44,506 45,619 46,759 47,928 49,127 50,355 51,614 52,904 54,227 55,582
$3,914,208 $4,012,063 $4,112,365 $4,215,174 $4,320,553 $4,428,567 $4,539,281 $4,652,763 $4,769,082 $4,888,309 $5,010,517 $5,135,780
(149,278) (153,010) (156,836) (160,757) (164,775) (168,895) (173,117) (177,445) (181,881) (186,428) (191,089) (195,866)
(44,314) (45,422) (46,557) (47,721) (48,914) (50,137) (51,391) (52,675) (53,992) (55,342) (56,726) (58,144)
(2,118)(2,171)(2,225)(2,281)(2,338)(2,396)(2,456)(2,518)(2,581)(2,645)(2,711)(2,779)
$3,718,498 $3,811,460 $3,906,747 $4,004,415 $4,104,526 $4,207,139 $4,312,317 $4,420,125 $4,530,628 $4,643,894 $4,759,991 $4,878,991
$2,095,395 $2,168,734 $2,244,639 $2,323,202 $2,404,514 $2,488,672 $2,575,775 $2,665,928 $2,759,235 $2,855,808 $2,955,762 $3,059,213
13,833 14,110 14,392 14,680 14,974 15,273 15,578 15,890 16,208 16,532 16,863 17,200
83,340 86,257 89,276 92,400 95,634 98,981 102,446 106,031 109,743 113,584 117,559 121,674
11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900
5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
0 0 0 0 0 0 0 0 0 0 0 0
130,010 134,560 139,270 144,144 149,189 154,411 159,816 165,409 171,198 177,190 183,392 189,811
$2,339,478 $2,420,561 $2,504,477 $2,591,326 $2,681,211 $2,774,238 $2,870,515 $2,970,158 $3,073,284 $3,180,014 $3,290,475 $3,404,797
$1,379,020 $1,390,899 $1,402,269 $1,413,089 $1,423,314 $1,432,901 $1,441,802 $1,449,967 $1,457,344 $1,463,880 $1,469,516 $1,474,194
0 0 0 0 0 0 0 0 0 0 0 0
$1,379,020 $1,390,899 $1,402,269 $1,413,089 $1,423,314 $1,432,901 $1,441,802 $1,449,967 $1,457,344 $1,463,880 $1,469,516 $1,474,194
0 0 0 0 0 0 0 0 0 0 0 0
(28,139) (28,983) (29,852) (30,748) (31,670) (32,620) (33,599) (34,607) (35,645) (36,715) (37,816) (38,950)
0 0 0 0 0 0 0 0 0 0 0 0
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
(28,139)(28,983)(29,852)(30,748)(31,670)(32,620)(33,599)(34,607)(35,645)(36,715)(37,816)(38,950)
28,139 28,983 29,852 30,748 31,670 32,620 33,599 34,607 35,645 36,715 37,816 38,950
0 0 0 0 0 0 0 0 0 0 0 0
$1,322,742 $1,332,934 $1,342,565 $1,351,593 $1,359,974 $1,367,660 $1,374,604 $1,380,753 $1,386,054 $1,390,451 $1,393,884 $1,396,293
$996,011 $938,831 $881,036 $822,660 $763,739 $704,313 $642,901 $579,229 $513,275 $445,022 $374,457 $301,567
22,650 22,650 22,650 22,650 22,650 21,129 19,287 17,377 15,398 13,351 11,234 9,047
(79,830)(80,445)(81,026)(81,571)(82,077)(82,541)(82,960)(83,331)(83,651)(83,916)(84,123)(84,269)
$938,831 $881,036 $822,660 $763,739 $704,313 $642,901 $579,229 $513,275 $445,022 $374,457 $301,567 $226,346
$7,255,710 $6,839,169 $6,418,147 $5,992,890 $5,563,665 $5,130,755 $4,683,388 $4,219,547 $3,739,088 $3,241,884 $2,727,831 $2,196,847
165,000 165,000 165,000 165,000 165,000 153,923 140,502 126,586 112,173 97,257 81,835 65,905
(581,541)(586,022)(590,256)(594,226)(597,910)(601,290)(604,342)(607,046)(609,376)(611,309)(612,819)(613,878)
$6,839,169 $6,418,147 $5,992,890 $5,563,665 $5,130,755 $4,683,388 $4,219,547 $3,739,088 $3,241,884 $2,727,831 $2,196,847 $1,648,875
$661,371 $666,467 $671,282 $675,797 $679,987 $683,830 $687,302 $690,377 $693,027 $695,225 $696,942 $698,146
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Cash Flow-II; jlr; 10/3/2022 Item 2A-56
APPENDIX B - TABLE 4
CASH FLOW ANALYSIS
PALM VILLAS AT MILLENNIUM - PHASE II
PALM DESERT, CALIFORNIA
I. Project Income
Gross Potential Base Rental Income 102.5% /Year
Gross Potential PBV Subsidy Income 102.5% /Year
Miscellaneous Income 102.5% /Year
Gross Potential Income
(Less) Vacancy & Collection Allowance - GPRI 5.0% of PGI
(Less) Vacancy & Collection Allowance - PBV 5.0% of PGI
(Less) Vacancy & Collecton Allowance - Misc Inc. 5.0% of PGI
Effective Gross Income
II. Operating Expenses
General Operating Expenses 103.5% /Year
Property Taxes 102.0% /Year
Social Programs 103.5% /Year
County Monitoring Fee 100.0% /Year
Bond Issuer Fee 100.0% /Year
Annual City Fee 100.0% /Year
Replacement Reserves 103.5% /Year
Total Operating Expenses
III. Net Operating Income
(Less) Debt Service
IV. Available Cash Flow
(Less) Asset Management Fee - LP 103.0% /Year
(Less) Asset Management Fee - MGP 103.0% /Year
(Less) Deferred Developer Fee
Deferred Developer Fee Balance
(Less) Asset Management Fee - AGP
Annual Payment 103.0% /Year
AMF Balance
V. Cash Flow Available for Distribution
VI. City Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 6.04% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments 6.00% Disc Rate
VII. County Loan
Beginning Balance
Simple Interest 3.00% Interest
(Less) Residual Receipts Payment 43.96% of RR
Ending Balance
Nominal Payments (55 Years)
PV of Payments (6.00% Discount Rate)6.00% Disc Rate
VIII. Cash Flow to Developer
Year 48 Year 49 Year 50 Year 51 Year 52 Year 53 Year 54 Year 55
$4,015,257 $4,115,639 $4,218,530 $4,323,993 $4,432,093 $4,542,895 $4,656,467 $4,772,879
1,191,946 1,221,744 1,252,288 1,283,595 1,315,685 1,348,577 1,382,292 1,416,849
56,972 58,396 59,856 61,352 62,886 64,458 66,070 67,722
$5,264,175 $5,395,779 $5,530,673 $5,668,940 $5,810,664 $5,955,930 $6,104,829 $6,257,449
(200,763) (205,782) (210,926) (216,200) (221,605) (227,145) (232,823) (238,644)
(59,597) (61,087) (62,614) (64,180) (65,784) (67,429) (69,115) (70,842)
(2,849)(2,920)(2,993)(3,068)(3,144)(3,223)(3,303)(3,386)
$5,000,966 $5,125,990 $5,254,140 $5,385,493 $5,520,131 $5,658,134 $5,799,587 $5,944,577
$3,166,286 $3,277,106 $3,391,804 $3,510,517 $3,633,386 $3,760,554 $3,892,173 $4,028,400
17,544 17,895 18,253 18,618 18,990 19,370 19,757 20,152
125,932 130,340 134,902 139,623 144,510 149,568 154,803 160,221
11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900
5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
0 0 0 0 0 0 0 0
196,454 203,330 210,447 217,812 225,436 233,326 241,492 249,944
$3,523,116 $3,645,570 $3,772,305 $3,903,471 $4,039,221 $4,179,718 $4,325,126 $4,475,617
$1,477,850 $1,480,420 $1,481,835 $1,482,023 $1,480,909 $1,478,416 $1,474,462 $1,468,960
0 0 0 0 0 0 0 0
$1,477,850 $1,480,420 $1,481,835 $1,482,023 $1,480,909 $1,478,416 $1,474,462 $1,468,960
0 0 0 0 0 0 0 0
(40,119) (41,323) (42,562) (43,839) (45,154) (46,509) (47,904) (49,341)
0 0 0 0 0 0 0 0
$0 $0 $0 $0 $0 $0 $0 $0
(40,119)(41,323)(42,562)(43,839)(45,154)(46,509)(47,904)(49,341)
40,119 41,323 42,562 43,839 45,154 46,509 47,904 49,341
0 0 0 0 0 0 0 0
$1,397,612 $1,397,775 $1,396,710 $1,394,345 $1,390,601 $1,385,399 $1,378,653 $1,370,277
$226,346 $148,788 $68,893 $0 $0 $0 $0 $0
6,790 4,464 2,067 0 0 0 0 0
(84,348)(84,358)(70,960)0 0 0 0 0
$148,788 $68,893 $0 $0 $0 $0 $0 $0
$1,648,875 $1,083,883 $501,870 $0 $0 $0 $0 $0
49,466 32,516 15,056 0 0 0 0 0
(614,458)(614,529)(516,927)0 0 0 0 0
$1,083,883 $501,870 $0 $0 $0 $0 $0 $0
$698,806 $698,887 $808,824 $1,394,345 $1,390,601 $1,385,399 $1,378,653 $1,370,277
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; Cash Flow-II; jlr; 10/3/2022 Item 2A-57
APPENDIX C
SB 341 INCOME TARGETING ANALYSIS
Item 2A-58
APPENDIX C
SB 341 INCOME TARGETING ANALYSIS
PALM VILLAS AT MILLENNIUM (PHASES I & II)
PALM DESERT, CALIFORNIA
Extremely-
Low Income
31% - 59%
AMI
60% - 80%
AMI
Not
Restricted by
City Total Project
I. Number of Units
Phase I 36 61 23 0 120
Phase II 36 60 23 0 119
Total Units 72 121 46 0 239
II.Financial Gap
Phase I $1,800,000 $3,050,000 $1,150,000 $0 $6,000,000
Phase II $228,000 $381,000 $146,000 $0 $755,000
Total Financial Gap $2,028,000 $3,431,000 $1,296,000 $0 $6,755,000
III.Income Targeting Test
LMIHAF Assistance FY 20/21 1 1,829,326 0 4,200,674 0 $6,030,000
LIMHAF Assistance FY 21/22 2 3,866,983 1,912,701 1,455,316 0 $7,235,000
LIMHAF Assistance FY 22/23 2,028,000 3,431,000 1,296,000 0 6,755,000
LIMHAF Assistance FY 23/24 0 0 0 0 $0
LIMHAF Assistance FY 24/25 0 0 0 0 $0
Total LMIHAF Assistance FY 19/20 - FY 23/24 $7,724,309 $5,343,701 $6,951,990 $0 $20,020,000
As a % of Total LMIHAF Assistance 39% 27% 35% 0% 100%
SB 341 Requirements At least 30%At most 20% Must be $0
1
2
Vitalia Project includes 267 restricted units (81 ELI and 186 80% AMI).
UHC Project includes 174 restricted units (93 ELI, 46 59% AMI and 35 80% AMI).
Prepared by: Keyser Marston Associates, Inc.
Filename: Palm Communities Project PF - 09.30.22; APPENDIX C; jlr; 10/3/2022
Item 2A-59
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DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT
AMONG
CITY OF PALM DESERT
PALM DESERT HOUSING AUTHORITY
AND
PALM COMMUNITIES
(PALM VILLAS AT MILLENNIUM)
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ARTICLE 1. DEFINITIONS AND EXHIBITS ................................................................ 3
Section 1.1 Definitions................................................................................................. 3
Section 1.2 Exhibits. .................................................................................................... 8
ARTICLE 2. PREDISPOSITION CONDITIONS FOR CONVEYANCE
OF EACH PHASE ........................................................................................ 9
Section 2.1 Conditions Precedent to Disposition of Property...................................... 9
Section 2.2 City Approvals. ......................................................................................... 9
Section 2.3 Parcel Map. ............................................................................................... 9
Section 2.4 Financing................................................................................................... 9
Section 2.5 Permits. ..................................................................................................... 9
Section 2.6 Tax Credits. ............................................................................................... 9
Section 2.7 Loan Closings. .......................................................................................... 9
Section 2.8 Construction Plans. ................................................................................. 10
Section 2.9 Construction Contract. ............................................................................ 10
Section 2.10 Cost Estimate. ......................................................................................... 10
Section 2.11 Construction Bonds. ................................................................................ 10
Section 2.12 Developer Organizational Documents. ................................................... 11
Section 2.13 Authority Loan. ....................................................................................... 11
Section 2.14 Tax Credit Equity. ................................................................................... 11
Section 2.15 City Easements........................................................................................ 11
Section 2.16 Phase II Conveyance. .............................................................................. 11
Section 2.17 HCD Confirmation of Exemption. .......................................................... 11
Section 2.18 AHAP. ..................................................................................................... 11
Section 2.19 Title Report. ............................................................................................ 11
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ARTICLE 3. DISPOSITION OF PROPERTY ............................................................... 12
Section 3.1 Conveyance of Phase I Parcel and Phase II Parcel. ................................ 12
Section 3.2 Purchase Prices. ...................................................................................... 12
Section 3.3 Deposit. ................................................................................................... 12
Section 3.4 Opening Escrow. ..................................................................................... 13
Section 3.5 Close of Escrow. ..................................................................................... 13
Section 3.6 Costs of Escrow and Closing. ................................................................. 14
Section 3.7 Condition of Title. ................................................................................... 14
Section 3.8 Condition of Property. ............................................................................ 15
ARTICLE 4. CONSTRUCTION OF DEVELOPMENT ............................................... 17
Section 4.1 Construction and Operation Consistent with Agreements. ..................... 17
Section 4.2 Commencement of Development. .......................................................... 18
Section 4.3 Completion of the Development. ............................................................ 18
Section 4.4 Equal Opportunity. .................................................................................. 18
Section 4.5 Construction Under Laws. ...................................................................... 18
Section 4.6 Progress Report. ...................................................................................... 18
Section 4.7 Construction Responsibilities. ................................................................ 18
Section 4.8 Mechanics Liens, Stop Notices, and Notices of Completion.................. 19
Section 4.9 Inspections. ............................................................................................. 19
Section 4.10 Records. .................................................................................................. 19
Section 4.11 Certificate of Completion. ...................................................................... 20
ARTICLE 5. AUTHORITY LOAN PROVISIONS ....................................................... 20
Section 5.1 Authority Loan. ....................................................................................... 20
Section 5.2 Use of Authority Loan. ........................................................................... 20
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Section 5.3 Delivery of Promissory Notes; Recording of Housing
Agreements; Deeds of Trust; Notices of Restrictions............................. 20
Section 5.4 Term of the Authority Loan. ................................................................... 21
Section 5.5 Interest; Payments. .................................................................................. 21
Section 5.6 Disbursement of Authority Loans. .......................................................... 21
Section 5.7 Repayment Schedule. .............................................................................. 22
Section 5.8 Reports and Accounting of Residual Receipts........................................ 22
Section 5.9 Non-Recourse. ........................................................................................ 23
ARTICLE 6. ONGOING DEVELOPER OBLIGATIONS ........................................... 23
Section 6.1 Applicability. .......................................................................................... 23
Section 6.2 Use of Development. .............................................................................. 23
Section 6.3 Maintenance. ........................................................................................... 24
Section 6.4 Taxes and Assessments. .......................................................................... 24
Section 6.5 Mandatory Language in All Subsequent Deeds, Leases and
Contracts. ................................................................................................ 25
Section 6.6 Management Agent. ................................................................................ 26
Section 6.7 Insurance Requirements. ......................................................................... 27
Section 6.8 Audits. ..................................................................................................... 30
ARTICLE 7. ASSIGNMENTS AND TRANSFERS ....................................................... 30
Section 7.1 Definitions............................................................................................... 30
Section 7.2 Purpose of Restrictions on Transfer. ....................................................... 31
Section 7.3 Prohibited Transfers. ............................................................................... 31
Section 7.4 Permitted Transfers. ................................................................................ 31
Section 7.5 Other Transfers with City Consent. ........................................................ 32
Section 7.6 Termination of Limitations on Transfers. ............................................... 32
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ARTICLE 8. DEFAULT AND REMEDIES ................................................................... 32
Section 8.1 General Applicability. ............................................................................. 32
Section 8.2 Fault of City. ........................................................................................... 33
Section 8.3 Fault of Authority. .................................................................................. 33
Section 8.4 Fault of Developer. ................................................................................. 33
Section 8.5 Notice and Cure Period Regarding City/Authority Defaults. ................. 34
Section 8.6 Remedies. ................................................................................................ 35
Section 8.7 Rights of Mortgagees. ............................................................................. 35
Section 8.8 Remedies Cumulative. ............................................................................ 36
ARTICLE 9. SECURITY FINANCING AND RIGHTS OF HOLDERS .................... 36
Section 9.1 No Encumbrances Except for Development Purposes. .......................... 36
Section 9.2 Holder Not Obligated to Construct. ........................................................ 36
Section 9.3 Notice of Default and Right to Cure. ...................................................... 36
Section 9.4 Failure of Holder to Complete Development.......................................... 37
Section 9.5 Right of Cure........................................................................................... 37
Section 9.6 Right of City to Satisfy Other Liens. ...................................................... 37
Section 9.7 Holder to be Notified. ............................................................................. 37
Section 9.8 Estoppel Certificates. .............................................................................. 37
ARTICLE 10. GENERAL PROVISIONS ......................................................................... 38
Section 10.1 Notices, Demands and Communications. ............................................... 38
Section 10.2 Non-Liability of Officials, Employees and Agents. ............................... 38
Section 10.3 Forced Delay. .......................................................................................... 38
Section 10.4 Inspection of Books and Records. .......................................................... 39
Section 10.5 Title of Parts and Sections. ..................................................................... 39
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Section 10.6 No Third-Party Beneficiaries. ................................................................. 39
Section 10.7 Applicable Law. ...................................................................................... 39
Section 10.8 No Brokers. ............................................................................................. 39
Section 10.9 Legal Actions. ......................................................................................... 39
Section 10.10 Severability. ............................................................................................ 39
Section 10.11 Binding Upon Successors. ...................................................................... 40
Section 10.12 Reserved. ................................................................................................. 40
Section 10.13 Parties Not Co-Venturers. ....................................................................... 40
Section 10.14 Discretion Retained by City. ................................................................... 40
Section 10.15 Time of the Essence. ............................................................................... 40
Section 10.16 Representation and Warranties of Developer. ........................................ 40
Section 10.17 Entire Understanding of the Parties. ....................................................... 41
Section 10.18 Amendments. .......................................................................................... 41
Section 10.19 Approvals. ............................................................................................... 41
Section 10.20 Counterparts; Multiple Originals. ........................................................... 41
Item 2A-65
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DISPOSITION, DEVELOPMENT, AND LOAN AGREEMENT
(Palm Villas at Millennium)
This DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT (the "Agreement")
is dated as of ______, 2022, and is entered into by and among the CITY OF PALM DESERT, a
municipal corporation (the "City"), the PALM DESERT HOUSING AUTHORITY, a public body
corporate and politic (the "Authority") and PALM COMMUNITIES, a California corporation (the
"Developer"), each individually a "Party" and collectively the "Parties," with reference to the
following facts, understandings and intentions of the Parties:
RECITALS
A. Defined terms used but not defined in these recitals are as defined in Article 1 of
this Agreement.
B. The City owns that approximately ten and one-half (10.49) acre site located in the
City of Palm Desert as more particularly described in Exhibit A (the “Property”). The City intends
to process a Parcel Map to divide the Property into the Phase I Parcel and Parcel II Parcel.
C. The Property has been declared exempt surplus land by the City Council of the City
under Government Code Section 54221(f)(1)(A) and has concluded based on the Developer's site
plan and proposed affordability that proposed Development meets the affordability and design
requirements of Government Code Section 37364. The California Department of Housing and
Community Development has confirmed such exemption in writing.
D. The City and the Developer entered into an Exclusive Negotiating Agreement (the
"ENA") on July 15, 2022, to negotiate the terms and the conditions for the development of the
Development on the Property. In accordance with the ENA, the City and Developer have
concluded that it is best to subdivide the Property into two parcels: the Phase I Parcel, as described
on Exhibit A-1, and the Phase II Parcel, as described on Exhibit A-2; the Property will be legally
subdivided prior to Closing as set forth herein.
E. The Developer intends to construct in two phases at least two hundred forty-one
(241) units of housing, two hundred thirty-nine (239) of which shall be made available to and
occupied by low-income households, very low-income households, and extremely low-income
households, and two (2) of which shall be on-site manager’s units.
F. The Developer intends to construct at least one hundred twenty-one (121) units on
the Phase I Parcel, with one hundred twenty (120) of the units restricted to Extremely-Low
Households, Very-Low Income Households and Low Income Households, at affordable rents, and
the other unit used as an on-site manager’s unit. The Phase I Development will be composed of
one, two and three bedroom units.
G. The Developer intends to construct at least one hundred twenty (120) units on the
Phase II Parcel, with one hundred nineteen (119) of the units restricted to Extremely-Low
Households, Very-Low Income Households and Low Income Households, at affordable rents, and
the other unit used as an on-site manager’s unit. The Phase II Development will also be composed
of one, two and three bedroom units.
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H. To effectuate this purpose, the City will convey the Property to the Developer in
two phases, subject to the terms and conditions of this Agreement.
I. To assist the Developer in acquiring the Phase I Parcel from the City and to develop
the Phase I Development, the Authority intends to make a loan to the Developer in the amount of
Six Million Dollars ($6,000,000.00), subject to the terms and conditions of this Agreement. To
assist the Developer in acquiring the Phase II Parcel from the City and to develop the Phase II
Development, the Authority intends to make a loan to the Developer in the amount not less than
Seven Hundred Fifty-Five Thousand Dollars ($755,000.00), subject to the terms and conditions of
this Agreement.
J. The Authority intends to enter into an agreement with the Developer's construction
lender for the Phase I Development providing that the construction lender will disburse the
remaining proceeds of the Authority's loan following the Close of Escrow to the construction
lender for the payment of construction costs of the Phase I Development. The agreement will
provide that the Authority Loan funds will be disbursed pari passu with the construction lender's
loan. The construction lender shall not have a security interest in such Authority funds.
K. Concurrently with the conveyance of the Phase I Parcel to the Developer, the
Developer and City intend to grant to each other reciprocal easements over the Phase I and Phase
II Parcel for ingress and egress. The Developer also intends to grant the Phase II Parcel owner
reasonable rights to use the Phase I Development's common area facilities upon the completion of
the Phase II Development (the "Phase I and Phase II Access Easement"). The Parties intend that
the Phase I and Phase II Access Easement will include a provision that the Phase I and Phase II
Access Easement may be amended by the Parties if the City intends to convey the Phase II Parcel
to a party that is not affiliated with the Developer.
L. Concurrently with the conveyance of the Phase I Parcel to the Developer, the City
intends to grant (i) an easement over the Parcel 9, an adjacent City-owned parcel, to allow ingress
and egress to the Phase I Parcel through the Phase II Parcel (the "Parcel 9 Easement"); and (ii) an
access easement over Parcel 9 to allow the Developer and the Phase II Parcel owner to clear any
accumulated sand against the Phase I and the Phase II boundary wall (the "Maintenance
Easement").
M. The City has determined that the Developer has the necessary expertise, skill and
ability to carry out the commitments set forth in this Agreement and that this Agreement is in the
best interests of, and will materially contribute to the implementation of, the City's affordable
housing goals through the development of the Property.
N. Developer has applied for and received a density bonus (including reduced parking
and increased density) for both the Phase I Development and the Phase II Development.
In consideration of the foregoing, and the mutual terms and conditions herein, the Parties
agree as follows:
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AGREEMENT
The foregoing recitals are hereby incorporated by reference and made part of this
Agreement.
ARTICLE 1.
DEFINITIONS AND EXHIBITS
Section 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement,
the following definitions apply throughout this Agreement.
(a) "Affordable Units" means the Two Hundred Thirty-Nine (239) Units
restricted by the Housing Agreements to be developed on the Property to be occupied by
Extremely-Low, Very-Low and Low-Income Households and to be available at affordable rent as
defined in accordance with Health & Safety Code Section 50053.
(b) "Annual Financial Statement" means for any calendar year: (i) the financial
statement of operating expenses and revenues for a Phase, prepared at the Developer’s expense,
by an independent certified accountant reasonably acceptable to the Authority, and showing the
Residual Receipts for the applicable calendar year; (ii) sufficient back-up data to support the
revenues and expenses claimed on the statement; and (iii) such additional information reasonably
requested by the Authority, all of which shall form the basis for determining Residual Receipts.
(c) "Approved Financing" means the loans, equity, and other financing
obtained by the Developer for the purpose of financing the costs of the Development that are
approved by the City and consistent with the Financing Proposal.
(d) "Approved Plans" means all designs for the Development approved by the
City in conjunction with the City Approvals prior to or concurrent with the Effective Date.
(e) "Authority" is defined in the introductory paragraph of this Agreement.
(f) "Authority Loans" or “Authority Loan”, as applicable, mean the loans by
the City to the Developer in an amount not to exceed Six Million Dollars ($6,000,000.00), to pay
the acquisition and development costs for the Phase I Development and a loan in an amount of
Seven Hundred Fifty-Five Thousand Dollars ($755,000.00) to pay acquisition costs for the Phase
II Development.
(g) "Building Permit" means the building permit and all other ministerial
construction permits required from the City to construct the Development..
(h) "Certificate of Completion" is defined in Section 4.11.
(i) "Certificate of Occupancy" means a final certificate of occupancy issued by
the City for the Development, or equivalent final inspection.
(j) City" is defined in the introductory paragraph of this Agreement.
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(k) "City/Authority Documents" means, collectively, this Agreement, the
Promissory Notes, the Deed of Trusts, the Housing Agreements, the Notice of Restrictions for
each phase of the Development and any other documents executed by the City and/or the Authority
and Developer.
(l) "City Approvals" means the permits and entitlements issued by the City to
allow for the commencement of construction for the respective Phase.
(m) "City Event of Default" is defined in Section 8.3.
(n) "Close of Escrow" means the date on which a fee interest in each of the
Phase I Parcel and the Phase II Parcel is conveyed to the Developer, as appropriate.
(o) "Construction Plans" means the final construction plans for the construction
of the Development as approved by the City in accordance with Section 2.5.
(p) "Control" means the power to direct the day-to-day management
responsibilities for the activities of Developer, and, with respect to a limited liability company,
means the: (1) managing member or members; or (2) the right to exercise, directly or indirectly,
more than fifty percent (50%) of the voting rights attributable to the limited liability company.
(q) “Declaration of Default" is defined in Section 8.5.
(r) “Deeds of Trust” shall mean the deeds of trust, assignment of rents, and
security agreement placed on the Developer’s interest in the Phase I Parcel and Phase II Parcel, as
security for the Authority Loans by the Developer as trustor with the Authority as beneficiary, as
well as any amendments to, modifications of, and restatements of said deed of trusts, in the forms
attached hereto as Exhibit F.
(s) "Defaulting Party" is defined in Section 8.5.
(t) "Density Bonus Agreement" shall mean the Density Bonus Agreement for
each Phase in the form attached hereto as Exhibits D-1 and D-2
(u) "Deposit" is defined in Section 3.3.
(v) "Developer" has the meaning in the introductory paragraph of this
Agreement.
(w) "Developer Event of Default" is defined in Section 8.4.
(x) "Development" means the development of at least two hundred forty-one
(241) apartment units to be developed on the Property.
(y) "Effective Date" shall mean the later of: (i) the date the Developer has
executed this Agreement; (ii) the date the Authority has executed this Agreement and (iii) the date
the City has executed this Agreement.
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(z) "ENA" is defined in Recital C.
(aa) "Escrow" means the escrow opened with the Title Company to accomplish
the transfer of Phase I and Phase II, respectively, from the City to the Developer.
(bb) “Extremely Low Income” means a household with an income that does not
exceed the qualifying limits for extremely low-income households, adjusted for actual household
size, for Riverside County, as published and periodically updated by HCD under Section 50106 of
the California Health and Safety Code, or successor provision.
(cc) "Financing Proposal" means the Developer's initial proposal for financing
the acquisition of the Property and the construction of the Development, including an estimate of
the sources and uses of funds, which is attached hereto as Exhibit K.
(dd) "Grading Permit" means the permit to commence grading on the Phase I
Parcel and the permit for the Phase II Parcel.
(ee) "Hazardous Materials" means any substance, material, or waste which is:
(1) defined as a "hazardous waste", "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "pollutant" or any other terms comparable to the
foregoing terms under any provision of California law or federal law; (2) petroleum; (3) asbestos;
(4) polychlorinated biphenyls; (5) radioactive materials; (6) MTBE; or (7) determined by
California, federal or local government authority to be capable of posing a risk of injury to health,
safety or property. Without limiting the foregoing, Hazardous Materials means and includes any
substance or material defined or designated as hazardous or toxic waste, hazardous or toxic
material, a hazardous, toxic or radioactive substance, or other similar term, by any Hazardous
Materials Laws including any federal, state or local environmental statute, regulation or ordinance
presently in effect that may be promulgated in the future, as such statutes, regulations and
ordinances may be amended from time to time.
(ff) The term "Hazardous Materials" does not include: (1) construction
materials, gardening materials, household products, office supply products or janitorial supply
products customarily used in the construction or maintenance, of residential developments, or
typically used in office or residential activities; or (2) certain substances which may contain
chemicals listed by the State of California under California Health and Safety Code Sections
25249.8 et seq., which substances are commonly used by a significant portion of the population
living within the region of the Development, including, but not limited to, alcoholic beverages,
aspirin, tobacco products, nutrasweet and saccharine, so long as such materials and substances are
stored, used and disposed of in compliance with all applicable Hazardous Materials Laws.
(gg) "Hazardous Materials Laws" means all federal, state, and local laws,
ordinances, regulations, orders and directives pertaining to Hazardous Materials in, on or under
the Development or any portion thereof.
(hh) "Housing Agreements" or “Housing Agreement”, as applicable, means the
Housing Agreements between the Developer and the Authority in the form of Exhibit H that will
be recorded against the Developer's fee interest in the Phase I Parcel and Phase II Parcel and all
improvements thereon, and will restrict the household income levels for occupancy of the Units
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thereon to Extremely Low, Very-Low and Low Income Households and will restrict the rent to
affordable rent.
(ii) "Low Income Household" means a household with an income that does not
exceed the qualifying limits for lower income households, adjusted for actual household size, for
Riverside County, as published and periodically updated by HCD under Section 50079.5 of the
California Health and Safety Code, or successor provision.
(jj) "Maintenance Easement" means an easement over Parcel 9 prepared by the
Developer and approved by the City granting the Developer and the Phase II Parcel owner the
right of access to clear sand from the outside of the Phase I Wall and the Phase II Wall abutting
the Maintenance Easement area, substantially in the form of Exhibit B-3.
(kk) “Notices of Restrictions” or “Notice of Restrictions”, as applicable, shall
mean the Notices of Affordability Restrictions in the form attached hereto as Exhibit G, which are
to be recorded against the Phase I Parcel and the Phase II Parcel upon the closing of the sales
thereof.
(ll) "Notice of Default" is defined in Section 8.5.
(mm) "Official Records" means the official land records of Riverside County.
(nn) "Parcel" means either the Phase I Parcel or the Phase II Parcel, as the context
requires.
(oo) "Parcel Map" means the Parcel Map prepared by the Developer and
approved by the City subdividing the Property into the two Phases and recorded in the Official
Records of the County of Riverside with any recording costs paid by the Developer.
(pp) "Parcel 9" means the City-owned parcel abutting the Phase I Parcel and the
Phase II Parcel described in Exhibit A-3.
(qq) "Parcel 9 Easement" means the easement for ingress and egress of over a
portion of Parcel 9 prepared by the Developer and approved by the City benefiting Parcel I and
granting the right to the Developer to improve the easement with street improvements,
substantially in the form of Exhibit B-2.
(rr) "Parties" means collectively the City, the Authority and the Developer and
the term Party refers to each of them individually.
(ss) "Phase" shall mean the Phase I Development or the Phase II Development,
as the context requires.
(tt) "Phase I Development" means the development of at least one hundred
twenty-one (121) units of housing, required offsite infrastructure improvements and parking
constructed on the Phase I Parcel, all as more fully set forth in the Scope of Development.
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(uu) "Phase II Development" means the development of at least one hundred
twenty (120) units of housing, required offsite infrastructure improvements and parking
constructed on the Phase II Parcel, all as more fully set forth in the Scope of Development.
(vv) "Parcel I and Parcel II Access Easement" means the reciprocal easement
prepared by the Developer and approved by the City for ingress and egress of over Parcel I and
Parcel II and granting the Phase II Parcel owner the right of reasonable access to the Phase I
Development common facilities, substantially in the form of Exhibit B-1.
(ww) "Phase I Parcel" means the property generally described in Exhibit A-1.
(xx) "Phase II Parcel" means the property generally described in Exhibit A-2.
(yy) "Promissory Notes" or “Promissory Note”, as applicable, shall mean the
promissory notes that will evidence the Developer's obligation to repay the applicable Authority
Loan for a Phase as set forth in this Agreement, and shall be in the form of Exhibit E. Each Phase
of the Development will have its own Promissory Note and shall not be cross-collateralized.
(zz) "Property" means the property generally described in the legal description
attached as Exhibit A, consisting of the Phase I Parcel and the Phase II Parcel.
(aaa) "Residual Receipts" in a particular calendar year for a Phase shall mean the
cash (without regard to the source) derived from the operation of such Phase of the Development
minus the following for that Phase, determined on a cash basis: (i) all real estate and personal
property taxes and assessments, insurance premiums and reasonable costs of maintenance,
operation and management incurred by the Developer in connection with the operation and
maintenance, (ii) property management fees not to exceed four and one-half percent (4.5%) of the
gross revenue of the Phase, (iii) the costs of servicing the senior construction loan/financing (and
any approved refinancing thereof) and other sources of permitted financing; (iv) amounts
necessary to maintain a guaranty or other form of security or bond for an operation reserve account,
(v) amounts deposited into a replacement initially capitalized reserve account in the minimum sum
of Three Hundred Twenty-Five Dollars ($325.00) per unit per annum, (vi) the repayment of any
amounts loaned by the Developer for material development costs which costs were not reasonably
foreseeable, (vii) deferred developer fees (viii) a limited partner monitoring fee in the annual
amount of Five Thousand Dollars ($5000.00) per year unless fully paid a permanent loan
conversion; (ix) a managing general partner fee in the annual amount of Fifteen Thousand Dollars
($15,000.00), increasing three percent (3%) annually; and (xi) an administrative general partner
fee in the annual amount of Ten Thousand Dollars ($10,000.00), increasing three percent (3%)
annually. In no event shall depreciation/amortization be deducted from cash revenues. Residual
Receipts shall be determined by Developer and Authority on a cash basis without regard to any
carry-over profit or loss from any prior calendar year, and shall be determined annually, on or
before June 1st for the preceding calendar year. Any deferred developer fee, limited partner
monitoring fee, managing general partner fee, and administrative general partner fee may not
accrue interest.
(bbb) "Schedule of Performance" means the schedule attached as Exhibit C
setting forth the schedule for the Developer's acquisition and development of the Phase I Parcel
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and the acquisition and development of the Phase II Parcel and the construction of the Phase I
Development and the Phase II Development and other deadlines.
(ccc) Scope of Development shall mean the description of the Development,
including a basic site plan, which will serve as a basis for the Developer's application for the City
Approvals. The Scope of Development is attached to this Agreement as Exhibit I.
(ddd) "Security Financing Interest" means a mortgage, deed of trust, or other
reasonable method of security encumbering the Developer's fee interest in the Phase I Parcel and
the Phase II Parcel that: (i) meets the requirements of this Agreement; and (ii) secures any
construction or permanent loan shown on the Financing Proposal, or any refinancing approved by
the Authority.
(eee) “TCAC” means the California Tax Credit Allocation Committee.
(fff) “TCAC Regulatory Agreement” means the regulatory agreement entered
into between the Developer and TCAC regulating the affordability of each Phase to be recorded
as an encumbrance on the Property.
(ggg) "Title Company" means First American Title Company, or such other title
company as the Parties may mutually select.
(hhh) "Title Report" is defined in Section 2.19.
(iii) "Transfer" has the meaning set forth in Section 7.1.
(jjj) "Unit" means one of the residential units to be constructed on the Property.
(kkk) "Very Low Income Household" means a household with an income that
does not exceed the qualifying limits for very low income households, adjusted for actual
household size, for Riverside County, as published and periodically updated by HCD under
Section 50105 of the California Health and Safety Code, or successor provision.
Section 1.2 Exhibits. The following exhibits are attached to and incorporated in this
Agreement:
Exhibit A: Legal Description of the Property
Exhibit A-1: Depiction of Phase I Parcel
Exhibit A-2: Depiction of Phase II Parcel
Exhibit A-3: Depiction of Parcel 9
Exhibit B-1: Phase I and Phase II Access Easement
Exhibit B-2: Parcel 9 Easement
Exhibit B-3: Maintenance Easement
Exhibit C: Form of Grant Deed
Exhibit D-1: Form of Phase I Density Bonus Agreement
Exhibit D-2: Form of Phase II Density Bonus Agreement
Exhibit E: Forms of Promissory Note
Exhibit F: Form of Deed of Trust
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Exhibit G-1: Form of Phase I Notice of Affordability Restrictions
Exhibit G-2: Forms of Phase II Notice of Affordability Restrictions
Exhibit H-1: Form of Phase I Housing Agreement
Exhibit H-2: Form of Phase II Housing Agreement
Exhibit I: Scope of Development
Exhibit J: Schedule of Performance
Exhibit K-1: Financing Plan – Phase I
Exhibit K-2: Financing Plan – Phase II
ARTICLE 2.
PREDISPOSITION CONDITIONS FOR
CONVEYANCE OF EACH PHASE
Section 2.1 Conditions Precedent to Disposition of Property. The requirements set forth
in this Article 2 are conditions precedent to the City's obligation to convey a Phase to the
Developer. The City has no obligation to convey a Phase to the Developer unless the conditions
precedent set forth in this Article 2 have been satisfied in the manner set forth below and within
the timeframe set forth in the Schedule of Performance. The closing of the conveyance of the
Phase I Parcel must occur on or before June 30, 2024 (or either party who is not in default may
terminate this Agreement by written notice to the other). The closing of the conveyance of the
Phase II Parcel must occur on or before June 30, 2025 (or either party who is not in default may
terminate this Agreement by written notice to the other).
Section 2.2 City Approvals. Prior to or concurrently with the conveyance of a Phase,
the Developer has obtained the City Approvals for the Phase and the Developer has paid the
required fees to the City and posted the required improvement bonds.
Section 2.3 Parcel Map. The Parcel Map subdividing the Property into the Phase I
Parcel and the Phase II Parcel has been approved by the City, in its absolute discretion, and the
Developer; the Parcel Map has been recorded prior to the Close of Escrow for the conveyance of
Phase I; and the Developer has paid the costs related to recording the Parcel Map and has agreed
to comply with any conditions of approval related to the Parcel Map.
Section 2.4 Financing. The financing listed in the Financing Proposal shown in Exhibit
C for the appropriate Phase is ready to close concurrently with the Close of Escrow for the Phase.
Section 2.5 Permits. The City has issued a Ready to Issue letter regarding the Building
Permit and the Developer has paid the Building Permit fee prior to or concurrently with the
applicable Close of Escrow.
Section 2.6 Tax Credits. The tax credits necessary to help finance the applicable
development shall have been awarded, and Developer shall have provided evidence thereof to
City, together with reasonable evidence that tax credit investors shall have legally committed to
provide equity funds sufficient to pay all development costs not being paid with loans/debt.
Section 2.7 Loan Closings. All loans necessary to finance costs in the City-approved
revised Financing Proposal/Plan shall have closed (or shall close concurrently with the applicable
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Close of Escrow) such that the lenders are conditionally obligated to disburse their loan funds (so
that the applicable development can be completed), and copies of the applicable loan documents
(or drafts that are final in all material respects) shall have been provided to City.
Section 2.8 Construction Plans. The Developer shall prepare construction plans for the
construction of the development of each Phase. The final construction plans for the development
of each submitted by the Developer for City approval shall consist of all construction
documentation upon which the Developer and its contractors shall rely in building the Phase I
Development and the Phase II Development. Such construction plans shall include (without
limitation) final architectural drawings, landscaping plans and specifications, final elevations,
building plans and specifications (also known as "working drawings"). The construction plans
shall be based upon the Approved Plans and shall not materially deviate from them without the
written consent of the City.
(a) As set forth in Section 10.14, the Developer acknowledges that execution
of this Agreement by the City does not constitute approval by the City of any required permits and
in no way limits the discretion of the City in the permit approval process.
(b) As part of the Developer's application for a Building Permit, the City shall
also have the right to review and approve the proposed construction plans for conformance with
the Approved Plans and the other commitments made by the Developer to the City. The Developer
acknowledges that the City's right to review and approve the proposed construction plans as
allowed by this paragraph is in addition to, and shall not be limited by, the City's obligation to
review the Developer's proposed construction plans for consistency with applicable building and
construction code requirements.
As approved, these construction plans for the applicable component of the Development shall be
referred to as the "Construction Plans".
Section 2.9 Construction Contract. Developer shall have delivered to City a copy of an
executed Guaranteed Maximum Price or Stipulated Sum construction contract for the applicable
Phase, which shows a development cost consistent with the revised Financing Proposal/Plan and
equity and debt funds committed to the applicable development
Section 2.10 Cost Estimate. The Developer's construction lender has shared its
construction cost estimate with the City or, in the alternative, if the construction lender is unwilling
to share its cost estimate, the City has obtained an independent cost estimate at the Developer's
cost to confirm the reasonableness of the construction costs.
Section 2.11 Construction Bonds. At least seven (7) days prior to Close of Escrow, the
Developer shall deliver to the City forms of one (1) labor and material bond and one (1)
performance bond for the Development issued by a reputable insurance company licensed to do
business in California, and named in the current list of "Surety Companies Acceptable on Federal
Bonds" as published in the Federal Register by the Audit Staff Bureau of Accounts, U.S. Treasury
Department, and reasonably acceptable to the City, each in a penal sum of not less than one
hundred percent (100%) of the scheduled cost of construction of the Phase for the City's review
and approval. The bonds shall name the City as co-obligee. Upon receipt by the City of the
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proposed payment and performance bonds, the City shall promptly review such bonds and approve
them if they satisfy the criteria set forth above and include any other modification reasonably
requested by the City. If the payment and performance bonds are not approved by the City, the
City shall set forth in writing and notify the Developer of the City's reasons for withholding such
approval. The Developer shall thereafter submit revised payment and performance bonds for City
approval, which approval shall be granted or denied in five (5) business days in accordance with
the criteria and procedures set forth above.
Section 2.12 Developer Organizational Documents. The Developer has provided the
Developer organizational documents to the City for its review and the City has approved the
documents.
Section 2.13 Authority Loan. The Authority is ready to make the applicable Authority
Loan in the amount necessary to acquire the Phase I Parcel or Phase II Parcel, as appropriate, and
the Developer shall have delivered the applicable City/Authority Documents, duly executed, to the
Authority.
Section 2.14 Tax Credit Equity. The City has approved the Developer's proposed uses of
any tax credit equity paid as of the Close of Escrow to the Developer.
Section 2.15 City Easements. The Developer and City have agreed upon the final forms
of the Phase I and Phase II Access Easement, the Parcel 9 Easement and the Maintenance
Easement.
Section 2.16 Phase II Conveyance. As a condition to the Close of Escrow for the Phase
II Parcel only, the Close of Escrow for the Phase I Parcel shall have occurred, and Developer shall
not be in default under this DDLA or the Authority loan relating to the Phase I Parcel.
Section 2.17 HCD Confirmation of Exemption. The City has received confirmation that
the conveyance of the Property complies with the procedures of the Surplus Land Act (Gov't Code
Section 54220 et seq.).
Section 2.18 AHAP. The Developer and the Authority have entered into an Agreement
to Enter into a Housing Assistance Payments Contract.
Section 2.19 Title Report. The Developer has ordered a title report (the "Title Report")
from the Title Company within five (5) business days following the Effective Date of this
Agreement and promptly provided a copy of the Title Report to the City. The City and the
Developer have approved the title report for the Property within sixty (60) days following the
Effective Date. If the Parties do not agree on the Title Report within the sixty (60) day period,
either Party may terminate this Agreement, unless the Developer waives the requirement in this
Section 2.19. In the event the Agreement is terminated pursuant to this Section 2.19, the Deposit
shall be returned to the Developer and neither Party shall have any rights against or liability to the
other except those provisions of this Agreement that recite that they survive termination of this
Agreement.
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ARTICLE 3.
DISPOSITION OF PROPERTY
Section 3.1 Conveyance of Phase I Parcel and Phase II Parcel. Subject to the
satisfaction of the conditions to closing set forth above (which apply to each Phase, except as noted
in Section 2.15), the City will sell to the Developer, and the Developer will purchase from the City,
the Property under the terms, covenants, and conditions of this Agreement.
Section 3.2 Purchase Prices. The Purchase Price for the Phase I Parcel shall be One
Million Nine Hundred Sixty-Five Thousand Five Hundred Thirty-Nine Dollars ($1,965,539.00).
The Purchase Price for the Phase II Parcel shall be One Million Four Hundred Fifty-Nine Thousand
Four Hundred Sixty-One Dollars ($1,459,461.00).
Section 3.3 Deposit.
(a) Within fifteen (15) days following the Effective Date, Developer shall
deposit Twenty Thousand Dollars ($20,000.00) into Escrow as a good faith deposit for the
acquisition of the Phase I Parcel (the "Phase I Deposit"). Upon the Close of Escrow for Phase I,
the Phase I Deposit shall be applied to the Purchase Price. If this Agreement is terminated at no
fault to the Developer, the Phase I Deposit shall be immediately refunded to the Developer upon
the date the Agreement is terminated. Concurrently with the Close of Escrow for Phase I Parcel,
the Developer shall deposit Twenty Thousand Dollars ($20,000.00) into a Phase II Escrow as a
good faith deposit for the acquisition of the Phase II Parcel (the "Phase II Deposit"). Upon the
Close of Escrow for Phase II, the Phase I Deposit shall be applied to the Purchase Price. If this
Agreement is terminated at no fault to the Developer, the Phase II Deposit shall be immediately
refunded to the Developer upon the date the Agreement is terminated. The Phase I Deposit and
the Phase II Deposit shall constitute liquidated damages pursuant to Section 3.3(b).
(b) BUYER ACKNOWLEDGES THAT BY ENTERING INTO THIS
AGREEMENT, SELLER MAY REMOVE THE PROPERTY FROM THE ACTIVE REAL
ESTATE MARKET AND THUS SUSTAIN MISSED OPPORTUNITIES AND EXTENDED
CARRYING COSTS, AS WELL AS OTHER DAMAGES. IN THE EVENT THAT THE
ESCROW AND THIS TRANSACTION FAIL TO CLOSE AS A RESULT OF THE DEFAULT
OF BUYER IN THE PERFORMANCE OF ITS MATERIAL OBLIGATIONS UNDER THIS
AGREEMENT, BUYER AND SELLER AGREE THAT SELLER WILL SUSTAIN THESE
AND OTHER DAMAGES, AND THAT SELLER'S ACTUAL DAMAGES WOULD BE
IMPRACTICABLE OR EXTREMELY DIFFICULT TO DETERMINE. THE PARTIES
THEREFORE AGREE THAT IN THE EVENT THAT ESCROW AND THIS TRANSACTION
FAIL TO CLOSE AS A RESULT OF A MATERIAL DEFAULT OF BUYER, AND SELLER IS
READY, WILLING AND ABLE TO PERFORM ITS OBLIGATIONS HEREUNDER, SELLER,
AS SELLER'S SOLE AND EXCLUSIVE REMEDY, IS ENTITLED TO LIQUIDATED
DAMAGES IN THE AMOUNT OF THE INITIAL DEPOSIT THERETOFORE MADE. IN THE
EVENT ESCROW FAILS TO CLOSE SOLELY AS A RESULT OF BUYER'S MATERIAL
DEFAULT AND SELLER IS READY, WILLING AND ABLE TO PERFORM ITS
OBLIGATIONS HEREUNDER, THEN (A) THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF BUYER AND SELLER HEREUNDER AND THE ESCROW CREATED
HEREBY SHALL TERMINATE, AND (B) ESCROW AGENT SHALL, AND IS HEREBY
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AUTHORIZED AND INSTRUCTED TO, RETURN PROMPTLY TO BUYER AND SELLER
ALL DOCUMENTS AND INSTRUMENTS TO THE PARTIES WHO DEPOSITED THE
SAME. THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT
INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA
CIVIL CODE SECTIONS 3275 OR 3369 BUT IS INTENDED TO CONSTITUTE
LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE
SECTIONS 1671, 1676 AND 1677. SELLER HEREBY WAIVES THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 3389. SELLER AND BUYER ACKNOWLEDGE
THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTIO
3.3(b) , AND BY THEIR INITIALS IMMEDIATELY BELOW, AGREE TO BE BOUND BY
ITS TERMS.
SELLERS' INITIALS:
__________________________
BUYER'S INITIALS
_________________
Section 3.4 Opening Escrow. To accomplish the transfer of the Phase I Parcel and the
Phase II Parcel from the City to the Developer, the Parties will promptly establish an escrow for
each transfer with the Title Company after the Effective Date. The Parties will execute and deliver
reasonable written instructions to the Title Company to accomplish the terms hereof, which
instructions must be consistent with this Agreement.
Section 3.5 Close of Escrow. The Close of Escrow shall occur within thirty (30) days
after the Developer has met all of the closing conditions as set forth in Article 2 above for a
particular Parcel, but in no event shall the Close of Escrow occur later than June 30, 2024, for the
Phase I Parcel, and in no event shall the Close of Escrow for the Phase II Parcel occur later than
June 30, 2025.
(a) At the Close of Escrow, the City shall convey a fee interest in the applicable
Parcel to the Developer by the delivery of a Grant Deed in the form set forth in the attached Exhibit
C.
(b) At the Close of Escrow, the Developer has executed and delivered to
Escrow the Phase I and Phase II Access Easement, the Parcel 9 Easement and the Maintenance
Easement.
(c) Developer’s obligation to proceed with the acquisition of the Property from
the City pursuant to the terms of this Agreement is subject to the fulfillment or waiver by
Developer of each and all of the conditions precedent described below (“Developer Conditions
Precedent”). The Developer Conditions Precedent are solely for the benefit of the Developer and
shall be fulfilled or waived within the time periods provided for herein, and in any event, no later
than the date specified in the Schedule of Performance.
(1) There exists no condition, event or act which would constitute a
breach or default under this Agreement, the City Documents, the Development Approvals, or
under any other project financing agreements or contracts related to the Development, or which,
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upon the giving of notice or the passage of time, or both, would constitute such a breach or default
by the City.
(2) Subject to payment of the applicable fees, City shall be ready to
issue the building permit(s) necessary for the Developer to Commence Construction of the
Development.
(3) The Title Company shall, upon payment of Title Company’s
regularly scheduled premium, be irrevocably committed to issue an owner’s title policy upon
recordation of the applicable Grant Deed insuring Developer’s interest in the Property, subject
only to the exceptions in Section 3.7 below.
(4) The Parcel Map has been approved by the City and the Developer
and has been recorded or is ready to be recorded currently with the Close of Escrow in the Official
Records of Riverside County.
(5) There shall be an absence of any condemnation, environmental or
other pending governmental or any type of administrative or legal proceedings with respect to the
Property which would materially and adversely affect Developer’s intended uses of the Property
or the value of the Property.
(6) The City has executed and delivered to Escrow (x) the Phase I and
Phase II Access Easement, (y) the Parcel 9 Easement and (z) the Maintenance Easement.
(7) The City has executed and delivered to Escrow applicable Housing
Agreement and Notice of Affordability Restrictions, duly executed and acknowledged.
(8) There shall not have occurred between the Effective Date and the
Closing a material adverse change to the physical condition of the Property.
(9) There is no existing, pending or threatened litigation, suit, action or
proceeding before any court or administrative agency affecting the City or the Developer or the
Property that would, if adversely determined, materially adversely affect the Development or the
Developer's or the City's ability to perform their obligations under this Agreement or the
Developers' ability to develop and operate the Development.
Section 3.6 Costs of Escrow and Closing. The Developer must pay the cost of title
insurance, transfer tax, Title Company document preparation, recordation fees, and the escrow fees
of the Title Company, if any, and any additional costs to close the escrow. The costs borne by the
Developer are in addition to the Purchase Prices of the Parcels.
Section 3.7 Condition of Title. Upon the Close of Escrow for each Phase, the Developer
will take title subject to all title exceptions in the Title Report and all other liens, encumbrances,
clouds and conditions, rights of occupancy or possession, except:
(a) applicable building and zoning laws and regulations;
(b) The conditions and easements on the Parcel Map;
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(c) the Phase I and Phase II Access Easement;
(d) the applicable Housing Agreement;
(e) the applicable Density Bonus Agreement;
(f) the applicable Deed of Trust and Notice of Restrictions;
(g) any lien for current taxes and assessments or taxes and assessments accruing
subsequent to Close of Escrow;
(h) the liens of any Approved Financing (approved by the City);
(i) any other matters created by or with the consent of Developer.
Section 3.8 Condition of Property.
(a) City Information. In fulfillment of the purposes of Health and Safety Code
Section 25359.7(a), to the City's Current Actual Knowledge, no release of Hazardous Materials
has come to be located on or beneath the Property except as previously disclosed by the City to
the Developer. During the Negotiating Period, as defined in the ENA, the Developer completed
all due diligence activities, including but not limited to a physical adequacy determination of the
Property, and may not terminate this Agreement as a result of the purported physical unsuitability
of the Property. As used in this Agreement, the phrase "to the City's Current Actual Knowledge"
and words of similar import shall mean the actual knowledge of the City Manager (the "City
Representative"), on behalf of the City, as of the Effective Date, without any duty of separate
inquiry and investigation. The City represents and warrants that the City Representative is that
person affiliated with the City most knowledgeable regarding the ownership and operation of the
Property. Developer hereby agrees that the foregoing person shall not have or incur any personal
liability for the breach of any representation or warranty in this Agreement, and that Developer's
sole remedy for any such breach shall be against the City.
(b) "As is" Conveyance. Prior to the effective date, the Developer was provided
the opportunity to investigate the Property and has approved the physical condition of the Property.
The Developer specifically acknowledges and agrees that the City is selling each Phase of the
Property to the Developer and the Developer is buying each Phase of the Property from the City
(and all thereon) on an "as is with all faults" basis and that the Developer is not relying on any
representations or warranties of any kind whatsoever, express (except as expressly set forth in this
agreement) or implied, from the City as to any matters concerning the Property, including without
limitation: (1) the quality, nature, adequacy and physical condition of the Property (including,
without limitation, topography, climate, air, water rights, water, gas, electricity, utility services,
grading, drainage, sewers, access to public roads and related conditions); (2) the quality, nature,
adequacy, and physical condition of soils, geology, and groundwater; (3) the existence, quality,
nature, adequacy and physical condition of utilities serving the Property; (4) the development
potential of the Property, and the Property's use, habitability, merchantability, or fitness,
suitability, value or adequacy of the Property for any particular purpose; (5) public or private
restrictions on the use of the Property; (6) the compliance of the Property or its operation with any
applicable codes, laws, regulations, statutes, ordinances, covenants, conditions and restrictions of
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any governmental or quasi-governmental entity or of any other person or entity; (7) the presence
or absence of hazardous materials on, under or about the Property or the adjoining or neighboring
property; and (8) the condition of title to the Property. The Developer affirms that the Developer
has not relied on the skill or judgment of the City or any of its agents, employees or contractors to
select or furnish the Property for any particular purpose, and that the City makes no warranty that
the Property is fit for any particular purpose. The Developer acknowledges that it shall use its
independent judgment and make its own determination as to the scope and breadth of its due
diligence investigation which it shall make relative to the Property and shall rely upon its own
investigation of the physical, environmental, economic, and legal condition of the Property
(including, without limitation, whether the Property is located in any area which is designated as
a special flood hazard area, dam failure inundation area, earthquake fault zone, seismic hazard
zone, high fire severity area or wildland fire area, by any federal, state or local agency). The
Developer undertakes and assumes all risks associated with all matters pertaining to the Property's
location in any area designated as a special flood hazard area, dam failure inundation area,
earthquake fault zone, seismic hazard zone, high fire severity area or wildland fire area by any
federal, state or local agency.
(c) Survival. The terms and conditions of this Section expressly survive the
Close of Escrow. The City is not liable or bound in any manner by any oral or written statements,
representations, or information pertaining to the Property furnished by any contractor, agent,
employee, servant, or other person. The Developer acknowledges that the lease price will reflect
the "as is" nature of this sale and any faults, liabilities, defects, or other adverse matters that may
be associated with the Property. The Developer has fully reviewed the disclaimers and waivers
set forth in this Agreement with the Developer's counsel and understands the significance and
effect thereof.
(d) Acknowledgment. The Developer acknowledges and agrees that: (1) to the
extent required to be operative, the disclaimers of warranties contained in this Section are
"conspicuous" disclaimers for purposes of all applicable laws and other legal requirements; and
(2) the disclaimers and other agreements set forth in such sections are an integral part of this
Agreement, that the lease price will be adjusted to reflect the same and that the City would not
have agreed to lease the Property to the Developer without the disclaimers and other agreements
set forth in this Section.
(e) Developer's Release. The Developer, on behalf of itself and anyone
claiming by, through or under the Developer hereby waives its right to recover from and fully and
irrevocably releases the City and the Authority, and City Council members, Authority board
members and the officers, directors, representatives, consultants, employees and agents of City
and/or Authority (the "Released Parties") from any and all claims, responsibility, and/or liability
that the Developer may have or hereafter acquire against any of the Released Parties for any costs,
loss, liability, damage, expenses, demand, action or cause of action arising from or related to:
(1) the condition (including any construction defects, errors, omissions or other conditions, latent
or otherwise), valuation, salability or utility of the Property, or its suitability for any purpose
whatsoever; (2) any presence of Hazardous Materials; and (3) any information furnished by the
Released Parties under or in connection with this Agreement.
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(f) Scope of Release. The release set forth in Section 3.7(e) above includes
claims of which the Developer is presently unaware or which the Developer does not presently
suspect to exist which, if known by the Developer, would materially affect the Developer's release
of the Released Parties. The Developer specifically waives the provision of any statute or principle
of law that provides otherwise. In this connection and to the extent permitted by law, the
Developer agrees, represents and warrants that the Developer realizes and acknowledges that
factual matters now unknown to the Developer may have given or may hereafter give rise to causes
of action, claims, demands, debts, controversies, damages, costs, losses and expenses which are
presently unknown, unanticipated and unsuspected, and the Developer further agrees, represents
and warrants that the waivers and releases herein have been negotiated and agreed upon in light of
that realization and that the Developer nevertheless hereby intends to release, discharge and acquit
the Released Parties from any such unknown causes of action, claims, demands, debts,
controversies, damages, costs, losses and expenses. Accordingly, the Developer, on behalf of itself
and anyone claiming by, through or under the Developer, hereby assumes the above-mentioned
risks and hereby expressly waives any right the Developer and anyone claiming by, through or
under the Developer, may have under Section 1542 of the California Civil Code, which reads as
follows:
"A general release does not extend to claims which the creditor
or released party does not know or suspect to exist in his or her
favor at the time of executing the release, which if known by him
or her must have materially affected his or her settlement with
the debtor or released party."
Developer's Initials: __________
Notwithstanding the foregoing, this release does not apply to, nor will the City be released from,
the City's actual fraud or misrepresentation.
ARTICLE 4.
CONSTRUCTION OF DEVELOPMENT
Section 4.1 Construction and Operation Consistent with Agreements. Unless modified
by operation of Section 4.2, the Development must be constructed in accordance with the Scope
of Development, the Construction Plans and the terms and conditions of the Approved Plans and
the City Approvals. The Developer shall comply with all standards and requirements for
construction, use, operation, maintenance, management and encumbrance of the Development
which are set forth in this Agreement and the City Approvals. As between the City and the
Developer, the Developer shall be solely responsible for all costs necessary for the construction
and operation of the Development, including, but not limited to, any construction cost overruns.
Developer shall defend, indemnify and hold City harmless from and against any and all
claims, liabilities, damages, losses, costs and expenses arising directly or indirectly from or relating
to any allegations that City is liable for failure by Developer to pay prevailing wages and/or comply
with California Labor Code Sections 1720 et seq. (The foregoing is not an admission by Developer
or City that prevailing wages are required in connection with any development on either Phase.)
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Section 4.2 Commencement of Development. The Developer must commence
construction of the Phase I Development no later than the date set forth in the Schedule of
Performance and in no event more than thirty (30) days after Close of Escrow for the Phase I
Parcel. The Developer must commence construction of the Phase II Development no later than
the date set forth in the Schedule of Performance and in no event more than thirty (30) days after
Close of Escrow for the Phase II Parcel. For purposes of this Section 4.2, commencement of
construction means the commencement of grading of the Phase.
Section 4.3 Completion of the Development. Subject to Section 10.3 below, the
Developer must diligently prosecute to completion the construction of each Phase no later the date
set forth in the Schedule of Performance
Section 4.4 Equal Opportunity. During the construction of the Development, the
Developer, and its successors, assigns, and subcontractors must not discriminate against any
employee or applicant for employment in connection with the construction of the Development on
any basis listed in Section 12940 of the Government Code. Each of the following activities must
be conducted in a non-discriminatory manner: hiring; upgrading; demotion and transfers;
recruitment and recruitment advertising; layoff and termination; rate of pay and other forms of
compensation; and selection for training including apprenticeship.
Section 4.5 Construction Under Laws.
(a) Compliance with Project Documents. Developer shall construct the
Development in conformance with the Approved Plans, Approved Financing, and Financing
Proposal and consistent with the City Approvals. Developer shall notify the City in a timely
manner of any changes in the work required to be performed under this Agreement, including any
additions, changes, or deletions to the plans and specifications approved by the City.
(b) Compliance with Laws. Developer shall cause all construction work to be
performed in compliance with, without limitation: (1) all applicable laws, ordinances, rules and
regulations of federal, state, county or municipal governments or agencies now in force or that
may be enacted hereafter, including without limitation state prevailing wages pursuant to Labor
Code Section 1770 et seq., and the regulations pursuant thereto, if applicable; (2) all applicable
federal and state accessibility requirements; and (3) all directions, rules and regulations of any fire
marshal, health officer, building inspector, or other officer of every governmental agency now
having or hereafter acquiring jurisdiction. The work shall proceed only after procurement of each
permit, license, or other authorization that may be required by any governmental agency having
jurisdiction, and Developer shall be responsible to the City for the procurement and maintenance
thereof, as may be required of Developer and all entities engaged in work on the construction.
Section 4.6 Progress Report. Until such time as the Developer has completed
construction of the Development, as evidenced by the Certificate of Completion, the Developer
must provide the City with quarterly progress reports regarding the status of the construction of
the Development.
Section 4.7 Construction Responsibilities.
(a) The Developer shall comply with the Schedule of Performance.
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(b) The Developer is solely responsible for all aspects of the Developer's
conduct in connection with the Development, including but not limited to the quality and suitability
of the Construction Plans, the supervision of construction work, and the qualifications, financial
condition, and performance of all architects, engineers, contractors, subcontractors, suppliers,
consultants, and property managers. Any review or inspection undertaken by the City with
reference to the Development is solely for the purpose of determining whether the Developer is
properly discharging its obligations to the City and should not be relied upon by the Developer or
by any third parties as a warranty or representation by the City as to the quality of the design or
construction of the Development.
Section 4.8 Mechanics Liens, Stop Notices, and Notices of Completion.
(a) If any claim of lien is filed against the Property or the Development or a
stop notice is served on any lender or other third party in connection with the Development, then
the Developer must, within twenty (20) days after such filing or service, either pay and fully
discharge or cause the Developer's contractor to pay and fully discharge, the lien or stop notice,
effect the release of such lien or stop notice by delivering to the City a surety bond from a surety
reasonably acceptable to the City in sufficient form and amount, or provide the City with other
assurance reasonably satisfactory to the City that the claim of lien or stop notice will be paid or
discharged.
(b) If the Developer fails to discharge any lien, encumbrance, charge, or claim
in the manner required in this Section or obtain a surety bond, then in addition to any other right
or remedy, the City may (but is under no obligation to) discharge such lien, encumbrance, charge,
or claim at the Developer's expense. Alternatively, the City may require the Developer to
immediately deposit with the City the amount necessary to satisfy such lien or claim and any costs,
pending resolution thereof. The City may use such deposit to satisfy any claim or lien that is
adversely determined against the Developer.
(c) The Developer must file a valid notice of cessation or notice of completion
upon cessation of construction of the Development for a continuous period of thirty (30) days or
more and take all other reasonable steps to forestall the assertion of claims of lien against the
Property or the Development. The Developer authorizes the City, but without any obligation, to
record any notices of completion or cessation of labor, or any other notice that the City deems
necessary or desirable to protect its interest in the Development and Property.
Section 4.9 Inspections. The Developer must permit and facilitate, and require its
contractors to permit and facilitate, observation and inspection at the Development by the City and
the Authority during business hours with reasonable notice.
Section 4.10 Records.
(a) The Developer must maintain complete, accurate, and current records
pertaining to the Development for a period of seven (7) years after the creation of such records,
and permit any duly authorized representative of the City to inspect and copy records during
regular business days/hours. Records must be kept accurate and current, and shall be kept at
Developer's corporate office at 100 Pacifica, Suite 203, Irvine, California. Upon reasonable written
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notice from the City requesting to review specified Developer records, the Developer shall deliver
the records to the City's offices within fifteen (15) days following the City's request.
(b) The City will notify the Developer of any records it deems insufficient. The
Developer will have thirty (30) days after delivery of such a notice to correct any deficiency in the
records specified by the City in such notice, or if a period longer than thirty (30) days is reasonably
necessary to correct the deficiency, then the Developer must begin to correct the deficiency within
thirty (30) days and complete the correction of the deficiency as soon as reasonably possible.
Section 4.11 Certificate of Completion. Promptly after completing the Development in
accordance with those provisions of this Agreement that relate solely to the obligations of
Developer to construct the Development (including the dates for beginning and completion
thereof), the City will provide a Certificate of Completion so certifying (the "Certificate of
Completion"). The Certificate of Completion will be the conclusive determination that certain
covenants in this Agreement with respect to the obligations of the Developer to construct the
Development (excluding the Developer's compliance with Section 4.6) and the dates for the
beginning and completion thereof have been met. The Certificate of Completion shall be in such
form as will enable such certificate to be recorded in the Official Records. The Certificate of
Completion will not constitute evidence of compliance with or satisfaction of any obligation of the
Developer to: (a) any holder of a Security Financing Interest. The Certificate of Completion may
not be deemed a notice of completion under the California Civil Code.
ARTICLE 5.
AUTHORITY LOAN PROVISIONS
Section 5.1 Authority Loan. Subject to the terms and conditions set forth in this
Agreement, the Authority shall make a loan to the Developer for the Phase I Development in the
original principal amount of Six Million Dollars ($6,000,000.00) and a loan for the Phase II
Development in the original principal amount of not less than Seven Hundred Fifty-Five Thousand
Dollars ($755,000.00. The Authority Loan shall be evidenced by two promissory notes: (a) a
Promissory Note for the Phase I Development executed by Developer in favor of City in the
amount Six Million Dollars ($6,000,000.00) and secured by the Deed of Trust executed by the
Developer as trustor in favor of the City as beneficiary and recorded against the Developer’s fee
interest in the Phase I Parcel and (b) a Promissory Note for the Phase II Development executed by
Developer in favor of City in the amount not less than Seven Hundred Fifty-Five Thousand Dollars
($755,000.00) and secured by the Deed of Trust executed by the Developer as trustor in favor of
the City as beneficiary and recorded against the Developer’s fee interest in the Phase II Parcel.
Section 5.2 Use of Authority Loan. The proceeds of the Authority Loans shall be used
to fund the acquisition of the Parcels and the payment of fees and costs reasonably approved by
the City related to the development of Phase I and Phase II.
Section 5.3 Delivery of Promissory Notes; Recording of Housing Agreements; Deeds
of Trust; Notices of Restrictions. Prior to the Close of Escrow and in accordance with the Schedule
of Performance, the City shall cause escrow holder shall first record the Subdivision Map. Upon
and as a condition to the Close of Escrow for a Parcel, the escrow holder shall first record the
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applicable grant deed, and then the applicable Housing Agreement and Density Bonus Agreement
for that Phase, the applicable Notice of Restrictions and then the applicable Deed of Trust for the
applicable Agency Loan (with no intervening recordings). The Housing Agreement and Notice of
Restrictions shall remain in full force and effect for fifty-five (55) years after the issuance of the
final Certificate of Occupancy for the Development on the applicable Phase, regardless of any
repayment of the applicable Authority Loan following a Developer Event of Default or otherwise.
The Executive Director of the Authority shall have the authority to execute reasonable
subordination agreements subordinating the Authority Deed of Trust for a Phase to the deeds of
trust securing other construction and permanent financing, provided copies of the senior loan
documents shall have been provided for the City's reasonable review.
Section 5.4 Term of the Authority Loan. Unless sooner due under the terms of the
applicable Note, all principal and interest on the applicable Authority Loan shall be due upon the
earliest of:
(a) a Transfer of any portion of the applicable collateral Property or the
Developer’s interest in such Property other than a Transfer permitted or approved by the Authority
as provided in Section 10.6;
(b) the occurrence of a Developer Event of Default for which the Authority
exercises its right to cause the Authority Loan indebtedness to become immediately due and
payable, or
(c) a default under the Housing Agreement which has not been cured within the
time periods specified therein.
(d) Fifty-five (55) years from the date of the applicable final Certificate of
Occupancy.
Section 5.5 Interest; Payments. Simple interest at three percent (3%) per annum shall
accrue on the outstanding principal amount of the applicable Authority Loan except in a Developer
Event of Default, whereupon interest shall accrue from and after the date of the applicable
Promissory Note until paid at the rate of ten percent (10%) or the highest rate permitted by law.
Payments shall be structured as residual receipts payments over the course of the applicable
Authority Loan and shall first be applied to interest then to principal.
Section 5.6 Disbursement of Authority Loans.
(a) Disbursement of Authority Loan for Phase I. The Authority shall deposit
into Escrow the Phase I loan in the amount of Six Million Dollars ($6,000,000.00). The Phase I
funds shall be disbursed by escrow holder to pay the Phase I Purchase Price and to pay other Phase
I predevelopment costs outstanding as of the date of the Close of Escrow for Phase I. The
remaining balance of the Authority's Phase I loan shall be disbursed to the Phase I construction
lender to be disbursed by construction lender in accordance with the agreement between the City
and the construction lender.
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(b) Disbursement of Authority Loan for Phase II. The City shall deposit into
Escrow the Phase II loan in the amount of not less than Seven Hundred Fifty-Five Thousand
Dollars ($755,000.00). The Phase II funds shall be disbursed by escrow holder to pay the Phase
II Purchase Price and to pay other Phase II development cost outstanding as of the date of the
Close of Escrow Phase II.
Section 5.7 Repayment Schedule. The Authority Loan shall be repaid as follows:
(a) Payments. Commencing on the first June 1st following the completion of
the Phase, and on each June 1st thereafter until the Promissory Note is paid in full, the Developer
shall make repayments of the applicable Authority Loan from fifty percent (50%) of Residual
Receipts. The Authority will share the fifty percent (50%) of Residual Receipts payment with the
other public entities providing loans to the Developer for the respective Phase. The Authority's
percentage share of fifty percent (50%) of Residual Receipts shall be equal to the percentage
derived by dividing the Authority loan amount by the combined total of the Authority Loan and
the other public entity loans committed to the Developer. The Developer shall provide the
Authority, within one hundred eighty (180) days following the end of each calendar year, an
Annual Financial Statement showing the actual income and expenditures with respect to the
Development for the immediately preceding calendar year. Payments made shall be credited first
against accrued interest and then against outstanding principal.
(b) Payment in Full. All principal and interest, if any, on the applicable
Authority Loan shall, at the option of the Authority, be due and payable upon the earliest of: (1) a
Transfer other than a Transfer permitted or approved by the Authority as provided in Article 7
below; (2) the occurrence of an Event of Default for which the Authority exercises its right to
cause the applicable Authority Loan indebtedness to become immediately due and payable; or (3)
the maturity date of the applicable Promissory Note.
(c) Prepayment. The Developer shall have the right to prepay the Authority
Loan at any time.
Section 5.8 Reports and Accounting of Residual Receipts.
(a) Audited Financial Statement. In connection with the annual repayment of
the Authority Loan, the Developer shall furnish to the Authority an Annual Financial Statement.
(b) Books and Records. The Developer shall keep and maintain full, complete
and appropriate books, record and accounts relating to the Development, including all such books,
records and accounts necessary or prudent to evidence and substantiate in full detail the
Developer's calculation of Residual Receipts, at the Developer's corporate office currently at 100
Pacifica, Suite 203 in the City of Irvine. Books, records and accounts relating to the Developer's
compliance with the terms, provisions, covenants and conditions of this Agreement shall be kept
and maintained in accordance with generally accepted accounting principles consistently applied
and shall be consistent with requirements of this Agreement which provide for the calculation of
Residual Receipts on a cash basis. All such books, records, and accounts shall be open to and
available for inspection by the Authority, its auditors or other authorized representatives at
reasonable intervals during normal business hours on reasonable prior notice to the Developer.
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Copies of all tax returns and other reports that the Developer may be required to furnish any
governmental agency shall at all reasonable times be open for inspection by the Authority at the
place that the books, records and accounts of the Developer are kept. The Developer shall preserve
records on which any statement of Residual Receipts is based for a period of not less than five (5)
years after such statement is rendered.
Section 5.9 Non-Recourse.
Following recordation of the applicable Deed of Trust, and except as provided below, the
Developer shall not have any direct or indirect personal liability for payment of the principal of,
or interest on, the applicable Authority Loan or the performance of the covenants of the Developer
under the applicable Deed of Trust. The sole recourse of the Authority with respect to the principal
of, or interest on, the applicable Promissory Note and defaults by the Developer in the performance
of its covenants under the applicable Deed of Trust shall be to the property described in such Deed
of Trust; provided, however, that nothing contained in the foregoing limitation of liability shall:
(a) limit or impair the enforcement against all such security for the applicable Promissory Note of
all the rights and remedies of the Authority thereunder; or (b) be deemed in any way to impair the
right of the Authority to assert the unpaid principal amount of the applicable Promissory Note as
demand for money within the meaning and intendment of Section 431.70 of the California Code
of Civil Procedure or any successor provision thereto.
The foregoing limitation of liability is intended to apply only to the obligation for the
repayment of the principal of, and payment of interest on the applicable Promissory Note, except
as hereafter set forth; nothing contained herein is intended to relieve the Developer of personal
liability for (1) fraud or willful misrepresentation; (2) the failure to pay taxes, assessments or other
charges (which are not contested by Developer in good faith) which may create liens on the
Property or Phase that are payable or applicable prior to any foreclosure under the applicable Deed
of Trust (to the full extent of such taxes, assessments or other charges); (3) the Developer’s
indemnification obligations under this Agreement; (4) misappropriation of any rents, security
deposits, insurance proceeds, condemnation awards or any other proceeds derived from the
collateral security and (5) payment to the Authority of any rental income or other income arising
with respect to the Property received by the Developer after the Authority has given notice to the
Developer of the occurrence of an Event of Default, subject to the rights of any lender providing
a loan secured by the Property to which Authority has subordinated the Deed of Trust.
ARTICLE 6.
ONGOING DEVELOPER OBLIGATIONS
Section 6.1 Applicability. The conditions and obligations set forth in this Article 6
apply throughout the term of the Regulatory Agreement, unless a different period of applicability
is specified for a particular condition or obligation.
Section 6.2 Use of Development. The Developer hereby agrees that, for the entire
Term, the Development will be used and continuously operated only as affordable housing in
accordance with all applicable requirements of the California Community Redevelopment Law
(the "Law"), including, but not limited to, the requirement that such housing be provided to
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households described in Section 50079.5 of the Law, at rents not exceeding the amounts set forth
in Section 50053(b)(3). In the event of any conflict between the terms of this Agreement and the
Regulatory Agreement, the Developer shall comply with the stricter requirement. In addition, the
Developer shall comply with the TCAC Regulatory Agreement (each while they are in effect) all
other applicable laws, statutes, and regulations governing the Development, including, but not
limited to affordability restrictions of all other public entities encumbering the Phase and the
applicable requirements of Code Section 42, and all TCAC regulations, for such time that the
Development is subject to such regulations.
Section 6.3 Maintenance.
(a) The Developer agrees to maintain all interior and exterior portions of the
Development, including landscaping, of the Development in first-class condition and repair and in
a sanitary condition (and, as to landscaping, in a healthy condition, subject to any restrictions on
water use) and all applicable laws, rules, ordinances, orders, and regulations of all federal, state,
municipal, and other governmental agencies and bodies having or claiming jurisdiction and all
their respective departments, bureaus, and officials.
(b) The Developer acknowledges the great emphasis the City places on quality
maintenance to protect its investment and to provide quality affordable and market-rate housing
for area residents. In addition, the Developer must keep the Development free from all graffiti,
and any accumulation of shopping carts, debris or waste material. The Developer must promptly
make all repairs and replacements necessary to keep the Development in first-class condition and
repair and promptly eliminate all graffiti and replace dead and diseased plants and landscaping
with comparable approved materials.
(c) In the event that the Developer breaches any of the covenants contained in
this Section and such default continues for a period of seven (7) days after written notice from the
City with respect to graffiti, debris, waste material, and general maintenance or thirty (30) days
after written notice from the City with respect to landscaping and building maintenance, then the
City, in addition to whatever other remedy it may have at law or in equity, will have the right to
enter upon the Property and perform or cause to be performed all such acts and work necessary to
cure the default. Under such right of entry, the City will be permitted (but is not required) to enter
upon the Property and perform all acts and work necessary to protect, maintain, and preserve the
Development and landscaped areas on the Property, and Developer shall reimburse City for the
costs thereof and a ten percent (10%) administrative charge within ten (10) days after written
demand with evidence of the costs.
Section 6.4 Taxes and Assessments. The Developer must pay all real and personal
property taxes, assessments and charges and all franchise, income, employment, social security
benefit, withholding, sales, and other taxes assessed against it, or payable by it, at such times and
in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to
the Property; provided, however, that the Developer has the right to contest in good faith, any such
taxes, assessments, or charges. In the event the Developer exercises its right to contest any tax,
assessment, or charge against it, the Developer, on final determination of the proceeding or contest,
must immediately pay or discharge any decision or judgment rendered against it, together with all
costs, charges and interest.
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Section 6.5 Mandatory Language in All Subsequent Deeds, Leases and Contracts.
(a) Basic Requirement. The Developer may not restrict the rental, sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the Development on any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code. Developer or any person
claiming under or through the Developer may not establish or permit any such practice or practices
of discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees or vendees in the Development. The
foregoing covenant runs with the land.
(b) Provisions in Conveyance Documents. All deeds, leases or contracts made
or entered into by Developer, and its successor and assigns permitted under this Agreement, as to
any portion of the Property must contain therein the following language:
(1) In Deeds:
"(1) Grantee herein covenants by and for itself, its successors and
assigns, and all persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of any basis listed in
subdivision (a) and (d) of Section 12955 of the Government Code, as those bases are defined in
Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955
and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the property herein conveyed, nor shall the grantee or any person claiming
under or through the grantee, establish or permit any practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees or vendees in the property herein conveyed. The foregoing covenant shall
run with the land.
(2) Notwithstanding paragraph (1), with respect to familial
status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in
Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph
(1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code,
relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil
Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to
paragraph (1)."
(2) In Leases:
"(1) Lessee herein covenants by and for itself, its successors and
assigns, and all persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of any basis listed in
subdivision (a) and (d) of Section 12955 of the Government Code, as those bases are defined in
Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955
and Section 12955.2 of the Government Code in the leasing, subleasing, transferring, use,
occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee or any person
claiming under or through the lessee, establish or permit any such practice or practices of
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discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.
(2) Notwithstanding paragraph (1), with respect to familial
status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in
Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph
(1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code,
relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil
Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to
paragraph (1)."
(3) In Contracts:
"(1) There shall be no discrimination against or segregation of,
any person or group of persons on account of any basis listed in subdivision (a) and (d) of Section
12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision
(m) and paragraph (1) of subdivision (p) of Section 12955 and Section 12955.2 of the Government
Code in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property nor
shall the transferee or any person claiming under or through the transferee establish or permit any
such practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land.
(2) Notwithstanding paragraph (1), with respect to familial
status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in
Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph
(1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code,
relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil
Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to
paragraph (1)."
Section 6.6 Management Agent.
(a) The Developer shall manage or cause the Development to be managed in a
prudent and business-like manner, consistent with good property management standards for other
comparable high quality, well-managed affordable rental housing projects in the City of Palm
Desert. The Developer shall be responsible for all repair and maintenance functions of the
Development, including ordinary maintenance and replacement of capital items. The Developer
shall ensure maintenance of units and common areas in accordance with local health, building and
housing codes. Developer may contract with an experienced property management company or
property manager, to operate and maintain the Development (“Property Manager”). The Property
Management contract shall be subject to prior written approval by the City and shall contain a
provision allowing the Developer, with the approval of the lenders and the California Tax
Allocation Committee, to terminate the contract without penalty upon no more than thirty (30)
days' notice.
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(b) The Developer will develop a management plan and deliver a copy thereof
to City as a condition to the closing of each Phase (a "Property Management Plan"). The Property
Management Plan shall include the following:
(1) The role and responsibility of the Developer and its delegation of
authority, if any, to the Property Manager;
(2) Personnel policy and staffing arrangements, including ongoing
training of staff in best practices for serving the Project tenants;
(3) Plans and procedures for publicizing and achieving early and
continued occupancy;
(4) Procedures for determining tenant eligibility, and selecting tenants,
and for certifying and annually recertifying household status, income and size;
(5) Plans for carrying out an effective maintenance and repair program;
(6) Rent collection policies and procedures;
(7) Plans for enhancing tenant-management relations;
(8) Appeal and grievance procedures;
(9) Description of how service staff and property management staff will
work together to prevent evictions and to facilitate the implementation of reasonable
accommodation policies.
(c) Upon a determination by the City that the Property Manager has failed to
operate the Development in accordance with the Management Plan, the City shall provide written
notice to the Developer specifying the Property Manager's breach of the Management Plan and
providing the Developer at least thirty (30) days to cure the specified breach. Within thirty (30)
days the Developer must either use good faith efforts to cure the breach or, if such cure is of the
nature to take longer than thirty (30) days, the Developer shall commence the cure during the thirty
(30) day period and complete the cure by the conclusion of one hundred eighty (180) days the
Developer's receipt of the City's notice, or in such other time period as the parties may mutually
agree. If the Developer has failed to cure the breach of the Management Plan by the expiration of
the relevant cure period, the City may immediately provide a written notice to the Developer
requiring that the Developer promptly terminate the existing Property Manager and contract with
an alternative qualified management agent to operate the Project, each with the approval of the
lenders and the California Tax Allocation Committee, or to make such other arrangements as the
City deems reasonably necessary to ensure performance of the functions and obligations set forth
in the applicable Property Management Plan.
Section 6.7 Insurance Requirements.
(a) Required Coverage. The Developer must maintain and keep in force, at the
Developer's sole cost and expense, the following insurance applicable to the Development:
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(1) Workers' Compensation insurance, as required by the State of
California and consistent with statutory limits, and Employers' Liability coverage, with limits not
less than One Million Dollars ($1,000,000) each accident for bodily injury or disease.
(2) Commercial General Liability insurance with limits not less than
One Million Dollars ($1,000,000) each occurrence and Five Million Dollars ($5,000,000)
aggregate combined single limit for Bodily Injury and Property Damage, including coverages for
Contractual Liability, Personal Injury, Broadform Property Damage, Products and Completed
Operations. Products and Completed Operations coverage must be obtained no later than
completion of construction of the Development. The Developer shall cause the Developer's
general contractor to maintain Commercial General Liability insurance with limits not less than
Two Million Dollars ($2,000,000) each occurrence and Four Million Dollars ($4,000,000)
aggregate combined single limit for Bodily Injury and Property Damage, including coverages for
Contractual Liability, Personal Injury, Broadform Property Damage, Products and Completed
Operations.
(3) Commercial Automobile Liability insurance with limits not less
than One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury
and Property Damage, including coverages for owned, non-owned and hired vehicles, as
applicable; provided, however, that if the Developer does not own or lease vehicles, or operate any
non-owned vehicles for purposes of this Agreement, then no automobile liability insurance will be
required and both Parties to this Agreement must initial this provision signifying same.
(4) Professional liability insurance in an amount not less than One
Million Dollars ($1,000,000) each occurrence and Two Million Dollars ($2,000,000) aggregate
policy limit. Developer may meet this requirement by requiring any design professional retained
by the Developer or general contractor to maintain professional liability insurance in the minimum
amounts specified in this subsection.
(5) Builders' risk insurance during the course of construction (and upon
completion of construction, property insurance) covering the Development and covering all risks
of loss, excluding earthquake and including flood (if required), for one hundred percent (100%) of
the replacement value, with deductible, if any, acceptable to the City.
(b) Subcontractor's Insurance. Developer must require and verify that all
subcontractors and agents working on the Development maintain Workers' Compensation
insurance meeting all the requirements stated in this Section, and Developer must ensure that City
and the Authority are both additional insureds on insurance required from subcontractors as
described in subsection (c)(2) of this Section.
(c) General Requirements.
(1) Except for professional liability, the required insurance must be
provided under an occurrence form, and the Developer must maintain such coverage continuously
throughout the Term. Should any of the required insurance be provided under a form of coverage
that includes an annual aggregate limit or provides that claims investigation or legal defense costs
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be included in such annual aggregate limit, such annual aggregate limit must be three (3) times the
occurrence limits specified above.
(2) All Commercial General Liability, Commercial Automobile
Liability and Property insurance policies (including builders' risk) must be endorsed to name as
additional insureds the City, the Authority and their elected officials, officers, directors,
representatives, consultants, employees, and agents. The endorsement must include liability
arising out of work or operations performed by or on behalf of Developer including materials,
parts, or equipment furnished in connection with such work or operations and automobiles owned,
leased, hired or borrowed by or on behalf of Developer. For commercial general liability, the
policy must be endorsed with a form at least as broad as ISO form CG 20 10 11 85 or both CG 20
10 and CG 20 37 forms if later revisions used.
(3) Developer's insurance must be primary to any other insurance
(including self-insurance) available to the City or the Authority (including elected officials,
officers, directors, representatives, consultants, employees, and agents) with respect to any claim
arising out of this Agreement. Any insurance maintained by the City or Authority shall be excess
of the Developer's insurance and shall not contribute with it.
(4) No policy shall be canceled, limited, or allowed to expire without
renewal until after thirty (30) days written notice has been given to the City and Authority by first
class mail.
(5) Insurance is to be placed with insurers with a current A.M. Best's
rating of no less than A:VII, unless otherwise acceptable to the Entity. Exception may be made
for the State Compensation Insurance Fund when not specifically rated.
(d) Deductibles. Any deductibles or self-insured retentions must be declared to
and approved by City. At the option of City, either:
(1) Developer must reduce or eliminate such deductibles or self-insured
retentions as respects the City and its elected officials, officers, directors, representatives,
consultants, employees, and agents; or,
(2) Developer must provide a financial guarantee satisfactory to City
guaranteeing payment of losses and related investigations, claim administration, and defense
expenses.
(e) Subrogation Waiver. Developer hereby grants to City and the Authority a
waiver of any right to subrogation which any insurer of Developer may acquire against the City
by virtue of the payment of any loss under such insurance. Developer agrees to obtain any
endorsement that may be necessary to effect this waiver of subrogation. The Workers'
Compensation policy must be endorsed with a waiver of subrogation in favor of City for all work
performed by Developer, its employees, agents, and subcontractors. This provision applies
regardless of whether or not the City or Authority has requested or received a waiver of subrogation
endorsement from the insurer.
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(f) Certificates of Insurance. As a condition to the Close of Escrow for each
Phase, the Developer must provide certificates of insurance, in form and with insurers reasonably
acceptable to the City, evidencing compliance with the requirements of this Section, and must
provide complete copies of such insurance policies, including endorsements as required by this
Section. However, failure to obtain the required documents before the work beginning shall not
waive Developer's obligation to provide them. City reserves the right to require complete, certified
copies of all required insurance policies, including endorsements, required by these specifications,
at any time.
(g) Additional Coverage. Developer may carry, at its own expense, any
additional insurance it deems necessary or prudent. If Developer maintains higher levels than the
minimums shown above, City requires and shall be entitled to coverage for the higher limits
maintained by Developer. Any available insurance proceeds in excess of the specified minimum
levels of insurance and coverage shall be available to the City.
Section 6.8 Audits. The Developer must make available for examination at reasonable
intervals and during normal business hours to the Authority and the City all books, accounts,
reports, files, and other papers or property with respect to all matters covered by this Agreement,
and permit the Authority and the City to audit, examine, and make excerpts or transcripts from
such records, and such records shall be kept at 100 Pacifica, Suite 203 in the City of Irvine. The
Authority and the City may make audits of such records.
ARTICLE 7.
ASSIGNMENTS AND TRANSFERS
Section 7.1 Definitions. As used in this Article 7, the term "Transfer" means:
(a) Any total or partial sale, assignment or conveyance, or any trust or power,
or any transfer in any other mode or form, of or with respect to this Agreement or of the
Development or any part thereof or any interest therein or any contract or agreement to do any of
the same;
(b) Any total or partial sale, assignment or conveyance, or any trust or power,
or any transfer in any other mode or form, of or with respect to any ownership interest in Developer
or any contract or agreement to do any of the same;
(c) Any merger, consolidation, sale or lease of all or substantially all of the
assets of the Developer; or
(d) The leasing of part or all of the Development thereon; provided, however,
that leasing of the Units included within the Development to tenant occupants in accordance with
the Regulatory Agreement or the leasing of the Commercial Space in the Development in
accordance with this Agreement shall not be deemed a Transfer for purposes of this Article 7.
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Section 7.2 Purpose of Restrictions on Transfer.
(a) This Agreement is entered into solely for the purpose of the development
and operation of the Development and its subsequent use in accordance with the terms hereof. The
Developer recognizes that the qualifications and identity of Developer are of particular concern to
the City, in view of:
(1) The importance of the redevelopment of the Property to the general
welfare of the community;
(2) The land acquisition assistance and other public aids that have been
made available by law and by the government for the purpose of making such redevelopment
possible;
(3) The reliance by the City upon the unique qualifications and ability
of the Developer to serve as the catalyst for development of the Property;
(4) The fact that a change in ownership or Control of the Developer, or
of a substantial part thereof, or any other act or transaction involving or resulting in a significant
change in ownership or with respect to the identity of the parties in Control of the Developer is for
practical purposes a transfer or disposition of the Property;
(5) The fact that the Property is not to be acquired or used for
speculation, but only for development and operation by the Developer in accordance with this
Agreement and the Regulatory Agreement; and
(b) The Developer further recognizes that it is because of such qualifications
and identity that the City is entering into this Agreement with the Developer and that Transfers are
permitted only as provided in this Agreement.
Section 7.3 Prohibited Transfers. Any Transfer made in contravention of this Section
and is void and are deemed to be a Developer Event of Default under this Agreement whether or
not the Developer knew of or participated in such Transfer. Except for permitted Transfers
described in Section 7.4, no Transfer shall be permitted in the absence of specific written
agreement by the City, and, unless approved by the City in writing, no Transfer or assignment will
be deemed to relieve the Developer or any other party from any obligations under this Agreement.
Section 7.4 Permitted Transfers. Notwithstanding the provisions of Section 7.3, the
following Transfers are permitted and are hereby approved by the City without further review.
Any consent by the City under this Section 7.4 shall constitute the consent of the Authority:
(a) Notwithstanding the provisions of Section 7.3, the following Transfers shall
be permitted and are hereby approved by the City:
(1) Any Transfer creating a Security Financing Interest permitted
pursuant to the approved Financing Proposal;
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(2) Any Transfer of an entire Phase to a limited partnership in which the
Developer or an entity Controlled by the Developer is the administrative general partner of such
limited partnership (provided City shall have been given a copy of the limited partnership, and
copies of the organizational documents of the general partner).
(3) The Transfer of an entire Phase to a nonprofit managing general
partner pursuant to a right of first refusal agreement given by a limited partnership owner of the
Phase.
(4) The Transfer of an entire Phase to the administrative general partner
pursuant to an option agreement given by a limited partnership owner of the Phase.
(5) The admission of a tax credit investor limited partner to Developer,
and any subsequent transfer of investor limited partner interest thereafter.
(6) Any Transfer directly resulting from the foreclosure of a Security
Financing Interest or the granting of a deed in lieu of foreclosure of a Security Financing Interest
or as otherwise permitted under Article;
(7) The leasing of residential units within the Development in
accordance with the applicable Housing Agreement;
(8) The granting of reasonable easements or permits to facilitate the
Development of the Property.
Section 7.5 Other Transfers with City Consent.
(a) Any Transfers not permitted under Section 7.4 shall require the prior written
approval of the City Manager.
(b) No Transfer of this Agreement permitted under this Section will be effective
unless, at the time of the Transfer, the transferor and transferee enter into and records an
assignment and assumption agreement in a form reasonably approved by the City Manager.
Section 7.6 Termination of Limitations on Transfers. The limitations on Transfers set
forth in this Article 7 shall apply with respect to the Property or a Phase until issuance by the City
of a Certificate of Completion for the Phase.
ARTICLE 8.
DEFAULT AND REMEDIES
Section 8.1 General Applicability. The provisions of this Article 8 govern the Parties'
remedies for breach or failure of this Agreement. If a closing condition does not occur, then either
Party shall not be obligated to convey or accept the applicable parcel, may terminate the obligation
to convey/accept and the Deposit shall be returned to the Developer; however, the foregoing does
not relieve a party from the implied covenant of good faith and fair dealing (with the understanding
that such implied covenant does not apply to the City acting in its governmental capacity). .
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Section 8.2 Fault of City. Each of the following events, if uncured after expiration of
the applicable cure period in constitutes a "City Event of Default":
(a) The City, without good cause, fails to sell the Property to the Developer in
the manner set forth in Article 3 and the Developer is otherwise entitled by this Agreement to such
conveyance; or
(b) The City breaches any other material provision of this Agreement which is
materially adverse to Developer.
Section 8.3 Fault of Authority. Each of the following events, if uncured after expiration
of the applicable cure period, constitutes an "Authority Event of Default":
(a) The Authority, without good cause, fails to disburse the Authority Loan to
the Developer in the manner set forth in Article 5 and the Developer is otherwise entitled by this
Agreement to the disbursement; or
(b) The Authority breaches any other material provision of this Agreement
which is materially adverse to Developer.
Section 8.4 Fault of Developer. Each of the following events, if uncured after
expiration of the applicable cure period, constitutes a "Developer Event of Default":
(a) The Developer fails to exercise good faith and diligent efforts to satisfy,
within the time and in the manner set forth in Article 3, one or more of the conditions precedent to
the City's obligation to convey the Property to the Developer;
(b) The Developer refuses to accept conveyance from the City of the Property
within the time periods and under the terms set forth in Article 3 and fails to cure the default within
thirty (30) days after notice of default from City or Authority;
(c) The Developer fails to construct the Development in violation of Article 4
cure the default within thirty (30) days after notice of default from City or Authority;
(d) The Developer fails to comply with any construction deadlines in the
Schedule of Performance.
(e) Any default by the Developer under the Housing Agreement shall also be a
Developer Event of Default under this Agreement and the Authority Loan Documents, subject to
any required notice and cure period under the Housing Agreement;
(f) A Transfer occurs, either voluntarily or involuntarily, in violation of
Article 7;
(g) Any representation or warranty contained in this Agreement or in any
application, financial statement, certificate, or report submitted to the City in connection with this
Agreement proves to have been incorrect in any material and adverse respect when made;
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(h) A court having jurisdiction makes or enters any decree or order:
(1) adjudging the Developer to be bankrupt or insolvent; (2) approving as properly filed a petition
seeking reorganization of the Developer, or seeking any arrangement for the Developer, under the
bankruptcy law or any other applicable debtor's relief law or statute of the United States or any
state or other jurisdiction; (3) appointing a receiver, trustee, liquidator, or assignee of the
Developer, in bankruptcy or insolvency or for any of their properties; or (4) directing the winding
up or liquidation of the Developer, if any such decree or order described in clauses (1) to (4),
inclusive, continued unstayed or undischarged for a period of ninety (90) days unless a lesser time
period is permitted for cure under any other mortgage on the Property, in which event such lesser
time period will apply under this subsection (i) as well; or the Developer, admits in writing its
inability to pay its debts as they fall due or voluntarily submits to or files a petition seeking any
decree or order of the nature described in clauses (1) to (4), inclusive;
(i) The Developer assigns its assets for the benefit of its creditors or suffered a
sequestration or attachment of or execution on any substantial part of its property, unless the
property so assigned, sequestered, attached or executed upon have been returned or released within
ninety (90) days after such event (unless a lesser time period is permitted for cure under any other
mortgage on the Property, in which event such lesser time period will apply under this subsection
as well) or prior to sooner sale under such sequestration, attachment, or execution;
(j) The Developer voluntarily suspends its business or, the Developer is
dissolved or terminated;
(k) There occurs any default declared by any entity under any loan document
to which City or Authority is not a party/beneficiary, and which is related to any loans secured by
a deed of trust on the Development or any such deed of trust or any regulatory agreement recorded
against the Property (other than the Housing Agreement), after the expiration of applicable cure
periods in the applicable documents; or
(l) The Developer breaches any other provision of this Agreement and fails to
cure the default within thirty (30) days after notice of default from City or Authority, or the
Developer breaches any other provision of any Authority Loan Documents and fails to cure the
same within: (a) the cure period in the Authority Loan Documents, if any applicable to the default;
or (b) if no cure period applies, and the default is not included/described in the preceding
subsections, then Developer fails to cure the default within thirty (30) days after written notice
from Authority.
Section 8.5 Notice and Cure Period Regarding City/Authority Defaults.
(a) Before initiating any action for relief against City or Authority for an
alleged breach of this Agreement, Developer must deliver to City or Authority, as applicable, a
written notice of breach specifying all of the reasons for the allegation of default with reasonable
particularity. Within thirty (30) days, City or Authority (as applicable) must either: (1) use good
faith efforts to cure the breach or, if such cure is of the nature to take longer than thirty (30) days,
to follow the procedures specified in subsection (b) below; or (2) if in the determination of the City
or Authority, the event does not constitute a breach of this Agreement, the City or Authority, as
applicable, within thirty (30) days of receipt of the Notice of Default, must deliver to Developer a
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notice which sets forth with reasonable particularity the reasons that a default has not occurred.
Failure to respond within the thirty (30) day period may not be deemed an admission of the default.
(b) If the City or Authority, as applicable, believes that the Default cannot
practically be cured within the thirty (30)-day period, it shall not be in Default provided that:
(1) the cure is commenced during the thirty (30) day period after receipt of the Notice of Default;
(2) within the thirty (30) day period, the Defaulting Party provides a schedule to Developer for
cure, ; and (3) the cure is thereafter diligently prosecuted to completion, and City or Authority as
applicable uses good faith efforts to comply with the schedule.
Section 8.6 Remedies.
(a) City Remedies. With respect to an uncured Developer Event of Default, the
City shall be entitled to take any or all of the following remedies:
(1) Terminating this Agreement by giving written notice to the
Developer; provided, however, that the City's remedies under this Article 8 and the indemnification
provisions of this Agreement survive such termination. If the City elects to terminate this
Agreement, the provisions of this Agreement that are specified to survive such termination shall
remain in full force and effect.
(2) Prosecuting an action for damages (excluding specific performance,
punitive damages and indirect consequential damages); or seeking any other remedy available at
law or in equity (excluding punitive damages and indirect consequential damages).
(b) Developer Remedies. With respect to an uncured City Event of Default or
Authority Event of Default, the Developer shall be entitled to take any or all of the following
remedies:
(1) Terminating this Agreement by giving written notice to the
Developer; provided, however, that the Developer's remedies under this Article 8 and the
indemnification provisions of this Agreement survive such termination. If the Developer elects to
terminate this Agreement, the provisions of this Agreement that are specified to survive such
termination shall remain in full force and effect.
(2) Prosecuting an action for damages (excluding specific performance,
punitive damages, lost profits and indirect consequential damages); or seeking any other remedy
available at law or in equity (excluding punitive damages and indirect consequential damages).
(c) Authority Remedies. With respect to an uncured Developer Event of
Default as to a Phase, the Authority shall be entitled to exercise any or all remedies permitted at
law or in equity, and any remedies under the Promissory Note and Deed of Trust for that Phase
(including acceleration of the applicable loan).
Section 8.7 Rights of Mortgagees. Any rights of the City or Authority under this Article
8 will not defeat, limit or render invalid any Security Financing Interest permitted by this
Agreement or any rights provided for in this Agreement for the protection of holders of Security
Financing Interests.
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Section 8.8 Remedies Cumulative. No right, power, or remedy given to the City by the
terms of this Agreement is intended to be exclusive of any other right, power, or remedy; and each
and every such right, power, or remedy will be cumulative and in addition to every other right,
power, or remedy given by the terms of any such instrument, or by any statute or otherwise.
Neither the failure nor any delay to exercise any such rights and remedies will operate as a waiver
thereof, nor will any single or partial exercise of any such right or remedy preclude any other or
further exercise of such right or remedy, or any other right or remedy.
ARTICLE 9.
SECURITY FINANCING AND RIGHTS OF HOLDERS
Section 9.1 No Encumbrances Except for Development Purposes. Notwithstanding any
other provision of this Agreement, mortgages and deeds of trust, or any other reasonable method
of security are permitted to be placed upon the Developer's fee interest in the Property, but only
for the purpose of securing loans approved by the City under the approved Financing Proposal.
Mortgages, deeds of trust, or other reasonable security instruments securing loans approved by the
City under the approved Financing Proposal are each referred to as a "Security Financing Interest."
The words "mortgage" and "deed of trust" as used in this Agreement include all other appropriate
modes of financing real estate acquisition, construction, and land development.
Section 9.2 Holder Not Obligated to Construct. The holder of any Security Financing
Interest authorized by this Agreement is not obligated to construct or complete any Development
or to guarantee such construction or completion; nor will any covenant or any other provision in
conveyances from the City to the Developer evidencing the realty comprising the Property or any
part thereof be construed so to obligate such holder. However, no such holder shall devote the
Property or any portion thereof to any uses, or to construct any Development thereon, other than
the Development provided for or authorized by this Agreement and the Housing Agreement.
Section 9.3 Notice of Default and Right to Cure. Whenever the City under its rights set
forth in Article 8 of this Agreement delivers any notice or demand to the Developer with respect
to the commencement, completion, or cessation of the construction of the Development, the City
will at the same time deliver to each holder of record of any Security Financing Interest creating a
lien upon the Developer's fee interest in the Property or any portion thereof, and the Investor, a
copy of such notice or demand provided City shall have been given written notice of its address
for notice by the Developer. Each such holder (insofar as the rights of the City are concerned) has
the right, but not the obligation, at its option, within ninety (90) days after the delivery of the
notice, to cure or remedy or commence to cure or remedy any such default or breach affecting the
Property which is subject to the lien of the Security Financing Interest held by such holder and to
add the cost thereof to the security interest debt and the lien on its security interest. Nothing
contained in this Agreement is deemed to permit or authorize such holder to undertake or continue
the construction or completion of the Development (beyond the extent necessary to conserve or
protect such Development or construction already made) without first having expressly assumed
in writing the Developer's obligations to the City relating to such Development under this
Agreement under an assignment and assumption agreement prepared by the City and recordable
among the Official Records (the "Security Financing Interest Assignment"). The holder in that
event must agree to complete, in the manner provided in this Agreement (or as may be amended
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by the Security Financing Interest Assignment; provided, however, the City is under no obligation
to extend the dates for performance set forth in this Agreement), the Development to which the
lien or title of such holder relates. Any such holder properly completing such Development under
this paragraph must assume all rights and obligations of Developer under this Agreement and will
be entitled, upon completion and written request made to the City, to a Certificate of Completion
from the City.
Section 9.4 Failure of Holder to Complete Development. In any case where six (6)
months after default by the Developer in completion of construction of the Development under
this Agreement, the holder of record of any Security Financing Interest, having first exercised its
option to construct under the Security Financing Interest Assignment, has not proceeded diligently
with construction (as reasonably determined by the City), the City and Authority must be afforded
those rights against such holder it would otherwise have against Developer under this Agreement.
Section 9.5 Right of Cure. In the event of a default or breach by the Developer of a
Security Financing Interest prior to the completion of the Development, and the holder has not
exercised its option to complete the Development on the Property, the City or Authority may cure
the default, prior to the completion of any foreclosure. In such event the City or Authority as
applicable will be entitled to reimbursement from the Developer of all costs and expenses incurred
bin curing the default. The City will also be entitled to a lien upon the Property or any portion
thereof to the extent of such costs and disbursements, or in the case of the Authority, the
Developer’s obligation to reimburse for costs and disbursements shall be included in the
obligations secured by the applicable Deed of Trust. The City agrees that such lien will be
subordinate to any Security Financing Interest, and the City will execute from time to time any
and all documentation reasonably requested by Developer to effect such subordination.
Section 9.6 Right of City to Satisfy Other Liens. After the conveyance of title to the
Property or any portion thereof and after the Developer has had a reasonable time to challenge,
cure or satisfy any liens or encumbrances on the Property or any portion thereof, the City will have
the right to satisfy any such lien or encumbrances; provided, however, that nothing in this
Agreement will require the Developer to pay or make provision for the payment of any tax,
assessment, lien or charge so long as the Developer in good faith may contest the validity or
amount therein and so long as such delay in payment is not subject the Property or any portion
thereof to forfeiture or sale.
Section 9.7 Holder to be Notified. The Developer will insert each term contained in
this Article 9 into each Security Financing Interest or will procure acknowledgement of such terms
by each prospective holder of a Security Financing Interest prior to its coming into any security
right or interest in the Property or portion thereof.
Section 9.8 Estoppel Certificates. Any Party may at any time, and from time to time,
deliver written notice to another Party requesting such other party to certify in writing that, to the
knowledge of the certifying Party: (a) this Agreement is in full force and effect and a binding
obligation of the Parties; (b) this Agreement has not been amended or modified either orally or in
writing, or if so amended, identifying the amendments; and (c) the requesting Party is not in default
in the performance of its obligations under this Agreement, or if in default, the notice shall describe
the nature and amount of any such default. A Party receiving a request shall execute and return
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such certificate within fifteen (15) days following receipt of the request. The City Manager is
authorized to execute any estoppel certificate requested by the Developer on behalf of the City.
The Authority's Executive Director is authorized to execute any estoppel certificate requested by
the Developer on behalf of the Authority.
ARTICLE 10.
GENERAL PROVISIONS
Section 10.1 Notices, Demands and Communications. Formal notices, demands, and
communications between the City and the Developer will be sufficiently given if, and not be
deemed given unless, dispatched by registered or certified mail, postage prepaid, return receipt
requested, or delivered by reputable overnight delivery service, to the principal office of the City
and the Developer as follows:
City and Authority: City of Palm Desert/Palm Desert Housing Authority
73-510 Fred Waring Drive
Palm Desert, CA 92260
Attn: Housing Division
Developer: Palm Communities
100 Pacifica, Suite 203
Irvine, CA 92618
Attn: President
Such written notices, demands and communications may be sent in the same manner to such other
addresses as the affected Party may from time to time designate by notice as provided in this
Section.
Section 10.2 Non-Liability of Officials, Employees and Agents. No City Council
members, or Authority board members, or any of the officers, directors, representatives,
consultants, employees and agents of the City or Authority may be personally liable to the
Developer, or any successor in interest, in the event of any default or breach by the City or
Authority or for any amount which may become due to the Developer or successor or on any
obligation under the terms of this Agreement. Absent fraud or willful misconduct by the
responsible party, no members, officers, directors, representatives, consultants, employees and
agents of the Developer may be personally liable to the City or Authority, or any successor in
interest, in the event of any default or breach by the Developer or for any amount which may
become due to the City or Authority or successor or on any obligation under the terms of this
Agreement.
Section 10.3 Forced Delay. In addition to specific provisions of this Agreement, any
Party hereunder shall not be deemed to be in default with respect to a construction
obligation/deadline where delays or defaults are due to war; insurrection; strikes; lock-outs; riots;
floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine
restrictions; freight embargoes; lack of transportation; governmental restrictions or priority (except
for restrictions or priorities established by the Party required to perform the action required under
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this Agreement); unusually severe weather; inability to secure necessary labor, materials or tools;
acts or the failure to act of any public or governmental agency or entity (except that acts or the
failure to act of a Party shall not excuse performance by such Party, including without limitation
the Developer's inability to obtain financing for the Development or the economic infeasibility of
the Development) ("Force Majeure"). An extension of time for Force Majeure shall only be for
the period of the enforced delay, which period shall commence to run from the time of the
notification of the delay by the Party requesting the extension to the other Party. The Party
requesting an extension of time under this Section 10.3 shall give notice promptly following
knowledge of the delay to the other Party. If, however, notice by the Party claiming such extension
is sent to the other Party more than thirty (30) days after knowledge of the commencement of the
delay, the period shall commence to run upon the earlier of (i) thirty (30) days prior to the giving
of such notice or (ii) the date that the other Party received knowledge of the events giving rise to
the delay.
Section 10.4 Inspection of Books and Records. Upon request, the Developer must permit
the City and Authority to inspect at reasonable times and on a confidential basis those books,
records and all other documents of the Developer necessary to determine Developer's compliance
with the terms of this Agreement.
Section 10.5 Title of Parts and Sections. Any titles of the articles, sections or subsections
of this Agreement are inserted for convenience of reference only and should be disregarded in
construing or interpreting any part of its provision.
Section 10.6 No Third-Party Beneficiaries. There are no third party beneficiaries to this
Agreement.
Section 10.7 Applicable Law. This Agreement must be interpreted under and under the
laws of the State of California. Venue shall be Riverside County.
Section 10.8 No Brokers. Each Party represents to the other that it has not had any
contact or dealings regarding the Property, or any communication in connection with the subject
matter of this transaction, through any real estate broker or other person who can claim a right to
a commission or finder's fee. If any broker or finder makes a claim for a commission or finder's
fee based upon a contact, dealings, or communications, the Party through whom the broker or
finder makes this claim must indemnify, defend with counsel of the indemnified Party's choice,
and hold the indemnified Party harmless from all expense, loss, damage and claims, including the
indemnified Party's reasonable attorneys' fees, if necessary, arising out of the broker's or finder's
claim. The provisions of this Section survive expiration of the Term or other termination of this
Agreement and will remain in full force and effect.
Section 10.9 Legal Actions. In the event any legal action is commenced to interpret or
to enforce the terms of this Agreement or to collect damages as a result of any breach thereof, each
Party shall bear their own attorneys' fees and no attorneys' fees may be awarded to the Party
prevailing in the action.
Section 10.10 Severability. If any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the
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remainder of the provisions will continue in full force and effect unless the rights and obligations
of the Parties have been materially altered or abridged by such invalidation, voiding or
unenforceability.
Section 10.11 Binding Upon Successors. This Agreement is binding upon and inures to
the benefit of the heirs, administrators, executors, successors in interest and assigns of each of the
Parties hereto, except that there may be no Transfer of any interest by any of the Parties hereto
except under the terms of this Agreement. Any reference in this Agreement to a specifically named
Party is deemed to apply to any successor, heir, administrator, executor or assignee of such Party
who has acquired an interest in compliance with the terms of this Agreement, or under law.
Section 10.12 Reserved.
Section 10.13 Parties Not Co-Venturers. Nothing in this Agreement is intended to or does
establish the Parties as partners, co-venturers, or principal and agent with one another.
Section 10.14 Discretion Retained by City. The City's execution of this Agreement does
not constitute approval by the City and in no way limits the discretion or any governmental rights
or powers of the City in the permit and approval process in connection with construction of the
Development.
Section 10.15 Time of the Essence. In all matters under this Agreement, the Parties agree
that time is of the essence.
Section 10.16 Representation and Warranties of Developer. The Developer hereby
represents and warrants to the City and Authority as follows:
(a) Organization. The Developer is a duly organized, validly existing
corporation, is in good standing under the laws of the State of California and has the power and
authority to own its property and carry on its business as now being conducted.
(b) Authority of Developer. The Developer has full power and authority to
execute and deliver this Agreement and to perform and observe the terms and provisions of all of
the above.
(c) Authority of Persons Executing Documents. This Agreement and all other
documents or instruments executed and delivered, or to be executed and delivered, under this
Agreement have been executed and delivered by persons who are duly authorized to execute and
deliver the same for and on behalf of Developer, and all actions required under the Developer's
organizational documents and applicable governing law for the authorization, execution, delivery
and performance of this Agreement and all other documents or instruments executed and delivered,
or to be executed and delivered, under this Agreement, have been duly taken.
(d) Valid Binding Agreements. This Agreement and all other documents or
instruments which have been executed and delivered under or in connection with this Agreement
constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal,
valid and binding obligations of the Developer enforceable against it in accordance with their
respective terms.
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(e) No Breach of Law or Agreement. Neither the execution nor delivery of this
Agreement or of any other documents or instruments executed and delivered, or to be executed or
delivered, under this Agreement, nor the performance of any provision, condition, covenant or
other term hereof or thereof, will conflict with or result in a breach of any statute, rule or regulation,
or any judgment, decree or order of any court, City Council, commission or agency whatsoever
binding on the Developer, or any provision of the organizational documents of the Developer, or
will conflict with or constitute a breach of or a default under any agreement to which the Developer
is a party.
Section 10.17 Entire Understanding of the Parties. This Agreement constitutes the entire
understanding and agreement of the Parties. All prior discussions, understandings and written
agreements are superseded by this Agreement.
Section 10.18 Amendments. The Parties can amend this Agreement only by means of a
writing executed by the Developer, the Authority and the City.
Section 10.19 Approvals. Whenever this Agreement permits City approval, consent, or
waiver, to be authorized by the City Manager, the City Manager's signature shall constitute the
approval, consent, or waiver of the City, without further authorization required from the City
Council unless required by law or the terms of this Agreement. Whenever this Agreement permits
Authority approval, consent, or waiver, to be authorized by the Authority's Executive Director, the
Authority's Executive Director signature shall constitute the approval, consent, or waiver of the
Authority, without further authorization required from the Authority's governing board unless
required by law or the terms of this Agreement.
Section 10.20 Counterparts; Multiple Originals. This Agreement may be executed in
counterparts, each of which is deemed to be an original.
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The City, the Authority and the Developer are signing this Agreement as of the Effective Date.
CITY:
CITY OF PALM DESERT,
a municipal corporation
By:
Name: L. Todd Hileman
Title: City Manager
DEVELOPER:
PALM COMMUNITIES, a California
corporation
By:
Name: Danavon L. Horn
Title: President
APPROVED AS TO FORM:
Richard, Watson & Gerson
By: __________________
Special Counsel
AUTHORITY:
PALM DESERT HOUSING AUTHORITY
By:
Name: L. Todd Hileman
Title: Executive Director
APPROVED AS TO FORM:
Richard, Watson & Gerson
By: _____________________________
Special Counsel
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EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The land referred to is situated in the City of Palm Desert, State of California, and is described as
follows:
THOSE PORTIONS OF PARCEL 8 AND PARCEL 9 OF PARCEL MAP NO. 36792, IN THE.
CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS
SHOWN BY MAP ON FILE IN BOOK 239 OF PARCEL MAPS, PAGES 9 THROUGH 15,
INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY
DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID PARCEL 8; THENCE ALONG THE
SOUTH LINE OF SAID PARCEL 9, SOUTH 89°56'08" WEST 72.55 FEET TO A LINE THAT
IS PARALLEL WITH AND DISTANT EASTERLY 138.45 FEET, MEASURED AT RIGHT
ANGLES, FROM THE EAST RIGHT OF WAY LINE OF DINAH SHORE DRIVE, AS SHOWN
ON SAID PARCEL MAP NO. 36792; THENCE LEAVING SAID SOUTH LINE AND ALONG
SAID PARALLEL LINE, NORTH 0°00'00" EAST 31711 FEET; THENCE NORTH 90°00'00"
EAST 65.55 FEET TO A LINE THAT IS PARALLEL WITH AND DISTANT WESTERLY 7.00
FEET, MEASURED AT RIGHT ANGLES FROM THE WEST LINE OF SAID PARCEL 8;
THENCE NORTH 0°00'00" EAST 102.00 FEET ALONG LAST SAID PARALLEL LINE TO A
LINE THAT IS PARALLEL WITH AND DISTANT NORTHERLY 1,00 FEET; MEASURED
AT RIGHT ANGLES, FROM THE NORTH LINE OF SAID PARCEL 8; THENCE NORTH
90°00'00" EAST 275.69 FEET ALONG LAST SAID PARALLEL LINE TO AN
INTERSECTION WITH THE NORTHWESTERLY PROLONGATION OF THE
NORTHEASTERLY LINE OF SAID PARCEL 8; THENCE SOUTH 68°15'29" EAST 409,78
FEET ALONG SAID NORTHWESTERLY PROLONGATION AND SAID
NORTHEASTERLY LINE OF PARCEL 8 TO A TANGENT CURVE, CONCAVE
SOUTHWESTERLY HAVING A RADIUS OF 1445.00 FEET; THENCE SOUTHEASTERLY
ALONG SAID CURVE AND SAID NORTHEASTERLY LINE OF PARCEL 8 AN ARC
LENGTH OF 535.73 FEET, THROUGH A CENTRAL ANGLE OF 21°14'32" TO A NON-
TANGENT LINE, SAID NON- TANGENT LINE BEING PARALLEL WITH AND DISTANT
WESTERLY 36.00 FEET, MEASURED AT RIGHT ANGLES, FROM THE MOST EASTERLY
LINE OF SAID PARCEL 8; THENCE LEAVING SAID NORTHEASTERLY LINE OF
PARCEL 8, ALONG LAST SAID PARALLEL LINE, SOUTH 07°03'09" EAST 105.97 FEET
TO A POINT ON THE SOUTHEASTERLY LINE OF SAID PARCEL 8, BEING A NON-
TANGENT CURVE, CONCAVE SOUTHEASTERLY HAVING A RADIUS OF 73.00 FEET,
A RADIAL LINE TO SAID POINT BEARS NORTH 36°36'07" WEST; THENCE ALONG THE
SOUTHEASTERLY LINE OF SAID PARCEL 8 THE FOLLOWING FIVE (5) COURSES,.
SOUTHERLY ALONG SAID NON-TANGENT CURVE AN ARC LENGTH OF 28.61 FEET,
THROUGH A CENTRAL ANGLE OF 22°27'11" TO THE BEGINNING OF A REVERSE
CURVE, CONCAVE NORTHWESTERLY HAVING A RADIUS OF 60.00 FEET; A LINE
RADIAL TO SAID BEGINNING OF CURVE BEARS SOUTH 59°03'18" EAST; THENCE
SOUTHWESTERLY LONG LAST SAID CURVE AN ARC LENGTH OF 38.39 FEET
THROUGH A CENTRAL ANGLE OF 36°39'18" TO THE BEGINNING OF A REVERSE
CURVE, CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 336.00 FEET; A LINE
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RADIAL TO LAST SAID BEGINNING OF CURVE BEARS NORTH 22°24'00" WEST;
THENCE SOUTHEASTERLY ALONG LAST SAID CURVE AN ARC LENGTH OF 120.80
FEET; THROUGH A CENTRAL ANGLE OF 20°36'00"; THENCE SOUTH 47°00'00" WEST
102.69 FEET; THENCE NORTH 89°13'34" WEST 25.84 FEET TO THE BEGINNING OF A
NON-TANGENT CURVE, CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 1075.00
FEET, A LINE RADIAL TO SAID BE-GINNING OF CURVE BEARS NORTH 44°07'38"
EAST; THENCE ALONG THE SOUTHERLY LINE OF SAID PARCEL 8 THE FOLLOWING
TWO (2) COURSES NORTHWESTERLY ALONG LAST SAID CURVE AN ARC LENGTH
OF 829.14 FEET; THROUGH A CENTRAL ANGLE OF 44°11'30"; THENCE SOUTH
89°56'08" WEST 112.85 FEET TO SAID SOUTHWEST CORNER OF PARCEL 8 AND THE
POINT OF BEGINNING.
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EXHIBIT A-1
LEGAL DESCRIPTION OF PHASE I PARCEL
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EXHIBIT A-2
LEGAL DESCRIPTION OF PHASE II PARCEL
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EXHIBIT A-3
LEGAL DESCRIPTION OF PARCEL 9
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EXHIBIT B-1
PHASE II EASEMENT
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EXHIBIT B-2
PARCEL 9 EASEMENT
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EXHIBIT B-3
MAINTENANCE EASEMENT
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EXHIBIT C
FORM OF GRANT DEED
GRANT DEED
RECORDING REQUESTED BY:
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Attention: Housing Division
AFTER RECORDATION MAIL TO AND
MAIL TAX STATEMENTS TO:
Palm Desert Palm Villas Partners LP
100 Pacifica, Suite 203
Irvine, CA 92618
Attn: President
______________________________________________________________________
SPACE ABOVE THIS LINE FOR RECORDER’S USE
APN# ________________
THE UNDERSIGNED GRANTOR(S) DECLARE(S):
Documentary Transfer Tax is $___________City Transfer Tax is $0
computed on full value of property conveyed, or
computed on full value less value of liens and/or encumbrances remaining at time of sale,
Unincorporated Area [___], County of Riverside
EXEMPT FROM BUILDING HOMES AND JOBS ACTS FEE PER GOVERNMENT CODE
27388.1(a)(2)
GRANT DEED
For valuable consideration, the receipt of which is hereby acknowledged,
City of Palm Desert, a municipal corporation (herein called "Grantor") grants to Palm Desert Palm
Villas Partners LP, a California limited partnership (herein called "Grantee"), the real property located at
__________________________ in the City of Palm Desert, CA (the "Property"), as legally described in
the document attached hereto, labeled Exhibit A, and incorporated herein by this reference, together with
all of Grantor’s right, title and interest in and to all easements, privileges and rights appurtenant to the
Property, subject to (a) all non-delinquent real property taxes, (b) all non-delinquent special assessments, if
any, (c) all other liens, leases, easements, encumbrances, covenants, conditions, restrictions and other
matters of record, and (d) all matters affecting the status of title that would be revealed by an accurate
survey of the subject property. Grantor disclaims any and all express or implied warranties regarding the
Property other than the implied warranties stated in Section 1113 of the California Civil Code.
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1. The Property is conveyed subject to the Disposition Development and Loan Agreement dated as of
____________, 2022, by and between Grantor and Palm Communities, predecessor in interest to Grantee,
(the "Agreement"). The Agreement shall apply to this Grant Deed only until the termination of the
Agreement by its terms and thereafter shall have no further force or effect by reference in this Grant Deed.
2. Grantee herein covenants by and for itself, its successors and assigns that there shall be no
discrimination against or segregation of a person or of a group of persons on account of race, color, religion,
creed, national origin, ancestry, disability (actual or perceived), medical condition, age, source of income,
familial status, marital status, domestic partner status, sex, sexual preference/orientation, Acquired Immune
Deficiency Syndrome (AIDS) – acquired or perceived, or any additional basis listed in subdivision (a) or
(d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the
Government Code, as such provisions may be amended from time to time, in the sale, lease, sublease,
transfer, use, occupancy, tenure or enjoyment of the Property herein conveyed nor shall the Grantee or any
person claiming under or through the Grantee establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees, vendees, or employees in the Property herein conveyed. The foregoing
covenant shall run with the land.
All deeds, leases or other real property conveyance contracts entered into by the Grantee on or after
the date of this Grant Deed as to any portion of the Property shall contain the following language:
(a) In Deeds:
"Grantee herein covenants by and for itself, its successors and assigns that there
shall be no discrimination against or segregation of a person or of a group of persons
on account of race, color, religion, creed, national origin, ancestry, disability (actual
or perceived), medical condition, age, source of income, familial status, marital
status, domestic partner status, sex, sexual preference/orientation, Acquired
Immune Deficiency Syndrome (AIDS) – acquired or perceived, or any additional
basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as
those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph
(1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government
Code, as such provisions may be amended from time to time, in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the property herein
conveyed nor shall the grantee or any person claiming under or through the grantee
establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees, vendees, or employees in the property herein
conveyed. The foregoing covenant shall run with the land."
(b) In Leases:
"The lessee herein covenants by and for the lessee and lessee's heirs, personal
representatives and assigns and all persons claiming under or through the lessee that
his lease is made subject to the condition that there shall be no discrimination
against or segregation of any person or of a group of persons on account of race,
color, religion, creed, national origin, ancestry, disability (actual or perceived),
medical condition, age, source of income, familial status, marital status, domestic
partner status, sex, sexual preference/orientation, Acquired Immune Deficiency
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Syndrome (AIDS) – acquired or perceived, or any additional basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of
subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, as
such provisions may be amended from time to time, in the leasing, subleasing,
transferring, use, occupancy, tenure or enjoyment of the land herein leased nor shall
the lessee or any person claiming under or through the lessee establish or permit
any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, sublessees,
subtenants, vendees, or employees in the land herein leased."
(c) In Contracts:
"There shall be no discrimination against or segregation of any person or group of
persons on account of race, color, religion, creed, national origin, ancestry,
disability (actual or perceived), medical condition, age, source of income, familial
status, marital status, domestic partner status, sex, sexual preference/orientation,
Acquired Immune Deficiency Syndrome (AIDS) – acquired or perceived, or any
additional basis listed in subdivision (a) or (d) of Section 12955 of the Government
Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the
Government Code, as such provisions may be amended from time to time, in the
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property
nor shall the transferee or any person claiming under or through the transferee
establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees, vendees, or employees of the land."
3. The covenants contained in this Grant Deed shall be construed as covenants running with
the land.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Grantor has caused this Grant Deed to be executed by its
duly authorized representative.
Executed as of the __ day of _______________, 202_
CITY
CITY OF PALM DESERT
a municipal corporation
By: __________________________
Mayor
Dated: __________________________
ATTEST:
By: __________________________
_____________, City Clerk
Dated: __________________________
Dated: __________________________
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EXHIBIT A
LEGAL DESCRIPTION OF LAND
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LOS
ANGELES, IN THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND IS
DESCRIBED AS FOLLOWS:
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A notary public or other officer completing this certificate
verifies only the identity of the individual who signed the
document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of ____________________
County of ___________________
On _______________________ before me, _ __________________, notary public personally
appeared
_____ _____________ __________________, who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct
WITNESS my hand and official seal.
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EXHIBIT D
FORM OF DENSITY BONUS AGREEMENTS
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Exhibit D-1
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Exhibit D-2
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EXHIBIT E
FORMS OF PROMISSORY NOTE
SECURED PROMISSORY NOTE
(Phase I)
__________, 2023 $6,000,000.00
Palm Desert, California
FOR VALUE RECEIVED, the undersigned, Palm Desert Palm Villas Partners LP, a California
limited partnership (“Maker” or “Developer”), having its principal place of business at 100
Pacifica, Suite 203, Irvine, CA 92618 promises to pay to the order of the PALM DESERT
HOUSING AUTHORITY (“Payee”), at 73-510 Fred Waring Drive, Palm Desert, CA 92260, Attn:
_____________________, or at such other place as the holder of this Note from time to time may
designate in writing, the principal sum of Six Million Dollars ($6,000,000.00) (the “Principal
Amount”), together with interest on the unpaid principal amount disbursed under this promissory
note (“Note”) from time to time outstanding at the “Applicable Interest Rate,” as defined below,
in lawful money of the United States of America. This Note is being delivered, and the loans
evidenced hereby are being made, pursuant to the terms of a Disposition, Development and Loan
Agreement between Developer and Payee (“DDLA”). All capitalized terms used herein which are
not separately defined herein shall have the meanings set forth therefor in the DDLA.
As of the date of this Note, the One Million Nine Hundred Seventy Thousand Five Hundred Thirty-
Nine Dollars ($1,970,539.00) principal has been disbursed to the City of Palm Desert as a purchase
money loan to Maker for its acquisition from the City of the property encumbered by the deed of
trust securing this Note (the “Property”). The remainder of the Principal Amount shall be
disbursed as a construction loan as described in Section 5.6 of the DDLA. “Applicable Interest
Rate” means three percent (3%) per annum, simple interest, except that amounts not paid when
due shall accrue interest from the date due until the date paid at the lesser of: (i) ten percent (10%)
per annum, simple interest, or (ii) the maximum rate permitted by applicable law.
1. Payments. Payments under this Note shall be due and payable as follows: ____
percent of Residual Receipts, as defined in the DDLA, from the Development on the Property for
each calendar year shall be paid to Payee on an annual basis on June 1st the first anniversary of
issuance of a final certificate of occupancy for such Development , and each June 1st thereafter
(with respect to the Residual Receipts for the preceding calendar year, until all outstanding
principal and accrued interest under this Note has been paid in full. Payments shall first be applied
to accrued interest, then to remaining outstanding principal. In addition, the entire amount of
outstanding principal and accrued interest and any additional amounts which become owing
hereunder shall be paid by Maker to Payee as of the earliest of: (i) an Event of Default by Maker
under the DDLA (including, without limitation, an uncured default under the Housing Agreement
for the Property, any uncured default under any other loan provided by Maker to Payee or any
affiliate of Payee, and any uncured default under any other Housing Agreement following the
expiration of any applicable cure period executed by Payee or any affiliate of Payee in connection
with the remainder of the Property described in the DDLA); (ii) as provided in Section 4 below;
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or (iii) fifty-five (55) years after the date a final certificate of occupancy is issued for the
Development on the Property (the “Maturity Date”).
2. Secured by Deed of Trust. Repayment of this Note is secured by a deed of trust
(the “Deed of Trust”) executed by Maker for the benefit of Payee encumbering the Property
described in the Deed of Trust on which a portion of the Development described in the DDLA is
to be developed/constructed.
3. Prepayment. Maker shall have the right to prepay amounts owing under this Note
at any time, without premium.
4. Due on Sale or Encumbrance. In the event of any transfer of the Property, or any
portion thereof or interest therein, not permitted by the DDLA or approved in writing by Payee,
Payee shall have the absolute right at its option, without prior demand or notice, to declare all sums
secured hereby immediately due and payable. Failure of Payee to exercise the option to declare
all sums secured hereby immediately due and payable upon a Transfer will not constitute waiver
of the right to exercise this option in the event of any subsequent Transfer.
5. Miscellaneous.
(a) Governing Law. All questions with respect to the construction of this Note
and the rights and liabilities of the parties to this Note shall be governed by the laws of the State
of California.
(b) Attorneys’ Fees.
(i) Maker shall reimburse Payee for all reasonable attorneys’ fees, costs
and expenses, incurred by Payee in connection with the enforcement of Payee’s rights under this
Note, including, without limitation, reasonable attorneys’ fees, costs and expenses for trial,
appellate proceedings, out-of-court negotiations, workouts and settlements or for enforcement of
rights under any state or federal statute, including, without limitation, reasonable attorneys’ fees,
costs and expenses incurred to protect Payee’s security and attorneys’ fees, costs and expenses
incurred in bankruptcy and insolvency proceedings such as (but not limited to) seeking relief from
stay in a bankruptcy proceeding. The term “expenses” means any expenses incurred by Payee in
connection with any of the out-of-court, or state, federal or bankruptcy proceedings referred to
above, including, without limitation, the fees and expenses of any appraisers, consultants and
expert witnesses retained or consulted by Payee in connection with any such proceeding.
(ii) Payee shall also be entitled to its attorneys’ fees, costs and expenses
incurred in any post-judgment proceedings to collect and enforce the judgment. This provision is
separate and several and shall survive the merger of this Note into any judgment on this Note.
(c) Entire Agreement. This Note, the DDLA, the Deed of Trust and the
Housing Agreement required by the DDLA, [Density Bonus Agreement?] and the other documents
described in the DDLA constitute the entire agreement and understanding between and among the
parties in respect of the subject matter of such agreements and supersede all prior agreements and
understandings with respect to such subject matter, whether oral or written.
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(d) Time of the Essence. Time is of the essence with respect to every provision
hereof.
(e) Waivers by Maker. Maker waives: presentment; demand; notice of
dishonor; notice of default or delinquency; notice of acceleration; notice of protest and
nonpayment; notice of costs, expenses or losses and interest thereon; and diligence in taking any
action to collect any sums arising under this Note or in any proceeding against any of the rights or
interests in or to properties securing payment of this Note.
(f) Non-waivers. No previous waiver and no failure or delay by Maker in
acting with respect to the terms of this Note, the DDLA the Deed of Trust or any Housing
Agreement, shall constitute a waiver of any breach, default, or failure of condition under any of
them. A waiver of any term must be made in writing and shall be limited to the express written
terms of such waiver.
(g) Non-Recourse. Repayment of this Note and all other obligations of
Borrower hereunder, under the DDLA, Housing Agreement or Deed of Trust shall be a non-
recourse obligation of Borrower, such that the general partner of Maker shall not have any personal
obligation to make any payments or perform any other obligations of Maker.
(h) Cure by Limited Partner(s). Payee hereby agrees that any cure of any
default made or tendered by Maker’s limited partner (whose name and notice address is as set forth
below in this Section 5(h)) shall be deemed to be a cure by Maker and shall be accepted or rejected
on the same basis as if made or tendered by Maker.
Investor Limited Partner Name and Notice Address:
______________________
MAKER:
Palm Desert Palm Villas Partners
a California limited partnership
By:
Print Name:
Title:
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EXHIBIT F
FORMS OF DEED OF TRUST
RECORDING REQUESTED BY,
AND WHEN RECORDED MAIL TO:
Palm Desert Housing Authority
73-510 Fred Waring Drive
Palm Desert, CA 92260
Attn: _______________
SPACE ABOVE THIS LINE FOR RECORDER'S USE
DEED OF TRUST AND ASSIGNMENT OF RENTS
THIS DEED OF TRUST AND ASSIGNMENT OF RENTS (this “Deed of Trust”) is dated
as of _________, 2023, and is executed by PALM DESERT PALM VILLAS PARTNERS LP, a
California limited partnership (“Trustor”), in favor of FIRST AMERICAN TITLE COMPANY,
as “Trustee,” for the benefit of the PALM DESERT HOUSING AUTHORITY (“Beneficiary”).
Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO TRUSTEE IN TRUST,
WITH POWER OF SALE, that certain land in the City of Palm Desert, Riverside County,
California, described on Exhibit “A” attached hereto;
TOGETHER WITH the rents, issues and profits thereof and all leases and rental agreements
related thereto, SUBJECT, HOWEVER, to the right, power, and authority hereinafter given to
Trustor to collect and apply such rents, issues, and profits;
TOGETHER WITH all buildings and improvements of every kind and description now or
hereafter erected or placed thereon, and all fixtures, including but not limited to all gas and electric
fixtures, engines and machinery, radiators, heaters, furnaces, heating equipment, laundry
equipment, steam and hot water boilers, stoves, ranges, elevators and motors, bath tubs, sinks,
water closets, basins, pipes, faucets and other plumbing and heating fixtures, mantels, cabinets,
refrigerating plant and refrigerators, whether mechanical or otherwise, cooking apparatus and
appurtenances, and all shades, awnings, screens, blinds and other furnishings, it being hereby
agreed that all such fixtures and furnishings shall to the extent permitted by law be deemed to be
permanently affixed to and a part of the realty;
TOGETHER WITH all building materials and equipment now or hereafter delivered to the
premises and intended to be installed therein;
TOGETHER WITH all articles of personal property owned by the Trustor now or hereafter
attached to or used in and about the building or buildings now erected or hereafter to be erected on
the lands described which are necessary to the complete and comfortable use and occupancy of
such building or buildings for the purposes for which they were or are to be erected, including all
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other goods and chattels and personal property as are ever used or furnished in operating a building,
or the activities conducted therein, similar to the one herein described and referred to, and all
renewals or replacements thereof or articles in substitution therefor, whether or not the same are,
or shall be attached to the building or buildings in any manner.
All of the foregoing, together with the real property, is herein referred to as the “Property.”
For the purpose of securing (a) payment of the indebtedness evidenced by that certain promissory
note (the “Note”) of substantially even date herewith, in the stated principal sum of Six Million
Dollars ($6,000,000.00), executed by Trustor, as maker, in favor of Beneficiary, as payee, and all
amendments thereof; and (b) sums owing by Trustor to Beneficiary under this Deed of Trust.
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(1) That it shall faithfully perform each and every covenant contained in the Note, the
Disposition, Development and Loan Agreement (“Loan Agreement”) between Trustor and
Beneficiary dated substantially concurrently herewith and the Housing Agreement and
other documents described therein. Upon an Event Default under (and as defined in) the
Loan Agreement, Beneficiary may accelerate the loan evidenced by the Note, and if not
paid, may exercise any and all remedies permitted by law, including foreclosure of this
Deed of Trust.
(2) To appear in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses,
including cost of evidence of title and attorneys’ fees in a reasonable sum, in any such
action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought
by Beneficiary to foreclose this Deed of Trust.
(3) To pay at least ten (10) calendar days before delinquency all property taxes and
assessments and any other taxes affecting the Property, including assessments on
appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on
the Property or any part thereof, which appear to be prior or superior hereto (provided,
however, that Trustor may dispute in good faith any such tax or assessment after posting
bond on same).
(4) That should Trustor fail to make any payment or to do any act as herein provided,
then Beneficiary, without obligation so to do and without notice to or demand upon
Trustor and without releasing Trustor from any obligation hereof may: make or do the
same in such manner and to such extent as either may deem necessary to protect the
security hereof, Beneficiary or Trustee being authorized to enter upon the Property for
such purposes with written notice to Trustor; appear in and defend any action or
proceeding purporting to affect the security hereof or the rights or powers of Beneficiary
or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which
in the judgment of either appears to be prior or superior hereto; and, in exercising any
such powers, pay necessary expenses, employ counsel and pay its reasonable fees.
(5) To pay immediately and without demand all sums so expended by Beneficiary
hereunder, or under the Maintenance Agreement, in accordance with the terms thereof.
(6) The Trustor further covenants that it will not voluntarily create, suffer, or permit to
be created against the Property any lien or liens except for deeds of trust securing
financing used to pay for construction of the Project, as defined in the Loan Agreement (or
securing refinancing of such construction loans) and further that it will keep and maintain
the Property free from the claims of all persons supplying labor or materials which will
enter into the construction of any and all buildings now being erected or to be erected on
the Property, or will cause the release of or will provide a bond against any such liens
within ten (10) days of the attachment of the lien or liens.
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(7) That any award of damages in connection with any condemnation for public use of
or injury to the Property or any part thereof is hereby assigned and shall be paid to
Beneficiary who may apply or release such moneys it receives in the same manner and with
the same effect as above provided for disposition of proceeds of fire or other insurance.
(8) That by accepting payment of any sum secured hereby after its due date,
Beneficiary does not waive its right either to require prompt payment when due of all other
sums so secured or to declare default for failure so to pay.
(9) That at any time or from time to time, without liability therefor and without notice,
upon written request of Beneficiary, and without affecting the personal liability of any
person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of
the Property; consent to the making of any map or plat thereof; join in granting any
easement thereon; or join in any extension agreement or any agreement subordinating the
lien or charge hereof.
(10) That upon written request of Beneficiary stating that all sums secured hereby have
been paid or forgiven by Beneficiary, and upon surrender of the Note to Trustee for
cancellation and retention and upon payment of its fees, Trustee shall reconvey, without
warranty, the Property then held hereunder. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such
reconveyance may be described as “the person or persons legally entitled thereto.”
(11) That Trustor hereby absolutely and unconditionally assigns and transfers to
Beneficiary all the rents, income and profits of the Property encumbered hereby, and
hereby give to and confer upon Beneficiary the right, power and authority to collect such
rent, income, and profits, and Trustor irrevocably appoints Beneficiary Trustor’s true and
lawful attorney at the option of Beneficiary, at any time, to give receipts, releases and
satisfactions and to sue, either in the name of Trustor or in the name of Beneficiary, for all
income, and apply the same to the indebtedness secured hereby; provided, however, so long
as no default by Trustor in the payment of any indebtedness secured hereby shall exist and
be continuing beyond any applicable cure period expressly provided therein, then, Trustor
shall have the right to collect all rent, income and profits from the Property and to retain,
use and enjoy the same. Upon any such default, Beneficiary may at any time without
notice, either in person, by agent, or by a receiver to be appointed by a court, and without
regard to the adequacy of any security for the indebtedness hereby secured, enter upon and
take possession of the Property or any part thereof, in its own name sue for or otherwise
collect such rents, issues and profits, including those past due and unpaid, and apply the
same, less costs and expenses of operation and collection, including reasonable attorney’s
fees, upon any indebtedness secured hereby, and in such order as Beneficiary may
determine. The entering upon and taking possession of the Property, the collection of such
rents, issues and profits and the application thereof as aforesaid, shall not cure or waive
any default or notice of default hereunder or invalidate any act done pursuant to such
notice.
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(12) That upon a Default by Trustor under the Loan Agreement (after all notice and
cure periods have elapsed), Beneficiary may declare all sums secured hereby immediately
due and payable by delivery to Trustee of written declaration of default and demand for
sale and of written notice of default and election to cause to be sold the Property, which
notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee
this Deed of Trust, the Note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of
the notice of default, and notice of sale having been given as then required by law, Trustee,
without demand on Trustor, shall sell the Property at the time and place fixed by it in the
notice of sale, either as a whole or in separate parcels, and in such order as it may
determine, at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. Trustee may postpone sale of all or any portion of the
Property by public announcement at such time and place of sale, and from time to time
thereafter may postpone such sale by public announcement at the time fixed by the
preceding postponement. Trustee shall deliver to such purchaser its deed conveying the
Property so sold, but without any covenant or warranty, express or implied. The recitals in
such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at
the sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence
of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums
expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by
law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to
the person or persons legally entitled thereto.
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(13) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may
from time to time, by instrument in writing, substitute a successor or successors to any
Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary
and duly acknowledged and recorded in the office of the recorder of the county or counties
where the Property is situated, shall be conclusive proof of proper substitution of such
successor Trustee or Trustees, who shall, without conveyance from the Trustee
predecessor, succeed to all its title estate, rights, powers and duties. The instrument must
contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and
page where this Deed of Trust is recorded and the name and address of the new Trustee.
(14) That this Deed of Trust applies to, inures to the benefit of, and binds all parties
hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns.
The term Beneficiary shall mean the owner and holder, including pledgees, of the Note,
whether or not named as Beneficiary herein. In this Deed of Trust, whenever the context
so requires, the masculine gender includes the feminine and/or neuter, and the singular
number includes the plural.
(15) If Trustor shall sell, convey, hypothecate, transfer, encumber or alienate the
Property, or any part thereof, or any interest therein, or any interest in Trustor is
transferred, or Trustor shall be divested of title or any interest in the Property in any
manner or way, whether voluntarily or involuntarily, without the prior written consent of
the Beneficiary being first had and obtained (if and to the extent such consent is required
in the Loan Agreement or if the failure to get such consent would be an Event of Default
under the Loan Agreement), or if an Event of Default by Trustor shall occur under the
Loan Agreement, then Beneficiary shall have the right, at its option, to declare any
indebtedness or obligations secured hereby, irrespective of the maturity date specified in
any note evidencing the same, immediately due and payable.
(16) That Trustor shall promptly pay when due the payments of interest, principal, and
all other charges accruing under any superior or prior trust deed, mortgage, or other
instrument encumbering the Property. Beneficiary shall have the right, but not the
obligation, to cure any defaults on any superior or prior deed of trust or promissory note
secured thereby and upon curing such default Trustor shall immediately reimburse
Beneficiary for all costs and expenses incurred thereby, together with interest thereon at
the maximum legal rate permitted to be charged by non-exempt lenders under the State of
California, and Trustor’s failure to pay such amount on demand shall be a breach hereof.
Trustor’s breach or default of any covenant or condition of any superior or prior trust
deed, mortgage or other instrument encumbering the Property shall be a default under this
Deed of Trust, whereupon Beneficiary shall have the right to declare all sums under the
Note secured hereby immediately due and payable as provided in the Note.
(17) The undersigned Trustor requests that a copy of any Notice of Default and of any
Notice of Sale hereunder (and any other notices hereunder) be mailed to it at its address for
notices in the Loan Agreement.
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(18)Trustor shall not commit waste with respect to the Property.
(19)Any notices, requests or approvals given under this Deed of Trust from one party to
another must be in writing and may be personally delivered; or deposited with the United
States Postal Service, postage prepaid, for delivery by registered or certified mail, return
receipt requested; or sent by next business day delivery service such as FedEx, to the
following address:
If to Borrower: Palm Desert Palm Villas Partners LP,
a California limited partnership
100 Pacifica, Suite 203
Irvine, CA 92618
Attn:
If to Beneficiary: Palm Desert Housing Authority
73-510 Fred Waring Drive
Palm Desert, CA 92260
Either party may change its address for notice by giving written notice of its change of address to
the other party. Notices are considered delivered on the date received if given next business day
delivery service and three (3) business days after mailing if sent by United States Postal Service
registered or certified mail. If a notice is sent by registered or certified mail and receipt is rejected
it shall be considered delivered on the date delivery was attempted by the United States Postal
Service.
(20)Beneficiary acknowledges that Trustor and the California Tax Credit Allocation
Committee have or intend to enter into, or concurrently with the execution and delivery of
the Loan Documents are entering into, a Regulatory Agreement (the “TCAC Regulatory
Agreement”), which constitutes the extended low-income housing commitment described in
Section 42(h)(6)(B) of the Internal Revenue Code, as amended (the “Code”). Beneficiary
acknowledges and agrees that, in the event of a foreclosure of its interest under the Deed of
Trust or delivery by the Trustor of a deed in lieu thereof (collectively, a “Foreclosure”), the
following rule contained in Section 42(h)(6)(E)(ii) of the Code shall apply: For a period of
three (3) years from the date of Foreclosure, with respect to any unit that had been
regulated by the TCAC Regulatory Agreement, (i) none of the eligible tenants occupying
those units at the time of Foreclosure may be evicted or their tenancy terminated (other
than for good cause, including but not limited to, the tenants’ ineligibility pursuant to
Section 42 of the Code), (ii) nor may any rent be increased except as otherwise permitted
under Section 42 of the Code.
TRUSTOR:
Palm Desert Palm Villas Partners LP
a California limited partnership
Item 2A-225
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By:
Name:
Title:
Item 2A-226
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State of California )
County of ______ )
On _________________________, before me, ,
(insert name and title of the officer) Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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EXHIBIT "A"
DESCRIPTION OF LAND
Real property in the City of Palm Desert, County of Riverside, State of California, described as
follows:
[PHASE I LEGAL DESCRIPTION TO BE PROVIDED.]
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EXHIBIT G-1
FORM OF PHASE I NOTICE OF AFFORDABILITY RESTRICTIONS
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EXHIBIT G-2
FORMS OF PHASE II NOTICE OF AFFORDABILITY RESTRICTIONS
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EXHIBIT H-1
FORM OF PHASE I HOUSING AGREEMENT
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EXHIBIT H-2
FORM OF PHASE II HOUSING AGREEMENT
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EXHIBIT I
SCOPE OF DEVELOPMENT
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CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: October 13, 2022
PREPARED BY: Ryan Gayler, Senior Project Manager
Andy Ramirez, Deputy Director of Public Works
REQUEST: APPROVE FIVE POWER PURCHASE AGREEMENTS WITH
FOREFRONT POWER FOR THE CIVIC CENTER PHOTOVOLTAIC
PROJECT (PROJECT NO. 777-14)
RECOMMENDATION:
1.Conduct a Public Hearing and adopt a Resolution finding that the projects will result
in net cost savings to the City over the life of each 20-year contract, and that the
projects are statutorily exempt from CEQA evaluation.
2.Authorize the City Manager to execute the Power Purchase Agreements for
Photovoltaic Systems at the Civic Center, Parkview Office Complex, the Aquatic
Center, Entrada Del Paseo (Artists Center), and the Desert Willow Academy.
3.Authorize the City Manager to negotiate non-monetary changes and clarifications to
the agreements, in consultation with the City Attorney, as may be required to carry out
the intent of the agreements.
EXECUTIVE SUMMARY:
Staff has been working with a Joint Powers Authority (JPA) named School Project for Utility
Rate Reduction (SPURR), and their solar vendor ForeFront Power, to create a solar project
that would reduce the amount of power that is purchased from Southern California Edison.
On October 28, 2021, staff presented an informational item to the City Council introducing a
proposed photovoltaic (PV) project at the Civic Center campus. Staff planned to present an
agreement to the City Council for approval of photovoltaic improvements at the Civic Center,
Parkview Office Complex, and the Aquatic Center. However, shortly thereafter, the California
Public Utility Commission (CPUC) issued a draft decision which, if approved, would have
significantly impacted the net energy metering (NEM) program. The draft decision introduced
NEM 3.0 which would have negated the financial viability of many photovoltaic projects.
Staff was informed of the negative financial impact which resulted in staff placing the project
on hold until the economics could be confirmed. The draft decision was extremely unpopular
with the solar industry, and ultimately it was rejected and the CPUC was instructed to find an
alternative that was not as restrictive to the solar industry. This decision reactivated the
project and Public Works staff requested that ForeFront Power take a fresh look at the project.
As a result, two additional locations (Artists Center and Desert Willow Academy) were added
to increase the overall production of the photovoltaic system.
This project would be designed, installed, and maintained as part of a Power Purchase
Agreement (PPA) formed by the JPA with no capital outlay required by the City. A PPA is an
arrangement in which a third-party installs, owns, and operates an energy system on a
customer’s property. The customer then purchases the system's electric output for a
Item 3B-1
October 13, 2022 – Staff Report
Informational Item – Civic Center Photovoltaic Improvement Project
Page 2 of 5
predetermined period. A PPA allows the customer to receive stable and low-cost electricity
with no upfront cost, while also enabling the third-party owner to take advantage of tax credits
and pass those savings on to the customer. For this project, the combined energy generation
over the five proposed sites will be about 1.4 megawatts (MW). Over the twenty-year term of
the agreement, the City is expected to save a minimum of $2.3 Million on electricity bills.
BACKGROUND/ANALYSIS:
The City Council has expressed a desire to increase the City’s investment in renewable
energy technologies at City Hall, and other city-owned properties. Public Works staff were
made aware of SPURR, a JPA that was established by a group of hundreds of school districts
and community colleges across the state to help public agencies reduce utility costs through
the power of aggregated procurement.
The JPA issued a statewide RFP to select a solar vendor to evaluate facilities, make
recommendations for increasing renewable energy generation, and install solar at pre-
negotiated pricing and terms. A comprehensive competitive review process was conducted
and ForeFront Power was selected by the JPA as the winning vendor based upon high quality
work and low pricing. The JPA brings extensive knowledge and experience from hundreds of
PV projects and they have created an agreement with favorable terms and protections for
public agencies. As such, the JPA holds ForeFront Power accountable to the terms of the
agreement to ensure a successful project.
One of the benefits of this program is that ForeFront Power conducted a free energy
evaluation for the City of Palm Desert. ForeFront Power gathered energy usage data from all
electrical meters across all city-owned properties and identified five locations that were
suitable for PV improvements. The size of the system across the five locations is about 1.4
MW. The project will install PV structures in the parking lot of the Civic Center, the Parkview
Office Complex, Aquatic Center, Entrada Del Paseo (The Artists Center), and The Desert
Willow Academy. This project will install conduit for future electric vehicle charging stations
(EVCS) at the Civic Center (10 plugs), Parkview Office Complex (4 plugs), and the Aquatic
Center (4 plugs). No EVCS will be installed as part of this project as there are many
opportunities coming up for EVCS to be procured with grant funds.
Another benefit of the program is that ForeFront Power is responsible for the financing,
permitting, design, installation, maintenance, and repair of the PV system. Under the PPA,
the City will continue to pay the SCE electrical bill (however, at a reduced rate due to the PV
solar generation offset). With the anticipated cost savings, the City will also pay a monthly
PPA payment to ForeFront Power, at a rate, depending upon the location, between $0.1661
and $.2445 per kWh (kilowatt hour) which will not increase over the life of the contract. These
two rates combined will be less than the current SCE rate. Over time, as electrical rates climb,
the City will continue to pay the lower rate throughout the twenty-year term of the PPA. In
addition, there is a clause in the agreement that requires ForeFront Power to guarantee the
performance of the system so that the City maximizes solar generation and maintains the
lowest rates possible. The cost of the system, including installation and maintenance is rolled
into the monthly power purchase payment.
The PPA was submitted to the City Attorney for review. Best Best & Krieger (BB&K) began
reviewing and requesting improvements to the legal aspects of the agreement but
Item 3B-2
October 13, 2022 – Staff Report
Informational Item – Civic Center Photovoltaic Improvement Project
Page 3 of 5
recommended that the City obtain a consultant to conduct a peer review of the technical
aspects of the agreement. The City contracted with NV5 who recently acquired Sage
Renewable Energy Consulting, Inc., an expert in the field of comprehensive sustainable
energy planning. BB&K and NV5 have performed a rigorous legal and technical review of the
agreement and concluded that the terms of the agreement and assumptions used in the
analysis are reasonable. The final agreement went through a negotiation process with
ForeFront Power. BB&K and NV5 are satisfied with the result.
Procurement method:
Staff recommends utilizing Section 4217.12 of the Government Code to procure the
services of ForeFront Power. To use the code the City Council must make a determination
finding that the projects will result in net cost savings to the City over the life of the twenty-
year agreement. As mentioned previously, the project is expected to save a minimum of
$2.3 Million over the twenty-year term and a public hearing was duly noticed to take place
prior to the October 13, 2022, Council meeting to make the requisite determination. Staff
is confident in the financial analysis performed by ForeFront Power, and the review
performed by NV5. BB&K supports the use of Section 4217.12 for this project.
Landscape Impact:
The proposed PV improvements will be installed in the parking lots at City Hall, the Parkview
Office Complex, the Aquatic Center, the Artists Center, and the Desert Willow Academy.
These structures will be built over several existing landscaped median islands. The landscape
division performed an inventory and determined that the project will require the removal of
less than 100 trees. The majority of the trees to be removed are trees that will be under the
proposed carport structure. Below is a table showing the trees to be removed.
TREE QUANTITY
River She-Oak 22
Indian Rose Wood (Dalbergia) 13
Southern Live Oak 12
Mesquite 11
Palo Verde 8
Date Palm 6
Others 27
The PV structure at the Aquatic Center was relocated from the original position in the Date
Palm Grove to reduce the number of Date Trees slated for removal from 50 to 6. Several of
these trees listed above are nearing the end of their life cycle. The landscape division will
inspect the trees to determine those in the best condition and pursue the feasibility of
relocating those trees or planting new ones to other locations within the Civic Center.
Resource Preservation and Enhancement Committee Recommendation:
The project was presented to the Resource Preservation and Enhancement Committee on
October 18, 2021. The presentation was well received and the committee unanimously
recommended approval of the Civic Center Photovoltaic Project to the City Council. The
committee cited the renewable energy generation, reduction of greenhouse gases, and
added shaded parking as some of the many benefits of this project.
Item 3B-3
October 13, 2022 – Staff Report
Informational Item – Civic Center Photovoltaic Improvement Project
Page 4 of 5
Strategic Plan:
The installation of Solar Photovoltaic Systems addresses Energy and Sustainability Priority 2
of the City’s 2013-2033 Strategic Plan, Envision Palm Desert – Forward Together, which is
to “promote greater use of sustainable materials”. Specifically, installation of photovoltaic
systems helps to reduce dependence on the electric grid which generates electricity using
non-renewable resources.
CEQA:
Staff recommends that the City Council find that the project is exempt from California
Environmental Quality Act (CEQA) per Public Resources Code (CEQA Statute) § 21080.35.
This exemption applies as the project is an installation of a solar energy system, and
associated equipment, to service existing facilities owned by the City of Palm Desert located
on the same parcel. The improvements will be located within an existing parking lot used for
the parking of vehicles for at least the two previous years. The associated equipment is
located on the same parcel, will not occupy more than 500 feet of ground surface area, and
does not include a substation. The project does not qualify for the exceptions per § 21080.35
(d)(1-3) as the project does not require the issuance of a federal permit. The construction of
the solar canopy will require the removal of trees within planters located throughout the
existing parking area, however these trees are not required to be planted, maintained, or
protected pursuant to local, state, or federal requirements, and they are not native trees over
25 years old.
FINANCIAL IMPACT:
There is no current financial impact with this action. If the City Council approves the
agreements with ForeFront Power, in the first few years, the cost of electricity will increase
slightly over the previous year. This is because the City will continue to purchase electricity
from SCE (at a reduced amount due to the PV solar generation offset) as well as purchasing
electricity that will be generated through the PV system from ForeFront Power. Since the
PPA rate remains constant over the life of the contract, the City’s rates will remain low. As
SCE’s electrical rates increase, the savings to the City will also increase. By the final year of
the agreement, the cumulative savings to the City are estimated to be a minimum of $2.3
million.
There is incentive to proceed with this project expeditiously and submit the necessary
application documents. Staff was recently informed that Southern California Edison (SCE) is
attempting to change the net energy metering (NEM) program soon. This proposed change
would make many, if not all, photovoltaic projects economically unviable. It is anticipated that
these changes will come into effect as early as Fall 2022. Staff recommends approval of the
power purchase agreements to secure the legacy status on the current favorable NEM 2.0
rates before the proposed NEM 3.0 rates come into effect.
REVIEWED BY:
Department Director: Martin Alvarez
City Attorney: Robert Hargreaves
Finance Director: Veronica Chavez
Assistant City Manager: Chris Escobedo
City Manager: Todd Hileman
Item 3B-4
October 13, 2022 – Staff Report
Informational Item – Civic Center Photovoltaic Improvement Project
Page 5 of 5
ATTACHMENTS:
1. Power Purchase Agreements
2. Resolution 2022-____
3. CEQA Notice of Exemptions
4. Vicinity Map
Item 3B-5
RESOLUTION NO. 2022-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT, CALIFORNIA, MAKING FINDINGS ON ENERGY
SAVINGS AND DETERMINING OTHER MATTERS IN
CONNECTION WITH ENERGY SERVICE AGREEMENTS
WHEREAS, it is the policy of the State of California and the intent of the State
Legislature to promote all feasible means of energy conservation and all feasible uses of
alternative energy supply sources; and
WHEREAS, The City of Palm Desert (“City”) desires to reduce the rising costs of
meeting the energy needs at its facilities; and
WHEREAS, the City proposes to enter into power purchase agreements (“Power
Purchase Agreements”) and related contract documents with FFP BTM SOLAR, LLC ,
dba ForeFront Power (“Supplier”) for facilities at the City’s real property sites, pursuant to
which Power Purchase Agreements Supplier will design, construct, and install on City
property solar photovoltaic facilities and arrange with the local utility for interconnection
of the facilities, which will generate energy for the sites on which such facilities are
located;
WHEREAS, Supplier has provided the City with analysis showing the financial and
other benefits of entering into the Power Purchase Agreements, which analysis is
attached hereto as Exhibit A and made part hereof by this reference, and such analysis
has been independently verified by an energy consultant for the City as shown in Exhibit
B; and
WHEREAS, Exhibit A includes data showing that the anticipated cost to the City
for the electrical energy provided by the solar photovoltaic facilities will be less than the
anticipated cost to the City of electrical energy that would have been consumed by the
City in the absence of such measures; and
WHEREAS, Supplier was the selected vendor for School Project for Utility Rate
Reduction’s (“SPURR”) Renewable Energy Aggregated Procurement (“REAP”) Program,
a competitive statewide solar request for proposals (“RFP”) process, and the City adopts
the REAP Program’s competitive process as its own.
WHEREAS, the City proposes to enter into the Power Purchase Agreements and
related contract documents, each in substantially the form presented at this meeting,
subject to such changes, insertions or omissions as the City Manager reasonably deems
necessary following the City Council’s adoption of this Resolution; and
WHEREAS, pursuant to Government Code section 4217.12, this City Council held
a public hearing, public notice of which was given two weeks in advance, to receive public
comment, and to make a determination of cost savings; and
Item 3B-6
WHEREAS, the Power Purchase Agreements are in the best interests of the City;
and
WHEREAS, the City’s proposed approval of the Power Purchase Agreements is a
“Project” for purposes of the California Environmental Quality Act (“CEQA”); and
WHEREAS, said application has complied with the requirements of the "City of
Palm Desert Procedure for Implementation of CEQA” Resolution No. 2019-41, in that the
City has determined that the project will not have a significant impact on the environment
and that the project is statutorily exempt pursuant to Public Resources Code (CEQA
Statute), § 21080.35 for the installation of a solar energy system and associated
equipment within an existing parking lot, as outlined in the staff report and the project is
not subject to any of the exceptions for exemptions identified in § 21080.35 (d)(1-3)
therefore, no further environmental review is necessary; and
WHEREAS, the Project does not involve any of the following and so is eligible for
an exemption as described above under § 21080.35
(a) The project does not require an individual federal permit pursuant to Section
401 or 404 of the federal Clean Water Act (33 U.S.C. Sec. 1341 or 1344) or
waste discharge requirements pursuant to the Porter-Cologne Water Quality
Control Act (Division 7 (commencing with Section 13000) of the Water Code).
(b) The project does not require an individual take permit for species protected
under the federal Endangered Species Act of 1973 (16 U.S.C. Sec. 1531 et
seq.) or the California Endangered Species Act (Chapter 1.5 (commencing
with Section 2050) of Division 3 of the Fish and Game Code).
(c) The project does not require a streambed alteration permit pursuant to
Chapter 6 (commencing with Section 1600) of Division 2 of the Fish and
Game Code.
WHEREAS, Public Resources Code, section 21080.35 (added by Stats.2011, c.
469 (S.B.226), § 3), statutorily exempts from CEQA evaluation the installation of a solar
energy system, including associated equipment, on the roof of an existing building or at
an existing parking lot.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm
Desert as follows:
SECTION 1. The terms of the Power Purchase Agreements and related
agreements are in the best interests of the City.
SECTION 2. In accordance with Government Code section 4217.12, and based
on data provided by Exhibit A, the City Council, at a duly noticed public hearing, has
made the determination that the anticipated cost to the City for electrical energy
provided by the Power Purchase Agreements will be less than the anticipated cost to
the City of electrical energy that would have been consumed by the City in the absence
of the Power Purchase Agreements.
Item 3B-7
SECTION 3. The City Council hereby approves the Power Purchase
Agreements in accordance with Government Code section 4217.12.
SECTION 4. The City’s City Manager is hereby authorized and directed to
negotiate such further non-monetary changes and clarifications, as he reasonably
deems necessary, in consultation with the City Attorney, to finalize the Agreements for
execution, and thereafter to execute and deliver the Power Purchase Agreements
following the City Council’s adoption of this Resolution. The City’s City Manager is
further authorized and directed to execute and deliver any and all papers, instruments,
opinions, certificates, affidavits and other documents and to do or cause to be done any
and all other acts and things necessary or proper for carrying out this resolution and
said agreements.
SECTION 5. The Project hereby found to be exempt from the requirements of
CEQA pursuant to the Class 3, Class 11 and Class 14 Exemptions, as described above.
SECTION 6. The Project is hereby found to be exempt from the requirements of
CEQA pursuant to Public Resources Code, section 21080.35 (added by Stats.2011, c.
469 (S.B.226), § 3), as described above.
SECTION 7. City staff are hereby authorized to file and process a Notice of
CEQA Exemption for the Project in accordance with CEQA and the State CEQA
Guidelines, and the findings set forth in this resolution.
PASSED, APPROVED AND ADOPTED this 13th day of October, 2022, by the
following votes:
AYES:
NOES:
ABSENT:
ABSTAIN:
_____________________________
JAN C. HARNIK, MAYOR
ATTEST:
_____________________________
ANTHONY J. MEJIA, MMC
CITY CLERK
Item 3B-8
Project Cashflows: City of Palm Desert Solar Savings
Rate Scenario NEM 2.0 Financial Assumptions
Solutions Solar-Only Parameter Value
Project City-Wide Projects PPA Rate Escalator (%/yr)0.0%
Year 1 Savings -$60,363 Utility Energy Escalator (%/yr)4.0%
Cumulative Savings $2,376,393 Utility Demand Escalator (%/yr)4.0%
Payback Period 7 Years PPA Term (Years)20
Solar System Size (KW)1,394 Discount Rate (%)5.0%
Storage System Size (KW)0 Solar Degradation Rate (%)0.50%
Year Historic Utility Bill
(without solar)PPA Payment New Utility Bill
(with solar)
Total Electricity Costs
(PPA + Utility)Net Savings Cumulative Savings
1 668,727 450,203 278,888 729,090 -60,363 -60,363
2 695,476 447,952 292,193 740,144 -44,668 -105,032
3 723,295 445,712 306,105 751,816 -28,521 -133,553
4 752,227 443,483 320,650 764,134 -11,907 -145,460
5 782,316 441,266 335,858 777,124 5,192 -140,267
6 813,609 439,059 351,757 790,816 22,792 -117,475
7 846,153 436,864 368,378 805,242 40,911 -76,564
8 879,999 434,680 385,752 820,432 59,567 -16,997
9 915,199 432,506 403,913 836,419 78,780 61,783
10 951,807 430,344 422,895 853,239 98,568 160,351
11 989,879 428,192 442,735 870,928 118,952 279,302
12 1,029,474 426,051 463,471 889,522 139,952 419,255
13 1,070,653 423,921 485,141 909,062 161,591 580,846
14 1,113,479 421,801 507,787 929,588 183,891 764,737
15 1,158,019 419,692 531,452 951,144 206,875 971,612
16 1,204,339 417,594 556,180 973,773 230,566 1,202,178
17 1,252,513 415,506 582,017 997,523 254,990 1,457,167
18 1,302,613 413,428 609,013 1,022,442 280,172 1,737,339
19 1,354,718 411,361 637,219 1,048,580 306,138 2,043,477
20 1,408,907 409,304 666,686 1,075,991 332,916 2,376,393
Total $19,913,402 $8,588,921 $8,948,088 $17,537,009 $2,376,393 $2,376,393
Item 3B-9
EXHIBIT B - RESOLUTION 2022-_____
Item 3B-10
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Item 3B-18
Item 3B-19
Item 3B-20
GENERAL TERMS AND CONDITIONS OF
ENERGY SERVICES AGREEMENT
These General Terms and Conditions of Energy Services Agreement are dated as of the ____ day of _________,
2022 and are witnessed and acknowledged by FFP BTM SOLAR, LLC, a Delaware limited liability company
(“ForeFront Power”) and The City of Palm Desert, a California charter city (“Purchaser”), as evidenced by their
signature on the last page of this document. These General Terms and Conditions are intended to be incorporated
by reference into Energy Services Agreements that may be entered into between ForeFront Power and Purchaser or
between their respective Affiliates. These General Terms and Conditions shall have no binding effect upon
ForeFront Power or Purchaser, respectively, except to the extent Purchaser or ForeFront Power (or an Affiliate
thereof) becomes a party to an Energy Services Agreement that incorporates these General Terms and Conditions.
1. DEFINITIONS.
1.1 In addition to other terms specifically defined elsewhere in this Agreement, where capitalized, the
following words and phrases shall be defined as follows:
“Affiliate” means, with respect to any specified Person, any other Person directly or indirectly controlling,
controlled by or under common control with such specified Person.
“Agreement” means, the Energy Services Agreement.
“Applicable Law” means, with respect to any Person, any constitutional provision, law, statute, rule, regulation,
ordinance, treaty, order, decree, judgment, decision, certificate, holding, injunction, registration, license, franchise,
permit, authorization, guideline, Governmental Approval, consent or requirement of any Governmental Authority
having jurisdiction over such Person or its property, enforceable at law or in equity, including the interpretation and
administration thereof by such Governmental Authority.
“Assignment” has the meaning set forth in Section 13.1.
“Bankruptcy Event” means with respect to a Party, that either (i) such Party has (A) applied for or consented to the
appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property; (B) admitted in writing its inability, or be generally unable, to pay its debts as such
debts become due; (C) made a general assignment for the benefit of its creditors; (D) commenced a voluntary case
under any bankruptcy law; (E) filed a petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding up, or composition or readjustment of debts; (F) taken any corporate or other
action for the purpose of effecting any of the foregoing; or (ii) has a petition in bankruptcy filed against it, and such
petition is not dismissed within ninety (90) days after the filing thereof.
“Business Day” means any day other than Saturday, Sunday or any other day on which banking institutions in New
York, NY are required or authorized by Applicable Law to be closed for business.
“Commercial Operation” has the meaning set forth in Section 3.3(b).
“Commercial Operation Date” has the meaning set forth in Section 3.3(b).
“Confidential Information” has the meaning set forth in Section 15.1.
“Construction Start Date” means the date Provider actually starts causing to be performed under this Agreement
such work for which a contractor is required to be licensed in accordance with Article 5 (commencing with Section
7065) of Chapter 9 of Division 3 of the Business and Professions Code.
Item 3B-21
Page 2 of 28
“Covenants, Conditions and Restrictions” or “CCR” means those requirements or limitations related to the Premises
as may be set forth in a lease, if applicable, or by any association or other organization, having the authority to
impose restrictions.
“Delay Liquidated Damages” means the daily payment of (i) $0.250/day/kW (DC) of the estimated nameplate
capacity of the System (as set forth in Schedule 1 of the Special Conditions).
“Disruption Period” has the meaning set forth in Section 4.3.
“Early Termination Date” means any date on which this Agreement terminates other than by reason of expiration of
the then applicable Term.
“Early Termination Fee” means the fee payable by Purchaser to Provider under the circumstances described in
Section 2.2, Section 2.3 or Section 11.2.
“Effective Date” has the meaning set forth in the preamble to the Special Conditions.
“Energy Services” has the meaning set forth in the Special Conditions.
“Energy Services Agreement” means each Energy Services Agreement (including the Schedules attached thereto)
that may be entered into between ForeFront Power and Purchaser or between their respective Affiliates that
incorporates these General Terms and Conditions by reference.
“Energy Services Payment” has the meaning set forth in the Special Conditions.
“Environmental Attributes” shall mean, without limitation, carbon trading credits, renewable energy credits or
certificates, emissions reduction credits, emissions allowances, green tags, tradable renewable credits, or Green-e®
products.
“Environmental Documents” has the meaning set forth in Section 7.2(f).
“Environmental Law” means any and all federal, state, local, provincial and foreign, civil and criminal laws,
statutes, ordinances, orders, common law, codes, rules, regulations, judgments, decrees, injunctions relating to the
protection of health and the environment, worker health and safety, and/or governing the handling, use, generation,
treatment, storage, transportation, disposal, manufacture, distribution, formulation, packaging, labeling, or release to
the environment of or exposure to Hazardous Materials, including any such requirements implemented through
Governmental Approvals.
“Estimated Remaining Payments” means as of any date, the estimated remaining Energy Services Payments to be
made through the end of the then-applicable Term, as reasonably determined by Provider.
“Expiration Date” means the date on which this Agreement terminates by reason of expiration of the Term.
“Fair Market Value” means, with respect to any tangible asset or service, the price that would be negotiated in an
arm’s-length, free market transaction, for cash, between an informed, willing seller and an informed, willing buyer,
neither of whom is under compulsion to complete the transaction. Fair Market Value of the System will be
determined pursuant to Section 2.3.
“Financing Party” means, as applicable (i) any Person (or its agent) from whom Provider (or an Affiliate of
Provider) leases the System, (ii) any Person (or its agent) who has made or will make a loan to or otherwise provides
financing to Provider (or an Affiliate of Provider) with respect to the System, or (iii) any Person acquiring a direct or
indirect interest in Provider or in Provider’s interest in this Agreement or the System as a tax credit investor.
Item 3B-22
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“Force Majeure Event” has the meaning set forth in Section 10.1.
“ForeFront Power” has the meaning set forth in the Preamble.
“General Terms and Conditions” means these General Terms and Conditions of the Energy Services Agreement,
including all Exhibits hereto.
“Guaranteed Commercial Operation Date” has the meaning set forth in Section 5 of the Special Conditions, subject
to extension as set forth in Section 2.2(b).
“Guaranteed Construction Start Date” has the meaning set forth in Section 5 of the Special Conditions, subject to
extension as set forth in Section 2.2(b).
“Governmental Approval” means any approval, consent, franchise, permit, certificate, resolution, concession,
license, or authorization issued by or on behalf of any applicable Governmental Authority, including any such
approval, consent, order or binding agreements with or involving a governmental authority under Environmental
Laws.
“Governmental Authority” means any federal, state, regional, county, town, city, or municipal government, whether
domestic or foreign, or any department, agency, bureau, or other administrative, regulatory or judicial body of any
such government.
“Hazardous Materials” means any hazardous or toxic material, substance or waste, including petroleum, petroleum
hydrocarbons or petroleum products, and any other chemicals, materials, substances or wastes in any amount or
concentration which are regulated under or for which liability can be imposed under any Environmental Law.
“Initial Term” has the meaning set forth in Section 2 of the Special Conditions.
“Installation Work” means the construction and installation of the System and the start-up, testing and acceptance
(but not the operation and maintenance) thereof, all performed by or for Provider (by using one or more qualified
contractors holding the appropriate licenses required in the jurisdiction where the System will be installed) at the
Premises.
“Invoice Date” has the meaning set forth in Section 6.2.
“Liens” has the meaning set forth in Section 7.1(d).
“Local Electric Utility” means the local electric distribution owner and operator providing electric distribution and
interconnection services to Purchaser at the Premises.
“Losses” means all losses, liabilities, claims, demands, suits, causes of action, judgments, awards, damages, cleanup
and remedial obligations, interest, fines, fees, penalties, costs and expenses (including all attorneys’ fees and other
costs and expenses incurred in defending any such claims or other matters or in asserting or enforcing any indemnity
obligation).
“Option Price” has the meaning set forth in Section 2.3(i).
“Party” or “Parties” has the meaning set forth in the preamble to the Special Conditions.
“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture, firm, or other entity, or a Governmental Authority.
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“Pre-existing Environmental Conditions” means any: (i) violation of, breach of or non-compliance with any
Environmental Laws with respect to the Premises that first existed, arose or occurred on or prior to Provider’s
commencement of construction at the Premises and (ii) the presence or release of, or exposure to, any Hazardous
Materials at, to, on, in, under or from the Premises that first existed, arose or occurred on or prior to Provider’s
commencement of construction at the Premises.
“Premises” means the premises described in Schedule 1 of the Special Conditions. The Premises includes the
entirety of any structures and underlying real property located at the address in Schedule 1 of the Special Conditions.
“Property” means that certain real property and the facilities and improvements contained thereon of which the
Premises is a part.
“Provider” has the meaning set forth in the Special Conditions.
“Provider Default” has the meaning set forth in Section 11.1(a).
“Provider Indemnified Parties” has the meaning set forth in Section 16.2.
“Purchase Date” means the first Business Day that occurs after the applicable purchase date set forth in Schedule 3
of the Special Conditions.
“Purchaser” has the meaning set forth in the preamble to the Special Conditions.
“Purchaser Default” has the meaning set forth in Section 11.2(a).
“Purchaser Indemnified Parties” has the meaning set forth in Section 16.1.
“Renewal Term” if applicable, has the meaning set forth in Section 2 of the Special Conditions.
“Representative” has the meaning set forth in Section 15.1.
“Security Interest” has the meaning set forth in Section 8.2(a).
“Site-Specific Requirements” means the site-specific information and requirements as may be set forth in Schedule
6 of the Special Conditions.
“Special Conditions” means each Energy Services Agreement, excluding these General Terms and Conditions.
“Stated Rate” means a rate per annum equal to the lesser of (a) the “prime rate” (as reported in The Wall Street
Journal) plus two percent (2%) or (b) the maximum rate allowed by Applicable Law.
“System” has the meaning set forth in Schedule 1 of the Special Conditions.
“System-based Incentives” means any accelerated depreciation, installation or production-based incentives,
investment tax credits and subsidies including, but not limited to, the subsidies in Schedule 1 of the Special
Conditions and all other related subsidies and incentives.
“System Operations” means Provider’s operation, maintenance and repair of the System performed by Provider or
for Provider (by using one or more qualified contractors holding the appropriate licenses required in the jurisdiction
where the System will be installed) in accordance with the requirements herein.
“Term” means the Initial Term, and the subsequent Renewal Term(s), if any.
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“Term Year” means a twelve (12) month period beginning on the first day of the Term and each successive
twelve (12) month period thereafter.
“Termination Date” means the date on which this Agreement ceases to be effective, including on an Early
Termination Date or the Expiration Date.
1.2 Interpretation. The captions or headings in these General Terms and Conditions are strictly for
convenience and shall not be considered in interpreting this Agreement. Words in this Agreement that impart the
singular connotation shall be interpreted as plural, and words that impart the plural connotation shall be interpreted
as singular, as the identity of the parties or objects referred to may require. The words “include”, “includes”, and
“including” mean include, includes, and including “without limitation” and “without limitation by specification.”
The words “hereof”, “herein”, and “hereunder” and words of similar import refer to this Agreement as a whole and
not to any particular provision of this Agreement. Except as the context otherwise indicates, all references to
“Articles” and “Sections” refer to Articles and Sections of these General Terms and Conditions.
2. TERM AND TERMINATION.
2.1 Term. The Initial Term is as specified in the Special Conditions.
2.2 Early Termination.
(a) Purchaser may terminate this Agreement in accordance with the provisions of Section 7 of the
Special Conditions and Schedule 2 of the Special Conditions and no Early Termination Fee will apply to any such
termination.
(b) Purchaser may terminate this Agreement prior to any applicable Expiration Date for any reason
upon sixty (60) days’ prior written notice. Except as set forth in Section 2.2(a), if Purchaser terminates the
Agreement prior to the Expiration Date of the Initial Term, Purchaser shall pay, as liquidated damages, the Early
Termination Fee set forth on Schedule 3, Column 1 of the Special Conditions, and Provider shall cause the System
to be disconnected and removed from the Premises in accordance with Section 2.4. Upon Purchaser’s payment to
Provider of the Early Termination Fee, this Agreement shall terminate automatically.
(c) Purchaser may (i) if Provider fails to commence construction by the Guaranteed Construction Start
Date, be entitled (as its sole remedy) to Delay Liquidated Damages not to exceed $22.5/kW (DC) of the estimated
nameplate capacity of the System (as set forth in Schedule 1 of the Special Conditions), (ii) terminate this
Agreement with no liability whatsoever, including, but not limited to the Early Termination Fee, if Provider fails to
commence construction of the System by the date that is ninety (90) days after the Guaranteed Construction Start
Date, or (iii) if Provider fails to achieve Commercial Operation by the Guaranteed Commercial Operation Date, be
entitled (as its sole remedy) to Delay Liquidated Damages not to exceed $15/kW (DC) of the estimated nameplate
capacity of the System (as set forth in Schedule 1 of the Special Conditions), plus (if Installation Work had
commenced at the Premises as of the date of termination) any costs reasonably incurred by Purchaser to return its
Premises to its condition prior to commencement of the Installation Work. Further, Purchaser may terminate this
Agreement with no liability whatsoever, including, but not limited to the Early Termination Fee, if Provider fails to
commence Commercial Operation by the date that is sixty (60) days after the Guaranteed Commercial Operation
Date. The Guaranteed Construction Start Date and Guaranteed Commercial Operation Date shall be extended on a
day-for-day basis if any of the following occurs: (x) notwithstanding Provider’s commercially reasonable efforts,
interconnection approval is not obtained within sixty (60) days after the Effective Date, provided that
interconnection applications are submitted within 45 days of the later of (a) the Effective Date and (b) finalization of
the System layout, (y) a Force Majeure Event occurs or for any delays by the Local Electric Utility or (z) an
occurrence of any other unforeseeable event outside of Provider’s reasonable control that prevents the Provider from
performing its obligations in accordance with the Agreement, provided that Provider makes reasonable efforts to
mitigate the impact of such events on the Guaranteed Construction Start Date or Guaranteed Commercial Operation
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Date (as applicable). Any such extension pursuant to subsection (z) shall be subject to the approval of Purchaser
which shall not be unreasonably withheld, conditioned or delayed.
2.3 Purchase Option.
(i) On any Purchase Date, so long as a Purchaser Default shall not have occurred and be continuing,
Purchaser has the option to purchase the System for a purchase price (the “Option Price”) equal to the greater of (a)
the Fair Market Value of the System as of the Purchase Date, or (b) the Early Termination Fee as of the Purchase
Date, as specified in Schedule 3, Column 2 of the Special Conditions. To exercise its purchase option, Purchaser
shall, not less than one hundred and eighty (180) days prior to the proposed Purchase Date, provide written notice to
Provider of Purchaser’s intent to exercise its option to purchase the System on such Purchase Date. Within thirty
(30) days of receipt of Purchaser’s notice, Provider shall specify the Option Price, and provide all calculations and
assumptions supporting said Option Price to Purchaser. Purchaser shall then have a period of thirty (30) days after
notification to confirm or retract its decision to exercise the purchase option or, if the Option Price is equal to the
Fair Market Value of the System, to dispute the determination of the Fair Market Value of the System. In the event
Purchaser confirms its exercise of the purchase option in writing to Provider (whether before or after any
determination of the Fair Market Value determined pursuant to Section 2.3(ii)), (i) the Parties shall promptly execute
all documents necessary to (A) cause title to the System to pass to Purchaser on the Purchase Date, free and clear of
any Liens, and (B) assign all vendor warranties for the System to Purchaser, and (ii) Purchaser shall pay the Option
Price to Provider on the Purchase Date, such payment to be made in accordance with any previous written
instructions delivered to Purchaser by Provider or Provider’s Financing Party, as applicable, for payments under this
Agreement. Upon execution of the documents and payment of the Option Price, in each case as described in the
preceding sentence, this Agreement shall terminate automatically. Payment of the Option Price shall be in lieu of
and instead of any payments as described in Section 2.2 hereof. In the event Purchaser retracts its exercise of, or
does not timely confirm, the purchase option, the provisions of this Agreement shall be applicable as if Purchaser
had not exercised any option to purchase the System.
(ii) Determination of Fair Market Value. If the Option Price indicated by Provider in accordance with
Section 2.3(i) is equal to the Fair Market Value (as determined and demonstrated by supporting documentation
provided by Provider) and Purchaser disputes such stated Fair Market Value within thirty (30) days of receipt of
such notice from Provider, then the Parties shall mutually select an independent appraiser with experience and
expertise in the Energy Services industry. Such appraiser shall have expertise and experience in valuing
photovoltaic systems, resale markets for such systems and related environmental attributes, and shall act reasonably
and in good faith to determine Fair Market Value and shall set forth such determination in a written opinion
delivered to the Parties. The valuation made by the appraiser shall be binding upon the Parties in the absence of
fraud or manifest error; however, if Purchaser in good faith disputes the valuation made by the appraiser, Purchaser
shall have the right to retract its decision to exercise the Purchase Option. The costs of the appraisal shall be borne
by Purchaser if such appraisal results in a value equal or greater than the value provided by Provider pursuant to
Section 2.3(i); otherwise, the Parties shall equally share such cost.
2.4 Removal of System at Expiration. Subject to Purchaser’s exercise of its purchase option under
Section 2.3, upon the expiration or earlier termination of this Agreement, Provider shall, at Provider’s expense,
remove all of its tangible property comprising the System from the Premises on a mutually convenient date but in no
case later than ninety (90) days after the Termination Date. The Premises shall be returned to its original condition,
except for System mounting pads or other support structures on roof-mounted systems only, and ordinary wear and
tear. If the System is to be located on a roof, then in no case shall Provider’s removal of the System affect the
integrity of Purchaser’s roof, which shall be as leak proof as it was prior to removal of System (other than ordinary
wear and tear). For purposes of Provider’s removal of the System, Purchaser’s covenants pursuant to Section 7.2
shall remain in effect until the date of actual removal of the System. Provider shall leave the Premises in neat and
clean order. If Provider fails to remove or commence substantial efforts to remove the System by such agreed upon
date, Purchaser shall have the right, at its option, to remove the System to a public warehouse and restore the
Premises to its original condition (other than System mounting pads or other support structures and ordinary wear
and tear) at Provider’s reasonable cost.
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2.5 Conditions Prior to the Commercial Operation Date.
(a) In the event that any of the following events or circumstances occur prior to the Commercial
Operation Date, Provider may (at its sole discretion) provide notice that it is terminating this Agreement, in which
case neither Party shall have any liability to the other except for any such liabilities that may have accrued prior to
such termination, including but not limited to Provider’s restoration of the Premises in accordance with Section 2.4:
(i) Provider determines that the Premises, as is, is insufficient to accommodate the System or
unsuitable for construction or operation of the System.
(ii) There exist site conditions (including environmental conditions) or construction requirements that
were not known as of the Effective Date and that could reasonably be expected to materially increase the cost of
Installation Work or would adversely affect the electricity production from the System as designed.
(iii) There is a material adverse change in the regulatory environment, incentive program or federal or
state tax code (including the expiration of any incentive program or tax incentives in effect as of the Effective Date)
that could reasonably be expected to adversely affect the economics of the installation for Provider and its investors.
(iv) Provider is unable to obtain financing for the System on terms and conditions satisfactory to it.
(v) Provider has not received: (1) a fully executed a license in the form of Exhibit A of these General
Conditions from the owner of the Premises (if the Purchaser is a tenant), (2) a release or acknowledgement from any
mortgagee of the Premise, if required by Provider’s Financing Party, to establish the priority of its security interest
in the System, and (3) such other documentation as may be reasonably requested by Provider to evidence
Purchaser’s ability to meet its obligations under Section 7.2(d)(ii) to ensure that Provider will have access to the
Premises throughout the Term.
(vi) There has been a material adverse change in the rights of Purchaser to occupy the Premises or
Provider to construct the System on the Premises.
(viii) Purchaser has determined that there are easements, CCRs or other land use restrictions, liens or
encumbrances that would materially impair or prevent the installation, operation, maintenance or removal of the
System.
(ix) There has been a material adverse change in Purchaser’s credit-worthiness.
(b) If any of the conditions set forth in Section 2.5(a) are partly or wholly unsatisfied, and Provider
wishes to revise the information in the Special Conditions, then Provider may propose modifications to the Special
Conditions for acceptance by Purchaser. If Purchaser does not accept such modified Special Conditions, Provider
may terminate this Agreement as provided in Section 2.5(a) and shall restore the Premises in accordance with
Section 2.4. If Purchaser accepts such revised Special Conditions, such revised Special Conditions shall be deemed
an amendment of this Agreement, and this Agreement shall remain in force and effect upon execution by both
Parties. Nothing contained in this Section 2.5(b) will alter the rights of either Party with respect to the condition
precedent regarding NEM 2.0 in Section 7 of the Special Conditions or the provisions regarding interconnection
costs and change orders pursuant to Schedule 2 of the Special Conditions.
2.6 Co-Located Systems. With respect to any Systems that are co-located at the same Premises and
connected to the same meter, the Parties acknowledge that the Systems are intended to be owned and operated as
one integrated system, and that the Energy Services Payment (a) represents the added value of integrating the
Systems to enable Provider’s delivery of the Energy Services pursuant to the Agreements when needed by
Purchaser, and (b) is a component part of the total consideration payable to Provider in exchange for Provider’s
comprehensive duties under this Agreement and the Agreement(s) related to the other co-located System(s).
Accordingly, the Parties further agree (x) to treat the Systems as one integrated system for all purposes, and (y) that
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any right or option that is exercised with respect to the System or this Agreement, whether in respect of early
termination, purchase option or otherwise, shall also be exercised with respect to the Agreement(s) related to the
other co-located System(s).
3. CONSTRUCTION, INSTALLATION AND TESTING OF SYSTEM.
3.1 Installation Work. Provider will cause the System (by using one or more qualified contractors
holding the appropriate licenses required in the jurisdiction where the System will be installed) to be designed,
engineered, installed and constructed substantially in accordance with Schedule 1 of the Special Conditions and
Applicable Law. Prior to the Installation Work, Provider shall submit to Purchaser for review and approval all
construction plans and designs, including engineering evaluations of the impact of the System, which approval will
not be unreasonably delayed or withheld. Provider shall perform the Installation Work at the Premises between the
hours of 7:00 a.m. and 7:00 p.m. in a manner that minimizes inconvenience to and interference with the use of the
Premises to the extent commercially practical.
3.2 Approvals; Permits. Purchaser shall assist Provider in obtaining all necessary consents, approvals
and permits required to perform Purchaser’s obligations under this Agreement, including but not limited to those
related to the Local Electric Utility, any Governmental Approval, and any consents, waivers, approvals or releases
required pursuant to any applicable contract or CCR.
3.3 System Acceptance Testing.
(a) Provider shall conduct testing of the System in accordance with such methods, acts, guidelines,
standards and criteria reasonably accepted or followed by providers of Energy Services similar to those provided by
the System in the United States. Provider shall provide Purchaser with reasonable advanced notice of such testing
and shall permit Purchaser or Purchaser’s representative to observe such testing. Purchaser’s observation of such
testing shall not be construed as or deemed an approval of such testing or test results.
(b) If the results of such testing indicate that the System is capable of providing the Energy Services,
using such instruments and meters as have been installed for such purposes, and the System has been approved for
interconnected operation by the Local Electric Utility (“Commercial Operation”), then Provider shall send a written
notice to Purchaser to that effect, and the date of such notice shall be the “Commercial Operation Date”.
4. SYSTEM OPERATIONS.
4.1 Provider as Owner and Operator. The System will be owned by Provider or Provider’s Financing
Party and will be operated and maintained and, as necessary, repaired by Provider at its sole cost and expense;
provided, any repair or maintenance costs incurred by Provider as a result of Purchaser’s negligence or breach of its
obligations hereunder shall be reimbursed by Purchaser.
4.2 Metering. Provider shall install and maintain a utility grade kilowatt-hour (kWh) meter for the
measurement of electrical energy provided by the System and may, at its election, install a utility grade kilowatt-
hour (kWh) meter for the measurement of electrical energy delivered by the Local Electric Utility and consumed at
the Premises. Such meter(s) shall meet the general commercial standards of the solar photovoltaic industry or the
required standards of the Local Electric Utility.
4.2.1 Meter Testing.
(a) Provider shall provide certificates of calibration for all meters prior to the time of their installation,
no meter will be placed in service for which Provider has not provided certificates of calibration. Provider shall test
or arrange for all meters to be tested in accordance with the meter manufacturer’s recommendations. Provider shall
bear all costs and expenses associated with each meter testing. Purchaser shall be notified at least ten (10) days in
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advance of such testing and shall have the right to be present during such tests. Provider shall provide Purchaser
with detailed written results of all meter tests.
(b) Provider shall test or arrange for meter inspection and testing bi-annually when performing
System operations and maintenance.
4.2.2 Cost of Meter Repair.
(a) If meter testing, as described above demonstrates that a meter was operating outside of its
allowable calibrations (+/- 2%), then Provider will pay for the cost of repairs or replacement necessary to restore a
meter to proper working order.
(b) If a meter is found to be inaccurate by more than two percent (2%), invoices for the prior six (6)
months or from the last date such meter was registering accurately, whichever period is less, shall be adjusted to
reconcile the discrepancy and payment for the amount of the adjustment issued by the appropriate party within 45
days, except that Purchaser shall not be obligated to pay interest on any amount found to be due because a meter was
operating outside of its allowable calibration (+/- 2%).
4.2.3 Meter Data. Provider shall gather and maintain the data from all meters, including but not limited
to, interval data registered at least once every fifteen (15) minutes (“Meter Data”), and shall make such Meter Data
promptly available to Purchaser at Purchaser’s request.
4.3 System Disruptions. In the event that (a) the owner or lessee of the Premises repairs the Premises
for any reason not directly related to damage caused by the System, and such repair requires the partial or complete
temporary disassembly or movement of the System, or (b) any act or omission of Purchaser or Purchaser’s
employees, Affiliates, agents or subcontractors (collectively, a “Purchaser Act”) results in a disruption or outage in
System production, then, in either case, Purchaser shall (i) pay Provider for all work required by Provider to
disassemble or move the System and (ii) continue to make all payments for the Energy Services during such period
of System disruption (the “Disruption Period”), and (iii) reimburse Provider for any other lost revenue during the
Disruption Period, including any lost revenue associated with any reduced sales of Environmental Attributes and
any reduced System-based Incentives, if applicable, during the Disruption Period. For the purpose of calculating
Energy Services Payments and lost revenue for such Disruption Period, Energy Services for each month of said
months shall be deemed to have been produced at the average rate over the same month for which data exists (or, if
the disruption occurs within the first twelve (12) months of operation, the average over such period of operation).
Notwithstanding the foregoing, Purchaser shall be entitled to exercise its rights under Section 9 (Allowed Disruption
Time) of the Special Conditions.
4.4 System Warranty. Provider will obtain industry standard warranties on all major components of
the System, including no less than twenty-year warranty coverage for the photovoltaic panels and ten year warranty
coverage on inverters. All such warranties will be transferable to Purchaser upon any exercise of Purchaser’s right
to take possession and ownership of the System.
5. TITLE TO SYSTEM.
5.1 Throughout the duration of this Agreement, Provider or Provider’s Financing Party shall be the
legal and beneficial owner of the System at all times, and the System shall remain the personal property of Provider
or Provider’s Financing Party and shall not attach to or be deemed a part of, or fixture to, the Premises. The System
shall at all times retain the legal status of personal property as defined under Article 9 of the Uniform Commercial
Code. Purchaser covenants that it will use reasonable commercial efforts to place all parties having an interest in or
lien upon the real property comprising the Premises on notice of the ownership of the System and the legal status or
classification of the System as personal property. If there is any mortgage or fixture filing against the Premises
which could reasonably be construed as attaching to the System as a fixture of the Premises, Purchaser shall provide,
at Provider’s request, a disclaimer or release from such lien holder. If Purchaser is the fee owner of the Premises,
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Purchaser consents to the filing by Provider, on behalf of Purchaser, of a disclaimer of the System as a fixture of the
Premises in the office where real estate records are customarily filed in the jurisdiction of the Premises. If Purchaser
is not the fee owner, Purchaser will, at Provider’s request, use commercially reasonable efforts to obtain such
consent from such owner.
5.2 Environmental Attributes And System-Based Incentives. Purchaser’s purchase of Energy Services
includes Environmental Attributes, but does not include System-based incentives. Provider will cooperate with
Purchaser for the duration of the Term to file any applications and ongoing reports or regulatory filings for the
purpose of obtaining the benefits of the Environmental Attributes for Purchaser. System-based Incentives shall be
owned by Provider or Provider’s financing party for the duration of the System’s operating life. Purchaser disclaims
any right to System-based Incentives based upon the installation of the System at the Premises, and shall, at the
request of Provider, execute any document or agreement reasonably necessary to fulfill the intent of this Section 5.2.
6. PRICE AND PAYMENT.
6.1 Consideration. Purchaser shall pay to Provider a monthly Energy Services Payment for the
Energy Services provided during each calendar month of the Term as set forth in the Special Conditions.
6.2 Invoice. Provider shall invoice Purchaser on or about the first day of each month (each, an
“Invoice Date”), commencing on the first Invoice Date to occur after the Commercial Operation Date, for the
Energy Services Payment in respect of the immediately preceding month. The last invoice shall include Energy
Services provided only through the Termination Date of this Agreement. Invoices shall state, at a minimum, (i) the
amount of actual electricity produced by the System and delivered to the delivery point during the invoice period (if
applicable), (ii) the rates applicable to, and any charges incurred by, Purchaser under this Agreement, and (iii) the
total amount due from Purchaser.
6.3 Time of Payment. Purchaser shall pay all undisputed amounts due hereunder within thirty (30)
days after Purchaser’s receipt of an invoice from Provider.
6.4 Method of Payment. Purchaser shall make all payments under this Agreement either (a) by
electronic funds transfer in immediately available funds to the account designated by Provider from time to time or
(b) by check timely delivered to the location designated by Provider from time to time. All payments that are not
paid when due shall bear interest accruing from the date becoming past due until paid in full at a rate equal to the
Stated Rate.
6.5 Disputed Payments. If a bona fide dispute arises with respect to any invoice, Purchaser shall not
be deemed in default under this Agreement and the Parties shall not suspend the performance of their respective
obligations hereunder, including payment of undisputed amounts owed hereunder. If an amount disputed by
Purchaser is subsequently deemed to have been due pursuant to the applicable invoice, interest shall accrue at the
Stated Rate on such amount from the date becoming past due under such invoice until the date paid.
7. GENERAL COVENANTS.
7.1 Provider’s Covenants. Provider covenants and agrees to the following:
(a) Notice of Damage or Emergency. Provider shall (x) promptly notify Purchaser if it becomes
aware of any damage to or loss of the use of the System or that could reasonably be expected to adversely affect the
System, (y) immediately notify Purchaser if it becomes aware of any event or circumstance relating to the System or
the Premises that poses a significant risk to human health, the environment, the System or the Premises. In the event
of any damage to the Premises caused by, or as the result of, the System, Provider shall, at its sole cost, repair said
Premises to the condition existing prior to such damage.
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(b) Governmental Approvals. While providing the Installation Work, Energy Services, and System
Operations, Provider shall obtain and maintain and secure all Governmental Approvals required to be obtained and
maintained and secured by Provider and to enable Provider to perform such obligations.
(c) Health and Safety. Provider shall take all necessary and reasonable safety precautions with
respect to providing the Installation Work, Energy Services, and System Operations that shall comply with all
Applicable Laws pertaining to the health and safety of persons and real and personal property. All work shall be
performed by licensed professionals, as may be required by Applicable Law, and in accordance with such methods,
acts, guidelines, standards and criteria reasonably accepted or followed by a majority of System integrators in the
United States.
(d) Liens. Other than a Financing Party’s security interest in or ownership of the System, Provider
shall not directly or indirectly cause, create, incur, assume or suffer to exist any mortgage, pledge, lien (including
mechanics’, labor or materialman’s lien), charge, security interest, encumbrance or claim of any nature (“Liens”) on
or with respect to the Premises or any interest therein, in each case to the extent such Lien arises from or is related to
Provider’s performance or non-performance of its obligations hereunder. If Provider breaches its obligations under
this Section, it shall (i) immediately notify Purchaser in writing, (ii) promptly cause such Lien to be discharged and
released of record without cost to Purchaser, and (iii) defend and indemnify Purchaser against all costs and expenses
(including reasonable attorneys’ fees and court costs at trial and on appeal) incurred in discharging and releasing
such Lien; provided, Provider shall have the right to contest any such Lien, so long as it provides a statutory bond or
other reasonable assurances of payment that either remove such Lien from title to the Premises or that assure that
any adverse judgment with respect to such Lien will be paid without affecting title to the Premises.
(e) System Condition. Provider shall take all actions reasonably necessary, including but not limited
to repair and maintenance, to ensure that the System is capable of operating at a commercially reasonable
continuous rate throughout the Term.
(f) Environmental Indemnification by Provider. Provider shall indemnify, hold harmless and defend
Purchaser Indemnified Parties from and against all claims, pay costs and expenses, and conduct all actions required
under Environmental Laws in connection with the deposit, release, or spill of any Hazardous Materials at, on, above,
below or near the Premises by Provider. In no event shall Provider be responsible for the existence of any
Hazardous Materials at the Premises prior to the Effective Date. Provider shall promptly notify Purchaser if it
becomes aware of any Hazardous Materials, or any deposit, spill, or release of any Hazardous Materials at, on,
above, below or near the Premises.
(g) Production Data. Provider shall provide Purchaser with access to System production data in
electronic format, such as tabular Excel or csv with each production unit in a separate cell. Production data could be
delivered monthly or by granting Purchaser access to a web portal.
7.2 Purchaser’s Covenants. Purchaser covenants and agrees as follows:
(a) Notice of Damage or Emergency. Purchaser shall (i) promptly notify Provider if it becomes aware
of any damage to or loss of the use of the System or that could reasonably be expected to adversely affect the
System, (ii) immediately notify Provider it becomes aware of any event or circumstance that poses an imminent risk
to human health, the environment, the System or the Premises. In the event of damage to Purchaser’s premises
caused by, or as the result of, the System, Provider shall, at its sole cost, repair said premises to the condition
existing prior to such damage.
(b) Liens. Purchaser shall not directly or indirectly cause, create, incur, assume or suffer to exist any
Liens on or with respect to the System or any interest therein. If Purchaser breaches its obligations under this
Section, it shall immediately notify Provider in writing, shall promptly cause such Lien to be discharged and
released of record without cost to Provider, and shall indemnify Provider against all costs and expenses (including
reasonable attorneys’ fees and court costs at trial and on appeal) incurred in discharging and releasing such Lien.
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(c) Consents and Approvals. To the extent that only Purchaser is authorized to request, obtain or
issue any necessary approvals, Governmental Approvals, rebates or other financial incentives, Purchaser shall
cooperate with Provider to obtain or issue such approvals, Governmental Approvals, rebates or other financial
incentives in the name of Provider. Purchaser shall provide to Provider copies of all Governmental Approvals and
CCRs applicable to the Premises, other than those obtained by Provider or to which Provider is a party.
(d) Access to Premises, Grant of License.
(i) Purchaser hereby grants to Provider a revocable non-exclusive license coterminous with the Term
containing all the rights necessary for Provider to use and occupy portions of the Premises for the installation,
operation, maintenance and removal of the System pursuant to the terms of this Agreement, including ingress and
egress rights across the Property to the Premises for Provider and its employees, contractors and subcontractors and
access to electrical panels and conduits to interconnect or disconnect the System with the Premises’ electrical
wiring; provided, with respect to Provider’s access to the Property, such license shall be subject to reasonably safety
and security conditions or limitations imposed by Purchaser for the protection of the Property. If Provider’s
financing structure requires that Purchaser enter into a license agreement directly with Financing Party, Provider
shall enter into such an agreement which shall be in a form which is reasonably satisfactory to Purchaser and which
contain substantially the same rights as set forth in this Section 7.2(d).
(ii) Regardless of whether Purchaser is owner of the Premises or leases the Premises from a landlord,
Purchaser hereby covenants that (x) Provider shall have access to the Premises and System during the Term of this
Agreement and for so long as needed after termination to remove the System pursuant to the applicable provisions
herein, and (y) neither Purchaser nor Purchaser’s landlord will interfere or handle any Provider equipment or the
System without written authorization from Provider; provided, Purchaser and Purchaser’s landlord shall at all times
have access to and the right to observe the Installation Work or System removal.
(iii) If Purchaser is a lessee of the Premises, Purchaser further covenants that it shall deliver to
Provider, a license from Purchaser’s landlord in substantially the form attached hereto as Exhibit A of these General
Conditions.
(e) Temporary storage space during installation or removal. Purchaser shall use commercially
reasonable efforts to provide for sufficient space at the Property for the temporary storage and staging of tools,
materials and equipment and for the parking of construction crew vehicles and temporary construction trailers and
facilities reasonably necessary during the Installation Work, System Operations or System removal, and access for
rigging and material handling. Provider will work with Purchaser to ensure that such space is configured in such a
manner as to minimize the disruption of activities of Purchaser on the Property during the Installation Work.
Subject to Purchaser’s indemnity obligations set forth herein, Purchaser shall have no liability whatsoever in
connection with personal property or equipment of Provider or Provider’s employees, consultants, contractors,
subcontractors, and vendors. Provider shall be solely responsible for the safety and security of Provider’s
employees, consultants, contractors, subcontractors, and vendors, as well as any personal property, including but not
limited to, any tools, materials, and equipment of such parties used or stored on the Premises.
(f) Environmental Documents. On or before the Effective Date of each Special Conditions Purchaser
shall identify and set forth in each Special Conditions and unless previously delivered, Purchaser shall, to the extent
the same are known and in the possession or control of Purchaser, deliver to Provider copies of all reports,
agreements, plans, inspections, tests, studies or other materials concerning the presence of Hazardous Materials at,
from or on the Premises including, but not limited to, soil reports, design drawings, environmental reports, sampling
results or other documents relating to Hazardous Materials that have been identified or may be present on, in or
under the Premises (collectively, the “Environmental Documents”). Thereafter, Purchaser agrees to provide copies
of any new Environmental Documents within ten (10) days of receipt of same. Purchaser hereby agrees to furnish
such other documents in Purchaser’s possession or control with respect to Governmental Approvals compliance with
Environmental Law or Hazardous Materials with respect to the Premises as may be reasonably requested by
Provider from time to time.
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(g) Compliance with Environmental Laws. Notwithstanding anything to the contrary in this
Agreement, Purchaser shall operate and maintain the Premises to comply with the requirements of all applicable
Environmental Laws that limit or govern the conditions or uses of the Premises, without impairing or interfering
with Provider’s construction, operation and ownership of the System or occupancy of the Premises. In no event
shall Provider have any liability or obligation with respect to any Pre-existing Environmental Condition on, in or
under the Premises, or operations or maintenance of the Premises required to comply with Environmental Laws with
respect to Pre-Existing Environmental Conditions.
(h) Environmental Indemnification by Purchaser. Purchaser shall indemnify, hold harmless and
defend Provider from and against all claims, pay costs and expenses, and conduct all actions required under
Environmental Laws in connection with (i) the existence at, on, above, below or near the Premises of any Pre-
existing Environmental Conditions, and (ii) any Hazardous Materials released, spilled or deposited at, on above or
below the Premises by the Purchaser. Purchaser shall promptly notify Provider if it becomes aware of any
Hazardous Materials, or any deposit, spill, or release of any Hazardous Materials at, on, above, below or near the
Premises.
8. REPRESENTATIONS & WARRANTIES.
8.1 Representations and Warranties of Both Parties. In addition to any other representations and
warranties contained in this Agreement, each Party represents and warrants to the other as of the Effective Date that:
(a) it is duly organized and validly existing and in good standing in the jurisdiction of its organization;
(b) it has the full right and authority to enter into, execute, deliver, and perform its obligations under
this Agreement;
(c) it has taken all requisite corporate or other action to approve the execution, delivery, and
performance of the Agreement;
(d) this Agreement constitutes its legal, valid and binding obligation enforceable against such Party in
accordance with its terms, except as may be limited by applicable bankruptcy and other similar laws now or
hereafter in effect;
(e) there is no litigation, action, proceeding or investigation pending or, to the best of its knowledge,
threatened before any court or other Governmental Authority by, against, affecting or involving any of its business
or assets that could reasonably be expected to adversely affect its ability to carry out the transactions contemplated
herein;
(f) its execution and performance of this Agreement and the transactions contemplated hereby do not
and will not constitute a breach of any term or provision of, or a default under, (i) any contract, agreement or
Governmental Approval to which it or any of its Affiliates is a party or by which it or any of its Affiliates or its or
their property is bound, (ii) its organizational documents, or (iii) any Applicable Laws; and
(g) its execution and performance of this Agreement and the transactions contemplated hereby do not
and will not require any consent from a third party, including any Governmental Approvals from any Governmental
Authority, that are not identified in the Special Conditions.
8.2 Representations of Purchaser. Purchaser represents and warrants to Provider as of the Effective
Date that:
(a) Purchaser acknowledges that it has been advised that part of the collateral securing the financial
arrangements for the System may be the granting of a first priority perfected security interest (the “Security
Interest”) in the System to a Financing Party;
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(b) To Purchaser’s knowledge, the granting of the Security Interest will not violate any term or
condition of any covenant, restriction, lien, financing agreement, or security agreement affecting the Premises;
(c) Purchaser is aware of no existing lease, mortgage, security interest or other interest in or lien upon
the Premises that could attach to the System as an interest adverse to Provider’s Financing Party’s Security Interest
therein;
(d) To Purchaser’s knowledge, there exists no event or condition which constitutes a default, or
would, with the giving of notice or lapse of time, constitute a default under this Agreement;
(e) To Purchaser’s knowledge, Purchaser has identified and disclosed to Provider in the Special
Conditions (i) all Environmental Documents in Purchaser’s possession or control, (ii) all CCRs, Governmental
Approvals or other restrictions imposed under Applicable Laws with respect to the use of the Premises that could
affect the construction and operation of the System within Purchaser’s possession or control, and (iii) all
environmental reports, studies, data or other information relating to the use of the Premises by Provider within the
Purchaser’s possession or control;
(f) To Purchaser’s knowledge, the Premises is in compliance with Environmental Laws, and that
Purchaser holds and is in compliance with all Governmental Approvals required for the ownership and any current
operations or activities conducted at the Premises; and
(g) To Purchaser’s knowledge, Purchaser has identified in the Special Conditions and delivered to
Provider all material reports and information concerning the presence or release of Hazardous Materials on, in or
under the Premises in Purchaser’s possession or control.
Any Financing Party shall be an intended third-party beneficiary of this Section 8.2.
8.3 EXCLUSION OF WARRANTIES. EXCEPT FOR THE PRODUCTION GUARANTY SET
FORTH IN SECTION 8 OF THE SPECIAL CONDITIONS, THE PASS THROUGH WARRANTIES
DESCRIBED IN SECTION 4.4, AND TO THE EXTENT OTHERWISE EXPRESSLY SET FORTH HEREIN,
THE INSTALLATION WORK, SYSTEM OPERATIONS, AND ENERGY SERVICES PROVIDED BY
PROVIDER TO PURCHASER PURSUANT TO THIS AGREEMENT SHALL BE “AS-IS WHERE-IS.” NO
OTHER WARRANTY TO PURCHASER OR ANY OTHER PERSON, WHETHER EXPRESS, IMPLIED OR
STATUTORY, IS MADE AS TO THE INSTALLATION, DESIGN, DESCRIPTION, QUALITY,
MERCHANTABILITY, COMPLETENESS, USEFUL LIFE, FUTURE ECONOMIC VIABILITY, OR FITNESS
FOR ANY PARTICULAR PURPOSE OF THE SYSTEM, THE ENERGY SERVICES OR ANY OTHER
SERVICE PROVIDED HEREUNDER OR DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL OF
WHICH ARE EXPRESSLY DISCLAIMED BY PROVIDER.
9. TAXES AND GOVERNMENTAL FEES.
9.1 Purchaser Obligations. Purchaser shall reimburse and pay for any documented taxes, fees or
charges imposed or authorized by any Governmental Authority and paid by Provider due to Provider’s sale of the
Energy Services to Purchaser (other than income taxes imposed upon Provider). Provider shall notify Purchaser in
writing with a detailed statement of such amounts, which shall be invoiced by Provider and payable by Purchaser.
Purchaser shall timely report, make filings for, and pay any and all sales, use, income, gross receipts or other taxes,
and any and all franchise fees or similar fees assessed against it due to its purchase of the Energy Services. This
Section 9.1 excludes taxes specified in Section 9.2.
9.2 Provider Obligations. Subject to Section 9.1 above, Provider shall be responsible for all income,
gross receipts, ad valorem, personal property or real property or other similar taxes and any and all franchise fees or
similar fees assessed against it due to its ownership of the System.
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10. FORCE MAJEURE.
10.1 Definition. “Force Majeure Event” means any act or event that prevents the affected Party from
performing its obligations in accordance with this Agreement, if such act or event is beyond the reasonable control,
and not the result of the fault or negligence, of the affected Party and such Party had been unable to overcome such
act or event with the exercise of due diligence (including the expenditure of reasonable sums). Subject to the
foregoing conditions, “Force Majeure Event” shall include without limitation the following acts or events: (i)
natural phenomena, such as storms, hurricanes, floods, lightning, volcanic eruptions and earthquakes; (ii) explosions
or fires arising from lightning or other causes unrelated to the acts or omissions of the Party seeking to be excused
from performance; (iii) acts of war or public disorders, civil disturbances, riots, insurrection, sabotage, epidemic,
terrorist acts, or rebellion; (iv) strikes or labor disputes (except strikes or labor disputes caused solely by employees
of Provider or as a result of such party’s failure to comply with a collective bargaining agreement); and (v) action or
inaction by a Governmental Authority (unless Purchaser is a Governmental Authority and Purchaser is the Party
whose performance is affected by such action nor inaction). A Force Majeure Event shall not be based on the
economic hardship of either Party, or upon the expiration of any lease of the Premises by the Purchaser from the
owner of the Premises.
10.2 Excused Performance. Except as otherwise specifically provided in this Agreement, neither Party
shall be considered in breach of this Agreement or liable for any delay or failure to comply with this Agreement
(other than the failure to pay amounts due hereunder), if and to the extent that such delay or failure is attributable to
the occurrence of a Force Majeure Event; provided, the Party claiming relief under this Article 10 shall as soon as
practicable after becoming aware of the circumstances constituting Force Majeure (i) notify the other Party in
writing of the existence of the Force Majeure Event, (ii) exercise all reasonable efforts necessary to minimize delay
caused by such Force Majeure Event, (iii) notify the other Party in writing of the cessation or termination of said
Force Majeure Event and (iv) resume performance of its obligations hereunder as soon as practicable thereafter;
provided, Purchaser shall not be excused from making any payments and paying any unpaid amounts due in respect
of Energy Services delivered to Purchaser prior to the Force Majeure Event performance interruption. Subject to
Section 10.3 below, the Parties agree that to the extent permitted by Applicable Law, the Term of this Agreement
shall extend on a day for day basis for every day in which the occurrence of a Force Majeure Event has affected
either Party’s performance of its obligations hereunder.
10.3 Termination in Consequence of Force Majeure Event. If a Force Majeure Event shall have
occurred that has affected Provider’s performance of its obligations hereunder and that has continued for a
continuous period of one hundred eighty (180) days, then either Party shall be entitled to terminate this Agreement
upon ninety (90) days’ prior written notice to the other Party. If at the end of such ninety (90) day period such Force
Majeure Event shall still continue, this Agreement shall automatically terminate. Upon such termination for a Force
Majeure Event, neither Party shall have any liability to the other (other than any such liabilities that have accrued
prior to such termination, including but not limited to Provider’s obligations to remove the System and restore the
Premises as set forth herein), and Purchaser shall have no obligation to pay the Early Termination Fee.
11. DEFAULT.
11.1 Provider Defaults and Purchaser Remedies.
(a) Provider Defaults. The following events shall be defaults with respect to Provider (each, a
“Provider Default”):
(i) A Bankruptcy Event shall have occurred with respect to Provider;
(ii) Provider fails to pay Purchaser any undisputed amount owed under the Agreement within
thirty (30) days from receipt of notice from Purchaser of such past due amount; and
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(iii) Provider breaches any material representation, covenant or other term of this Agreement
and (A) if such breach can be cured within thirty (30) days after Purchaser’s written notice of such breach and
Provider fails to so cure, or (B) Provider fails to commence and pursue a cure within such thirty (30) day period if a
longer cure period is needed.
(b) Purchaser’s Remedies. If a Provider Default described in Section 11.1(a) has occurred and is
continuing, in addition to other remedies expressly provided herein, and subject to Article 12, Purchaser may
terminate this Agreement with no penalty or liability whatsoever, including but not limited to the Early Termination
Fee, and exercise any other remedy it may have at law or equity or under this Agreement.
11.2 Purchaser Defaults and Provider’s Remedies.
(a) Purchaser Default. The following events shall be defaults with respect to Purchaser (each, a
“Purchaser Default”):
(i) A Bankruptcy Event shall have occurred with respect to Purchaser;
(ii) Purchaser breaches any material representation, covenant or other term of this Agreement
if (A) such breach can be cured within thirty (30) days after Provider’s notice of such breach and Purchaser fails to
so cure, or (B) Purchaser fails to commence and pursue said cure within such thirty (30) day period if a longer cure
period is reasonably necessary; and
(iii) Purchaser fails to pay Provider any undisputed amount due Provider under this
Agreement within thirty (30) days from receipt of notice from Provider of such past due amount.
(b) Provider’s Remedies. If a Purchaser Default described in Section 11.2(a) has occurred and is
continuing, in addition to other remedies expressly provided herein, and subject to Article 12, Provider may
terminate this Agreement and upon such termination, (A) Provider shall be entitled to receive from Purchaser the
Early Termination Fee set forth on Schedule 3, Column 1 of the Special Conditions (or at the option of Purchaser,
the Option Price, provided all other conditions set forth in Section 2.3 hereof are met (including that the Purchase
Date occurs no earlier than the first available Purchase Date set forth on Schedule 3 of the Special Conditions) and
any outstanding monetary obligations of Purchaser arising prior to the Purchase Date have been satisfied by
Purchaser), and (B) Provider may exercise any other remedy it may have at law or equity or under this Agreement.
11.3 Cross Default. With respect to any Systems that are co-located at the same Premises, if a Party
defaults under this Agreement, it shall also be a default of such Party under the Agreement(s) related to the other co-
located System(s); provided, a cure of the original default shall be a cure of any such cross default. In the event of a
cross default, the non-defaulting Party shall be entitled to exercises its rights with respect to this Agreement and all
such other Agreements, including terminating all such Agreements and, if Provider terminates one or more
Agreements due to a Purchaser Default, Purchaser shall pay the Early Termination Fees for all such terminated
Agreements.
11.4 Removal of System. Upon any termination of this Agreement pursuant to this Article 11 and
payment of the Early Termination Fee (if applicable), Provider will remove the System pursuant to Section 2.4
hereof.
12. LIMITATIONS OF LIABILITY.
12.1 Except as expressly provided herein, neither Party shall be liable to the other Party for any special,
punitive, exemplary, indirect, or consequential damages, losses or damages for lost revenue or lost profits, whether
foreseeable or not, arising out of, or in connection with this Agreement. Notwithstanding the foregoing, this Section
12.1 shall not limit the damages available to a Party to the extent that it is covered by any indemnification or
insurance coverage with respect to third party claims of personal injury, wrongful death or property damage.
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12.2 A Party’s maximum liability to the other Party under this Agreement, shall be limited to the
aggregate Estimated Remaining Payments as of the date of the events giving rise to such liability, provided, the
limits of liability under this Section 12.2 shall not apply with respect to (i) indemnity obligations hereunder in
respect of personal injury or environmental claims and (ii) any obligation of Purchaser to pay Energy Service
Payments, the Early Termination Fee or the Option Price, (iii) any obligation of Provider to pay for Lost Savings in
accordance with the Special Conditions and (iv) if applicable, any obligation of Provider to remove the System and
restore the Premises in accordance with Section 2.4.
13. ASSIGNMENT.
13.1 Assignment by Provider. Provider shall not sell, transfer or assign (collectively, an “Assignment”)
the Agreement or any interest therein, without the prior written consent of Purchaser, which shall not be
unreasonably withheld, conditioned or delayed, so long as the proposed assignee has no less than five (5) years of
experience in the operation of photovoltaic energy generation systems similar to the System and agrees in writing to
assume all obligations of Provider under the Agreement; provided, Purchaser agrees that Provider may assign this
Agreement without the consent of the Purchaser to an Affiliate of Provider or any party providing financing for the
System with prior notice to Purchaser. In the event that Provider identifies a secured Financing Party in the Special
Conditions, or in a subsequent notice to Purchaser, then Purchaser shall comply with the provisions set forth in
Exhibit B of these General Terms and Conditions and agrees to provide such standard and customary estoppels as
Provider may reasonably request from time to time. Any Financing Party shall be an intended third-party
beneficiary of this Section 13.1. Any Assignment by Provider without obtaining the prior written consent and
release of Purchaser, when such consent is required by this Section 13.1, shall not release Provider of its obligations
hereunder.
13.2 Acknowledgment of Collateral Assignment. In the event that Provider identifies a secured
Financing Party in the Special Conditions, or in a subsequent notice to Purchaser, then Purchaser hereby
acknowledges:
(a) The collateral assignment by Provider to the Financing Party, of Provider’s right, title and interest
in, to and under this Agreement, as consented to under Section 13.1 of this Agreement.
(b) That the Financing Party as such collateral assignee shall be entitled to exercise the right and
remedies of Provider pursuant to this Agreement.
(c) That it has been advised that Provider has granted a first priority perfected security interest in the
System to the Financing Party and that the Financing Party has relied upon the characterization of the System as
personal property, as agreed in this Agreement in accepting such security interest as collateral for its financing of the
System.
Any Financing Party shall be an intended third- party beneficiary of this Section 13.2.
13.3 Assignment by Purchaser. Purchaser shall not assign this Agreement or any interest therein,
without Provider’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.
Any Assignment by Purchaser without the prior written consent of Provider shall not release Purchaser of its
obligations hereunder.
14. NOTICES.
14.1 Notice Addresses. Unless otherwise provided in this Agreement, all notices and communications
concerning this Agreement shall be in writing and addressed to the other Party (or Financing Party, as the case may
be) at the addresses set forth in the Special Conditions, or at such other address as may be designated in writing to
the other Party from time to time.
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14.2 Notice. Unless otherwise provided herein, any notice provided for in this Agreement shall be
hand delivered, or by commercial overnight delivery service, and shall be deemed delivered to the addressee or its
office when received at the address for notice specified above when hand delivered, , or on the Business Day after
being sent when sent by overnight delivery service (Saturdays, Sundays and legal holidays excluded).
14.3 Address for Invoices. All invoices under this Agreement shall be sent to the address provided by
Purchaser. Invoices shall be sent by regular first class mail postage prepaid.
15. CONFIDENTIALITY.
15.1 Confidentiality Obligation. If either Party provides confidential information, including business
plans, strategies, financial information, proprietary, patented, licensed, copyrighted or trademarked information,
and/or technical information regarding the financing, design, operation and maintenance of the System or of
Purchaser’s business (“Confidential Information”) to the other or, if in the course of performing under this
Agreement or negotiating this Agreement a Party learns Confidential Information regarding the facilities or plans of
the other, the receiving Party shall (a) protect the Confidential Information from disclosure to third parties with the
same degree of care accorded its own confidential and proprietary information, and (b) refrain from using such
Confidential Information, except in the negotiation and performance of this Agreement. Notwithstanding the above,
a Party may provide such Confidential Information to its officers, directors, members, managers, employees, agents,
contractors, consultants, Affiliates, lenders (existing or potential), investors (existing or potential) and potential
third-party assignees of this Agreement or third-party acquirers of Provider or its Affiliates (provided and on
condition that such potential third-party assignees be bound by a written agreement restricting use and disclosure of
Confidential Information) (collectively, “Representatives”), in each case whose access is reasonably necessary.
Each such recipient of Confidential Information shall be informed by the Party disclosing Confidential Information
of its confidential nature and shall be directed to treat such information confidentially and shall agree to abide by
these provisions. In any event, each Party shall be liable (with respect to the other Party) for any breach of this
provision by any entity to whom that Party improperly discloses Confidential Information. The terms of this
Agreement (but not its execution or existence) shall be considered Confidential Information for purposes of this
Article, except as set forth in Section 15.3. All Confidential Information shall remain the property of the disclosing
Party and shall be returned to the disclosing Party or destroyed after the receiving Party’s need for it has expired or
upon the request of the disclosing Party.
15.2 Permitted Disclosures. Notwithstanding any other provision herein, neither Party shall be required
to hold confidential any information that:
(a) Becomes publicly available other than through the receiving Party;
(b) Is required to be disclosed by a Governmental Authority, under Applicable Law, including but not
limited to the California Public Records Act, or pursuant to a validly issued subpoena or required filing, but a
receiving Party subject to any such requirement shall promptly notify the disclosing Party of such requirement;
(c) Is independently developed by the receiving Party; or
(d) Becomes available to the receiving Party without restriction from a third party under no obligation
of confidentiality.
15.3 Goodwill and Publicity. Neither Party shall use the name, trade name, service mark, or trademark
of the other Party in any promotional or advertising material without the prior written consent of such other Party.
The Parties shall coordinate and cooperate with each other when making public announcements related to the
execution and existence of this Agreement, and each Party shall have the right to promptly review, comment upon,
and approve any publicity materials, press releases, or other public statements by the other Party that refer to, or that
describe any aspect of, this Agreement; provided, no such publicity releases or other public statements (except for
filings or other statements or releases as may be required by Applicable Law) shall be made by either Party without
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the prior written consent of the other Party. At no time will either Party acquire any rights whatsoever to any
trademark, trade name, service mark, logo or other intellectual property right belonging to the other Party.
Notwithstanding the foregoing, Purchaser agrees that Provider may, at its sole discretion, take photographs of the
installation process of the System and/or the completed System, and Provider shall be permitted to use such images
(regardless of media) in its marketing efforts, including but not limited to use in brochures, advertisements, websites
and news outlet or press release articles. The images shall not include any identifying information without Purchaser
permission and the installation site shall not be disclosed beyond the type of establishment (such as “Retail Store,”
“Distribution Center,” or such other general terms), the city and state. Furthermore, Purchaser will have the right to
take photographs of the System and to use such photographs on its website or in other materials which publicize
Purchaser’s commitment to the procurement of clean energy.
15.4 Enforcement of Confidentiality Obligation. Each Party agrees that the disclosing Party would be
irreparably injured by a breach of this Article 15 by the receiving Party or its Representatives or other Person to
whom the receiving Party discloses Confidential Information of the disclosing Party and that the disclosing Party
may be entitled to equitable relief, including injunctive relief and specific performance, in the event of any breach of
the provisions of this Article 15. To the fullest extent permitted by Applicable Law, such remedies shall not be
deemed to be the exclusive remedies for a breach of this Article 15, but shall be in addition to all other remedies
available at law or in equity.
16. INDEMNITY.
16.1 Provider’s Indemnity. To the extent permitted by Applicable Law, Provider agrees that it shall
defend, indemnify and hold harmless Purchaser, its permitted successors and assigns and their respective officials,
directors, officers, members, shareholders and employees (collectively, the “Purchaser Indemnified Parties”) from
and against any and all Losses incurred by the Purchaser Indemnified Parties arising out of, pertaining to, or relating
to the Installation Work and the ownership and operation of the System, including without limitation, any claims
arising from the negligence, recklessness or willful misconduct of the Provider or its contractors, consultants,
employees, or agents while present on the Property or the Premises. Provider shall not, however, be required to
reimburse or indemnify any Purchaser Indemnified Party for any Loss to the extent such Loss is due to the
negligence or willful misconduct of any Purchaser Indemnified Party.
Provider will indemnify, hold harmless, release and defend Purchaser from and against any and all claims
arising from an allegation, charge, assertion or accusation by a third party that Provider and/or Purchaser has
violated California Government Code Section 1090 or any other conflict-of-interest law in the procurement,
execution or performance of this Agreement. This indemnification obligation will continue to bind Provider after
the termination or expiration of this Agreement.
The provisions of this Article shall survive the termination of this Agreement howsoever caused.
Provider’s obligation to indemnify the Purchaser Indemnified Parties shall not be restricted to insurance proceeds, if
any, received by the Purchaser Indemnified Parties.
16.2 Purchaser’s Indemnity. To the extent permitted by Applicable Law, Purchaser agrees that it shall
indemnify and hold harmless Provider, its permitted successors and assigns and their respective directors, officers,
members, shareholders and employees (collectively, the “Provider Indemnified Parties”) from and against any and
all Losses incurred by Provider Indemnified Parties to the extent arising from or out of any claim for or arising out
of any injury to or death of any Person or loss or damage to property of any Person to the extent arising out of
Purchaser’s negligence or willful misconduct. Purchaser shall not, however, be required to reimburse or indemnify
any Provider Indemnified Party for any Loss to the extent such Loss is due to the negligence or willful misconduct
of any Provider Indemnified Party.
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17. INSURANCE.
17.1 Generally. Purchaser and Provider shall each maintain the following insurance coverages in full
force and effect throughout the Term either through insurance policies or acceptable self-insured retentions: (a)
Workers’ Compensation and Employer’s Liability Insurance as may be from time to time required under applicable
federal and state law, (b) Commercial General Liability Insurance with limits of not less than $5,000,000 general
aggregate, $2,000,000 per occurrence, and (c) automobile liability insurance with limits of not less than $1,000,000
combined single limit. Additionally, Provider shall carry adequate property loss insurance on the System which
need not be covered by Purchaser’s property coverage. The amount and terms of insurance coverage will be
determined at Provider’s sole discretion. Provider acknowledges that Purchaser may provide such coverage through
municipal self-insurance or a public agency risk pool.
17.2 Certificates of Insurance. Each Party, upon request, shall furnish current certificates evidencing
that the insurance required under Section 17.1 is being maintained. Each Party’s insurance policy provided
hereunder shall contain a provision whereby the insured agrees to give the other Party thirty (30) days’ written
notice before the insurance is cancelled or materially altered.
17.3 Additional Insureds. Each Party’s general liability insurance policy shall be written on an
occurrence basis and shall include the other Party as an additional insured for ongoing and completed operations as
its interest may appear.
17.4 Insurer Qualifications. All insurance maintained hereunder by Provider shall be maintained with
companies either rated no less than A- as to Policy Holder’s Rating in the current edition of Best’s Insurance Guide
(or with an association of companies each of the members of which are so rated) or having a parent company’s debt
to policyholder surplus ratio of 1:1.
17.5 Waiver of Subrogation. All insurance coverage maintained or procured by Provider pursuant to
this Agreement shall be endorsed to waive subrogation against Purchaser, its elected or appointed officers, agents,
officials, employees, and volunteers or shall specifically allow Provider or others providing insurance evidence in
compliance with these specifications to waive their right of recovery prior to a loss. Provider hereby waives its own
right of recovery against Purchaser and shall require similar written express waivers and insurance clauses from
each of its subcontractors.
17.6 Pass Through Clause. Provider agrees to ensure that its subconsultants, subcontractors, and
any other party brought onto or involved in the project by Provider, maintain the same minimum insurance coverage
and endorsements required of Provider. Provider agrees to monitor and review all such coverage and assumes all
responsibility for ensuring that such coverage is provided in conformity with the requirements of this section.
However, in the event Provider’s subcontractor(s) cannot comply with this requirement, Provider shall be required
to ensure that its subcontractor(s) provide and maintain insurance coverage and endorsements sufficient to the
specific risk involved with subcontractor’s scope of work and services, with limits less than required of the Provider,
but in all other terms consistent with the Purchaser’s requirements under this Agreement. This provision does not
relieve the Provider of its contractual obligations under the Agreement and/or limit its liability to the amount of
insurance coverage provided by its subcontractor(s). This provision is intended solely to give Provider the ability to
utilize a subcontractor who may be otherwise qualified to perform the work or services but may not carry the same
insurance limits as required of the Provider under this Agreement given the limited scope of work or services
provided by the subcontractor. Provider agrees that upon request, all agreements with subcontractors, and others
engaged in the project, will be submitted to Purchaser for review.
17.7 Umbrella Coverage. At Provider’s option, the insurance requirements in this Agreement may be
met by a combination of primary and umbrella/excess coverage.
Item 3B-40
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18. MISCELLANEOUS.
18.1 Integration; Exhibits. The Agreement, together with the Exhibits and Schedules attached thereto
or incorporated by reference, constitute the entire agreement and understanding between Provider and Purchaser
with respect to the subject matter thereof and supersedes all prior agreements relating to the subject matter hereof
which are of no further force or effect. The Exhibits and Schedules attached to this Agreement, including these
General Terms and Conditions as incorporated by reference, are integral parts of this Agreement and are an express
part of this Agreement. In the event of a conflict between the provisions of these General Terms and Conditions and
any applicable Special Conditions, the provisions of the Special Conditions shall prevail.
18.2 Amendments. This Agreement may only be amended, modified or supplemented by an instrument
in writing executed by duly authorized representatives of Provider and Purchaser.
18.3 Industry Standards. Except as otherwise set forth herein, for the purpose of this Agreement the
normal standards of performance within the Energy Services industry in the relevant market shall be the measure of
whether a Party’s performance is reasonable and timely. Unless expressly defined herein, words having well-known
technical or trade meanings shall be so construed.
18.4 Cumulative Remedies. Except as set forth to the contrary herein, any right or remedy of Provider
or Purchaser shall be cumulative and without prejudice to any other right or remedy, whether contained herein or
not.
18.5 [Reserved].
18.6 Limited Effect of Waiver. The failure of Provider or Purchaser to enforce any of the provisions of
this Agreement, or the waiver thereof, shall not be construed as a general waiver or relinquishment on its part of any
such provision, in any other instance or of any other provision in any instance.
18.7 Survival. The obligations under Section 2.4 (Removal of System), Section 7.1 (Provider
Covenants), Sections 7.2(d), (e), (f), (g) and (h) (Purchaser Covenants), Section 8.3 (Exclusion of Warranties),
Article 9 (Taxes and Governmental Fees), Article 12 (Limitation of Liability), Article 14 (Notices), Article 15
(Confidentiality), Article 18 (Miscellaneous), all payment or indemnification obligations accrued prior to
termination of this Agreement, or pursuant to other provisions of this Agreement that, by their sense and context, are
intended to survive termination of this Agreement shall survive the expiration or termination of this Agreement for
any reason.
18.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws
of the State of California without reference to any choice of law principles. The Parties agree that the courts of the
State of California and the Federal Courts sitting in the County of Riverside shall have jurisdiction over any action
or proceeding arising under this Agreement to the fullest extent permitted by Applicable Law. The Parties waive to
the fullest extent permitted by Applicable Law any objection it may have to the laying of venue of any action or
proceeding under this Agreement any courts described in this Section 18.8.
18.9 Severability. If any term, covenant or condition in this Agreement shall, to any extent, be invalid
or unenforceable in any respect under Applicable Law, the remainder of this Agreement shall not be affected
thereby, and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent
permitted by Applicable Law and, if appropriate, such invalid or unenforceable provision shall be modified or
replaced to give effect to the underlying intent of the Parties and to the intended economic benefits of the Parties.
18.10 Relation of the Parties. The relationship between Provider and Purchaser shall not be that of
partners, agents, or joint ventures for one another, and nothing contained in this Agreement shall be deemed to
constitute a partnership or agency agreement between them for any purposes, including federal income tax purposes.
Item 3B-41
Page 22 of 28
Provider and Purchaser, in performing any of their obligations hereunder, shall be independent contractors or
independent parties and shall discharge their contractual obligations at their own risk.
18.11 Successors and Assigns. This Agreement and the rights and obligations under this Agreement
shall be binding upon and shall inure to the benefit of Provider and Purchaser and their respective successors and
permitted assigns.
18.12 Counterparts. This Agreement may be executed in one or more counterparts, all of which taken
together shall constitute one and the same instrument.
18.13 Electronic Delivery. This Agreement may be duly executed and delivered by a Party by execution
and facsimile or electronic, “pdf” delivery of the signature page of a counterpart to the other Party.
18.14 Liquidated Damages Not Penalty. Purchaser acknowledges that the Early Termination Fee
constitutes liquidated damages, and not penalties, in lieu of Provider’s actual damages resulting from the early
termination of this Agreement. Purchaser further acknowledges that Provider’s actual damages may be impractical
and difficult to accurately ascertain, and in accordance with Purchaser’s rights and obligations under this
Agreement, the Early Termination Fee constitutes fair and reasonable damages to be borne by Purchaser in lieu of
Provider’s actual damages.
[Remainder of page intentionally left blank.]
Item 3B-42
Page 23 of 28
These General Terms and Conditions are witnessed and acknowledged by ForeFront Power and Purchaser below.
Neither ForeFront Power nor Purchaser shall have any obligations or liability resulting from its witnessing and
acknowledging these General Terms and Conditions.
“FOREFRONT POWER”: FFP BTM SOLAR, LLC
By: _________________________________________
Name: _______________________________________
Title: ________________________________________
Date: ________________________________________
“PURCHASER”: CITY OF PALM DESERT
By: _________________________________________
Name: _______________________________________
Title: ________________________________________
Date: ________________________________________
Item 3B-43
Exhibit A
of General Terms and Conditions
[PURCHASER’S LETTERHEAD]
[Landlord’s Address]
Attn: Authorized Representative
Re: Proposed Energy System Installation at [Address of Premises]. Lease dated [ ] between [PURCHASER]
and [LANDLORD] (the “Lease”)
Dear Authorized Representative:
As has been discussed with you, [PURCHASER] (“Purchaser”) and [FFP Entity], LLC (“Provider”) have entered
into an Energy Services Agreement, pursuant to which Provider will install, finance, operate, and maintain a [solar
photovoltaic] [battery storage] system at the above-referenced premises which [PURCHASER] leases from you
pursuant to the Lease. By signing below and returning this letter to us, you confirm that:
1. The [solar photovoltaic] [battery storage] system and the renewable energy (including environmental
credits and related attributes) produced by the system are personal property, and shall not be considered the property
(personal or otherwise) of [LANDLORD] upon installation of the system at the premises. Landlord consents to the
filing by Provider of a disclaimer of the System as a fixture of the Premises in the office where real estate records
are customarily filed in the jurisdiction of the Premises.
2. Provider or its designee (including finance providers) shall have the right without cost to access the
premises in order to install, operate, inspect, maintain, and remove the [solar photovoltaic] [battery storage] system.
[LANDLORD] will not charge Purchaser or Provider any rent for such right to access the premises.
3. [LANDLORD] has been advised that the finance providers for the [solar photovoltaic] [battery storage]
system have a first priority perfected security interest in the system. Provider and the finance providers for the
[solar photovoltaic] [battery storage] system (including any system lessor or other lender) are intended beneficiaries
of [LANDLORD]’s agreements in this letter.
4. [LANDLORD] will not take any action inconsistent with the foregoing.
We thank you for your consideration of this opportunity and we look forward to working with you in our
environmental campaign to increase the utilization of clean, renewal energy resources.
Very truly yours,
[PURCHASER]
By:______________________________
Name:
Title:
Acknowledged and agreed by:
[LANDLORD]
By: ________________________
Name:
Title:
Item 3B-44
Page 25 of 28
Exhibit B
of General Terms and Conditions
Certain Agreements for the Benefit of the Financing Parties
Purchaser acknowledges that Provider will be receiving financing accommodations from one or more Financing
Parties and that Provider may sell or assign the System or this Agreement and/or may secure Provider’s obligations
by, among other collateral, a pledge or collateral assignment of this Agreement and a first security interest in the
System. In order to facilitate such necessary sale, conveyance, or financing, and with respect to any such Financing
Party, Purchaser agrees as follows:
(a) Consent to Collateral Assignment. Purchaser consents to either the assignment, sale or conveyance to
a Financing Party or the collateral assignment by Provider to a Financing Party, of Provider’s right, title and interest
in and to this Agreement with prior notice to Purchaser.
(b) Notices of Default. Purchaser will deliver to the Financing Party, concurrently with delivery thereof to
Provider, a copy of each notice of default given by Purchaser under this Agreement, inclusive of a reasonable
description of Provider default. No such notice will be effective absent delivery to the Financing Party. Purchaser
will not mutually agree with Provider to cancel, modify or terminate this Agreement without the written consent of
the Financing Party, however, this provision shall not be interpreted to limit any termination rights of either Party as
set forth in the Agreement.
(c) Rights Upon Event of Default. Notwithstanding any contrary term of this Agreement:
i. The Financing Party shall be entitled to exercise, in the place and stead of Provider, any and all rights
and remedies of Provider under this Agreement in accordance with the terms of this Agreement and only in the
event of Provider’s or Purchaser’s default. The Financing Party shall also be entitled to exercise all rights and
remedies of secured parties generally with respect to this Agreement and the System, subject to the assignee
qualifications set forth in clause (iii) below.
ii. The Financing Party shall have the right, but not the obligation, to pay all sums due under this
Agreement and to perform any other act, duty or obligation required of Provider thereunder or cause to be cured any
default of Provider thereunder in the time and manner provided by the terms of this Agreement. Nothing herein
requires the Financing Party to cure any default of Provider under this Agreement or (unless the Financing Party has
succeeded to Provider’s interests under this Agreement) to perform any act, duty or obligation of Provider under this
Agreement, but Purchaser hereby gives it the option to do so.
iii. Upon the exercise of remedies under its security interest in the System, including any sale thereof
by the Financing Party, whether by judicial proceeding or under any power of sale contained therein, or any
conveyance from Provider to the Financing Party (or any assignee of the Financing Party) in lieu thereof, the
Financing Party shall give notice to Purchaser of the transferee or assignee of this Agreement. Notwithstanding the
foregoing, any assignee or transferee of the Financing Party shall have no less than five (5) years of experience
operating a photovoltaic energy generation facility similar to the System. Any such exercise of remedies shall not
constitute a default under this Agreement.
iv. Upon any default not reasonably susceptible to cure by a Finance Party, including, without limitation,
rejection or other termination of this Agreement pursuant to any process undertaken with respect to Provider under
the United States Bankruptcy Code, at the request of the Financing Party made within ninety (90) days of such
default, Purchaser shall enter into a new agreement with the Financing Party or its designee having the same terms
and conditions as this Agreement.
(d) Right to Cure.
i. Purchaser will not exercise any right to terminate or suspend this Agreement unless it shall have given
the Financing Party prior written notice by sending notice to the Financing Party (at the address provided by
Item 3B-45
Page 26 of 28
Provider) of its intent to terminate or suspend this Agreement, specifying the condition giving rise to such right,
and the Financing Party shall not have caused to be cured the condition giving rise to the right of termination or
suspension within thirty (30) days after such notice or (if longer) the periods provided for in this Agreement. The
Parties agree that the cure rights described herein are in addition to and apply and commence following the
expiration of any notice and cure period applicable to Provider The Parties respective obligations will otherwise
remain in effect during any cure period; provided, if such Provider default reasonably cannot be cured by the
Financing Party within such period and the Financing Party commences and continuously pursues cure of such
default within such period, such period for cure will be extended for a reasonable period of time under the
circumstances, such period not to exceed additional ninety (90) days.
ii. If the Financing Party (including any purchaser or transferee), pursuant to an exercise of remedies by
the Financing Party, shall acquire title to or control of Provider’s assets and shall, within the time periods described
in Sub-section (c)(i). above, cure all defaults under this Agreement existing as of the date of such change in title or
control in the manner required by this Agreement and which are capable of cure by a third person or entity, then
such person or entity shall no longer be in default under this Agreement, and this Agreement shall continue in full
force and effect.
Item 3B-46
Page 27 of 28
Exhibit C
of General Conditions
Requirements Applicable to the Installation Work
Section B.1 Prohibition Against Use of Tobacco. All properties and facilities owned, leased or operated by the
Purchaser are tobacco-free work places. No person on, at or in any Purchaser-controlled property or facility,
including, without limitation, the Premises, may smoke, chew or otherwise use tobacco products. Provider shall be
responsible for: (i) informing any and all persons present on or at the Premises on account of the Installation Work
about the Purchaser’s tobacco-free policy; and (ii) strictly enforcing such policy with respect to the Premises. The
Purchaser, Provider, and each Subcontractor shall require that any person present on or at the Premises on account
of the Installation Work who violates such policy must permanently leave the Premises, and shall prohibit such
person from thereafter being present or performing any of the Installation Work on or at the Premises.
Section B.2 Prohibition Against Use of Drugs.
(a) Purchaser Drug-Free Policy. All properties and facilities owned, leased or operated by the
Purchaser are drug-free work places. No person on, at or in any Purchaser-controlled property or facility, including,
without limitation, the Premises, may: (i) engage in the unlawful manufacture, dispensation, possession or use,
including being under the influence, of any controlled substance, (ii) possess or use any alcoholic beverage, or (iii)
use any substance which may cause significant impairment of normal abilities. Provider shall be responsible for: (i)
informing any and all persons present on or at the Premises on account of the Installation Work about the
Purchaser’s drug-free policy; and (ii) strictly enforcing such policy with respect to the Premises. The Purchaser,
Provider, and each Subcontractor shall require that any person present on or at the Premises on account of the
Installation Work who violates such policy must permanently leave the Premises, and shall prohibit such person
from thereafter being present or performing any of the Installation Work on or at the Premises.
(b) Drug-Free Workplace Certification. Provider is hereby made subject to the requirements of
Government Code Sections 8350 et seq., the Drug-Free Workplace Act of 1990.
Section B.3 Compliance with Prevailing Wage Labor Requirements. The Installation Work is a “public
works” project as defined in Section 1720 of the California Labor Code (“Labor Code”) and made applicable
pursuant to Section 1720.6 of the Labor Code. Therefore, the Installation Work is subject to applicable provisions
of Part 7, Chapter 1, of the Labor Code and Title 8 of the California Code of Regulations, Section 16000 et seq.
(collectively, “Labor Law”). Provider acknowledges that, as provided by Senate Bill 854 (Stats. 2014, Ch. 28), the
Project is subject to labor compliance monitoring and enforcement by the California Department of Industrial
Relations (“DIR”).
Section B.4 Compliance with Labor Code Requirements. Provider must be, and shall be deemed and
construed to be, aware of and understand the requirements of the Labor Law that require the payment of prevailing
wage rates and the performance of other requirements on public works projects. Provider, at no additional cost to
the Purchaser, must: (i) comply with any and all applicable Labor Law requirements, including, without limitation,
requirements for payment of prevailing wage rates, inspection and submittal (electronically, as required) of payroll
records, interview(s) of workers, et cetera; (ii) ensure that its Subcontractors are aware of and comply with the Labor
Law requirements; (iii) in connection with Labor Law compliance matters, cooperate with the DIR, the Purchaser
and other entities with competent jurisdiction; and (iv) post all job-site notices required by law in connection with
the Installation Work, including, without limitation, postings required by DIR regulations. A Subcontractor that has
been debarred in accordance with the Labor Code, including, without limitation, pursuant to Sections 1777.1 or
1777.7, is not eligible to bid on, perform, or contract to perform any portion of the Installation Work. Wage rates
for the Installation Work shall be in accordance with the general prevailing rates of per-diem wages determined by
the Director of Industrial Relations pursuant to Labor Code Section 1770. The following Labor Code sections are
by this reference incorporated into and are a fully operative part of the Contract, and Provider shall be responsible
for compliance therewith:
Item 3B-47
Page 28 of 28
(a) Section 1735: Anti-Discrimination Requirements;
(b) Section 1775: Penalty for Prevailing Wage Rate Violations;
(c) Section 1776: Payroll Records;
(d) Sections 1777.5,1777.6 and 1777.7: Apprenticeship Requirements;
(e) Sections 1810 through 1812: Working Hour Restrictions;
(f) Sections 1813 and 1814: Penalty for Failure to Pay Overtime; and
(g) Section 1815: Overtime Pay.
Section B.5 Requirements for Payroll Records. Provider must comply with all applicable provisions of Labor
Code Sections 1776 and 1812, which relate to preparing and maintaining accurate payroll records, and making such
payroll records available for review and copying by the Purchaser, the DIR Division of Labor Standards
Enforcement, and the DIR Division of Apprenticeship Standards. The payroll records must be certified and made
available as required by Labor Code Section 1776.
Section B.6 Contractor Registration. On and after March 1, 2015, no contractor may bid on a public works
project unless the contractor is, and no subcontractor may be listed in any bid for a public works project unless the
subcontractor is, currently registered with the DIR and qualified to perform public work pursuant to Labor Code
Section 1725.5. On and after April 1, 2015, no contractor or subcontractor may be awarded a contract for work on a
public works project, or may perform any work on a public works project, unless the contractor or subcontractor is
currently registered with the DIR and qualified to perform public work pursuant to Labor Code Section 1725.5. It is
not a violation of Labor Code Section 1725.5 for an unregistered contractor to submit a bid authorized by Business
and Professions Code Section 7029.1 or Public Contract Code Section 20103.5, if the contractor is registered at the
time the contract is awarded.
Section B.7 Permits and Licenses. Without limiting anything set forth in Section B.7 of this Exhibit C,
Provider, its Subcontractors, and all of their respective employees and agents: (i) shall secure and maintain in force
at all times during the performance of the Installation Work such licenses and permits as are required by law; and
(ii) shall comply with all federal and State, and County laws and regulations, and other governmental requirements
applicable to the System or the Installation Work. Provider or its subcontractors shall obtain and pay for all permits
and licenses required for the performance of, or necessary in connection with, the Installation Work, and shall give
all necessary notices and deliver all necessary certificates to the Purchaser, and shall pay all royalties and license
fees arising from the use of any material, machine, method or process used in performing the Installation Work.
Provider shall be solely responsible for all charges, assessments and fees payable in connection with any such
licenses, permits, materials, machines, methods, and processes.
Item 3B-48
ENERGY SERVICES AGREEMENT – SOLAR
Civic Center West
This Energy Services Agreement (“Agreement”) is made and entered into as of this ____ day of ___________, 2022
(or, if later, the latest date of a Party’s execution and delivery to the other Party of this Agreement, the “Effective
Date”), between FFP BTM SOLAR, LLC, a Delaware limited liability company (“Provider”), and The City of Palm
Desert, a California charter city (“Purchaser”; and, together with Provider, each, a “Party” and together, the
“Parties”).
RECITALS
A. Purchaser desires that Provider install and operate a solar photovoltaic system at the Premises (as hereafter
defined) for the purpose of providing Energy Services (as hereafter defined), and Provider is willing to
have the Installation Work performed by using one or more qualified contractors holding the appropriate
licenses required in the jurisdiction where the System will be installed;
B. Provider is in the business of designing, constructing, owning, financing, and operating solar photovoltaic
systems for the purpose of selling power generated by the systems to its purchasers;
C. California Government Code sections 4217.10 et seq. authorizes a public entity to enter into energy service
contracts, facility financing contracts, and related agreements to implement the State’s conservation and
alternative energy supply source policy;
D. Purchaser’s governing body has made those findings required by Government Code section 4217.12 that
the anticipated cost to the Purchaser for Energy Services provided by the System under this Agreement is
expected to be less than the anticipated marginal cost to the Purchaser of electrical energy that would have
been consumed by Purchaser in the absence of its purchase of the Energy Services;
E. Provider and Purchaser acknowledged those certain General Terms and Conditions of Energy Services
Agreement between FFP BTM Solar, LLC and Purchaser of even date herewith (“General Terms and
Conditions”), which are incorporated by reference as set forth herein; and
F. The terms and conditions of this Energy Services Agreement, excluding the General Terms and Conditions
incorporated herein, constitute the “Special Conditions” referred to in the General Terms and Conditions.
In consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Incorporation of General Terms and Conditions. The General Terms and Conditions are incorporated
herein as if set forth in their entirety.
2. Initial Term. The initial term of this Agreement shall commence on the Effective Date and shall continue
for Twenty (20) years from the Commercial Operation Date (as defined in the General Terms and
Conditions), unless and until extended or terminated earlier pursuant to the provisions of this Agreement
(the “Initial Term”). After the Initial Term, this Agreement may be renewed for an additional five (5) year
term (a “Renewal Term”). At least one hundred and eighty (180) days, but no more than three hundred and
sixty-five (365) days, prior to the expiration of the Initial Term, Provider shall give written notice to
Purchaser of the availability of the Renewal Term. Purchaser shall have sixty (60) days to agree to
continuation of this Agreement for the Renewal Term. Absent agreement to the Renewal Term this
Agreement shall expire on the Expiration Date. The Initial Term and the subsequent Renewal Term, if any,
are referred to collectively as the “Term”.
3. Schedules. The following Schedules hereto are hereby incorporated into this Agreement:
Item 3B-49
2
Schedule 1 Description of the Premises, System and Subsidy
Schedule 2 Energy Services Payment
Schedule 3 Early Termination Fee
Schedule 4 Estimated Annual Production
Schedule 5 Notice Information
Schedule 6 Reserved
Schedule 7 Specific Items for Scope of Work
Schedule 8 Acknowledgment of Upgrades, Schedule or Scope Change
Schedule 9 Site Diagram
4. Privacy. Purchaser acknowledges that the System may collect certain information about Purchaser’s
electricity usage and the System performance and that such information may be used by Provider: (i) as
necessary to carry out its obligations under this Agreement; and (ii) may be used and shared with third
parties in connection with Provider’s other business activities, provided, however, that such information
shall be anonymized so as to delete all information which would identify such information to Purchaser.
All such information that is identifiable to Purchaser will be stored and processed in the United States.
5. Milestone Dates.
5.1 The Guaranteed Construction Start Date is 450 days from Effective Date provided that the Local
Electric Utility is prepared to begin its construction on any required utility, (distribution or
transmission), upgrades, if any. In the event that the Local Electric Utility is not prepared to
commence construction on required upgrades, if any are required, Provider will be allowed a day
for day extension to the Guaranteed Construction Start Date, as defined in the Definitions section
of Exhibit A General Terms and Conditions between the Parties.
5.2 The Guaranteed Commercial Operation Date is 270 days from Guaranteed Construction Start
Date.
6. Purchase Requirement; Energy Services Payment. “Energy Services” means the supply of electrical energy
output from the System . Purchaser agrees to purchase one hundred percent (100%) of the Energy Services
generated by the System and made available by Provider to Purchaser during each relevant month of the
Term, up to a maximum of one hundred and ten percent (110%) of Estimated Annual Production, as
defined in Schedule 4. While the Energy Services are calculated and billed on a per kWh basis as set forth
in Schedule 2 of these Special Conditions, they represent a package of services and benefits.
7. Net Energy Metering.
7.1 The Parties acknowledge that the pricing assumes Net Energy Metering (NEM) 2.0 for the Initial
Term. If (i) Provider fails to submit interconnection applications by November 17, 2022, or (ii)
prior to the Commercial Operation Date, (A) Provider fails to keep such interconnection
applications in good standing such that the System would not be eligible for NEM 2.0, or (B) the
CPUC issues a decision such that the System would not be eligible for NEM 2.0 grandfathering
for at least twenty (20) years, Purchaser may terminate this Agreement with no liability
whatsoever, including, but not limited to the Early Termination Fee. The foregoing shall not apply
to the extent Provider’s failure is caused by an act or omission by Purchaser in connection with
Provider’s submittal of interconnection applications.
Provided, however, that in the event of a change in Applicable Law that occurs after the Commercial
Operation Date and results in a loss of NEM 2.0 grandfathering, Purchaser shall have no such termination
right. Provided further that Purchaser shall ensure any correspondence with the Local Electric Utility
regarding the tariff and changes to the interconnection agreement are promptly shared with Provider.
Item 3B-50
3
8. Estimated Annual Production. The annual estimate of electricity generated by the system for each year of
the initial term is set as forth in Schedule 4 of the Special Conditions (“Estimated Annual Production”).
Within sixty (60) days of each annual anniversary of the Commercial Operation Date, Provider will provide
a statement to Purchaser that shows the actual annual kWh production from the System for the Term Year,
the Estimated Annual Production, and the Minimum Guaranteed Output (defined below).
9. Minimum Guaranteed Output. If the System fails to generate at least ninety-five percent (95%) of the
Estimated Annual Production for a full Term Year (such amount, the “Minimum Guaranteed Output”),
other than as a result of the acts or omissions of Purchaser or the Local Electric Utility (including a
Disruption Period), or an Event of Force Majeure, Provider shall credit Purchaser an amount equal to
Purchaser’s Lost Savings on the next invoice or invoices during the following Term Year. If the credit is
due in the Term Year of the Term, then Provider shall pay the face value of the credit to Purchaser. The
formula for calculating Lost Savings for the applicable Term Year is as follows:
Lost Savings = (MGO*WPR - AE) x RV
MGO = Minimum Guaranteed Output, as measured in total kWh, for the System for the applicable
Term Year.
WPR = Weather Performance Ratio, measured as the ratio of the actual insolation over typical
(pro-forma) insolation. Such Weather Performance Ratio shall only apply if the ratio is less than
1.00.
AE = Actual Electricity, as measured in total kWh, delivered by the System for the Term Year
plus the estimated lost energy production during a Disruption Period.
RV = (ATP - kWh Rate)
ATP = Average tariff price, measured in $/kWh, for the Term Year paid by Purchaser with respect
to the Premises. This price is determined by dividing the total cost for delivered electricity,
including all charges associated with such electricity howsoever named, including, without
limitation, charges for distribution, transmission, demand, and systems benefits, paid to the Local
Electric Utility during the applicable Term Year by the total amount of delivered electricity by the
electric utility during such Term Year.
kWh Rate = the kWh Rate in effect for the applicable Term Year(s), measured in $/kWh.
If the RV is zero or less, then no Lost Savings payment is due to Purchaser. Any Lost Savings payment
shall occur no later than sixty (60) days after the end of the Term Year during which such Lost Savings
occurred.
10. Allowed Disruption Time. Notwithstanding the provisions in Section 4.3 of the General Terms and
Conditions to the contrary, during years 4 through 20 (but not years 1 through 3) of the Term, Purchaser
shall be afforded a one-time allocation of fifteen (15) days which may be used consecutively or in separate
periods of at least twenty-four (24) hours each (“Allowed Disruption Time”) during which the System shall
be rendered non-operational. Purchaser shall not be obligated to make payments to Provider for electricity
not received during the Allowed Disruption Time, nor shall Purchaser be required to reimburse Provider for
any other lost revenue during the Allowed Disruption Time, including any lost revenue associated with any
reduced sales of Environmental Attributes, and Provider shall be credited for the estimated lost production
the System would have produced during such Allowed Disruption Time toward satisfaction of its Minimum
Guaranteed Output, as set forth in Section 8 of the Special Conditions, such estimated lost production to be
calculated in the same manner as set forth in Section 4.3 of the General Conditions.
11. Distribution Upgrades, Scope and Schedule Changes.
Item 3B-51
4
a. For any distribution upgrades required or changes to the scope of Installation Work made pursuant
to Schedule 2 of the Special Conditions, the Parties may execute an acknowledgment in the form
attached hereto as Schedule 8 detailing (i) the description of the distribution upgrades or change in
scope of the Installation Work (ii) the amount of the adjustment in the kWh Rate and Early
Termination Fee that corresponds to such costs, if any (iii) changes to the Estimated Annual
Production in Schedule IV, if any, and (iv) any change to the Guaranteed Construction Start Date
and Guaranteed Commercial Operation Date resulting from such upgrades or scope changes;
b. For any day for day extensions made pursuant to Section 2.2(b) of the General Conditions, the
Parties may execute an acknowledgment in the form attached hereto as Schedule 8 detailing (i) the
circumstances that warrant such day for day extension and (ii) the updated Guaranteed
Construction Start Date and/or Guaranteed Commercial Operation Date;
c. For any extensions that are not made pursuant to Section 2.2(b) of the General Conditions,
Provider may request extensions to the Guaranteed Construction Start Date and/or Guaranteed
Commercial Operation Date to the extent that Provider can demonstrate to Purchaser that Provider
is seeking such extension for good cause. Purchaser in its sole discretion may approve such
extension(s) by executing an acknowledgment in the form attached hereto as Schedule 8 on which
Provider details (i) the circumstances for which Provider deems good cause for such extension(s),
(ii) the actions that Provider is taking to complete the System on a schedule agreeable to the
Purchaser and (iii) the updated Guaranteed Construction Start Date and/or Guaranteed
Commercial Operation Date.
For the avoidance of doubt, Purchaser designates [Insert Name(s) or Post(s) of person(s) authorized to
Execute] as authorized to execute the acknowledgment form attached hereto as Schedule 8 provided the terms of
such acknowledgment comply with this Section 11.
12. Sunlight Access. Purchaser will take all reasonable actions as necessary to prevent other buildings,
structures or flora from overshadowing or otherwise blocking access of sunlight to the System.
13. Use of System. Purchaser will not use electrical energy generated by the System for the purposes of
heating a swimming pool within the meaning of Section 48 of the Internal Revenue Code.
IN WITNESS WHEREOF and in confirmation of their consent to the terms and conditions contained in
this Agreement and intending to be legally bound hereby, Provider and Purchaser have executed this Agreement as
of the Effective Date.
“PURCHASER”:
CITY OF PALM DESERT
By:___________________________
Name:
Title:
Date:
“PROVIDER”:
FFP BTM SOLAR, LLC
By:___________________________
Name:
Title:
Date:
Item 3B-52
5
SCHEDULES
I. Schedule 1 – Description of the Premises, System and Subsidy
A. Premises
73510 Fred Waring Drive,
Palm Desert, CA 92260
Site diagram attached: Yes No
B. Description of Solar System
Behind the meter, grid interconnected, canopy mounted solar.
Solar System Size: 469.8 kW (DC) (this is an estimate (and not a guarantee) of the
System size; Provider may update the System Size prior to the
Commercial Operation Date.)
C. Anticipated Subsidy or
Rebate
$0
D. Interconnection Baseline
Cost
$0
II. Schedule 2 – Energy Services Payment
Purchaser shall pay to Provider a monthly payment (the “Energy Services Payment”) for the Energy
Services provided by the System during each calendar month of the Term equal to the product of (x) Actual
Monthly Production for the System for the relevant month multiplied by (y) the kWh Rate.
The “Actual Monthly Production” means the amount of energy recorded by Provider’s metering equipment
during each calendar month of the Term.
The kWh Rate with respect to the System under this Agreement shall be in accordance with the following
schedule:
PPA Rate Table
Term
Year
kWh Rate
($/kWh)
Term
Year
$/kWh Rate
($/kWh)
1 $0.1661 11 $0.1661
2 $0.1661 12 $0.1661
3 $0.1661 13 $0.1661
4 $0.1661 14 $0.1661
5 $0.1661 15 $0.1661
6 $0.1661 16 $0.1661
7 $0.1661 17 $0.1661
8 $0.1661 18 $0.1661
9 $0.1661 19 $0.1661
10 $0.1661 20 $0.1661
Potential Price Adjustment for Cost Savings. Provider and Purchaser acknowledge that there may be an opportunity
for additional cost savings with respect to the construction and interconnection of the System as a result of changes
in the Investment Tax Credit pursuant to the Inflation Reduction Act of 2022 and that a decrease in the kWh Rate
Item 3B-53
6
may be appropriate to allow Purchaser to share in such savings once the scope and nature of the changes have been
fully analyzed. To the extent that Provider is able to achieve such savings, Provider and Purchaser will meet and
confer in good faith to discuss an equitable adjustment in the kWh Rate, provided, however, that any change in the
kWh Rate will be subject to a written amendment to this Agreement.
Distribution Upgrades. The pricing set forth in this Agreement is based on the assumption that the total cost of
Local Electric Utility upgrade costs in connection with the interconnection of the System with the Local Electrical
Utility will not exceed the Interconnection Baseline Cost. In the event that distribution upgrade costs required by
the Local Electric Utility exceed the Interconnection Baseline Cost, then Provider will give written notice of the
additional cost to Purchaser and within sixty (60) days of Purchaser’s receipt of such notice, Purchaser will provide
written notice (email is acceptable) to Provider of Purchaser’s election of one of the following options:
a. Purchaser will bear all the distribution upgrade costs in excess of the Interconnection Baseline Cost, and the
kWh Rates stated in the PPA Rate Table will remain unchanged. Purchaser shall make payments directly to
the Local Electric Utility in accordance with the requirements of the Local Electric Utility; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
distribution upgrade costs incurred by Provider, the kWh rate in the PPA Rate Table will increase (i)
$0.00068 per kWh if the cost of the upgrades are not ITC eligible; or (ii) $.00042 per kWh if the costs are
ITC eligible.
Scope Changes (ITC Eligible). If changes in project scope occur that are eligible for the Federal Investment Tax
Credit (including but not limited to adverse geotechnical conditions or the inclusion of spare conduit) and the costs
directly related to such changes go beyond those contemplated as part of the development and implementation of the
System in this Agreement, then Provider will provide reasonable documentation demonstrating the direct and actual
time and materials costs relating to such increase in costs to Purchaser. Within sixty (60) days after Purchaser
receives such documentation, Purchaser will provide written notice to Provider of Purchaser’s election of one of the
following options:
a. Purchaser will bear all of the reasonably documented scope change costs, and the kWh rate as stated in
Table 1 will remain unchanged; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
costs, the kWh rate in Table 1 will increase $0.00042 per kWh.
Scope Changes (Non-ITC Eligible). If changes in project scope occur that are not eligible for the Federal Investment
Tax Credit (including but not limited to ADA compliance costs not related to System configuration or construction)
and the costs directly related to such changes go beyond those contemplated as part of the development and
implementation of the System in this Agreement , then Provider will provide reasonable documentation
demonstrating the direct and actual time and materials costs relating to such costs to Purchaser. Within sixty (60)
days after Purchaser receives such documentation, Purchaser will provide written notice to Provider of Purchaser’s
election of one of the following options:
a. Purchaser will pay the entire amount of such associated costs, and the kWh rate as stated in the PPA Rate
Table will remain unchanged.; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
associated costs, the kWh rate in the PPA Rate Table will increase $0.00057 per kWh..
Purchaser Additional Cost Limitation; Termination Rights. Notwithstanding the election by Purchaser to pay for
excess costs associated with Distribution Upgrades and/or Scope Changes pursuant to this Schedule 2 via
incremental increases in the kWh Rate, in no event will Purchaser by responsible for an incremental rate increase in
excess of $0.0156 per kWh in the aggregate, nor shall Purchaser be required to pay any lump sum amount for
excess costs that are not covered as a result of such limitation. Provider will have the option, but not the obligation,
to absorb excess cost which exceed the obligation of Purchaser pursuant to this Schedule 2. If Provider notifies
Purchaser that it does not intend to absorb such costs and the System is no longer financially viable, then either party
will have the right to terminate this Agreement and Provider will remove the System pursuant to Section 2.4 of the
General Conditions.
Item 3B-54
7
Item 3B-55
8
III. Schedule 3 – Early Termination Fee
The Early Termination Fee with respect to the System under this Agreement shall be calculated in
accordance with the following:
Early
Termination
Occurs in Year:
Column 1
Early Termination Fee
where Purchaser does not
take Title to the System
($/Wdc including costs of
removal)
Purchase Date Occurs on the
91st day following:
(Each “Anniversary” below
shall refer to the anniversary
of the Commercial Operation
Date)
Column 2
Early Termination Fee
where Purchaser takes
Title to the System
($/Wdc, does not include
costs of removal)
1* $5.49 --
2 $4.76 --
3 $4.40 --
4 $4.07 --
5 $3.76 --
6 $3.44 5th Anniversary $2.94
7 $3.39 6th Anniversary $2.89
8 $3.35 7th Anniversary $2.85
9 $3.31 8th Anniversary $2.81
10 $3.27 9th Anniversary $2.77
11 $3.22 10th Anniversary $2.72
12 $3.18 11th Anniversary $2.68
13 $3.13 12th Anniversary $2.63
14 $3.08 13th Anniversary $2.58
15 $3.03 14th Anniversary $2.53
16 $2.98 15th Anniversary $2.48
17 $2.93 16th Anniversary $2.43
18 $2.87 17th Anniversary $2.37
19 $2.81 18th Anniversary $2.31
20 $2.75 19th Anniversary $2.25
At Expiration (the end of the Initial Term), the amount in Column 1 shall be deemed to be zero (0).
*Includes Early Termination prior to the Commercial Operation Date.
Upon the payment of the Early Termination Fee in Column 2, Provider will transfer title to the System to
Purchaser, free and clear of any encumbrances.
IV. Schedule 4 – Estimated Annual Production
Estimated Annual Production commencing on the Commercial Operation Date with respect to System
under this Agreement shall be as follows:
Term
Year
Estimated
Production
(kWh)
Term
Year
Estimated
Production
(kWh)
1 818,861 11 778,827
2 814,767 12 774,933
3 810,693 13 771,059
4 806,640 14 767,203
5 802,607 15 763,367
Item 3B-56
9
6 798,594 16 759,550
7 794,601 17 755,753
8 790,628 18 751,974
9 786,674 19 748,214
10 782,741 20 744,473
The values set forth in the table above are estimates (and not guarantees), of approximately how many
kWhs are expected to be generated annually by the System assuming the System size indicated in Schedule
1 and based on initial System designs. Provider may deliver to Purchaser an updated table on or about the
Commercial Operation Date based on the actual System size and design.
V. Schedule 5 – Notice Information
Purchaser:
City of Palm Desert
c/o City Manager
73510 Fred Waring Drive
Palm Desert, CA 92260
Provider:
FFP BTM Solar, LLC
c/o Forefront Power, LLC
Attn: Director, Energy Services
100 Montgomery St., Suite 725
San Francisco, CA 94104
With a copy to
FFP BTM Solar, LLC
c/o Forefront Power, LLC
Attn: Legal Department
100 Montgomery St., Suite 725
San Francisco, CA 94104
Email: FPLegal@forefrontpower.com
Financing Party:
[To be provided by Provider when known]
VI. Schedule 6 – Reserved
VII. Schedule 7 –Specific Items for Scope of Work
1.1. All System structures shall be permitted through the City of Palm Desert Department of
Building and Safety as carports or shade structures, as applicable. Provider shall cause to all
necessary permits to be issued on behalf of the project(s).
1.2. Provider and Purchaser are operating under the assumption that the premises will be eligible
for a CEQA Notice of Exemption (NOE), and that a special use, conditional use, or zoning
permit will not be required. Provider assumes that Purchaser, as lead agency, will issue a
Notice of Exemption for CEQA. Upon request, Provider shall provide such limited support as
necessary to Purchaser to obtain the NOE, including, if necessary, biological study and
associated consultant statement and summary citing exemptions applicable. Provider shall not
be responsible for costs or delays associated with any unforeseen required CEQA studies,
special use, conditional use, or zoning permits, or mitigations that may result from a CEQA
submittal and public comment.
Item 3B-57
10
1.3. Solar arrays will be canopy height of 13’6” minimum clearance.
1.4. Provider shall be responsible for all tree trimming and tree removal in order to facilitate the
installation of the Systems. Provider will remove tree such that area is flush with grade.
Purchaser shall acknowledge and approve removal of trees identified by Provider, in order to
install the system and such approval shall not be unreasonably withheld. Purchaser shall be
responsible for the costs associated with afforestation or reforestation for any trees removed.
Purchaser can elect to address afforestation or reforestation itself, or require that Provider
address it through the change order process described in Schedule 2. Irrigation re-routing
shall not be the responsibility of the Provider.
1.5. Provider intends to interconnect the System to Purchaser-owned 480V service conductors at a
mutually agreeable location. Provider assumes that the existing conductors and service
equipment are sufficiently capable of accepting the additional electrical load of the System.
Provider shall not bear responsibility for any required upgrades to the pre-existing electrical
system.
1.6. Provider shall be responsible for all fees associated with the interconnection application,
except that Provider shall not be responsible for transmission and distribution upgrades
determined necessary by the Local Electric Utility in excess of the Interconnection Baseline
Cost.
1.7. Provider shall be responsible for verifying and understanding existing ADA parking, striping,
and paths of travel and what code-required upgrades may be necessary as a result of the
System and any pre-existing non-compliance. Provider shall be responsible for all required
ADA striping, signage within the solar canopy footprint and connecting to existing ADA-
compliant path of travel. Provider’s scope excludes any demolition, grading, paving, curb
cuts, or truncated domes throughout the Premises to achieve ADA compliance, or any
required ADA striping and signage outside of the solar canopy footprint and connecting to the
existing ADA-compliant path of travel. Should any excluded items for ADA-compliance be
required, Provider will work with Purchaser in good faith to determine a mutually-acceptable
solution for Purchaser to pay the costs associated with such upgrades, including potentially an
increase in the kWh rate in Schedule 2.
1.8. Provider shall install code-compliant electrical infrastructure to support the future installation
of Electrical Vehicle Charging Stations (EVCS), as shown in Schedule 9. After installation of
such EVCS infrastructure, Provider shall have no further rights or duties with respect to the
use or maintenance thereof; provided, if at any time during the Term, Purchaser needs to
conduct any repairs or replacements of such infrastructure, it shall coordinate with Provider
prior to commencing any such repairs or replacements to ensure that the System is not
damaged or impacted in any way except as is expressly provided for in this Agreement.
1.9. Provider acknowledges that carport structures will be built within existing paved parking
areas and that the cost of pavement removal and repaving for the installation of footings and
any underground conduit will be included in the System Cost Estimate and is the
responsibility of Provider. Provider assumes that soil conditions are class 3 soils, and not
such soils that are rocky, sandy, contaminated, ground water, caving, or otherwise have
problematic construction limitations. If soil conditions prove to be other than class 3 soils,
Provider shall not be responsible for such additional expenses as a result of additional
subterranean geotechnical work including boring and trenching. Prior to any boring or
trenching, Provider will consult a local database of underground utility installations as well as
on site ground penetrating radar or equivalent (collectively, “Underground Investigations”)
and will be solely responsible for any damage to third party underground facilities or
equipment that is identifiable via Underground Investigations and for any facilities or
equipment actually disclosed by Purchaser. Purchaser will notify Provider of any such
installations that are known to Purchaser. Provider shall work with Purchaser in good faith to
Item 3B-58
11
determine a mutually-acceptable solution for Purchaser to pay such additional costs, including
potentially an increase in the kWh rate in Schedule 2.
1.10. Provider will install infrastructure and coordinate the with Utility to install a Net Generation
Output Meter (NGOM) to allow for continued operational of existing PV system under
current tariff structure.
1.11. Provider assumes Civic Center East and West projects will be constructed in one
mobilization.
1.12. Provider agrees to construct the System in no more than 1 construction phases.
1.13. Provider shall be responsible for all inspection and inspector costs associated with the
installation of the system.
Item 3B-59
12
VIII. Schedule 8 –Acknowledgment of Upgrades, Schedule or Scope Change
Upgrades, Scope and/or Schedule Change Acknowledgment
This Acknowledgment is made in accordance with Section 10 of the Special Conditions, as defined in that Energy
Service Agreement – [Solar], between [PURCHASER] (“Purchaser”) and FFP BTM Solar, LLC (“Provider”), dated
[_________, 20___] (the “Agreement”). Upon execution by both Purchaser and Provider, this Acknowledgment
shall be effective as of [INSERT DATE] (the “Acknowledgment Effective Date”).
1. Type of Change:
Distribution Upgrades
Scope Changes (ITC Eligible)
Scope Changes (Non-ITC Eligible)
Day for Day Extension
Extension for Good Cause
2. Description of Change
[INSERT DESCRIPTION AND IF PROVIDER SEEKING EXTENSION FOR GOOD CAUSE,
PROVIDER TO DETAIL CIRCUMSTANCES AND ACTIONS PROVIDER IS TAKING TO COMPLETE
SYSTEM ON AGREED UPON SCHEDULE]
3. kWh Rate and Early Termination Fee [IF NO IMPACT TO RATE OR ETF THEN DELETE]
[INSERT UPDATED KWH RATE AND EARLY TERMINATION FEE TABLE]
4. Estimated Annual Production [IF NO IMPACT TO ESTIMATED ANNUAL PRODUCTION THEN DELETE]
[INSERT UPDATED SCHEDULE 4 ESTIMATED ANNUAL PRODUCTION TABLE]
5. Updated Guaranteed Construction Start Date and Guaranteed Commercial Operation Date [IF NO IMPACT TO
CLIFF DATES THEN DELETE]
The Parties hereby agree that the Guaranteed Construction Start Date and the Guaranteed Commercial
Operation Date as defined in the Agreement are updated as follows:
Guaranteed Construction Start Date: [__________]
Guaranteed Commercial Operation Date: [__________]
The Parties hereby acknowledge and confirm the terms set forth herein as of the Acknowledgment Effective Date.
[PURCHASER] FFP BTM Solar, LLC
By: By:
Name: Name:
Title: Title:
Item 3B-60
13
IX. Schedule 9 – Site Diagram
Item 3B-61
ENERGY SERVICES AGREEMENT – SOLAR
Civic Center East
This Energy Services Agreement (“Agreement”) is made and entered into as of this ____ day of ___________, 2022
(or, if later, the latest date of a Party’s execution and delivery to the other Party of this Agreement, the “Effective
Date”), between FFP BTM SOLAR, LLC, a Delaware limited liability company (“Provider”), and The City of Palm
Desert, a California charter city (“Purchaser”; and, together with Provider, each, a “Party” and together, the
“Parties”).
RECITALS
A. Purchaser desires that Provider install and operate a solar photovoltaic system at the Premises (as hereafter
defined) for the purpose of providing Energy Services (as hereafter defined), and Provider is willing to
have the Installation Work performed by using one or more qualified contractors holding the appropriate
licenses required in the jurisdiction where the System will be installed;
B. Provider is in the business of designing, constructing, owning, financing, and operating solar photovoltaic
systems for the purpose of selling power generated by the systems to its purchasers;
C. California Government Code sections 4217.10 et seq. authorizes a public entity to enter into energy service
contracts, facility financing contracts, and related agreements to implement the State’s conservation and
alternative energy supply source policy;
D. Purchaser’s governing body has made those findings required by Government Code section 4217.12 that
the anticipated cost to the Purchaser for Energy Services provided by the System under this Agreement is
expected to be less than the anticipated marginal cost to the Purchaser of electrical energy that would have
been consumed by Purchaser in the absence of its purchase of the Energy Services;
E. Provider and Purchaser acknowledged those certain General Terms and Conditions of Energy Services
Agreement between FFP BTM Solar, LLC and Purchaser of even date herewith (“General Terms and
Conditions”), which are incorporated by reference as set forth herein; and
F. The terms and conditions of this Energy Services Agreement, excluding the General Terms and Conditions
incorporated herein, constitute the “Special Conditions” referred to in the General Terms and Conditions.
In consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Incorporation of General Terms and Conditions. The General Terms and Conditions are incorporated
herein as if set forth in their entirety.
2. Initial Term. The initial term of this Agreement shall commence on the Effective Date and shall continue
for Twenty (20) years from the Commercial Operation Date (as defined in the General Terms and
Conditions), unless and until extended or terminated earlier pursuant to the provisions of this Agreement
(the “Initial Term”). After the Initial Term, this Agreement may be renewed for an additional five (5) year
term (a “Renewal Term”). At least one hundred and eighty (180) days, but no more than three hundred and
sixty-five (365) days, prior to the expiration of the Initial Term, Provider shall give written notice to
Purchaser of the availability of the Renewal Term. Purchaser shall have sixty (60) days to agree to
continuation of this Agreement for the Renewal Term. Absent agreement to the Renewal Term this
Agreement shall expire on the Expiration Date. The Initial Term and the subsequent Renewal Term, if any,
are referred to collectively as the “Term”.
3. Schedules. The following Schedules hereto are hereby incorporated into this Agreement:
Item 3B-62
2
Schedule 1 Description of the Premises, System and Subsidy
Schedule 2 Energy Services Payment
Schedule 3 Early Termination Fee
Schedule 4 Estimated Annual Production
Schedule 5 Notice Information
Schedule 6 Reserved
Schedule 7 Specific Items for Scope of Work
Schedule 8 Acknowledgment of Upgrades, Schedule or Scope Change
Schedule 9 Site Diagram
4. Privacy. Purchaser acknowledges that the System may collect certain information about Purchaser’s
electricity usage and the System performance and that such information may be used by Provider: (i) as
necessary to carry out its obligations under this Agreement; and (ii) may be used and shared with third
parties in connection with Provider’s other business activities, provided, however, that such information
shall be anonymized so as to delete all information which would identify such information to Purchaser.
All such information that is identifiable to Purchaser will be stored and processed in the United States.
5. Milestone Dates.
5.1 The Guaranteed Construction Start Date is 450 days from Effective Date provided that the Local
Electric Utility is prepared to begin its construction on any required utility, (distribution or
transmission), upgrades, if any. In the event that the Local Electric Utility is not prepared to
commence construction on required upgrades, if any are required, Provider will be allowed a day
for day extension to the Guaranteed Construction Start Date, as defined in the Definitions section
of Exhibit A General Terms and Conditions between the Parties.
5.2 The Guaranteed Commercial Operation Date is 270 days from Guaranteed Construction Start
Date.
6. Purchase Requirement; Energy Services Payment. “Energy Services” means the supply of electrical energy
output from the System . Purchaser agrees to purchase one hundred percent (100%) of the Energy Services
generated by the System and made available by Provider to Purchaser during each relevant month of the
Term, up to a maximum of one hundred and ten percent (110%) of Estimated Annual Production, as
defined in Schedule 4. While the Energy Services are calculated and billed on a per kWh basis as set forth
in Schedule 2 of these Special Conditions, they represent a package of services and benefits.
7. Net Energy Metering.
7.1 The Parties acknowledge that the pricing assumes Net Energy Metering (NEM) 2.0 for the Initial
Term. If (i) Provider fails to submit interconnection applications by November 17, 2022, or (ii)
prior to the Commercial Operation Date, (A) Provider fails to keep such interconnection
applications in good standing such that the System would not be eligible for NEM 2.0, or (B) the
CPUC issues a decision such that the System would not be eligible for NEM 2.0 grandfathering
for at least twenty (20) years, Purchaser may terminate this Agreement with no liability
whatsoever, including, but not limited to the Early Termination Fee. The foregoing shall not apply
to the extent Provider’s failure is caused by an act or omission by Purchaser in connection with
Provider’s submittal of interconnection applications.
Provided, however, that in the event of a change in Applicable Law that occurs after the Commercial
Operation Date and results in a loss of NEM 2.0 grandfathering, Purchaser shall have no such termination
right. Provided further that Purchaser shall ensure any correspondence with the Local Electric Utility
regarding the tariff and changes to the interconnection agreement are promptly shared with Provider.
Item 3B-63
3
8. Estimated Annual Production. The annual estimate of electricity generated by the system for each year of
the initial term is set as forth in Schedule 4 of the Special Conditions (“Estimated Annual Production”).
Within sixty (60) days of each annual anniversary of the Commercial Operation Date, Provider will provide
a statement to Purchaser that shows the actual annual kWh production from the System for the Term Year,
the Estimated Annual Production, and the Minimum Guaranteed Output (defined below).
9. Minimum Guaranteed Output. If the System fails to generate at least ninety-five percent (95%) of the
Estimated Annual Production for a full Term Year (such amount, the “Minimum Guaranteed Output”),
other than as a result of the acts or omissions of Purchaser or the Local Electric Utility (including a
Disruption Period), or an Event of Force Majeure, Provider shall credit Purchaser an amount equal to
Purchaser’s Lost Savings on the next invoice or invoices during the following Term Year. If the credit is
due in the Term Year of the Term, then Provider shall pay the face value of the credit to Purchaser. The
formula for calculating Lost Savings for the applicable Term Year is as follows:
Lost Savings = (MGO*WPR - AE) x RV
MGO = Minimum Guaranteed Output, as measured in total kWh, for the System for the applicable
Term Year.
WPR = Weather Performance Ratio, measured as the ratio of the actual insolation over typical
(pro-forma) insolation. Such Weather Performance Ratio shall only apply if the ratio is less than
1.00.
AE = Actual Electricity, as measured in total kWh, delivered by the System for the Term Year
plus the estimated lost energy production during a Disruption Period.
RV = (ATP - kWh Rate)
ATP = Average tariff price, measured in $/kWh, for the Term Year paid by Purchaser with respect
to the Premises. This price is determined by dividing the total cost for delivered electricity,
including all charges associated with such electricity howsoever named, including, without
limitation, charges for distribution, transmission, demand, and systems benefits, paid to the Local
Electric Utility during the applicable Term Year by the total amount of delivered electricity by the
electric utility during such Term Year.
kWh Rate = the kWh Rate in effect for the applicable Term Year(s), measured in $/kWh.
If the RV is zero or less, then no Lost Savings payment is due to Purchaser. Any Lost Savings payment
shall occur no later than sixty (60) days after the end of the Term Year during which such Lost Savings
occurred.
10. Allowed Disruption Time. Notwithstanding the provisions in Section 4.3 of the General Terms and
Conditions to the contrary, during years 4 through 20 (but not years 1 through 3) of the Term, Purchaser
shall be afforded a one-time allocation of fifteen (15) days which may be used consecutively or in separate
periods of at least twenty-four (24) hours each (“Allowed Disruption Time”) during which the System shall
be rendered non-operational. Purchaser shall not be obligated to make payments to Provider for electricity
not received during the Allowed Disruption Time, nor shall Purchaser be required to reimburse Provider for
any other lost revenue during the Allowed Disruption Time, including any lost revenue associated with any
reduced sales of Environmental Attributes, and Provider shall be credited for the estimated lost production
the System would have produced during such Allowed Disruption Time toward satisfaction of its Minimum
Guaranteed Output, as set forth in Section 8 of the Special Conditions, such estimated lost production to be
calculated in the same manner as set forth in Section 4.3 of the General Conditions.
11. Distribution Upgrades, Scope and Schedule Changes.
Item 3B-64
4
a. For any distribution upgrades required or changes to the scope of Installation Work made pursuant
to Schedule 2 of the Special Conditions, the Parties may execute an acknowledgment in the form
attached hereto as Schedule 8 detailing (i) the description of the distribution upgrades or change in
scope of the Installation Work (ii) the amount of the adjustment in the kWh Rate and Early
Termination Fee that corresponds to such costs, if any (iii) changes to the Estimated Annual
Production in Schedule IV, if any, and (iv) any change to the Guaranteed Construction Start Date
and Guaranteed Commercial Operation Date resulting from such upgrades or scope changes;
b. For any day for day extensions made pursuant to Section 2.2(b) of the General Conditions, the
Parties may execute an acknowledgment in the form attached hereto as Schedule 8 detailing (i) the
circumstances that warrant such day for day extension and (ii) the updated Guaranteed
Construction Start Date and/or Guaranteed Commercial Operation Date;
c. For any extensions that are not made pursuant to Section 2.2(b) of the General Conditions,
Provider may request extensions to the Guaranteed Construction Start Date and/or Guaranteed
Commercial Operation Date to the extent that Provider can demonstrate to Purchaser that Provider
is seeking such extension for good cause. Purchaser in its sole discretion may approve such
extension(s) by executing an acknowledgment in the form attached hereto as Schedule 8 on which
Provider details (i) the circumstances for which Provider deems good cause for such extension(s),
(ii) the actions that Provider is taking to complete the System on a schedule agreeable to the
Purchaser and (iii) the updated Guaranteed Construction Start Date and/or Guaranteed
Commercial Operation Date.
For the avoidance of doubt, Purchaser designates [Insert Name(s) or Post(s) of person(s) authorized to
Execute] as authorized to execute the acknowledgment form attached hereto as Schedule 8 provided the terms of
such acknowledgment comply with this Section 11.
12. Sunlight Access. Purchaser will take all reasonable actions as necessary to prevent other buildings,
structures or flora from overshadowing or otherwise blocking access of sunlight to the System.
13. Use of System. Purchaser will not use electrical energy generated by the System for the purposes of
heating a swimming pool within the meaning of Section 48 of the Internal Revenue Code.
IN WITNESS WHEREOF and in confirmation of their consent to the terms and conditions contained in
this Agreement and intending to be legally bound hereby, Provider and Purchaser have executed this Agreement as
of the Effective Date.
“PURCHASER”:
CITY OF PALM DESERT
By:___________________________
Name:
Title:
Date:
“PROVIDER”:
FFP BTM SOLAR, LLC
By:___________________________
Name:
Title:
Date:
Item 3B-65
5
SCHEDULES
I. Schedule 1 – Description of the Premises, System and Subsidy
A. Premises
73510 Fred Waring Dr,
Palm Desert, CA 92260
Site diagram attached: Yes No
B. Description of Solar System
Behind the meter, grid interconnected, canopy mounted solar.
Solar System Size: 180.09 kW (DC) (this is an estimate (and not a guarantee) of the
System size; Provider may update the System Size prior to the
Commercial Operation Date.)
C. Anticipated Subsidy or
Rebate
$0
D. Interconnection Baseline
Cost
$0
II. Schedule 2 – Energy Services Payment
Purchaser shall pay to Provider a monthly payment (the “Energy Services Payment”) for the Energy
Services provided by the System during each calendar month of the Term equal to the product of (x) Actual
Monthly Production for the System for the relevant month multiplied by (y) the kWh Rate.
The “Actual Monthly Production” means the amount of energy recorded by Provider’s metering equipment
during each calendar month of the Term.
The kWh Rate with respect to the System under this Agreement shall be in accordance with the following
schedule:
PPA Rate Table
Term
Year
kWh Rate
($/kWh)
Term
Year
$/kWh Rate
($/kWh)
1 $0.2195 11 $0.2195
2 $0.2195 12 $0.2195
3 $0.2195 13 $0.2195
4 $0.2195 14 $0.2195
5 $0.2195 15 $0.2195
6 $0.2195 16 $0.2195
7 $0.2195 17 $0.2195
8 $0.2195 18 $0.2195
9 $0.2195 19 $0.2195
10 $0.2195 20 $0.2195
Potential Price Adjustment for Cost Savings. Provider and Purchaser acknowledge that there may be an opportunity
for additional cost savings with respect to the construction and interconnection of the System as a result of changes
in the Investment Tax Credit pursuant to the Inflation Reduction Act of 2022 and that a decrease in the kWh Rate
Item 3B-66
6
may be appropriate to allow Purchaser to share in such savings once the scope and nature of the changes have been
fully analyzed. To the extent that Provider is able to achieve such savings, Provider and Purchaser will meet and
confer in good faith to discuss an equitable adjustment in the kWh Rate, provided, however, that any change in the
kWh Rate will be subject to a written amendment to this Agreement.
Distribution Upgrades. The pricing set forth in this Agreement is based on the assumption that the total cost of
Local Electric Utility upgrade costs in connection with the interconnection of the System with the Local Electrical
Utility will not exceed the Interconnection Baseline Cost. In the event that distribution upgrade costs required by
the Local Electric Utility exceed the Interconnection Baseline Cost, then Provider will give written notice of the
additional cost to Purchaser and within sixty (60) days of Purchaser’s receipt of such notice, Purchaser will provide
written notice (email is acceptable) to Provider of Purchaser’s election of one of the following options:
a. Purchaser will bear all the distribution upgrade costs in excess of the Interconnection Baseline Cost, and the
kWh Rates stated in the PPA Rate Table will remain unchanged. Purchaser shall make payments directly to
the Local Electric Utility in accordance with the requirements of the Local Electric Utility; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
distribution upgrade costs incurred by Provider, the kWh rate in the PPA Rate Table will increase (i)
$0.0007 per kWh if the cost of the upgrades are not ITC eligible; or (ii) $.00044 per kWh if the costs are
ITC eligible.
Scope Changes (ITC Eligible). If changes in project scope occur that are eligible for the Federal Investment Tax
Credit (including but not limited to adverse geotechnical conditions or the inclusion of spare conduit) and the costs
directly related to such changes go beyond those contemplated as part of the development and implementation of the
System in this Agreement, then Provider will provide reasonable documentation demonstrating the direct and actual
time and materials costs relating to such increase in costs to Purchaser. Within sixty (60) days after Purchaser
receives such documentation, Purchaser will provide written notice to Provider of Purchaser’s election of one of the
following options:
a. Purchaser will bear all of the reasonably documented scope change costs, and the kWh rate as stated in
Table 1 will remain unchanged; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
costs, the kWh rate in Table 1 will increase $0.00044 per kWh.
Scope Changes (Non-ITC Eligible). If changes in project scope occur that are not eligible for the Federal Investment
Tax Credit (including but not limited to ADA compliance costs not related to System configuration or construction)
and the costs directly related to such changes go beyond those contemplated as part of the development and
implementation of the System in this Agreement , then Provider will provide reasonable documentation
demonstrating the direct and actual time and materials costs relating to such costs to Purchaser. Within sixty (60)
days after Purchaser receives such documentation, Purchaser will provide written notice to Provider of Purchaser’s
election of one of the following options:
a. Purchaser will pay the entire amount of such associated costs, and the kWh rate as stated in the PPA Rate
Table will remain unchanged.; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
associated costs, the kWh rate in the PPA Rate Table will increase $0.00058 per kWh..
Purchaser Additional Cost Limitation; Termination Rights. Notwithstanding the election by Purchaser to pay for
excess costs associated with Distribution Upgrades and/or Scope Changes pursuant to this Schedule 2 via
incremental increases in the kWh Rate, in no event will Purchaser by responsible for an incremental rate increase in
excess of $0.0360 per kWh in the aggregate, nor shall Purchaser be required to pay any lump sum amount for
excess costs that are not covered as a result of such limitation. Provider will have the option, but not the obligation,
to absorb excess cost which exceed the obligation of Purchaser pursuant to this Schedule 2. If Provider notifies
Purchaser that it does not intend to absorb such costs and the System is no longer financially viable, then either party
will have the right to terminate this Agreement and Provider will remove the System pursuant to Section 2.4 of the
General Conditions.
Item 3B-67
7
Item 3B-68
8
III. Schedule 3 – Early Termination Fee
The Early Termination Fee with respect to the System under this Agreement shall be calculated in
accordance with the following:
Early
Termination
Occurs in Year:
Column 1
Early Termination Fee
where Purchaser does not
take Title to the System
($/Wdc including costs of
removal)
Purchase Date Occurs on the
91st day following:
(Each “Anniversary” below
shall refer to the anniversary
of the Commercial Operation
Date)
Column 2
Early Termination Fee
where Purchaser takes
Title to the System
($/Wdc, does not include
costs of removal)
1* $6.99 --
2 $6.04 --
3 $5.57 --
4 $5.14 --
5 $4.74 --
6 $4.33 5th Anniversary $3.83
7 $4.26 6th Anniversary $3.76
8 $4.21 7th Anniversary $3.71
9 $4.16 8th Anniversary $3.66
10 $4.11 9th Anniversary $3.61
11 $4.05 10th Anniversary $3.55
12 $3.99 11th Anniversary $3.49
13 $3.93 12th Anniversary $3.43
14 $3.87 13th Anniversary $3.37
15 $3.80 14th Anniversary $3.30
16 $3.73 15th Anniversary $3.23
17 $3.66 16th Anniversary $3.16
18 $3.59 17th Anniversary $3.09
19 $3.51 18th Anniversary $3.01
20 $3.42 19th Anniversary $2.92
At Expiration (the end of the Initial Term), the amount in Column 1 shall be deemed to be zero (0).
*Includes Early Termination prior to the Commercial Operation Date.
Upon the payment of the Early Termination Fee in Column 2, Provider will transfer title to the System to
Purchaser, free and clear of any encumbrances.
IV. Schedule 4 – Estimated Annual Production
Estimated Annual Production commencing on the Commercial Operation Date with respect to System
under this Agreement shall be as follows:
Term
Year
Estimated
Production
(kWh)
Term
Year
Estimated
Production
(kWh)
1 304,172 11 289,301
2 302,651 12 287,855
3 301,138 13 286,415
4 299,632 14 284,983
5 298,134 15 283,558
Item 3B-69
9
6 296,643 16 282,141
7 295,160 17 280,730
8 293,684 18 279,326
9 292,216 19 277,930
10 290,755 20 276,540
The values set forth in the table above are estimates (and not guarantees), of approximately how many
kWhs are expected to be generated annually by the System assuming the System size indicated in Schedule
1 and based on initial System designs. Provider may deliver to Purchaser an updated table on or about the
Commercial Operation Date based on the actual System size and design.
V. Schedule 5 – Notice Information
Purchaser:
City of Palm Desert
c/o City Manager
73510 Fred Waring Drive
Palm Desert, CA 92260
Provider:
FFP BTM Solar, LLC
c/o Forefront Power, LLC
Attn: Director, Energy Services
100 Montgomery St., Suite 725
San Francisco, CA 94104
With a copy to
FFP BTM Solar, LLC
c/o Forefront Power, LLC
Attn: Legal Department
100 Montgomery St., Suite 725
San Francisco, CA 94104
Email: FPLegal@forefrontpower.com
Financing Party:
[To be provided by Provider when known]
VI. Schedule 6 – Reserved
VII. Schedule 7 –Specific Items for Scope of Work
1.1. All System structures shall be permitted through the City of Palm Desert Department of
Building and Safety as carports or shade structures, as applicable. Provider shall cause to all
necessary permits to be issued on behalf of the project(s).
1.2. Provider and Purchaser are operating under the assumption that the premises will be eligible
for a CEQA Notice of Exemption (NOE), and that a special use, conditional use, or zoning
permit will not be required. Provider assumes that Purchaser, as lead agency, will issue a
Notice of Exemption for CEQA. Upon request, Provider shall provide such limited support as
necessary to Purchaser to obtain the NOE, including, if necessary, biological study and
associated consultant statement and summary citing exemptions applicable. Provider shall not
be responsible for costs or delays associated with any unforeseen required CEQA studies,
special use, conditional use, or zoning permits, or mitigations that may result from a CEQA
submittal and public comment.
Item 3B-70
10
1.3. Solar arrays will be canopy height of 13’6” minimum clearance.
1.4. Provider shall be responsible for all tree trimming and tree removal in order to facilitate the
installation of the Systems. Provider will remove tree such that area is flush with grade.
Purchaser shall acknowledge and approve removal of trees identified by Provider, in order to
install the system and such approval shall not be unreasonably withheld. Purchaser shall be
responsible for the costs associated with afforestation or reforestation for any trees removed.
Purchaser can elect to address afforestation or reforestation itself, or require that Provider
address it through the change order process described in Schedule 2. Irrigation re-routing
shall not be the responsibility of the Provider.
1.5. Provider intends to interconnect the System to Purchaser-owned 208V service conductors at a
mutually agreeable location. Provider assumes that the existing conductors and service
equipment are sufficiently capable of accepting the additional electrical load of the System.
Provider shall not bear responsibility for any required upgrades to the pre-existing electrical
system.
1.6. Provider shall be responsible for all fees associated with the interconnection application,
except that Provider shall not be responsible for transmission and distribution upgrades
determined necessary by the Local Electric Utility in excess of the Interconnection Baseline
Cost.
1.7. Provider shall be responsible for verifying and understanding existing ADA parking, striping,
and paths of travel and what code-required upgrades may be necessary as a result of the
System and any pre-existing non-compliance. Provider shall be responsible for all required
ADA striping, signage within the solar canopy footprint and connecting to existing ADA-
compliant path of travel. Provider’s scope excludes any demolition, grading, paving, curb
cuts, or truncated domes throughout the Premises to achieve ADA compliance, or any
required ADA striping and signage outside of the solar canopy footprint and connecting to the
existing ADA-compliant path of travel. Should any excluded items for ADA-compliance be
required, Provider will work with Purchaser in good faith to determine a mutually-acceptable
solution for Purchaser to pay the costs associated with such upgrades, including potentially an
increase in the kWh rate in Schedule 2.
1.8. Provider shall install code-compliant electrical infrastructure to support the future installation
of Electrical Vehicle Charging Stations (EVCS), as shown in Schedule 9. After installation of
such EVCS infrastructure, Provider shall have no further rights or duties with respect to the
use or maintenance thereof; provided, if at any time during the Term, Purchaser needs to
conduct any repairs or replacements of such infrastructure, it shall coordinate with Provider
prior to commencing any such repairs or replacements to ensure that the System is not
damaged or impacted in any way except as is expressly provided for in this Agreement.
1.9. Provider acknowledges that carport structures will be built within existing paved parking
areas and that the cost of pavement removal and repaving for the installation of footings and
any underground conduit will be included in the System Cost Estimate and is the
responsibility of Provider. Provider assumes that soil conditions are class 3 soils, and not
such soils that are rocky, sandy, contaminated, ground water, caving, or otherwise have
problematic construction limitations. If soil conditions prove to be other than class 3 soils,
Provider shall not be responsible for such additional expenses as a result of additional
subterranean geotechnical work including boring and trenching. Prior to any boring or
trenching, Provider will consult a local database of underground utility installations as well as
on site ground penetrating radar or equivalent (collectively, “Underground Investigations”)
and will be solely responsible for any damage to third party underground facilities or
equipment that is identifiable via Underground Investigations and for any facilities or
equipment actually disclosed by Purchaser. Purchaser will notify Provider of any such
installations that are known to Purchaser. Provider shall work with Purchaser in good faith to
Item 3B-71
11
determine a mutually-acceptable solution for Purchaser to pay such additional costs, including
potentially an increase in the kWh rate in Schedule 2.
1.10. Provider will install infrastructure and coordinate the with Utility to install a Net Generation
Output Meter (NGOM) to allow for continued operational of existing PV system under
current tariff structure.
1.11. Provider assumes Civic Center East and West projects will be constructed in one
mobilization.
1.12. Provider agrees to construct the System in no more than 1 construction phases.
1.13. Provider shall be responsible for all inspection and inspector costs associated with the
installation of the system.
Item 3B-72
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VIII. Schedule 8 –Acknowledgment of Upgrades, Schedule or Scope Change
Upgrades, Scope and/or Schedule Change Acknowledgment
This Acknowledgment is made in accordance with Section 10 of the Special Conditions, as defined in that Energy
Service Agreement – [Solar], between [PURCHASER] (“Purchaser”) and FFP BTM Solar, LLC (“Provider”), dated
[_________, 20___] (the “Agreement”). Upon execution by both Purchaser and Provider, this Acknowledgment
shall be effective as of [INSERT DATE] (the “Acknowledgment Effective Date”).
1. Type of Change:
Distribution Upgrades
Scope Changes (ITC Eligible)
Scope Changes (Non-ITC Eligible)
Day for Day Extension
Extension for Good Cause
2. Description of Change
[INSERT DESCRIPTION AND IF PROVIDER SEEKING EXTENSION FOR GOOD CAUSE,
PROVIDER TO DETAIL CIRCUMSTANCES AND ACTIONS PROVIDER IS TAKING TO COMPLETE
SYSTEM ON AGREED UPON SCHEDULE]
3. kWh Rate and Early Termination Fee [IF NO IMPACT TO RATE OR ETF THEN DELETE]
[INSERT UPDATED KWH RATE AND EARLY TERMINATION FEE TABLE]
4. Estimated Annual Production [IF NO IMPACT TO ESTIMATED ANNUAL PRODUCTION THEN DELETE]
[INSERT UPDATED SCHEDULE 4 ESTIMATED ANNUAL PRODUCTION TABLE]
5. Updated Guaranteed Construction Start Date and Guaranteed Commercial Operation Date [IF NO IMPACT TO
CLIFF DATES THEN DELETE]
The Parties hereby agree that the Guaranteed Construction Start Date and the Guaranteed Commercial
Operation Date as defined in the Agreement are updated as follows:
Guaranteed Construction Start Date: [__________]
Guaranteed Commercial Operation Date: [__________]
The Parties hereby acknowledge and confirm the terms set forth herein as of the Acknowledgment Effective Date.
[PURCHASER] FFP BTM Solar, LLC
By: By:
Name: Name:
Title: Title:
Item 3B-73
13
IX. Schedule 9 – Site Diagram
Item 3B-74
ENERGY SERVICES AGREEMENT – SOLAR
Aquatic Center
This Energy Services Agreement (“Agreement”) is made and entered into as of this ____ day of ___________, 2022
(or, if later, the latest date of a Party’s execution and delivery to the other Party of this Agreement, the “Effective
Date”), between FFP BTM SOLAR, LLC, a Delaware limited liability company (“Provider”), and The City of Palm
Desert, a California charter city (“Purchaser”; and, together with Provider, each, a “Party” and together, the
“Parties”).
RECITALS
A. Purchaser desires that Provider install and operate a solar photovoltaic system at the Premises (as hereafter
defined) for the purpose of providing Energy Services (as hereafter defined), and Provider is willing to
have the Installation Work performed by using one or more qualified contractors holding the appropriate
licenses required in the jurisdiction where the System will be installed;
B. Provider is in the business of designing, constructing, owning, financing, and operating solar photovoltaic
systems for the purpose of selling power generated by the systems to its purchasers;
C. California Government Code sections 4217.10 et seq. authorizes a public entity to enter into energy service
contracts, facility financing contracts, and related agreements to implement the State’s conservation and
alternative energy supply source policy;
D. Purchaser’s governing body has made those findings required by Government Code section 4217.12 that
the anticipated cost to the Purchaser for Energy Services provided by the System under this Agreement is
expected to be less than the anticipated marginal cost to the Purchaser of electrical energy that would have
been consumed by Purchaser in the absence of its purchase of the Energy Services;
E. Provider and Purchaser acknowledged those certain General Terms and Conditions of Energy Services
Agreement between FFP BTM Solar, LLC and Purchaser of even date herewith (“General Terms and
Conditions”), which are incorporated by reference as set forth herein; and
F. The terms and conditions of this Energy Services Agreement, excluding the General Terms and Conditions
incorporated herein, constitute the “Special Conditions” referred to in the General Terms and Conditions.
In consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Incorporation of General Terms and Conditions. The General Terms and Conditions are incorporated
herein as if set forth in their entirety.
2. Initial Term. The initial term of this Agreement shall commence on the Effective Date and shall continue
for Twenty (20) years from the Commercial Operation Date (as defined in the General Terms and
Conditions), unless and until extended or terminated earlier pursuant to the provisions of this Agreement
(the “Initial Term”). After the Initial Term, this Agreement may be renewed for an additional five (5) year
term (a “Renewal Term”). At least one hundred and eighty (180) days, but no more than three hundred and
sixty-five (365) days, prior to the expiration of the Initial Term, Provider shall give written notice to
Purchaser of the availability of the Renewal Term. Purchaser shall have sixty (60) days to agree to
continuation of this Agreement for the Renewal Term. Absent agreement to the Renewal Term this
Agreement shall expire on the Expiration Date. The Initial Term and the subsequent Renewal Term, if any,
are referred to collectively as the “Term”.
3. Schedules. The following Schedules hereto are hereby incorporated into this Agreement:
Item 3B-75
2
Schedule 1 Description of the Premises, System and Subsidy
Schedule 2 Energy Services Payment
Schedule 3 Early Termination Fee
Schedule 4 Estimated Annual Production
Schedule 5 Notice Information
Schedule 6 Reserved
Schedule 7 Specific Items for Scope of Work
Schedule 8 Acknowledgment of Upgrades, Schedule or Scope Change
Schedule 9 Site Diagram
4. Privacy. Purchaser acknowledges that the System may collect certain information about Purchaser’s
electricity usage and the System performance and that such information may be used by Provider: (i) as
necessary to carry out its obligations under this Agreement; and (ii) may be used and shared with third
parties in connection with Provider’s other business activities, provided, however, that such information
shall be anonymized so as to delete all information which would identify such information to Purchaser.
All such information that is identifiable to Purchaser will be stored and processed in the United States.
5. Milestone Dates.
5.1 The Guaranteed Construction Start Date is 450 days from Effective Date provided that the Local
Electric Utility is prepared to begin its construction on any required utility, (distribution or
transmission), upgrades, if any. In the event that the Local Electric Utility is not prepared to
commence construction on required upgrades, if any are required, Provider will be allowed a day
for day extension to the Guaranteed Construction Start Date, as defined in the Definitions section
of Exhibit A General Terms and Conditions between the Parties.
5.2 The Guaranteed Commercial Operation Date is 270 days from Guaranteed Construction Start
Date.
6. Purchase Requirement; Energy Services Payment. “Energy Services” means the supply of electrical energy
output from the System . Purchaser agrees to purchase one hundred percent (100%) of the Energy Services
generated by the System and made available by Provider to Purchaser during each relevant month of the
Term, up to a maximum of one hundred and ten percent (110%) of Estimated Annual Production, as
defined in Schedule 4. While the Energy Services are calculated and billed on a per kWh basis as set forth
in Schedule 2 of these Special Conditions, they represent a package of services and benefits.
7. Net Energy Metering.
7.1 The Parties acknowledge that the pricing assumes Net Energy Metering (NEM) 2.0 for the Initial
Term. If (i) Provider fails to submit interconnection applications by November 17, 2022, or (ii)
prior to the Commercial Operation Date, (A) Provider fails to keep such interconnection
applications in good standing such that the System would not be eligible for NEM 2.0, or (B) the
CPUC issues a decision such that the System would not be eligible for NEM 2.0 grandfathering
for at least twenty (20) years, Purchaser may terminate this Agreement with no liability
whatsoever, including, but not limited to the Early Termination Fee. The foregoing shall not apply
to the extent Provider’s failure is caused by an act or omission by Purchaser in connection with
Provider’s submittal of interconnection applications.
Provided, however, that in the event of a change in Applicable Law that occurs after the Commercial
Operation Date and results in a loss of NEM 2.0 grandfathering, Purchaser shall have no such termination
right. Provided further that Purchaser shall ensure any correspondence with the Local Electric Utility
regarding the tariff and changes to the interconnection agreement are promptly shared with Provider.
Item 3B-76
3
8. Estimated Annual Production. The annual estimate of electricity generated by the system for each year of
the initial term is set as forth in Schedule 4 of the Special Conditions (“Estimated Annual Production”).
Within sixty (60) days of each annual anniversary of the Commercial Operation Date, Provider will provide
a statement to Purchaser that shows the actual annual kWh production from the System for the Term Year,
the Estimated Annual Production, and the Minimum Guaranteed Output (defined below).
9. Minimum Guaranteed Output. If the System fails to generate at least ninety-five percent (95%) of the
Estimated Annual Production for a full Term Year (such amount, the “Minimum Guaranteed Output”),
other than as a result of the acts or omissions of Purchaser or the Local Electric Utility (including a
Disruption Period), or an Event of Force Majeure, Provider shall credit Purchaser an amount equal to
Purchaser’s Lost Savings on the next invoice or invoices during the following Term Year. If the credit is
due in the Term Year of the Term, then Provider shall pay the face value of the credit to Purchaser. The
formula for calculating Lost Savings for the applicable Term Year is as follows:
Lost Savings = (MGO*WPR - AE) x RV
MGO = Minimum Guaranteed Output, as measured in total kWh, for the System for the applicable
Term Year.
WPR = Weather Performance Ratio, measured as the ratio of the actual insolation over typical
(pro-forma) insolation. Such Weather Performance Ratio shall only apply if the ratio is less than
1.00.
AE = Actual Electricity, as measured in total kWh, delivered by the System for the Term Year
plus the estimated lost energy production during a Disruption Period.
RV = (ATP - kWh Rate)
ATP = Average tariff price, measured in $/kWh, for the Term Year paid by Purchaser with respect
to the Premises. This price is determined by dividing the total cost for delivered electricity,
including all charges associated with such electricity howsoever named, including, without
limitation, charges for distribution, transmission, demand, and systems benefits, paid to the Local
Electric Utility during the applicable Term Year by the total amount of delivered electricity by the
electric utility during such Term Year.
kWh Rate = the kWh Rate in effect for the applicable Term Year(s), measured in $/kWh.
If the RV is zero or less, then no Lost Savings payment is due to Purchaser. Any Lost Savings payment
shall occur no later than sixty (60) days after the end of the Term Year during which such Lost Savings
occurred.
10. Allowed Disruption Time. Notwithstanding the provisions in Section 4.3 of the General Terms and
Conditions to the contrary, during years 4 through 20 (but not years 1 through 3) of the Term, Purchaser
shall be afforded a one-time allocation of fifteen (15) days which may be used consecutively or in separate
periods of at least twenty-four (24) hours each (“Allowed Disruption Time”) during which the System shall
be rendered non-operational. Purchaser shall not be obligated to make payments to Provider for electricity
not received during the Allowed Disruption Time, nor shall Purchaser be required to reimburse Provider for
any other lost revenue during the Allowed Disruption Time, including any lost revenue associated with any
reduced sales of Environmental Attributes, and Provider shall be credited for the estimated lost production
the System would have produced during such Allowed Disruption Time toward satisfaction of its Minimum
Guaranteed Output, as set forth in Section 8 of the Special Conditions, such estimated lost production to be
calculated in the same manner as set forth in Section 4.3 of the General Conditions.
11. Distribution Upgrades, Scope and Schedule Changes.
Item 3B-77
4
a. For any distribution upgrades required or changes to the scope of Installation Work made pursuant
to Schedule 2 of the Special Conditions, the Parties may execute an acknowledgment in the form
attached hereto as Schedule 8 detailing (i) the description of the distribution upgrades or change in
scope of the Installation Work (ii) the amount of the adjustment in the kWh Rate and Early
Termination Fee that corresponds to such costs, if any (iii) changes to the Estimated Annual
Production in Schedule IV, if any, and (iv) any change to the Guaranteed Construction Start Date
and Guaranteed Commercial Operation Date resulting from such upgrades or scope changes;
b. For any day for day extensions made pursuant to Section 2.2(b) of the General Conditions, the
Parties may execute an acknowledgment in the form attached hereto as Schedule 8 detailing (i) the
circumstances that warrant such day for day extension and (ii) the updated Guaranteed
Construction Start Date and/or Guaranteed Commercial Operation Date;
c. For any extensions that are not made pursuant to Section 2.2(b) of the General Conditions,
Provider may request extensions to the Guaranteed Construction Start Date and/or Guaranteed
Commercial Operation Date to the extent that Provider can demonstrate to Purchaser that Provider
is seeking such extension for good cause. Purchaser in its sole discretion may approve such
extension(s) by executing an acknowledgment in the form attached hereto as Schedule 8 on which
Provider details (i) the circumstances for which Provider deems good cause for such extension(s),
(ii) the actions that Provider is taking to complete the System on a schedule agreeable to the
Purchaser and (iii) the updated Guaranteed Construction Start Date and/or Guaranteed
Commercial Operation Date.
For the avoidance of doubt, Purchaser designates [Insert Name(s) or Post(s) of person(s) authorized to
Execute] as authorized to execute the acknowledgment form attached hereto as Schedule 8 provided the terms of
such acknowledgment comply with this Section 11.
12. Sunlight Access. Purchaser will take all reasonable actions as necessary to prevent other buildings,
structures or flora from overshadowing or otherwise blocking access of sunlight to the System.
13. Use of System. Purchaser will not use electrical energy generated by the System for the purposes of
heating a swimming pool within the meaning of Section 48 of the Internal Revenue Code.
IN WITNESS WHEREOF and in confirmation of their consent to the terms and conditions contained in
this Agreement and intending to be legally bound hereby, Provider and Purchaser have executed this Agreement as
of the Effective Date.
“PURCHASER”:
CITY OF PALM DESERT
By:___________________________
Name:
Title:
Date:
“PROVIDER”:
FFP BTM SOLAR, LLC
By:___________________________
Name:
Title:
Date:
Item 3B-78
5
SCHEDULES
I. Schedule 1 – Description of the Premises, System and Subsidy
A. Premises
73751 Magnesia Falls Rd,
Palm Desert, CA 92260
Site diagram attached: Yes No
B. Description of Solar System
Behind the meter, grid interconnected, canopy mounted solar.
Solar System Size: 344.52 kW (DC) (this is an estimate (and not a guarantee) of the
System size; Provider may update the System Size prior to the
Commercial Operation Date.)
C. Anticipated Subsidy or
Rebate
$0
D. Interconnection Baseline
Cost
$0
II. Schedule 2 – Energy Services Payment
Purchaser shall pay to Provider a monthly payment (the “Energy Services Payment”) for the Energy
Services provided by the System during each calendar month of the Term equal to the product of (x) Actual
Monthly Production for the System for the relevant month multiplied by (y) the kWh Rate.
The “Actual Monthly Production” means the amount of energy recorded by Provider’s metering equipment
during each calendar month of the Term.
The kWh Rate with respect to the System under this Agreement shall be in accordance with the following
schedule:
PPA Rate Table
Term
Year
kWh Rate
($/kWh)
Term
Year
$/kWh Rate
($/kWh)
1 $0.1691 11 $0.1691
2 $0.1691 12 $0.1691
3 $0.1691 13 $0.1691
4 $0.1691 14 $0.1691
5 $0.1691 15 $0.1691
6 $0.1691 16 $0.1691
7 $0.1691 17 $0.1691
8 $0.1691 18 $0.1691
9 $0.1691 19 $0.1691
10 $0.1691 20 $0.1691
Potential Price Adjustment for Cost Savings. Provider and Purchaser acknowledge that there may be an opportunity
for additional cost savings with respect to the construction and interconnection of the System as a result of changes
in the Investment Tax Credit pursuant to the Inflation Reduction Act of 2022 and that a decrease in the kWh Rate
Item 3B-79
6
may be appropriate to allow Purchaser to share in such savings once the scope and nature of the changes have been
fully analyzed. To the extent that Provider is able to achieve such savings, Provider and Purchaser will meet and
confer in good faith to discuss an equitable adjustment in the kWh Rate, provided, however, that any change in the
kWh Rate will be subject to a written amendment to this Agreement.
Distribution Upgrades. The pricing set forth in this Agreement is based on the assumption that the total cost of
Local Electric Utility upgrade costs in connection with the interconnection of the System with the Local Electrical
Utility will not exceed the Interconnection Baseline Cost. In the event that distribution upgrade costs required by
the Local Electric Utility exceed the Interconnection Baseline Cost, then Provider will give written notice of the
additional cost to Purchaser and within sixty (60) days of Purchaser’s receipt of such notice, Purchaser will provide
written notice (email is acceptable) to Provider of Purchaser’s election of one of the following options:
a. Purchaser will bear all the distribution upgrade costs in excess of the Interconnection Baseline Cost, and the
kWh Rates stated in the PPA Rate Table will remain unchanged. Purchaser shall make payments directly to
the Local Electric Utility in accordance with the requirements of the Local Electric Utility; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
distribution upgrade costs incurred by Provider, the kWh rate in the PPA Rate Table will increase (i)
$0.00068 per kWh if the cost of the upgrades are not ITC eligible; or (ii) $.00042 per kWh if the costs are
ITC eligible.
Scope Changes (ITC Eligible). If changes in project scope occur that are eligible for the Federal Investment Tax
Credit (including but not limited to adverse geotechnical conditions or the inclusion of spare conduit) and the costs
directly related to such changes go beyond those contemplated as part of the development and implementation of the
System in this Agreement, then Provider will provide reasonable documentation demonstrating the direct and actual
time and materials costs relating to such increase in costs to Purchaser. Within sixty (60) days after Purchaser
receives such documentation, Purchaser will provide written notice to Provider of Purchaser’s election of one of the
following options:
a. Purchaser will bear all of the reasonably documented scope change costs, and the kWh rate as stated in
Table 1 will remain unchanged; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
costs, the kWh rate in Table 1 will increase $0.00042 per kWh.
Scope Changes (Non-ITC Eligible). If changes in project scope occur that are not eligible for the Federal Investment
Tax Credit (including but not limited to ADA compliance costs not related to System configuration or construction)
and the costs directly related to such changes go beyond those contemplated as part of the development and
implementation of the System in this Agreement , then Provider will provide reasonable documentation
demonstrating the direct and actual time and materials costs relating to such costs to Purchaser. Within sixty (60)
days after Purchaser receives such documentation, Purchaser will provide written notice to Provider of Purchaser’s
election of one of the following options:
a. Purchaser will pay the entire amount of such associated costs, and the kWh rate as stated in the PPA Rate
Table will remain unchanged.; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
associated costs, the kWh rate in the PPA Rate Table will increase $0.00057 per kWh..
Purchaser Additional Cost Limitation; Termination Rights. Notwithstanding the election by Purchaser to pay for
excess costs associated with Distribution Upgrades and/or Scope Changes pursuant to this Schedule 2 via
incremental increases in the kWh Rate, in no event will Purchaser by responsible for an incremental rate increase in
excess of $0.0183 per kWh in the aggregate, nor shall Purchaser be required to pay any lump sum amount for
excess costs that are not covered as a result of such limitation. Provider will have the option, but not the obligation,
to absorb excess cost which exceed the obligation of Purchaser pursuant to this Schedule 2. If Provider notifies
Purchaser that it does not intend to absorb such costs and the System is no longer financially viable, then either party
will have the right to terminate this Agreement and Provider will remove the System pursuant to Section 2.4 of the
General Conditions.
Item 3B-80
7
Item 3B-81
8
III. Schedule 3 – Early Termination Fee
The Early Termination Fee with respect to the System under this Agreement shall be calculated in
accordance with the following:
Early
Termination
Occurs in Year:
Column 1
Early Termination Fee
where Purchaser does not
take Title to the System
($/Wdc including costs of
removal)
Purchase Date Occurs on the
91st day following:
(Each “Anniversary” below
shall refer to the anniversary
of the Commercial Operation
Date)
Column 2
Early Termination Fee
where Purchaser takes
Title to the System
($/Wdc, does not include
costs of removal)
1* $5.55 --
2 $4.81 --
3 $4.45 --
4 $4.12 --
5 $3.80 --
6 $3.48 5th Anniversary $2.98
7 $3.43 6th Anniversary $2.93
8 $3.39 7th Anniversary $2.89
9 $3.35 8th Anniversary $2.85
10 $3.31 9th Anniversary $2.81
11 $3.26 10th Anniversary $2.76
12 $3.22 11th Anniversary $2.72
13 $3.17 12th Anniversary $2.67
14 $3.12 13th Anniversary $2.62
15 $3.07 14th Anniversary $2.57
16 $3.02 15th Anniversary $2.52
17 $2.96 16th Anniversary $2.46
18 $2.90 17th Anniversary $2.40
19 $2.84 18th Anniversary $2.34
20 $2.78 19th Anniversary $2.28
At Expiration (the end of the Initial Term), the amount in Column 1 shall be deemed to be zero (0).
*Includes Early Termination prior to the Commercial Operation Date.
Upon the payment of the Early Termination Fee in Column 2, Provider will transfer title to the System to
Purchaser, free and clear of any encumbrances.
IV. Schedule 4 – Estimated Annual Production
Estimated Annual Production commencing on the Commercial Operation Date with respect to System
under this Agreement shall be as follows:
Term
Year
Estimated
Production
(kWh)
Term
Year
Estimated
Production
(kWh)
1 597,398 11 568,191
2 594,411 12 565,350
3 591,439 13 562,523
4 588,481 14 559,711
5 585,539 15 556,912
Item 3B-82
9
6 582,611 16 554,128
7 579,698 17 551,357
8 576,800 18 548,600
9 573,916 19 545,857
10 571,046 20 543,128
The values set forth in the table above are estimates (and not guarantees), of approximately how many
kWhs are expected to be generated annually by the System assuming the System size indicated in Schedule
1 and based on initial System designs. Provider may deliver to Purchaser an updated table on or about the
Commercial Operation Date based on the actual System size and design.
V. Schedule 5 – Notice Information
Purchaser:
City of Palm Desert
c/o City Manager
73510 Fred Waring Drive
Palm Desert, CA 92260
Provider:
FFP BTM Solar, LLC
c/o Forefront Power, LLC
Attn: Director, Energy Services
100 Montgomery St., Suite 725
San Francisco, CA 94104
With a copy to
FFP BTM Solar, LLC
c/o Forefront Power, LLC
Attn: Legal Department
100 Montgomery St., Suite 725
San Francisco, CA 94104
Email: FPLegal@forefrontpower.com
Financing Party:
[To be provided by Provider when known]
VI. Schedule 6 – Reserved
VII. Schedule 7 –Specific Items for Scope of Work
1.1. All System structures shall be permitted through the City of Palm Desert Department of
Building and Safety as carports or shade structures, as applicable. Provider shall cause to all
necessary permits to be issued on behalf of the project(s).
1.2. Provider and Purchaser are operating under the assumption that the premises will be eligible
for a CEQA Notice of Exemption (NOE), and that a special use, conditional use, or zoning
permit will not be required. Provider assumes that Purchaser, as lead agency, will issue a
Notice of Exemption for CEQA. Upon request, Provider shall provide such limited support as
necessary to Purchaser to obtain the NOE, including, if necessary, biological study and
associated consultant statement and summary citing exemptions applicable. Provider shall not
be responsible for costs or delays associated with any unforeseen required CEQA studies,
special use, conditional use, or zoning permits, or mitigations that may result from a CEQA
submittal and public comment.
Item 3B-83
10
1.3. Solar arrays will be canopy height of 13’6” minimum clearance.
1.4. Provider shall be responsible for all tree trimming and tree removal in order to facilitate the
installation of the Systems. Provider will remove tree such that area is flush with grade.
Purchaser shall acknowledge and approve removal of trees identified by Provider, in order to
install the system and such approval shall not be unreasonably withheld. Purchaser shall be
responsible for the costs associated with afforestation or reforestation for any trees removed.
Purchaser can elect to address afforestation or reforestation itself, or require that Provider
address it through the change order process described in Schedule 2. Irrigation re-routing
shall not be the responsibility of the Provider.
1.5. Provider intends to interconnect the System to Purchaser-owned 480V service conductors at a
mutually agreeable location. Provider assumes that the existing conductors and service
equipment are sufficiently capable of accepting the additional electrical load of the System.
Provider shall not bear responsibility for any required upgrades to the pre-existing electrical
system.
1.6. Provider shall be responsible for all fees associated with the interconnection application,
except that Provider shall not be responsible for transmission and distribution upgrades
determined necessary by the Local Electric Utility in excess of the Interconnection Baseline
Cost.
1.7. Provider shall be responsible for verifying and understanding existing ADA parking, striping,
and paths of travel and what code-required upgrades may be necessary as a result of the
System and any pre-existing non-compliance. Provider shall be responsible for all required
ADA striping, signage within the solar canopy footprint and connecting to existing ADA-
compliant path of travel. Provider’s scope excludes any demolition, grading, paving, curb
cuts, or truncated domes throughout the Premises to achieve ADA compliance, or any
required ADA striping and signage outside of the solar canopy footprint and connecting to the
existing ADA-compliant path of travel. Should any excluded items for ADA-compliance be
required, Provider will work with Purchaser in good faith to determine a mutually-acceptable
solution for Purchaser to pay the costs associated with such upgrades, including potentially an
increase in the kWh rate in Schedule 2.
1.8. Provider shall install code-compliant electrical infrastructure to support the future installation
of Electrical Vehicle Charging Stations (EVCS), as shown in Schedule 9. After installation of
such EVCS infrastructure, Provider shall have no further rights or duties with respect to the
use or maintenance thereof; provided, if at any time during the Term, Purchaser needs to
conduct any repairs or replacements of such infrastructure, it shall coordinate with Provider
prior to commencing any such repairs or replacements to ensure that the System is not
damaged or impacted in any way except as is expressly provided for in this Agreement.
1.9. Provider acknowledges that carport structures will be built within existing paved parking
areas and that the cost of pavement removal and repaving for the installation of footings and
any underground conduit will be included in the System Cost Estimate and is the
responsibility of Provider. Provider assumes that soil conditions are class 3 soils, and not
such soils that are rocky, sandy, contaminated, ground water, caving, or otherwise have
problematic construction limitations. If soil conditions prove to be other than class 3 soils,
Provider shall not be responsible for such additional expenses as a result of additional
subterranean geotechnical work including boring and trenching. Prior to any boring or
trenching, Provider will consult a local database of underground utility installations as well as
on site ground penetrating radar or equivalent (collectively, “Underground Investigations”)
and will be solely responsible for any damage to third party underground facilities or
equipment that is identifiable via Underground Investigations and for any facilities or
equipment actually disclosed by Purchaser. Purchaser will notify Provider of any such
installations that are known to Purchaser. Provider shall work with Purchaser in good faith to
Item 3B-84
11
determine a mutually-acceptable solution for Purchaser to pay such additional costs, including
potentially an increase in the kWh rate in Schedule 2.
1.10. Provider will install infrastructure and coordinate the with Utility to install a Net Generation
Output Meter (NGOM) to allow for continued operational of existing PV system under
current tariff structure.
1.11. Provider agrees to construct the System in no more than 1 construction phases.
1.12. Provider shall be responsible for all inspection and inspector costs associated with the
installation of the system.
Item 3B-85
12
VIII. Schedule 8 –Acknowledgment of Upgrades, Schedule or Scope Change
Upgrades, Scope and/or Schedule Change Acknowledgment
This Acknowledgment is made in accordance with Section 10 of the Special Conditions, as defined in that Energy
Service Agreement – [Solar], between [PURCHASER] (“Purchaser”) and FFP BTM Solar, LLC (“Provider”), dated
[_________, 20___] (the “Agreement”). Upon execution by both Purchaser and Provider, this Acknowledgment
shall be effective as of [INSERT DATE] (the “Acknowledgment Effective Date”).
1. Type of Change:
Distribution Upgrades
Scope Changes (ITC Eligible)
Scope Changes (Non-ITC Eligible)
Day for Day Extension
Extension for Good Cause
2. Description of Change
[INSERT DESCRIPTION AND IF PROVIDER SEEKING EXTENSION FOR GOOD CAUSE,
PROVIDER TO DETAIL CIRCUMSTANCES AND ACTIONS PROVIDER IS TAKING TO COMPLETE
SYSTEM ON AGREED UPON SCHEDULE]
3. kWh Rate and Early Termination Fee [IF NO IMPACT TO RATE OR ETF THEN DELETE]
[INSERT UPDATED KWH RATE AND EARLY TERMINATION FEE TABLE]
4. Estimated Annual Production [IF NO IMPACT TO ESTIMATED ANNUAL PRODUCTION THEN DELETE]
[INSERT UPDATED SCHEDULE 4 ESTIMATED ANNUAL PRODUCTION TABLE]
5. Updated Guaranteed Construction Start Date and Guaranteed Commercial Operation Date [IF NO IMPACT TO
CLIFF DATES THEN DELETE]
The Parties hereby agree that the Guaranteed Construction Start Date and the Guaranteed Commercial
Operation Date as defined in the Agreement are updated as follows:
Guaranteed Construction Start Date: [__________]
Guaranteed Commercial Operation Date: [__________]
The Parties hereby acknowledge and confirm the terms set forth herein as of the Acknowledgment Effective Date.
[PURCHASER] FFP BTM Solar, LLC
By: By:
Name: Name:
Title: Title:
Item 3B-86
13
IX. Schedule 9 – Site Diagram
Item 3B-87
ENERGY SERVICES AGREEMENT – SOLAR
Art Museum
This Energy Services Agreement (“Agreement”) is made and entered into as of this ____ day of ___________, 2022
(or, if later, the latest date of a Party’s execution and delivery to the other Party of this Agreement, the “Effective
Date”), between FFP BTM SOLAR, LLC, a Delaware limited liability company (“Provider”), and The City of Palm
Desert, a California charter city (“Purchaser”; and, together with Provider, each, a “Party” and together, the
“Parties”).
RECITALS
A. Purchaser desires that Provider install and operate a solar photovoltaic system at the Premises (as hereafter
defined) for the purpose of providing Energy Services (as hereafter defined), and Provider is willing to
have the Installation Work performed by using one or more qualified contractors holding the appropriate
licenses required in the jurisdiction where the System will be installed;
B. Provider is in the business of designing, constructing, owning, financing, and operating solar photovoltaic
systems for the purpose of selling power generated by the systems to its purchasers;
C. California Government Code sections 4217.10 et seq. authorizes a public entity to enter into energy service
contracts, facility financing contracts, and related agreements to implement the State’s conservation and
alternative energy supply source policy;
D. Purchaser’s governing body has made those findings required by Government Code section 4217.12 that
the anticipated cost to the Purchaser for Energy Services provided by the System under this Agreement is
expected to be less than the anticipated marginal cost to the Purchaser of electrical energy that would have
been consumed by Purchaser in the absence of its purchase of the Energy Services;
E. Provider and Purchaser acknowledged those certain General Terms and Conditions of Energy Services
Agreement between FFP BTM Solar, LLC and Purchaser of even date herewith (“General Terms and
Conditions”), which are incorporated by reference as set forth herein; and
F. The terms and conditions of this Energy Services Agreement, excluding the General Terms and Conditions
incorporated herein, constitute the “Special Conditions” referred to in the General Terms and Conditions.
In consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Incorporation of General Terms and Conditions. The General Terms and Conditions are incorporated
herein as if set forth in their entirety.
2. Initial Term. The initial term of this Agreement shall commence on the Effective Date and shall continue
for Twenty (20) years from the Commercial Operation Date (as defined in the General Terms and
Conditions), unless and until extended or terminated earlier pursuant to the provisions of this Agreement
(the “Initial Term”). After the Initial Term, this Agreement may be renewed for an additional five (5) year
term (a “Renewal Term”). At least one hundred and eighty (180) days, but no more than three hundred and
sixty-five (365) days, prior to the expiration of the Initial Term, Provider shall give written notice to
Purchaser of the availability of the Renewal Term. Purchaser shall have sixty (60) days to agree to
continuation of this Agreement for the Renewal Term. Absent agreement to the Renewal Term this
Agreement shall expire on the Expiration Date. The Initial Term and the subsequent Renewal Term, if any,
are referred to collectively as the “Term”.
3. Schedules. The following Schedules hereto are hereby incorporated into this Agreement:
Item 3B-88
2
Schedule 1 Description of the Premises, System and Subsidy
Schedule 2 Energy Services Payment
Schedule 3 Early Termination Fee
Schedule 4 Estimated Annual Production
Schedule 5 Notice Information
Schedule 6 Reserved
Schedule 7 Specific Items for Scope of Work
Schedule 8 Acknowledgment of Upgrades, Schedule or Scope Change
Schedule 9 Site Diagram
4. Privacy. Purchaser acknowledges that the System may collect certain information about Purchaser’s
electricity usage and the System performance and that such information may be used by Provider: (i) as
necessary to carry out its obligations under this Agreement; and (ii) may be used and shared with third
parties in connection with Provider’s other business activities, provided, however, that such information
shall be anonymized so as to delete all information which would identify such information to Purchaser.
All such information that is identifiable to Purchaser will be stored and processed in the United States.
5. Milestone Dates.
5.1 The Guaranteed Construction Start Date is 450 days from Effective Date provided that the Local
Electric Utility is prepared to begin its construction on any required utility, (distribution or
transmission), upgrades, if any. In the event that the Local Electric Utility is not prepared to
commence construction on required upgrades, if any are required, Provider will be allowed a day
for day extension to the Guaranteed Construction Start Date, as defined in the Definitions section
of Exhibit A General Terms and Conditions between the Parties.
5.2 The Guaranteed Commercial Operation Date is 270 days from Guaranteed Construction Start
Date.
6. Purchase Requirement; Energy Services Payment. “Energy Services” means the supply of electrical energy
output from the System . Purchaser agrees to purchase one hundred percent (100%) of the Energy Services
generated by the System and made available by Provider to Purchaser during each relevant month of the
Term, up to a maximum of one hundred and ten percent (110%) of Estimated Annual Production, as
defined in Schedule 4. While the Energy Services are calculated and billed on a per kWh basis as set forth
in Schedule 2 of these Special Conditions, they represent a package of services and benefits.
7. Net Energy Metering.
7.1 The Parties acknowledge that the pricing assumes Net Energy Metering (NEM) 2.0 for the Initial
Term. If (i) Provider fails to submit interconnection applications by November 17, 2022, or (ii)
prior to the Commercial Operation Date, (A) Provider fails to keep such interconnection
applications in good standing such that the System would not be eligible for NEM 2.0, or (B) the
CPUC issues a decision such that the System would not be eligible for NEM 2.0 grandfathering for
at least twenty (20) years, Purchaser may terminate this Agreement with no liability whatsoever,
including, but not limited to the Early Termination Fee. The foregoing shall not apply to the extent
Provider’s failure is caused by an act or omission by Purchaser in connection with Provider’s
submittal of interconnection applications.
Provided, however, that in the event of a change in Applicable Law that occurs after the Commercial
Operation Date and results in a loss of NEM 2.0 grandfathering, Purchaser shall have no such termination
right. Provided further that Purchaser shall ensure any correspondence with the Local Electric Utility
regarding the tariff and changes to the interconnection agreement are promptly shared with Provider.
Item 3B-89
3
8. Estimated Annual Production. The annual estimate of electricity generated by the system for each year of
the initial term is set as forth in Schedule 4 of the Special Conditions (“Estimated Annual Production”).
Within sixty (60) days of each annual anniversary of the Commercial Operation Date, Provider will provide
a statement to Purchaser that shows the actual annual kWh production from the System for the Term Year,
the Estimated Annual Production, and the Minimum Guaranteed Output (defined below).
9. Minimum Guaranteed Output. If the System fails to generate at least ninety-five percent (95%) of the
Estimated Annual Production for a full Term Year (such amount, the “Minimum Guaranteed Output”),
other than as a result of the acts or omissions of Purchaser or the Local Electric Utility (including a
Disruption Period), or an Event of Force Majeure, Provider shall credit Purchaser an amount equal to
Purchaser’s Lost Savings on the next invoice or invoices during the following Term Year. If the credit is
due in the Term Year of the Term, then Provider shall pay the face value of the credit to Purchaser. The
formula for calculating Lost Savings for the applicable Term Year is as follows:
Lost Savings = (MGO*WPR - AE) x RV
MGO = Minimum Guaranteed Output, as measured in total kWh, for the System for the applicable
Term Year.
WPR = Weather Performance Ratio, measured as the ratio of the actual insolation over typical
(pro-forma) insolation. Such Weather Performance Ratio shall only apply if the ratio is less than
1.00.
AE = Actual Electricity, as measured in total kWh, delivered by the System for the Term Year
plus the estimated lost energy production during a Disruption Period.
RV = (ATP - kWh Rate)
ATP = Average tariff price, measured in $/kWh, for the Term Year paid by Purchaser with respect
to the Premises. This price is determined by dividing the total cost for delivered electricity,
including all charges associated with such electricity howsoever named, including, without
limitation, charges for distribution, transmission, demand, and systems benefits, paid to the Local
Electric Utility during the applicable Term Year by the total amount of delivered electricity by the
electric utility during such Term Year.
kWh Rate = the kWh Rate in effect for the applicable Term Year(s), measured in $/kWh.
If the RV is zero or less, then no Lost Savings payment is due to Purchaser. Any Lost Savings payment
shall occur no later than sixty (60) days after the end of the Term Year during which such Lost Savings
occurred.
10. Allowed Disruption Time. Notwithstanding the provisions in Section 4.3 of the General Terms and
Conditions to the contrary, during years 4 through 20 (but not years 1 through 3) of the Term, Purchaser
shall be afforded a one-time allocation of fifteen (15) days which may be used consecutively or in separate
periods of at least twenty-four (24) hours each (“Allowed Disruption Time”) during which the System shall
be rendered non-operational. Purchaser shall not be obligated to make payments to Provider for electricity
not received during the Allowed Disruption Time, nor shall Purchaser be required to reimburse Provider for
any other lost revenue during the Allowed Disruption Time, including any lost revenue associated with any
reduced sales of Environmental Attributes, and Provider shall be credited for the estimated lost production
the System would have produced during such Allowed Disruption Time toward satisfaction of its Minimum
Guaranteed Output, as set forth in Section 8 of the Special Conditions, such estimated lost production to be
calculated in the same manner as set forth in Section 4.3 of the General Conditions.
11. Distribution Upgrades, Scope and Schedule Changes.
Item 3B-90
4
a. For any distribution upgrades required or changes to the scope of Installation Work made pursuant
to Schedule 2 of the Special Conditions, the Parties may execute an acknowledgment in the form
attached hereto as Schedule 8 detailing (i) the description of the distribution upgrades or change in
scope of the Installation Work (ii) the amount of the adjustment in the kWh Rate and Early
Termination Fee that corresponds to such costs, if any (iii) changes to the Estimated Annual
Production in Schedule IV, if any, and (iv) any change to the Guaranteed Construction Start Date
and Guaranteed Commercial Operation Date resulting from such upgrades or scope changes;
b. For any day for day extensions made pursuant to Section 2.2(b) of the General Conditions, the
Parties may execute an acknowledgment in the form attached hereto as Schedule 8 detailing (i) the
circumstances that warrant such day for day extension and (ii) the updated Guaranteed
Construction Start Date and/or Guaranteed Commercial Operation Date;
c. For any extensions that are not made pursuant to Section 2.2(b) of the General Conditions,
Provider may request extensions to the Guaranteed Construction Start Date and/or Guaranteed
Commercial Operation Date to the extent that Provider can demonstrate to Purchaser that Provider
is seeking such extension for good cause. Purchaser in its sole discretion may approve such
extension(s) by executing an acknowledgment in the form attached hereto as Schedule 8 on which
Provider details (i) the circumstances for which Provider deems good cause for such extension(s),
(ii) the actions that Provider is taking to complete the System on a schedule agreeable to the
Purchaser and (iii) the updated Guaranteed Construction Start Date and/or Guaranteed
Commercial Operation Date.
For the avoidance of doubt, Purchaser designates [Insert Name(s) or Post(s) of person(s) authorized to
Execute] as authorized to execute the acknowledgment form attached hereto as Schedule 8 provided the terms of
such acknowledgment comply with this Section 11.
12. Sunlight Access. Purchaser will take all reasonable actions as necessary to prevent other buildings,
structures or flora from overshadowing or otherwise blocking access of sunlight to the System.
13. Use of System. Purchaser will not use electrical energy generated by the System for the purposes of
heating a swimming pool within the meaning of Section 48 of the Internal Revenue Code.
IN WITNESS WHEREOF and in confirmation of their consent to the terms and conditions contained in
this Agreement and intending to be legally bound hereby, Provider and Purchaser have executed this Agreement as
of the Effective Date.
“PURCHASER”:
CITY OF PALM DESERT
By:___________________________
Name:
Title:
Date:
“PROVIDER”:
FFP BTM SOLAR, LLC
By:___________________________
Name:
Title:
Date:
Item 3B-91
5
SCHEDULES
I. Schedule 1 – Description of the Premises, System and Subsidy
A. Premises
72567 CA-111,
Palm Desert, CA 92260
Site diagram attached: Yes No
B. Description of Solar System
Behind the meter, grid interconnected, canopy mounted solar.
Solar System Size: 133.11 kW (DC) (this is an estimate (and not a guarantee) of the
System size; Provider may update the System Size prior to the
Commercial Operation Date.)
C. Anticipated Subsidy or
Rebate
$0
D. Interconnection Baseline
Cost
$0
II. Schedule 2 – Energy Services Payment
Purchaser shall pay to Provider a monthly payment (the “Energy Services Payment”) for the Energy
Services provided by the System during each calendar month of the Term equal to the product of (x) Actual
Monthly Production for the System for the relevant month multiplied by (y) the kWh Rate.
The “Actual Monthly Production” means the amount of energy recorded by Provider’s metering equipment
during each calendar month of the Term.
The kWh Rate with respect to the System under this Agreement shall be in accordance with the following
schedule:
PPA Rate Table
Term
Year
kWh Rate
($/kWh)
Term
Year
$/kWh Rate
($/kWh)
1 $0.2445 11 $0.2445
2 $0.2445 12 $0.2445
3 $0.2445 13 $0.2445
4 $0.2445 14 $0.2445
5 $0.2445 15 $0.2445
6 $0.2445 16 $0.2445
7 $0.2445 17 $0.2445
8 $0.2445 18 $0.2445
9 $0.2445 19 $0.2445
10 $0.2445 20 $0.2445
Potential Price Adjustment for Cost Savings. Provider and Purchaser acknowledge that there may be an opportunity
for additional cost savings with respect to the construction and interconnection of the System as a result of changes
in the Investment Tax Credit pursuant to the Inflation Reduction Act of 2022 and that a decrease in the kWh Rate
Item 3B-92
6
may be appropriate to allow Purchaser to share in such savings once the scope and nature of the changes have been
fully analyzed. To the extent that Provider is able to achieve such savings, Provider and Purchaser will meet and
confer in good faith to discuss an equitable adjustment in the kWh Rate, provided, however, that any change in the
kWh Rate will be subject to a written amendment to this Agreement.
Distribution Upgrades. The pricing set forth in this Agreement is based on the assumption that the total cost of
Local Electric Utility upgrade costs in connection with the interconnection of the System with the Local Electrical
Utility will not exceed the Interconnection Baseline Cost. In the event that distribution upgrade costs required by
the Local Electric Utility exceed the Interconnection Baseline Cost, then Provider will give written notice of the
additional cost to Purchaser and within sixty (60) days of Purchaser’s receipt of such notice, Purchaser will provide
written notice (email is acceptable) to Provider of Purchaser’s election of one of the following options:
a. Purchaser will bear all the distribution upgrade costs in excess of the Interconnection Baseline Cost, and the
kWh Rates stated in the PPA Rate Table will remain unchanged. Purchaser shall make payments directly to
the Local Electric Utility in accordance with the requirements of the Local Electric Utility; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
distribution upgrade costs incurred by Provider, the kWh rate in the PPA Rate Table will increase (i)
$0.00068 per kWh if the cost of the upgrades are not ITC eligible; or (ii) $.00042 per kWh if the costs are
ITC eligible.
Scope Changes (ITC Eligible). If changes in project scope occur that are eligible for the Federal Investment Tax
Credit (including but not limited to adverse geotechnical conditions or the inclusion of spare conduit) and the costs
directly related to such changes go beyond those contemplated as part of the development and implementation of the
System in this Agreement, then Provider will provide reasonable documentation demonstrating the direct and actual
time and materials costs relating to such increase in costs to Purchaser. Within sixty (60) days after Purchaser
receives such documentation, Purchaser will provide written notice to Provider of Purchaser’s election of one of the
following options:
a. Purchaser will bear all of the reasonably documented scope change costs, and the kWh rate as stated in
Table 1 will remain unchanged; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
costs, the kWh rate in Table 1 will increase $0.00042 per kWh.
Scope Changes (Non-ITC Eligible). If changes in project scope occur that are not eligible for the Federal Investment
Tax Credit (including but not limited to ADA compliance costs not related to System configuration or construction)
and the costs directly related to such changes go beyond those contemplated as part of the development and
implementation of the System in this Agreement , then Provider will provide reasonable documentation
demonstrating the direct and actual time and materials costs relating to such costs to Purchaser. Within sixty (60)
days after Purchaser receives such documentation, Purchaser will provide written notice to Provider of Purchaser’s
election of one of the following options:
a. Purchaser will pay the entire amount of such associated costs, and the kWh rate as stated in the PPA Rate
Table will remain unchanged.; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
associated costs, the kWh rate in the PPA Rate Table will increase $0.00057 per kWh..
Purchaser Additional Cost Limitation; Termination Rights. Notwithstanding the election by Purchaser to pay for
excess costs associated with Distribution Upgrades and/or Scope Changes pursuant to this Schedule 2 via
incremental increases in the kWh Rate, in no event will Purchaser by responsible for an incremental rate increase in
excess of $0.0441 per kWh in the aggregate, nor shall Purchaser be required to pay any lump sum amount for
excess costs that are not covered as a result of such limitation. Provider will have the option, but not the obligation,
to absorb excess cost which exceed the obligation of Purchaser pursuant to this Schedule 2. If Provider notifies
Purchaser that it does not intend to absorb such costs and the System is no longer financially viable, then either party
will have the right to terminate this Agreement and Provider will remove the System pursuant to Section 2.4 of the
General Conditions.
Item 3B-93
7
Item 3B-94
8
III. Schedule 3 – Early Termination Fee
The Early Termination Fee with respect to the System under this Agreement shall be calculated in
accordance with the following:
Early
Termination
Occurs in Year:
Column 1
Early Termination Fee
where Purchaser does not
take Title to the System
($/Wdc including costs of
removal)
Purchase Date Occurs on the
91st day following:
(Each “Anniversary” below
shall refer to the anniversary
of the Commercial Operation
Date)
Column 2
Early Termination Fee
where Purchaser takes
Title to the System
($/Wdc, does not include
costs of removal)
1* $8.38 --
2 $7.23 --
3 $6.66 --
4 $6.14 --
5 $5.65 --
6 $5.16 5th Anniversary $4.66
7 $5.08 6th Anniversary $4.58
8 $5.02 7th Anniversary $4.52
9 $4.95 8th Anniversary $4.45
10 $4.89 9th Anniversary $4.39
11 $4.82 10th Anniversary $4.32
12 $4.75 11th Anniversary $4.25
13 $4.68 12th Anniversary $4.18
14 $4.60 13th Anniversary $4.10
15 $4.52 14th Anniversary $4.02
16 $4.43 15th Anniversary $3.93
17 $4.35 16th Anniversary $3.85
18 $4.25 17th Anniversary $3.75
19 $4.16 18th Anniversary $3.66
20 $4.05 19th Anniversary $3.55
At Expiration (the end of the Initial Term), the amount in Column 1 shall be deemed to be zero (0).
*Includes Early Termination prior to the Commercial Operation Date.
Upon the payment of the Early Termination Fee in Column 2, Provider will transfer title to the System to
Purchaser, free and clear of any encumbrances.
IV. Schedule 4 – Estimated Annual Production
Estimated Annual Production commencing on the Commercial Operation Date with respect to System
under this Agreement shall be as follows:
Term
Year
Estimated
Production
(kWh)
Term
Year
Estimated
Production
(kWh)
1 239,731 11 228,011
2 238,532 12 226,871
3 237,340 13 225,736
4 236,153 14 224,608
5 234,972 15 223,485
Item 3B-95
9
6 233,797 16 222,367
7 232,628 17 221,255
8 231,465 18 220,149
9 230,308 19 219,048
10 229,156 20 217,953
The values set forth in the table above are estimates (and not guarantees), of approximately how many
kWhs are expected to be generated annually by the System assuming the System size indicated in Schedule
1 and based on initial System designs. Provider may deliver to Purchaser an updated table on or about the
Commercial Operation Date based on the actual System size and design.
V. Schedule 5 – Notice Information
Purchaser:
City of Palm Desert
c/o City Manager
73510 Fred Waring Drive
Palm Desert, CA 92260
Provider:
FFP BTM Solar, LLC
c/o Forefront Power, LLC
Attn: Director, Energy Services
100 Montgomery St., Suite 725
San Francisco, CA 94104
With a copy to
FFP BTM Solar, LLC
c/o Forefront Power, LLC
Attn: Legal Department
100 Montgomery St., Suite 725
San Francisco, CA 94104
Email: FPLegal@forefrontpower.com
Financing Party:
[To be provided by Provider when known]
VI. Schedule 6 – Reserved
VII. Schedule 7 –Specific Items for Scope of Work
1.1. All System structures shall be permitted through the City of Palm Desert Department of
Building and Safety as carports or shade structures, as applicable. Provider shall cause to all
necessary permits to be issued on behalf of the project(s).
1.2. Provider and Purchaser are operating under the assumption that the premises will be eligible
for a CEQA Notice of Exemption (NOE), and that a special use, conditional use, or zoning
permit will not be required. Provider assumes that Purchaser, as lead agency, will issue a
Notice of Exemption for CEQA. Upon request, Provider shall provide such limited support as
necessary to Purchaser to obtain the NOE, including, if necessary, biological study and
associated consultant statement and summary citing exemptions applicable. Provider shall not
be responsible for costs or delays associated with any unforeseen required CEQA studies,
special use, conditional use, or zoning permits, or mitigations that may result from a CEQA
submittal and public comment.
Item 3B-96
10
1.3. Solar arrays will be canopy height of 13’6” minimum clearance.
1.4. Provider shall be responsible for all tree trimming and tree removal in order to facilitate the
installation of the Systems. Provider will remove tree such that area is flush with grade.
Purchaser shall acknowledge and approve removal of trees identified by Provider, in order to
install the system and such approval shall not be unreasonably withheld. Purchaser shall be
responsible for the costs associated with afforestation or reforestation for any trees removed.
Purchaser can elect to address afforestation or reforestation itself, or require that Provider
address it through the change order process described in Schedule 2. Irrigation re-routing
shall not be the responsibility of the Provider.
1.5. Provider intends to interconnect the System to Purchaser-owned 208V service conductors at a
mutually agreeable location. Provider assumes that the existing conductors and service
equipment are sufficiently capable of accepting the additional electrical load of the System.
Provider shall not bear responsibility for any required upgrades to the pre-existing electrical
system.
1.6. Provider shall be responsible for all fees associated with the interconnection application,
except that Provider shall not be responsible for transmission and distribution upgrades
determined necessary by the Local Electric Utility in excess of the Interconnection Baseline
Cost.
1.7. Provider shall be responsible for verifying and understanding existing ADA parking, striping,
and paths of travel and what code-required upgrades may be necessary as a result of the
System and any pre-existing non-compliance. Provider shall be responsible for all required
ADA striping, signage within the solar canopy footprint and connecting to existing ADA-
compliant path of travel. Provider’s scope excludes any demolition, grading, paving, curb
cuts, or truncated domes throughout the Premises to achieve ADA compliance, or any
required ADA striping and signage outside of the solar canopy footprint and connecting to the
existing ADA-compliant path of travel. Should any excluded items for ADA-compliance be
required, Provider will work with Purchaser in good faith to determine a mutually-acceptable
solution for Purchaser to pay the costs associated with such upgrades, including potentially an
increase in the kWh rate in Schedule 2.
1.8. Provider acknowledges that carport structures will be built within existing paved parking areas
and that the cost of pavement removal and repaving for the installation of footings and any
underground conduit will be included in the System Cost Estimate and is the responsibility of
Provider. Provider assumes that soil conditions are class 3 soils, and not such soils that are
rocky, sandy, contaminated, ground water, caving, or otherwise have problematic construction
limitations. If soil conditions prove to be other than class 3 soils, Provider shall not be
responsible for such additional expenses as a result of additional subterranean geotechnical
work including boring and trenching. Prior to any boring or trenching, Provider will consult a
local database of underground utility installations as well as on site ground penetrating radar
or equivalent (collectively, “Underground Investigations”) and will be solely responsible for
any damage to third party underground facilities or equipment that is identifiable via
Underground Investigations and for any facilities or equipment actually disclosed by
Purchaser. Purchaser will notify Provider of any such installations that are known to
Purchaser. Provider shall work with Purchaser in good faith to determine a mutually-
acceptable solution for Purchaser to pay such additional costs, including potentially an
increase in the kWh rate in Schedule 2.
1.9. Provider shall be responsible for removal and disposal of solar panels, inverters, and associated
electrical equipment on roof. Removal of roof attachments is excluded.
1.10. Provider agrees to construct the System in no more than 1 construction phases.
Item 3B-97
11
1.11. Provider shall be responsible for all inspection and inspector costs associated with the
installation of the system.
Item 3B-98
12
VIII. Schedule 8 –Acknowledgment of Upgrades, Schedule or Scope Change
Upgrades, Scope and/or Schedule Change Acknowledgment
This Acknowledgment is made in accordance with Section 10 of the Special Conditions, as defined in that Energy
Service Agreement – [Solar], between [PURCHASER] (“Purchaser”) and FFP BTM Solar, LLC (“Provider”), dated
[_________, 20___] (the “Agreement”). Upon execution by both Purchaser and Provider, this Acknowledgment
shall be effective as of [INSERT DATE] (the “Acknowledgment Effective Date”).
1. Type of Change:
Distribution Upgrades
Scope Changes (ITC Eligible)
Scope Changes (Non-ITC Eligible)
Day for Day Extension
Extension for Good Cause
2. Description of Change
[INSERT DESCRIPTION AND IF PROVIDER SEEKING EXTENSION FOR GOOD CAUSE,
PROVIDER TO DETAIL CIRCUMSTANCES AND ACTIONS PROVIDER IS TAKING TO COMPLETE
SYSTEM ON AGREED UPON SCHEDULE]
3. kWh Rate and Early Termination Fee [IF NO IMPACT TO RATE OR ETF THEN DELETE]
[INSERT UPDATED KWH RATE AND EARLY TERMINATION FEE TABLE]
4. Estimated Annual Production [IF NO IMPACT TO ESTIMATED ANNUAL PRODUCTION THEN DELETE]
[INSERT UPDATED SCHEDULE 4 ESTIMATED ANNUAL PRODUCTION TABLE]
5. Updated Guaranteed Construction Start Date and Guaranteed Commercial Operation Date [IF NO IMPACT TO
CLIFF DATES THEN DELETE]
The Parties hereby agree that the Guaranteed Construction Start Date and the Guaranteed Commercial
Operation Date as defined in the Agreement are updated as follows:
Guaranteed Construction Start Date: [__________]
Guaranteed Commercial Operation Date: [__________]
The Parties hereby acknowledge and confirm the terms set forth herein as of the Acknowledgment Effective Date.
[PURCHASER] FFP BTM Solar, LLC
By: By:
Name: Name:
Title: Title:
Item 3B-99
13
IX. Schedule 9 – Site Diagram
Item 3B-100
ENERGY SERVICES AGREEMENT – SOLAR
Desert Willow Golf Course
This Energy Services Agreement (“Agreement”) is made and entered into as of this ____ day of ___________, 2022
(or, if later, the latest date of a Party’s execution and delivery to the other Party of this Agreement, the “Effective
Date”), between FFP BTM SOLAR, LLC, a Delaware limited liability company (“Provider”), and The City of Palm
Desert, a California charter city (“Purchaser”; and, together with Provider, each, a “Party” and together, the
“Parties”).
RECITALS
A. Purchaser desires that Provider install and operate a solar photovoltaic system at the Premises (as hereafter
defined) for the purpose of providing Energy Services (as hereafter defined), and Provider is willing to
have the Installation Work performed by using one or more qualified contractors holding the appropriate
licenses required in the jurisdiction where the System will be installed;
B. Provider is in the business of designing, constructing, owning, financing, and operating solar photovoltaic
systems for the purpose of selling power generated by the systems to its purchasers;
C. California Government Code sections 4217.10 et seq. authorizes a public entity to enter into energy service
contracts, facility financing contracts, and related agreements to implement the State’s conservation and
alternative energy supply source policy;
D. Purchaser’s governing body has made those findings required by Government Code section 4217.12 that
the anticipated cost to the Purchaser for Energy Services provided by the System under this Agreement is
expected to be less than the anticipated marginal cost to the Purchaser of electrical energy that would have
been consumed by Purchaser in the absence of its purchase of the Energy Services;
E. Provider and Purchaser acknowledged those certain General Terms and Conditions of Energy Services
Agreement between FFP BTM Solar, LLC and Purchaser of even date herewith (“General Terms and
Conditions”), which are incorporated by reference as set forth herein; and
F. The terms and conditions of this Energy Services Agreement, excluding the General Terms and Conditions
incorporated herein, constitute the “Special Conditions” referred to in the General Terms and Conditions.
In consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Incorporation of General Terms and Conditions. The General Terms and Conditions are incorporated
herein as if set forth in their entirety.
2. Initial Term. The initial term of this Agreement shall commence on the Effective Date and shall continue
for Twenty (20) years from the Commercial Operation Date (as defined in the General Terms and
Conditions), unless and until extended or terminated earlier pursuant to the provisions of this Agreement
(the “Initial Term”). After the Initial Term, this Agreement may be renewed for an additional five (5) year
term (a “Renewal Term”). At least one hundred and eighty (180) days, but no more than three hundred and
sixty-five (365) days, prior to the expiration of the Initial Term, Provider shall give written notice to
Purchaser of the availability of the Renewal Term. Purchaser shall have sixty (60) days to agree to
continuation of this Agreement for the Renewal Term. Absent agreement to the Renewal Term this
Agreement shall expire on the Expiration Date. The Initial Term and the subsequent Renewal Term, if any,
are referred to collectively as the “Term”.
3. Schedules. The following Schedules hereto are hereby incorporated into this Agreement:
Item 3B-101
2
Schedule 1 Description of the Premises, System and Subsidy
Schedule 2 Energy Services Payment
Schedule 3 Early Termination Fee
Schedule 4 Estimated Annual Production
Schedule 5 Notice Information
Schedule 6 Reserved
Schedule 7 Specific Items for Scope of Work
Schedule 8 Acknowledgment of Upgrades, Schedule or Scope Change
Schedule 9 Site Diagram
4. Privacy. Purchaser acknowledges that the System may collect certain information about Purchaser’s
electricity usage and the System performance and that such information may be used by Provider: (i) as
necessary to carry out its obligations under this Agreement; and (ii) may be used and shared with third
parties in connection with Provider’s other business activities, provided, however, that such information
shall be anonymized so as to delete all information which would identify such information to Purchaser.
All such information that is identifiable to Purchaser will be stored and processed in the United States.
5. Milestone Dates.
5.1 The Guaranteed Construction Start Date is 450 days from Effective Date provided that the Local
Electric Utility is prepared to begin its construction on any required utility, (distribution or
transmission), upgrades, if any. In the event that the Local Electric Utility is not prepared to
commence construction on required upgrades, if any are required, Provider will be allowed a day
for day extension to the Guaranteed Construction Start Date, as defined in the Definitions section
of Exhibit A General Terms and Conditions between the Parties.
5.2 The Guaranteed Commercial Operation Date is 270 days from Guaranteed Construction Start
Date.
6. Purchase Requirement; Energy Services Payment. “Energy Services” means the supply of electrical energy
output from the System . Purchaser agrees to purchase one hundred percent (100%) of the Energy Services
generated by the System and made available by Provider to Purchaser during each relevant month of the
Term, up to a maximum of one hundred and ten percent (110%) of Estimated Annual Production, as
defined in Schedule 4. While the Energy Services are calculated and billed on a per kWh basis as set forth
in Schedule 2 of these Special Conditions, they represent a package of services and benefits.
7. Net Energy Metering.
7.1 The Parties acknowledge that the pricing assumes Net Energy Metering (NEM) 2.0 for the Initial
Term. If (i) Provider fails to submit interconnection applications by November 17, 2022, or (ii)
prior to the Commercial Operation Date, (A) Provider fails to keep such interconnection
applications in good standing such that the System would not be eligible for NEM 2.0, or (B) the
CPUC issues a decision such that the System would not be eligible for NEM 2.0 grandfathering
for at least twenty (20) years, Purchaser may terminate this Agreement with no liability
whatsoever, including, but not limited to the Early Termination Fee. The foregoing shall not apply
to the extent Provider’s failure is caused by an act or omission by Purchaser in connection with
Provider’s submittal of interconnection applications.
Provided, however, that in the event of a change in Applicable Law that occurs after the Commercial
Operation Date and results in a loss of NEM 2.0 grandfathering, Purchaser shall have no such termination
right. Provided further that Purchaser shall ensure any correspondence with the Local Electric Utility
regarding the tariff and changes to the interconnection agreement are promptly shared with Provider.
Item 3B-102
3
8. Estimated Annual Production. The annual estimate of electricity generated by the system for each year of
the initial term is set as forth in Schedule 4 of the Special Conditions (“Estimated Annual Production”).
Within sixty (60) days of each annual anniversary of the Commercial Operation Date, Provider will provide
a statement to Purchaser that shows the actual annual kWh production from the System for the Term Year,
the Estimated Annual Production, and the Minimum Guaranteed Output (defined below).
9. Minimum Guaranteed Output. If the System fails to generate at least ninety-five percent (95%) of the
Estimated Annual Production for a full Term Year (such amount, the “Minimum Guaranteed Output”),
other than as a result of the acts or omissions of Purchaser or the Local Electric Utility (including a
Disruption Period), or an Event of Force Majeure, Provider shall credit Purchaser an amount equal to
Purchaser’s Lost Savings on the next invoice or invoices during the following Term Year. If the credit is
due in the Term Year of the Term, then Provider shall pay the face value of the credit to Purchaser. The
formula for calculating Lost Savings for the applicable Term Year is as follows:
Lost Savings = (MGO*WPR - AE) x RV
MGO = Minimum Guaranteed Output, as measured in total kWh, for the System for the applicable
Term Year.
WPR = Weather Performance Ratio, measured as the ratio of the actual insolation over typical
(pro-forma) insolation. Such Weather Performance Ratio shall only apply if the ratio is less than
1.00.
AE = Actual Electricity, as measured in total kWh, delivered by the System for the Term Year
plus the estimated lost energy production during a Disruption Period.
RV = (ATP - kWh Rate)
ATP = Average tariff price, measured in $/kWh, for the Term Year paid by Purchaser with respect
to the Premises. This price is determined by dividing the total cost for delivered electricity,
including all charges associated with such electricity howsoever named, including, without
limitation, charges for distribution, transmission, demand, and systems benefits, paid to the Local
Electric Utility during the applicable Term Year by the total amount of delivered electricity by the
electric utility during such Term Year.
kWh Rate = the kWh Rate in effect for the applicable Term Year(s), measured in $/kWh.
If the RV is zero or less, then no Lost Savings payment is due to Purchaser. Any Lost Savings payment
shall occur no later than sixty (60) days after the end of the Term Year during which such Lost Savings
occurred.
10. Allowed Disruption Time. Notwithstanding the provisions in Section 4.3 of the General Terms and
Conditions to the contrary, during years 4 through 20 (but not years 1 through 3) of the Term, Purchaser
shall be afforded a one-time allocation of fifteen (15) days which may be used consecutively or in separate
periods of at least twenty-four (24) hours each (“Allowed Disruption Time”) during which the System shall
be rendered non-operational. Purchaser shall not be obligated to make payments to Provider for electricity
not received during the Allowed Disruption Time, nor shall Purchaser be required to reimburse Provider for
any other lost revenue during the Allowed Disruption Time, including any lost revenue associated with any
reduced sales of Environmental Attributes, and Provider shall be credited for the estimated lost production
the System would have produced during such Allowed Disruption Time toward satisfaction of its Minimum
Guaranteed Output, as set forth in Section 8 of the Special Conditions, such estimated lost production to be
calculated in the same manner as set forth in Section 4.3 of the General Conditions.
11. Distribution Upgrades, Scope and Schedule Changes.
Item 3B-103
4
a. For any distribution upgrades required or changes to the scope of Installation Work made pursuant
to Schedule 2 of the Special Conditions, the Parties may execute an acknowledgment in the form
attached hereto as Schedule 8 detailing (i) the description of the distribution upgrades or change in
scope of the Installation Work (ii) the amount of the adjustment in the kWh Rate and Early
Termination Fee that corresponds to such costs, if any (iii) changes to the Estimated Annual
Production in Schedule IV, if any, and (iv) any change to the Guaranteed Construction Start Date
and Guaranteed Commercial Operation Date resulting from such upgrades or scope changes;
b. For any day for day extensions made pursuant to Section 2.2(b) of the General Conditions, the
Parties may execute an acknowledgment in the form attached hereto as Schedule 8 detailing (i) the
circumstances that warrant such day for day extension and (ii) the updated Guaranteed
Construction Start Date and/or Guaranteed Commercial Operation Date;
c. For any extensions that are not made pursuant to Section 2.2(b) of the General Conditions,
Provider may request extensions to the Guaranteed Construction Start Date and/or Guaranteed
Commercial Operation Date to the extent that Provider can demonstrate to Purchaser that Provider
is seeking such extension for good cause. Purchaser in its sole discretion may approve such
extension(s) by executing an acknowledgment in the form attached hereto as Schedule 8 on which
Provider details (i) the circumstances for which Provider deems good cause for such extension(s),
(ii) the actions that Provider is taking to complete the System on a schedule agreeable to the
Purchaser and (iii) the updated Guaranteed Construction Start Date and/or Guaranteed
Commercial Operation Date.
For the avoidance of doubt, Purchaser designates [Insert Name(s) or Post(s) of person(s) authorized to
Execute] as authorized to execute the acknowledgment form attached hereto as Schedule 8 provided the terms of
such acknowledgment comply with this Section 11.
12. Sunlight Access. Purchaser will take all reasonable actions as necessary to prevent other buildings,
structures or flora from overshadowing or otherwise blocking access of sunlight to the System.
13. Use of System. Purchaser will not use electrical energy generated by the System for the purposes of
heating a swimming pool within the meaning of Section 48 of the Internal Revenue Code.
IN WITNESS WHEREOF and in confirmation of their consent to the terms and conditions contained in
this Agreement and intending to be legally bound hereby, Provider and Purchaser have executed this Agreement as
of the Effective Date.
“PURCHASER”:
CITY OF PALM DESERT
By:___________________________
Name:
Title:
Date:
“PROVIDER”:
FFP BTM SOLAR, LLC
By:___________________________
Name:
Title:
Date:
Item 3B-104
5
SCHEDULES
I. Schedule 1 – Description of the Premises, System and Subsidy
A. Premises
38500 Portola Ave,
Palm Desert, CA 92260
Site diagram attached: Yes No
B. Description of Solar System
Behind the meter, grid interconnected, canopy mounted solar.
Solar System Size: 266.22 kW (DC) (this is an estimate (and not a guarantee) of the
System size; Provider may update the System Size prior to the
Commercial Operation Date.)
C. Anticipated Subsidy or
Rebate
$0
D. Interconnection Baseline
Cost
$0
II. Schedule 2 – Energy Services Payment
Purchaser shall pay to Provider a monthly payment (the “Energy Services Payment”) for the Energy
Services provided by the System during each calendar month of the Term equal to the product of (x) Actual
Monthly Production for the System for the relevant month multiplied by (y) the kWh Rate.
The “Actual Monthly Production” means the amount of energy recorded by Provider’s metering equipment
during each calendar month of the Term.
The kWh Rate with respect to the System under this Agreement shall be in accordance with the following
schedule:
PPA Rate Table
Term
Year
kWh Rate
($/kWh)
Term
Year
$/kWh Rate
($/kWh)
1 $0.1925 11 $0.1925
2 $0.1925 12 $0.1925
3 $0.1925 13 $0.1925
4 $0.1925 14 $0.1925
5 $0.1925 15 $0.1925
6 $0.1925 16 $0.1925
7 $0.1925 17 $0.1925
8 $0.1925 18 $0.1925
9 $0.1925 19 $0.1925
10 $0.1925 20 $0.1925
Potential Price Adjustment for Cost Savings. Provider and Purchaser acknowledge that there may be an opportunity
for additional cost savings with respect to the construction and interconnection of the System as a result of changes
in the Investment Tax Credit pursuant to the Inflation Reduction Act of 2022 and that a decrease in the kWh Rate
Item 3B-105
6
may be appropriate to allow Purchaser to share in such savings once the scope and nature of the changes have been
fully analyzed. To the extent that Provider is able to achieve such savings, Provider and Purchaser will meet and
confer in good faith to discuss an equitable adjustment in the kWh Rate, provided, however, that any change in the
kWh Rate will be subject to a written amendment to this Agreement.
Distribution Upgrades. The pricing set forth in this Agreement is based on the assumption that the total cost of
Local Electric Utility upgrade costs in connection with the interconnection of the System with the Local Electrical
Utility will not exceed the Interconnection Baseline Cost. In the event that distribution upgrade costs required by
the Local Electric Utility exceed the Interconnection Baseline Cost, then Provider will give written notice of the
additional cost to Purchaser and within sixty (60) days of Purchaser’s receipt of such notice, Purchaser will provide
written notice (email is acceptable) to Provider of Purchaser’s election of one of the following options:
a. Purchaser will bear all the distribution upgrade costs in excess of the Interconnection Baseline Cost, and the
kWh Rates stated in the PPA Rate Table will remain unchanged. Purchaser shall make payments directly to
the Local Electric Utility in accordance with the requirements of the Local Electric Utility; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
distribution upgrade costs incurred by Provider, the kWh rate in the PPA Rate Table will increase (i)
$0.00068 per kWh if the cost of the upgrades are not ITC eligible; or (ii) $.00042 per kWh if the costs are
ITC eligible.
Scope Changes (ITC Eligible). If changes in project scope occur that are eligible for the Federal Investment Tax
Credit (including but not limited to adverse geotechnical conditions or the inclusion of spare conduit) and the costs
directly related to such changes go beyond those contemplated as part of the development and implementation of the
System in this Agreement, then Provider will provide reasonable documentation demonstrating the direct and actual
time and materials costs relating to such increase in costs to Purchaser. Within sixty (60) days after Purchaser
receives such documentation, Purchaser will provide written notice to Provider of Purchaser’s election of one of the
following options:
a. Purchaser will bear all of the reasonably documented scope change costs, and the kWh rate as stated in
Table 1 will remain unchanged; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
costs, the kWh rate in Table 1 will increase $0.00042 per kWh.
Scope Changes (Non-ITC Eligible). If changes in project scope occur that are not eligible for the Federal Investment
Tax Credit (including but not limited to ADA compliance costs not related to System configuration or construction)
and the costs directly related to such changes go beyond those contemplated as part of the development and
implementation of the System in this Agreement , then Provider will provide reasonable documentation
demonstrating the direct and actual time and materials costs relating to such costs to Purchaser. Within sixty (60)
days after Purchaser receives such documentation, Purchaser will provide written notice to Provider of Purchaser’s
election of one of the following options:
a. Purchaser will pay the entire amount of such associated costs, and the kWh rate as stated in the PPA Rate
Table will remain unchanged.; or
b. Purchaser may elect to have Provider finance such costs, in which case for every $0.01 per watt DC of such
associated costs, the kWh rate in the PPA Rate Table will increase $0.00057 per kWh..
Purchaser Additional Cost Limitation; Termination Rights. Notwithstanding the election by Purchaser to pay for
excess costs associated with Distribution Upgrades and/or Scope Changes pursuant to this Schedule 2 via
incremental increases in the kWh Rate, in no event will Purchaser by responsible for an incremental rate increase in
excess of $0.0276 per kWh in the aggregate, nor shall Purchaser be required to pay any lump sum amount for
excess costs that are not covered as a result of such limitation. Provider will have the option, but not the obligation,
to absorb excess cost which exceed the obligation of Purchaser pursuant to this Schedule 2. If Provider notifies
Purchaser that it does not intend to absorb such costs and the System is no longer financially viable, then either party
will have the right to terminate this Agreement and Provider will remove the System pursuant to Section 2.4 of the
General Conditions.
Item 3B-106
7
Item 3B-107
8
III. Schedule 3 – Early Termination Fee
The Early Termination Fee with respect to the System under this Agreement shall be calculated in
accordance with the following:
Early
Termination
Occurs in Year:
Column 1
Early Termination Fee
where Purchaser does not
take Title to the System
($/Wdc including costs of
removal)
Purchase Date Occurs on the
91st day following:
(Each “Anniversary” below
shall refer to the anniversary
of the Commercial Operation
Date)
Column 2
Early Termination Fee
where Purchaser takes
Title to the System
($/Wdc, does not include
costs of removal)
1* $6.35 --
2 $5.49 --
3 $5.07 --
4 $4.68 --
5 $4.32 --
6 $3.95 5th Anniversary $3.45
7 $3.89 6th Anniversary $3.39
8 $3.84 7th Anniversary $3.34
9 $3.80 8th Anniversary $3.30
10 $3.75 9th Anniversary $3.25
11 $3.70 10th Anniversary $3.20
12 $3.65 11th Anniversary $3.15
13 $3.59 12th Anniversary $3.09
14 $3.53 13th Anniversary $3.03
15 $3.48 14th Anniversary $2.98
16 $3.41 15th Anniversary $2.91
17 $3.35 16th Anniversary $2.85
18 $3.28 17th Anniversary $2.78
19 $3.21 18th Anniversary $2.71
20 $3.13 19th Anniversary $2.63
At Expiration (the end of the Initial Term), the amount in Column 1 shall be deemed to be zero (0).
*Includes Early Termination prior to the Commercial Operation Date.
Upon the payment of the Early Termination Fee in Column 2, Provider will transfer title to the System to
Purchaser, free and clear of any encumbrances.
IV. Schedule 4 – Estimated Annual Production
Estimated Annual Production commencing on the Commercial Operation Date with respect to System
under this Agreement shall be as follows:
Term
Year
Estimated
Production
(kWh)
Term
Year
Estimated
Production
(kWh)
1 464,820 11 442,095
2 462,496 12 439,885
3 460,184 13 437,685
4 457,883 14 435,497
5 455,593 15 433,319
Item 3B-108
9
6 453,315 16 431,153
7 451,049 17 428,997
8 448,793 18 426,852
9 446,549 19 424,718
10 444,317 20 422,594
The values set forth in the table above are estimates (and not guarantees), of approximately how many
kWhs are expected to be generated annually by the System assuming the System size indicated in Schedule
1 and based on initial System designs. Provider may deliver to Purchaser an updated table on or about the
Commercial Operation Date based on the actual System size and design.
V. Schedule 5 – Notice Information
Purchaser:
City of Palm Desert
c/o City Manager
73510 Fred Waring Drive
Palm Desert, CA 92260
Provider:
FFP BTM Solar, LLC
c/o Forefront Power, LLC
Attn: Director, Energy Services
100 Montgomery St., Suite 725
San Francisco, CA 94104
With a copy to
FFP BTM Solar, LLC
c/o Forefront Power, LLC
Attn: Legal Department
100 Montgomery St., Suite 725
San Francisco, CA 94104
Email: FPLegal@forefrontpower.com
Financing Party:
[To be provided by Provider when known]
VI. Schedule 6 – Reserved
VII. Schedule 7 –Specific Items for Scope of Work
1.1. All System structures shall be permitted through the City of Palm Desert Department of
Building and Safety as carports or shade structures, as applicable. Provider shall cause to all
necessary permits to be issued on behalf of the project(s).
1.2. Provider and Purchaser are operating under the assumption that the premises will be eligible
for a CEQA Notice of Exemption (NOE), and that a special use, conditional use, or zoning
permit will not be required. Provider assumes that Purchaser, as lead agency, will issue a
Notice of Exemption for CEQA. Upon request, Provider shall provide such limited support as
necessary to Purchaser to obtain the NOE, including, if necessary, biological study and
associated consultant statement and summary citing exemptions applicable. Provider shall not
be responsible for costs or delays associated with any unforeseen required CEQA studies,
special use, conditional use, or zoning permits, or mitigations that may result from a CEQA
submittal and public comment.
Item 3B-109
10
1.3. Solar arrays will be canopy height of 13’6” minimum clearance.
1.4. Provider shall be responsible for all tree trimming and tree removal in order to facilitate the
installation of the Systems. Provider will remove tree such that area is flush with grade.
Purchaser shall acknowledge and approve removal of trees identified by Provider, in order to
install the system and such approval shall not be unreasonably withheld. Purchaser shall be
responsible for the costs associated with afforestation or reforestation for any trees removed.
Purchaser can elect to address afforestation or reforestation itself, or require that Provider
address it through the change order process described in Schedule 2. Irrigation re-routing
shall not be the responsibility of the Provider.
1.5. Provider intends to interconnect the System to Purchaser-owned 208V service conductors at a
mutually agreeable location. Provider assumes that the existing conductors and service
equipment are sufficiently capable of accepting the additional electrical load of the System.
Provider shall not bear responsibility for any required upgrades to the pre-existing electrical
system.
1.6. Provider shall be responsible for all fees associated with the interconnection application,
except that Provider shall not be responsible for transmission and distribution upgrades
determined necessary by the Local Electric Utility in excess of the Interconnection Baseline
Cost.
1.7. Provider shall be responsible for verifying and understanding existing ADA parking, striping,
and paths of travel and what code-required upgrades may be necessary as a result of the
System and any pre-existing non-compliance. Provider shall be responsible for all required
ADA striping, signage within the solar canopy footprint and connecting to existing ADA-
compliant path of travel. Provider’s scope excludes any demolition, grading, paving, curb
cuts, or truncated domes throughout the Premises to achieve ADA compliance, or any
required ADA striping and signage outside of the solar canopy footprint and connecting to the
existing ADA-compliant path of travel. Should any excluded items for ADA-compliance be
required, Provider will work with Purchaser in good faith to determine a mutually-acceptable
solution for Purchaser to pay the costs associated with such upgrades, including potentially an
increase in the kWh rate in Schedule 2.
1.8. Provider acknowledges that carport structures will be built within existing paved parking
areas and that the cost of pavement removal and repaving for the installation of footings and
any underground conduit will be included in the System Cost Estimate and is the
responsibility of Provider. Provider assumes that soil conditions are class 3 soils, and not
such soils that are rocky, sandy, contaminated, ground water, caving, or otherwise have
problematic construction limitations. If soil conditions prove to be other than class 3 soils,
Provider shall not be responsible for such additional expenses as a result of additional
subterranean geotechnical work including boring and trenching. Prior to any boring or
trenching, Provider will consult a local database of underground utility installations as well as
on site ground penetrating radar or equivalent (collectively, “Underground Investigations”)
and will be solely responsible for any damage to third party underground facilities or
equipment that is identifiable via Underground Investigations and for any facilities or
equipment actually disclosed by Purchaser. Purchaser will notify Provider of any such
installations that are known to Purchaser. Provider shall work with Purchaser in good faith to
determine a mutually-acceptable solution for Purchaser to pay such additional costs, including
potentially an increase in the kWh rate in Schedule 2.
1.9. Provider agrees to construct the System in no more than 1 construction phases.
1.10. Provider shall be responsible for all inspection and inspector costs associated with the
installation of the system.
Item 3B-110
11
Item 3B-111
12
VIII. Schedule 8 –Acknowledgment of Upgrades, Schedule or Scope Change
Upgrades, Scope and/or Schedule Change Acknowledgment
This Acknowledgment is made in accordance with Section 10 of the Special Conditions, as defined in that Energy
Service Agreement – [Solar], between [PURCHASER] (“Purchaser”) and FFP BTM Solar, LLC (“Provider”), dated
[_________, 20___] (the “Agreement”). Upon execution by both Purchaser and Provider, this Acknowledgment
shall be effective as of [INSERT DATE] (the “Acknowledgment Effective Date”).
1. Type of Change:
Distribution Upgrades
Scope Changes (ITC Eligible)
Scope Changes (Non-ITC Eligible)
Day for Day Extension
Extension for Good Cause
2. Description of Change
[INSERT DESCRIPTION AND IF PROVIDER SEEKING EXTENSION FOR GOOD CAUSE,
PROVIDER TO DETAIL CIRCUMSTANCES AND ACTIONS PROVIDER IS TAKING TO COMPLETE
SYSTEM ON AGREED UPON SCHEDULE]
3. kWh Rate and Early Termination Fee [IF NO IMPACT TO RATE OR ETF THEN DELETE]
[INSERT UPDATED KWH RATE AND EARLY TERMINATION FEE TABLE]
4. Estimated Annual Production [IF NO IMPACT TO ESTIMATED ANNUAL PRODUCTION THEN DELETE]
[INSERT UPDATED SCHEDULE 4 ESTIMATED ANNUAL PRODUCTION TABLE]
5. Updated Guaranteed Construction Start Date and Guaranteed Commercial Operation Date [IF NO IMPACT TO
CLIFF DATES THEN DELETE]
The Parties hereby agree that the Guaranteed Construction Start Date and the Guaranteed Commercial
Operation Date as defined in the Agreement are updated as follows:
Guaranteed Construction Start Date: [__________]
Guaranteed Commercial Operation Date: [__________]
The Parties hereby acknowledge and confirm the terms set forth herein as of the Acknowledgment Effective Date.
[PURCHASER] FFP BTM Solar, LLC
By: By:
Name: Name:
Title: Title:
Item 3B-112
13
IX. Schedule 9 – Site Diagram
Item 3B-113
Notice of Exemption FORM “B”
NOTICE OF EXEMPTION
TO:
Office of Planning and Research
P. O. Box 3044, Room 113
Sacramento, CA 95812-3044
FROM: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Clerk of the Board of Supervisors
or
County Clerk
County of: Riverside
2724 Gateway Dr, Riverside,
CA 92507
1.Project Title:City of Palm Desert – Civic Center Photovoltaic
Project – Civic Center West
2.Project Applicant:City of Palm Desert
3.Project Location – Identify street address and
cross streets or attach a map showing project
site (preferably a USGS 15’ or 7 1/2’
topographical map identified by quadrangle
name):
73-510 Fred Waring Drive, Palm Desert, CA 92260.
In the parking lot for City Hall.
4.(a) Project Location – City: Palm Desert (b)Project Location – County: Riverside
5.Description of nature, purpose, and
beneficiaries of Project:
A request to install solar carport canopies for
generating electricity.
6.Name of Public Agency approving project:City of Palm Desert
7.Name of Person or Agency undertaking the
project, including any person undertaking an
activity that receives financial assistance
from the Public Agency as part of the activity
or the person receiving a lease, permit,
license, certificate, or other entitlement of use
from the Public Agency as part of the activity:
City of Palm Desert.
8.Exempt status: (check one)
(a) Ministerial project. (Pub. Res. Code § 21080(b)(1); State CEQA
Guidelines § 15268)
(b) Not a project.
(c) Emergency Project. (Pub. Res. Code § 21080(b)(4); State CEQA
Guidelines § 15269(b),(c))
(d) Categorical Exemption.
State type and section
number:
(e) Declared Emergency. (Pub. Res. Code § 21080(b)(3); State CEQA
Guidelines § 15269(a))
(f) Statutory Exemption.
State Code section number:
(Public Resources Code (CEQA Statute) § 21080.35)
(g) Other. Explanation: General Rule – Section 15061(b)(3)
9.Reason why project was exempt:This proposal is for the installation of a solar energy
system and associated equipment within an existing
parking lot, and the project is not subject to any of the
Item 3B-114
Notice of Exemption FORM “B”
exceptions for exemptions identified in § 21080.35
(d)(1-3).
10. Lead Agency Contact Person: Ryan Gayler, Project Manager
Telephone: (760) 776-6393
11. If filed by applicant: Attach Preliminary Exemption Assessment (Form “A”) before filing.
12. Has a Notice of Exemption been filed by the public agency approving the project? Yes No
13. Was a public hearing held by the lead agency to consider the exemption? Yes No
If yes, the date of the public hearing was: October 13, 2022
Signature:__________________________________ Date:_______________
Title: Project Manager
Signed by Lead Agency Signed by Applicant
Date Received for Filing:
(Clerk Stamp Here)
Authority cited: Sections 21083 and 21100, Public Resources Code.
Reference: Sections 21108, 21152, and 21152.1, Public Resources Code.
Item 3B-115
Notice of Exemption FORM “B”
NOTICE OF EXEMPTION
TO:
Office of Planning and Research
P. O. Box 3044, Room 113
Sacramento, CA 95812-3044
FROM: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Clerk of the Board of Supervisors
or
County Clerk
County of: Riverside
2724 Gateway Dr, Riverside,
CA 92507
1. Project Title: City of Palm Desert – Civic Center Photovoltaic
Project – Civic Center East
2. Project Applicant: City of Palm Desert
3. Project Location – Identify street address and
cross streets or attach a map showing project
site (preferably a USGS 15’ or 7 1/2’
topographical map identified by quadrangle
name):
73-710 Fred Waring Drive, Palm Desert, CA 92260.
In the parking lot
4. (a) Project Location – City: Palm Desert (b) Project Location – County: Riverside
5. Description of nature, purpose, and
beneficiaries of Project:
A request to install solar carport canopies for
generating electricity.
6. Name of Public Agency approving project: City of Palm Desert
7. Name of Person or Agency undertaking the
project, including any person undertaking an
activity that receives financial assistance
from the Public Agency as part of the activity
or the person receiving a lease, permit,
license, certificate, or other entitlement of use
from the Public Agency as part of the activity:
City of Palm Desert.
8. Exempt status: (check one)
(a) Ministerial project. (Pub. Res. Code § 21080(b)(1); State CEQA
Guidelines § 15268)
(b) Not a project.
(c) Emergency Project. (Pub. Res. Code § 21080(b)(4); State CEQA
Guidelines § 15269(b),(c))
(d) Categorical Exemption.
State type and section
number:
(e) Declared Emergency. (Pub. Res. Code § 21080(b)(3); State CEQA
Guidelines § 15269(a))
(f) Statutory Exemption.
State Code section number:
(Public Resources Code (CEQA Statute) § 21080.35)
(g) Other. Explanation: General Rule – Section 15061(b)(3)
9. Reason why project was exempt: This proposal is for the installation of a solar energy
system and associated equipment within an existing
parking lot, and the project is not subject to any of the
Item 3B-116
Notice of Exemption FORM “B”
exceptions for exemptions identified in § 21080.35
(d)(1-3).
10. Lead Agency Contact Person: Ryan Gayler, Project Manager
Telephone: (760) 776-6393
11. If filed by applicant: Attach Preliminary Exemption Assessment (Form “A”) before filing.
12. Has a Notice of Exemption been filed by the public agency approving the project? Yes No
13. Was a public hearing held by the lead agency to consider the exemption? Yes No
If yes, the date of the public hearing was: October 13, 2022
Signature:__________________________________ Date:_______________
Title: Project Manager
Signed by Lead Agency Signed by Applicant
Date Received for Filing:
(Clerk Stamp Here)
Authority cited: Sections 21083 and 21100, Public Resources Code.
Reference: Sections 21108, 21152, and 21152.1, Public Resources Code.
Item 3B-117
Notice of Exemption FORM “B”
NOTICE OF EXEMPTION
TO:
Office of Planning and Research
P. O. Box 3044, Room 113
Sacramento, CA 95812-3044
FROM: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Clerk of the Board of Supervisors
or
County Clerk
County of: Riverside
2724 Gateway Dr, Riverside,
CA 92507
1. Project Title: City of Palm Desert – Civic Center Photovoltaic
Project – Civic Center West
2. Project Applicant: City of Palm Desert
3. Project Location – Identify street address and
cross streets or attach a map showing project
site (preferably a USGS 15’ or 7 1/2’
topographical map identified by quadrangle
name):
73-751 Magnesia Falls Drive, Palm Desert, CA 92260.
In the parking lot.
4. (a) Project Location – City: Palm Desert (b) Project Location – County: Riverside
5. Description of nature, purpose, and
beneficiaries of Project:
A request to install solar carport canopies for
generating electricity.
6. Name of Public Agency approving project: City of Palm Desert
7. Name of Person or Agency undertaking the
project, including any person undertaking an
activity that receives financial assistance
from the Public Agency as part of the activity
or the person receiving a lease, permit,
license, certificate, or other entitlement of use
from the Public Agency as part of the activity:
City of Palm Desert.
8. Exempt status: (check one)
(a) Ministerial project. (Pub. Res. Code § 21080(b)(1); State CEQA
Guidelines § 15268)
(b) Not a project.
(c) Emergency Project. (Pub. Res. Code § 21080(b)(4); State CEQA
Guidelines § 15269(b),(c))
(d) Categorical Exemption.
State type and section
number:
(e) Declared Emergency. (Pub. Res. Code § 21080(b)(3); State CEQA
Guidelines § 15269(a))
(f) Statutory Exemption.
State Code section number:
(Public Resources Code (CEQA Statute) § 21080.35)
(g) Other. Explanation: General Rule – Section 15061(b)(3)
9. Reason why project was exempt: This proposal is for the installation of a solar energy
system and associated equipment within an existing
parking lot, and the project is not subject to any of the
Item 3B-118
Notice of Exemption FORM “B”
exceptions for exemptions identified in § 21080.35
(d)(1-3).
10. Lead Agency Contact Person: Ryan Gayler, Project Manager
Telephone: (760) 776-6393
11. If filed by applicant: Attach Preliminary Exemption Assessment (Form “A”) before filing.
12. Has a Notice of Exemption been filed by the public agency approving the project? Yes No
13. Was a public hearing held by the lead agency to consider the exemption? Yes No
If yes, the date of the public hearing was: October 13, 2022
Signature:__________________________________ Date:_______________
Title: Project Manager
Signed by Lead Agency Signed by Applicant
Date Received for Filing:
(Clerk Stamp Here)
Authority cited: Sections 21083 and 21100, Public Resources Code.
Reference: Sections 21108, 21152, and 21152.1, Public Resources Code.
Item 3B-119
Notice of Exemption FORM “B”
NOTICE OF EXEMPTION
TO:
Office of Planning and Research
P. O. Box 3044, Room 113
Sacramento, CA 95812-3044
FROM: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Clerk of the Board of Supervisors
or
County Clerk
County of: Riverside
2724 Gateway Dr, Riverside,
CA 92507
1. Project Title: City of Palm Desert – Civic Center Photovoltaic
Project – Artists Center
2. Project Applicant: City of Palm Desert
3. Project Location – Identify street address and
cross streets or attach a map showing project
site (preferably a USGS 15’ or 7 1/2’
topographical map identified by quadrangle
name):
72-567 Highway 111, Palm Desert, CA 92260. In the
parking lot
4. (a) Project Location – City: Palm Desert (b) Project Location – County: Riverside
5. Description of nature, purpose, and
beneficiaries of Project:
A request to install solar carport canopies for
generating electricity.
6. Name of Public Agency approving project: City of Palm Desert
7. Name of Person or Agency undertaking the
project, including any person undertaking an
activity that receives financial assistance
from the Public Agency as part of the activity
or the person receiving a lease, permit,
license, certificate, or other entitlement of use
from the Public Agency as part of the activity:
City of Palm Desert.
8. Exempt status: (check one)
(a) Ministerial project. (Pub. Res. Code § 21080(b)(1); State CEQA
Guidelines § 15268)
(b) Not a project.
(c) Emergency Project. (Pub. Res. Code § 21080(b)(4); State CEQA
Guidelines § 15269(b),(c))
(d) Categorical Exemption.
State type and section
number:
(e) Declared Emergency. (Pub. Res. Code § 21080(b)(3); State CEQA
Guidelines § 15269(a))
(f) Statutory Exemption.
State Code section number:
(Public Resources Code (CEQA Statute) § 21080.35)
(g) Other. Explanation: General Rule – Section 15061(b)(3)
9. Reason why project was exempt: This proposal is for the installation of a solar energy
system and associated equipment within an existing
parking lot, and the project is not subject to any of the
Item 3B-120
Notice of Exemption FORM “B”
exceptions for exemptions identified in § 21080.35
(d)(1-3).
10. Lead Agency Contact Person: Ryan Gayler, Project Manager
Telephone: (760) 776-6393
11. If filed by applicant: Attach Preliminary Exemption Assessment (Form “A”) before filing.
12. Has a Notice of Exemption been filed by the public agency approving the project? Yes No
13. Was a public hearing held by the lead agency to consider the exemption? Yes No
If yes, the date of the public hearing was: October 13, 2022
Signature:__________________________________ Date:_______________
Title: Project Manager
Signed by Lead Agency Signed by Applicant
Date Received for Filing:
(Clerk Stamp Here)
Authority cited: Sections 21083 and 21100, Public Resources Code.
Reference: Sections 21108, 21152, and 21152.1, Public Resources Code.
Item 3B-121
Notice of Exemption FORM “B”
NOTICE OF EXEMPTION
TO:
Office of Planning and Research
P. O. Box 3044, Room 113
Sacramento, CA 95812-3044
FROM: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Clerk of the Board of Supervisors
or
County Clerk
County of: Riverside
2724 Gateway Dr, Riverside,
CA 92507
1. Project Title: City of Palm Desert – Civic Center Photovoltaic
Project – Desert Willow Academy
2. Project Applicant: City of Palm Desert
3. Project Location – Identify street address and
cross streets or attach a map showing project
site (preferably a USGS 15’ or 7 1/2’
topographical map identified by quadrangle
name):
38-500 Portola Avenue, Palm Desert, CA 92260. In
the parking lot
4. (a) Project Location – City: Palm Desert (b) Project Location – County: Riverside
5. Description of nature, purpose, and
beneficiaries of Project:
A request to install solar carport canopies for
generating electricity.
6. Name of Public Agency approving project: City of Palm Desert
7. Name of Person or Agency undertaking the
project, including any person undertaking an
activity that receives financial assistance
from the Public Agency as part of the activity
or the person receiving a lease, permit,
license, certificate, or other entitlement of use
from the Public Agency as part of the activity:
City of Palm Desert.
8. Exempt status: (check one)
(a) Ministerial project. (Pub. Res. Code § 21080(b)(1); State CEQA
Guidelines § 15268)
(b) Not a project.
(c) Emergency Project. (Pub. Res. Code § 21080(b)(4); State CEQA
Guidelines § 15269(b),(c))
(d) Categorical Exemption.
State type and section
number:
(e) Declared Emergency. (Pub. Res. Code § 21080(b)(3); State CEQA
Guidelines § 15269(a))
(f) Statutory Exemption.
State Code section number:
(Public Resources Code (CEQA Statute) § 21080.35)
(g) Other. Explanation: General Rule – Section 15061(b)(3)
9. Reason why project was exempt: This proposal is for the installation of a solar energy
system and associated equipment within an existing
parking lot, and the project is not subject to any of the
Item 3B-122
Notice of Exemption FORM “B”
exceptions for exemptions identified in § 21080.35
(d)(1-3).
10. Lead Agency Contact Person: Ryan Gayler, Project Manager
Telephone: (760) 776-6393
11. If filed by applicant: Attach Preliminary Exemption Assessment (Form “A”) before filing.
12. Has a Notice of Exemption been filed by the public agency approving the project? Yes No
13. Was a public hearing held by the lead agency to consider the exemption? Yes No
If yes, the date of the public hearing was: October 13, 2022
Signature:__________________________________ Date:_______________
Title: Project Manager
Signed by Lead Agency Signed by Applicant
Date Received for Filing:
(Clerk Stamp Here)
Authority cited: Sections 21083 and 21100, Public Resources Code.
Reference: Sections 21108, 21152, and 21152.1, Public Resources Code.
Item 3B-123
CARMEL CIRCARMEL CIR
RANCHO RDSAN PASAN PASCUAL AVECARMEL CIRRANCHO RDRANCHO RS
CARMEL CIR FRED WARSAN PABLO AVEFRED WARING DRDate:2022Vicinity Map for the Civic CenterPhotovoltaic Project••VICINITY MAPCivic CenterPAINTERS PATHEL PASEOMAGNESIA FALLS DRDESERT WILLOW CTPORTOLA AVEArtist CenterAquatic CenterDesert WillowItem 3B-124
City of Palm Desert
City Council Agenda
Renewable Energy Presentation
Photovoltaic Capital Improvement Project
October 2022
Item 3B-125
2
Priority 1: The vision is to be a responsible
steward of the City’s natural resources. Priorities are to
reduce per-capita consumption of energy and water,
promote greater use of sustainable materials with an eye
upon the needs of future generations
Priority 2: Promote greater usage of more sustainable
materials.
•The well-being of future generations depends on a healthy
environment.
•Strategy: Develop policies and programs to discourage waste,
increase renewable energy production and increase the use of
environmentally responsible materials.
Priority 3: Encourage all new construction to be
net zero energy in design
City Council Priorities
Energy & Sustainability
New
Utility
Bill
Item 3B-126
3
Spring 2021:City staff evaluated a statewide, competitively bid Solar Procurement Program conducted by SPURR, a Joint Powers Authority consisting of +300 public agencies. This JPA selected ForeFront Power as best qualified and lowest bid.
Fall 2021: Public Works presented an initial solar proposal to City Council.
Fall 2021-Fall 2022:Public Works & ForeFront completed…
Fall 2022 Peer Review Completed: Sage and the City’s Legal Counsel provided a technical and legal review on the proposed solar projects.
October 13th 2022:Staff recommends that Council approve Power Purchase Agreements with ForeFront to implement an energy saving project at 5 locations.
Palm Desert Renewable Energy Background
•City-Wide Solar
Evaluation
•Master Planning
Review
•City Stakeholder
Feedback
•NEM 2.0 Legacy
Analysis
•RPEC Committee
Approval
•CEQA Analysis /
Compliance
•Site Visits •EV-Ready Analysis •Contract Negotiation
Item 3B-127
5
No upfront cost to City
0% Rate Escalator for 20 Years
Electricity Rate Stability
Monetize Federal Tax Credit
Operations & Maintenance Included
Guaranteed Performance
Future Ownership Flexibility
Power Purchase Agreement with ForeFront Power
SCE/CCA
Bill
SCE/CCA Bill
SCE/CCA Bill
PPA Payment
Solar savings
$19,913,402
$8,948,088
$8,588,921
$2,376,393
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
Without Solar With Solar
Palm Desert City Est. PPA 20Y Savings
Utility Bill Solar PPA Savings
City Savings
Electricity
Bill
Est. PPA
Payment
Electricity
Bill
Item 3B-128
Civic Center (West) –470kW
Item 3B-129
Civic Center (East) –180kW
Item 3B-130
Aquatic Center –345kW
Item 3B-131
Art Museum –133kW
Trees marked in yellow to
remain and are modelled
in the shade analysis.
Trees marked in green to
be removed.
Item 3B-132
Desert Willow Golf Resort –266kW
Item 3B-133
11
Palm Desert City –Pricing & Savings
Assumes 4% Annual Utility Energy and Demand Charge Escalator
Assumes 1.5 Year to Complete Construction
Site PPA
Escalator
Solar System
Size (kW)
% Energy
Offset
EVCS Readiness
Conduit Included
Pre-Solar
Utility Bill
Year 1
Savings
20 Year
Savings
Civic Center West 0%470 91%5 Future Dual EVCS (10 Plugs)$235,282 ($229) $1,238,791
Civic Center East 0%180 99%2 Future Dual EVCS (4 Plugs)$94,430 ($9,731)$312,737
Aquatic Center 0%345 100%2 Future Dual EVCS (4 Plugs)$132,231 ($19,954)$368,179
Art Museum 0%133 91%None $74,213 ($14,361)$128,444
Desert Willow Golf Course 0%266 91%None $131,519 ($16,089)328,241
Total 0%1,394 94%-$667,674 ($60,364)$2,376,392
On Site Solar Capacity
•1,394kW across 5 Sites
No Upfront Cost
Save
•+$2.3M over 20 years
0% Rate Escalation for 20 Years
Operation and Maintenance Included
Solar Carport Structures
•Shaded Parking
•New LED Lighting
Local Labor
EVCS-Ready Infrastructure
Sustainability
•Solar Renewable Energy Credits
Secure NEM 2.0 Upon Receiving Council Approval
Item 3B-134
12
Tree Seedlings Lbs of Coal Burned Passenger Vehicles
329,968 22,079,074 4,300
Barrels of Oil Acres of Forest Homes Energy Use
46,201 23,616 3,883
GHG Equivalencies 2,184,616 kWh of Electricity in 20 Years
Metrics from EPA Calculator Item 3B-135
Conclusions
Statewide,
Competitive RFP
Solar Carports
+1.3MW PV
+$2.3M Lifetime
Energy Savings
Turnkey Solutions
2024 Construction
Secure NEM 2.0
Legacy Rates
Staff, Peer, Legal
Reviewed
Recommendation:
•Conduct Public Hearing and approve the Resolution finding the
projects will result in a net savings over the life of the contracts
•Approve the Power Purchase Agreements for the PV systems at
City Hall, Parkview Office Complex, the Aquatic Center, the Artists
Center, and Desert Willow Academy
Item 3B-136