HomeMy WebLinkAbout2023-09-26; City Council; Resolution 2023-241RESOLUTION NO. 2023-241
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING A LOAN AGREEMENT WITH THE CALIFORNIA
STATE WATER RESOURCES CONTROL BOARD FOR FUNDING FOR THE
WASTEWATER SUPERVISORY CONTROL AND DATA ACQUISITION PROJECT
WHEREAS, the City Council of the City of Carlsbad, California has determined it is desirable to
finance the costs of constructing and/or reconstructing certain public facilities and improvements
relating to its wastewater system, including the Wastewater Supervisory Control and Data Acquisition,
or SCADA, Improvements Project; and
WHEREAS, the city intends to finance the construction and/or reconstruction of the project or
portions of the project with a Clean Water State Revolving Fund loan provided by the State of California,
acting by and through the State Water Resources Control Board, or State Water Board, in an amount
of up to $4,601,000.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.That the above recitations are true and correct.
2.That the Clean Water State Revolving Fund loan agreement in Attachment A is
approved.
3.That the City Manager or designee ("authorized representative") is authorized and
directed to sign and file for, and on behalf of the city, the loan agreement in Attachment
A from the State Water Board for the planning, design and construction of the
Wastewater SCADA Improvements Project.
4.That the City Manager or designee is authorized to sign all other documents necessary
to finalize, implement and comply with the loan agreement in Attachment A, subject to
the approval by the City Attorney.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 26th day of Sept., 2023, by the following vote, to wit:
AYES:
NAYS:
ABSTAIN:
ABSENT:
Blackburn, Bhat-Patel, Acosta, Burkholder, Luna.
None.
None.
None.
KEITH BLACKBURN, Mayor
SHERRY FREISINGER, City Clerk
(SEAL)
_l.L_!__!_~--
Attachment A
Water Boards
E. JOAQUIN ESQUIVEL, CHAIR I EILEEN SOBECK, EXECUTIVE DIRECTOR
GAVIN N EWSOM
GOVERNOR
YANA GARCIA
SECRETARY FOR
ENVIRONMENTAL PROTECTION
1001 I Street, Sacramento, CA 95814 I Mailing Address: P.O. Box 100, Sacramento, CA 95812-0100 I www.waterboards.ca.gov
THIS PAGE INTENTIONALLY LEFT BLANK
TABLE OF CONTENTS
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page i of 48
AGREEMENT ............................................................................................................................................... 1
1. AUTHORITY .......................................................................................................................................... 1
2. INTENTION ............................................................................................................................................ 1
3. AGREEMENT, TERM, DOCUMENTS INCORPORATED BY REFERENCE. ...................................... 1
4. PARTY CONTACTS .............................................................................................................................. 2
5. DEFINITIONS ........................................................................................................................................ 3
EXHIBIT A -SCOPE OF WORK .................................................................................................................. 9
A 1. PROJECT DESCRIPTION, USEFUL LIFE, AND SCOPE OF WORK ........................................... 9
A.2. STANDARD PROJECT REQUIREMENTS ........................................................................................ 9
A.2.1 Acknowledgements .................................................................................................................................... 9
A.2.2 Reports ....................................................................................................................................................... 9
A.2.2.1 Progress Reports ................................................................................................................................ 9
A.2.2.2 Project Completion Report .............................................................................................................. 10
A.2.2.3 As Needed Reports .......................................................................................................................... 10
A.2.2.4 [Reserved.] ....................................................................................................................................... 10
A.2.2.5 DBE Reports for SRF Projects ........................................................................................................ 10
A.2.3 Signage .................................................................................................................................................... 11
A.2.4 Commencement of Operations ................................................................................................................ 11
A.3 DATES & DELIVERABLES .............................................................................................................. 11
A.4 SCHEDULE ...................................................................................................................................... 12
EXHIBIT B -FUNDING TERMS ................................................................................................................. 13
B.1.
B.1.1
B.1.2
B.1.3
B.1.4
B.1.5
B.1.6
B.1.7
B.1.8
B.1.9
FUNDING AMOUNTS AND REIMBURSEMENTS ...................................................................... 13
Funding Contingency and Other Sources ................................................................................................ 13
Estimated Reasonable Cost. ..................................................................................................................... 13
Project Funding Amount. ......................................................................................................................... 13
[Reserved.] ............................................................................................................................................... 13
Budget Costs ............................................................................................................................................ 13
Contingent Disbursement. ....................................................................................................................... 14
Reimbursement Procedure ....................................................................................................................... 14
Withholding ofDisbursements ................................................................................................................ 15
Fraud and Misuse of Public Funds; Enforcement. ................................................................................... 16
B.2 RECIPIENT'S PAYMENT OBLIGATION, PLEDGE, AND RESERVE ............................................. 16
B.2.1 ProjectCosts ............................................................................................................................................ 16
B.2.2 Estimated Principal Payment Due ........................................................................................................... 17
B.2.3 Interest Rate and In-Lieu of Interest Charges .......................................................................................... 17
B.2.4 [Reserved.] ............................................................................................................................................... 17
B.2.5 Obligation Absolute ................................................................................................................................. 17
B.2.6
B.2.7
B.2.7.1
B.2.7.2
B.2.7.3
B.2.8
B.2.9
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page ii of 48
Payment Timing ....................................................................................................................................... 17
Pledged Revenues .................................................................................................................................... 18
Establishment of Enterprise Fund and Reserve Fund .......................................................................... 18
Pledge of Net Revenues, Enterprise Fund, and Reserve Fund ............................................................. 18
Application and Purpose of the Enterprise Fund ................................................................................. 18
No Prepayment. ....................................................................................................................................... 19
Reserve Fund ........................................................................................................................................... 19
8.3 RATES, FEES AND CHARGES ...................................................................................................... 19
8.4 ADDITIONAL DEBT ......................................................................................................................... 19
8.5 NO LIENS ......................................................................................................................................... 20
EXHIBIT C -GENERAL & PROGRAMMATIC TERMS & CONDITIONS .................................................. 21
C.1 REPRESENTATIONS & WARRANTIES ......................................................................................... 21
C.1.1 Application and General Recipient Commitments .................................................................................. 21
C.1.2 Authorization and Validity ...................................................................................................................... 21
C.1.3 No Violations ........................................................................................................................................... 21
C.1.4 No Litigation ............................................................................................................................................ 21
C.1.5 Property Rights ........................................................................................................................................ 21
C.1.6 Solvency and Insurance ........................................................................................................................... 22
C.1.7 Legal Status andEligibility ...................................................................................................................... 22
C.1.8 Financial Statements and Continuing Disclosure .................................................................................... 22
C.1.9 System Obligations .................................................................................................................................. 22
C.1.10 No Other Material Debt. .......................................................................................................................... 22
C.1.11 Compliance with State Water Board Funding Agreements ..................................................................... 22
C.2 DEFAULTS AND REMEDIES .......................................................................................................... 22
C.2.1 Return of Funds; Acceleration; and Additional Payments ....................................................................... 23
C.2.2 [Reserved.] ............................................................................................................................................... 23
C.2.3 Administrative remedies .......................................................................................................................... 23
C.2.4 Judicial remedies ..................................................................................................................................... 23
C.2.5 Termination .............................................................................................................................................. 23
C.2.6 Damages for Breach of Tax-Exempt Status ............................................................................................. 24
C.2.7 Damages for Breach of Federal Conditions ............................................................................................. 24
C.2.8 Remedies and Limitations ....................................................................................................................... 24
C.2.9 Non-Waiver ............................................................................................................................................. 24
C.2.10 Status Quo ................................................................................................................................................ 24
C.3 STANDARD CONDITIONS .................................................................................................................. 24
C.3.1 Access, Inspection, and Public Records ................................................................................................... 24
C.3.2 Accounting and Auditing Standards; Financial Management Systems; Records Retention .................... 25
C.3.3 Amendment. ............................................................................................................................................ 26
C.3.4 Assignability ............................................................................................................................................ 26
C.3.5 Audit. ....................................................................................................................................................... 26
C.3.6 Bonding ................................................................................................................................................... 26
C.3.7 Competitive Bidding ................................................................................................................................ 26
C.3.8 Compliance with Applicable Laws, Rules, and Requirements ............................................................... .26
C.3.9 Computer Software .................................................................................................................................. 26
C.3.10 Conflict of Interest. .................................................................................................................................. 27
C.3.11 Continuous Use of Project; No Lease, Sale, Transfer of Ownership, or Disposal of Project .................. 27
C.3.12 Data Management. ................................................................................................................................... 27
C.3.13 Disputes ................................................................................................................................................... 27
ii
C.3.14
C.3.15
C.3.16
C.3.17
C.3.18
C.3.19
C.3.20
C.3.21
C.3.22
C.3.23
C.3.24
C.3.25
C.3.26
C.3.27
C.3.28
C.3.29
C.3.30
C.3.31
C.3.32
C.3.33
C.3.34
C.3.35
C.3.36
C.3.37
C.3.38
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page iii of 48
[Reserved.] ............................................................................................................................................... 27
Environmental Clearance ......................................................................................................................... 27
Governing Law ........................................................................................................................................ 28
Income Restrictions ................................................................................................................................. 28
Indemnification and State Reviews ......................................................................................................... 28
Independent Actor ................................................................................................................................... 29
Integration ................................................................................................................................................ 29
Leveraging Covenants ............................................................................................................................. 29
No Discrimination ................................................................................................................................... 29
No Third Party Rights .............................................................................................................................. 30
No Obligation of the State ....................................................................................................................... 30
Notice ....................................................................................................................................................... 30
Operation and Maintenance; Insurance .................................................................................................... 32
Permits, Subcontracting, and Remedies ................................................................................................... 33
Professionals ............................................................................................................................................ 33
Prevailing Wages ..................................................................................................................................... 34
Public Funding ......................................................................................................................................... 34
Recipient's Responsibility for Work ....................................................................................................... 34
Related Litigation .................................................................................................................................... 34
Rights in Data .......................................................................................................................................... 34
State Water Board Action; Costs and Attorney Fees ............................................................................... 34
Timeliness ................................................................................................................................................ 3 5
Unenforceable Provision .......................................................................................................................... 35
Venue ....................................................................................................................................................... 35
Waiver and Rights of the State Water Board .......................................................................................... .35
C.4 MISCELLANEOUS STATE AND FEDERAL REQUIREMENTS .......................................................... 35
C.4.1 [Reserved.] ............................................................................................................................................... 35
C.4.2 State Cross-Cutters .................................................................................................................................. 35
C.4.3 Federal Requirements and Cross-Cutters for SRF Funding ..................................................................... 36
EXHIBIT D -SPECIAL CONDITIONS ........................................................................................................ 42
EXHIBIT E -PAYMENT SCHEDULE ......................................................................................................... 43
EXHIBIT F-TAX CERTIFICATE ............................................................................................................... 44
F.1 Purpose ............................................................................................................................................ 44
F.2 Tax Covenant. .................................................................................................................................. 44
F.3 Governmental Unit. .......................................................................................................................... 44
F.4 Financing of a Capital Project. ......................................................................................................... 44
F.5 Ownership and Operation of Project. ............................................................................................... 44
F.6 Temporary Period ............................................................................................................................. 44
F.7 Working Capital ................................................................................................................................ 45
F.8 Expenditure of Proceeds .................................................................................................................. 45
F.9 Private Use and Private Payments .................................................................................................. 45
iii
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page iv of 48
F. 10 No Sale, Lease or Private Operation of the Project. ................................................................... .45
F.11 No Disproportionate or Unrelated Use ......................................................................................... 46
F. 12 Management and Service Contracts ............................................................................................ 46
F.13 No Disposition of Financed Property ............................................................................................ 46
F.14 Useful Life of Project. ................................................................................................................... 46
F. 15 Payments ...................................................................................................................................... 46
F. 16 No Other Replacement Proceeds ................................................................................................. 46
F.17 No Sinking or Pledged Fund ......................................................................................................... 47
F.18 Reserve Amount. .......................................................................................................................... 47
F.19 Reimbursement Resolution .......................................................................................................... 47
F.20 Reimbursement Expenditures ...................................................................................................... 47
F.21 Change in Use of the Project. ....................................................................................................... 47
F.22 Rebate Obligations ....................................................................................................................... 47
F.23 No Federal Guarantee .................................................................................................................. 48
F.24 Amendments ................................................................................................................................. 48
F.25 Reasonable Expectations ............................................................................................................. 48
F.26 Assignment. .................................................................................................................................. 48
iv
AGREEMENT
1. AUTHORITY.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 1 of 48
(a) The State Water Resources Control Board (State Water Board) is authorized, and implements its
authority, to provide financial assistance under this Agreement pursuant to Section 13475 et seq. of the
Water Code, and Resolution Nos. 2019-0064 and 2022-0040.
(b) The Recipient is authorized to enter into this Installment Sale Agreement (Agreement) pursuant to
Resolution No. 2020-217.
2. INTENTION.
(a) The Recipient desires to receive financial assistance for and undertake work required for the
wastewater construction Project according to the terms and conditions set forth in this Agreement.
(b) The State Water Board proposes to assist in providing financial assistance for eligible costs of the
Project in the amount set forth in Exhibit B, according to the terms and conditions set forth in this
Agreement, with the expectation that the Recipient shall repay all of the financial assistance to the State
Water Board.
(c) The Recipient intends to evidence its obligation to submit Payments to the State Water Board and
secure its obligation with Net Revenues of its wastewater enterprise, as set forth in Exhibit B, according to
the terms and conditions set forth in this Agreement.
(d) The Recipient intends to certify and evidence its compliance with the Tax Covenants set forth in
Exhibit F.
3. AGREEMENT, TERM, DOCUMENTS INCORPORATED BY REFERENCE.
In consideration 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 to the terms, provisions, and conditions of this Agreement.
(a) 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 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.
(b) Subject to the satisfaction of any condition precedent to this Agreement, this Agreement shall
become effective upon the signature of both the Recipient and the State Water Board. Conditions
precedent are not limited to the following:
i. The Recipient must deliver to the Division a resolution authorizing this Agreement.
ii. The Recipient must deliver an opinion of general counsel satisfactory to the State Water
Board's counsel dated on or after the date that the Recipient signs this Agreement.
(c) Upon execution, the term of the Agreement shall begin on the Eligible Work Start Date and
extend through the Final Payment Date.
(d) This Agreement includes the following exhibits and attachments thereto:
i. EXHIBIT A -SCOPE OF WORK
ii. EXHIBIT B -FUNDING TERMS
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 O
Page 2 of 48
iii. EXHIBIT C -GENERAL & PROGRAMMATIC TERMS & CONDITIONS
iv. EXHIBIT D -SPECIAL CONDITIONS
v. EXHIBIT E-PAYMENT SCHEDULE
vi. EXHIBIT F-TAX CERTIFICATE
(e) This Agreement includes the following documents incorporated by reference, as well as any
documents incorporated by reference in Exhibit D:
i. the Final Plans & Specifications, dated March 2, 2023, which are the basis for the
construction contract to be awarded by the Recipient;
ii. the Waste Discharge Requirement Order No. CA0107395;
iii. the Recipient's Reimbursement Resolution No. 2020-218 dated November 17, 2020;
iv. the Recipient's Tax Questionnaire dated October 19, 2021 .
v. the Davis-Bacon requirements found at:
https://www.waterboards.ca.gov/water issues/programs/grants loans/srf/docs/2022/dav
is-bacon-2022-cwsrf-governmental-entities-public.pdf
(f) This Agreement, and any amendments hereto, may be executed and delivered in any number of
counterparts, each of which when delivered shall be deemed to be an original, but such
counterparts shall together constitute one document. The parties may sign this Agreement, and
any amendments hereto, either by an electronic signature using a method approved by the State
Water Board or by a physical, handwritten signature. The parties mutually agree that an electronic
signature using a method approved by the State Water Board is the same as a physical,
handwritten signature for the purposes of validity, enforceability, and admissibility.
4. PARTY CONTACTS
State Water Board Citv of Carlsbad
Section: Division of Financial Assistance
Name: Michael Parra, Project Manager Name: Vicki Quiram, Utilities
Director/General Manacier
Address: 1001 I Street, 16th Floor Address: 5950 El Camino Real
City, State, Sacramento, CA 95814 City, State, Zip: Carlsbad, CA, 92008
Zio:
Phone: (916) 449-5987 Phone: (442) 339-2307
Fax: Fax:
Email: Michael.Parra@waterboards.ca.gov Email: vicki. quiram@carlsbadca.gov
The Recipient may change its contact upon written notice to the Division, which notice shall be
accompanied by authorization from the Recipient's Authorized Representative. The State Water Board
will notify the Recipient of any changes to its contact.
While the foregoing are contacts for day-to-day communications regarding Project work, the Recipient
shall provide official communications and events of Notice as set forth in Exhibit C to the Division's
Deputy Director.
5. DEFINITIONS.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 3 of 48
Unless otherwise specified, each capitalized term used in this Agreement has the following meaning:
"Additional Payments" means 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.
"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.
"Agreement'' means this agreement, including all exhibits and attachments hereto.
"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.
"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 Payments paid hereunder.
"Charge In Lieu of Interest" means any fee or charge in lieu of some or all of, but not to exceed, the
interest that would otherwise be owed under this Agreement, as set forth in Exhibit E.
"Code" as used in Exhibit F 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.
"Cover Page" means the front page of this Agreement.
"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 Exhibit B 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), together with any Charge In Lieu of Interest on this Obligation or other
System Obligations to the State Water Board, calculated with the following assumptions:
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 4 of 48
a. Principal payments (unless a different subdivision 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 ta)(-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 ta)(able obligation under federal law, is the average of SOFR, 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
subdivisions (b) or (c) of this definition of Debt Service;
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 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 subdivisions (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 Construction Start Date" means the date set forth on the Cover Page of this Agreement,
establishing the date on or after which construction costs may be incurred and eligible for reimbursement
hereunder.
"Eligible Work Start Date" means the date set forth on the Cover Page of this Agreement, establishing the
date on or after which any non-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 of the following events:
a) Failure by the Recipient to make any payment required to be paid pursuant to this Agreement,
including Payments;
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;
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 5 of 48
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 Exhibit B 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; the appointment of or taking possession of the
Recipient's property by a receiver, liquidator, assignee, trustee, custodian, conservator, or similar official;
the Recipient's entering into a general assignment for the benefit of creditors; the initiation of resolutions
or proceedings to terminate the Recipient's existence, or any action in furtherance of any of the foregoing;
i) A determination pursuant to Gov. Code section 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; or
j) Loss of the Recipient's rights, licenses, permits, or privileges necessary for the operation of the
System or the Project, or the occurrence of any material restraint on the Recipient's enterprise by a
government agency or court order.
"Final Payment 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 on the Cover Page of this Agreement.
"Final Reimbursement Request Date" means the date set forth as such on the Cover Page of this
Agreement, after which date, no further Project Funds disbursements may be requested.
"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, equipment, or resources for the
Project.
"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, or the Uniform
System of Accounts, as adopted by the California Public Utilities Commission for water utilities.
"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.
"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 with respect to such System Obligation pursuant to
Rule 15c2-12(b)(5).
"Material Obligation" means an obligation of the Recipient that is material to this transaction, including
System Obligations.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 6 of 48
"Maximum Annual Debt Service" means the maximum amount of Debt Service due on System
Obligations in a Fiscal Year during the period commencing with the Fiscal Year for which such calculation
is made and within the next five years 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 Operations
and Maintenance Costs for such Fiscal Year.
"Obligation" means the obligation of the Recipient to make Payments (including 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 B 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.
"Parity Obligation" means a debt obligation of the Recipient on parity with this Obligation. There are no
Parity Obligations.
"Payment" means any payment due to the State Water Board from the Recipient pursuant to this
Agreement.
"Policy" means the State Water Board's "Policy for Implementing the Clean Water State Revolving Fund,"
as amended from time to time, including the Intended Use Plan in effect as of the execution date of this
Agreement.
"Project'' means the Project financed by this Agreement as described in Exhibits A and B 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, and may include capitalized
interest.
"Project Funds" means all moneys disbursed to the Recipient by the State Water Board for eligible Project
Costs pursuant to this Agreement.
"Recipient" means the City of Carlsbad.
"Records Retention End Date" means the last date that the Recipient is obligated to maintain records and
is set forth on the Cover Page of this Agreement.
"Regional Water Quality Control Board" or "Regional Water Board" means the appropriate Regional Water
Quality Control Board.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 7 of 48
"Reimbursement Resolution" means the Recipient's reimbursement resolution identified and incorporated
by reference in this Agreement.
"Reserve Fund" means the reserve fund required pursuant to Exhibit B 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.
"Senior Obligation" means a debt obligation of the Recipient that is senior to this Obligation. There are no
Senior Obligations.
"SRF" means the Clean Water State Revolving Fund.
"State" means State of California.
"State Water Board" means the State Water Resources Control Board.
"Subordinate Obligation" means a debt obligation of the Recipient that is subordinate to this Obligation.
There are no Subordinate Obligations.
"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 to be
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, any Parity Obligation, any Subordinate Obligation, and such additional
obligations as may hereafter be issued in accordance with the provisions of such obligations and this
Agreement.
"Useful Life" means the economically useful life of the Project beginning at Completion of Construction
and is set forth in Exhibit A
"Year" means calendar year unless otherwise expressly indicated.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 8 of 48
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto.
CITY OF CARLSBAD:
By: _____________ _
Name: Vicki Quiram
Title: Utilities Director/General Manager
Date: _____________ _
STATE WATER RESOURCES CONTROL BOARD:
By: _____________ _
Name: Joe Karkoski
Title: Deputy Director
Division of Financial Assistance
Date: _____________ _
EXHIBIT A-SCOPE OF WORK
A 1. PROJECT DESCRIPTION, USEFUL LIFE, AND SCOPE OF WORK.
(a) The Project is the project set forth on the Cover Page of this Agreement.
(b) The Useful Life of this Project is at least 20 years.
(c) Scope of Work.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 9 of 48
The Recipient agrees to install, construct, and program SCADA system improvements including:
• Upgrades to existing communication equipment,
• Installing new monitoring equipment,
• Upgrades to electrical hardware,
• Installation of new computer software, and
• Programming the upgraded SCADA system.
Upon Completion of Construction, the Recipient must expeditiously initiate Project operations.
A.2. STANDARD PROJECT REQUIREMENTS.
A.2.1 Acknowledgements.
The Recipient shall include the following acknowledgement 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."
A.2.2 Reports
A.2.2.1 Progress Reports.
(a) The Recipient must provide a progress report to the Division each quarter, beginning no later
than 90 days after execution of this Agreement.
(b) The Recipient must provide a progress report with each reimbursement request. Failure to
provide a complete and accurate progress report may result in the withholding of Project Funds,
as set forth in Exhibit B.
(c) A progress report must contain the following information:
i. 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;
Exhibit A
ii. A description of compliance with environmental requirements;
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 10 of 48
iii. A listing of change orders including amount, description of work, and change in contract
amount and schedule; and
iv. Any problems encountered, proposed resolution, schedule for resolution, and status of
previous problem resolutions.
A.2.2.2 Project Completion Report.
(a) The Recipient must submit a Project 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 include the
following:
i. Description of the Project,
ii. Description of the water quality problem the Project sought to address,
iii. Discussion of the Project's likelihood of successfully addressing that water quality
problem in the future, and
iv. Summary of compliance with applicable environmental conditions.
(b) 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.
A.2.2.3 As Needed Reports.
The Recipient must provide expeditiously, during the term of this Agreement, any reports, data,
and information reasonably required by the Division, 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.
A.2.2.4 [Reserved.]
A.2.2.5 DBE Reports for SRF Projects.
The Recipient must report Disadvantaged Business Enterprise (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 must comply with 40 CFR § 33.301 and require its contractors and
subcontractors on the Project to comply.
Exhibit A
A.2.3 Signage.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 O
Page 11 of 48
The Recipient shall place a sign at least four feet tall by eight feet wide made of¾ 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 Recipient is encouraged to use
recycled or recovered materials when procuring signs, and must comply with 2 CFR 200.323 if applicable.
The sign must include the following disclosure statement and color logos (available from the Division) and
be consistent with the requirements at https://www.whitehouse.gov/wp-content/uploads/2022/08/Building-
a-Better-America-Brand-Guide.pdf, including the requirement for a larger sign if located in a highway
right-of-way.
a.
=========PRESIDENT JOE BIDEN =========
BUILDING A
BETTER AMERICA
;;;aaaa___,___,-a;BUILD.GOV----------a Clean Water
,!th.'' \''I II Lili
~ ~
Water Boards
b. "Funding for this SCADA Implementation Project has been provided in full or in part by the Clean
Water State Revolving Fund and President Biden's Bipartisan Infrastructure Law 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."
c. 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.
A.2.4 Commencement of Operations.
Upon Completion of Construction of the Project, the Recipient must expeditiously initiate Project
operations.
A.3 DATES & DELIVERABLES.
(a) Time is of the essence.
(b) The Recipient must expeditiously proceed with and complete construction of the Project.
(c) The following dates are established as on the Cover Page of this Agreement:
i. Eligible Work Start Date
ii. Eligible Construction Start Date
iii. Completion of Construction Date
iv. Final Reimbursement Request Date
v. Records Retention End Date
vi. Final Payment Date
(d) The Recipient must award the prime construction contract timely.
( e) The Recipient agrees to start construction no later March 31, 2023.
(f) The Recipient must deliver any request for extension of the Completion of Construction date no less
than 90 days prior to the Completion of Construction date.
Exhibit A
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 12 of 48
(g) The undisbursed balance of this Agreement will be deobligated if the Recipient does not provide its
final reimbursement request to the Division on or before the Final Reimbursement Request Date.
A.4 SCHEDULE.
Failure to provide items by the due dates indicated in the table below may constitute a material violation
of this Agreement. The Project Manager may adjust the dates in the "Estimated Due Date" column of this
table, but Critical Due Date adjustments will require an amendment to this Agreement. The Recipient
must complete and submit all work in time to be approved by the Division prior to Project Completion. As
applicable for specific submittals, the Recipient must plan adequate time to solicit, receive, and address
comments prior to submitting the final submittal. The Recipient must submit the final reimbursement
request prior to the Final Reimbursement Request Date set forth on the Cover Page.
ITEM DESCRIPTION OF SUBMITTAL CRITICAL DUE DATE ESTIMATED DUE DATE
EXHIBIT A-SCOPE OF WORK
A. ADDITIONAL SUBMITTAL(S) TO
DIVISION
1. Final Plans and Specifications N/A
2. Final Budget Approval Package N/A October 31, 2023
B. REPORTS
1. Progress Reports Quarterly
2. Final Inspection and Certification N/A
3. Project Completion Report TBD
4 As Needed Reports TBD
EXHIBIT B -REIMBURSEMENTS, BUDGET DETAIL, AND REPORTING PROVISIONS
A. REIMBURSEMENTS
1. Reimbursement Requests N/A Quarterly
2. Final Reimbursement Request September 30, 2026 N/A
Exhibit A
EXHIBIT B -FUNDING TERMS
8.1. FUNDING AMOUNTS AND REIMBURSEMENTS
8.1.1 Funding Contingency and Other Sources.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 13 of 48
(a) If this Agreement's funding for any fiscal year expires due to reversion or is reduced, substantially
delayed, or deleted by the Budget Act, by Executive Order, or by order or action of the Department of
Finance, the State Water Board has the option to either cancel this Agreement with no liability accruing to
the State Water Board, or offer an amendment to the Recipient to reflect the reduced amount.
(b) If funding for Project Costs is made available to the Recipient from sources other than this Agreement,
the Recipient must notify the Division. The Recipient may retain such funding up to an amount which
equals the Recipient's share of Project Costs. To the extent allowed by requirements of other funding
sources, excess funding must be remitted to the State Water Board to be applied to Payments due
hereunder, if any.
8.1.2 Estimated Reasonable Cost.
The estimated reasonable cost of the total Project, including associated planning and design costs is four
million, six hundred and one thousand dollars and no cents ($4,601,000).
8.1.3 Project Funding Amount.
Subject to the terms of this Agreement, the State Water Board agrees to provide Project Funds not to
exceed the amount of the Project Funding Amount set forth on the Cover Page of this Agreement.
B.1.4 [Reserved.]
B. 1.5 Budget Costs.
(a) Estimated budget costs are contained in the Summary Project Cost Table below:
LINE ITEM TOTAL ESTIMATED COST PROJECT FUNDING
AMOUNT
Construction $2 582 990 $2 582 990
Pre-Purchased Material/Equipment $0 $0
Purchase of Land $0 $0
Contingency $725 152 $725 152
Force Account $0 $0
Allowances (Soft Costs) $1,292,858 $1,292,858
TOTAL $4,601,000 $4,601,000
The Division's Final Budget Approval and related Form 259 and Form 260 will document a more detailed
budget of eligible Project Costs and Project funding amounts.
Upon written request by the Recipient, the Division may adjust the line items of the Summary Project Cost
Table at the time of Division's Final Budget Approval. Upon written request by the Recipient, the Division
may also adjust the line items of the Summary Project Cost Table as well as the detailed budget at the
time of Recipient's submittal of its final claim. Any line item adjustments to the Summary Project Cost
Exhibit B
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 14 of 48
Table that are due to a change in scope of work will require an Agreement amendment. The sum of
adjusted line items in both the Summary Project Cost Table and the detailed budget must not exceed the
Project Funding Amount. The Division may also propose budget adjustments.
(b) Under no circumstances may the sum of line items in the budget approved through the Final Budget
Approval process exceed the Project Funding Amount. Any increase in the Project Funding Amount will
require an Agreement amendment.
8.1.6 Contingent Disbursement.
(a) The State Water Board's disbursement of funds hereunder is contingent on the Recipient's
compliance with the terms and conditions of this Agreement.
(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 entity. 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.
(c) Construction costs and disbursements are not available until after the Division has approved the
final budget form submitted by the Recipient.
(d) No costs incurred prior to the Eligible Work Start Date are eligible for reimbursement.
(e) Construction costs incurred prior to the Eligible Construction Start Date are not eligible for
reimbursement.
(f) Failure to proceed according to the timelines set forth in this Agreement may require the
Recipient to repay to the State Water Board all disbursed Project Funds.
(g) The Recipient agrees to ensure that its final reimbursement request is received by the Division no
later than the Final Reimbursement Request Date. If the final reimbursement request is not received
timely, the undisbursed balance of this Agreement will be deobligated.
(h) The Recipient is not entitled to interest earned on undisbursed funds.
8.1. 7 Reimbursement Procedure.
Except as may be otherwise provided in this Agreement, disbursement of Project Funds will be made as
follows:
(a) Upon execution and delivery of this Agreement by both parties, the Recipient may request
immediate reimbursement of any eligible incurred planning and design allowance costs through
submission to the State Water Board of the Reimbursement Request Form 260 and Form 261, or
any amendment thereto, duly completed and executed. To be eligible for reimbursement, Project
Costs, including any planning and design allowance costs, must have been incurred in
compliance with all applicable requirements, including the state and federal cross-cutting
requirements listed in Exhibit C.
Exhibit B
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 O
Page 15 of 48
(b) The Recipient must submit a reimbursement request for costs incurred prior to the date this
Agreement is executed by the State Water Board no later than ninety (90) days after this
Agreement is executed by the State Water Board. Late reimbursement requests may not be
honored.
(c) The Recipient may request reimbursement of eligible construction and equipment costs
consistent with budget amounts approved by the Division in the Final Budget Approval.
(d) Additional Project Funds will be promptly disbursed to the Recipient upon receipt of
reimbursement request Form 260 and Form 261, or any amendment thereto, duly completed and
executed by the Recipient for incurred costs consistent with this Agreement, along with receipt of
progress reports due under Exhibit A.
(e) The Recipient must not request reimbursement 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 reimbursement request. Supporting
documentation (e.g., receipts) must be submitted with each reimbursement request. The amount
requested for administration costs must include a calculation formula (i.e., hours or days worked
times the hourly or daily rate = total amount claimed). Disbursement of Project Funds will be
made only after receipt of a complete, adequately supported, properly documented, and
accurately addressed reimbursement request. Reimbursement requests submitted without
supporting documents may be wholly or partially withheld at the discretion of the Division.
(f) The Recipient must spend Project Funds within 30 days of receipt. If the Recipient earns interest
earned on Project Funds, it must report that interest immediately to the State Water Board. The
State Water Board may deduct earned interest from future disbursements.
(g) The Recipient shall not request a reimbursement unless that Project Cost is allowable,
reasonable, and allocable.
(h) 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.
(i) No work or travel outside the State of California is permitted under this Agreement unless the
Division provides prior written authorization. Failure to comply with this restriction may result in
termination this Agreement, pursuant to Exhibit C. Any reimbursement for necessary travel and
per diem shall be at rates not to exceed those set by the California Department of Human
Resources at http://www.calhr.ca.gov/employees/Pages/travel-reimbursements.aspx. as of the
date costs are incurred by the Recipient.
B.1.8 Withholding of Disbursements.
Notwithstanding any other provision of this Agreement, the State Water Board may withhold 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 as determined by the
Division;
(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
payment of debt service on System Obligations;
Exhibit B
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 16 of 48
(c) Commencement of litigation or a judicial or administrative proceeding related to the Project,
System, or Revenues that the State Water Board determines may impair the timely
satisfaction of Recipient's obligations under this Agreement;
(d) Any investigation by the State Water Board, 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,
that 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;
(g) Suspicion of fraud, forgery, embezzlement, theft, or any other misuse of public funds by the
Recipient or its employees, or by its contractors or agents regarding the Project or the
System;
(h) An event requiring Notice as set forth in Exhibit C;
(i) An Event of Default or an event that the Division determines may become an Event of
Default.
8.1.9 Fraud and Misuse of Public Funds; Enforcement.
All requests for reimbursement submitted must be accurate and signed by the Recipient's Authorized
Representative under penalty of perjury. All costs submitted pursuant to this Agreement must only be for
the work or tasks set forth in this Agreement. The Recipient must not submit any invoice containing costs
that are ineligible or have been reimbursed from other funding sources unless required and specifically
noted as such (i.e., match costs). Any eligible costs for which the Recipient is seeking reimbursement
shall not be reimbursed from any other source. Double or multiple billing for time, services, or any other
eligible cost is improper and will not be compensated. Any suspected occurrences of fraud, forgery,
embezzlement, theft, or any other misuse of public funds may result in suspension of disbursements and,
notwithstanding any other section in this Agreement, the termination of this Agreement requiring the
repayment of all Project Funds disbursed hereunder. Additionally, the Deputy Director of the Division
may request an audit; refer the matter for appropriate administrative action, including but not
limited to the recovery of financial assistance provided and the imposition of civil penalties;
and/or refer the matter to the Attorney General's Office or the appropriate district attorney's office for
criminal prosecution or the imposition of civil liability. A person who knowingly makes or causes to be
made any false statement, material misrepresentation, or false certification in any submittal may be
subject to a civil penalty, criminal fine, or imprisonment. (Wat. Code, § 13490 et seq.)
8.2 RECIPIENT'S PAYMENT OBLIGATION, PLEDGE, AND RESERVE
8.2.1 Project Costs.
The Recipient must pay any and all costs connected with the Project including, without limitation, any and
all Project Costs and Additional Payments. If the Project Funds are not sufficient to pay the Project Costs
in full, the Recipient must nonetheless complete the Project and pay that portion of the Project Costs in
excess of available Project Funds, and shall not be entitled to any reimbursement therefor from the State
Water Board.
Exhibit B
8.2.2 Estimated Principal Payment Due.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 17 of 48
The estimated amount of principal that will be due to the State Water Board from the Recipient under this
Agreement is four million, six hundred and one thousand dollars and no cents ($4,601,000).
8.2.3 Interest Rate and In-Lieu of Interest Charges.
(a) The Recipient agrees to make all Payments according to the schedule in Exhibit E, and as otherwise
set forth herein, at an interest rate of 2.45% per annum.
(b) Interest will accrue beginning with each disbursement.
(c) In lieu of, and not to exceed, interest otherwise due under this Agreement, the Recipient agrees to pay
the following charge(s), as further set forth in Exhibit E:
• an Administrative Service Charge
• a Small Community Grant Fund Charge
8.2.4 [Reserved.]
8.2.5 Obligation Absolute.
The obligation of the Recipient to make the Payments and other payments required to be made by it
under this Agreement, from the Net Revenues and/or other amounts legally available to the Recipient
therefor, is absolute and unconditional, and until such time as the Payments and Additional Payments
have been paid in full, the Recipient must not discontinue or suspend any Payments or other payments
required to be made by it hereunder when due, whether or not the Project, or any related 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 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.
8.2.6 Payment Timing.
(a) Beginning one year after Completion of Construction, the Recipient must submit an annual Payment
of the principal of the Project Funds, together with all interest accruing thereon. The Recipient must make
Payments fully amortizing the total principal of the Project by the Final Payment Date. Payments are
based on a standard fully amortized assistance amount with equal annual payments.
(b) The remaining balance is the previous balance, plus the disbursements, plus the accrued interest on
both, plus any Charge In Lieu of Interest, less the Payment. Payment calculations will be made beginning
one (1) year after Completion of Construction. Exhibit Eis a payment schedule based on the provisions
of this Exhibit and an estimated disbursement schedule. Actual payments will be based on actual
disbursements.
(c) 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 must make each 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
Exhibit B
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 O
Page 18 of 48
assessment, payment will be deemed to have been made if payment is deposited in the U.S. Mail within
the grace period with postage 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.
(d) 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 must 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.
(e) Each Payment must 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.
The Recipient must pay Payments and Additional Payments from Net Revenues and/or other amounts
legally available to the Recipient therefor.
8.2. 7 Pledged Revenues.
8.2.7.1 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 this Exhibit, the Recipient must
establish and maintain a Reserve Fund.
8.2.7.2 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 on parity with the Parity Obligations. 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 Payments and Additional Payments hereunder. The
Enterprise Fund, Net Revenues in the Enterprise Fund, and any Reserve 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.
8.2.7.3 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 in order of priority. 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.
Exhibit B
B.2.8 No Prepayment.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 19 of 48
Pursuant to State Water Board's Debt Management Policy, adopted on October 3, 2017, 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.
8.2.9 Reserve Fund.
Prior to Completion of Construction, the Recipient must establish a restricted Reserve Fund, held in its
Enterprise Fund, equal to one year's Debt Service on this Obligation. The Recipient must maintain the
Reserve Fund throughout the term of this Agreement. The Reserve Fund is subject to lien and pledged
as security for this Obligation, and its use is restricted to payment of this Obligation during the term of this
Agreement.
8.3 RATES, FEES AND CHARGES.
(a) The Recipient must, 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 must ensure that Net Revenues are equal to the sum of (i) at least 120% of the Maximum
Annual Debt Service with respect to all outstanding System Obligations senior to and on parity with the
Obligation and (ii) at least 100% of the Maximum Annual Debt Service with respect to all outstanding
System Obligations subordinate to the Obligation, so long as System Obligations other than this
Obligation are outstanding. Upon defeasance of all System Obligations other than this Obligation, this
ratio must be at least 120%, except where System Obligations are defeased pursuant to refunding
obligations.
(b) 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.
(c) Upon consideration of a voter initiative to reduce Revenues, the Recipient must make a finding
regarding the effect of such a reduction on the Recipient's ability to satisfy the rate covenant set forth in
this Section. The Recipient must make its findings available to the public. The Recipient's Authorized
Representative must 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 this Agreement and its obligation to operate and maintain the Project
for its Useful Life. The Recipient must diligently pursue and bear any and all costs related to such
challenge. The Recipient must notify and regularly update the State Water Board regarding the status of
any such challenge.
8.4 ADDITIONAL DEBT.
(a) The Recipient's future debt that is secured by Revenues pledged herein may not be senior to this
Obligation.
(b) The Recipient may issue additional parity or subordinate debt only if all of the following conditions are
met:
Exhibit B
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 20 of 48
i. No Event of Default (or no event with respect to which notice has been given and which,
once all notice of grace periods have passed, would constitute an Event of Default) has
occurred and is continuing.
ii. 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 this Exhibit with respect to any
outstanding and proposed additional obligations;
iii. The Recipient is in compliance with any reserve fund requirement of this Obligation.
8.5 NO LIENS.
The Recipient must not make any pledge of or place any lien on the Project, System, or Revenues except
as otherwise provided or permitted by this Agreement.
Exhibit B
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 21 of 48
EXHIBIT C -GENERAL & PROGRAMMATIC TERMS & CONDITIONS
C.1 REPRESENTATIONS & WARRANTIES.
The Recipient represents, warrants, and commits to the following as of the Eligible Work Start Date and
continuing thereafter for the term of this Agreement.
C.1.1 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 agrees to comply with all terms, provisions, conditions, and commitments of this
Agreement, including all incorporated documents.
The Recipient agrees to fulfill all assurances, declarations, representations, and commitments in its
application, accompanying documents, and communications filed in support of its request for funding
under this Agreement.
C.1.2 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.
C.1.3 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 of execution of this Agreement by the Recipient, 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 of execution of this Agreement by the Recipient.
C.1.4 No Litigation.
There are, as of the date of execution of this Agreement by the Recipient, no 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.
There are no proceedings, actions, or offers by a public entity to acquire by purchase or the
power of eminent domain the System or any of the real or personal property related to or
necessary for the Project.
C.1.5 Property Rights.
The Recipient owns or has sufficient property rights in the Project property for the longer of the
Useful Life or the term of this Agreement, either in fee simple, for a term of years, or as an
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 22 of 48
easement or license that is not subject to third-party revocation during the Useful Life of the
Project.
C.1.6 Solvency and Insurance.
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. The Recipient is solvent and will
not be rendered insolvent by the transactions contemplated by this Agreement. The Recipient is able to
pay its debts as they become due. The 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 employer liability, professional liability.
C.1. 7 Legal Status and Eligibility.
The Recipient is duly organized and existing and in good standing under the laws of the State of
California. Recipient must at all times maintain its current legal existence and preserve and keep in full
force and effect its legal rights and authority. The Recipient acknowledges that changes to its legal or
financial status may affect its eligibility for funding under this Agreement and commits to maintaining its
eligibility. Within the preceding ten years, the Recipient has not failed to demonstrate compliance with
state or federal audit disallowances.
C.1.8 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 GMP. 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 statements 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, if any.
C.1.9 System Obligations
The Recipient has no System Obligations other than those defined in this Agreement.
C. 1. 10 No Other Material Debt.
The Recipient has no Material Obligations
C.1.11 Compliance with State Water Board Funding Agreements.
The Recipient represents that it is in compliance with all State Water Board funding agreements to which
it is a party.
C.2 DEF AUL TS AND REMEDIES
In addition to any other remedy set forth in this Agreement, the following remedies are available under
this Agreement.
Exhibit C
C.2.1 Return of Funds; Acceleration; and Additional Payments.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 23 of 48
Notwithstanding any other provision of this Agreement, if the Division determines that an Event of Default
has occurred, the Recipient may be required, upon demand, immediately to do each of the following:
i. return to the State Water Board any grant or principal forgiveness amounts received pursuant
to this Agreement;
ii. accelerate the payment of any principal owed under this Agreement, all of which shall be
immediately due and payable;
iii. pay interest at the highest legal rate on all of the foregoing; and
iv. pay any Additional Payments.
C.2.2 [Reserved.]
C.2.3 Administrative remedies.
Whenever the State Water Board determines that the Recipient, the Recipient's contractor, consultant,
employee, agent, assignee, or grantee has violated any requirement or term of the Agreement, the State
Water Board may impose civil penalties in accordance with Water Code, section 13497. The State Water
Board may impose civil liability administratively against the Recipient or the Recipient's consultant or
contractor or other agent furnishing any information related to funds disbursed or costs claimed for
reimbursement if the Recipient or the Recipient's consultant or contractor or other agent fails to
personally attest that the information is true, accurate, and complete the best of one's knowledge. (Wat.
Code,§ 13498.) The State Water Board may impose civil liability administratively against any person
who makes a misrepresentation in any submittal to the State Water Board, including, but not limited to, an
application, report, certification, record, invoice, form, or other document that is submitted to the State
Water Board relating to a financial assistance agreement. (Wat. Code, § 13499.)
C.2.4 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:
i. 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;
ii. 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
iii. take whatever action at law or in equity as may appear necessary or desirable to the
State Water Board to collect the Payments then due or thereafter to become due, or to
enforce performance of any obligation or covenant of the Recipient under this
Agreement.
C.2.5 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.
Exhibit C
C.2.6 Damages for Breach of Tax-Exempt Status.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 24 of 48
In the event that any breach of any of the provisions of this Agreement by the Recipient results in the loss
of tax-exempt status for any bonds of the State or any subdivision or agency thereof, or if such breach
results 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 must 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.
C.2. 7 Damages for Breach of Federal Conditions.
In the event that any breach of any of the provisions of this Agreement by the Recipient results in the
failure of Project Funds to be used pursuant to the provisions of this Agreement, or if such breach results
in an obligation on the part of the State or any subdivision or agency thereof to reimburse the federal
government, the Recipient must 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.
C.2.8 Remedies and Limitations.
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.
Any claim of the Recipient is limited to the rights and remedies provided to the Recipient under this
Agreement and is subject to the claims procedures provided to the Recipient under this Agreement.
C.2.9 Non-Waiver.
Nothing in this Agreement shall affect or impair the Recipient's Obligation to pay 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.
C.2. 1 O 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 brought.
C.3 STANDARD CONDITIONS
C.3.1 Access, Inspection, and Public Records.
The Recipient must 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 Agreement. 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
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 25 of 48
the application, all of the documents incorporated into this Agreement by reference, and all reports,
reimbursement requests, and supporting documentation submitted hereunder.
C.3.2 Accounting and Auditing Standards; Financial Management Systems; Records Retention.
(a) The Recipient must maintain project accounts according to GAAP as issued by the Governmental
Accounting Standards Board (GASB) or its successor. The Recipient must maintain GAAP-compliant
project accounts, including GAAP requirements relating to the reporting of infrastructure assets.
(b) The Recipient must 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 is bound by, and must comply
with, the provisions and requirements of the federal Single Audit Act of 1984 and 2 CFR Part 200, subpart
F, and updates or revisions, thereto.
(c) Without limitation of the requirement to maintain Project accounts in accordance with GAAP, the
Recipient must:
i. Establish an official file for the Project which adequately documents all
significant actions relative to the Project;
ii. Establish separate accounts which will adequately and accurately depict all
amounts received and expended on the Project, including all assistance funds
received under this Agreement;
iii. 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;
iv. Establish an accounting system which will accurately depict final total costs of
the Project, including both direct and Indirect Costs;
v. 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
vi. If 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
performed by each employee.
(d) The Recipient must maintain separate books, records and other material relative to the Project.
The Recipient must also retain such books, records, and other material for itself and for each contractor
or subcontractor who performed or performs work on this project for a minimum of thirty-six (36) years
after Completion of Construction. The Recipient must 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 must
allow and must 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 survive the term of this Agreement.
Exhibit C
C.3.3 Amendment.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 26 of 48
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.
Requests for amendments must be in writing and directed to the contact listed in Section 4 and to the
Division's Chief of Loans and Grants Administration Section.
C.3.4 Assignability.
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.
C.3.5 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 must be performed by a
certified public accountant independent of the Recipient and at the cost of the Recipient. The audit must
be in the form required by the Division.
(b) Audit disallowances must be returned to the State Water Board.
C.3.6 Bonding.
Where contractors are used, the Recipient must not authorize construction to begin until each contractor
has furnished a performance bond in favor of the Recipient in the following 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.
C.3. 7 Competitive Bidding
Recipient must adhere to any applicable state law or local ordinance for competitive bidding and
applicable labor laws.
C.3.8 Compliance with Applicable Laws, Rules, and Requirements.
The Recipient must, 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 must:
(a) Comply with the provisions of the adopted environmental mitigation plan, if any, for the term of
this Agreement;
(b) Comply with the Policy; and
(c) Comply with and require compliance with the state and federal requirements set forth elsewhere
in this Agreement.
C.3.9 Computer Software.
The Recipient certifies that it has appropriate systems and controls in place to ensure that state funds will
not be used in the performance of this Agreement for the acquisition, operation or maintenance of
computer software in violation of copyright laws.
Exhibit C
C.3.1 O Conflict of Interest.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 27 of 48
The Recipient certifies that its owners, officers, directors, agents, representatives, and employees are in
compliance with applicable state and federal conflict of interest laws.
C.3.11 Continuous Use of Project; No 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.
C.3.12 Data Management.
The Recipient will undertake appropriate data management activities so that Project data can be
incorporated into statewide data systems.
C.3.13 Disputes.
(a) The Recipient may appeal a staff decision within 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 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 representative thereof,
on any question of law.
(c) Recipient must continue with the responsibilities under this Agreement during any dispute.
(d) This section relating to disputes does not establish an exclusive procedure for resolving claims
within the meaning of Government Code sections 930 and 930.4.
C.3.14 [Reserved.]
C.3.15 Environmental Clearance.
(a) No work that is subject to CEQA or NEPA may proceed under this Agreement unless the State Water
Board has provided environmental clearance. The State Water Board may require changes in the scope
of work or additional mitigation as a condition to providing construction or implementation funding under
this Agreement. Recipient shall not perform any work subject to CEQA and/or NEPA before the State
Water Board completes its environmental review and specifies any changes in scope or additional
mitigation that may be required. Proceeding with work subject to CEQA and/or NEPA without approval by
the State Water Board shall constitute a breach of a material provision of this Agreement.
(b) If this Project includes modification of a river or stream channel, the Recipient must fully mitigate
environmental impacts resulting from the modification. The Recipient must provide documentation that
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 28 of 48
the environmental impacts resulting from such modification will be fully mitigated considering all of the
impacts of the modification and any mitigation, environmental enhancement, and environmental benefit
resulting from the Project, and whether, on balance, any environmental enhancement or benefit equals or
exceeds any negative environmental impacts of the Project.
C.3.16 Governing Law.
This Agreement is governed by and shall be interpreted in accordance with the laws of the State of
California.
C.3.17 Income Restrictions.
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 must 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.
C.3.18 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
the Project; or (4) any untrue statement or alleged untrue statement of any 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 must also provide for the defense and
indemnification of the Indemnified Persons in any contractual provision extending indemnity to the
Recipient in any contract let for the performance of any work under this Agreement, and must cause the
Indemnified Persons 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 survive the term of this Agreement.
Exhibit C
C.3.19 Independent Actor.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 29 of 48
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.
C.3.20 Integration.
This Agreement constitutes the complete and final agreement between the parties. No oral or written
understanding or agreement not incorporated in this Agreement shall be binding on either party.
C.3.21 Leveraging Covenants.
(a) Notwithstanding any other provision hereof, the Recipient covenants and agrees that it will
comply with the Tax Covenants set forth in Exhibit F of this Agreement.
(b) 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 issued for the benefit of the State Water Board to comply with Rule 15c2-12(b)(5).
(c) The Recipient further covenants to provide the State Water Board with copies of all continuing
disclosure 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 voluntary disclosure of information
related to an outstanding System Obligation. The Recipient must 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.
C.3.22 No Discrimination.
(a) The Recipient must 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 must include a covenant
of nondiscrimination running with the land in the instrument effecting or recording the transfer of such real
property.
(c) The Recipient must 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 must not
unlawfully discriminate, harass, or allow 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
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 O
Page 30 of 48
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 must 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 must 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 must comply with all applicable federal civil rights
regulations, including statutory and national policy requirements. (2 CFR § 200.300). This includes, to the
greatest extent practicable and to the extent permitted by law, the requirement to respect and protect the
freedom of persons and organizations to engage in political and religious speech. (Executive Order
13798).
(i) The Recipient, its contractors, and subcontractors must give written notice of their obligations under
this clause to labor organizations with which they have a collective bargaining or other agreement.
U) The Recipient must include the nondiscrimination and compliance provisions of this clause in all
subcontracts to perform work under this Agreement.
C.3.23 No Third Party Rights.
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.
C.3.24 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 solely out of the moneys encumbered pursuant to this
Agreement.
C.3.25 Notice.
Upon the occurrence of any of the following events, the Recipient must provide notice as set forth below.
(a) Within 24 hours of the following, the Recipient must notify the Division by phone at (916)
327-9978 and by email to michael.parra@waterboards.ca.gov and
Lisa. Honq@waterboards.ca.qov and CleanWaterSRF@waterboards.ca.qov:
i. The seizure of, or levy on, any Revenues securing this Agreement;
ii. Any discovery of any potential tribal cultural resource and/or archaeological or
historical resource. Should a potential tribal cultural resource and/or
archaeological or historical resource be discovered during construction or Project
implementation, the Recipient must ensure that all work in the area of the find will
cease until a qualified archaeologist 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 must implement appropriate actions as directed by the Division.
(b) [Reserved.]
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 O
Page 31 of 48
(c) Within five (5) business days, the Recipient must notify the Division by phone at (916)
327-9978; by email to Lance.Reese@waterboards.ca.qov to
michael.parra@waterboards.ca.gov and Lisa.Hong@waterboards.ca.gov and
CleanWaterSRF@waterboards.ca.gov; and by mail to the contact address set forth in
Section 4 of this Agreement of the occurrence of any of the following events:
i. Bankruptcy, insolvency, receivership or similar event of the Recipient, or actions
taken in anticipation of any of the foregoing;
ii. Change of ownership of the Project or the System or change of management or
service contracts, if any, for operation of the System;
iii. Loss, theft, damage, or impairment to Project, the Revenues or the System;
iv. Failure to meet any debt service coverage test in Exhibit B of this Agreement;
v. Draws on the Reserve Fund;
vi. Listed Events and Events of Default, except as otherwise set forth in this section;
vii. Failure to observe or perform any covenant or comply with any condition in this
Agreement;
viii. An offer from a public entity to purchase the Project or the System or any portion
thereof, or any of the real or personal property related to or necessary for the
Project;
ix. A proceeding or action by a public entity to acquire the Project or the System by
power of eminent domain;
x. lncurrence of a System Obligation or other Material Obligation by the Recipient;
or
xi. A default, event of acceleration, termination event, modification of terms, or other
similar event under the terms of a System Obligation or other Material Obligation
of the Recipient, any of which reflect financial difficulties.
(d) Within ten (10) business days, the Recipient must notify the Division by phone at (916)
327-9978, by email to michael.parra@waterboards.ca.gov and
Lisa.Hong@waterboards.ca.gov and CleanWaterSRF@waterboards.ca.gov, and by mail
to the contact address set forth in Section 4 of this Agreement of the following events:
i. Material defaults on Material Obligations, other than this Obligation;
ii. Unscheduled draws on material debt service reserves or credit enhancements,
reflecting financial difficulties;
iii. Substitution of credit or liquidity providers, if any or their failure to perform;
iv. 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, or any judgment or court order relating to such
litigation that has a significant effect on the Project or the System;
v. Circulation of a petition to repeal, reduce, or otherwise challenge the Recipient's
rates for services of the System;
vi. Consideration of dissolution, or disincorporation, or any other event that could
materially impair the Revenues;
vii. 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;
viii. Rating changes on outstanding System Obligations, if any;
ix. Enforcement actions by or brought on behalf of the State Water Board or
Regional Water Board; or
x. 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
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 O
Page 32 of 48
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) The Recipient must notify the Division promptly by phone at (916) 327-9978, by email to
michael.parra@waterboards.ca.gov and Lisa.Hong@waterboards.ca.gov and
CleanWaterSRF@waterboards.ca.gov, and by mail to the contact address set forth in
Section 4 of this Agreement of any of the following events:
i. 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 reimbursement made pursuant to this
Agreement, by the Recipient, its employees, agents, or contractors;
ii. Any substantial change in scope of the Project. The Recipient must 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;
iii. 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;
iv. 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;
v. 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;
vi. Any Project monitoring, demonstration, or other implementation activities
required in Exhibit A or Exhibit D of this Agreement, if any;
vii. 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;
viii. Any allegation of research misconduct involving research activities that are
supported in whole or in part with EPA funds under this Project, as required by
Exhibit C.4.3(xxvii);
ix. Any events requiring notice to the Division pursuant to the provisions of this
Agreement;
x. Completion of Construction of the Project, and actual Project Completion;
xi. The award of the prime construction contract for the Project;
xii. Initiation of construction of the Project.
C.3.26 Operation and Maintenance; Insurance.
The Recipient agrees to sufficiently and properly staff, operate and maintain all portions of the System
during the Useful Life of the Project 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 self-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
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 0
Page 33 of 48
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 must begin such reconstruction, repair or
replacement as expeditiously as possible, and must pay out of such net proceeds all costs and expenses
in connection with such reconstruction, repair or replacement so that the same must be completed and
the System must 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 Payments, if any, in accordance with the terms of this
Agreement, the Recipient must provide additional funds to restore or replace 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 must provide the Division with a copy of all such certificates prior to the commencement of
construction of the Project.
C.3.27 Permits, Subcontracting, and Remedies.
Recipient must 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 must be
submitted to the Division before any construction begins.
The Recipient must not contract or allow subcontracting with excluded parties. The Recipient must 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 must 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 administered 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
C.3.28 Professionals.
The Recipient agrees that only licensed professionals will be used to perform services under this
Agreement where such services are called for. All technical reports required pursuant to this Agreement
that involve planning, investigation, evaluation, design, or other work requiring interpretation and proper
application of engineering, architectural, or geologic sciences, shall be prepared by or under the direction
of persons registered to practice in California pursuant to Business and Professions Code, sections
5536.1, 6735, 7835, and 7835.1. To demonstrate compliance with California Code of Regulations, title 16,
sections 415 and 3065, all technical reports must contain a statement of the qualifications of the
responsible registered professional(s). As required by these laws, completed technical reports must bear
the signature(s) and seal(s) of the registered professional(s) in a manner such that all work can be clearly
attributed to the professional responsible for the work.
Exhibit C
C.3.29 Prevailing Wages.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 34 of 48
The Recipient agrees to be bound by all applicable provisions of State Labor Code regarding prevailing
wages. The Recipient must 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 Davis-Bacon provisions incorporated by reference in
Section 3 of this Agreement.
C.3.30 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.
C.3.31 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 performance of work.
C.3.32 Related Litigation.
Under no circumstances may the Recipient use funds from any reimbursement 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.
C.3.33 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 such work, or any part thereof, and
to authorize others to do so, and to receive electronic copies from the Recipient upon request.
C.3.34 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 litigation
between the parties hereto arising from this Agreement, it is agreed that each party shall bear its own
costs and attorney fees.
Exhibit C
C.3.35 Timeliness.
Time is of the essence in this Agreement.
C.3.36 Unenforceable Provision.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 35 of 48
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.
C.3.37 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.
C.3.38 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.
C.4 MISCELLANEOUS STATE AND FEDERAL REQUIREMENTS
C.4.1 [Reserved.]
C.4.2 State Cross-Cutters.
Recipient represents that, as applicable, it complies and covenants to maintain compliance with the
following for the term of the Agreement:
i. The California Environmental Quality Act (CEQA), as set forth in Public Resources Code 21000
et seq. and in the CEQA Guidelines at Title 14, Division 6, Chapter 3, Section 15000 et seq.
ii. Water Conservation requirements, including regulations in Division 3 of Title 23 of the California
Code of Regulations.
iii. Monthly Water Diversion Reporting requirements, including requirements set forth in Water Code
section 5103.
iv. Public Works Contractor Registration with Department of Industrial Relations requirements,
including requirements set forth in Sections 1725.5 and 1771.1 of the Labor Code.
v. Volumetric Pricing & Water Meters requirements, including the requirements of Water Code
sections 526 and 527.
vi. Urban Water Management Plan requirements, including the Urban Water Management Planning
Act (Water Code,§ 10610 et seq.).
vii. Urban Water Demand Management requirements, including the requirements of Section
10608.56 of the Water Code.
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 36 of 48
viii. Delta Plan Consistency Findings requirements, including the requirements of Water Code section
85225 and California Code of Regulations, title 23, section 5002.
ix. Agricultural Water Management Plan Consistency requirements, including the requirements of
Water Code section 10852.
x. Charter City Project Labor Requirements, including the requirements of Labor Code section 1782
and Public Contract Code section 2503.
xi. The Recipient agrees that it will, at all times, comply with and require its contractors and
subcontractors to comply with directives or orders issued pursuant to Division 7 of the Water
Code.
xii. Regulations in Division 4 of Title 22 of the California Code of Regulations, including but not
limited to California Waterworks Standards in Chapter 16, and Lead and Copper regulations in
Chapter 17.5.
C.4.3 Federal Requirements and Cross-Cutters for SRF Funding.
The Recipient acknowledges, warrants compliance with, and covenants to continuing compliance with the
following federal terms and conditions with Respect to all Project Costs for the term of this Agreement
and for the Useful Life of the Project:
i. 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 system 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.
ii. The Recipient acknowledges that funds received under this Agreement are subject to the Build
America Buy America (BABA) requirements of Public Law 117-58 (the Infrastructure Investment
and Jobs Act, also known as the Bipartisan Infrastructure Law (BIL), signed into law on
November 15, 2021), which are in addition to "iron and steel products" requirements described in
section C.4.3 (i) above. Specifically, unless (1) the Recipient has requested and obtained a
waiver from USEPA on file with the State Water Board pertaining to the Project or the Project is
otherwise covered by a general applicability waiver, as confirmed in writing by the State Water
Board; or (2) the State Water Board and, to the extent the Project is co-funded by any other
agency using federal funds subject to BABA requirements, each such agency, has advised the
Recipient in writing that the BABA requirements are not applicable to the Project, the Recipient
shall ensure and certifies that, as these terms are defined within and made applicable by Public
Law 117-58:
(a) all iron and steel used in the Project are produced in the United States;
(b) the manufactured products used in the Project are produced in the United States; and
(c) the construction materials used in the Project are produced in the United States.
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 0
Page 37 of 48
The Recipient must comply and require its contractors and subcontractors to comply with all
applicable BABA requirements and reporting and must inform the State Water Board immediately
of any information regarding a violation of the foregoing.
Based on representations made by the Recipient and corresponding evidence on file with the
State Water Board, the Project qualifies for the "Adjustment Period Waiver of Section 70914(a) of
P.L. 117-58, Build America, Buy America Act, 2021 for SRF Projects that have Initiated Design
Planning", found at EPA-SRF - Final Waiver -Adjustment Period September 2022 -Signed.pdf.
This waiver applies to projects that have initiated project design planning prior to May 14, 2022,
the statutory effective date of the BABA requirements, and permits the use of non-domestic
manufactured products and construction materials that would otherwise be prohibited under the
BABA requirements. This program waiver does not waive the iron and steel requirements under
BABA Sections 70917(a) and (b) of BIL provide a savings provision for existing statutory
requirements that meet or exceed BABA requirements, such as the "iron and steel products"
requirements applicable to SRF funded projects referenced in section C.4.3 (i) above, which will
continue to apply as part of BABA requirements.
iii. The Recipient must include in full the Wage Rate Requirements (Davis-Bacon) language
incorporated by reference in Section 3 of this Agreement in all construction contracts and
subcontracts.
iv. The Recipient must comply with the signage requirements set forth in Exhibit A
v. The Recipient shall notify the State Water Board and the USEPA contact 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.
vi. The Recipient shall comply with applicable USEPA general terms and conditions found at
https://www.epa.gov/g rants/epa-general-terms-and-cond itions-effective-october-1-2022-or-later.
vii. No Recipient may receive funding under this Agreement unless it has provided its Unique Entity
Identifier, assigned by the System for Award management, to the State Water Board.
viii. [Reserved.]
ix. 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 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.
x. 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.
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 0
Page 38 of 48
xi. 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.
xii. 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 lnteragency 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.
xiii. The Recipient agrees that any reports, documents, publications or other materials developed for
public distribution supported by this Agreement shall contain the Disclosure statement set forth in
Exhibit A.
xiv. The Recipient acknowledges that it 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.
xv. The Recipient, its employees, contractors and subcontractors and their employees warrants that
it will 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.
xvi. The Recipient certifies to the best of its knowledge and belief that:
a. No federal appropriated funds have been paid or will be paid, by or on behalf of the
Recipient, to any person for influencing or attempting to influence an officer or employee
of any agency, a Member of Congress, an officer or employee of Congress, or an
employee of a Member of Congress in connection with the awarding of any federal
contract, the making of any federal grant, the making of any federal loan, the entering into
of any cooperative agreement, and the extension, continuation, renewal, amendment, or
modification of any federal contract, grant, loan, or cooperative agreement.
b. If any funds other than federal appropriated funds have been paid or will be paid to any
person for influencing or attempting to influence an officer or employee of any agency, a
Member of Congress in connection with this Agreement, the Recipient shall complete and
submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its
instructions, and notify the State Water Board.
The Recipient shall require this certification from all parties to any contract or agreement that the
Recipient enters into and under which the Recipient incurs costs for which it seeks
reimbursements under this Agreement.
xvii. The Recipient must comply with the following federal non-discrimination requirements:
a. Title VI of the Civil Rights Act of 1964, which prohibits discrimination based on race,
color, and national origin, including limited English proficiency (LEP).
b. Section 504 of the Rehabilitation Act of 1973, which prohibits discrimination against
persons with disabilities.
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 39 of 48
c. The Age Discrimination Act of 1975, which prohibits age discrimination.
d. Section 13 of the Federal Water Pollution Control Act Amendments of 1972, which
prohibits discrimination on the basis of sex.
e. 40 CFR Part 7, as it relates to the foregoing.
xviii. If the Project relates to construction of a publicly owned treatment works, 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.
xix. If the Project relates to construction of a publicly owned treatment works, the Recipient certifies
that it has developed and is implementing a fiscal sustainability plan for the Project, except as set
forth in Exhibit D, 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.
xx. 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, the 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:
employment, 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.
"(c) The contractor will send to each labor union or representative of workers with which 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 Labor, or
pursuant thereto, and will permit access to his books, records, and accounts by the contracting
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 O
Page 40 of 48
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 vendor 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."
xxi. The Recipient agrees to comply with the requirements of USEPA's Program for Utilization of
Small, Minority and Women's Business Enterprises.
xxii. 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/ .
xxiii. 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.
xxiv. 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 Exchange Network or
USEPA's Central Data Exchange, it will ensure that any connections are secure.
xxv. 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 found
at www.fgdc.gov.
xxvi. If the Recipient is a water system that serves 500 or fewer persons, the Recipient represents that
it has considered publicly-owned wells as an alternative drinking water supply.
xxvii. The Recipient represents that it is not a corporation that has any unpaid Federal tax liability that
has been assessed, for which all judicial and administrative remedies have been exhausted or
have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the
authority responsible for collecting the tax liability; and it is not a corporation that was convicted of
a felony criminal violation under a Federal law within the preceding 24 months.
Exhibit C
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 O
Page 41 of 48
xxviii. The Recipient agrees to immediately notify the Project Manager in writing about any allegation of
research misconduct involving research activities that are supported in whole or in part with EPA
funds under this Project, including fabrication, falsification, or plagiarism in proposing, performing,
or reviewing research, or in reporting research results, or ordering, advising, or suggesting that
subordinates engage in research misconduct.
xxix. The Recipient agrees to comply with, and require all contractors and subcontractors to comply
with, EPA's Scientific Integrity Policy, available at https://www.epa.gov/osa/policy-epa-scientific-
integrity. when conducting, supervising, and communicating science and when using or applying
the results of science. For purposes of this condition scientific activities include, but are not
limited to, computer modelling, economic analysis, field sampling, laboratory experimentation,
demonstrating new technology, statistical analysis, and writing a review article on a scientific
issue.
The Recipient shall not suppress, alter, or otherwise impede the timely release of scientific
findings or conclusions; intimidate or coerce scientists to alter scientific data, findings, or
professional opinions or exert non-scientific influence on scientific advisory boards; knowingly
misrepresent, exaggerate, or downplay areas of scientific uncertainty; or otherwise violate the
EPA's Scientific Integrity Policy. The Recipient must refrain from acts of research misconduct,
including publication or reporting, as described in EPA's Policy and Procedures for Addressing
Research Misconduct, Section 9.C, and must ensure scientific findings are generated and
disseminated in a timely and transparent manner, including scientific research performed by
contractors and subcontractors.
xxx. The Recipient agrees to comply with the Animal Welfare Act of 1966 (7 USC 2131-2156).
Recipient also agrees to abide by the "U .S. Government Principles for the Utilization and Care of
Vertebrate Animals used in Testing, Research, and Training," available at
http://grants.nih.gov/grants/olaw/references/phspol. htm#USGovPrinci pies.
xxxi. The Recipient certifies that no Project Funds will be used on:
a. Video surveillance or telecommunications equipment produced by Huawei Technologies
Company or ZTE Corporation (or any subsidiary or affiliate of such entities),
telecommunications equipment produced by Hytera Communications Corporation,
Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company (or
any subsidiary or affiliate of such entities);
b. Telecommunications or video surveillance services produced by such entities;
c. Telecommunications or video surveillance equipment or services produced or provided
by an entity that the Secretary of Defense, in consultation with the Director of the National
Intelligence or the Director of the Federal Bureau of Investigation, reasonably believes to
be an entity owned or controlled by, or otherwise connected to, the government of a
covered foreign country; or
d. Other telecommunications or video surveillance services or equipment in violation of i
CFR 200.216.
Exhibit C
EXHIBIT D -SPECIAL CONDITIONS
Executive Order N-6-22 -Russian Sanctions.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 O
Page 42 of 48
On March 4, 2022, Governor Gavin Newsom issued Executive Order N-6-22 (the EO) regarding
Economic Sanctions against Russia and Russian entities and individuals. "Economic Sanctions" refers to
sanctions imposed by the U.S. government in response to Russia's actions in Ukraine, as well as any
sanctions imposed under state law. The EO directs state agencies to terminate contracts with, and to
refrain from entering any new contracts with, individuals or entities that are determined to be a target of
Economic Sanctions. Accordingly, should the State Water Board determine Recipient is a target of
Economic Sanctions or is conducting prohibited transactions with sanctioned individuals or entities, that
shall be grounds for termination of this Agreement. The State Water Board shall provide Recipient
advance written notice of such termination, allowing Recipient at least 30 calendar days to provide a
written response. Termination shall be at the sole discretion of the State Water Board.
The Recipient represents that the Recipient is not a target of economic sanctions imposed in response to
Russia's actions in Ukraine imposed by the United States government or the State of California. The
Recipient is required to comply with the economic sanctions imposed in response to Russia's actions in
Ukraine, including with respect to, but not limited to, the federal executive orders identified in California
Executive Order N-6-22, located at https://www.gov.ca.gov/wp-content/uploads/2022/03/3.4.22-Russia-
Ukraine-Executive-Order.pdf and the sanctions identified on the United States Department of the
Treasury website (https://home. treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-
country-information/ukraine-russia-related-sanctions ). The Recipient is required to comply with all
applicable reporting requirements regarding compliance with the economic sanctions, including, but not
limited to, those reporting requirements set forth in California Executive Order N-6-22 for all Recipients
with one or more agreements with the State of California with an aggregated value of Five Million Dollars
($5,000,000) or more. Notwithstanding any other provision in this Agreement, failure to comply with the
economic sanctions and all applicable reporting requirements may result in termination of this Agreement.
For Recipients with an aggregated agreement value of Five Million Dollars ($5,000,000) or more
with the State of California, reporting requirements include, but are not limited to, information
related to steps taken in response to Russia's actions in Ukraine, including but not limited to:
1. Desisting from making any new investments or engaging in financial transactions with
Russian institutions or companies that are headquartered or have their principal place of
business in Russia;
2. Not transferring technology to Russia or companies that are headquartered or have their
principal place of business in Russia; and
3. Direct support to the government and people of Ukraine.
Exhibit D
EXHIBIT E -PAYMENT SCHEDULE
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 43 of 48
See the attached preliminary Payment Schedule. The final Payment Schedule will be forwarded to the
Recipient after all disbursements have been paid and construction of the Project has been completed.
Exhibit E
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EXHIBIT F-TAX CERTIFICATE
F.1 Purpose.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-11 O
Page 44 of 48
The purpose of this Exhibit F 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 Exhibit F
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.
F.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.
F.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.
F.4 Financing of a Capital Project.
The Recipient will use the Project Funds to finance capital expenditures it has incurred or will incur for the
construction, reconstruction, installation or acquisition of the Project in accordance with the terms of this
Agreement. Such expenditures shall not have previously been financed with the proceeds of any other issue of
indebtedness except for interim financing by the Recipient, the date of maturity, prepayment or redemption of
which is within thirty (30) days of the date of disbursement of Project Funds under this Agreement. All Project
Funds shall be allocated to expenditures by the Recipient within thirty (30) days of the date of disbursement,
including (if at all) Project Funds allocated to repay interim financing of the Recipient. For purposes of this
Section F.4, "interim financing" means notes, commercial paper, loans, lines of credit and other forms of short-
term borrowing.
F.5 Ownership and Operation of Project.
The Recipient exclusively owns and, except as provided in Section F.12 hereof, operates the Project.
F.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.
Exhibit F
F.7 Working Capital.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 45 of 48
No operational expenditures of the Recipient or any related entity are being, have been or will be financed or
refinanced with Project Funds.
F.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 F.20 below), (ii) Preliminary Expenditures (as defined in
Section F.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.
F.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
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 priority
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, including
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 property under the same or similar arrangements is predominantly by natural persons who are
not engaged in a trade or business.
F. 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 F .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.
Exhibit F
F.11 No Disproportionate or Unrelated Use.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 46 of 48
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.
F.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, or Revenue Procedure 2017-13, as
applicable. The Recipient represents that it will not be party to any such 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.
F.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.
F.14 Useful Life of Project.
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 in Exhibit A hereto.
F.15 Payments.
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 expected to equal or exceed the
Payments during each payment period. Any amounts accumulated in a sinking fund or bona fide debt service
fund to pay Payments (whether or not deposited to a fund or account established by the Recipient) will be
disbursed to pay Payments within thirteen months of the initial date of accumulation or deposit. Any such fund
used for the payment of 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 Payments in either case for the immediately
preceding year.
F.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 will 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.
Exhibit F
F.17 No Sinking or Pledged Fund.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 47 of 48
Except as set forth in Section F.18 below, the Recipient will not create or establish any sinking fund or pledged
fund which will be used to pay 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 Payments, the Recipient will invest such
sinking fund and pledged fund moneys at a yield that does not exceed the yield on the Bonds.
F.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 Exhibit B. 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 solely 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.
F.19 Reimbursement Resolution.
The "reimbursement resolution" adopted by the Recipient is incorporated herein by reference.
F.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 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.
F.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.
F.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.
Exhibit F
F.23 No Federal Guarantee.
City of Carlsbad
Agreement No.: D2201008
Project No.: C-06-8605-110
Page 48 of 48
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 exceptions 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.
F.24 Amendments.
The provisions in this Exhibit 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 income of interest on the Bonds pursuant to Section 103 of the Code.
F.25 Reasonable Expectations.
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 Exhibit, the expectations of the Recipient as set forth in this
Exhibit 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 Exhibit.
F.26 Assignment.
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 Payments (but excluding the State Water Board's rights to
Additional Payments and to notices, opinions and indemnification under each Obligation).
Exhibit F
Wat..:r Boards