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HomeMy WebLinkAboutItem 7.2 East Bay Reg Comm Sys~~~~ OF DU~~2 /!/ ~ '~~~~j2 ~~ ~ % ~'~LIFOR~~~ STAFF REPORT C I T Y C L E R K DUBLIN CITY COUNCIL File # ^~ (~^^O -0~ DATE: October 5, 2010 TO: Honorable Mayor and City Councilmembers ~- FROM: Joni Pattillo, City Manager SUBJEC~~-Approval of Project Operating Agreement with the East Bay Regional Communications System Authority (EBRCSA) Prepared By: Gary Huisingh, Public Works Director, Tom McCarthy, Police Chief and Pau/ Rankin, Administrative Services Director EXECUTIVE SUMMARY: The City Council will consider entering into a Project Operating Agreement with the East Bay Regional Communications System Authority (EBRCSA) to participate with other member agencies in the development and operation of a state of the art radio communications system that would provide regional interoperability. FINANCIAL IMPACT: The telecommunications system being developed by EBRCSA is projected to cost nearly $70 million, however a significant portion of these costs will be paid by grants. To date, the EBRCSA has received grant funding totaling approximately $39 million. An additional $13,987,000 in grants is anticipated to be received over the next 4 years, leaving a total of $17 million to be financed. The Authority is proposing to fund the remaining $17 million from one- time participant fees. The proposed Agreement addresses the one-time fees as well as ongoing Operating Fees once the system is in place. EBRCSA SYSTEM COSTS (Range of Costs is shown as costs will fluctuate based on total number of radios in svstem and financina costs_1 One Time Cost Recommended Per Radio Ci Costs Up Front Participation Fee $200 $5,600 Need 136 radios / City paid 108 - Net Additional Radios 28 $200 each System Costs Not Covered By Grants - Two Options Based On 136 City & Police Radios - Plus 63 Radios For Fire De t a Pre- a $1,320 - $1,545 Max. $307,455 b Finance: Monthl a ments 15 Yrs. $2,403 -$2,817 TOTAL APPROPRIATION BY CITY $ 313,055 The radio count includes radios for Dublin Police Services; Public Works; City Emergency Operations Center; and 63 for Dublin's share of the Alameda County Fire Department. A Budget Change is required. In the future, Annual Operations and Maintenance Costs are estimated to be between $59,700 and $69,252 per year based on 199 total radios. The City will also need to fund the cost of new radios that will operate on the system. Page 1 of 4 ITEM NO. ~2 RECOMMENDATION: Staff recommends that the City Council 1) adopt the Resolution approving a Project Operating Agreement with the East Bay Regional Communications System Authority (EBRCSA) and authorizing the Execution and Implementation of Same, and 2) approve the Budget Change. . • ~ 6`~~~~ Submitted By Public Works Director and Police Chief ~~ ~ `:~.-~' Reviewed By Administrative Services Director ~Ow ~ Reviewed By {~ Assistant City Manager DESCRIPTION: Backqround The EBRCSA was created as a Joint Powers Authority (JPA) on September 11, 2007, with the goal of developing and operating a state of the art radio communications system that would provide regional interoperability. The new system will replace a patchwork of systems currently in use in Contra Costa and Alameda Counties. All of the existing systems are in need of replacement or upgrading, and most lack adequate capacity. Current systems utilize four different frequency bands, allowing for no interoperability between agencies operating in different frequency bands. The EBRCSA currently includes 36 member agencies consisting of Alameda and Contra Costa Counties, 29 cities, 4 special districts, and the University of California. The JPA Board of Directors includes 23 representatives consisting of Elected Officials, Police Chiefs, Fire Chiefs, and City Managers. City Manager Pattillo is a representative on the JPA Board of Directors. The EBRCSA system was designed by Motorola through a procurement process initiated by Alameda County. The EBRCSA hired CTA Communications to complete a review of the original design, make recommendations as to the final design, and provide cost information on the final build-out of the system, as well as the operating and maintenance costs. The current estimated cost to complete the new system is $69,952,910. The EBRCSA has secured approximately $39 million in funds from the Bay Area Super Urban Area Security Initiative, Urban Area Security Initiative, State Homeland Security and COPS grant programs. To date, funds have been used to develop the system and purchase equipment. The West Contra Costa County Cell is now complete and will be available for use once the testing is complete. The East Alameda County Cell is 80% complete and expected to be operational by the end of the year. The full system is targeted to be up and available to all system users prior to January 1, 2013. The EBRCSA has been working with Alameda and Contra Costa Counties on a financing strategy that incorporates a combination of grants and debt financing to fund the remaining $30,987,000 needed to complete the system. An additional $13,987,000 in grants is anticipated to be received over the next 4 years, leaving a total of $17,000,000 to be financed. Page 2 of 4 Both Alameda and Contra Costa Counties are currently preparing to issue new debts to fund projects unrelated to the EBRCSA. In doing so, both Counties are taking advantage of American Recovery and Reinvestment Act (ARRA) bonds, which will require the transactions to be completed prior to the end of 2010. The opportunity to partner with the two Counties on the financing offers significant advantages to the EBRCSA. The size of the issuance and creditworthiness of the Counties will result in a much lower interest rate, avoid the need to go through a rating process, reduce issuance costs, and lower costs for all participants. The proposed Agreement (Attachment 1) establishes the structure for agencies to finance their share of the system infrastructure costs as well as the ongoing operation and maintenance of the system. Participation Fees The Authority will fund its operations from monthly fees that address finro components: 1) Total annual debt service payment of $2,066,000. This is the portion of the infrastructure that is proposed to be financed. 2) System operations and maintenance costs of $3,850,000. These costs (debt service and system operations/maintenance) will then be divided by the total number of radios operating on the system. The combined monthly user fees for both components are estimated to fall within a range of $40.00 to $45.00 per radio ($480 to $540 annually). Financinq of Svstem Infrastructure Costs The Authority is providing two options to all member agencies to finance the infrastructure system costs. The cost to will be allocated based upon the total subscriber units (radios). Option 1: Participate in the financing program which will require monthly fees charged per radio. The cost is estimated between $13.35 and $15.65 per month per radio. The cost range depends on the cost of financing and total number of radio subscribers. Debt service payment will commence in Fiscal Year 2013-2014, once the entire system is operational, and run through 2028. Over the 15-year repayment period, the City would be expected to expend $2,403 to $2,817 per radio. Option 2: Prepay the share of infrastructure charges. The pre-payment fee is $1,320 to $1,545 per radio. As more users join the EBRCSA during the intervening two years (prior to the first debt service payment) the rate will be adjusted to match the total user count. The initial payment will be set reflecting the additional users. Staff is recommending that the City elect Option 2 which is to pre-pay the Infrastructure Fee. The cost to the City is estimated to be a maximum of $307,455 for 199 radios. The actual savings will not be known until the full program is established; however, the prepayment option will save the City in excess of $170,000 compared to the proposed financing in Option 1. Cost Sharinq Of Costs Required For Operations & Maintenance As noted, a future component of the program approved as part of the Agreement is the ongoing operation of the system. The planning also includes putting aside reserves for the eventual replacement and upgrade of components. The monthly per radio user fees are expected to Page 3 of 4 range from $25 to $29 per month to cover maintenance and operations. If the City of Dublin proceeds with the pre-payment as recommended, this will be the only monthly charge. The Authority plans to begin collecting the operating charge when they are able to use the system, even if this occurs before the commencement of the debt service payment in 2013. The new user fees will replace current monthly user fees being paid by member agencies. Agencies may also choose to fund their share of the system costs up front in lieu of participating in the financing. This would reduce their monthly user fees by approximately one- third. Based on 199 radios, the current estimated annual cost for system operations and maintenance is between $59,700 and $69,252 per year. The City has a designated reserve to address costs associated with this project. However, the cost sharing arrangements were not finalized when the Budget was prepared, and no funding was appropriated in the Fiscal Year 2010-2011 Budget. A Budget change has been included that will appropriate $315,055 in the Disaster Preparedness Activity for City participation under the pre-payment terms. As noted in the Financial Section, the City will also incur costs in the future to replace City owned radios with units that are compatible with the new system. The EBRCSA and its member agencies are working to obtain competitive pricing and options for radio units. The City equipment costs have not been budgeted at this time. Staff will work with the EBRCSA to refine the timing of the purchase with when system is operational. An item for appropriating funds from the special Emergency Radio System designated reserve funds, will be presented in the future for City Council consideration. NOTICING REQUIREMENTS/PUBLIC OUTREACH: Posting of the meeting agenda serves as notice to the general public. ATTACHMENTS: 1. Resolution Approving the Project Operating Agreement with the East Bay Regional Communications System Authority and Authorizing the Execution and Implementation of Same, together with Exhibit "A", Project Operating Agreement 2. Budget Change G:~AGF:NDA STATEMENTS. M1SC\stf rpt EBRCSA Communications ~greement 100~ IO.doc Page 4 of 4 ~~~j~~ RESOLUTION NO. - 10 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN *********** APPROVING A PROJECT OPERATING AGREEMENT WITH THE EAST BAY REGIONAL COMMUNICATIONS SYSTEM AUTHORITY (EBRCSA) AND AUTHORIZING THE EXECUTION AND IMPLEMENTATION OF SAME WHEREAS, the City of Dublin is a member of the East Bay Regional Communications System Authority (the "EBRCSA"), a joint powers authority organized and existing under and by virtue of the laws of the State of California, pursuant to a Joint Exercise of Powers Agreement dated as of September 11, 2007; and WHEREAS, the EBRCSA is authorized to acquire, plan, design, finance, construct, operate and maintain a P-25 compliant communications system serving Alameda and Contra Costa counties and individual political jurisdictions therein, including the City of Dublin (the "Project"); and WHEREAS, the EBRCSA intends to issue Revenue Bonds (the "Bonds") for the purpose of financing the acquisition, construction and operation of the Project, and will own and operate the Project for the benefit of its members and subscribers; and WHEREAS, the Bonds are to be secured by a pledge of and first lien on annual payments by each member and subscriber for the service provided by the Project, to pay the principal of and interest on the Bonds; and WHEREAS, the Operating Agreement, attached hereto as Exhibit "A", sets forth the terms and conditions of Service Payments and Operating Payments by the City of Dublin for EBRCSA's acquisition, construction and operation of the Project for the benefit of its members and subscribers, including the City of Dublin; and WHEREAS, the Operating Agreement is intended to establish a means of providing Revenues for the Project, and is not in itself an approval of the Project; and WHEREAS, execution of the Operating Agreement is in the best interest of the City of Dublin; NOW, THEREFORE, BE IT RESOLVED THAT the City Council of the City of Dublin hereby: (1) approves the Operating Agreement in the form attached hereto as Exhibit "A"; (2) authorizes the City Manager to execute the Operating Agreement; and (3) authorizes the City Manager to execute such further documents and take such further actions as may be necessary and appropriate to implement the intent of this Resolution and which do not materially or substantially increase the City of Dublin's obligations thereunder. 7, c~ ~f~ - ~j-~ ( D 1 ~~ ATTACHMENT a ~~~z~ ~ PASSED, APPROVED AND ADOPTED this 5th day of October, 2010, by the following vote: AYES: NOES: ABSENT: ABSTAIN: ATTEST: City Clerk Mayor G:~AGENDA STATEMENTS, MISC\Reso Approving EBRCSA Operating Agreement 2.DOC 2 ~ ~ /~ ~ EAST BAY REGIONAL COMMUNICATIONS SYSTEM AUTHORITY PROJECT OPERATING AGREEMENT This PROJECT OPERATING AGREEMENT (the "Operating Agreement"), mad.e and entered into as of , 2010, (the "Effective Date"), by and between the East Bay Regional Communications System Authority, a joint exercise of powers authority organized and existing under and by virtue of the laws of the State of California (the "Authority"), and the public agency set forth on the signature page hereof ("User"). WITNESSETH: WHEREAS, the Authority is a joint exercise of powers authority duly organized and existing under the provisions of Articles 1 through 4(commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act"), formed by the Members pursuant to a Joint Exercise of Powers Agreement dated as of September 11, 2007 (the "JPA Agreement"), and is authorized pursuant to Article 4 of the Act (the "Bond Law") to borrow money for the purpose of paying the cost of public ca.pital improvements within the State of California, including a P25 compliant or equivalent cammunications system serving Alameda and Contra Costa. Counties and individual political jurisdictions therein (the "Project"); and WHEREAS, User and the Authority propose to enter into this Operating Agreement, whereby the Authority will own and operate the Project for the benefit of the User, and the User will pay, pursuant to user fees, the cost of the Project, consisting of a buy-in cost based on the number of radios in use in the Project ("Initial Payments"), the cost of the Project (the "Service Payments") and the cost of its annual operation (the "Operating Payments"), (Service Payments and Operating Payments referred to herein collectively as the "User Payments"); and WHEREAS, the Authority will issue its Revenue Bonds (the "Bonds"), pursuant to its duly adopted resolution ("Resolution"), for the purpose of providing money to acquire the Project; and WHEREAS, the Bonds are to be secured by a pledge of and first lien on the User Payments to the extent received by the Authority from the Users pursuant to Operating Agreements executed by each of them (the "Revenues"), which Revenues are anticipated.to be sufficient in time and amount to pay the principal of and interest on the Bonds; and WHEREAS, this Operating Agreement is intended to establish a means of providing the Revenues and ensuring the sound operation of the Project, and is not in itself an approval of the Proj ect. NOW, THEREFORE, for and in consideration of the premises and the material covenants hereinafter contained, the undersigned User and the Authority agree as follows: -1- Project Opera6ng Agreement 090910 ~ EXHIBIT . - Tn fiha RACnIi itinn ,~ ';~` ~. Section 1.01. Definitions. ARTICLE I DEFINITIONS Unless the context otherwise requires, the terms defined in this Section 1.01 shall for all purposes hereof, and of any amendment hereof, and of any opinion or report or other document mentioned lierein or therein, have the meanings defined herein; the following definitions to be equally applicable to both the singulaz and plural forms of any of the terms defined herein. All capitalized terms used in this Operating Agreement and not defined herein shall have the meanings ascribed thereto in the Trust Agreement. "Act" means Articles 1 through 4(commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State of Califomia. "Authority" means the East Bay Regional Communications System Authority, a joint exercise of powers authority organized and existing under the Act and any successor thereto. "Authorized Representa.tive" means: (a) with respect to the Authority, its Chair, Vice Chair, Executive Director, or Secretary, or any other person designated as an Authorized Representative of the Authority by a Written Certificate of the Authority signed by its Chair and filed with the Trustee; and (b) with respect to a User, any person authorized to perform any act or sign any document by or pursuant to a resolution of the governing board of such User and filed with the Authority. "Bondholder or " Bond Owner" means any person who shall be the registered owner of any Outstanding Bond. "Bond Law" means Article 4(commencing with Section 6584) of Chapter S of Division 7 of Title 1 of the California Government Code, as amended from time to time. "Bbnds" means the Revenue Bonds of the Authority issued from time to time to finance the Project pursuant to the Trust Agreement. "Business Day" means a day which is not a Saturday, Sunday or legal holiday on which banking institutions in the State of California, or in any state in wluch the Office of the Trustee is located, are closed. • "County" means the County of Alameda and/or the County of Contra Costa, as further specified herein. "Debt Service" means the debt service due Alameda and Contra Costa Counties on the EBRCSA Bonds and set forth in the Trust Agreement and/or Financing Agreements, as they may be amended or supplemented from time to time. "Due Date" means, with respect to the User Payments, August 31 st of each yeaz. -2- Project Operating Agreement 090910 ~ ~; i ~~1~ ~) "Event of Default" means an event of default described in Section 5.01 hereof. "Financing Agreement" means an agreement between the Authority and the respective County pursuant to which County will purchase the Bonds. "Fiscal Year" means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period hereafter selected and designated as the official Fiscal Yeaz period of the Authority designated in a Written Certificate of the Authority delivered to the Trustee. "Initial Payments" means the charge established by the Authority as an up-front payment required to become a User pursuant to Section 3.01. "JPA Agreement" means that certain Joint Exercise of Powers Agreement, dated as of September 11, 2007, esta.blishing the Authority, as originally executed or as it may from time to time be supplemented, modified or amended as provided therein. "Members" means Users that are signatories to the JPA Agreement, as the same may be amended and that are parties to an Operating Agreement. "Net Proceeds" means, when used with respect to any insurance or condemnation award received by the Authority, the proceeds from such insurance or condemnation award remaining after payment of all reasonable expenses (including attorneys' fees) incurred in the collection of such proceeds. "New User" means a User entering into an Operating Agreement with the Authority that has not paid a$200 per radio Initial Payment. "Operating Agreement" means this operating agreement, dated as of including any amendments and supplements hereto. "Operating Costs" means the costs spent or incurred by the Authority for maintaining and operating the Project, including all expenses of management, repair and operation, including but not limited to costs of electricity, outside vendor contracts, software license and upgrades, , replenishment of the Reserve and Replacement Fund, and a11 other expenses necessary to maintain and preserve the Project in good repair and working order, and a11 administrative costs of the Authority, including administrative costs attributable to the Project and to the Operating Agreement, including without limitation salaries and wages of employees, overhead, insurance, taxes (if any), expenses, reasonable compensation and indemnification of fiscal agents, paying agents and trustees with respect to the foregoing, and fees of auditors, accountants, attorneys or engineers, and all applicable federal, state a:nd local requirements pertaining to the operation of the Project. "Operating Payment" means the share of Operating Costs, including but not limited to funding of the Reserve and Replacement Fund and funding of new capital, annually allocated to each User, as annually determined by the Authority. • 3- Project Operating Agreement 090910 Co~ %~ ~ ~~~~ "Operating Period" means the period in each year from July 1 to and including the following June 30, during which time the Authority is operating the Project. 'Project" means that certain public safety radio system to be financed with the proceeds of the Bonds and all other sources of financing available to the Authority, as described in Exhibit B hereto, as the same may be amended from time to time. "Reserve and Replacement Fund means the reserve and replacement fund held by the Authority pursuant to Section 3.06 hereof. "Reserve and Replacement Fund Requirement" means that requirement for the Authority's maintenance of a minimum of One Million Dollars ($1,000,000) in the Reserve and Replacement Fund. "Revenue Fund" means the special fund held by the Trustee pursuant to the Trust Agreement. "Revenues" means (a) the Initial Payments, (b) all User Payments received by the Authority from the Users hereunder, including the proceeds of any business interruption insurance, (c) invest~nent income with respect to any moneys held by the Trustee in the funds and accounts established under the Trust Agreement and/or the Financing Agreements, and (d) a11 other funds from any source legally available to the Authority. "Service Payments" means the annual payments by each User for the service provided by the Project in the applica.ble Operating Period, in the amounts set forth in Exhibit A hereto, as revised periodically from time to time by the Authority, which amounts sha11 be used by the Authority to pay the principal of and interest on the Bonds and/or be deposited in the Reserve and Replacement Fund. "Subscribers" means users of the Project pursuant to conditions imposed by the Authority and this Operating Agreement, that are parties to this Operating Agreement but aze not signatories to the JPA Agreement. "Trustee means initially the Treasurer, Auditor or other designee of the County of Alameda or such other firm appointed by the Authority and acting as an independent Trustee with the duties and powers provided in the Trust Agreement; its successors and assigns; and any other corporation or association which may at any time be substituted in its place, as provided in the Trust Agreement. "Trust Agreement" means the Trust Agreement, dated as of October 1, 2010, between the Authority and the Trustee, as originally executed and as it may from time to time be amended or supplemented. "User Payment" means, collectively, the Service Payment and the Operating Payment due in any year, except to the extent such amounts are rebated to a User due to abatement of such User's obligations hereunder as provided in Section 3.04 hereof. "Users" includes Members and Subscribers. Project Operating Agreement 090910 _ 4 ~ ~~ ~ ~~ ~ ~ ARTICLE II OPERATION OF THE FACILITIES Section 2.01. Operation of the Project• Title. The Authority has or will enter into purchase orders and contracts to supervise and provide for, or cause to be supervised and provided for, the complete planning, design, construction, acquisition, financing, improvement, repair, modification and installation of the Project. The Authority covenants to obtain such land use permits as aze required for acquisition and installation of the Project. In the event any such permit cannot be reasonably obtained, the Authority will use its best efforts to pursue alternate sites for such component of the Project. The Authority agrees tha.t it will cause the work under said contracts to be diligently performed and that the Project will be ~onstructed, improved, repaired, modified, acquired and installed in accordance with the specifications approved by the Authority. In connection therewith, the Authority hereby agrees to operate the Project for the duration of this Operating Agreement. The Project shall be used for radio service for public safety and other govemmental uses for the benefit and convenience of the Users, which shall have the right to use the Project at a11 times herein mentioned at rates and chazges established by the Authority, except as otherwise provided pursuant to Article V hereof. In order to effectively operate the Project, the Authority hereby agrees to maintain and preserve the Project in good repair and working order at a11 times and to operate the Project in an efficient and economical manner, and will pay a11 maintenance and operation costs of the Project as they become due and payable from available revenues. At a11 times during the term of this Operating Agreement the Authority shall hold title to the Project, including a11 additions which comprise fixtures, repairs, replacements or modifications thereto, except for such equipment as is owned by one or more Users or other governmental agencies and licensed to the Authority. Upon the termination of this Operating Agreement, all right, title and interest in and to the Project shall be retained by the Authority except as may be otherwise provided pursuant to licensing or other agreements. The Users recagnize and acknowledge that the operation, control, ownership and management of the Project is at the complete and sole discretion of the Anthority. Nothing in this Operating Agreement sha11 be construed to limit the Authority's discretion in management and operation of the Project. In connection therewith, User hereby consents to all steps or actions Authority has taken or may take which are necessary or appropriate for the authorization, issuance, sale and delivery of the Bonds and the acquisition and construction of the Project. The Bonds shall be issued, sold and delivered on such terms and conditions as the Authority, in its reasonable discretion, deems necessary or desirable. User hereby agrees to cooperate with the Authority and its designated representatives, and to provide a11 reasona.bly requested material relating to the User, in order to timely accomplish such authorization, issuance, sale and delivery of the Bonds; provided that such cooperation does not constitute an agreement to issue any land use permits. However, User covenants to promptly process a11 applications of the Authority for necessary land use permits. ~ -5- Project Operating Agreement 0909I0 < ~~ ~~~J The Authority will make a11 reasonable effort to provide continuous service to the Users, but may temporarily discontinue or reduce service to one or more of the Users for the purpose of necessary investigation, inspection, maintenance, repair or replacement of any of the Project, or except as provided in Article V hereof. The Authority sha11 notify Users as far in advance as reasonably possible of any discontinuance or reduction of service, and the estimated duration of such discontinuance or reduction. Recognizing that the Users will rely on the Authority for uninterrupted service, the Authority agrees to use its best efforts throughout the term of this Operating Agreement to minimize any such discontinuance or reduction of service. The Authority sha11 prepare a budget for a11 Operating Costs by of each year, and shall promptly provide each User with a copy thereof. To the extent Opera.ting Costs in any year exceed the amount set forth in the budget, the Authority shall promptly notify each User in writing of such increases. Upon receipt of such notice, the User hereby agrees to use its best efforts to pay such increased Operating Costs as soon as possible. Section 2.02. Modification of Project. The Authority sha11 have the right to make additions, modifications and improvements to the Project or any portion thereof. All additions, modifications and improvements to the Project shall thereafter comprise part of the Project and become subject to the provisions of this Operating Agreement. Such additions, modifications and improvements shall not in any way damage the Project, or cause the Project to be used for purposes other than those authorized under the provisions of state and federallaw; and the Project, upon completion of any additions, modifications and improvements ma.de thereto pursuant to this Section, sha11 be of a value which is not substantially less than the value thereof immediately prior to the making of such additions, modifications and improvements. The Authority will not permit any mechanic`s or other lien to be established or remain against the Project for labor or materials furnished in connection with any remodeling, additions, modifications, irnprovements, repairs, renewals or replacements made by the Authority pursuant to this Section; provided that if any such lien is esta.blished and the Authority may in good faith contest any lien filed or established against the Project, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom. T'he Users will coopera.te fully in any such contest, upon the request and at the expense of the Authority. Notwithstanding any other provision hereof, the Authority sha11 be entitled to remove portions of the Project from service, upon a filing with the Trustee of evidence that adequate facilities remain to provide comparable levels of service to the Users notwithstanding any such removal. Section 2.03. Term. Unless extended by mutual agreement, the term of this Operating Agreement shail commence on the date of delivery of any Bond to the initial purchaser thereof and terminate (subject to such other termination events as provided in this Operating Agreement), on the date on which no Bonds aze Outstanding. -6- Project Operating Agreement 090910 G ~~~~ ~~ ~~ ARTICLE III PAYMENT OF INITIAL PAYMENTS AND USER PAYMENTS; RESERVE AND REPLACEMENT FUND Section 3.01. Pavment of the Initial Payment and User Pavments. New Users who enter into this Operating Agreement and existing Users who have paid an Initial Payment of $200 per radio who wish to increase the number of radios in their existing service, shall pay an Initial Payment to the Authority, or its successors or assigns, from any source of legally available money, of Two Hundred Dollars ($200) per radio. The Initial Payments sha11 be deposited in the Reserve and Replacement Fund. In addition, each New User, or User increasing the number of radios in service, shall pay an Operating Payment equal to the fee per radio paid by a11 then existing Users, and a Service Payment per radio equal to that paid by each existing User then paying a Service Payment, unless such New User selects prepaytnent of its Service Payment. In the event that a New User chooses to prepay its Service Payment at the time of its execurion of the Opera.ting Agreement, the Authority will calculate the appropriate contribution of the New User based on the total cost of the Project, and will deposit such Service Payment in the Reserve and Replacement Fund. In addition to any required Initial Payment, on each Due Date, beginning in 2013, unless required eazlier pursuant to a supplemental agreement, each User shall each pay to the Authority, or its successors or assigns, from any source of legally available money, its Service Payment, and its Operating Payment. The Operating Payment owed by each User sha11 be in the amount annually determined by the Authority for such Operating Period. The payment in any Operating Period by a User of its User Payment sha11 be for use of the Project by such User during such Operating Period. Service Payments for New Users entering into an Operating Agreement after August 2013 shall be deposited in the Reserve and Replacement Fund. Each Initial Payment and User Payment sha11 be payable by the Users in accordance with the terms hereof and at the times required herein in lawful money of the United States of America. In the event a User should fail to make any of the payments required in this Section 3.01, the payment in default shall continue as an obligation of such User until the amount in default shall ha.ve been fully paid, and the Users agree to pay the same with interest thereon, to the extent permitted under applicable law, from the date of default to the daxe of payment at the highest rate of interest represented by any Outstanding Bond plus one percent (1%). Overdue Service Payments, if received, sha1l be deposited in the Reserve and Replacement Fund to the extent that the amount on deposit therein is less than the Reserve and Replacement Fund Requirement, and then to the Revenue Fund. Overdue Operating Payments shall be used by the Authority to pay Operating Costs. The User Payment coming due and payable during each Operating Period shall constitute the total payment for service to such User provided by the Project for such Opera.ting Period, and sha11 be paid by each User in each Operating.Period for and in consideration of the right of the use and service provided by the Project during each Operating Period. The parties hereto have -7- Project Operating Agrcement 090910 I ~s '~ agreed and determined that the total User Payment represents not more than the fair value of the cost of the service provided by the Project. In making such determination, consideration has been given to the estimated fair market value of the Project, the costs of financing, servicing and operating the Project, other obligations of the Users and the Authority under this Opera.ting Agreement, the uses and purposes which may be served by the Project and the benefits therefrom which will accrue to the Users and the general public. Section 3.02. Source of Pavments: Budget and Appropriation. The User Payments sha11 be payable from any source of legally available funds of the Users. User covenants to take such action as may be necessary to include all payments owed hereunder in each of its annual budgets during the term of this Operating Agreement and to make the necessary annua,l appropriations for all such payments. The covenants on the part of User contained herein shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of User to take such action and do such things as are required by law in the performance of the official duty of such officials to enable such User to carry out and perform the covenants and agreements of such User in this Operating Agreement. In the event of abatement of User's Service Payment due to the Project being unavailable for use, the Authorized Representative of such User and all other officers of such User charged ' with the duty of preparing and submitting the annual budget of User to its legislative body shall include in the proposed budget, and request that the legislative body include in the final approved budget, and thereby appropriate, any amount necessary to replenish the Reserve and Replacement Fund in the amount of such User's abated Service Payment. Such officers shall use their best efforts to obtain such appropriation. The request for inclusion in the final approved budget and appropriation shall be made in each Fiscal Year following any such abatement so long as is necessary to restore the Reserve and Replacement Fund. Notwithstanding the foregoing provisions of this pazagraph, the decision of the legislative body as to whether or not to approve and appropriate any amount under this para.graph in any given Fiscal Year for the purpose of reinsta.ting the Reserve and Replacement Fund Requirement is in the sole and sound discretion of such legislative body, and the failure to make any such appropriation in any given Fiscal Year sha11 not constitute an Event of Default under this Operating Agreement. Section 3.03. Reserved. Section 3.04. Abatement of Pavment of User Payments. If the Project sha11 be taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, this Operating Agreement sha11 cease with respect thereto as of the day possession shall be so taken. If less than a11 of the Project shall be taken permanently, or if the Project or any portion thereof shall be taken temporarily, under the power of eminent domain, and there is a resulting substantial interference with the service provided by the Project, then (a) this Operating Agreement shall continue in full force and effect with respect thereto and sha11 not be terminated by virtue of such taking and the parties hereto waive the benefit of any law to the contrary, and (b) there shall be a partial abatement of the User Payments, in an amount to be determined by the Authority such that the -8- Project Operating Agreement 090910 1/a Ga~ ~~ resulting User Payments represent fair consideration for the service provided by the remaining usable components of the Project. The User Payments sha11 be abated during any period in which there is a ma.terial failure by the Authority to provide radio service from the Project to such User. The amount of such abatement sha11 be determined by the Authority such that the resulting User Payments represent fair consideration for the service provided by the portions of the Project not damaged or destroyed. Such abatement shall continue for the period commencing with such material damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such material damage, destruction or malfunction, this Operating Agreement shall continue in full force and effect and User waives any right to terminate this Operating Agreement by virtue of any such damage and destruction. Section 3.05. Receint and Deposit of User Payments. The Authority covenants and agrees that the User Payments, when and as received, will be received and held by or on behalf of the Authority in trust and deposited in the Revenue Fund. Section 3.06. Establishment, Maintenance and Use of Reserve and Replacement Fund. The Authority shall maintain and hold a separate fund to be known as the "Reserve and Replacement Fund." The Authority sha11 deposit Revenues remaining after paying Debt Service on the Bonds, and Operating Payments remaining after payment of a11 Operating Costs for the Fiscal Year , in the Reserve and Replacement Fund until the amount on deposit therein is at least equal to the Reserve and Replacement Fund Requirement , and thereafter add such amounts as the Authority sha11 determine from time to time as necessary to replenish the Reserve and Replacement Fund so that it has on deposit an amount at least equal to the Reserve and Replacement Fund Requirement. The Authority may withdraw amounts from the Reserve and Replacement Fund for use in repairing, improving or replacing the Project or any component thereof; providing credits to Users pursuant to Exhibit A hereto; or for any other lawful purpose that is authorized by the Authority's Board of Directors; provided, however, that in the event any User Payment is abated as provided herein or is insufficient to pay Debt Service, amounts on deposit in the Reserve and Replacement Fund may be used for transfer to the Trustee in an amount equal to such abated User Payments or such insufficiency, until such time as the abatement is discontinued and User Payments are sufficient to pay Debt Service. ARTICLE IV REPRESENTATIONS, COVENANTS AND WARRANTIES Section 4.01. Comnliance with Operatin~ Agreernent. The Users will punctually pay the User Payments in strict conformity with the terms hereof, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by them. The Authority will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein and in the Trust Agreement required to be observed and performed by it, and it is expressly understood and agreed by and among the parties to this Operating Agreement that each of the agreements, conditions, covenants and terms contained in -9- Project Operating Agreement 090910 / ~ ~ ~ \\ I~ W~ this Operating Agreement is an essential and material term of th~ operation of the Project by the Authority. Section 4.02. A~ainst Encumbrances. The Authority hereby covenants that as of the date hereof there is no pledge of or lien on the Revenues other than the pledge and lien securing the Bonds. The Authority will not make any pledge of or place any lien on the Revenues except as provided for herein or in the Resolution. Section 4.03. A~ainst Sale or Other Disposition of Property. The Authority will not sell, lease, encumber or otherwise dispose of the Project or any part thereof; provided however, any real or personal property which has become nonoperative or which is not need.ed for the efficient and proper operation of the Project, or any material or equipment which has become worn out, may be sold or exchanged at not less than the fair market value thereof, provided that such sale or exchange does not materially adversely affect the service provided by the Project and that the proceeds (if any) of such sale or exchange shall be deposited, at the discretion of the Authority, in the Revenue Fund or the Reserve and Replacement Fund. Section 4.04. Against Competitive Project. To the extent permitted by law, the User covenants not to acquire, maintain or operate within the jurisdiction of the Authority any public safety radio system competitive with the Project without the prior written consent of the Authority, which consent sha11 not be unreasonably withheld. Section 4.05: Tax Covenants. The Authority and User hereby covenant that they shall not make or permit any use of the Project that may cause the Bonds, or bonds the proceeds of which are used to purcha.se the Bonds, to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. The Authority covenants that so long as any Bonds remain Outstanding, the amount of capacity of the Project to be used, allocated or assigned to any person, other than a governmental unit, will not exceed ten percent (10%) of the total capacity of the Proj ect during such period. For these purposes, the total capacity of the Project shall be determined by multiplying the capacity of the Project by the number of years in the term of the Bonds. The term "governmental unit" means the State of California or any political subdivision thereof but excludes the United States Government or any agency thereof. Section 4.06. Access to the Project. The Users and any Authorized Representa.tive of the Users, and the Users' successors or assigns, sha11 have the right at all reasonable times to enter upon and to examine and inspect the Project or any part thereof. The Users, any Authorized Representative of the Users and the -10- Project Operating Agreement 090910 r~ ~+~ ~~ ~~ Users' successors or assigns shall further have such rights of access to the Project or any component thereof as may be reasonably necessary to cause the proper maintenance of the Project in the event of failure by the Authority to perform its obligations hereunder; provided, however, that neither the Users nor any of their assigns shall have any obligation to cause such proper maintenance. Section 4.07. Maintenance of Existence• Amendment of JPA A eement. User hereby covenants that so long as any Bond is Outstanding, User will not terminate this Operating Agreement except as provided in this Section or Section 6.01 hereof. Withdrawal from the JPA Agreement shall not constitute a withdrawal from this Operating Agreement. User , shall use its best efforts to maintain its existence and the existence of the Authority, will not dissolve or otherwise dispose of a11 or substantially all of its own or the Authority's assets and will not consolidate with or merge into another public agency or permit one or more public agencies to consolidate with or merge into it; provided, however, that User may dissolve, consolidate or merge, sell or otherwise transfer to another entity all or substantially all of its assets, provided that the surviving, resulting or transferee entity, as the case may be (i) is a public agency of the State of California or a subdivision thereof, (ii) assumes in writing all of the obligations of User under this Opera.ting Agreement, and (iii) provides an opinion of Bond Counsel (addressed to the Trustee, Counties and the Authority) to the effect that such dissolution, consolidation, merger, sale or transfer will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes, and complies with the requirements of this Section 4.07. The Authority will use its best efforts to enforce the provisions of this Section 4.Q7. So long as any Bond is Outstanding, each Member hereby covenants not to amend or modify the JPA Agreement in a manner which materially affects this Operating Agreement without first obtaining an opinion of Bond Counsel that such modification or amendment does not materially adversely affect the interests of the Bond Owners. Section 4.08. Pavment of Claims. The Authority will pay and discharge any and a111awful claims for labor, materials or supplies which, if unpaid, might become a lien on the Revenues or any part thereof or on any funds in the control of the Authority prior or superior to the lien of the Bonds or which might impair the security of the Bonds. Section 4.09. Compliance with Contracts. The Authority will comply with, keep, observe and perform a11 agreements, conditions, covenants and terms, express or implied, required to be performed by it contained in all contracts for the use of the Project and all other contracts affecting or involving the Project to the extent that the Authority is a pazty thereto, including the contract with the initial Project vendor. Section 4.10. Insurance. (a) The Authority shall procure and maintain, or cause to be procured and maintained, throughout the term of this Operating Agreement, casualty insurance against loss vr -11- Project Operating Agrecment 090910 l " f$ ~i~.i ~~ damage to the Project, in an amount at least equal to the then Outstanding principal amount of the Bonds. Such insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke, fire, lighhung, vandalism, malicious mischief and such other hazards as are normally covered by such insurance with extended coverage. Such insurance sha11 not cover loss or damage by seismic activity. Such insurance sha11 be subject to such deductibles as are customarily maintained by public agencies with respect to works and properties of a like character, but in any case sha11 not exceed One Hundred Thousand Dollars ($100,000). Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the Authority, and may be maintained in whole or in part in the form of the participation by the Authority in a joint powers authority or other program providing pooled insurance; provided that such insurance may not be maintained by the Authority in the form of self-insurance. The Net Proceeds of such insurance shall be applied as provided in the Trust Agreement. (b) The Authority sha11 maintain or cause to be maintained throughout the term of this Opera.ting Agreement, a standard comprehensive general insurance policy or policies in protection of the Authority, the Users, and their respective members, officers, agents, employees, designated volunteers and assigns. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Project as required by the JPA Agreement. Such policy or policies shall provide coverage in such liability limits and be subject to such deductibles as the Authority shall deem adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the Authority, and may be maintained in whole or in part in the form of self-insurance by the Authority, subject to the provisions of (e) below, or in the form of the participation by the Authority in a joint powers authority or other program providing pooled insurance. The proceeds of such liability insurance shall be applied by the Authority towazd extinguishment or satisfaction of the liability with respect to which paid. (c) The Authority will procure and maintain, or cause to be procured and maintained, workers' compensation insurance against liability for compensation under the Workers' Compensation Insurance and Safety Act of California, or any act hereafter enacted as an amendment or supplement or in lieu thereof, such insurance to cover a11 persons employed by the Authority in connection with the opera.tion of the Project; provided that such insurance may be effected under a legal self-insurance program. (d) The Authority shall procure and maintain, or cause to be procured and maintained, throughout the term of this Operating Agreement, business interruption or use and occupancy insurance to cover loss, total or partial, of the use of the Project and the service provided thereby as a result of any of the hazards covered in the insurance required by this Section 4.10, in an amount at least equal to the maximum Debt Service coming due and payable in any two (2) consecutive years. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the Authority, and may be maintained in whole or in part in the form of participation in a joint powers authority or other program providing pooled insurance; provided that such insurance may not be maintained by the Authority in the form of self-insurance. The Net Proceeds of such insurance, if any, sha11 be paid to the Trustee and ~ -12- Project Operating Agreement 090910 /.~~ ~'~ ~~ deposited in the Revenue Fund, and sha11 be credited towards the User Payments allocable to the insured improvements as the same become due and payable. (e) Insurance required to be maintained by subparagraphs (b) or (c) above may be effected under a legal self-insurance program so long as (i) the Authority sha11 certify to the Trustee that the Authority has segregated amounts in a special insurance reserve meeting the requirements of the applicable subpara.graph (which segregated reserve may be held by any legal depository of Authority funds) and (ii) the Trustee receives a certificate of a na.tionally recognized Insurance Consultant that such reserve is actuarially sound, upon which certificate the Trustee may conclusively rely. All policies of insurance required to be maintained herein shall provide that the Trustee sha11 be given thirty (30) days' written notice of any intended cancellation thereof or reduction of coverage provided thereby, provided, however, the Trustee shall not be responsible for the sufficiency of any insurance herein required. Section 4.1 l. Books and Accounts• Statements. (a) The Authority will keep proper books of record and accounts of the Project, separate from all other records and accounts of the Authority, in which complete and conect entries shall be made of a11 transactions relating to the Project. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Users. (b) The Authority will prepare and file with the Trustee and the Counties annually within one hundred eighty (180) days after the close of each Fiscal Year during the term of this Operating Agreement a certified statement that a11 insurance required by this Operating Agreement to be carried by the Authority with respect to the Project is in full force and effect and complies with the terms hereof. (c) The Authority will cause to be prepared not more than two hundred ten (210) days after the close of each Fiscal Year financial statements of the Authority for such Fiscal Year prepazed in accordance with Generally Accepted Accounting Principles, together with an Accountant's Report thereon prepared by an Independent Certified Public Accountant who examined such financial statements, and a general statement of the physical condition of the Project. The Authority will furnish a copy of such summary statement to the Users. Section 4.12. Pavment of Taxes and Compliance with Governmental Re~ulations. The Authority will pay and discharge a11 taxes, assessments and other governmental charges, if any, which may hereafter be lawfully imposed upon the Project or any part thereof when the same shall become due. The Authority will duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the Project or any part thereof, but the Authority shall not be required to comply with any regulations or requirements so long as the validity or application thereof shall be contested in good faith. Section 4.13. Amount of Service and Operatin~ Pavments. The Authority will, at all times during the term of this Operating Agreement, fix, prescribe and collect the Service Payments and Operating Payments in connection with use of -13- Project Operating Ageemcnt 090910 l~~ ~ ~ ~ the Project so as to yield sufficient amounts, after making reasona.ble allowances for contingencies and errors in the estimates, to pay the Debt Service and Operating Costs due in the applicable Fiscal Year. The Authority shall provide a written statement to the Counties and the Trustee by October 1 of each year to the effect that it has on deposit, or reasonably expects to have on deposit when needed, sufficient funds to pay the Debt Service and Operating Costs as they come due in the current Fiscal Year. Section 4.14. Operation of Proiect. The Authority will, so long as the Bonds are Outstanding, continue to operate the Project. The Authority will use its best efforts to employ, or cause to be employed, sufficient staff to maintain and operate the Project. User hereby covenants to purchase any replacement or additional components to be used in conjunction with the service provided by the Project from the Authority, or in conformity with such specifications as the Authority may, from time to time, prescribe. User will not use the service provided by the Project with any equipment which is not authorized by the Authority. User hereby eovenants not to use the Project in any manner which may adversely affect the service provided by the Project. Section 4.15. Reserved. Section 4.16. Further Assurances. The Authority and the Users will each adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof of the respective parties. Section 4.17. Eminent Domain Proceeds. If a11 or any part of the Project sha11 be taken by eminent domain proceedings, the Net Proceeds thereof sha11 be used to prepay or defease the Bonds. Section 4.1$. Use of Eminent Domain. User hereby covenants and agrees, to the extent it may lawfully do so, that during the term of this Operating Agreement, and so long as any of the Bonds remain Outstanding and unpaid, User will not exercise the power of condemnation with respect to the Project or any component thereof. User further covenants and agrees, to the extent it may lawfully do so, that if for any reason the foregoing covenant is determined to be unenforceable or if User should fail or refuse to abide by such covenant and shall condemn the Project or any component thereof, the appraised value of the Project or such component shall not be less than the greater of (i) if the Bonds are then subj ect to redemption, the principal and interest due on the Bonds outstanding through the date of their redemption, or (ii) if the Bonds are not then subject to redemption, the amount necessary to defease such Bonds to the first available redemption date in accordance with the Trust Agreement. ~ Section 4.19. Further Renresenta.tions Covenants and Warranties of the Authority. The Authority represents, covenants and warrants to the Users as follows: ~ - 14- Project Operating Agreement 090910 ~r ; ~ ~ ~`1 ~ ~~' (a) Due Oreanization and Existence. The Authority is a joint exercise of powers authority duly organized and validly existing under the JPA Agreement and the laws of the State of California, has fu111egal right, power and authority under the laws of the State of California to enter into this Operating Agreement and to carry out and consumrnate all transactions contemplated hereby, and by proper action the Authority has duly authorized the execution and delivery of this Opera.ting Agreement. (b) Due Execution. The representa.tives of the Authority executing this Operating Agreement have been fully authorized to execute the same pursuant to a resolution duly adopted by the Board of the Authority. (c) Valid, Bindin~ and Enforceable Obli ations. This Operating Agreement has been duly authorized, executed and delivered by the Authority and constitutes the legal, valid and binding agreement of the Authority enforceable against the Authority in accordance with its terms. (d) No Conflicts. The execution and delivery of this Operating Agreement, the consnmmation of the transactions on the part of the Authority herein contemplated and the fulfillment of or compliance by the Authority with the terins and conditions hereof do not and will not conflict with or constitute a violation or brea,ch of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the Authority is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature wha.tsoever upon any of the property or assets of the Authority, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consumrnation of the transactions contemplated by this Operating Agreement or the financial condition, assets, properties or operations of the Authority. (e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Authority, and no consent, permission, authorization, order or license of or filing or registration with any governmental authority is necessary in connection with the execution and delivery of this Operating Agreement, or the consummation of any transaction herein contemplated, except as have been obtained or made and as are in full force and effect. (~ No Liti ation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governrrienta,l authority pending or, to the knowledge of the Authority after reasonable investigation, threatened against or affecting the Authority or the assets, properties or operations of the Authority which, if determined adversely to the Authority or its interests, would ha.ve a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Operating Agreement, or upon the financial condition, assets, properties or operations of the Authority, and the Authority is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by -15- Projecc Operating Ageement 090910 (~f; / V ~ ~/' `-'" P this Operating Agreement or the financial conditions, assets, properties or operations of the Authority. Section 4.20. Renresentations Covenants and Warranties of User User represents, covenants and warrants to the Authority as follows: (a) Due Or~anization and Existence. User is a public body, corporate and politic, duly organized and validly existing under the laws of the State of California, has full legal right, power and authority to enter into this Operating Agreement and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action User has duly authorized the execution and delivery of this Operating Agreement. (b) Due Execution. The representatives of User executing this Operating Agreement aze fully authorized to execute the same pursuant to official action taken by the governing body of the User. (c) Valid, Bindin~ and Enforceable Obli ation. This Operating Agreement has been duly authorized, executed and delivered by User and constitutes the legal, valid and binding agreement of User, enforceable against User in accordance with its terms. (d) No Conflicts. The execution and delivery of this Operating Agreement, the consumtnation of the transactions on the part of User herein contemplated and the fulfillment of or compliance by User with the terms and conditions hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regularion, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which User is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of User, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions on the part of such User contemplated by this Operating Agreement or the financial condition, assets, properties or operations of such User. (e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of User, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of this Operating Agreement, or the consummation of any transaction herein contemplated, except as have been obtained or made and as are in full force and effect. ( fl No Liti ation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of User after reasonable investigation, threatened against or affecting such User or the assets, properties or operations of such User which, if determined adversely to the User or its interests, would ha.ve a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Operating Agreement, or upon the financial condition, assets, properties or operations of the User , and User is not in default with respect to any order -16- Project Operating Agreement 090910 ~~ ~~~ ~ or decree of any court or any order, regulation or demand of any federal, sta.te, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Operating Agreement or the financial conditions, assets, properties or operations of User. ARTICLE V EVENTS OF DEFAULT AND REMEDIES Section 5.01. Events of Default. Any one or more of the following events shall constitute an Event of Default hereunder: (a) Default shal~ be made in the due and punctual payment by a User of its User Payments when and as the same shall become due and payable; (b) Failure by User to observe and perform any non-monetary condition or agreement on its part to be observed or performed, for a period of thirty (30) days after receipt of written notice specifying such failure and requesting that it be remedied has been given to User by the Authority or the Trustee; provided, however, that if in the reasonable opinion of User the failure stated in the notice can be corrected, but not within such thirty (30} day period, such failure sha11 not constitute an Event of Default if User shall commence to cure such failure within such thirty (30) day period and thereafter diligently and in good faith cure such failure in a reasonable period of time; or (c) User shall file a petition seeking arrangement or reorganization under federal bankruptcy laws or any other applicable law of the United Sta.tes of America or any sta.te therein, or if a court of competent jurisdiction shall approve a petition filed with the consent of a User seeking arrangement or reorganiza.tion under the federal bankru.ptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction sha11 assume custody or control of such User or of the whole or any substantial part of its property; Section 5.02. Remedies of the Authoritv. Whenever any Event of Default sha11 have happened and be continuing, it shall be lawful for the Authority to, and the Authority shall, at the written direction of any Bond Holder, exercise against a User any and all remedies available pursuant to law or granted pursuant to this Operating Agreement; provided, however, that notwithstanding anything herein or in the Trust Agreement to the contrary, there shall be no right under any circumstances to accelerate the User Payments or otherwise declare any User Payment not then in default to be immediately due and payable. Each and every covenant hereof to be kept and performed by the User is expressly made a condition and upon the breach thereof the Authority may exercise any and all rights granted hereunder; provided, that no termination of this Operating Agreement shall be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. Upon the occurrence and during the continuance of any Event of Default, the Authority shall have and is granted each and every one of the following remedies, subject in a11 respects to the limita,tions set forth in Section 5.04. . -17- Project Operafing Agreement 090910 ~~~ 3~ ~ (a) Enforcement of Payments Without Termination. In the event the Authority does not elect to terminate tYus Operating Agreement with respect to a User in the manner hereinafter provided for in subpazagraph (b) hereof, the User agrees to and sha11 remain liable for the payment of its User Payment and the performance of all conditions herein contained and shall reimburse the Authority for the full amount of its User Payments to the end of this Opera.ting Agreement; provided that its User Payments sha11 be payable only at the same time and in the same manner as hereinabove provided for such User Payment, notwithstanding any suit brought by the Authority for the purpose of obtaining possession of the Project or any component thereof or the exercise of any other remedy by the Auttiority. Notwithstanding the provisions of the JPA Agreement, User agrees that this Operating Agreement constitutes full and sufficient notice of the right of the Authority to re-allocate service provided by the Project in the event of default by a User without effecting a surrender of this Operating Agreement, and further agrees that no acts of the Authority in effecting such re-allocation shall constitute a surrender or termination of this Opera.ting Agreement irrespective of the term for which such re-allocation is made or the terms and conditions of such re-allocation, or otherwise, but that, on the contrary, in the event of such default by a User the right to terminate this Operating Agreement with respecf to such User shall vest in the Authority to be effected in the sole and exclusive manner hereinafter provided for in subparagraph (b) hereof. Any User which is in default hereunder agrees to surrender and quit possession of the Project or any component thereof upon demand of the Authority. (b) Termina.tion of the Ot~eratin~A~reement. Notwithstanding any provision of the JPA Agreement to the contrary, the Authority, at its option, may, and shall at the written direction of either Bond Holder, termina.te this Operating Agreement and reallocate all or any portion of the service capacity of the Project relating to a defaulting User; provided, that the ~ Authority sha11 not terminate this Operating Agreement with respect to a User unless such ternunation will not materially adversely affect either Bond Holder. In the event of such termina.tion of this Operating Agreement by the Authority at its option and in the manner hereinafter provided on account of default by a User (and notwithstanding any re-allocation of the service capacity of the Project by the Authority in any manner whatsoever), the defaulting User nevertheless agrees to pay to the Authority the difference between all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of the User Payment and any amounts realized from the reallocation of such service capacity. Neither notice to pay the User Payment or notice to deliver up possession of any component of the Project given pursuant to law sha11 of itself operate to terminate this Operating Agreement, and no termination of this Operating Agreement on account of default by a User shall be or become effective by operation of law, or otherwise, unless and until the Authority shall have given written notice to such User of the election on the part of the Authority to terminate this Operating Agreement with regards to such User. User covenants and agrees that no surrender of the Project, or any component thereof, or any termination of this Operating Agreement shall be valid in any manner or for any purpose whatsoever unless stated and accepted by the Authority by such written notice. User hereby irrevocably appoints the Authority as the agent and attorney-in-fact of User to terminate a defaulting User's service from the Project upon the occurrence and continuation of an Event of Default relating to such User, and User hereby exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned in accordance with the provisions herein contained. -18- Project Operating Agreement 090910 _~/~ ~~ ~J (c) Proceedings at Law or In Equity. The Authority may, and sha1I at the written direction of either Bond Holder: (i) by mandamus or other action or proceeding or suit at law or in equity, enforce its rights against a User, or any board member, officer or employee thereof, and compel the User or any such board member, officer or employee to perform and carry out its or his duties under applicable law and the agreements and covenants contained herein required to be performed by it or him; ~ (ii) by suit in equity enjoin any acts or things which are unlawful or violate the rights of the Authority; or (iii} by suit in equity upon the happening of an Event of Default require the User and its hoazd members, off'icers and employees to account as the trustee'of an express trust. Section 5.03. Non-Waiver. A waiver of any default or breach of duty or contract by the Authority (which waiver sha11 be subject to the prior written consent of the Bond Holders) shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Authority to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of dut~ or contract or an acquiescence therein, and every right or remedy conferred upon the Authority by applicable law or by this Article V may be enforced and exercised from time to time and as often as shall be deemed expedient by the Authority. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Authority, the Authority and the Users sha1l be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 5.04. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive of any other remedy, and each such remedy sha11 be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by any other law. Section 5.05. A~reement to Pav Attomevs' Fees and Expenses. In the event any party to this Operating Agreement should default under any of the proyisions hereof and the nondefaulting parties should employ attorneys or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party, upon successful completion of such proceedings by the nondefaulting party, agrees that it will on demand therefor pay to the nondefaulting party the reasonable fees of and subject to any - 19- Project Operadng Agreement 090910 ~b~ ~~~ ~ provision in the JPA Agreement regarding indemnification or payment of attorney fees, such attorney fees and such other expenses so incurred by the nondefaulting party. Section 5.06. Trustee and Bond Owners to Exercise Ri h~ts,. Such rights and remedies as are given to the Authority under this Article V have been pledged by the Authority to the Trustee for the benefit of the Bond Owners, to which pledge User hereby consents. Such rights and remedies shall be exercised by the Authority, the Trustee and the Bond Owners as provided in the Trust Agreement. ARTICLE ~VI MISCELLANEOUS Section 6.01. Prepa ent. Notwithstanding any other provision of this Operating Agreement, a User, with the consent of the Authority, may secure the payment of its Service Payments by a deposit with the Trustee, as escrow holder under an escrow deposit and trust agreement as referenced in and in conformance with the Trust Agreement, of either (i) cash in an amount which is sufficient to pay all unpaid Service Payments in accordance with the schedule set forth in the Trust Agreement, or (ii) non-callable Federal Securities or pre-refunded non-callable municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively, or any other investment approved in writing by the Trustee, together with cash if required, in such amount as will, in the opinion of an independent certified public accountant, together with interest to accrue thereon, be fully . sufficient to pay a11 unpaid Service Payments pursuant to the Trust Agreement on their payment dates so that a pro-rata share of the Bonds sha11 be defeased as provided for in the Trust Agreement. Notwithstanding the JPA Agreement or any other provision of this Opera.ting Agreement, including without limitation Sections 4.07 and 5.01 thereof, in the event of a deposit pursuant to this Section 6.01, all obligations of the User under this Opera.ting Agreement shall cease and terminate, excepting only the obligation of the User to make, or cause to be made, all Service Payments from the deposit made by User pursuant to this Section 6.01 and the obligation, to the extent the User is still using the service provided by the Project, to pay the Operating Payments. Said deposit sha11 be deemed to be and shall constitute a special fund for the payment of Service Payments in accordance with the provisions of this Operating Agreement The Authority sha11 consent to such prepayment or defeasance to the extent the same complies with the tax covenants of the Authority and the Counties. Section 6.02. Benefits of OperatinR Agreement Limited to Parties. Except as provided in Section 6.03, nothing contained herein, express or implied, is intended to give to any person other than the Authority or the Users any right, remedy or claim under or pursuant hereto, and any agreement or covenant required herein to be performed by or on behalf of the Authority or the Users sha11 be for the sole and exclusive benefit of the other P~3'• -20- Project Operating Agreement 090910 ~~ ~~ ~~ ~~ Section 6.03. Successor Is Deemed Included In All References to Predecessor. Whenever the Authority or the User is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Authority or the User, and a11 agreements and covenants required hereby to be performed by or on behalf of the Authority or the User shall bind and inure to the benefit of the respective successors thereof whether so expressed or not; provided, however, that the Authority sha11 not provide service from the Project to any successor to a User until such successor accepts in writing the obligations hereunder of the predecessor User. Section 6.04. Waiver of Personal Liabilitv. No board member, officer or employee of User sha11 be individually or personally liable for the User Payrnent, but nothing contained herein shall relieve any board member, off'icer or employee of User from the performance of any official duty provided by any applicable provisions of law or hereby. Section 6.05. Article and Section Headings Gender and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto sha11 be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and words of any gender sha11 be deemed and construed to include all genders. All references herein to "Articles," "Sections" and other subdivisions or clauses aze to the corresponding articles, sections, subdivisions or clauses hereof; and the words "hereby," "herein," "hereof," "hereto," "herewith," "hereunder" and other words of similar import refer to this Operating Agreement as a whole and not to any particular article, section, snbdivision or clause hereof. Section 6.06. Partial Invaliditv. If any one or more of the agreements or covenants or portions thereof contained herein required to be performed by or on the part of the Authority or the Users shall be contrary to the law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and sha11 be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof. The Authority and User hereby declare that they would have executed this Operating Agreement, and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 6.07. Assi ent. This Operating Agreement and any rights hereunder may be assigned by the Authority without the necessity of obtaining the prior consent of the Users. No User may assign any of its rights hereunder without the prior written consent of the Authority. Section 6.08. Net Contract. -21- Project Operating Agreement 090910 (y {{{ ~ ~ // jjj f~~ v ~~ ~ V This Operating Agreement shall be deemed and construed to be a"net-net-net obligation" and User hereby agrees that the User Payments shall annually be an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever. Section 6.09. California Law. This Operating Agreement shall be construed and governed in accordance with the laws of the State of California. Section 6.10. Notices. Any notice, request, complaint, demand or other communication under this Operating Agreement shall be given by first class mail or personal delivery to the party entitled thereto at its address as set forth below, or by facsimile transmission or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) forty-eight (48) hours after deposit in the United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. User, the Authority or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder. Authority: East Bay Regional Communications System Authority Alameda County Office of Homeland Security and Emergency Services 4985 Broder Boulevard Dublin California 94568 Facsimile: (925) Attention: William J. McCammon, Executive Director User: City of Dublin 100 Civic Plaza Dublinc California 94568 Facsimile: (925) 833-6651 Attention: City Manager Trustee: Section 611. Effective Date. This Operating Agreement shall become effective upon its execution and delivery, and shall terminate as set forth in Section 2.03 hereof. -22- Project Operating Agreement 090910 ~.'•'~'`'/,~ ~~° ~ Section 6.12. Execution in Counterparts. This Operating Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. Section 6.13. Amendments. The Users and the Authority may at any time amend or modify any of the provisions of this Operating Agreement, but only with the prior written consent of the Owners of a majority in aggregate principal amount of the Outstanding Bonds. No such amendment shall adversely affect the rights, obligations, immunities or indemnities of the Trustee hereunder without the Trustee's written consent. The Authority shall obtain and cause to filed with the Trustee an opinion of Bond Counsel with respect to any amendment or modification hereof, stating that all conditions precedent to such amendment have been satisfied. Promptly following the effective date of any amendment or modification pursuant to this Section, the Authority shall mail written notice thereof to each rating agency which then maintains a rating on the Bonds. Section 6.14. Business Davs. Any act or thing required to be done or exist on any date set forth herein which does not constitute a Business Day in any year shall be deemed to be done or to exist on such date if such act or thing is done or exists on the next date which constitutes a Business Day. IN WITNESS WHEREOF, the Authority and the undersigned User has entered into this Operating Agreement effective on the date first written above. [Signature Pages to Follow.J -23- Project Operating Agreement 090910 _ ,W~+ ~~ ~'' L% AUTHORITY: East Bay Regional Communications System Authority By: William D. Shinn, Chair APPROVED AS TO FORM: By: Robin Donoghue, Attorney at Law USER: City of Dublin By: Joni L. Pattillo, City Manager ATTEST: By: Caroline Soto, City Clerk APPROVED AS TO FORM: By: John Bakker, City Attorney -24- Project Operating Agreement 090910 ~~ ~~'~~ ~~ ~ EXHIBIT A SERVICE AND OPERATING PAYMENT AMOUNTS AS OF FISCAL YEAR 2013-2014 Service and operatirig payrrients will be made each yeaz based on the number of radios each jurisdiction operates on the EBRCSA System, once the jurisdiction has paid the upfront cost of $200 per radio. There aze two types of payment categories: Payment Category # 1- Users who have paid the Service Payment component of their User Payment up front and are only responsible for the Operating Payment component of the User Payment. These Users will pay an estimated amount of $1,545 per radio for a onetime payment for the Service Payment component of the User Payment, with an estimated Operating Payment of $30 per month per radio designated for use in the Project. The Authority will notify the User of the amount of the Operating Payment in January of the fiscal year preceding the fiscal year of such payment. Operating Payxnents will be due by August 31St of the fiscal year in which such payment is due. Payment Category #2 - Users who have not prepaid the Service Payment component of their User Payment are responsible for both the Service Payment and Operating Payment components of the User Payment. Such Users will pay a combined User Payment that includes the Service Payment and Operating Payment components, with an estimated combined payment of $45 per month per ra.dio designated for use in the Project. T'he Authority will notify the User of the amount of the required payment in January of the fiscal year preceding the fiscal year of such payment. The payments will be due by August 31 St of the fiscal year in which such payment is due. The User Payments reflected in this Exhibit A are based on Project costs of $17,000,000 and a IJser count of 11,000 radios. In the event that prior to January l, 2013, the User count of radios increases or decreases, or the Project cost decreases, the User will receive a credit or a rate adjustment, as applicable. - 25 - Project Operating Agreement 090910 ~ R 2~ , ~~ ~ EXHIBIT B PROJECT DESCRTPTION (To be appended.) 15051833 -26- Project Operating Agreement 090910 V i ~~ S ~ ~ f r~ ~ I AUTHORITY: East Bay Regional Communications System Authority By: [Name and Title] APPROVED AS TO FORM: By: [Name and Title] USER: (Name of Entity) By: [Name and Title] ATTEST: By: [Name and Tide] APPROVED AS TO FORM: By: [Name and Title) -24- Projcct Operating Agreement 090910 _ __ _ __. _ _._ _ . _ _ __ __ _ _ _ ~ . .. CITY OF DUBLIN ~ ~~ BUDGET CHANGE FORM FY 2010 / 2011 '~~r''~'`~ ~' ~~ CHANGE FORM # New Appropriations (City Council Approval Required): Budget Transfers: X From Unappropriated Reserves (*) _ From Budgeted Contingent Reserve (1001.1901.81101) * General Fund - Special Designation Within Same Department Activity From New Revenues __ Between Departments (City Council Approval Required) Other ,,.. ,~ ~.. F _ _~. . ._ ... . _ :,. _~..._. DECREASE=BUaGET AGCOUNT~ ; AMOUNT, ~-.: -INCREASE BUDGET ACCOUNT: AMOUNT :-: Name: EXPENSE - GENERAL FUND - Disaster Preparedness- $ 313,055 Contract Services - General GL Account # 1001.2501.64001 REASON FOR BUDGET CHANGE ENTRY: As presented to the City Council on October 5, 2010, the East Bay Regional Communications Authority has offered agencies to pre-pay their infrastructure "buy- in" costs for the backbone emergency communications system. Prepayment will reduce the cost to the City of Dublin in the long term. The City Council had previously established a General Fund reserve to finance this cost. The amount required was unknown at the time the Budget was adopted, therefore a Budget Change is needed. Fin Mgr/ASD: Date: '~t Z~' ~fl Signature ., City Mana~er: ~ ~ ;~..,~ ~,~~ %~°`; O ~ Date: ~ Z~'~~~ Si nature As Approved at the City Council Meeting on: Date: 10/5~2010-- Mayor: Date: Signature Posted By: Date: G:'BxclqrlChnqgrs'.3 ?D/0 //~~9_!0 J_/0_GP_F.BRCSA_Rndin.Cy:<.Joc ATTACHMENT 2