HomeMy WebLinkAbout09-04-2018 Item 14 WRRF Project Update Meeting Date: 9/4/2018
FROM: Carrie Mattingly, Utilities Director
Prepared By: Lianne Westberg, Assistant Program Manager – WSC
SUBJECT: WATER RESOURCE RECOVERY FACILITY PROJECT UPDATE
RECOMMENDATION
Receive and file update on Water Resource Recovery Facility Project and associated Project
Labor Agreement negotiations.
DISCUSSION
The Water Resource Recovery Facility (WRRF) Project has achieved the 95% design milestone.
All plans and specifications are essentially complete with only minor quality assurance and
quality contro l items pending. These documents are available as Council Reading Files for public
review in the office of the City Clerk.
Key items of interest related to project costs and funding are:
1. Value engineering was performed at the 60% design milestone. This w ork resulted in seven
million dollars in cost reductions.
2. The 95% design cost estimate (Attachment D) is within the range of costs provided at 60%
design, although overall the range has increased.
Cost Estimate
Design
Milestone
Low Median High
60% Design $91,100,000 $107,180,000 $128,620,000
95% Design $102,960,000 $114,400,000 $131,560,000
Cost increases are related to several unit processes (including the membrane bioreactor) and
t he more detailed design has resulted in increased cost for concrete, steel, and electrical
components.
3. The design estimate includes a ten percent construction contingency.
4. The bid documents include the Water Resource Center. It is an ‘additive alternate’ in the bid
package. This approach preserves maximum flexibility for the City by allowing this portion
of the project to be separated out if necessary due to funding constraints.
5. The City will receive a State Revolving Fund (SRF) loan up to $140 million at an interest
rate that is half the State’s General Obligation Bond interest rate. The City has been
recommended for $4 million of principal forgiveness from green project reserve funding. The
funding package has been approved by State Board management and the Initial Agreement is
near ly complete.
6. Two grants are in the approval process (CalOES and the Integrated Regional Water
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Management Plan). If the grants make it all the way through the ir respective processes, they
are expected to total about $3 million.
WRRF Project Overview and Update
The WRRF Project is divided into five phases. Phases 1 and 2 are complete. Phase 3, which runs
through the award of the construction contract, is near completion. A milestone schedule is provided
as Attachment A.
WRRF Project Phasing Plan
Phase Schedule Status
Phase 1– Project Planning January 2014 – June 2015 Complete
Phase 2 – Preliminary Design July 2015 – June 2016 Complete
Phase 3 – Final Design July 2016 – April 2019* Ongoing
Phase 4 – Construction May 2019 – May 2022 Pending
Phase 5 – Close Out June 2022 – August 2022 Pending
*Phase 3 - Final Design includes the bidding timeframe to the start of construction
Work efforts currently underway include:
1. Building permit review
2. Project Labor Agreement negotiations per Council direction
3. Construction Management and Inspection Services
4. Contractor pre-qualification
Over the next several months, the City Council will be considering and taking action on the
following WRRF Project-related items:
1. Consideration of Project Labor Agreement
2. Authorization to bid the Project
3. State Revolving Fund Initial Agreement
4. Construction Manage ment and Inspection Services agreement
5. Phase 4 Program Management services
6. Engineering services during construction
Project Labor Agreement Update
A staff negotiating team (consisting of the City Attorney, the Utilities Director, the City’s
retained project consultant , and retained Project Labor Agreement counsel), have been in
negotiations with the Trades Council negotiating team to attempt to define and prioritize
objectives and develop mutually agreeable language for a Project Labor Agreement covering the
WRRF Project. The teams engaged in a lengthy in-person negotiating session on August 10,
2018 during which the teams reviewed the draft agreement proposed by the Trades Council, and
discussed City Council direction, City bargaining objectives, public input received related to the
Council study session, and significant input conveyed to staff and the City Council by local
contractors and contractors’ association representatives.
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During that initial meeting, the teams had very productive discussions, clarifying priorities and
anticipated focus areas of negotiation for both the City and the Trades Council. Subsequent to
the meeting, the staff negotiating team met internally to develop counterproposal language and
that language has been conveyed to and is under consideration by the Trades Council team. Staff
believes negotiations are proceeding constructively and anticipate that further areas of
negotiation will become very focused through next round exchanges and that both teams will be
in a position to assess the likelihood of reaching agreement in the time frame established by
Council and in alignment with the Project timelines set forth above. If staff reaches a point
where further Council direction is required, staff will return to Council with a further status
summary and request for additional direction on any remaining areas of disagreement prior to the
October 2018 negotiating deadline.
ENVIRONMENTAL REVIEW
The Environmental Impact Report (EIR) for the WRRF Project was certified by Council on
August 16, 2016.
CONCURRENCES
Utilities has collaborated with the Public Works and Community Development Departments.
Community Development concurs with the environmental review findings. The Public Works
and Community Development Departments are reviewing the Building Permit Submittal.
Comments will be incorporated into the Bid Set, and the City Engineer will provide final
approval.
FISCAL IMPACT
The WRRF Project will primarily be financed through a low -interest SRF loan administered by
the State Water Resources Control Board Water Recycling Funding Program. The City’s SRF
funding package has been approved by SWRCB management and the Initial Agreement is being
developed. While the State Water Resources Contro l Board initially committed to providing the
Initial Agreement by August 2018, it is experiencing delays due to an enterprise fiscal software
change. The State’s plan is to provide the Initial Agreement to the City in October for Council to
execute in November. The State Board has assured the City that the project will receive the
funding agreement this calendar year. The project is listed as a “fundable project’ in the State
Board’s Intended Use Plan. The State Water Resources Control Board has also provid ed the
attached letter and draft Initial Agreement (Attachments B and C).
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Adequate funding is available in the Sewer Fund to support the project’s construction, including
a 12% percent City-held contingency. The project budget is $140,000,000 and the estimated
range of construction costs at 95% design is provided below.
Cost Estimate
Design
Milestone
Low Median High
95% Design $102,960,000 $114,400,000 $131,560,000
Other project costs will include contingencies and soft costs (such as construction ma nagement,
engineering services during construction, and other project support services).
AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE
Building Permit Submittal Plans, Specifications and Cost Estimate for the Water Resource
Recovery Facility Project , Specification No. 91620.
Attachments:
a - WRRF Project Milestone Graphic
b - Funding Decision Letter
c - WRRF Project Draft ISA Construction Agreement 5-31-18
d - COUNCIL READING FILE - Basis of Estimate - 95pct
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DRAFT 5/31/18
CITY OF SAN LUIS OBISPO
AND
CALIFORNIA STATE WATER RESOURCES CONTROL BOARD
CONSTRUCTION INSTALLMENT SALE AGREEMENT
San Luis Obispo Water Resource Recovery Facility Expansion and Improvements Project
PROJECT NO. [C-06-8029-110]
AGREEMENT NO. [ ]
AMOUNT: $
ELIGIBLE START DATE: _________________
COMPLETION OF CONSTRUCTION DATE: ______________
FINAL DISBURSEMENT REQUEST DATE: _____________
FINAL REPAYMENT DATE: _____________
RECORDS RETENTION END DATE: _____________
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City of San Luis Obispo
Agreement No.: XX-XXX-550
Project No.: C-06-8029-110
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TABLE OF CONTENTS
WHEREAS, ................................................................................................................................................... 1
ARTICLE I DEFINITIONS ......................................................................................................................... 1
1.1 Definitions. .......................................................................................................................................... 1
1.2 Exhibits Incorporated.......................................................................................................................... 6
ARTICLE II REPRESENTATIONS, WARRANTIES, AND COMMITMENTS ........................................... 6
2.1 Application and General Recipient Commitments. ............................................................................ 6
2.2 Authorization and Validity. .................................................................................................................. 6
2.3 No Violations. ..................................................................................................................................... 6
2.4 No Litigation. ...................................................................................................................................... 6
2.5 Solvency and Insurance. .................................................................................................................... 6
2.6 Legal Status and Eligibility. ................................................................................................................ 7
2.7 Financial Statements and Continuing Disclosure. ............................................................................. 7
2.8 Completion of Project. ........................................................................................................................ 7
2.9 Award of Construction Contracts. ...................................................................................................... 7
2.10 Notice. ............................................................................................................................................. 7
2.11 Findings and Challenge .................................................................................................................. 9
2.12 Project Access. ............................................................................................................................... 9
2.13 Project Completion; Initiation of Operations. .................................................................................. 9
2.14 Continuous Use of Project; Lease, Sale, Transfer of Ownership, or Disposal of Project. .......... 9
2.15 Project Reports. .............................................................................................................................. 9
2.16 Federal Disadvantaged Business Enterprise (DBE) Reporting. ................................................... 10
2.17 Records. ....................................................................................................................................... 10
2.18 Audit. ............................................................................................................................................. 11
ARTICLE III FINANCING PROVISIONS ................................................................................................. 11
3.1 Purchase and Sale of Project. .......................................................................................................... 11
3.2 Amounts Payable by the Recipient. ................................................................................................. 12
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City of San Luis Obispo
Agreement No.: XX-XXX-550
Project No.: C-06-8029-110
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3.3 Obligation Absolute. ......................................................................................................................... 13
3.4 No Obligation of the State. ............................................................................................................... 13
3.5 Disbursement of Project Funds; Availability of Funds. ..................................................................... 13
3.6 Withholding of Disbursements and Material Violations. ................................................................... 14
3.7 Pledge; Rates, Fees and Charges; Additional Debt. ....................................................................... 15
3.8 Financial Management System and Standards. .............................................................................. 16
3.9 Accounting and Auditing Standards. ................................................................................................ 16
3.10 Other Assistance. ......................................................................................................................... 16
ARTICLE IV MISCELLANEOUS PROVISIONS ..................................................................................... 17
4.1 Amendment and Integration. ............................................................................................................ 17
4.2 Assignability. .................................................................................................................................... 17
4.3 Bonding. ........................................................................................................................................... 17
4.4 Competitive Bidding ......................................................................................................................... 17
4.5 Compliance with Law, Regulations, etc. .......................................................................................... 17
4.6 Conflict of Interest. ........................................................................................................................... 18
4.7 Damages for Breach Affecting Tax-Exempt Status or Federal Compliance .................................... 18
4.8 Disputes. .......................................................................................................................................... 18
4.9 Governing Law. ................................................................................................................................ 18
4.10 Income Restrictions. ..................................................................................................................... 18
4.11 Indemnification and State Reviews. ............................................................................................. 19
4.12 Independent Actor. ....................................................................................................................... 19
4.13 Leveraging Covenants. ................................................................................................................. 19
4.14 Non-Discrimination Clause. .......................................................................................................... 20
4.15 No Third Party Rights. .................................................................................................................. 20
4.16 Operation and Maintenance; Insurance. ...................................................................................... 21
4.17 Permits, Subcontracting, and Remedies. ..................................................................................... 21
4.18 Prevailing Wages. ......................................................................................................................... 21
4.19 Public Funding. ............................................................................................................................. 22
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City of San Luis Obispo
Agreement No.: XX-XXX-550
Project No.: C-06-8029-110
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4.20 Recipient’s Responsibility for Work. ............................................................................................. 22
4.21 Related Litigation. ......................................................................................................................... 22
4.22 Rights in Data. .............................................................................................................................. 22
4.23 State Water Board Action; Costs and Attorney Fees. .................................................................. 22
4.24 Termination and Remedies Upon Event of Default. ..................................................................... 22
4.25 Timeliness. .................................................................................................................................... 23
4.26 Unenforceable Provision. ............................................................................................................. 23
4.27 Useful Life. .................................................................................................................................... 24
4.28 Venue. .......................................................................................................................................... 24
4.29 Waiver and Rights of the State Water Board. .............................................................................. 24
ARTICLE V TAX COVENANTS .............................................................................................................. 24
5.1 Purpose. ........................................................................................................................................... 24
5.2 Tax Covenant. .................................................................................................................................. 24
5.3 Governmental Unit. .......................................................................................................................... 24
5.4 Financing of a Capital Project. ......................................................................................................... 24
5.5 Ownership and Operation of Project. ............................................................................................... 24
5.6 Temporary Period. ............................................................................................................................ 25
5.7 Working Capital. ............................................................................................................................... 25
5.8 Expenditure of Proceeds. ................................................................................................................. 25
5.9 Private Use and Private Payments. ................................................................................................. 25
5.10 No Sale, Lease or Private Operation of the Project. .................................................................... 26
5.11 No Disproportionate or Unrelated Use. ........................................................................................ 26
5.12 Management and Service Contracts. ........................................................................................... 26
5.13 No Disposition of Financed Property. ........................................................................................... 26
5.14 Useful Life of Project..................................................................................................................... 26
5.15 Installment Payments. .................................................................................................................. 27
5.16 No Other Replacement Proceeds. ................................................................................................ 27
5.17 No Sinking or Pledged Fund. ........................................................................................................ 27
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Agreement No.: XX-XXX-550
Project No.: C-06-8029-110
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5.18 Reserve Amount. .......................................................................................................................... 27
5.19 Reimbursement Resolution. ......................................................................................................... 27
5.20 Reimbursement Expenditures. ..................................................................................................... 27
5.21 Change in Use of the Project. ....................................................................................................... 28
5.22 Rebate Obligations. ...................................................................................................................... 28
5.23 No Federal Guarantee. ................................................................................................................. 28
5.24 No Notices or Inquiries from IRS. ................................................................................................. 28
5.25 Amendments. ................................................................................................................................ 28
5.26 Reasonable Expectations. ............................................................................................................ 28
EXHIBIT A - SCOPE OF WORK & INCORPORATED DOCUMENTS
EXHIBIT A - FBA –FINAL BUDGET APPROVAL
EXHIBIT B - FUNDING AMOUNT
EXHIBIT C - PAYMENT SCHEDULE
EXHIBIT D - SPECIAL CONDITIONS
EXHIBIT E - PROGRAMMATIC CONDITIONS & CROSS-CUTTERS
EXHIBIT F - SCHEDULE OF SYSTEM OBLIGATIONS
EXHIBIT G - DAVIS-BACON REQUIREMENTS
EXHIBIT H - COMPLIANCE WITH CROSS-CUTTING STATE AUTHORITIES
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City of San Luis Obispo
Agreement No.: XX-XXX-550
Project No.: C-06-8029-110
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WHEREAS,
1. The State Water Board is authorized to provide financial assistance under this Agreement pursuant to
the following:
• Chapter 6.5 of Division 7 of the California Water Code (State Act)
• Title VI of the federal Water Pollution Control Act (Federal Act)
2. The State Water Board determines eligibility for financial assistance, determines a reasonable
schedule for providing financial assistance, establishes compliance with the Federal Act and the State
Act, and establishes the terms and conditions of a financial assistance agreement.
3. The Recipient has applied to the State Water Board for financial assistance for the Project described
in Exhibit A of this Agreement and the State Water Board has selected the application for financial
assistance.
4. The State Water Board proposes to assist in providing financial assistance for eligible costs of the
Project, and the Recipient desires to participate as a recipient of financial assistance from the State
Water Board and evidence its obligation to pay Installment Payments, which obligation will be
secured by Net Revenues, as defined herein, upon the terms and conditions set forth in this
Agreement, all pursuant to the Federal Act and the State Act.
NOW, THEREFORE, in consideration of the premises and of the mutual representations, covenants and
agreements herein set forth, the State Water Board and the Recipient, each binding itself, its successors
and assigns, do mutually promise, covenant, and agree as follows:
Subject to the satisfaction of any conditions precedent to this Agreement, this Agreement shall become
effective upon the signature of both the Recipient and the State Water Board.
Upon execution, the term of the Agreement shall begin on the Eligible Start Date and extend throu gh the
Final Repayment Date.
ARTICLE I DEFINITIONS
1.1 Definitions.
Unless otherwise specified, each capitalized term used in this Agreement has the following meaning:
"Additional Payments" means the Additional Payments described in Section 3.2(c) of this Agreement.
"Agreement" means this Installment Sale Agreement, including all exhibits and attachments.
"Allowance" means an amount based on a percentage of the accepted bid for an eligible project to help
defray the planning, design, and construction engineering and administration costs of the Project.
"Authorized Representative" means the duly appointed representative of the Recipient as set forth in the
certified original of the Recipient’s authorizing resolution that designates the authorized representative by
title.
"Bank" means the California Infrastructure and Economic Development Bank.
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City of San Luis Obispo
Agreement No.: XX-XXX-550
Project No.: C-06-8029-110
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“Bond Funded Portion of the Project Funds” means any portion of the Project Funds which was or will be
funded with Bond Proceeds.
“Bond Proceeds” means original proceeds, investment proceeds, and replacement proceeds of Bonds .
"Bonds" means any series of bonds issued by the Bank, the interest on which is excluded from gross
income for federal tax purposes, all or a portion of the proceeds of which have been, are, or will be
applied by the State Water Board to fund all or any portion of the Project Costs or that are secured in
whole or in part by Installment Payments paid hereunder.
"Code" as used in Article V of this Agreement means the Internal Revenue Code of 1986, as amended,
and any successor provisions and the regulations of the U.S. Department of the Treasury promulgated
thereunder.
"Completion of Construction" means the date, as determined by the Division after consultation with the
Recipient, that the work of building and erection of the Project is substantially complete, and is identified
in Exhibit A of this Agreement.
“CWSRF” means the Clean Water State Revolving Fund.
“Days” means calendar days unless otherwise expressly indicated.
“Debt Service” means, as of any date, with respect to outstanding System Obligations and, in the case of
the additional debt tests in Section 3.7 of this Agreement, any System Obligations that are proposed to be
outstanding, the aggregate amount of principal and interest scheduled to become due (either at maturity
or by mandatory redemption), calculated with the following assumptions:
a. Principal payments (unless a different subsection of this definition applies for purposes of
determining principal maturities or amortization) are made in accordance with any
amortization schedule published for such principal, including any minimum sinking fund
payments;
b. Interest on a variable rate System Obligation that is not subject to a swap agreement and
that is issued or will be issued as a tax-exempt obligation under federal law, is the
average of the SIFMA Municipal Swap Index, or its successor index, during the 24
months preceding the date of such calculation;
c. Interest on a variable rate System Obligation that is not subject to a swap agreement and
that is issued or will be issued as a taxable obligation under federal law, is the average of
LIBOR, or its successor index, during the 24 months preceding the date of such
calculation;
d. Interest on a variable rate System Obligation that is subject to a swap agreement is the
fixed swap rate or cap strike rate, as appropriate, if the variable rate has been swapped
to a fixed rate or capped pursuant to an interest rate cap agreement or similar
agreement;
e. Interest on a fixed rate System Obligation that is subject to a swap agreement such that
all or a portion of the interest has been swapped to a variable rate shall be treated as
variable rate debt under subsections (b) or (c) of this definition of Debt Ser vice;
f. Payments of principal and interest on a System Obligation are excluded from the
calculation of Debt Service to the extent such payments are to be paid from amounts
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then currently on deposit with a trustee or other fiduciary and restricted for the
defeasance of such System Obligations;
g. If 25% or more of the principal of a System Obligation is not due until its final stated
maturity, then principal and interest on that System Obligation may be projected to
amortize over the lesser of 30 years or the useful life of the financed asset, and interest
may be calculated according to subsections (b)-(e) of this definition of Debt Service, as
appropriate.
“Deputy Director” means the Deputy Director of the Division.
"Division" means the Division of Financial Assistance of the State Water Board or any other segment of
the State Water Board authorized to administer this Agreement.
“Eligible Start Date” means the date set forth in Exhibit B, establishing the date on or after which
construction costs may be incurred and eligible for reimbursement hereunder.
“Enterprise Fund” means the enterprise fund of the Recipient in which Revenues are deposited.
“Event of Default” means the occurrence of any one or more of the following events:
a) Failure by the Recipient to pay Installment Payments when due, or failure to make any other
payment required to be paid pursuant to this Agreement;
b) A representation or warranty made by or on behalf of the Recipient in this Agreement or in any
document furnished by or on behalf of the Recipient to the State Water Board pursuant to this
Agreement shall prove to have been inaccurate, misleading or incomplete in any material respect;
c) A material adverse change in the condition of the Recipient, the Revenues, or the System, which
the Division reasonably determines would materially impair the Recipient’s ability to satisfy its
obligations under this Agreement.
d) Failure by the Recipient to comply with the additional debt test or reserve fund requirement, if
any, in Section 3.7 or Exhibit D of this Agreement;
e) Failure to operate the System or the Project without the Division’s approval;
f) Failure by the Recipient to observe and perform any covenant, condition, or provision in this
Agreement, which failure shall continue for a period of time, to be determined by the Division;
g) The occurrence of a material breach or event of default under any System Obligation that results
in the acceleration of principal or interest or otherwise requires immediate prepayment,
repurchase or redemption;
h) Initiation of proceedings seeking arrangement, reorganization, or any other relief under any
applicable bankruptcy, insolvency, or other similar law now or hereafter in effect; or the
appointment of or taking possession of the Recipient’s property by a receiver, liquidator,
assignee, trustee, custodian, conservator, or similar official; or the Recipient’s entering into a
general assignment for the benefit of creditors; or any action in furtherance of any of the
foregoing;
i) Initiation of resolutions or proceedings to terminate the Recipient’s existence;
j) A determination pursuant to Gov. Code § 11137 that the Recipient has violated any provision in
Article 9.5 of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code;
“Final Disbursement Request Date” means the date established in Exhibit A, after which date, no further
Project Funds disbursements may be requested.
“Final Repayment Date” is the date by which all principal and accrued interest due under this Agreement
is to be paid in full to the State Water Board and is specified in Exhibit B and Exhibit C.
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"Fiscal Year" means the period of twelve (12) months terminating on June 30 of any year, or any other
annual period selected and designated by the Recipient as its Fiscal Year in accordance with applicable
law.
"Force Account" means the use of the Recipient's own employees or equipment.
“GAAP” means generally accepted accounting principles, the uniform accounting and reporting
procedures set forth in publications of the American Institute of Certified Public Accountants or its
successor, or by any other generally accepted authority on such procedures, and includes, as applicable,
the standards set forth by the Governmental Accounting Standards Board or its successor.
“Indirect Costs” means those costs that are incurred for a common or joint purpose benefiting more than
one cost objective and are not readily assignable to the Project (i.e., costs that are not directly related to
the Project). Examples of Indirect Costs include, but are not limited to: central service costs; general
administration of the Recipient; non-project-specific accounting and personnel services performed within
the Recipient organization; depreciation or use allowances on buildings and equipment; the costs of
operating and maintaining non-project-specific facilities; tuition and conference fees; generic overhead or
markup; and taxes.
"Initiation of Construction" means the date that notice to proceed with work is issued for the Project, or, if
notice to proceed is not required, the date of commencement of building and erection of the Project.
"Installment Payments" means Installment Payments due and payable by the Recipient to the State
Water Board under this Agreement, the amounts of which are set forth as Exhibit C hereto, or as may be
set forth in the final payment schedule forwarded to Recipient after all disbursements have been paid and
construction of the Project has been completed.
“Listed Event” means, so long as the Recipient has outstanding any System Obligation subject to Rule
15c2-12, any of the events required to be reported pursuant to Rule 15c2-12(b)(5).
“Maximum Annual Debt Service” means the maximum amount of Debt Service due on System
Obligations in any Fiscal Year during the period commencing with the Fiscal Year for which such
calculation is made and terminating with the last Fiscal Year in which Debt Service for any System
Obligations will become due.
"Net Revenues" means, for any Fiscal Year, all Revenues received by the Recipient less the O perations
and Maintenance Costs for such Fiscal Year.
"Obligation" means the obligation of the Recipient to make Installment Payments and Additional
Payments as provided herein, as evidenced by the execution of this Agreement, proceeds of such
obligations being used to fund the Project as specified in the Project Description in Exhibit A and Exhibit A-
FBA and in the documents thereby incorporated by reference.
"Operations and Maintenance Costs" means the reasonable and necessary costs paid or incurred by the
Recipient for maintaining and operating the System, determined in accordance with GAAP, including all
reasonable expenses of management and repair and all other expenses necessary to maintain and
preserve the System in good repair and working order, and including all reasonable and necessary
administrative costs of the Recipient that are charged directly or apportioned to the operation of the
System, such as salaries and wages of employees, overhead, taxes (if any), the cost of permits, licenses ,
and charges to operate the System and insurance premiums; but excluding, in all cases depreciation,
replacement, and obsolescence charges or reserves therefor and amortization of intangibles.
“Other Material Obligation” means an obligation of the Recipient set forth in Exhibit F that is not payable
from Net Revenues, but is otherwise material to this transaction.
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"Policy" means the State Water Board's “Policy for Implementing the Clean Water State Revolving Fund,”
as amended from time to time, and including the Intended Use Plan in effect as of the Eligible Start Date.
“Project” means the Project financed by this Agreement as described in Exhibit A, Exhibit A-FBA, and in
the documents incorporated by reference herein.
"Project Completion" means the date, as determined by the Division after consultation with the Recipient,
that operation of the Project is initiated or is capable of being initiated, whichever comes first .
"Project Costs" means the incurred costs of the Recipient which are eligible for financial assistance under
this Agreement, which are allowable costs as defined under the Policy, and which are reasonable,
necessary and allocable by the Recipient to the Project under GAAP, plus capitalized interest.
“Project Funds” means all moneys disbursed to the Recipient by the State Water Board pursuant to this
Agreement.
“Project Manager” means the person designated by the State Water Board to manage performance of the
Agreement.
“Recipient” means the City of San Luis Obispo.
“Records Retention End Date” means the last date that the Recipient is obligated to maintain records
pursuant to Section 2.17 of this Agreement.
“Regional Water Quality Control Board” or “Regional Water Board” means the appropriate Regional Water
Quality Control Board.
“Reimbursement Resolution” means the Recipient’s reimbursement resolution identified in Exhibit A of
this Agreement.
“Reserve Fund” means the reserve fund required pursuant to Section 3.7 of this Agreement.
"Revenues" means, for each Fiscal Year, all gross income and revenue received or receivable by the
Recipient from the ownership or operation of the System, determined in accordance with GAAP, including
all rates, fees, and charges (including connection fees and charges) as received by the Recipient for the
services of the System, and all other income and revenue howsoever derived by the Recipient from the
ownership or operation of the System or arising from the System, including all income from the deposit or
investment of any money in the Enterprise Fund or any rate stabilization fund of the Recipient or held on
the Recipient’s behalf, and any refundable deposits made to establish credit, and advances or
contributions in aid of construction.
“Rule 15c2-12(b)(5)” means Rule 15c2-12(b)(5) promulgated by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
“SRF” means the Clean Water State Revolving Fund.
“State” means State of California.
“State Water Board” means the State Water Resources Control Board.
"System" means all wastewater collection, pumping, transport, treatment, storage, and disposal facilities,
including land and easements thereof, owned by the Recipient, including the Project, and all other
properties, structures, or works hereafter acquired and constructed by the Recipient and determined t o be
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a part of the System, together with all additions, betterments, extensions, or improvements to such
facilities, properties, structures, or works, or any part thereof hereafter acquired and constructed .
“System Obligation” means any obligation of the Recipient payable from the Revenues, including but not
limited to this Obligation and obligations reflected in Exhibit F and such additional obligations as may
hereafter be issued in accordance with the provisions of such obligations and this Agreement.
“Year” means calendar year unless otherwise expressly indicated.
1.2 Exhibits Incorporated.
All exhibits to this Agreement, including any amendments and supplements hereto, are hereby incorporated
herein and made a part of this Agreement.
ARTICLE II REPRESENTATIONS, WARRANTIES, AND COMMITMENTS
The Recipient represents, warrants, and commits to the following as of the Eligible Start Date set forth on
the first page hereof and continuing thereafter for the term of this Agreement.
2.1 Application and General Recipient Commitments.
The Recipient has not made any untrue statement of a material fact in its application for this financial
assistance, or omitted to state in its application a material fact that makes the statements in its application
not misleading.
The Recipient shall comply with all terms, provisions, conditions, and commitments of this Agreement,
including all incorporated documents, and shall fulfill all assurances, declarations, representations, and
commitments in its application, accompanying documents, and communications filed in support of its
request for financial assistance.
2.2 Authorization and Validity.
The execution and delivery of this Agreement, including all incorporated documents, has been
duly authorized by the Recipient. Upon execution by both parties, this Agreement constitutes a
valid and binding obligation of the Recipient, enforceable in accordance with its terms, except as
such enforcement may be limited by law.
2.3 No Violations.
The execution, delivery, and performance by Recipient of this Agreement, including all
incorporated documents, do not violate any provision of any law or regulation in effect as of the
date set forth on the first page hereof, or result in any breach or default under any contract,
obligation, indenture, or other instrument to which Recipient is a party or by which Recipient is bound
as of the date set forth on the first page hereof.
2.4 No Litigation.
As of the date of the execution of this Agreement, there are no current pending or, to Recipient’s
knowledge, threatened actions, claims, investigations, suits, or proceedings before any
governmental authority, court, or administrative agency which materially affect the financial
condition or operations of the Recipient, the System, the Revenues, and/or the Project.
2.5 Solvency and Insurance.
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None of the transactions contemplated by this Agreement will be or have been made with an actual intent
to hinder, delay, or defraud any present or future creditors of Recipient. As of the date set forth on the first
page hereof, Recipient is solvent and will not be rendered insolvent by the transactions contemplated by
this Agreement. Recipient is able to pay its debts as they become due. Recipient maintains sufficient
insurance coverage considering the scope of this Agreement, including, for example but not necessarily
limited to, general liability, automobile liability, workers compensation and employers liability, professional
liability.
2.6 Legal Status and Eligibility.
Recipient is duly organized and existing and in good standing under the laws of the State of California.
Recipient shall at all times maintain its current legal existence and preserve and keep in full force and
effect its legal rights and authority. Recipient shall maintain its eligibility for funding under this Agreement.
2.7 Financial Statements and Continuing Disclosure.
The financial statements of Recipient previously delivered to the State Water Board as of the date(s) set
forth in such financial statements: (a) are materially complete and correct; (b) present fairly the financial
condition of the Recipient; and (c) have been prepared in accordance with GAAP. Since the date(s) of
such financial statements, there has been no material adverse change in the financial condition of the
Recipient, nor have any assets or properties reflected on such financial s tatements been sold,
transferred, assigned, mortgaged, pledged or encumbered, except as previously disclosed in writing by
Recipient and approved in writing by the State Water Board.
The Recipient is current in its continuing disclosure obligations associated with its material debt.
2.8 Completion of Project.
The Recipient shall expeditiously proceed with and complete construction of the Project in sub stantial
accordance with Exhibit A and Exhibit A-FBA.
2.9 Award of Construction Contracts.
(a) The Recipient shall award the prime construction contract timely in order to meet the start of
construction date specified in Exhibit A.
(b) The Recipient shall promptly notify the Division in writing, via mail or email, both of the award of
the prime construction contract for the Project and of Initiation of Construction of the Project. The
Recipient shall make all reasonable efforts to complete construction in substantial conformance
with the terms of the contract by the Completion of Construction date established in Exhibit A.
2.10 Notice.
(a) The Recipient shall notify the Deputy Director Division and the Project Manager in writing, via
mail or email, within five (5) working days of the occurrence of any of the following events:
1) Bankruptcy, insolvency, receivership or similar event of the Recipient, or actions taken in
anticipation of any of the foregoing;
2) Change of ownership of the System or change of management or service contracts, if
any, for operation of the System;
3) Material loss, theft, damage, or impairment to the Revenues or the System;
4) Failure to meet any debt service coverage test in section 10 of this Agreement;
5) Unscheduled draws on the Reserve Fund;
6) Listed Events or Events of Default, except as set forth in subdivisions (b) or (c) of this
section; or
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7) Failure to observe or perform any covenant in this Agreement.
(b) The Recipient shall notify the Deputy Director of the Division and the Project Manager in writing
within ten (10) working days of the following:
1) Material defaults on System Obligations, other than this Obligation;
2) Unscheduled draws on debt service reserves held for System Obligations, other than this
Obligation, if any, reflecting financial difficulties;
3) Unscheduled draws on credit enhancements on System Obligations, if any, reflecting
financial difficulties;
4) Substitution of credit or liquidity providers, if any or their failure to perform;
5) Any litigation pending or threatened with respect to the Project or the Recipient’s
technical, managerial or financial capacity to operate the System or the Recipient’s
continued existence, circulation of a petition to repeal, reduce, or otherwise challenge the
Recipient’s rates for services of the System, or any other event that could materially
impair the Revenues;
6) Adverse tax opinions, the issuance by the Internal Revenue Service or proposed or final
determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other
material notices of determinations with respect to the tax status of any tax-exempt bonds;
7) Rating changes on outstanding System Obligations, if any;
8) Issuance of additional parity obligations; or
9) Any enforcement actions by the Regional Water Board;
(c) The Recipient shall notify the Division promptly, within three (3) working days, of the following:
(1) The discovery of a false statement of fact or representation made in this Agreement or in the
application to the Division for this financial assistance, or in any certification, report, or
request for disbursement made pursuant to this Agreement, by the Recipient, its employees,
agents, or contractors;
(2) Any substantial change in scope of the Project. The Recipient shall undertake no substantial
change in the scope of the Project until prompt written notice of the proposed change has
been provided to the Division and the Division has given written approval for the change;
(3) Cessation of all major construction work on the Project where such cessation of work is
expected to or does extend for a period of thirty (30) days or more;
(4) Any circumstance, combination of circumstances, or condition, which is expected to or does
delay Completion of Construction for a period of ninety (90) days or more beyond the
estimated date of Completion of Construction as specified in Exhibit A;
(5) Discovery of any unexpected endangered or threatened species, as defined in the federal
Endangered Species Act. Should a federally protected species be unexpectedly encountered
during construction of the Project, the Recipient agrees to promptly notify the Division. This
notification is in addition to the Recipient’s obligations under the federal Endangered Species
Act;
(6) Any Project monitoring, demonstration, or other implementation activities required in Exhibit A
or Exhibit D of this Agreement, if any;
(7) Any public or media event publicizing the accomplishments and/or results of this Agreement
and provide the opportunity for attendance and participation by state representatives with at
least ten (10) working days’ notice to the Division;
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(8) Any events requiring notice to the Division pursuant to the provisions of Exhibit E to this
Agreement; or
(9) Completion of Construction of the Project, and actual Project Completion.
(d) The Recipient shall notify the Division within 24 hours of any discovery of any potential tribal
cultural resource and/or archeological or historical resource. Notice shall be addressed to the
Deputy Director of the Division and to Ahmad Kashkoli at Ahmad.Kashkoli@waterboards.ca.gov
and via phone at (916) 341-5855. Should a potential tribal cultural resource and/or archeological
or historical resource be discovered during construction, the Recipient shall ensure that all work
in the area of the find will cease until a qualified archeologist has evaluated the situation and
made recommendations regarding preservation of the resource, and the Division has determined
what actions should be taken to protect and preserve the resource. The Recipient shall
implement appropriate actions as directed by the Division.
2.11 Findings and Challenge
Upon consideration of a voter initiative to reduce Revenues, the Recipient shall make a finding regarding
the effect of such a reduction on the Recipient's ability to satisfy the rate covena nt set forth in Section 3.7
of this Agreement. The Recipient shall make its findings available to the public and shall request, if
necessary, the authorization of the Recipient’s decision-maker or decision-making body to file litigation to
challenge any such initiative that it finds will render it unable to satisfy the rate covenant set forth in
Section 3.7 and its obligation to operate and maintain the Project for its useful life. The Recipient shall
diligently pursue and bear any and all costs related to such challenge. The Recipient shall notify and
regularly update the State Water Board regarding the status of any such challenge.
2.12 Project Access.
The Recipient shall ensure that the State Water Board, the Governor of the State, the United States
Environmental Protection Agency, the Office of Inspector General, any member of Congress, or any
authorized representative of the foregoing, will have safe and suitable access to the Project site at all
reasonable times during Project construction and thereafter for the term of the Obligation. The Recipient
acknowledges that, except for a subset of information regarding archaeological records, the Project
records and locations are public records, including but not limited to all of the submissions accompanying
the application, all of the documents incorporated by Exhibit A and Exhibit A-FBA, and all reports,
disbursement requests, and supporting documentation submitted hereunder.
2.13 Project Completion; Initiation of Operations.
Upon Completion of Construction of the Project, the Recipient shall expeditiously initiate Project
operations.
2.14 Continuous Use of Project; Lease, Sale, Transfer of Ownership, or Disposal of
Project.
The Recipient agrees that, except as provided in this Agreement, it will not abandon, substantially
discontinue use of, lease, sell, transfer ownership of, or dispose of all or a significant part or portion of the
Project during the useful life of the Project without prior written approval of the Division. Such approval
may be conditioned as determined to be appropriate by the Division, including a condition requiring
repayment of all disbursed Project Funds or all or any portion of all remaining funds covered by this
Agreement together with accrued interest and any penalty assessments that may be due.
2.15 Project Reports.
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(a) Status Reports. The Recipient shall provide status reports no less frequently than quarterly,
starting with the execution of this Agreement. A status report must accompany any disbursement
request and is a condition precedent to any disbursement. At a minimum, the reports will contain
the following information:
(1) A summary of progress to date including a description of progress since the last report,
percent construction complete, percent contractor invoiced, and percent schedule
elapsed;
(2) A description of compliance with environmental requirements;
(3) A listing of change orders including the dollar amount, description of work, and change in
contract amount and schedule; and
(4) Any problems encountered, proposed resolution, schedule for resolution, and status of
previous problem resolutions.
(b) Project Completion Report. The Recipient shall submit a Proj ect Completion Report to the
Division with a copy to the appropriate Regional Water Board on or before the due date
established by the Division and the Recipient at the time of final project inspection. The Project
Completion Report must address the following:
(1) Describe the Project,
(2) Describe the water quality problem the Project sought to address,
(3) Discuss the Project’s likelihood of successfully addressing that water quality problem in
the future, and
(4) Summarize compliance with environmental conditions, if applicable.
If the Recipient fails to submit a timely Project Completion Report, the State Water
Board may stop processing pending or future applications for new financial assistance,
withhold disbursements under this Agreement or other agreements, and begin
administrative proceedings.
(c) As Needed Reports. The Recipient shall provide expeditiously, during the term of this
Agreement, any reports, data, and information reasonably required by the Di vision, including but
not limited to material necessary or appropriate for evaluation of the funding program or to fulfill
any reporting requirements of the state or federal government.
2.16 Federal Disadvantaged Business Enterprise (DBE) Reporting.
The Recipient shall report DBE utilization to the Division on the DBE Utilization Report, State Water Board
Form DBE UR334. The Recipient must submit such reports to the Division annually within ten (10)
calendar days following October 1 until such time as the "Notice of Completion" is issued. The Recipient
shall comply with 40 CFR § 33.301.
2.17 Records.
(a) Without limitation of the requirement to maintain Project accounts in accordance with GAAP, the
Recipient shall:
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(1) Establish an official file for the Project which adequately document s all significant
actions relative to the Project;
(2) Establish separate accounts which will adequately and accurately depict all amounts
received and expended on the Project, including all assis tance funds received under this
Agreement;
(3) Establish separate accounts which will adequately depict all income received which is
attributable to the Project, specifically including any income attributable to assistance
funds disbursed under this Agreement;
(4) Establish an accounting system which will accurately depict final total costs of the
Project, including both direct and indirect costs;
(5) Establish such accounts and maintain such records as may be necessary for the State to
fulfill federal reporting requirements, including any and all reporting requirements under
federal tax statutes or regulations; and
(6) If a Force Account is used by the Recipient for any phase of the Project, other than for
planning, design, and construction engineering and administration provided for by
allowance, accounts will be established which reasonably document all employee hours
charged to the Project and the associated tasks perf ormed by each employee. Force
Account Indirect costs are not eligible for funding.
(b) The Recipient shall maintain separate books, records and other material relative to the Project.
The Recipient shall also retain such books, records, and other material for itself and for each
contractor or subcontractor who performed or performs work on the Project for a minimum of
thirty-six (36) years after Completion of Construction. The Recipient shall require that such books,
records, and other material are subject at all reasonable times (at a minimum during normal
business hours) to inspection, copying, and audit by the State Water Board, the California State
Auditor, the Bureau of State Audits, the United States Environmental Protection Agency
(USEPA), the Office of Inspector General, the Internal Revenue Service, the Governor, or any
authorized representatives of the aforementioned. The Recipient shall allow and shall require its
contractors to allow interviews during normal business hours of any employees who might
reasonably have information related to such records. The Recipient agrees to include a similar
duty regarding audit, interviews, and records retention in any contract or subcontract related to
the performance of this Agreement. The provisions of this section shall survive the discharge of
the Recipient's Obligation and the term of this Agreement.
2.18 Audit.
(a) The Division may call for an audit of financial information relative to the Project if the Division
determines that an audit is desirable to assure program integrity or if an audit becomes necessary
because of state or federal requirements. If an audit is called for, the audit shall be performed by
a certified public accountant independent of the Recipient and at the cost of the Recipient. The
audit shall be in the form required by the Division
(b) Audit disallowances will be returned to the State Water Board.
ARTICLE III FINANCING PROVISIONS
3.1 Purchase and Sale of Project.
The Recipient hereby sells to the State Water Board and the State Water Board hereby purchases from
the Recipient the Project. Simultaneously therewith, the Recipient hereby purchases from the State
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Water Board, and the State Water Board hereby sells to the Recipient, the Project in accordance with the
provisions of this Agreement. All right, title, and interest in the Project shall immediately vest in the
Recipient on the date of execution and delivery of this Agreement by both parties without further action on
the part of the Recipient or the State Water Board. The State Water Board’s disbursement of funds
hereunder is contingent on the Recipient’s compliance with the terms and conditions of this Agreement.
3.2 Amounts Payable by the Recipient.
(a) Installment Payments. Interest will accrue beginning with each disbursement. Beginning one
year after Completion of Construction, repayment of the principal of the Project Funds, together
with all interest accruing thereon, shall be repaid annually, and shall be fully amortized by the
Final Repayment Date.
The Installment Payments are based on a standard fully amortized assistance amount with equal
annual payments. The remaining balance is the previous balance, plus the disbursements, plus
the accrued interest on both, less the Installment Payment. Installment Payment calculations will
be made beginning one (1) year after Completion of Construction. Exhibit C is a payment
schedule based on the provisions of this article and an estimated disbursement schedule. Actual
payments will be based on actual disbursements.
Upon Completion of Construction and submission of necessary reports by the Recipient, the
Division will prepare an appropriate payment schedule and supply the same to the Recipient. The
Division may amend this schedule as necessary to accurately reflect amounts due under this
Agreement. The Division will prepare any necessary amendments to the payment schedule and
send them to the Recipient.
The Recipient shall make each Installment Payment on or before the due date therefor. A ten (10)
day grace period will be allowed, after which time a penalty in the amount of costs incurred by the
State Water Board will be assessed for late payment. These costs may include, but are not
limited to, lost interest earnings, staff time, bond debt service default penalties, if any, and other
related costs. For purposes of penalty assessment, payment will be deemed to have been made
if payment is deposited in the U.S. Mail within the grace period with pos tage prepaid and properly
addressed. Any penalties assessed will not be added to the assistance amount balance, but will
be treated as a separate account and obligation of the Recipient. The interest penalty will be
assessed from the payment due date.
The Recipient is obligated to make all payments required by this Agreement to the State Water
Board, notwithstanding any individual default by its constituents or others in the payment to the
Recipient of fees, charges, taxes, assessments, tolls or other charges ("Charges") levied or
imposed by the Recipient. The Recipient shall provide for the punctual payment to the State
Water Board of all amounts which become due under this Agreement and which are received
from constituents or others in the payment to the Recipient. In the event of failure, neglect or
refusal of any officer of the Recipient to levy or cause to be levied any Charge to provide payment
by the Recipient under this Agreement, to enforce or to collect such Charge, or to pay over to the
State Water Board any money collected on account of such Charge necessary to satisfy any
amount due under this Agreement, the State Water Board may take such action in a court of
competent jurisdiction as it deems necessary to compel the performance of all duties relating to
the imposition or levying and collection of any of such Charges and the payment of the money
collected therefrom to the State Water Board. Action taken pursuant hereto shall not deprive the
State Water Board of, or limit the application of, any other remedy provided by law or by this
Agreement.
Each Installment Payment shall be paid in lawful money of the United States of America by check
or other acceptable form of payment set forth at www.waterboards.ca.gov/make_a_payment.
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The Recipient shall not be entitled to interest earned on undisbursed funds. Upon execution of
this Agreement, the State Water Board shall encumber an amount equal to the Obligation. The
Recipient shall pay Installment Payments and Additional Payments from Net Revenues and/or
other amounts legally available to the Recipient therefor. Interest on any funds disbursed to the
Recipient shall begin to accrue as of the date of each disbursement.
(b) Project Costs. The Recipient shall pay any and all costs connected with the Project including,
without limitation, any and all Project Costs. If the Project Funds are not sufficient to pay the
Project Costs in full, the Recipient shall nonetheless complete the Project and pay that portion of
the Project Costs in excess of available Project Funds, and, unless otherwise agreed to by the
State Water Board, shall not be entitled to any reimbursement therefor from the State Water
Board.
(c) Additional Payments. In addition to the Installment Payments required to be made by the
Recipient, the Recipient shall also pay to the State Water Board the reasonable extraordinary
fees and expenses of the State Water Board, and of any assignee of the State Water Board's
right, title, and interest in and to this Agreement, in connection with this Agreement, including all
expenses and fees of accountants, trustees, staff, contractors, consultants, costs, insurance
premiums and all other extraordinary costs reasonably incurred by the State Water Board or
assignee of the State Water Board.
Additional Payments may be billed to the Recipient by the State Water Board from time to time,
together with a statement executed by a duly authorized representative of the State Water Board,
stating that the amounts billed pursuant to this section have been incurred by the State Water
Board or its assignee for one or more of the above items and a copy of the invoice or statement
for the amount so incurred or paid. Amounts so billed shall be paid by the Recipient within thirty
(30) days after receipt of the bill by the Recipient.
(d) The Recipient may not prepay any portion of the principal and interest due under this Agreement
without the written consent of the Deputy Director of the Division.
3.3 Obligation Absolute.
The obligation of the Recipient to make the Installment Payments and other payments required to be
made by it under this Agreement from Net Revenues and/or other amounts legally available to the
Recipient therefor, is absolute and unconditional, and until such time as the Installment Payments and
Additional Payments have been paid in full, the Recipient shall not discontinue or suspend any
Installment Payments or other payments required to be made by it hereunder when due, whether or not
the System or any part thereof is operating or operable or has been completed, or its use is suspended,
interfered with, reduced or curtailed or terminated in whole or in part, and such Installment Payments and
other payments shall not be subject to reduction whether by offset or otherwise and shall not be
conditional upon the performance or nonperformance by any party of any agreement for any cause
whatsoever.
3.4 No Obligation of the State.
Any obligation of the State Water Board herein contained shall not be an obligation, debt, or liability of the
State and any such obligation shall be payable so lely out of the moneys encumbered pursuant to this
Agreement.
3.5 Disbursement of Project Funds; Availability of Funds.
(a) Except as may be otherwise provided in this Agreement, disbursement of Project Funds will be
made as follows:
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(1) Upon execution and delivery of this Agreement by both parties, the Recipient may request
immediate disbursement of any eligible incurred planning and design allowance as
specified in Exhibit B from the Project Funds through submission to the State Water Board
of the Disbursement Request Form 260, or any amendment thereto, duly completed and
executed.
(2) The Recipient may request disbursement of eligible construction and equipment costs
consistent with budget amounts referenced in Exhibit B and Exhibit A-FBA. (Note that this
Agreement will be amended to incorporate Exhibit A-FBA after final budget approval.)
(3) Additional Project Funds will be promptly disbursed to the Recipient upon receipt of
Disbursement Request Form 260, or any amendment thereto, duly completed and
executed by the Recipient for incurred costs consistent with this Agreement, along with
receipt of status reports due under Section 2.15 above.
(4) The Recipient shall not request disbursement for any Project Cost until such cost has been
incurred and is currently due and payable by the Recipient, although the actual payment of
such cost by the Recipient is not required as a condition of disbursement request.
(5) Recipient shall spend Project Funds within thirty (30) days of receipt. Any interest earned
on Project Funds shall be reported to the State Water Board and may be required to be
returned to the State Water Board or deducted from future disbursements.
(6) The Recipient shall not be entitled to interest earned on undisbursed funds.
(7) The Recipient shall not request a disbursement unless that Project Cost is allowable,
reasonable, and allocable.
(8) Notwithstanding any other provision of this Agreement, no disbursement shall be required
at any time or in any manner which is in violation of or in conflict with federal or state laws,
policies, or regulations.
(b) The State Water Board's obligation to disburse Project Funds is contingent upon the availability of
sufficient funds to permit the disbursements provided for herein. If sufficient funds are not available
for any reason, including but not limited to failure of the federal or State government to appropriate
funds necessary for disbursement of Project Funds, the State Water Board shall not be obligated to
make any disbursements to the Recipient under this Agreement. This provision shall be construed
as a condition precedent to the obligation of the State Water Board to make any disbursements
under this Agreement. Nothing in this Agreement shall be construed to provide the Recipient with a
right of priority for disbursement over any other agency. If any disbursements due the Recipient
under this Agreement are deferred because sufficient funds are unavailable, it is the intention of the
State Water Board that such disbursement will be made to the Recipient when sufficient funds do
become available, but this intention is not binding.
3.6 Withholding of Disbursements and Material Violations.
Notwithstanding any other provision of this Agreement, the State Water Board may withhold the
disbursement of all or any portion of the Project Funds upon the occurrence of any of the following
events:
a. The Recipient’s failure to maintain reasonable progress on the Project;
b. Placement on the ballot or passage of an initiative or referendum to repeal or reduce the
Recipient’s taxes, assessments, fees, or charges levied for operation of the System or
repayment of debt service on System Obligations;
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c. Commencement of litigation or a judicial or administrative proceeding related to the
System, Project, or Revenues that the State Water Board determines may impair the
timely completion of the Project or the repayment of the Obligation;
d. Any investigation by the District Attorney, California State Auditor, Bureau of State Audits,
United States Environmental Protection Agency’s Office of Inspector General, the Internal
Revenue Service, Securities and Exchange Commission, a grand jury, or any other state
or federal agency, relating to the Recipient’s financial management, accounting
procedures, or internal fiscal controls;
e. A material adverse change in the condition of the Recipient, the Revenues, or the
System, which the Division reasonably determines would materially impair the Recipient’s
ability to satisfy its obligations under this Agreement, or any other event that the Division
reasonably determines would materially impair the Recipient’s ability to satisfy its
obligations under this Agreement,
f. The Recipient’s material violation of, or threat to materially violate, any term of this
Agreement; and
g. An Event of Default.
3.7 Pledge; Rates, Fees and Charges; Additional Debt.
(a) Establishment of Enterprise Fund and Reserve Fund. In order to carry out its System
Obligations, the Recipient covenants that it shall establish and maintain or shall have established
and maintained the Enterprise Fund. All Revenues received shall be deposited when and as
received in trust in the Enterprise Fund. As required in paragraph (f) of this Section, the Recipient
shall establish and maintain a Reserve Fund.
(b) Pledge of Net Revenues, Enterprise Fund, and Reserve Fund. The Obligation hereunder shall be
secured by a lien on and pledge of the Enterprise Fund, Net Revenues, and any Reserve Fund in
priority as specified in Exhibit F (senior, parity, or subordinate). The Recipient hereby pledges
and grants such lien on and pledge of the Enterprise Fund, Net Revenues, and any Reserve
Fund to secure the Obligation, including payment of Installment Payments and Additional
Payments hereunder. The Net Revenues in the Enterprise Fund, shall be subject to the lien of
such pledge without any physical delivery thereof or further act, and the lien of such pledge shall
be valid and binding as against all parties having claims of any kind in tort, contract, or otherwise
against the Recipient.
(c) Application and Purpose of the Enterprise Fund. Subject to the provisions of any outstanding
System Obligation, money on deposit in the Enterprise Fund shall be applied and used first, to
pay Operations and Maintenance Costs, and thereafter, all amounts due and payable with
respect to the System Obligations. After making all payments hereinabove required to be made
in each Fiscal Year, the Recipient may expend in such Fiscal Year any remaining money in the
Enterprise Fund for any lawful purpose of the Recipient, including payment of subordinate debt.
(d) Rates, Fees and Charges.
The Recipient shall, to the extent permitted by law, fix, prescribe and collect rates, fees and
charges for the System during each Fiscal Year which are reasonable, fair, and nondiscriminatory
and which will be sufficient to generate Revenues in the amounts necessary to cover Operations
and Maintenance Costs, and shall ensure that Net Revenues are equal to at least 110% the
Maximum Annual Debt Service with respect to all outstanding System Obligations.
The Recipient may make adjustments from time to time in such fees and charges and may make
such classification thereof as it deems necessary, but shall not reduce the rates, fees and
charges then in effect unless the Net Revenues from such reduced rates, fees, and charges will
at all times be sufficient to meet the requirements of this section.
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(e) Additional Debt Test.
(1) Additional Senior Debt. The Recipient’s future debt that is secured by the Net Revenues
pledged herein may not be senior to this Obligation, except where the new senior obligation
refunds or refinances a senior obligation with the same lien position as the existing senior
obligation, the new senior obligation has the same or earlier repayment term as the refunded
senior debt, the new senior debt service is the same or lower than the existing debt service,
and the new senior debt will not diminish the Recipient’s ability to repay its SRF obligations.
(2) Additional Parity or Subordinate Debt. The Recipient may issue additional parity or
subordinate debt only if
(A) Net Revenues in the most recent Fiscal Year, excluding transfers from a rate stabilization
fund, if any, meet the ratio for rate covenants set forth in paragraph (d) of this Section with
respect to all outstanding and proposed additional obligations ;
(B) The Recipient is in compliance with any reserve fund requirement of this Obligation.
(f) Reserve Fund.
Prior to Completion of Construction, the Recipient shall establish a restricted Reserve Fund, held
in its Enterprise Fund, equal to one year’s Debt Service on this Obligation. The Recipient shall
maintain the Reserve Fund throughout the term of this Agreement. The Reserve Fund shall be
subject to lien and pledged as security for this Obligation, and its use shall be restricted to
payment of this Obligation during the term of this Agreement.
(g) The Recipient may issue or incur subordinate obligations or otherwise issue or incur obligations
payable from a lien on Net Revenues that is subordinate to the lien of Net Revenues securing the
Obligation.
(h) The Recipient shall not make any pledge of or place any lien on Revenues and shall not make
any pledge of or place any lien on Net Revenues except as otherwise provided or permitted by
this Agreement.
3.8 Financial Management System and Standards.
The Recipient shall comply with federal standards for financial management systems. The Recipient
agrees that, at a minimum, its fiscal control and accounting procedures will be sufficient to permit
preparation of reports required by the federal government and tracking of Project funds to a level of
expenditure adequate to establish that such funds have not been used in violation of federal or State law
or the terms of this Agreement. To the extent applicable, the Recipient shall be bound by, and comply
with, the provisions and requirements of the federal Single Audit Act of 1984, Office of Management and
Budget (OMB) Circular No. A-133 and 2 CFR Part 200, subpart F, and updates or revisions, thereto.
3.9 Accounting and Auditing Standards.
The Recipient must maintain Project accounts according to GAAP as issued by the Governmental
Accounting Standards Board (GASB) or its successor. The Recipient shall maintain GAAP-compliant
project accounts, including GAAP requirements relating to the reporting of infrastructure assets.
3.10 Other Assistance.
If funding for Project Costs is made available to the Recipient from sources other than this Agreement,
the Recipient shall notify the Division. The Recipient may retain such funding up to an amount which
equals the Recipient's local share of Project Costs. To the extent allowed by requirements of other
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funding sources, excess funding shall be remitted to the State Water Board to be applied to Installment
Payments due hereunder, if any.
ARTICLE IV MISCELLANEOUS PROVISIONS
4.1 Amendment and Integration.
No amendment or variation of the terms of this Agreement shall be valid unless made in writing and
signed by both the Recipient and the Deputy Director or designee.
This Agreement constitutes the complete and final agreement between the parties. No prior oral or
written understanding or agreement not incorporated in this Agreement shall be binding on either party.
4.2 Assignability.
The Recipient consents to any pledge, sale, or assignment to the Bank or a trustee for the benefit of the
owners of the Bonds, if any, at any time of any portion of the State Water Board's estate, right, title, and
interest and claim in, to and under this Agreement and the right to make all related waivers and
agreements in the name and on behalf of the State Water Board, as agent and attorney-in-fact, and to
perform all other related acts which are necessary and appropriate under this Agreement, if any, and the
State Water Board's estate, right, title, and interest and claim in, to and under this Agreement to
Installment Payments (but excluding the State Water Board's rights to Additional Payments and to
notices, opinions and indemnification under each Obligation). This Agreement is not assignable by the
Recipient, either in whole or in part, without the consent of the State Water Board in the form of a formal
written amendment to this Agreement.
4.3 Bonding.
Where contractors are used, the Recipient shall not authorize construction to begin until each contractor
has furnished a performance bond in favor of the Recipient in the f ollowing amounts: faithful performance
(100%) of contract value; labor and materials (100%) of contract value. This requirement shall not apply
to any contract for less than $25,000.00.
4.4 Competitive Bidding
Recipient shall adhere to any applicable State law or local ordinance for competitive bidding and
applicable labor laws.
4.5 Compliance with Law, Regulations, etc.
The Recipient shall, at all times, comply with and require its contractors and subcontractors to comply
with all applicable federal and State laws, rules, guidelines, regulations, and requirements. Without
limitation of the foregoing, to the extent applicable, the Recipient shall:
(a) Comply with the provisions of the adopted environmental mitigation plan, if any, for the term of
this Agreement;
(b) Comply with the State Water Board's Policy;
(c) Comply with and require compliance with the list of State laws attached as Exhibit H.
(d) Comply with and require its contractors and subcontractors on the Project to comply with federal
DBE requirements; and
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(e) Comply with and require its contractors and subcontractors to comply with the list of federal laws
attached as Exhibit E.
4.6 Conflict of Interest.
As of the date of execution of this Agreement, the Recipient certifies that its owners, officers, directors,
agents, representatives, and employees are in compliance with applicable State and federal conflict of
interest laws. The Recipient shall ensure that its owners, officers, directors, agents, representatives, and
employees maintain compliance with applicable State and federal conflict of interest laws for the term of
this Agreement.
4.7 Damages for Breach Affecting Tax-Exempt Status or Federal Compliance
In the event that any breach of any of the provisions of this Agreement by the Recipient shall result in the
loss of tax-exempt status for any bonds of the State or any subdivision or agency thereof, including Bonds
issued on behalf of the State Water Board, or if such breach shall result in an obligation on the part of the
State or any subdivision or agency thereof to reimburse the federal government by reason of any
arbitrage profits, the Recipient shall immediately reimburse the State or any subdivision or agency thereof
in an amount equal to any damages paid by or loss incurred by the State or any subdivision or agency
thereof due to such breach. In the event that any breach of any of the provisions of this Agreement by
the Recipient shall result in the failure of Project Funds to be used pursuant to the provisions of this
Agreement, or if such breach shall result in an obligation on the part of the State or any subdivision or
agency thereof to reimburse the federal government, the Recipient shall immediately reimburse the State
or any subdivision or agency thereof in an amount equal to any damages paid by or loss incurred by the
State or any subdivision or agency thereof due to such breach.
4.8 Disputes.
(a) The Recipient may appeal a staff decision within thirty (30) days to the Deputy Director of the
Division or designee, for a final Division decision. The Recipient may appeal a final Division
decision to the State Water Board within thirty (30) days. The Office of the Chief Counsel of the
State Water Board will prepare a summary of the dispute and make recommendations relative to
its final resolution, which will be provided to the State Water Board’s Executive Director and each
State Water Board Member. Upon the motion of any State Water Board Member, the State Water
Board will review and resolve the dispute in the manner determined by the State Water Board.
Should the State Water Board determine not to review the final Division decision, this decision will
represent a final agency action on the dispute.
(b) This clause does not preclude consideration of legal questions, provided that nothing herein shall
be construed to make final the decision of the State Water Board, or any official or re presentative
thereof, on any question of law.
(c) Recipient shall continue with the responsibilities under this Agreement during any dispute.
(d) This section 4.8 relating to disputes does not establish an exclusive procedure for resolving
claims within the meaning of Government Code sections 930 and 930.4.
4.9 Governing Law.
This Agreement is governed by and shall be interpreted in accordance with the laws of the State of
California.
4.10 Income Restrictions.
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The Recipient agrees that any refunds, rebates, credits, or other amounts (including any interest thereon)
accruing to or received by the Recipient under this Agreement shall be paid by the Recipient to the State
Water Board, to the extent that they are properly allocable to costs for which the Recipient has been
reimbursed by the State Water Board under this Agreement.
4.11 Indemnification and State Reviews.
The parties agree that review or approval of Project plans and specifications by the State Water Board is
for administrative purposes only , including conformity with application and eligibility criteria, and
expressly not for the purposes of design defect review or construction feasibility, and does not relieve the
Recipient of its responsibility to properly plan, design, construct, operate, and maintain the Project. To
the extent permitted by law, the Recipient agrees to indemnify, defend, and hold harmless the State
Water Board, the Bank, and any trustee, and their officers, employees, and agents for the Bonds, if any
(collectively, "Indemnified Persons"), against any loss or liability arising out of any claim or action brought
against any Indemnified Persons from and against any and all losses, claims, damages, liabilities , or
expenses, of every conceivable kind, character, and nature whatsoever arising out of, resulting from, or in
any way connected with (1) the System or the Project or the conditions, occupancy, use, possession,
conduct, or management of, work done in or about, or the planning, design, acquisition, installation , or
construction, of the System or the Project or any part thereof; (2) the carrying out of any of the
transactions contemplated by this Agreement or any related document; (3) any violation of any applicable
law, rule or regulation, any environmental law (including, without limitation, the Federal Comprehensive
Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act,
the California Hazardous Substance Account Act, the Federal Water Pollution Control Act, the Clean Air
Act, the Toxic Substances Control Act, the Occupational Safety and Health Act, the Safe Drinking Water
Act, the California Hazardous Waste Control Law, and California Water Code Section 13304, and any
successors to said laws), rule or regulation or the release of any toxic substance on or near the System;
or (4) any untrue statement or alleged untrue statement of an y material fact or omission or alleged
omission to state a material fact necessary to make the statements required to be stated therein, in light
of the circumstances under which they were made, not misleading with respect to any information
provided by the Recipient for use in any disclosure document utilized in connection with any of the
transactions contemplated by this Agreement, except those arising from the gross negligence or willful
misconduct of the Indemnified Persons. The Recipient shall also provide for the defense and
indemnification of the Indemnified Parties in any contractual provision extending indemnity to the
Recipient in any contract let for the performance of any work under this Agreement, and shall cause the
Indemnified Parties to be included within the scope of any provision for the indemnification and defense of
the Recipient in any contract or subcontract. To the fullest extent permitted by law, the Recipient agrees
to pay and discharge any judgment or award entered or made against Indemnified Persons with respect
to any such claim or action, and any settlement, compromise or other voluntary resolution. The
provisions of this section shall survive the term of this Agreement and the discharge of the Recipient's
Obligation hereunder.
4.12 Independent Actor.
The Recipient, and its agents and employees, if any, in the performance of this Agreement, shall act in an
independent capacity and not as officers, employees, or agents of the State Water Board.
4.13 Leveraging Covenants.
(a) Tax Covenant. Notwithstanding any other provision hereof, the Recipient covenants and agrees
that it will comply with the Tax Covenants set forth in Article V of this Agreement.
(b) Disclosure of Financial Information, Operating Data, and Other Information. The Recipient
covenants to furnish such financial, operating and other data pertaining to the Recipient as may
be requested by the State Water Board to: (i) enable the State Water Board to cause the
issuance of Bonds and provide for security therefor; or (ii) enable any underwriter of Bonds
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issued for the benefit of the State Water Board to comply with Rule 15c2-12(b)(5). The Recipient
further covenants to provide the State Water Board with copies of all continuing disc losure
documents or reports that are disclosed pursuant to (i) the Recipient’s continuing disclosure
undertaking or undertakings made in connection with any outstanding System Obligation, (ii) the
terms of any outstanding System Obligation, or (iii) a volu ntary disclosure of information related to
an outstanding System Obligation. The Recipient shall disclose such documents or reports to the
State Water Board at the same time such documents or reports are submitted to any
dissemination agent, trustee, nationally recognized municipal securities information repository,
the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA)
website or other person or entity.
4.14 Non-Discrimination Clause.
(a) The Recipient shall comply with Government Code section 11135 and the implementing
regulations (Cal. Code Regs, tit. 2, § 11140 et seq.), including, but not limited to, ensuring that no
person is unlawfully denied full and equal access to the benefits of, or unlawfully subjected to
discrimination in the operation of, the Project or System on the basis of sex, race, color, religion,
ancestry, national origin, ethnic group identification, age, mental disability, physical disability,
medical condition, genetic information, marital status, or sexual orientation as such terms are
defined under California law, for as long as the Recipient retains ownership or possession of the
Project.
(b) If Project Funds are used to acquire or improve real property, the Recipient shall include a
covenant of nondiscrimination running with the land in the instrument effecting or recording the
transfer of such real property.
(c) The Recipient shall comply with the federal American with Disabilities Act of 1990 and
implementing regulations as required by Government Code section 11135(b).
(d) The Recipient’s obligations under this section shall survive the term of this Agreement.
(e) During the performance of this Agreement, Recipient and its contractors and subcontractors shall
not unlawfully discriminate, harass, or allo w harassment against any employee or applicant for
employment because of sex, race, color, ancestry, religious creed, national origin, sexual
orientation, physical disability (including HIV and AIDS), mental disability, medical condition
(cancer), age (over 40), marital status, denial of family care leave, or genetic information, gender,
gender identity, gender expression, or military and veteran status.
(f) The Recipient, its contractors, and subcontractors shall ensure that the evaluation and treatment
of their employees and applicants for employment are free from such discrimination and
harassment.
(g) The Recipient, its contractors, and subcontractors shall comply with the provisions of the Fair
Employment and Housing Act and the applicable regulations promulgated thereunder. (Gov.
Code, §12990, subds. (a)-(f) et seq.;Cal. Code Regs., tit. 2, § 7285 et seq.) Such regulations are
incorporated into this Agreement by reference and made a part hereof as if set forth in full.
(h) The Recipient, its contractors, and subcontractors shall give written notice of their obligations
under this clause to labor organizations with which they have a collective bargaining or other
agreement.
(i) The Recipient shall include the nondiscrimination an d compliance provisions of this clause in all
subcontracts to perform work under this Agreement.
4.15 No Third Party Rights.
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The parties to this Agreement do not create rights in, or grant remedies to, any third party as a beneficiary
of this Agreement, or of any duty, covenant, obligation , or undertaking established herein.
4.16 Operation and Maintenance; Insurance.
The Recipient agrees to sufficiently and properly staff, operate and maintain all portions of the System
during its useful life in accordance with all applicable state and federal laws, rules, and regulations.
The Recipient will procure and maintain or cause to be maintained insurance on the System with
responsible insurers, or as part of a reasonable system of se lf-insurance, in such amounts and against
such risks (including damage to or destruction of the System) as are usually covered in connection with
systems similar to the System. Such insurance may be maintained by a self -insurance plan so long as
such plan provides for (i) the establishment by the Recipient of a separate segregated self -insurance fund
in an amount determined (initially and on at least an annual basis) by an independent insurance
consultant experienced in the field of risk management employing accepted actuarial techniques and
(ii) the establishment and maintenance of a claims processing and risk management program.
In the event of any damage to or destruction of the System caused by the perils covered by such
insurance, the net proceeds thereof shall be applied to the reconstruction, repair or replacement of the
damaged or destroyed portion of the System. The Recipient shall begin such reconstruction, repair or
replacement as expeditiously as possible, and shall pay out of such net proceeds all costs and expenses
in connection with such reconstruction, repair or replacement so that the same shall be completed and
the System shall be free and clear of all claims and liens. If such net proceeds are insufficient to
reconstruct, repair, or restore the System to the extent necessary to enable the Recipient to pay all
remaining unpaid principal portions of the Installment Payments, if any, in accordance with the terms of
this Agreement, the Recipient shall provide additional funds to restore or re place the damaged portions of
the System.
Recipient agrees that for any policy of insurance concerning or covering the construction of the Project, it
will cause, and will require its contractors and subcontractors to cause, a certificate of insurance to be
issued showing the State Water Board, its officers, agents, employees, and servants as additional
insured; and shall provide the Division with a copy of all such certificates prior to the commencement of
construction of the Project.
4.17 Permits, Subcontracting, and Remedies.
The Recipient shall comply in all material respects with all applicable federal, state and local laws, rules
and regulations. Recipient shall procure all permits, licenses and other authorizations necessary to
accomplish the work contemplated in this Agreement, pay all charges and fees, and give all notices
necessary and incidental to the due and lawful prosecution of the work. Signed copies of any such
permits or licenses shall be submitted to the Division before construction begins.
The Recipient shall not contract or allow subcontracting with excluded parties. The Recipient shall not
contract with any party who is debarred or suspended or otherwise excluded from or ineligible for
participation in any work overseen, directed, funded, or administered by the State Water Board program
for which this funding is authorized. For any work related to this Agreement, the Recipient shall not
contract with any individual or organization on the State Water Board’s List of Disqualified Businesses
and Persons that is identified as debarred or suspended or otherwise excluded from or ineligible for
participation in any work overseen, directed, funded, or adm inistered by the State Water Board program
for which funding under this Agreement is authorized. The State Water Board’s List of Disqualified
Businesses and Persons is located at
http://www.waterboards.ca.gov/water_issues/programs/enforcement/fwa/dbp.shtml
4.18 Prevailing Wages.
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The Recipient agrees to be bound by all applicable provisions of State Labor Code regarding prevailing
wages. The Recipient shall monitor all agreements subject to reimbursement from this Agreement to
ensure that the prevailing wage provisions of the State Labor Code are being met. In addition, the
Recipient agrees to comply with the provisions of Exhibit G (Davis-Bacon).
4.19 Public Funding.
This Project is publicly funded. Any service provider or contractor with which the Recipient contracts must
not have any role or relationship with the Recipient, that, in effect, substantially limits the Recipient's
ability to exercise its rights, including cancellation rights, under the contract, based on all the facts and
circumstances.
4.20 Recipient’s Responsibility for Work.
The Recipient shall be responsible for all work and for persons or entities engaged in work performed
pursuant to this Agreement, including, but not limited to, contractors, subcontractors, suppliers, and
providers of services. The Recipient shall be responsible for responding to any and all disputes arising
out of its contracts for work on the Project. The State Water Board will not mediate disputes between the
Recipient and any other entity concerning responsibility for perform ance of work.
4.21 Related Litigation.
Under no circumstances may the Recipient use funds from any disbursement under this Agreement to
pay costs associated with any litigation the Recipient pursues against the State Water Board or any
Regional Water Quality Control Board. Regardless of the outcome of any such litigation, and
notwithstanding any conflicting language in this Agreement, the Recipient agrees to repay all of the
disbursed funds plus interest in the event that Recipient does not complete the Project.
4.22 Rights in Data.
The Recipient agrees that all data, plans, drawings, specifications, reports, computer programs, operating
manuals, notes, and other written or graphic work produced in the performance of this Agreement are
subject to the rights of the State as set forth in this section. The State shall have the right to reproduce,
publish, and use all such work, or any part thereof, in any manner and for any purposes whatsoever and
to authorize others to do so. If any such work is copyrightable, the Recipient may copyright the same,
except that, as to any work which is copyrighted by the Recipient, the State reserves a royalty-free,
nonexclusive, and irrevocable license to reproduce, publish, and use s uch work, or any part thereof, and
to authorize others to do so, and to receive electronic copies from the Recipient upon request .
4.23 State Water Board Action; Costs and Attorney Fees.
Any remedy provided in this Agreement is in addition to and not in derogation of any other legal or
equitable remedy available to the State Water Board as a result of breach of this Agreement by the
Recipient, whether such breach occurs before or after completion of the Project, and exercise of any
remedy provided by this Agreement by the State Water Board shall not preclude the State Water Board
from pursuing any legal remedy or right which would otherwise be available. In the event of litigatio n
between the parties hereto arising from this Agreement, it is agreed that each party shall bear its own
costs and attorney fees.
4.24 Termination and Remedies Upon Event of Default.
For purposes of this section, the term “State Water Board” shall mean the State Water Board and its
assignees.
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(a) Acceleration of Obligation. Whenever the State Water Board determines that an Event of Default
shall have occurred, the State Water Board may declare all principal components of Installment
Payments and accrued interest thereon to be immediately due and payable, whereupon the same
shall become due and payable, along with Additional Payments and penalty assessments, if any,
notwithstanding anything in this Agreement to the contrary. In the event of such accelerati on,
interest shall accrue from the date of such acceleration at the highest legal rate of interest.
(b) Judicial remedies. Whenever the State Water Board determines that an Event of Default shall
have occurred, the State Water Board may enforce its rights under this Agreement by any judicial
proceeding, whether at law or in equity. Without limiting the generality of the foregoing, the State
Water Board may: by suit in equity, require the Recipient to account for amounts relating to this
Agreement as if the Recipient were the trustee of an express trust; by mandamus or other
proceeding, compel the performance by the Recipient and any of its officers, agents, and
employees of any duty under the law or of any obligation or covenant under this Agreement,
including, but not limited to, the imposition and collection of rates for the services of the System
sufficient to meet all requirements of this Agreement; and take whatever action at law or in equity
as may appear necessary or desirable to the State Water Board to collect the Installment
Payments then due or thereafter to become due, or to enforce performance of any obligation or
covenant of the Recipient under this Agreement.
(c) Termination. Upon an Event of Default, the State Water Board may terminate this Agreement.
Interest shall accrue on all amounts due at the highest legal rate of interest from the date that the
State Water Board delivers notice of termination to the Recipient.
(d) Remedies Not Exclusive. None of the remedies available to the State Water Board shall be
exclusive of any other remedy, and each such remedy shall be cumulative and in addition to
every other remedy given hereunder or now or hereafter existing at law or in equity. The State
Water Board may exercise any remedy, now or hereafter existing, without exhausting and without
regard to any other remedy.
(e) Non-waiver. Nothing in this section or any other section of this Agreement shall affect or impair
the Recipient’s obligation to pay Installment Payments as provided herein or shall affect or impair
the right of the State Water Board to bring suit to enforce such payment. No delay or omission of
the State Water Board in the exercise of any right arising upon an Event of Default shall impair
any such right or be construed to be a waiver of any such Event of Default. The State Water
Board may exercise from time to time and as often as shall be deemed expedient by the State
Water Board, any remedy or right provided by law or pursuant to this Agreement.
(f) Status Quo. If any action to enforce any right or exercise any remedy shall be brought and either
discontinued or determined adversely to the State Water Board, then the State Water Board shall
be restored to its former position, rights and remedies as if no such action had been brough t.
4.25 Timeliness.
Time is of the essence in this Agreement.
4.26 Unenforceable Provision.
In the event that any provision of this Agreement is unenforceable or held to be unenforceable, then the
parties agree that all other provisions of this Agreement have force and effect and shall not be affected
thereby.
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4.27 Useful Life.
The Recipient warrants that the economic useful life of the Project, commencing at Project Completion, is
at least equal to the term of this Agreement, as set forth in Exhibit B.
4.28 Venue.
Any action arising out of this Agreement shall be filed and maintained in the Superior Court in and for the
County of Sacramento, California.
4.29 Waiver and Rights of the State Water Board.
Any waiver of rights by the State Water Board with respect to a default or other matter arising under this
Agreement at any time shall not be considered a waiver of rights with respect to any other default or
matter.
Any rights and remedies of the State Water Board provided for in this Agreement are in addition to any
other rights and remedies provided by law.
ARTICLE V TAX COVENANTS
5.1 Purpose.
The purpose of this Article V is to establish the reasonable expectations of the Recipient regarding the
Project and the Project Funds, and is intended to be and may be relied upon for purposes of Sections
103, 141 and 148 of the Code and as a certification described in Section 1.148-2(b)(2) of the Treasury
Regulations. This Article V sets forth certain facts, estimates and circumstances which form the basis for
the Recipient’s expectation that neither the Project nor the Bond Funded Portion of the Project Funds is to
be used in a manner that would cause the Obligation to be classified as “arbitrage bonds” under Section
148 of the Code or “private activity bonds” under Section 141 of the Code.
5.2 Tax Covenant.
The Recipient agrees that it will not take or authorize any action or permit any action within its reasonable
control to be taken, or fail to take any action within its reasonable control, with respect to the Project
which would result in the loss of the exclusion of interest on the Bonds from gross income for federal
income tax purposes under Section 103 of the Code.
5.3 Governmental Unit.
The Recipient is a state or local governmental unit as defined in Section 1.103 -1 of the Treasury
Regulations or an instrumentality thereof (a "Governmental Unit") and is not the federal government or
any agency or instrumentality thereof.
5.4 Financing of a Capital Project.
The Recipient will use the Project Funds to finance costs it has incurred or will incur for the construction,
reconstruction, installation or acquisition of the Project. Such costs shall not have previously been
financed with the proceeds of any other issue of tax-exempt obligations.
5.5 Ownership and Operation of Project.
The Recipient exclusively owns and, except as provided in Section 5.12 hereof, operates the Project.
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5.6 Temporary Period.
The Recipient reasonably expects that at least eighty-five percent (85%) of the Bond Funded Portion of
the Project Funds will be allocated to expenditures for the Project within three (3) years of the earlier of
the effective date of this Agreement or the date the Bonds are issued ("Applicable Date"). The Recipient
has incurred, or reasonably expects that it will incur within six (6) months of the Applicable Date, a
substantial binding obligation (i.e., not subject to contingencies within the control of the Recipient or a
related party) to a third party to expend at least five percent (5%) of the Bond Funded Portion of the
Project Funds on Project Costs. The completion of acquisition, construction, improvement and equipping
of the Project and the allocation of the Bond Funded Portion of the Project Funds to Project Costs will
proceed with due diligence.
5.7 Working Capital.
No operational expenditures of the Recipient or any related entity are being, have been or will be financed
or refinanced with Project Funds.
5.8 Expenditure of Proceeds.
The Bond Funded Portion of the Project Funds shall be used exclusively for the following purposes: (i)
Reimbursement Expenditures (as defined in Section 5.20 below), (ii) Preliminary Expenditures (as
defined in Section 5.20 below) in an aggregate amount not exceeding twenty percent (20%) of the Bond
Funded Portion of the Project Funds, (iii) capital expenditures relating to the Project originally paid by the
Recipient on or after the date hereof, (iv) interest on the Obligation through the later of three (3) years
after the Applicable Date or one (1) year after the Project is placed in service, and (v) initial operating
expenses directly associated with the Project in the aggregate amount not more than five percent (5%) of
the Bond Funded Portion of the Project Funds.
5.9 Private Use and Private Payments.
No portion of the Project Funds or the Project is being, has been or will be used in the aggregate for any
activities that constitute a Private Use (as defined below). No portion of the principal of or interest with
respect to the Installment Payments will be secured by any interest in property (whether or not the
Project) used for a Private Use or in payments in respect of property used for a Private Use, or will be
derived from payments in respect of property used for a Private Use. "Private Use" means any activity
that constitutes a trade or business that is carried on by persons or entities, other than a Governmental
Unit. The leasing of the Project or the access by or the use of the Project by a person or entity other than
a Governmental Unit on a basis other than as a member of the general public shall constitute a Private
Use. Use by or on behalf of the State of California or any of its agencies, instrumentalities or subdivisions
or by any local Governmental Unit and use as a member of the general public will be disregarded in
determining whether a Private Use exists. Use under an arrangement that conveys p riority rights or other
preferential benefits is generally not use on the same basis as the general public. Arrangements
providing for use that is available to the general public at no charge or on the basis of rates that are
generally applicable and uniformly applied do not convey priority rights or other preferential benefits. For
this purpose, rates may be treated as generally applicable and uniformly applied even if (i) different rates
apply to different classes of users, such as volume purchasers, if the differences in rates are customary
and reasonable; or (ii) a specially negotiated rate arrangement is entered into, but only if the user is
prohibited by federal law from paying the generally applicable rates, and the rates established are as
comparable as reasonably possible to the generally applicable rates. An arrangement that does not
otherwise convey priority rights or other preferential benefits is not treated, nevertheless, as general
public use if the term of the use under the arrangement, inc luding all renewal options, is greater than 200
days. For this purpose, a right of first refusal to renew use under the arrangement is not treated as a
renewal option if (i) the compensation for the use under the arrangement is redetermined at generally
applicable, fair market value rates that are in effect at the time of renewal; and (ii) the use of the financed
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property under the same or similar arrangements is predominantly by natural persons who are not
engaged in a trade or business.
5.10 No Sale, Lease or Private Operation of the Project.
The Project (or any portion thereof) will not be sold or otherwise disposed of, in whole or in part, to any
person who is not a Governmental Unit prior to the final maturity date of the Obligation. The Project will
not be leased to any person or entity that is not a Governmental Unit prior to the final maturity date of the
Obligation. Except as permitted under Section 5.12 hereof, the Recipient will not enter any contract or
arrangement or cause or permit any contract or arrangement to be entered with persons or entities that
are not Governmental Units if that contract or arrangement would confer on such persons or entities any
right to use the Project on a basis different from the right of members of the general public. The contracts
or arrangements contemplated by the preceding sentence include but are not limited to management
contracts, take or pay contracts or put or pay contracts, and capacity guarantee contracts.
5.11 No Disproportionate or Unrelated Use.
No portion of the Project Funds or the Project is being, has been, or will be used for a Private Use that is
unrelated or disproportionate to the governmental use of the Project Funds.
5.12 Management and Service Contracts.
The Recipient represents that, as of the date hereof, it is not a party to any contract, agreement or other
arrangement with any persons or entities engaged in a trade or business (other than Governmental Units)
that involve the management or operation of property or the provision of services at or with respect to the
Project that does not comply with the standards of the Treasury Regulations, Revenue Procedure 97-13,
as modified by Revenue Procedure 2001-39 and IRS Notice 2014-67, or Revenue Procedure 2017-13, as
applicable. The Recipient represents that it will not be party to any su ch contract, agreement or
arrangement with any person or entity that is not a Governmental Unit for the management of property or
the provision of services at or with respect to the Project, while the Obligation (including any obligation or
series thereof issued to refund the Obligation, as the case may be) is outstanding, except: (a) with
respect to any contract, agreement or arrangement that does not constitute “private business use” of the
Project under Code §141(b), or (b) with respect to any contract, agreement or arrangement that complies
with (i) Revenue Procedure 97-13, 1997-1 C.B. 632, as amended by Revenue Procedure 2001-39, 2001-
2 C.B. 38, and as amplified by Notice 2014-67, with respect to contracts entered into before August 18,
2017 and not materially modified or extended after August 18, 2017, or (ii) Revenue Procedure 2017-13,
with respect to contracts entered into or materially modified or extended on or after August 18, 2017, or
(c) with respect to any contract, agreement or arrangement that does not give rise to use of the Bond
Funded Portion of the Project Funds or the Project by a non-Governmental Unit of more than the amount
of such non-qualified use permitted by the Code, or (d) in the event that the Recipient receives an opinion
of counsel, satisfactory to the State Water Board and the Bank and expert in the issuance of state and
local government bonds the interest on which is excluded from gross income under Section 103 of the
Code (“Nationally-Recognized Bond Counsel”), that such contract, agreement or arrangement will not
adversely affect the exclusion of the interest on the Obligation from gross income for federal income
taxation purposes.
5.13 No Disposition of Financed Property.
As of the date hereof, the Recipient does not expect to sell or otherwise dispose of any portion of the
Project, in whole or in part, prior to the final maturity date of the Obligation.
5.14 Useful Life of Project.
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As of the date hereof, the Recipient reasonably expects that the economic useful life of the Project,
commencing at Project Completion, will be at least equal to the term of this Agreement, as set forth on
Exhibit B hereto.
5.15 Installment Payments.
Installment Payments generally are expected to be derived from assessments, taxes, fees, charges or
other current Revenues of the Recipient in each year, and such current Revenues are expe cted to equal
or exceed the Installment Payments during each payment period. Any amounts accumulated in a sinking
fund or bona fide debt service fund to pay Installment Payments (whether or not deposited to a fund or
account established by the Recipient) will be disbursed to pay Installment Payment s within thirteen
months of the initial date of accumulation or deposit. Any such fund used for the payment of Installment
Payments will be depleted once a year except for a reasonable carryover amount not exceeding the
greater of earnings on such fund or one-twelfth of the Installment Payments in either case for the
immediately preceding year.
5.16 No Other Replacement Proceeds.
The Recipient will not use any of the Bond Funded Portion of the Project Funds to replace or substitute
other funds of the Recipient that were otherwise to be used to finance the Project or which are or wi ll be
used to acquire securities, obligations or other investment property reasonably expected to produce a
yield that is materially higher than the yield on the Bonds.
5.17 No Sinking or Pledged Fund.
Except as set forth in Section 5.18 below, the Recipient will not create or establish any sinking fund or
pledged fund which will be used to pay Installment Payments on the Obligation within the meaning of
Section 1.148-1(c) of the Treasury Regulations. If any sinking fund or pledged fund comes into being with
respect to the Obligation before the Obligation has been fully retired which may be used to pay the
Installment Payments, the Recipient will invest such sinking fund and pledged fund moneys at a yield that
does not exceed the yield on the Bonds.
5.18 Reserve Amount.
The State Water Board requires that the Recipient maintain and fund a separate account in an amount
equal to one (1) year of Debt Service with respect to the Obligation (the “Reserve Amount”) as set forth in
Section 3.7. The Recipient represents that the Reserve Amount is and will be available to pay debt
service with respect to the Obligation, if and when needed. The Reserve Amount consists solel y of
revenues of the Recipient and does not include any proceeds of any obligations the interest on which is
excluded from gross income for federal income tax purposes or investment earnings thereon. The
aggregate of the Reserve Amount, up to an amount not exceeding the lesser of (i) ten percent of the
aggregate principal amount of the Obligation, (ii) the maximum annual debt service with respect to the
Obligation, or (iii) 125 percent of the average annual debt service with respect to the Obligation, will be
treated as a reasonably required reserve fund.
5.19 Reimbursement Resolution.
The “reimbursement resolution” adopted by the Recipient is incorporated herein by reference, pursuant to
Exhibit A.
5.20 Reimbursement Expenditures.
Reimbursements are disallowed, except as specifically authorized in Exhibit B or Exhibit D of this
Agreement. To the extent so authorized, a portion of the Bond Funded Portion of the Project Funds may
be applied to reimburse the Recipient for Project Costs paid before the date hereof, so long as the Project
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Cost was (i) not paid prior to sixty (60) days before the Recipient’s adoption of a declaration of official
intent to finance the Project, (ii) not paid more than eighteen (18) months prior to the date hereof or the
date the Project was placed-in-service, whichever is later, and (iii) not paid more than three (3) years prior
to the date hereof (collectively, “Reimbursement Expenditures”), unless such cost is attributable to a
“preliminary expenditure.” Preliminary expenditure for this purpose means architectural, engineering,
surveying, soil testing and similar costs incurred prior to the commencement of construction or
rehabilitation of the Project, but does not include land acquisition, site preparation and similar costs
incident to the commencement of acquisition, construction or rehabilitation of the Project. Preliminary
expenditures may not exceed 20% of the Bond Funded Portion of the Project Funds.
5.21 Change in Use of the Project.
The Recipient reasonably expects to use all of the Bond Funded Portion of the Project Funds and the
Project for the entire stated term to maturity of the Obligation. Absent an opinion of Nationally-
Recognized Bond Counsel to the effect that such use of the Bond Funded Portion of the Project Funds
will not adversely affect the exclusion from federal gross income of interest on the Bonds pursuant to
Section 103 of the Code, the Recipient will use the Bond Funded Portion of the Project Funds and the
Project solely as set forth in this Agreement.
5.22 Rebate Obligations.
If the Recipient satisfies the requirements of one of the spending exceptions to rebate specified in Section
1.148-7 of the Treasury Regulations, amounts earned from investments, if any, acquired with the Bond
Funded Portion of the Project Funds will not be subject to the rebate requirements imposed under Section
148(f) of the Code. If the Recipient fails to satisfy such requirements for any period, it will notify the State
Water Board and the Bank immediately and will comply with the provisions of the Code and the Treasury
Regulations at such time, including the payment of any rebate amount calculated by the State Water
Board or the Bank.
5.23 No Federal Guarantee.
The Recipient will not directly or indirectly use any of the Bond Funded Portion of the Project Funds in
any manner that would cause the Bonds to be "federally guaranteed" within the meaning of Section
149(b) of the Code, taking into account various except ions including any guarantee related to investments
during an initial temporary period until needed for the governmental purpose of the Bonds, investments as
part of a bona fide debt service fund, investments of a reasonably required reserve or replacement fund,
investments in bonds issued by the United States Treasury, investments in refunding escrow funds or
certain other investments permitted under the Treasury Regulations.
5.24 No Notices or Inquiries from IRS.
Within the last 10 years, the Recipient has not received any notice of a final action of the Internal
Revenue Service that determines that interest paid or payable on any debt obligation of the Recipient is
or was includable in the gross income of an owner or beneficial owner thereof for federal income tax
purposes under the Code.
5.25 Amendments.
The provisions in this Article may be amended, modified or supplemented at any time to reflect changes
in the Code upon obtaining written approval of the State Water Board and the Bank and an opinion of
Nationally-Recognized Bond Counsel to the effect that such amendment, modification or supplement will
not adversely affect the exclusion from federal gross inc ome of interest on the Bonds pursuant to Section
103 of the Code.
5.26 Reasonable Expectations.
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The Recipient warrants that, to the best of its knowledge, information and belief, and based on the facts
and estimates as set forth in the tax covenants in this Article, the expectations of the Recipient as set
forth in this Article are reasonable. The Recipient is not aware of any facts or circumstances that would
cause it to question the accuracy or reasonableness of any representation made in the provisions in this
Article V.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto.
CITY OF SAN LUIS OBISPO:
By:____________________________________
Name: [Officer]
Title: [Title1]
Date:__________________________________
STATE WATER RESOURCES CONTROL BOARD:
By:____________________________________
Name:
Title: Deputy Director
Division of Financial Assistance
Date:_________________________________
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EXHIBIT A – SCOPE OF WORK
1. Eligible Start Date. The Eligible Start Date is __________.
2. Start of Construction Date. The Recipient agrees to start construction no later than the estimated
date of __________.
3. Completion of Construction Date. The Completion of Construction date is hereby established as
___________. The Recipient shall deliver any request for extension of the Completion of
Construction date no less than 90 days prior to the Completion of Construction date.
4. Final Disbursement Request Date. The Recipient agrees to ensure that its final Request for
Disbursement is received by the Division no later than _______________ [six months after
Completion of Construction], unless prior approval has been granted by the Division. Otherwise, the
undisbursed balance of this Agreement will be de-obligated.
5. Records Retention Date is __________.
6. Incorporated Documents. Incorporated by reference into this Agreement are the following
documents:
a. the Final Plans & Specifications, dated __________, which are the basis for the construction
contract to be awarded by the Recipient (Agreement will be amended to incorporate such
document);
b. the Waste Discharge Requirement Order No. _________ (and/or National Pollutant
Discharge Elimination System Permit No. _________);
c. the Recipient’s Reimbursement Resolution No. _______ dated _________________;
d. the Recipient’s Tax Questionnaire dated _________________.
7. Reporting. Status Reports due at least quarterly.
8. Scope of Work.
[insert scope]
9. Signage.
The Recipient shall place a sign at least four feet tall by eight feet wide made of ¾ inch thick exterior
grade plywood or other approved material in a prominent location on the Project site and shall maintain
the sign in good condition for the duration of the construction period. The sign must include the following
disclosure statement and color logos (available from the Division):
“Funding for this $x.x million [name of ]project has been provided in full or in part by the Clean
Water State Revolving Fund through an agreement with the State Water Resources Control
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Board. California’s Clean Water State Revolving Fund is capitalized through a variety of funding
sources, including grants from the United States Environmental Protection Agency and State
bond proceeds.”
The Project sign may include another agency's required promotional information so long as the above
logos and disclosure statement are equally prominent on the sign. The sign shall be prepared in a
professional manner.
The Recipient shall include the following disclosure statement in any document, written report, or
brochure prepared in whole or in part pursuant to this Agreement:
“Funding for this project has been provided in full or in part through an agreement with the State
Water Resources Control Board. California’s Clean Water State Revolving Fund is capitalized
through a variety of funding sources, including grants from the United States Environmental
Protection Agency and state bond proceeds. The contents of this document do not necessarily
reflect the views and policies of the foregoing, nor does mention of trade names or commercial
products constitute endorsement or recommendation for use.”
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EXHIBIT B – FUNDING AMOUNT
1. Estimated Reasonable Cost. The estimated reasonable cost of the total Project, including associated
planning and design costs is Written Dollar Amount dollars and no cents ($Dollar Amount).
2. Project Financing. Subject to the terms of this Agreement, the State Water Board agrees to provide
Project Funds in the amount of up to Written Dollar Amount dollars and no cents ($Dollar Amount). A
portion of this amount Written Dollar Amount dollars and no cents ($Dollar Amount) is anticipated to be
a forgiven. The estimated amount of principal that will be due to the State Water Board under this
Agreement is Written Dollar Amount dollars and no cents ($Dollar Amount).
3. Payment, Interest Rate, and Charges. The Recipient agrees to make all Installment Payments
according to the schedule in Exhibit C at an interest rate of Written Interest Rate % (X%) per annum.
The Recipient agrees to pay an Administrative Service Charge in lieu of interest to be reflected in
Exhibit C. The Recipient agrees to pay a Small Community Grant Fund Charge in lieu of interest to be
reflected in Exhibit C.
4. Contingent Principal Forgiveness. Contingent on the Recipient’s performance of its ob ligations under
this Agreement, the State Water Board agrees to forgive up to Written Dollar Amount dollars and no
cents ($Dollar Amount) of the principal under this Agreement.
5. Useful Life. The useful life of this Project is at least ________ years.
6. The Final Repayment Date is _________________.
7. Budget costs are contained in the Project Cost Table below, which is part of Exhibit A-FBA. (This
Agreement will be amended to incorporate Exhibit A-FBA.)
8. Preliminary budget costs are as follows:
Planning and design allowances: $
Construction costs and disbursements are not available until after this Agreement has been amended
to incorporate Exhibit A-FBA. Construction costs incurred prior to the Eligible Start Date are not
eligible for reimbursement. Failure to begin construction according to the timelines set forth in Exhibit
A may require the Recipient to repay to the State Water Board all disb ursed Project Funds, including
planning and design allowances.
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EXHIBIT C – PAYMENT SCHEDULE
See the attached preliminary Payment Schedule dated Date. The final Payment Schedule will be
forwarded to the Recipient after all disbursements have been paid and construction of the Project has
been completed.
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EXHIBIT D – SPECIAL CONDITIONS
Recipient acknowledges and agrees to the following special conditions:
[environmental]
[credit – coverage, real property, conditions precedent]
[technical]
[other legal] – As a condition precedent to this Agreement, the Recipient must deliver an opinion of bond
counsel and general counsel satisfactory to the State Water Board’s counsel.
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EXHIBIT E – PROGRAMMATIC CONDITIONS & CROSS-CUTTERS
The Recipient agrees to comply with the following federal conditions:
(A) Federal Award Conditions
(1) American Iron and Steel. Unless the Recipient has obtained a waiver from USEPA on
file with the State Water Board or unless this Project is not a project for the construction,
alteration, maintenance or repair of a public water system or treatment work , the
Recipient shall not purchase “iron and steel products” produced outside of the United
States on this Project. Unless the Recipient has obtained a waiver from USEPA on file
with the State Water Board or unless this Project is not a project for the construction,
alteration, maintenance or repair of a public water s ystem or treatment work, the
Recipient hereby certifies that all “iron and steel products” used in the Project were or will
be produced in the United States. For purposes of this section, the term "iron and steel
products" means the following products made primarily of iron or steel: lined or unlined
pipes and fittings, manhole covers and other municipal castings, hydrants, tanks, flanges,
pipe clamps and restraints, valves, structural steel, reinforced precast concrete, and
construction materials. “Steel” means an alloy that includes at least 50 percent iron,
between .02 and 2 percent carbon, and may include other elements.
(2) Wage Rate Requirements (Davis-Bacon). The Recipient shall include in full the language
provided in Exhibit G of this Agreement in all contracts and subcontracts.
(3) Signage Requirements. The Recipient shall comply with the USEPA’s Guidelines for
Enhancing Public Awareness of SRF Assistance Agreements, dated June 3, 2015, as
otherwise specified in this Agreement.
(4) Public or Media Events. The Recipient shall notify the State Water Board and the EPA
contact as provided in the notice provisions of this Agreement of public or media events
publicizing the accomplishment of significant events related to this Project and provide
the opportunity for attendance and participation by federal representatives with at least
ten (10) working days’ notice.
(5) EPA General Terms and Conditions (USEPA GTCs). The Recipient shall comply with
applicable EPA general terms and conditions found at http://www.epa.gov/ogd, including
but not limited to the following:
(a) DUNS. No Recipient may receive funding under this Agreement unless it has
provided its DUNS number to the State Water Board.
(b) Executive Compensation. The Recipient shall report the names and total
compensation of each of its five most highly compensated executives for the
preceding completed fiscal year, as set forth in the USEPA GTCs.
(c) Federal Exclusion or Disqualification. The Recipient represents and warrants that
it and its principals are not excluded or disqualified from participating in this
transaction as such terms are defined in Parts 180 and 1532 of Title 2 of the
Code of Federal Regulations (2 CFR). If the Recipient is excluded after
execution of this Agreement, the Recipient shall notify the Division within ten (10)
days and shall inform the Division of the Recipient’s exclusion in any request for
amendment of this Agreement. The Recipient shall comply with Subpart C of
Part 180 of 2 CFR, as supplemented by Subpart C of Part 1532 of 2 CFR. Such
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compliance is a condition precedent to the State Water Board’s performance of
its obligations under this Agreement. When entering into a covered transaction
as defined in Parts 180 and 1532 of 2 CFR, the Recipient shall require the other
party to the covered transaction to comply with Subpart C of Part 180 of 2 CFR,
as supplemented by Subpart C of Part 1532 of 2 CFR.
(d) Conflict of Interest. To the extent applicable, the Recipient shall disclose to the
State Water Board any potential conflict of interest consistent with USEPA’s Final
Financial Assistance Conflict of Interest Policy at
https://www.epa.gov/grants/epas-final-financial-assistance-conflict-interest-policy.
A conflict of interest may result in disallowance of costs.
(e) Copyright and Patent.
i. USEPA and the State Water Board have the right to reproduce, publish, use
and authorize others to reproduce, publish and use copyrighted works or
other data developed under this assistance agreement.
ii. Where an invention is made with Project Funds, USEPA and the State Water
Board retain the right to a worldwide, nonexclusive, nontransferable,
irrevocable, paid-up license to practice the invention owned by the Recipient.
The Recipient must utilize the Interagency Edison extramural invention
reporting system at http://iEdison.gov and shall notify the Division when an
invention report, patent report, or utilization report is filed.
(f) Credit. The Recipient agrees that any reports, documents, publications or other
materials developed for public distribution supported by this Agreement shall
contain the following statement:
“This project has been funded wholly or in part by the United States Environmental
Protection Agency and the State Water Resources Control Board. The contents of
this document do not necessarily reflect the views and policies of the
Environmental Protection Agency or the State Water Resources Control Board, nor
does the EPA or the Board endorse trade names or recommend the use of
commercial products mentioned in this document.”
(g) Electronic and Information Technology Accessibility. The Recipient is encouraged
to follow guidelines established under Section 508 of the Rehabilitation Act,
codified at 36 CFR Part 1194, with respect to enabling individuals with disabilities
to participate in its programs supported by this Project.
(h) Trafficking in Persons. The Recipient, its employees, contractors and
subcontractors and their employees may not engage in severe forms of trafficking
in persons, procure a commercial sex act during the term of this Agreement, or use
forced labor in the performance of this Agreement. The Recipient must include this
provision in its contracts and subcontracts under this Agreement. The Recipient
must inform the State Water Board immediately of any information regarding a
violation of the foregoing. The Recipient understands that failure to comply with
this provision may subject the State Water Board to loss of federal funds. The
Recipient agrees to compensate the State Water Board for any such funds lost due
to its failure to comply with this condition, or the failure of its contractors or
subcontractors to comply with this condition. The State Water Board may
unilaterally terminate this Agreement if the Recipient that is a private entity is
determined to have violated the foregoing. Trafficking Victims Protection Act of
2000.
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(B) Super Cross-Cutters - Civil Rights Obligations. The Recipient must comply with the following
federal non-discrimination requirements:
(1) Title VI of the Civil Rights Act of 1964, which prohibits discrimination based on race, color,
and national origin, including limited English proficiency (LEP).
(2) Section 504 of the Rehabilitation Act of 1973, which prohibits discrimination against persons
with disabilities.
(3) The Age Discrimination Act of 1975, which prohibits age discrimination.
(4) Section 13 of the Federal Water Pollution Control Act Amendments of 1972, which prohibits
discrimination on the basis of sex.
(5) 40 CFR Part 7, as it relates to the foregoing.
(C) WRRDA Conditions
(1) Architectural and engineering contracts. Where the Recipient contracts for program
management, construction management, feasibility studies, preliminary engineering,
design, engineering, surveying, mapping, or architectural related services, the Recipient
shall ensure that any such contract is negotiated in the same manner as a contract for
architectural and engineering services is negotiated under chapter 11 of title 40, United
States Code, or an equivalent State qualifications-based requirement as determined by the
State Water Board.
(2) Fiscal sustainability. The Recipient certifies that it has developed and is implementing a
fiscal sustainability plan for the Project that includes an inventory of critical assets that are a
part of the Project, an evaluation of the condition and performance of inventoried assets or
asset groupings, a certification that the recipient has evaluated and will be implementing
water and energy conservation efforts as part of the plan, and a plan for maintaining,
repairing, and, as necessary, replacing the Project and a plan for funding such activities.
(D) Cross-Cutters
1) Executive Order No. 11246. The Recipient shall include in its contracts and subcontracts related
to the Project the following provisions:
"During the performance of this contract, th e contractor agrees as follows:"(a) The contractor will not
discriminate against any employee or applicant for employment because of race, creed, color, or
national origin. The contractor will take affirmative action to ensure that applicants are employed, and
that employees are treated during employment, without regard to their race, creed, color, or national
origin. Such action shall include, but not be limited to the following: emplo yment, upgrading, demotion,
or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of
compensation; and selection for training, including apprenticeship. The contractor agrees to post in
conspicuous places, available to employees and applicants for employment, notices to be provided by
the contracting officer setting forth the provisions of this nondiscrimination clause.
"(b) The contractor will, in all solicitations or advertisements for employees placed by or on behalf of
the contractor, state that all qualified applicants will receive consideration for employment without
regard to race, creed, color, or national origin.
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"(c) The contractor will send to each labor union or representative of workers with whic h he has a
collective bargaining agreement or other contract or understanding, a notice, to be provided by the
agency contracting officer, advising the labor union or workers' representative of the contractor's
commitments under Section 202 of Executive Order No. 11246 of September 24, 1965, and shall post
copies of the notice in conspicuous places available to employees and applicants for employment.
"(d) The contractor will comply with all provisions of Executive Order No. 11246 of Sept. 24, 1965, and
of the rules, regulations, and relevant orders of the Secretary of Labor.
"(e) The contractor will furnish all information and reports required by Executive Order No. 11246 of
September 24, 1965, and by the rules, regulations, and orders of the Secretary of L abor, or pursuant
thereto, and will permit access to his books, records, and accounts by the contracting agency and the
Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations,
and orders.
"(f) In the event of the contractor's noncompliance with the nondiscrimination clauses of this contract
or with any of such rules, regulations, or orders, this contract may be cancelled, terminated or
suspended in whole or in part and the contractor may be declared ineligible for further Government
contracts in accordance with procedures authorized in Executive Order No. 11246 of Sept 24, 1965,
and such other sanctions may be imposed and remedies invoked as provided in Executive Order No.
11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor, or as
otherwise provided by law.
"(g) The contractor will include the provisions of Paragraphs (1) through (7) in every subcontract or
purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued
pursuant to Section 204 of Executive Order No. 11246 of Sept. 24, 1965, so that such provisions will be
binding upon each subcontractor or vendor. The contractor will take such action with respect to any
subcontract or purchase order as the contracting agency may direct as a means of enforcing such
provisions including sanctions for noncompliance: Provided, however, That in the event the contractor
becomes involved in, or is threatened with, litigation with a subcontractor or vendo r as a result of such
direction by the contracting agency, the contractor may request the United States to enter into such
litigation to protect the interests of the United States."
(2) Disadvantaged Business Enterprises (40 CFR Part 33). The Recipient agrees to comply
with the requirements of USEPA’s Program for Utilization of Small, Minority and Women’s
Business Enterprises. The DBE rule can be accessed at www.epa.gov/osbp . The
Recipient shall comply with, and agrees to require its prime contractors to comply with 40
CFR Section 33.301, and retain all records documenting compliance with the six good faith
efforts. (IUP)
(3) Procurement Prohibitions under Section 306 of the Clean Air Act and Section 508 of the
Clean Water Act, including Executive Order 11738, Administration of the Clean Air Act and
the Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, or
Loans; 42 USC § 7606; 33 USC § 1368. Except where the purpose of this Agreement is to
remedy the cause of the violation, the Recipient may not procure goods, services, or
materials from suppliers excluded under the federal System for Award Management:
http://www.sam.gov/ .
(4) Uniform Relocation and Real Property Acquisition Policies Act, Pub. L. 91-646, as
amended; 42 USC §§4601-4655. The Recipient must comply with the Act’s implementing
regulations at 49 CFR 24.101 through 24.105.
(5) The Recipient agrees that if its network or information system is connected to USEPA
networks to transfer data using systems other than the Environmental Information
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Exchange Network or USEPA’s Central Data Exchange, it will ensure that any connections
are secure.
(E) Geospatial Data Standards
All geospatial data created pursuant to this Agreement that is submitted to the State Water Board
for use by USEPA or that is submitted directly to USEPA must be consistent with Federal
Geographic Data Committee endorsed standards. Information on these standards may be fou nd
at www.fgdc.gov.
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EXHIBIT F – SCHEDULE OF SYSTEM OBLIGATIONS
Except for the following and the Obligation evidenced by this Agreement, the Recipient certifies that it has
no outstanding System Obligations or Other Material Obligations, and that it is in compliance with all
applicable additional debt provisions of the following:
The following outstanding debt is senior to the Obligation:
Title
The following outstanding debt is on parity with the Obligation:
Title
I-Bank CIEDB-B08-087
USBancorp
SunTrust-443-5006721-001
The following outstanding debt is subordinate to the Obligation:
Title
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EXHIBIT G – DAVIS-BACON REQUIREMENTS
For purposes of this Exhibit only, “subrecipient” or “sub recipient” means the Recipient as defined in this
Agreement.
For purposes of this Exhibit only, “recipient” or “State recipient” means the State Water Board.
I. Requirements For Sub recipients That Are Governmental Entities:
If a sub recipient has questions regarding when Davis-Bacon (DB) applies, obtaining the correct DB wage
determinations, DB provisions, or compliance monitoring, it may contact the State Water Board at
DavisBacon@waterboards.ca.gov or phone (916) 327-7323. The recipient or sub recipient may also obtain
additional guidance from DOL’s web site at
http://www.dol.gov/whd/
1. Applicability of the Davis- Bacon (DB) prevailing wage requirements.
DB prevailing wage requirements apply to the construction, alteration, and repair of treatment works carried out
in whole or in part with assistance made available by a State water pollution control revolving fund and to any
construction project carried out in whole or in part by assistance made available by a drinking water treatment
revolving loan fund. If a sub recipient encounters a unique situation at a site that presents uncertainties regarding
DB applicability, the sub recipient must discuss the situation with the recipient State before authorizing work on
that site.
2. Obtaining Wage Determinations.
(a) Sub recipients shall obtain the wage determination for the locality in which a covered activity subject to DB will
take place prior to issuing requests for bids, proposals, quotes or other methods for soliciting contract s
(solicitation) for activities subject to DB. These wage determinations shall be incorporated into solicitations and
any subsequent contracts. Prime contracts must contain a provision requiring that subcontractors follow the wage
determination incorporated into the prime contract.
(i) While the solicitation remains open, the sub recipient shall monitor www.wdol.gov weekly to ensure that the
wage determination contained in the solicitation remains current. The sub recipients shall amend the solicitation if
DOL issues a modification more than 10 days prior to the closing date (i.e. bid opening) for the solicitation. If DOL
modifies or supersedes the applicable wage determination less than 10 days prior to the closing date, the sub
recipients may request a finding from the State recipient that there is not a reasonable time to notify interested
contractors of the modification of the wage determination. The State recipient will provide a report of its findings
to the sub recipient.
(ii) If the sub recipient does not award the contract within 90 days of the closure of the solicitation, any
modifications or supersedes DOL makes to the wage determination contained in the solicitation shall be effective
unless the State recipient, at the request of the sub recipient, obtains an extension of the 90 day period from DOL
pursuant to 29 CFR 1.6(c)(3)(iv). The sub recipient shall monitor www.wdol.gov on a weekly basis if it does not
award the contract within 90 days of closure of the solicitation to ensure that wage determinations contained in
the solicitation remain current.
(b) If the sub recipient carries out activity subject to DB by issuing a task order, work assignment or similar
instrument to an existing contractor (ordering instrument) rather than by publishing a solicitation, the sub
recipient shall insert the appropriate DOL wage determination from www.wdol.gov into the ordering instrument.
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(c) Sub recipients shall review all subcontracts subject to DB entered into by prime contractors to verify that the
prime contractor has required its subcontractors to include the applicable wage determinations.
(d) As provided in 29 CFR 1.6(f), DOL may issue a revised wage determination applicable to a sub recipient’s
contract after the award of a contract or the issuance of an ordering instrument if DOL determines that the sub
recipient has failed to incorporate a wage determination or has used a wage determination that clearly does not
apply to the contract or ordering instrument. If this occurs, the sub recipient shall either terminate the contract or
ordering instrument and issue a revised solicitation or ordering instrument or incorporate DOL’s wage
determination retroactive to the beginning of the contract or ordering instrument by change order. The sub
recipient’s contractor must be compensated for any increases in wages resulting from the use of DOL’s revised
wage determination.
3. Contract and Subcontract provisions.
(a) The Recipient shall insure that the sub recipient(s) shall insert in full in any contract in excess of $2,000 which is
entered into for the actual construction, alteration and/or repair, including painting and decorating, of a treatment
work under the CWSRF or a construction project under the DWSRF - financed in whole or in part from Federal
funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any
contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is
expressly indicated), and which is subject to the labor standards provisions of an y of the acts listed in 29 CFR § 5.1
or, for CWSRF projects, the FY 2015 Water Resource Reform and Development Act, or for DWSRF projects, the
Consolidated Appropriations Act, 2017, the following clauses:
(1) Minimum wages.
(i) All laborers and mechanics employed or working upon the site of the work will be paid unconditionally and not
less often than once a week, and without subsequent deduction or rebate on any account (except s uch payroll
deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part
3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment
computed at rates not less than those contained in the wage determination of the Secretary of Labor which is
attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist
between the contractor and such laborers and mechanics. Contributions made or costs reasonably anticipated for
bona fide fringe benefits under section
1(b)(2) of the Davis-Bacon Act on behalf of laborers or mechanics are considered wages paid to such laborers or
mechanics, subject to the provisions of paragraph (a)(1)(iv) of this section; also, regular contributions made or
costs incurred for more than a weekly period (but not less often than quarterly) under plans, funds, or programs
which cover the particular weekly period, are deemed to be constructively made or incurred during such weekly
period. Such laborers and mechanics shall be paid the appropriate wage rate and fringe benefits on the wage
determination for the classification of work actually performed, without regard to skill, except as provided in §
5.5(a)(4). Laborers or mechanics performing work in more than one classification may be compensat ed at the rate
specified for each classification for the time actually worked therein: Provided that the employer's payroll records
accurately set forth the time spent in each classification in which work is performed. The wage determination
(including any additional classification and wage rates conformed under paragraph (a)(1)(ii) of this section) and the
Davis-Bacon poster (WH-1321) shall be posted at all times by the contractor and its subcontractors at the site of
the work in a prominent and accessible place where it can be easily seen by the workers. Sub recipients may obtain
wage determinations from the U.S. Department of Labor’s web site, www.dol.gov.
(ii)(A) The sub recipient(s), on behalf of EPA, shall require that any class of laborers or mechanics, including
helpers, which is not listed in the wage determination and which is to be employed under the contract shall be
classified in conformance with the wage determination. The State award official shall approve a request for an
additional classification and wage rate and fringe benefits therefore only when the following criteria have been
met:
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(1) The work to be performed by the classification requested is not performed by a classification in the wage
determination; and
(2) The classification is utilized in the area by the construction industry; and
(3) The proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage
rates contained in the wage determination.
(B) If the contractor and the laborers and mechanics to be employed in the classification (if known), or their
representatives, and the sub recipient(s) agree on the classification and wage rate (including the amount
designated for fringe benefits where appropriate), documentation of the action taken and the request, including
the local wage determination shall be sent by the sub recipient (s) to the State award official. The State award
official will transmit the request, to the Administrator of the Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor, Washington, DC 20210 and to the EPA DB Regional Coordinator
concurrently. The Administrator, or an authorized representative, will approve, modify, or disapprove every
additional classification request within 30 days of receipt and so advise the State award official or will notify the
State award official within the 30-day period that additional time is necessary.
(C) In the event the contractor, the laborers or mechanics to be employed in the classification or their
representatives, and the sub recipient(s) do not agree on the proposed classification and wage rate (including the
amount designated for fringe benefits, where appropriate), the award official shall refer the request and the local
wage determination, including the views of all interested parties and the recommendation of the State award
official, to the Administrator for determination. The request shall be sent to the EPA DB Regional Coordinator
concurrently. The Administrator, or an authorized representative, will issue a determination within 30 days of
receipt of the request and so advise the contracting officer or will notify the contracting officer within the 30 -day
period that additional time is necessary.
(D) The wage rate (including fringe benefits where appropriate) determined pursuant to paragraphs (a)(1)(ii)(B) or
(C) of this section, shall be paid to all workers performing work in the classification under this contract from the
first day on which work is performed in the classification.
(iii) Whenever the minimum wage rate prescribed in the contract for a class of laborers or mechanics includes a
fringe benefit which is not expressed as an hourly rate, the contractor shall either pay the benefit as stated in the
wage determination or shall pay another bona fide fringe benefit or an hourly cash equivalent thereof.
(iv) If the contractor does not make payments to a trustee or other third person, the contractor may consider as
part of the wages of any laborer or mechanic the amount of any costs reasonably anticipated in providing bona
fide fringe benefits under a plan or program, Provided, That the Secretary of Labor has found, upon the written
request of the contractor, that the applicable standards of the Davis-Bacon Act have been met. The Secretary of
Labor may require the contractor to set aside in a separate account assets for the meeting of obligations under the
plan or program.
(2) Withholding. The sub recipient(s), shall upon written request of the EPA Award Official or an authorized
representative of the Department of Labor, withhold or cause to be withheld from the contractor under this
contract or any other Federal contract with the same prime contractor, or any other federally -assisted contract
subject to Davis-Bacon prevailing wage requirements, which is held by the same prime contractor, so much of the
accrued payments or advances as may be considered necessary to pay laborers and mechanics, including
apprentices, trainees, and helpers, employed by the contractor or any subcontractor th e full amount of wages
required by the contract. In the event of failure to pay any laborer or mechanic, including any apprentice, trainee,
or helper, employed or working on the site of the work, all or part of the wages required by the contract, the
(Agency) may, after written notice to the contractor, sponsor, applicant, or owner, take such action as may be
necessary to cause the suspension of any further payment, advance, or guarantee of funds until such violations
have ceased.
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(3) Payrolls and basic records.
(i) Payrolls and basic records relating thereto shall be maintained by the contractor during the course of the work
and preserved for a period of three years thereafter for all laborers and mechanics working at the site of the work.
Such records shall contain the name, address, and social security number of each such worker, his or her correct
classification, hourly rates of wages paid (including rates of contributions or costs anticipated for bona fide fringe
benefits or cash equivalents thereof of the types described in section 1(b)(2)(B) of the Davis-Bacon Act), daily and
weekly number of hours worked, deductions made and actual wages paid. Whenever the Secretary of Labor has
found under 29 CFR 5.5(a)(1)(iv) that the wages of any laborer or mechan ic include the amount of any costs
reasonably anticipated in providing benefits under a plan or program described in section 1(b)(2)(B) of the Davis -
Bacon Act, the contractor shall maintain records which show that the commitment to provide such benefits is
enforceable, that the plan or program is financially responsible, and that the plan or program has been
communicated in writing to the laborers or mechanics affected, and records which show the costs anticipated or
the actual cost incurred in providing such benefits. Contractors employing apprentices or trainees under approved
programs shall maintain written evidence of the registration of apprenticeship programs and certification of
trainee programs, the registration of the apprentices and trainees, and t he ratios and wage rates prescribed in the
applicable programs.
(ii)(A) The contractor shall submit weekly, for each week in which any contract work is performed, a copy of all
payrolls to the sub recipient, that is, the entity that receives the sub -grant or loan from the State capitalization
grant recipient. Such documentation shall be available on request of the State recipient or EPA. As to each payroll
copy received, the sub recipient shall provide written confirmation in a form satisfactory to the Sta te indicating
whether or not the project is in compliance with the requirements of 29 CFR 5.5(a)(1) based on the most recent
payroll copies for the specified week. The payrolls shall set out accurately and completely all of the information
required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses
shall not be included on the weekly payrolls. Instead the payrolls shall only need to include an individually
identifying number for each employee (e.g., the last four digits of the employee's social security number). The
required weekly payroll information may be submitted in any form desired. Optional Form WH-347 is available for
this purpose from the Wage and Hour Division Web site at https://www.dol.gov/whd/forms/index.htm or its
successor site. The prime contractor is responsible for the submission of copies of payrolls by all subcontractors.
Contractors and subcontractors shall maintain the full social security number and current address of each covered
worker, and shall provide them upon request to the sub recipient(s) for transmission to the State or EPA if
requested by EPA, the State, the contractor, or the Wage and Hour Division of the Department of Labor for
purposes of an investigation or audit of compliance with prevailing wage requirements. It is not a violation of this
section for a prime contractor to require a subcontractor to provide addresses and social security numbers to the
prime contractor for its own records, without weekly submission to the sub recipient(s).
(B) Each payroll submitted shall be accompanied by a “Statement of Compliance,” signed by the contractor or
subcontractor or his or her agent who pays or supervises the payment of the persons employed under the contract
and shall certify the following:
(1) That the payroll for the payroll period contains the information required to be provided under § 5.5 (a)(3)(ii) of
Regulations, 29 CFR part 5, the appropriate information is being maintained under § 5.5 (a)(3)(i) of Regulations, 29
CFR part 5, and that such information is correct and complete;
(2) That each laborer or mechanic (including each helper, apprentice, and trainee) employed on the contract
during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly,
and that no deductions have been made either directly or indirectly from the full wages earned, other than
permissible deductions as set forth in
Regulations, 29 CFR part 3;
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(3) That each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash
equivalents for the classification of work performed, as specified in the applicable wage determination
incorporated into the contract.
(C) The weekly submission of a properly executed certification set forth on the reverse side of Optional Form WH-
347 shall satisfy the requirement for submission of the “Statement of Compliance” required by paragraph
(a)(3)(ii)(B) of this section.
(D) The falsification of any of the above certifications may subject the contractor or subcontractor to civil or
criminal prosecution under section 1001 of title 18 and section 231 of title 31 of the United States Code.
(iii) The contractor or subcontractor shall make the records required under paragraph (a)(3)(i) of this section
available for inspection, copying, or transcription by authorized representatives of the State, EPA or the
Department of Labor, and shall permit such representatives to interview employees during working hours on the
job. If the contractor or subcontractor fails to submit the required records or to make them available, the Federal
agency or State may, after written notice to the contractor, sponsor, applicant, or owner, take such actio n as may
be necessary to cause the suspension of any further payment, advance, or guarantee of funds. Furthermore,
failure to submit the required records upon request or to make such records available may be grounds for
debarment action pursuant to 29 CFR 5.12.
(4) Apprentices and trainees
(i) Apprentices. Apprentices will be permitted to work at less than the predetermined rate for the work they
performed when they are employed pursuant to and individually registered in a bona fide apprenticeship program
registered with the U.S. Department of Labor, Employment and Training Administration, Office of Apprenticeship
Training, Employer and Labor Services, or with a State Apprenticeship Agency recognized by the Office, or if a
person is employed in his or her first 90 days of probationary employment as an apprentice in such an
apprenticeship program, who is not individually registered in the program, but who has been certified by the
Office of Apprenticeship Training, Employer and Labor Services or a State Apprenticeship Agency (where
appropriate) to be eligible for probationary employment as an apprentice. The allowable ratio of apprentices to
journeymen on the job site in any craft classification shall not be greater than the ratio permitted to the contractor
as to the entire work force under the registered program. Any worker listed on a payroll at an apprentice wage
rate, who is not registered or otherwise employed as stated above, shall be paid not less than the applicable wage
rate on the wage determination for the classification of work actually performed. In addition, any apprentice
performing work on the job site in excess of the ratio permitted under the registered program shall be paid not
less than the applicable wage rate on the wage determination for the work actually performed. Where a
contractor is performing construction on a project in a locality other than that in which its program is registered,
the ratios and wage rates (expressed in percentages of the journeyman's hourly rate) specified in the contractor's
or subcontractor's registered program shall be observed. Every apprentice must be paid at not less than the rate
specified in the registered program for the apprentice's level of progress, expressed as a percentage of the
journeymen hourly rate specified in the applicable wage determination. Apprentices shall be paid fringe benefits in
accordance with the provisions of the apprenticeship program. If the apprenticeship program does not specify
fringe benefits, apprentices must be paid the full amount of fringe benefits listed on the wage determination for
the applicable classification. If the Administrator determines that a different practice prevails for the applicable
apprentice classification, fringes shall be paid in accordance with that determination. In the event the Office of
Apprenticeship Training, Employer and Labor Services, or a State Apprenticeship Agency recognized by the Office,
withdraws approval of an apprenticeship program, the contractor will no longer be permitted to utilize a pprentices
at less than the applicable predetermined rate for the work performed until an acceptable program is approved.
(ii) Trainees. Except as provided in 29 CFR 5.16, trainees will not be permitted to work at less than the
predetermined rate for the work performed unless they are employed pursuant to and individually registered in a
program which has received prior approval, evidenced by formal certification by the U.S. Department of Labor,
Employment and Training Administration. The ratio of trainees to journeymen on the job site shall not be greater
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than permitted under the plan approved by the Employment and Training Administration. Every trainee must be
paid at not less than the rate specified in the approved program for the trainee's level of prog ress, expressed as a
percentage of the journeyman hourly rate specified in the applicable wage determination. Trainees shall be paid
fringe benefits in accordance with the provisions of the trainee program. If the trainee program does not mention
fringe benefits, trainees shall be paid the full amount of fringe benefits listed on the wage determination unless
the Administrator of the Wage and Hour Division determines that there is an apprenticeship program associated
with the corresponding journeyman wage rate on the wage determination which provides for less than full fringe
benefits for apprentices. Any employee listed on the payroll at a trainee rate who is not registered and
participating in a training plan approved by the Employment and Training Administration shall be paid not less than
the applicable wage rate on the wage determination for the classification of work actually performed. In addition,
any trainee performing work on the job site in excess of the ratio permitted under the registered program shall be
paid not less than the applicable wage rate on the wage determination for the work actually performed. In the
event the Employment and Training Administration withdraws approval of a training program, the contractor will
no longer be permitted to utilize trainees at less than the applicable predetermined rate for the work performed
until an acceptable program is approved.
(iii) Equal employment opportunity. The utilization of apprentices, trainees and journeymen under this part shall
be in conformity with the equal employment opportunity requirements of Executive Order 11246, as amended and
29 CFR part 30.
(5) Compliance with Copeland Act requirements. The contractor shall comply with the requirements of 29 CFR part
3, which are incorporated by reference in this contract.
(6) Subcontracts. The contractor or subcontractor shall insert in any subcontracts the clauses contained in 29 CFR
5.5(a)(1) through (10) and such other clauses as the EPA determines may by appropriate, and also a clause
requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime contractor shall be
responsible for the compliance by any subcontractor or lower tier subcontractor with all the contract clauses in 29
CFR 5.5.
(7) Contract termination; debarment. A breach of the contract clauses in 29 CFR 5.5 may be grounds for
termination of the contract, and for debarment as a contractor and a subcontractor as provided in 29 CFR 5.12.
(8) Compliance with Davis-Bacon and Related Act requirements. All rulings and interpretations of the Davis-Bacon
and Related Acts contained in 29 CFR parts 1, 3, and 5 are herein incorporated by reference in this contract.
(9) Disputes concerning labor standards. Disputes arising out of the labor standards provision s of this contract shall
not be subject to the general disputes clause of this contract. Such disputes shall be resolved in accordance with
the procedures of the Department of Labor set forth in 29 CFR parts 5, 6, and 7. Disputes within the meaning of
this clause include disputes between the contractor (or any of its subcontractors) and sub recipient(s), State, EPA,
the U.S. Department of Labor, or the employees or their representatives.
(10) Certification of eligibility.
(i) By entering into this contract, the contractor certifies that neither it (nor he or she) nor any person or firm who
has an interest in the contractor's firm is a person or firm ineligible to be awarded Government contracts by virtue
of section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1).
(ii) No part of this contract shall be subcontracted to any person or firm ineligible for award of a
Government contract by virtue of section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1).
(iii) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 U.S.C.
1001.
4. Contract Provision for Contracts in Excess of $100,000.
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(a) Contract Work Hours and Safety Standards Act. The sub recipient shall insert the following clauses set forth in
paragraphs (a)(1), (2), (3), and (4) of this section in full in any contract in an amount in excess of $100,000 and
subject to the overtime provisions of the Contract Work Hours and Safety Standards Act. These clauses shall be
inserted in addition to the clauses required by Item 3, above or 29 CFR 4.6. As used in this paragraph, the terms
laborers and mechanics include watchmen and guards.
(1) Overtime requirements. No contractor or subcontractor contracting for any part of the contract work which
may require or involve the employment of laborers or mechanics shall require or permit any such laborer or
mechanic in any workweek in which he or she is employed on such work to work in excess of forty hours in such
workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times
the basic rate of pay for all hours worked in excess of forty hours in such workweek.
(2) Violation; liability for unpaid wages; liquidated damages. In the event of any violation of the clause set forth in
paragraph (a)(1) of this section the contractor and any subcontractor responsible therefore shall be liable for the
unpaid wages. In addition, such contractor and subcontractor shall be liable to the United States (in the case of
work done under contract for the District of Columbia or a territory, to such District or to such territory), for
liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or
mechanic, including watchmen and guards, employed in violation of th e clause set forth in paragraph (a)(1) of this
section, in the sum of $25 for each calendar day on which such individual was required or permitted to work in
excess of the standard workweek of forty hours without payment of the overtime wages required by t he clause set
forth in paragraph (a)(1) of this section.
(3) Withholding for unpaid wages and liquidated damages. The sub recipient , upon written request of the EPA
Award Official or an authorized representative of the Department of Labor, shall withhold or cause to be withheld,
from any moneys payable on account of work performed by the contractor or subcontractor under any such
contract or any other Federal contract with the same prime contractor, or any other federally -assisted contract
subject to the Contract Work Hours and Safety Standards Act, which is held by the same prime contractor, such
sums as may be determined to be necessary to satisfy any liabilities of such contractor or subcontractor for unpaid
wages and liquidated damages as provided in the clause set forth in paragraph (b)(2) of this section.
(4) Subcontracts. The contractor or subcontractor shall insert in any subcontracts the clauses set forth in paragraph
(a)(1) through (4) of this section and also a clause requiring the subcontractors to include these clauses in any
lower tier subcontracts. The prime contractor shall be responsible for compliance by any subcontractor or lower
tier subcontractor with the clauses set forth in paragraphs (a)(1) through (4) of this section. (b) In addition to the
clauses contained in Item 3, above, in any contract subject only to the
Contract Work Hours and Safety Standards Act and not to any of the other statutes cited in 29 CFR 5.1, the Sub
recipient shall insert a clause requiring that the contractor or subcontractor shall maintain payrolls and basic
payroll records during the course of the work and shall preserve them for a period of three years from the
completion of the contract for all laborers and mechanics, including guards and watchmen, working on the
contract. Such records shall contain the name and address of each such employee, social security number, correct
classifications, hourly rates of wages paid, daily and weekly number of hours worked, deductions made, and actual
wages paid. Further, the Sub recipient shall insert in any such contract a clause providing that the records to be
maintained under this paragraph shall be made available by the contractor or subcontractor for inspection,
copying, or transcription by authorized representatives of the USEPA and the Department of Labor and the State
Water Board, and the contractor or subcontractor will permit such representatives to interview employees during
working hours on the job.
5. Compliance Verification
(a) The sub recipient shall periodically interview a sufficient number of employees entitled to DB prevailing wages
(covered employees) to verify that contractors or subcontractors are paying the appropriate wage rates. As
provided in 29 CFR 5.6(a)(3), all interviews must be conducted in confidence. The sub recipient must use Standard
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City of San Luis Obispo
Agreement No.: XX-XXX-550
Project No.: C-06-8029-110
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Form 1445 (SF 1445) or equivalent documentation to memorialize the interviews. Copies of the SF 1445 are
available from EPA on request.
(b) The sub recipient shall establish and follow an interview schedule based on its assessment of the risks of
noncompliance with DB posed by contractors or subcontractors and the duration of the contract or subcontract.
Sub recipients must conduct more frequent interviews if the initial interviews or other information indicated that
there is a risk that the contractor or subcontractor is not complying with DB.
Sub recipients shall immediately conduct interviews in response to an alleged violation of the prevailing wage
requirements. All interviews shall be conducted in confidence."
(c) The sub recipient shall periodically conduct spot checks of a representative sample of weekly payroll data to
verify that contractors or subcontractors are paying the appropriate wage rates. The sub recipient shall establish
and follow a spot check schedule based on its assessment of the risks of noncompliance with DB posed by
contractors or subcontractors and the duration of the contract or subcontract. At a minimum, if practicable, the
sub recipient should spot check payroll data within two weeks of each contractor or subcontractor’s submission of
its initial payroll data and two weeks prior to the completion date the contract or subcontract. Sub recipients must
conduct more frequent spot checks if the initial spot check or other information indica tes that there is a risk that
the contractor or subcontractor is not complying with DB. In addition, during the examinations the sub recipient
shall verify evidence of fringe benefit plans and payments there under by contractors and subcontractors who
claim credit for fringe benefit contributions.
(d) The sub recipient shall periodically review contractors’ and subcontractors’ use of apprentices and trainees to
verify registration and certification with respect to apprenticeship and training programs approved by either the
U.S Department of Labor or a state, as appropriate, and that contractors and subcontractors are not using
disproportionate numbers of, laborers, trainees and apprentices. These reviews shall be conducted in accordance
with the schedules for spot checks and interviews described in Item 5(b) and (c) above.
(e) Sub recipients must immediately report potential violations of the DB prevailing wage requirements to the EPA
DB contact listed above and to the appropriate DOL Wage and Hour District Office listed at
http://www.dol.gov/whd/america2.htm.
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Name of Recipient
Agreement No.: XX-XXX-550
Project No.: C-06-XXXX-XXX
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EXHIBIT H – COMPLIANCE WITH CROSS-CUTTING STATE AUTHORITIES
1. WATER CONSERVATION REGULATIONS
The Recipient certifies that it complies with and shall continue to comply the requirements of Article 2 of
Chapter 3.5 of Division 3 of Title 23 of the California Code of Regulations. The Recipient will include a
discussion of its implementation of such requirements, as applicable, in reports submitted pursuant to
Section 2.15 of this Agreement.
2. CALIFORNIA DEBT INVESTMENT ADVISORY COMMISSION (CDIAC)
Where Recipient is a public entity, Recipient acknowledges its responsibility to file debt obligations wi th
the CDIAC. Recipient understands that CDIAC has waived filing fees for State Water Board SRF debt.
3. COMPLIANCE WITH STATE REQUIREMENTS
Recipient represents that it complies with the following conditions precedent and shall continue to
maintain compliance:
(a) Monthly Water Diversion Reporting
If Recipient is a water diverter, Recipient must maintain compliance with Water Code section
5103, subdivision (e)(2)(A) by submitting monthly diversion reports to the Division of Water Rights
of the State Water Resources Control Board.
(b) Public Works Contractor Registration with Department Of Industrial Relations
To bid for public works contracts, Recipient and Recipient’s subcontractors must register with the
Department of Industrial Relations as required by Labor Code sections 1725.5 and 1771.1.
(c) Volumetric Pricing & Water Meters
If Recipient is an “urban water supplier” as defined by Water Code section 10617, Recipient must
charge each customer for actual water volume measured by water meter according to the
requirements of Water Code sections 526 and 527. Section 527 further requires that such
suppliers not subject to section 526 install water meters on all municipal and industrial service
connections within their service area by 2025.
(d) Urban Water Management Plan
If Recipient is an “urban water supplier” as defined by Water Code section 10617, the Recipient
certifies that this Project complies with the Urban Water Management Planning Act (Water Code,
§ 10610 et seq.). This shall constitute a condition precedent to this Agreement.
(e) Urban Water Demand Management
If Recipient is an “urban water supplier” as defined by Water Code section 1061 7, Recipient must
comply with water conservation measures established by SBx7-7. (Water Code, Sec. 10608.56.)
(f) Delta Plan Consistency Findings
If Recipient is a state or local public agency and the proposed action is covered by the Delta Plan,
Recipient must submit certification of project consistency with the Delta Plan to the Delta
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Name of Recipient
Agreement No.: XX-XXX-550
Project No.: C-06-XXXX-XXX
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Stewardship Council according to the requirements of Water Code section 85225 and California
Code of Regulations, title 23, section 5002.
(g) Agricultural Water Management Plan Consistency
If Recipient is an agricultural water supplier as defined by Water Code section 10608.12,
Recipient must comply with Agricultural Water Management Planning requirements as mandated
by Water Code section 10852.
(h) Charter City Project Labor Requirements
If Recipient is a charter city as defined in Labor Code section 1782, subdivision (d)(2), Recipient
will comply with the requirements of Labor Code section 1782 and Public Contract Code section
2503 as discussed in the following subparts (1) and (2).
(1) Prevailing Wage
Recipient certifies that it is eligible for state funding assistance notwithstanding Labor
Code section 1782.
Specifically Recipient certifies that no charter provision nor ordinance authorizes a
construction project contractor not to comply with Labor Code’s prevailing wage rate
requirements, nor, within the prior two years (starting from January 1, 2015 or after) has
the city awarded a public works contract without requiring the contractor to comply with
such wage rate requirements according to Labor Code section 1782.
(2) Labor Agreements
Recipient certifies that no charter provision, initiative, or ordinance limits or constrains the
city’s authority or discretion to adopt, require, or utilize project labor agreements that
include all the taxpayer protection antidiscrimination provisions of Public Contract Code
section 2500 in construction projects, and that Recipient is accordingly eligible for state
funding or financial assistance pursuant to Public Contract Code section 2503.
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