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20240702 Late CorrespondenceTO: FROM: DATE: SUBJECT: ";:- .p() "' CITY OF ~ RANCHO PALOS VERDES HONORABLE MAYOR & CITY COUNCIL MEMBERS CITY CLERK JULY 2, 2024 ADDITIONS/REVISIONS AND AMENDMENTS TO AGENDA Attached are revisions/additions and/or amendments to the agenda material presented for tonight's meeting . Item No. Description of Material Non-Agenda Email exchange between Staff and Antonio Ferrari 2 Email from James M. Lloyd 3 Emails from: Ambar Servin; Tony Buesing; Denny Jaconi ** PLEASE NOTE: Materials attached after the color page(s) were submitted through Monday, July 1, 2024**. Respectfully submitted, L:ILATE CORRESPONDENCE\202412024 Coversheets\20240702 additions revisions to agenda .docx From: Sent: To: Subject: Importance: Teresa Takaoka Tuesday, July 2, 2024 3:27 PM Nathan Zweizig FW: Remaining Balances & Invoices-DUE IMMEDIATELY-(PO# 20240176 & PO# 20240294) High Late corr non-agenda items 'f'o CJ '<~ ?:',ff :~ 7 • ~ . .:l.: ... 1.0 Teresa Takaoka City Clerk tJilit@rp~ Phone -(310) 544-5217 Address: 30940 Hawthorne Blvd . Rancho Palos Verdes, CA 90275 Website: www.rpvca,grut Conn.,cl wllh 1h .. Cily f,om yo1,1r phoA., o.-1abh,1! DOWNLOAD -?1'i:r ~ GHIJON ~,... Google Play This e·rnail mes,;age contains infonnat:ion belonqinq l:o the City of Rancho Palos Verdes, whici1 rnay be p:•ivileged, confidcntiili, anclior protected from c!isc,osurc. The infornwt:ion is intended only for use of the individual 01· entity narncd. Un,.wthoriZ('ci clisserninalion, clistribut:ion, or copyin9 is strictly prohibit:ecl. If you received this email in error, or arc not an intended recipient, please notify the sender imrnediatdy. Thank you fo1· your cissisldnc(! c111d coopcr·ation. From: Ara Mihranian <AraM@rpvca.gov> Sent: Tuesday, July 2, 2024 3:12 PM To: Antonio Ferrari <ferraribackflow@gmail.com>; Juan Hernandez <jhernandez@rpvca.gov>; Jennifer Grieco <jgrieco@rpvca.gov>; Zack Lavenant <zlavenant@rpvca.gov>; James O'Neill <joneill@rpvca.gov>; Accounts Payable <accountspayable@rpvca.gov>; CC <CC@rpvca.gov> Subject: RE: Remaining Balances & Invoices-DUE IMMEDIATELY-(PO# 20240176 & PO# 20240294) Importance: High Dear Mr. Ferrari, The City Council and I are in receipt of your emails and demands on being paid for your company's backflow testing invoices. First, I would like to clarify that this matter is not related to tonight's City Council Consent Calendar Agenda Item H: Consideration and Possible Action to Ratify Payment to Ferrari Backflow, Inc. for a Backflow Prevention Device at Ladera Linda Community Park, for which Staff is recommending that the City Council ratify payment in the total amount of $27,995. 1 There seems to be no dispute or disagreement on this matter. I understand that your concern is related to an invoice you submitted for City-wide backflow testing services. If that is the case and you want to address this matter at tonight's City Council meeting, you should speak on non-agenda items at the beginning of the City Council meeting. Make sure you submit a speaker slip. I would like to also make sure you aware that Staff is rejecting your invoice because the Public Works Maintenance Superintendent Juan Hernandez sent you an email on October 18, 2023, pre-dating work performed, stating: "Hi Tony, thanks for the follow-up. We are still processing the contract and will send you fully executed copy over soon. A copy of the PO # 2024-0176 is attached. Please use and add on future invoice as a reference. Unfortunately, we had to use a vendor we already had a contract with to make repairs to meet Cal Waters deadline. However, we still be asking for your help and services in upcoming projects, 2024 testing, and jobs as they come up. Thanks for your help." This email clearly uses a future tense when referring to requests and does not authorize any work to be performed and indicates we used another vendor to address the Cal Water matter. Therefore, the City's Purchasing Ordinance does not allow staff to make payment for these services because they were not authorized in advance. Let me know if you prefer to speak with me directly. Ara Ara Michael Mihranian City Manager aram@rpvca.gov Phone -(310) 544-5202 Address: 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 Website: www.rpvca.gov ~ GffllON lf?J• Google Play to thr.1 Oty of Rand·io Palos ~vhich n·iav be privl[e(!ed 1 '!,t,,ndc:I cdy for use-tile indi1;idi1al or entity is prDhibited. H you rr:u:!1,;ed thls en1di! !n e1Tc:r 1 innnc,jiate!y. "'.hank you frn· vour a::;s1stance and From: Antonio Ferrari <ferraribackflow@gmail.com> Sent: Tuesday, July 2, 2024 12:00 PM To: Juan Hernandez <jhernandez@rpvca.gov>; J€nnifer Grieco <jgrieco@rpvca.gov>; Zack Lavenant <zlavenant@rpvca.gov>; James O'Neill <joneill@rpvca.gov>; Accounts Payable <accountspayable@rpvca.gov>; CC <CC@rpvca.gov> Subject: Remaining Balances & Invoices-DUE IMMEDIATELY-{PO# 20240176 & PO# 20240294) Hi City of RPV Team, 2 Attached are (3) pending invoices for your review and immediate processing. Due to the City of Rancho Palos Verdes conducting a breach of contract, and not communicating properly to cancel the PO# or assigned work, we are requesting all invoices be PAID IMMEDIATELY. Please feel free to reply or call me with any questions or concerns. Have a great day! Antonio Ferrari (Tony) Ferrari Backflow Inc. Cell (310) 922-8254 Iii • ii lii'II ii ,- 1 FERRARI I 8ACKFLOW INC. • CA LIC# 1077343 • • • 3 From: Sent: To: Cc: Subject: Attachments: James Lloyd <james@calhdf.org> Tuesday, July 2, 2024 12:03 PM CC; John Cruikshank; Eric Alegria; David Bradley; Barbara Ferraro; Paul Seo Ara Mihranian; CityManager; Elena Gerli; CityClerk; Planning CalHDF public comment re zoning text amendment for 2July2024 Council meeting Ranchos Palos Verdes -Zoning Text Amendment -2 July 2024 .pdf Dear Ranchos Palos Verdes City Council, Please see attached CalHDF's public comment regarding the proposed zoning text amendment, calendared as agenda item 2. Our comment concerns the portion of the text amendment that would restrict applicants from submitting multiple land use applications for the same parcel. Sincerely, James M. Lloyd Director of Planning and Investigations California Housing Defense Fund james@calhdf.org 1 Jul 2, 2024 City of Rancho Palos Verdes 30940 Hawthorne Boulevard Rancho Palos Verdes, CA 90275 Re: Proposed Zoning Text Amendment By email: cc@rpvca.gov; john.cruikshank@rpvca.gov; eric,alegria@rpvca.gov; david.bradley@rpvca.gov; barbara.ferraro@rpvca.gov: paul.seo@rpvca.gov CC: aram@rpvca.gov; citymanager@rpvca.gov; egerli@awattorneys.com; cityclerk@rpvca.gov; planning@rpvca.gov Dear Ranchos Palos Verdes City Council, The California Housing Defense Fund ("CalHDF") submits this letter to remind the Council of its obligation to abide by all relevant state housing laws when evaluating the proposed zoning text amendment under consideration at tonight's Council meeting as agenda item 2. SB 330 compels the city to accept an application for a housing development project. (Gov. Code,§ 65941.1.) Notwithstanding the City's concerns regarding staff workload, the statute does not allow the application to be denied because the applicant has already submitted a separate land use application for the parcel in question. (See ibid.) In addition, the Housing Accountability Act (Gov. Code,§ 65589.5; the "HA.A") requires approval of zoning and general plan compliant housing development projects unless findings can be made regarding specific, objective, written health and safety hazards. The HAA also bars cities from imposing conditions on the approval of such projects that would reduce the project's density unless, again, such written findings are made. The City may not require an applicant to withdraw an application, thereby denying the project, without making the required health and safety findings mandated by the HAA. (Id. at subd. (j)(1).) To avoid violating both SB 330 and the HAA, the Council should disapprove this zoning text amendment, as it would illegally restrict the rights of applicants for housing development projects. 360 Grand Ave #323, Oakland 94610 www.calhdf.org If the City's staff are facing increased workload, this is due to years of pent-up demand for new housing across the state of California, where 171.000 people are homeless, or 40,000 more than four years ago. We recommend that the City hire more planning and building staff and move towards ministerial review to simplify planning approvals. CalHDF is a 501(c)3 non-profit corporation whose mission includes advocating for increased access to housing for Californians at all income levels, including low-income households. You may learn more about CalHDF at www.calhdf.org. Sincerely, Dylan Casey CalHDF Executive Director James M. Lloyd CalHDF Director of Planning and Investigations 2of2 From: Sent: To: Subject: Follow Up Flag: Flag Status: Late corr Teresa Takaoka City Clerk terit@rpvca.gov Phone -(310) 544-5217 Address: 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 Website: www.rpvca.gov Teresa Takaoka Tuesday, July 2, 2024 11 :47 AM CityClerk FW: Emergency Follow up Flagged This e-mail message contains information belonging to the City of Rancho Palos Verdes, which may be privileged, confidential, and/or protected from disclosure. The information is intended only for use of the individual or entity named. Unauthorized dissemination, distribution, or copying is strictly prohibited. If you received this email in error, or are not an intended recipient, please notify the sender immediately. Thank you for your assistance and cooperation. -----Original Message----- From: Am bar Servin <ambarservin@gmail.com> Sent: Tuesday, July 2, 2024 11:43 AM To: CC <CC@rpvca.gov> Subject: Emergency EXTERNAL EMAIL: Do not click links or open any attachments unless you recognize the sender and know the content is safe!!!. Good evening council members, Mr Mayor. Today I am packing up our 5 month old son's bedroom because it is settling. The house was going to be his one day and we currently don't know if we can save it. Every time we think we have a solution, we get thrown a curve ball. Not every company feels comfortable about working on homes in this area. Last night we spoke to great friends in Seaview who are 1 3. also packing up. We are all living in uncertainty and fear for the future. This emergency needs to be extended, because it is a crisis! Thank you for your time. Ambar Servin Sent on the run 323.286.3330 2 Subject: FW: Please include tonight this letter From: Teresa Takaoka <TeriT@rpvca.gov> Sent: Tuesday, July 2, 2024 3:00 PM To: tony b <tonybuesing@gmail.com>; Enyssa Sisson <esisson@rpvca.gov>; CityClerk <CityClerk@rpvca.gov> Subject: RE: Please include tonight this letter Good afternoon, This letter will be added to the late correspondence packet and posted on our website. Thank you. /0:. ! 1973-};5? Teresa Takaoka City Clerk terit@rp~ Phone -(310) 544-5217 Address: 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 Website: www.rpvca.goJ.1 DOWNLOAD -nzfr Ava1lobl• ln th"' App .Slore and Googl,.. Play ~ GfTITON ~ Google Play This e mail rnessacJe contains information belon9i11q to the, City of Rancho F'alos Verdes, which may be privilogecl, confic!ontial, and/or protcctc:d frorn disclosure. The infonnation is intended oniy for use of the inclividual or entity namer1. Unauthorized clissemination, clistribul:ion, or copyi119 is strictly prohibited. If you received this Cf\liiil in erTor, or aro not an intended rc:cipient, please notify the sencler immediately. Thank you for your assistance and cooperation. From: tony b <tonybuesing@gmail.com> Sent: Tuesday, July 2, 2024 2:58 PM To: Enyssa Sisson <esisson@rpvca.gov>; CityClerk <CityClerk@rpvca.gov> Subject: Please include tonight this letter Hello Enyssa Please read this during the city meeting of 7/2 regarding item 2. I will sign up for the zoom next so you can include this letter tonight. Thanks Tony 1 Good Evening City Council, Mayor, Ara, Ramzi, and Staff, It's 10 months now and you are sticking Borings at water of 200 feet in depth. You are wasting money and time. Go to the toe of the slide and beach areas where you flooded the area from 40 years of negligence of allowing storm water to flood the landslide region. Stop preaching you are doing something when you are doing nothing. The community sees through your mirage of fake actions. You have to put the bores where water is at a depth of 100 feet or less and this action will show you really are vested in saving the 400 homeowners. Your actions of not making Cal Water act faster on installing pipes above ground in the West region of Exultant and Admirable is causing many neighbors damages and having to leave their homes. You are the city and you need to save homes and tax dollars. Your actions to date with Cal Water and the landslide is a demise. Your actions of allowing sewage to spill under the street of Dauntless is horrific and disgusting. Again why aren't you being proactive and rather than waiting till the last minute. Gas Lines failing daily and again where is your enforcement powers to elevate the lines? The main sewage for the entire hill is routed through a failing street and why wasn't that fixed years ago and rerouted? Your actions to allow the entire hill of 3 cities to be punished by a failed sewer system is not acceptable. We need action now of moving the city sewer away from the failing street. You are sinking the reputation of RPV and LA County will have to seize your position if you don't perform with due diligence. Tony Buesing 2 Subject: FW: Comment on Agenda Item July 2 CC Meeting Agenda Item 2 From: Dennis Jaconi <dennyjaconi@gmail.com> Sent: Tuesday, July 2, 2024 2:15 PM To: CC <CC@rpvca.gov> Subject: Comment on Agenda Item July 2 CC Meeting Agenda Item 2 Good evening City Leadership and Staff, After recently rewatching the City Council Meeting dated September 19th ( which I encourage all of you to revisit), I realize that we are now facing the predicament we feared and voiced at that time. During that meeting, we urged the City to declare a Local Emergency to expedite mitigation efforts, including partnering with Cal Water to update infrastructure and relocate water mains and lines above ground in affected areas to protect our homes. The City declared a Local Emergency shortly thereafter, with the aim of securing funding and implementing proactive measures such as new dewatering wells, improved runoff drainage, and solutions from utility companies. Today, nearly 10 months later, the local emergency has not led to completed dewatering efforts or substantial mitigation projects and We are still here discussing loan terms for the Abatement Districts. Incidents of broken water lines have only increased significantly. And we are now losing our homes, not by the few, but by the hundreds. This situation has escalated beyond a local emergency; it is now a local crisis. The affected communities urgently need assistance, particularly for residents facing the daunting task of rebuilding and temporary relocation. SBA loans are insufficient to address the magnitude of our challenges. We urge you to allocate resources immediately to develop a comprehensive plan to aid the hundreds of homes that have been destroyed or are under threat. We eagerly await your decisive actions on this matter. Sincerely, Denny J aconi 1 3. 2 TO: HONORABLE MAYOR & CITY COUNCIL MEMBERS FROM: CITY CLERK DATE: JULY 1, 2024 SUBJECT: ADDITIONS/REVISIONS AND AMENDMENTS TO AGENDA _____________________________________________________________________ Attached are revisions/additions and/or amendments to the agenda material received through Monday afternoon for the Tuesday, July 2, 2024, City Council meeting: Item No. Description of Material 4 Updates from Staff Respectfully submitted, __________________ Teresa Takaoka L:\LATE CORRESPONDENCE\2024\2024 Coversheets\20240702 additions revisions to agenda thru Monday.docx Subject: Attachments: July 2 CC Meeting -Ag~nda Item No. 4 (ACLAD/KCLAD Loan Package) 2024-06-26 RPV ACLAD Loan Agreement_FINAL_clean copy.pdf; 2024-06-26 RPV KCLAD Loan Agreement_FINAL_clean copy.pdf From: Ara Mihranian <AraM@rpvca.gov> Sent: Monday, July 1, 2024 1:28 PM Cc: Vina Ramos <Vramos@rpvca.gov>; Elena Gerli <egerli@awattorneys.com>; Anita Luck <aluck@awattorneys.com>; Ramzi Awwad <rawwad@rpvca.gov> Subject: July 2 CC Meeting -Agenda Item No. 4 (ACLAD/KCLAD Loan Package) Honorable Mayor and City Councilmembers, Attached for your consideration, as late correspondence, are the final drafts of the loan documents between the City and AC LAD and KCLAD. At this time, there are no salient changes to the documents from what was summarized in the staff report. AC LAD is conducting a special meeting tomorrow before the City Council meeting to take formal action on the loan document. If anything changes, staff will report it out at the meeting. Ara Ara Michael Mihranian City Manager aram@rpvca.gov Phone -(310) 544-5202 Address: 30940 Hawthorne Blvd. Rancho Palos Verdes, CA 90275 Website: www.rpvca.gov ~ C,[TITOO ~,-Google Play 1 01201.0005/989203.1 LOAN AGREEMENT Between CITY OF RANCHO PALOS VERDES and ABALONE COVE LANDSLIDE ABATEMENT DISTRICT (Abalone Cove Subslide of Portuguese Bend Landslide Stabilization Project) LOAN AGREEMENT (Portuguese Bend Landslide Abatement Project)) This Loan Agreement is made as of this ___ day of ______, 2024, by and between the City of Rancho Palos Verdes (“City”) and the Abalone Cove Landslide Abatement District, a district of the State of California (“Borrower”). RECITALS A. Borrower is a geologic hazard abatement district duly organized pursuant to Public Resources Code Sections 26500 et seq. (the “Law”). B. Borrower desires to take certain steps mitigate and stabilize the effects of the Portuguese Bend Landslide within its area, as described herein on Exhibit “A” attached hereto (the “Project”). C. Due to the recent rainstorms in Southern California which affected the landslide, Borrower needs to commence work on a portion of the Project to mitigate further detrimental effects on the landslide. D. Borrower has requested that the City assist the Borrower and loan it money to commence a portion of the Project. E. Pursuant to the Law, the City is permitted to provide financial assistance to the District. F. The financial assistance effectuates a public purpose as the Project is part of the overall stabilization of the Portuguese Bend Landslide within the City including Palos Verdes Drive South which is a major arterial roadway supporting approximately 16,000 daily trips. G. As described herein, the City desires to loan funds to Borrower to allow Borrower to commence and continue with portions of the Project. NOW THEREFORE, IN CONSIDERATION of the mutual agreements, obligations, and representations, and in further consideration for the making of the Loan (described below), Borrower and City hereby agree as follows: ARTICLE I DEFINITIONS The following terms have the meanings and content set forth in this section wherever used in this Loan Agreement, attached Exhibits, or documents incorporated into this Loan Agreement by reference. 1.1 “AMORTIZATION SCHEDULE” means the total amount and due date of each payment due pursuant to this Loan Agreement and the Promissory Note as well as the portion -2- of Principal and Interest contained in each payment. The Amortization Schedule shall be attached to the Loan Agreement as Exhibit “C”. 1.2 “BORROWER” is the Abalone Cove Landslide Abatement District, a geologic hazard abatement district duly organized pursuant to Public Resources Code Sections 26500 et seq. 1.3 “CITY” is the City of Rancho Palos Verdes, California. 1.4 “CONSTRUCTION SCHEDULE”, the best guess as to the timing of the phases of the Project as shown in the attached Exhibit “D”. 1.5 “COUNTY” means the County of Los Angeles, political subdivision of the State of California. 1.6 “DRAW” or “DRAW DOWN” means each disbursement of funds to Borrower pursuant to this Loan Agreement. 1.7 “FINANCE DIRECTOR” means the Finance Director of the City. 1.8 “LOAN” means the contribution of funds to help finance the Project from the City in an amount not to exceed One Million Five Hundred Thousand Dollars ($1,500,000.00). 1.9 “LOAN DOCUMENTS” means collectively this Loan Agreement and the Note, as they may be amended, modified, or restated from time to time, along with all exhibits and attachments to these documents. 1.10 “NOTE” means the promissory note executed by the Borrower in favor of City in the amount of the Loan to evidence the Loan of City funds in connection with the Project, as well as any amendments to, modifications of, or restatements of said promissory note, substantially in the form attached hereto as Exhibit “B.” 1.11 “PROJECT” means the certain work described on Exhibit “A” hereto related to the mitigation of the effects of the Portuguese Bend Landslide in the area of Borrower as described in Exhibit “A”, attached hereto.. ARTICLE II TERMS OF THE LOAN On and subject to the terms and conditions of the Loan Documents, City agrees to make and Borrower agrees to accept a loan with the following terms: 2.1 FUNDS ON LOAN. The total principal amount of the Loan shall not exceed One Million Five Hundred Thousand Dollars ($1,500,000.00) (“Maximum Amount”). The Loan shall consist of two or more disbursements of funds to Borrower by City (each disbursement a “Draw Down”) pursuant to the terms of Section 3.2. Each Draw Down shall constitute a portion of the Loan. -3- 2.1.1 TERM OF FUNDS ON LOAN; REPAYMENT. The principal and all current and accrued interest on the Loan and Note shall be due and payable commencing on the first drawdown date on the Loan in accordance with the terms hereof, and on each subsequent draw down of principal as described hereunder. The maximum term of the loan shall be twelve (12) years from the first draw down date. . Payments of principal and interest shall be made annually on December 1,of each year, commencing December 1, 2025. A. The Finance Director will prepare an initial amortization schedule of the Loan based subsequent to each Draw Down and attach that amortization schedule to this Loan Agreement as Exhibit “C”. As the Draws are actually made, the Finance Director shall prepare a revised amortization schedule and that revised amortization schedule bearing the date of its preparation shall replace the previous Exhibit “C” to this Loan Agreement. Notwithstanding the modification of the amortization statement to reflect the timing of the Draws, the term of the Loan shall remain 12 years from the initial disbursement. Each amortization schedule shall be approved, in writing by the Finance Director and the Chairman of the Borrower. B. The City retains the right, in its sole discretion, to forgo the physical payment of that portion of its annual assessment payable to the Borrower in an amount equal to the next payment to be made by Borrower under the Loan per the then applicable amortization schedule. 2.1.2 EVIDENCE. Borrower shall evidence and secure its obligation to repay the Loan of by executing the Promissory Note, in substantially the form attached hereto as Exhibit “B”. 2.2 INTEREST. The Note shall bear interest on the unpaid principal amount of the loan at any time at a rate of 2.5 percent (2.5%) per year from the date of the initial disbursement until the Loan is repaid in full. 2.3 USE OF FUNDS. Loan proceeds may be used only for the purpose of constructing the Project as described within Exhibit “A”, which purposes include, but are not limited to, the costs of required professionals under this Loan Agreement, including a professional engineer, construction inspector, a project bookkeeper/accountant and Builder’s Risk insurance premiums. Operational expenditures including administrative costs, legal and or litigation costs, and ongoing maintenance are not permitted uses of the loan. 2.4 CONSTRUCTION OF THE PROJECT. Borrower hereby agrees to use the Loan to assist with the costs to develop the Project as described in Exhibit “A”. Borrower shall also carry out the Project in compliance with all applicable State and local law and regulations promulgated thereunder. 2.5 DEVELOPMENT OF THE PROJECT. Borrower shall commence and diligently prosecute the completion of the Project within the time provided and otherwise in strict compliance with this Agreement. Construction of the Project shall commence within ________ days of the initial Draw as well as subsequent to any additional Draws and all phases of the Project shall be completed by ____. [Board needs to discuss] -4- 2.6 LIMIT ON ASSISTANCE. Except as is expressly provided for in this Agreement, the City shall have no obligation to provide Borrower with additional financial assistance, to make any monetary or financial contribution toward the Project, to pay any development costs, or to carry-out or complete the Project. Notwithstanding the previous sentence, the City Council may, at its discretion, offer in-kind assistance such as professional services to the Borrower and contract with the Borrower with respect thereto. 2.7 GRANT FUNDS. ACLAD is actively pursuing and identifying additional sources of funding, including Congressional Directed Spending and FEMA grants which are directly tied to the timely passage of the federal fiscal year budget. The federal funds will be a significant supplement to the ACLAD operating budget thereby possibly reducing or even eliminating the amount of the Loan required to complete the Projects. ARTICLE III LOAN DISBURSEMENT AND REPAYMENT 3.1 CONDITIONS PRECEDENT TO DISBURSEMENT. City shall not be obligated to make any disbursements of the Loan proceeds or take any other action under the Loan Documents unless the following conditions precedent are satisfied prior to the disbursement of the Loan and by the dates set forth herein, as may be extended by the City Manager: 3.1.1 Borrower has provided and City has received a certified Engineer’s Report (“Report”), in connection with the portion of the Project being undertaken, which Report purports to describe that the work being undertaken will have the effect of stabilizing the Landslide for which disbursements will be made from this Loan. 3.1.2 Borrower has provided, and City has received a report on the Project for the landscape mitigation measures which has been prepared by licensed geotechnical engineering company. The report shall be completed by ____. [Board to discuss] 3.1.3 Borrower has provided to the City the plans and specifications certified to meet all applicable codes and standards by a licensed Professional Engineer. 3.1.4 Borrower has deployed a qualified construction inspector on all days that construction is performed, to assure that construction is performed in accordance with plans and specifications; Borrower shall submit daily construction reports to the City detailing all activities and conditions. 3.1.5 Borrower has delivered to City executed contracts and schedules for the portion of the Project being undertaken, and all required proof of insurance in a form acceptable to City; and 3.1.6 Borrower has received all approvals necessary to commence construction of the Project. 3.1.7 The City has received a resolution of the Borrower approving the Loan Agreement and the City has approved the Loan Agreement. -5- 3.1.8 Borrower has worked with the City to develop a 10-Year Financial Model outlining estimated Sources of Revenues and Expenditures. The Financial Model tool shall assist in upholding Borrower’s repayment obligations to the City and in identifying financial challenges early, if any, allowing for appropriate measures to be taken. The Financial Model shall be completed by July 31, 2024. The Loan funds are to be used by Borrower for the construction of the Project and shall be disbursed as described in Sections 3.2 through 3.3. Conditions 2.5 and 3.1.2 may, upon approval of the City Manager, may be continued to a date certain following a loan disbursement. 3.2 DISBURSEMENT OF LOAN. The Loan shall be disbursed by City to Borrower from time to time at such times and amounts as contained within the Construction Schedule in Exhibit “D” and shall not exceed the Maximum Amount or the amount required for the Project, if lower. Disbursements shall occur as follows: (i) Borrower may request a draw down on amounts necessary to pay City–approved costs, which draw, if requested, shall be funded, provided that Borrower has submitted all required documentation to the City in connection with such draw (as further described below) and (ii) after construction has commenced, construction disbursements shall be disbursed to contractors or the District following receipt of invoices and contracts relating to the work for which a disbursement is requested, also pursuant to 3.3. 3.2.1 ENGINEERING; CONSTRUCTION COSTS. City agrees to provide the Loan to Borrower, to provide financial assistance to Borrower for certain Project costs such that the Draw Downs on the Loan shall be in phases or from time to time. Soft costs (excluding the costs of the professional engineer, construction inspector, a project bookkeeper/accountant and Builder’s Risk Insurance premiums) may not be paid for from the Draw Downs of the Loan unless agreed to by the City Manager. 3.2.2 APPROVAL AND PAYMENT. Upon receipt of the Application for Disbursement the City Finance Director and City Engineer or Public Works Director shall review the same and shall approve the same subject to such exceptions as the City deems reasonably necessary and appropriate under the then current circumstances. Such approval may not unreasonably be withheld or delayed. The City shall pay, or cause to be paid, any approved disbursements within twenty (20) days following the City's receipt of the corresponding complete Application for Disbursement. In addition, on or about the ___of each month, a City representative , shall attend a monthly job site inspection, conducted by the Borrower, to verify that the portion of the application for disbursement is complete. 3.3 APPLICATIONS FOR DISBURSEMENT. From time to time after execution of this Loan Agreement and continuing until all of the Loan has been disbursed, subject to the limitations of Section 3.2, Borrower may submit to the City an "Application for Disbursement." Each Application for Disbursement shall include: -6- 3.3.1 A written, itemized statement, signed by a representative of the Borrower which sets forth: (i) a description of the work performed, being performed, or to be performed, material supplied, and/or costs incurred or due for which disbursement is requested; and (ii) the total amount incurred, expended and/or due for the requested disbursement. Back up documentation shall be presented to substantiate the disbursement request, including contracts, invoices, etc. All moneys applied for and disbursed pursuant to this Section shall be applied only for the corresponding improvements and the statement(s) by the representative of the Borrower shall so affirm, in a writing signed under penalty of perjury. 3.3.2 Certification that items in the Application for Disbursement have not been subject to a previous request and that there are no mechanics liens in connection with the work or that upon payment, a release of mechanics lien shall be made for such progress payment and that upon the final payment, an unconditional waiver and release shall be made. 3.3.3 Certification that in completing work pursuant to this Section, the Borrower has complied or will comply with all applicable laws or is complying with all applicable laws. Each Application for Disbursement by the Borrower shall constitute a representation and warranty by the Borrower that all work encompassed by the Application has been or will be accomplished in accordance with sound construction practices and laws, and that the Borrower is in compliance with all of the provisions of this Agreement. Review by the City of any Application For Disbursement, document invoice, engineer’s report, or other item required herein is for the purpose of administering the loan under this Agreement. The City is not responsible for any of the work and does not, by its review, intend to take responsibility for the appropriateness, quality or standards or anything else related to the work. 3.4. CITY CREATED ACCOUNT. The City shall create a separate account in which it shall record the loan/note proceeds described herein and from which it shall make disbursements to pay Borrower or Borrower’s contractors related to the Note upon approval of the Borrower’s Application for Disbursement. ARTICLE IV CONSTRUCTION OF THE PROJECT; RELATED COVENANTS 4.1 RECORDS. Borrower shall be accountable to City for all funds disbursed to Borrower pursuant to the Loan Documents and agrees to maintain records that accurately and fully show the date, amount, purpose, and payee of all expenditures drawn from Loan funds, and to keep all invoices, receipts, and other documents related to expenditures from said Loan funds for not less than the term of the Loan. Records must be kept accurate and current. Borrower shall provide such records to City upon request of City. City shall notify Borrower of any records it deems insufficient. Borrower shall have seven (7) calendar days from the date of said notice to correct any deficiency in the records specified by City in said notice, or, if more than seven (7) days shall be reasonably necessary to correct the deficiency, Borrower shall -7- begin to correct the deficiency within seven (7) days and correct the deficiency as soon as reasonably possible. Borrower shall promptly comply with all requirements or conditions of the Loan Documents relating to notices, extensions and other events required to be reported or requested. Borrower shall promptly supply, upon the request of City, any and all information and documentation which involves the development of the Project. Borrower shall provide City with all records and books requested by City within one day of such request. Borrower shall provide that City shall have access to quarterly financial reports, including Balance Sheets, Statement of Revenues and Expenditures, Detailed Accounting Reports of Expenditures and Revenues. Borrower shall provide such items to City quarterly on the 15 days of a subsequent quarter for the previous quarter, commencing December 15, 2024. Borrower shall provide to the City monthly updates of current expenditures, expected future expenditures and progress reports on the Project. 4.2 AUDITS. Borrower shall make available for examination to City at reasonable intervals throughout the term of this Loan and during normal business hours all books, accounts, reports, files, and other papers or property with respect to all matters covered by these Loan Documents, and shall permit City to audit, examine, and make excerpts or transcripts from such records. City may make audits of any conditions relating to this Loan. Borrower shall provide the City with its annual financial audit report by Dember 1 of each year, commencing on December 1, 2025 for its financial transactions for FY 2023-24. 4.3 BORROWER RESPONSIBILITIES DURING WORK. The Borrower shall be solely responsible for all actions necessary for the construction of work on the Project and cause all construction of the Project to be performed in accordance in accordance with all other applicable laws and regulations. The cost of constructing all of the improvements or work required to be done on the Project shall be borne by Borrower. Borrower acknowledges and agrees that the Project would be considered to be a "public work" "paid for in whole or in part out of public funds," as described in California Labor Code Section 1720 such that Borrower shall pay prevailing wages in connection with the construction of the Project. Accordingly, Borrower shall indemnify, defend and hold the City and the City Council and City employees and City consultants harmless from and against any all liability, loss, damage, costs, or expenses (including reasonable attorneys’ fees and court costs) arising from or as a result of any action or determination that Borrower’s construction of the Project failed to comply with any applicable prevailing wage laws 4.4 SCHEDULE OF PERFORMANCE; PROGRESS REPORTS. Borrower shall begin and complete all construction and/or work in accordance with the Project schedule to be provided by Borrower to the City by Board to Discuss. Once construction is commenced, it shall be diligently pursued to completion, and shall not be abandoned for more than thirty (30) consecutive days. Borrower shall keep the City informed of the progress of construction and shall submit monthly written reports of the progress of the construction to the City in the form required by the City. Borrower shall also provide monthly reports on all expenditures on the Project. -8- ARTICLE V INDEMNITY AND INSURANCE 5.1 GENERAL INDEMNITY. To the full extent permitted by law, Borrower expressly agrees to and shall indemnify, defend, release, and hold City and City and their officers, officials, agents, servants, employees, attorneys and contractors harmless from and against, any claim, liability, loss, damage, entry, cost, or expense (including, but not limited to, attorneys’ fees, expert fees, and court costs) which arises out of or is in any way connected with Borrower’s construction of and/or work on the Project and any act, omission or item related to or arising out of the Loan Documents. City shall not be responsible for any acts, errors or omissions of any person or entity and their respective officers, agents, servants, employees or contractors. The parties expressly agree that the obligations of Borrower under this Section shall survive the expiration or early termination of the Agreement. 5.2 INSURANCE. Prior to the commencement of any construction by Borrower on the Project, Borrower or its contractors shall procure and maintain, at its sole cost and expense, in a form, amount and content satisfactory to City and appropriate for the type of work, during the entire term of such entry or construction, insurance satisfactory to the work being performed on the Project, including but not limited to casualty insurance, workers compensation, and Builders Risk insurance. All the policies of insurance, [except the Builder’s Risk insurance], shall be primary insurance and shall name City, City, and their officers, employees, and agents as additional insureds. The insurer shall waive all rights of subrogation and contribution it may have against City, and their officers, employees and agents and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days prior written notice to City and City. In the event any of said policies of insurance are cancelled, Borrower shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section to the City. No work or services under this Agreement shall commence until the Borrower has provided City with Certificates of Insurance or appropriate insurance binders evidencing the above insurance coverages and said Certificates of Insurance or binders are approved by City. The Borrower agrees that the provisions of this Section shall not be construed as limiting in any way the extent to which the Borrower may be held responsible for the payment of damages to any persons or property resulting from the Borrower’s activities or the activities of any person or persons for which the Borrower is otherwise responsible. 5.3 NON-LIABILITY OF OFFICIALS, EMPLOYEES AND AGENTS. No officials, employees and agents of City shall be personally liable to Borrower for any obligation created under the terms of these Loan Documents. 5.4 RIGHTS OF ACCESS. Representatives of the City shall have the reasonable right to access the Project without charges or fees, at any time during normal construction hours during the period of construction and upon reasonable notice to Borrower, for the purpose of assuring compliance with this Agreement, including but not limited to the inspection of the construction work being performed by or on behalf of Borrower. Such representatives of City -9- shall be those who are so identified in writing by the City Manager, City Engineer, or Public Works Director. ARTICLE VI DEFAULT AND REMEDIES 6.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall constitute an “Event of Default” under this Loan Agreement: 6.1.1 Monetary. (A) Borrower's failure to pay when due any sums payable under the Note and Loan; and (B) Borrower's use of Loan funds for costs other than approved costs or for uses inconsistent with other terms and restrictions in the Loan Documents; 6.1.2 General Performance of Loan Obligations. Any substantial breach by Borrower beyond applicable notice and cure periods of any material obligations on Borrower imposed in the Loan Document. 6.1.3 Representations and Warranties. A determination by City that any of Borrower’s representations or warranties made in the Loan Documents, or any certificates, documents, or schedules supplied to City by Borrower were untrue in any material respect when made, or that Borrower concealed or failed to disclose a material fact from City. 6.1.4 Damage to Property. Material damage or destruction of the Project by fire or other casualty, if Borrower does not take steps to reconstruct the Project; or 6.1.5 Bankruptcy, Dissolution, and Insolvency. Borrower's: (A) filing for bankruptcy, dissolution, or reorganization, (B) making a general assignment for the benefit of creditors; (C) applying for the appointment of a receiver, trustee, custodian, or liquidator; (D) insolvency; or (E) failure, inability or admission in writing of its inability to pay its debts as they become due. 6.2 NOTICE OF DEFAULT AND OPPORTUNITY TO CURE. For all Events of Default, City shall give written notice to Borrower of any Event of Default by specifying: (a) the nature of the event or deficiency giving rise to the Default, (b) the action required to cure the deficiency, if an action to cure is possible, and (c) a date, which shall not be less than thirty (30) days from the date of receipt of the notice or the date the notice was refused, by which such action to cure must be taken or if a cure is not possible within thirty (30) days, to begin such cure and diligently prosecute such cure to completion which shall, in any event, not exceed ninety (90) days after the date of receipt of the notice to cure. The City has the sole discretion to determine whatever additional reasonable time is needed to cure. Following an Event of Default, interest shall accrue at five percent rate (5%). 6.3 CITY'S REMEDIES. Upon the happening of an Event of Default by Borrower and a failure to cure said Event of Default within the time specified in Section 6.2 above, City's obligation to disburse Loan proceeds shall terminate, and City may also, in addition to other rights and remedies permitted by the Loan Documents or applicable law, proceed with any or all of the following remedies in any order or combination City may choose in its sole discretion and/or any other remedy provided by Law or equity: -10- 6.3.1 Terminate this Loan Agreement, in which event the entire principal amount outstanding and all accrued interest under the Note as well as any other monies advanced to Borrower by City under the Loan Documents including administrative costs, shall immediately become due and payable at the option of City; 6.3.2 Bring an action in equitable relief (A) seeking the specific performance by Borrower of the terms and conditions of the Loan Documents, and/or (B) enjoining, abating, or preventing any violation of said terms and conditions, and/or (C) seeking declaratory relief; 6.3.3 Accelerate the Loan and demand immediate full payment of the principal amount outstanding and all accrued interest under the Note as well as any other monies advanced to Borrower by City under the Loan Documents; 6.3.4 Disburse from Loan proceeds any amount necessary to cure any monetary default; 6.3.5 Provide for an offset of any amounts due and amounts incurred in pursuing remedial action against the City’s annual assessment due to the District, as such assessment becomes due. City may treat such offset as a remedy or an advance. 6.3.6 Pursue any other remedy allowed at law or in equity. ARTICLE VII GENERAL PROVISIONS 7.1 BORROWER'S WARRANTIES. Borrower represents and warrants (A) that it has access to professional advice and support to the extent necessary to enable Borrower to fully comply with the terms of the Loan Agreement and to otherwise carry out the Project, (B) that it is duly organized, validly existing and in good standing under the laws of the State of California, (C) that it has the full power and authority to undertake the Project and to execute the Loan Agreement and related agreements, (D) that the persons executing and delivering the Loan Documents are authorized to execute and deliver such document on behalf of Borrower, (E) and (E) that all representations in the Borrower's submissions of materials related to the loan or the annual assessments are true, correct and complete in all material respects and are offered to induce City to make this loan. 7.2 PROPOSITION 218. Borrower shall comply with Proposition 218 as it applies to Borrower’s increase of assessments. 7.3 CONFLICTS OF INTEREST. Borrower covenants that no person who exercises or has exercised any functions or responsibilities with respect to the activities funded pursuant to this contract or who is in a position to participate in a decision-making process or gain inside information with regard to such activities, may obtain a personal or financial interest or benefit from the activity, or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties, during, or at any time after, such person's tenure. Borrower shall exercise due diligence to ensure that the prohibition in this Section is followed. -11- 7.4 TERM OF THIS AGREEMENT. This Loan Agreement shall commence on the date set forth above and remain in full force and effect throughout the term of the loan. 7.5 GOVERNING LAW. The Loan Documents shall be interpreted under and be governed by the laws of the State of California, except for those provisions relating to choice of law or those provisions preempted by federal law. 7.6 STATUTORY REFERENCES. All references in the Loan Documents to particular statutes, regulations, ordinances, or resolutions of the United States, the State of California, or the County of Los Angeles, or the City of Rancho Palos Verdes shall be deemed to include the same statute, regulation, ordinance, or resolution as hereafter amended or renumbered, or if repealed, to such other provisions as may thereafter govern the same subject as the provision to which specific reference was made. 7.7 TIME. Time is of the essence in these Loan Documents. 7.8 CONSENTS AND APPROVALS. Any consent or approval of City or Borrower required under the Loan Documents shall not be unreasonably withheld. Any approval required under the Loan Documents shall be in writing and executed by an authorized representative of the party granting the approval. 7.9 NOTICES, DEMANDS AND COMMUNICATIONS. Formal notices, demands and communications between Borrower and City shall be sufficiently given and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, to the principal offices of Borrower and City as follows: CITY: City of Rancho Palos Verdes 30940 Hawthorne Boulevard Rancho Palos Verdes, CA 90275 Attention: City Manager -12- BORROWER: Abalone Cove Landslide Abatement District 30940 Hawthorne Boulevard Rancho Palos Verdes, CA 90275 Attention: ACLAD and P.O. Box 365 Palos Verdes Peninsula 90274 Attn: ACLAD ___________ 7.10 RELATIONSHIP OF PARTIES. The relationship of Borrower and City for this Project under this Loan Agreement is and at all times shall remain solely that of a debtor and a creditor, and shall not be construed as a joint venture, equity venture, partnership, or any other relationship. City neither undertakes nor assumes any responsibility or duty to Borrower or any third party with respect to the Project, or the Loan. 7.11 ASSIGNMENT AND ASSUMPTION. Borrower shall not assign any of its interests under this Loan Agreement or the Loan Documents to any other party, except as specifically permitted under the terms of the Loan Documents, without the prior written consent of City. Any unauthorized assignment shall be void. 7.12 WAIVER. Any waiver by City of any obligation in these Loan Documents must be in writing. No waiver will be implied from any delay or failure by City to take action on any breach or default of Borrower or to pursue any remedy allowed under the Loan Documents or applicable law. Any extension of time granted to Borrower to perform any obligation under the Loan Documents shall not operate as a waiver or release from any of its obligations under the Loan Documents. Consent by City to any act or omission by Borrower shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for City's written consent to future waivers. 7.13 INTEGRATION. This Loan Agreement and the other Loan Documents, including exhibits, executed by Borrower for the Property, if any, contain the entire agreement of the parties relating to this Project and supersede any and all prior negotiations. 7.14 OTHER AGREEMENTS. Borrower represents that it has not entered into any agreements that are inconsistent with the terms of the Loan Documents. Borrower shall not enter into any agreements that are inconsistent with the terms of the Loan Documents without an express waiver by City in writing. 7.15 AMENDMENTS AND MODIFICATIONS. Any amendments or modifications to the Loan Documents must be in writing, and shall be made only if executed by both Borrower and City. 7.16 SEVERABILITY. Every provision of this Loan Agreement is intended to be severable. If any provision of this Loan Agreement shall be held invalid, illegal, or -13- unenforceable by a court of competent jurisdiction, then the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired. [Signatures on next page.] -14- In witness whereof, the parties have executed this Loan Agreement as of the date first written above. CITY: BORROWER: City of Rancho Palos Verdes ABALONE COVE LANDSLIDE ABATEMENT DISTRICT By: ___________________________ Mayor By: _______________________________ ATTEST: Name: GORDON LEON Title: Chairman _______________________________ City Clerk APPROVED AS TO FORM: _______________________________ Elena Gerli, City Attorney B-1 EXHIBIT “A” The loan amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) will be allocated as follows: • $1,250,000 for four additional wells, system repairs, and optimization. • The remaining balance will be used for fissure filling, surface drainage, and preliminary engineering for Altamira Canyon. B-2 EXHIBIT “B PROMISSORY NOTE $1,500,000 (“Loan Amount”) ______________, 20__ (“Note Date”) FOR VALUE RECEIVED, the undersigned (herein, “Maker” or “Borrower”) hereby promises to pay to the order of the City of Rancho Palos Verdes, a municipal corporation (“Holder” or “City”), at a place designated by Holder, the principal sum of (“Note Amount”), plus any accrued interest. The maximum Note Amount shall not exceed One Million Five Hundred Thousand Dollars ($1,500,000.00). This “Loan” is the result of a loan from City to Maker to assist in the cost of certain projects of stabilizing the Abalone Cove Landslide a sub- slide of the greater Portuguese Bend Landslide Complex in the geographical area of Maker (“Project”) pursuant to a Loan Agreement executed immediately preceding this Promissory Note (“Note”) between City and Maker. The term “Loan” herein shall only refer to the amounts actually paid out by City and any interest thereon, if any, as provided herein. Except as otherwise provided herein, the defined terms used in this Note shall have the same meaning as set forth in the Agreement. 1. Purpose of Loan. Pursuant to the terms and conditions of the Loan Agreement, the Holder has contributed the Loan amount for the implementation and/or construction of the Project. The Holder accepts this Note as evidence of the Loan. 2. Loan Amount. The maximum principal amount of the Loan shall not exceed One Million Five Hundred Thousand Dollars ($1,500,000.00). The amount of the Loan shall be a draw down loan starting from zero and will increase with each disbursement on the Loan, with each disbursement to be agreed upon by City and Maker as to amount and timing. Repayment of the Note shall include interest payments at the rate of two and a half percent (2.5%) per year on the Note. Payment of the Note shall be as described in Section 4. 3. Prepayment. Maker may prepay the outstanding balance of the Note, in whole or in part, at anytime without penalty. 4. Term of Fund Loan; Repayment. The Loan shall be amortized over a twelve (12) year period commencing with the initial disbursement under the Loan. Payments on the Loan shall be in the amounts and at such times B-3 as indicated on the amortization schedules prepared by City and amended as each additional disbursement under the Loan is made. Payments shall be due on December 1 of each year, commencing on December 1, 2025, and continuing on each subsequent December 1 thereafter. All accrued and unpaid interest and all unpaid principal shall be due and payable on December 1 of the twelfth (12th) year following the initial draw down under the Note. An amortization schedule for the Loan shall be prepared by the Finance Director of the City as if the total amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) had been disbursed at one time shall be attached to the Loan Agreement and this Note. The amortization schedule shall be updated by the Finance Director at the time of the initial disbursement and each subsequent disbursement thereafter reflecting all disbursements on the Loan and shall replace the prior amortization schedule. In all events the term shall remain twelve (12) years from the initial disbursement. The updated amortization schedules shall be acknowledged by the Chairman of the Board of the Maker. The initial and updated amortization schedules shall be attached hereto as Exhibit “C”. The City retains the right, in its sole discretion, to forgo the physical payment of that portion of its annual assessment payable to the Borrower in an amount equal to the next payment to be made by Borrower under the Loan per the then applicable amortization schedule 5. Default; Cross-Default; Acceleration. 5.1 In addition to Maker’s failure to perform the requirements of this Note, Maker shall also be in default of this Note if Maker violates or fails to perform any provision of the Loan Agreement. 5.2 Default by Maker of this Note or of the Loan Agreement, shall constitute a default of this Note and all of the Loan Agreement. 5.3 In the event Maker fails to perform hereunder or under the Loan Agreement, for a period of thirty (30) days after the date of written notice from Holder that such performance was due, Maker shall be in default of this Note. Prior to exercising any of its remedies hereunder, City shall give Maker written notice of such default, and Maker shall thereafter have thirty (30) days to cure such default; provided, however, that if the default hereunder is solely as a result of a default under the Loan Agreement, the default, notice, and cure provisions of the applicable document shall apply. If Maker cures a default within the cure period set forth in the applicable document, Maker shall be deemed to have also cured that default under this Note. If Maker does not cure a default within the cure period, Maker shall be deemed in default under this Note and the Loan Agreement. In the event Maker is deemed in default under this Note, and has not cured the default within the time set forth in the applicable notice of default, Holder may, at its option, declare this Note and the entire obligations hereby evidenced immediately due and payable and collectible then or thereafter as Holder may elect, regardless of the date of maturity. Upon such occurrence, the balance of the Note will be due and owing together with interest which shall accrue from the date of the default at five percent (5%) per year. In addition, City may advance and/or credit funds from City’s annual assessment due to ACLAD for the default and any interest costs. At the time of such advance, City may, in B-4 its discretion determine that such amount is an advance and the event of default continues to accrue or City may determine that the credit cures such default. 6. Collection Costs; Attorneys’ Fees. If, because of any event of default under this Note or the Loan Agreement, any attorney is engaged by Holder, including the City Attorney, to enforce or defend any provision of this instrument, whether or not suit is filed hereon, then Maker shall pay upon demand reasonable attorneys’ fees, expert witness fees and all costs so incurred by Holder together with interest thereon until paid at the applicable rate of interest payable hereunder, as if such fees and costs had been added to the principal owing hereunder. 7. Financial and Audit Reports. Borrower shall submit quarterly financial reports to the City due on the 15th day of the first month of the following reporting quarter and shall provide the City an annual financial audit report on December 1, commencing on December 1, 2025 for its financial transactions for FY 2023-24. Prior to issuance of the first draw down, the Borrower shall work with the Director of Finance to develop a 10-Year Financial Model outlining estimated Sources of Revenues and Expenditures. The Financial Model tool shall assist in upholding Borrower’s repayment obligations to the City and in identifying financial challenges early, if any, allowing for appropriate measures to be taken. The Financial Model shall be completed by July 31, 2024. 8. Waivers by Maker. Maker and all endorsers, guarantors and persons liable or to become liable on this Note waive presentment, protest and demand, notice of protest, demand and dishonor and nonpayment of this Note and any and all other notices or matters of a like nature, and consent to any and all renewals and extensions near the time of payment hereof and agree further that at any time and from time to time without notice, the terms of payment herein may be modified between Holder and Maker. 9. Severability. The unenforceability or invalidity of any provision or provisions of this Note as to any persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 10. Notices. All notices, demands, requests, elections, approvals, disapprovals, consents or other communications given under this Note shall be in writing and shall be given by personal delivery, certified mail, return receipt requested, or overnight guaranteed delivery service and addressed as follows: B-5 If to Holder: City of Rancho Palos Verdes 30940 Hawthorne Boulevard Rancho Palos Verdes, CA 90275 Attn: City Manager If to Maker: ACLAD 30940 Hawthorne Boulevard Rancho Palos Verde, CA 90274 Attention: ACLAD And P.O. Box 365 Palos Verdes Peninsula 90274Attention: ACLAD . Notices shall be effective upon the earlier of receipt or three days after the notice is placed in the mail. Each party shall promptly notify the other party of any change(s) of address to which notice shall be sent pursuant to this Note. 11. Attorneys' Fees. If this Note is not paid when due or if any Event of Default occurs, Maker promises to pay all costs of enforcement and collection, including but not limited to, reasonable attorneys' fees, whether or not any action or proceeding is brought to enforce the provisions hereof. 12. Modifications. Neither this Note nor any term hereof may be waived, amended, discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by Maker and Holder. No delay or omission on the part of Holder in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note. 13. No Waiver by Holder. No waiver of any breach, default or failure of condition under the terms of this Note shall be implied from any failure of the Holder to take action, or any delay be implied from any failure by the Holder in taking action, with respect to such breach, default or failure from any prior waiver of any similar or unrelated breach, default or failure. 14. Nonassignability. Maker may not transfer, assign, or encumber this Note in any manner without the prior, express, written authorization of Holder, which may be given or withheld by Holder in Holder’s sole and absolute discretion. It shall be deemed reasonable for Holder to refuse authorization for any reason or no stated reason. Holder may freely transfer, assign, or encumber Holder’s interest in this Note in any manner, at Holder’s sole discretion. B-6 15. Governing Law. This Note has been executed and delivered by Maker in the State of California and is to be governed and construed in accordance with the laws thereof. Any litigation arising in connection with this Note shall be instituted in a court within the County of Los Angeles, California. 16. Time of Essence. Time is of the essence in the performance of the obligations and provisions set forth in this Note. B-7 IN WITNESS WHEREOF, the parties have executed this Note as of the date first above written. “MAKER” ABALONE COVE LANDSLIDE ABATEMENT DISTRICT By: Its: Chairman By: Its: Vice-Chairman C-1 EXHIBIT “C” Loan Amortization Schedule Loan Summary (ACLAD) Loan amount $1,500,000 Scheduled payment Annual interest rate 2.50%Scheduled number of payments Loan period in years 12 Actual number of payments Number of payments per year 1 Total early payments Start date of loan 12/1/2025 Total interest Payment Number Payment Date Beginning Balance Scheduled Payment Total Payment Principal Interest Ending balance Cumulative interest 1 12/1/2025 $1,500,000 $146,231 $146,231 $108,731 $37,500 $1,391,269 $37,500 2 12/1/2026 $1,391,269 $146,231 $146,231 $111,449 $34,782 $1,279,820 $72,282 3 12/1/2027 $1,279,820 $146,231 $146,231 $114,235 $31,996 $1,165,585 $104,277 4 12/1/2028 $1,165,585 $146,231 $146,231 $117,091 $29,140 $1,048,494 $133,417 5 12/1/2029 $1,048,494 $146,231 $146,231 $120,018 $26,212 $928,476 $159,629 6 12/1/2030 $928,476 $146,231 $146,231 $123,019 $23,212 $805,457 $182,841 7 12/1/2031 $805,457 $146,231 $146,231 $126,094 $20,136 $679,363 $202,978 8 12/1/2032 $679,363 $146,231 $146,231 $129,247 $16,984 $550,116 $219,962 9 12/1/2033 $550,116 $146,231 $146,231 $132,478 $13,753 $417,638 $233,715 10 12/1/2034 $417,638 $146,231 $146,231 $135,790 $10,441 $281,849 $244,155 11 12/1/2035 $281,849 $146,231 $146,231 $139,184 $7,046 $142,664 $251,202 12 12/1/2036 $142,664 $146,231 $142,664 $139,097 $3,567 $0 $254,768 $146,231 12 1 $254,768 D-1 EXHIBIT “D” Construction schedule is to be determined by the ACLAD Board and the City after receiving City Council’s approval of the financial assistance package. Additional requirements are included in Section 4.4 Schedule of Performance; Progress Reports. 01203.0023/982387.1 LOAN AGREEMENT Between CITY OF RANCHO PALOS VERDES and KLONDIKE CANYON GEOLOGIC HAZARD ABATEMENT DISTRICT (Klondike Canyon Subslide of Portuguese Bend Landslide Stabilization Project) LOAN AGREEMENT (Portuguese Bend Landslide Abatement Project)) This Loan Agreement is made as of this ___ day of ______, 2024, by and between the City of Rancho Palos Verdes (“City”) and the Klondike Canyon Geologic Hazard Abatement District (“Borrower”). RECITALS A. Borrower is a geologic hazard abatement district duly organized pursuant to Public Resources Code Sections 26500 et seq. (the “Law”). B. Borrower desires to take certain steps mitigate and stabilize the effects of the Portuguese Bend Landslide within its area, as described herein on Exhibit “A” attached hereto (the “Project”). C. Due to the recent rainstorms in Southern California which affected the landslide, Borrower needs to commence work on a portion of the Project to mitigate further detrimental effects on the landslide. D. Borrower has requested that the City assist the Borrower and loan it money to commence a portion of the Project. E. Pursuant to the Law, the City is permitted to provide financial assistance to the District. F. The financial assistance effectuates a public purpose as the Project is part of the overall stabilization of the Portuguese Bend Landslide within the City including Palos Verdes Drive South which is a major arterial roadway supporting approximately 16,000 daily trips. G. As described herein, the City desires to loan funds to Borrower to allow Borrower to commence and continue with portions of the Project. NOW THEREFORE, IN CONSIDERATION of the mutual agreements, obligations, and representations, and in further consideration for the making of the Loan (described below), Borrower and City hereby agree as follows: ARTICLE I DEFINITIONS The following terms have the meanings and content set forth in this section wherever used in this Loan Agreement, attached Exhibits, or documents incorporated into this Loan Agreement by reference. 1.1 “AMORTIZATION SCHEDULE” means the total amount and due date of each payment due pursuant to this Loan Agreement and the Promissory Note as well as the portion of -2- Principal and Interest contained in each payment. The Amortization Schedule shall be attached to the Loan Agreement as Exhibit “C”. 1.2 “BORROWER” is the Klondike Geologic Hazard Abatement District, a geologic hazard abatement district duly organized pursuant to Public Resources Code Sections 26500 et seq. 1.3 “CITY” is the City of Rancho Palos Verdes, California. 1.4 “CONSTRUCTION SCHEDULE”, the best guess as to the timing of the phases of the Project as shown in the attached Exhibit “D”. 1.5 “COUNTY” means the County of Los Angeles, political subdivision of the State of California. 1.6 “DRAW” or “DRAW DOWN” means each disbursement of funds to Borrower pursuant to this Loan Agreement. 1.7 “FINANCE DIRECTOR” means the Finance Director of the City. 1.8 “LOAN” means the contribution of funds to help finance the Project from the City in an amount not to exceed One Million Nine Hundred Seventeen Thousand and Five Hundred Dollars ($1,917,500.00). 1.9 “LOAN DOCUMENTS” means collectively this Loan Agreement and the Note, as they may be amended, modified, or restated from time to time, along with all exhibits and attachments to these documents. 1.10 “NOTE” means the promissory note executed by the Borrower in favor of City in the amount of the Loan to evidence the Loan of City funds in connection with the Project, as well as any amendments to, modifications of, or restatements of said promissory note, substantially in the form attached hereto as Exhibit “B.” 1.11 “PROJECT” means the certain work described on Exhibit “A” hereto related to the mitigation of the effects of the Portuguese Bend Landslide in the area of Borrower as described in Exhibit “A”, attached hereto.. ARTICLE II TERMS OF THE LOAN On and subject to the terms and conditions of the Loan Documents, City agrees to make and Borrower agrees to accept a loan with the following terms: 2.1 FUNDS ON LOAN. The total principal amount of the Loan shall not exceed One Million Nine Hundred Seventeen Thousand and Five Hundred Dollars ($1,917,500.00) (“Maximum Amount”). The Loan shall consist of one or more disbursements of funds to Borrower by City (each disbursement a “Draw Down”) pursuant to the terms of Section 3.2. Each Draw Down shall constitute a portion of the Loan. -3- 2.1.1 TERM OF FUNDS ON LOAN; REPAYMENT. The principal and all current and accrued interest on the Loan and Note shall be due and payable commencing on the first drawdown date on the Loan in accordance with the terms hereof, and on each subsequent draw down of principal as described hereunder. The maximum term of the loan shall be twelve (12) years from the first draw down date. Payments of principal and interest shall be made annually on December 1,of each year, commencing December 1, 2025. A. The Finance Director will prepare an initial amortization schedule of the Loan based subsequent to each Draw Down and attach that amortization schedule to this Loan Agreement as Exhibit “C”. As the Draws are actually made, the Finance Director shall prepare a revised amortization schedule and that revised amortization schedule bearing the date of its preparation shall replace the previous Exhibit “C” to this Loan Agreement. Notwithstanding the modification of the amortization statement to reflect the timing of the Draws, the term of the Loan shall remain 12 years from the initial disbursement. Each amortization schedule shall be approved, in writing by the Finance Director and the Chairman of the Borrower. B. The City retains the right, in its sole discretion, to forgo the physical payment of that portion of its annual assessment payable to the Borrower in an amount equal to the next payment to be made by Borrower under the Loan per the then applicable amortization schedule. 2.1.2 EVIDENCE. Borrower shall evidence and secure its obligation to repay the Loan of by executing the Promissory Note, in substantially the form attached hereto as Exhibit “B”. 2.2 INTEREST. The Note shall bear interest on the unpaid principal amount of the loan at any time at a rate of 2.5 percent (2.5%) per year from the date of the initial disbursement until the Loan is repaid in full. 2.3 USE OF FUNDS. Loan proceeds may be used only for the purpose of constructing the Project as described within Exhibit “A”, which purposes include, but are not limited to, the costs of required professionals under this Loan Agreement, including a professional engineer, construction inspector, a project bookkeeper/accountant and Builder’s Risk insurance premiums. Operational expenditures including administrative costs, legal and or litigation costs, and ongoing maintenance are not permitted uses of the loan. 2.4 CONSTRUCTION OF THE PROJECT. Borrower hereby agrees to use the Loan to assist with the costs to develop the Project as described in Exhibit “A”. Borrower shall also carry out the Project in compliance with all applicable State and local law and regulations promulgated thereunder. 2.5 DEVELOPMENT OF THE PROJECT. Borrower shall commence and diligently prosecute the completion of the Project within the time provided and otherwise in strict compliance with this Agreement. Construction of the Project shall commence within ________ days of the initial Draw as well as subsequent to any additional Draws and all phases of the Project shall be completed by ____. [Board needs to discuss] -4- 2.6 LIMIT ON ASSISTANCE. Except as is expressly provided for in this Agreement, the City shall have no obligation to provide Borrower with additional financial assistance, to make any monetary or financial contribution toward the Project, to pay any development costs, or to carry-out or complete the Project. Notwithstanding the previous sentence, the City Council may, at its discretion, offer in-kind assistance such as professional services to the Borrower and contract with the Borrower with respect thereto. 2.7 GRANT FUNDS. KCLAD is actively pursuing and identifying additional sources of funding, including Congressional Directed Spending and FEMA grants which are directly tied to the timely passage of the federal fiscal year budget. The federal funds will be a significant supplement to the KCLAD operating budget thereby possibly reducing or even eliminating the amount of the Loan required to complete the Projects. ARTICLE III LOAN DISBURSEMENT AND REPAYMENT 3.1 CONDITIONS PRECEDENT TO DISBURSEMENT. City shall not be obligated to make any disbursements of the Loan proceeds or take any other action under the Loan Documents unless the following conditions precedent are satisfied prior to the disbursement of the Loan and by the dates set forth herein, as may be extended by the City Manager: 3.1.1 Borrower has provided and City has received a certified Engineer’s Report (“Report”), in connection with the portion of the Project being undertaken, which Report purports to describe that the work being undertaken will have the effect of stabilizing the Landslide for which disbursements will be made from this Loan. 3.1.2 Borrower has provided, and City has received a report on the Project for the landscape mitigation measures which has been prepared by licensed geotechnical engineering company. The report shall be completed by ____. [Board to discuss] 3.1.3 Borrower has provided to the City the plans and specifications certified to meet all applicable codes and standards by a licensed Professional Engineer. 3.1.4 Borrower has deployed a qualified construction inspector on all days that construction is performed, to assure that construction is performed in accordance with plans and specifications; Borrower shall submit daily construction reports to the City detailing all activities and conditions. 3.1.5 Borrower has delivered to City executed contracts and schedules for the portion of the Project being undertaken, and all required proof of insurance in a form acceptable to City; and 3.1.6 Borrower has received all approvals necessary to commence construction of the Project. 3.1.7 The City has received a resolution of the Borrower approving the Loan Agreement and the City has approved the Loan Agreement. -5- 3.1.8 Borrower has worked with the City to develop a 10-Year Financial Model outlining estimated Sources of Revenues and Expenditures. The Financial Model tool shall assist in upholding Borrower’s repayment obligations to the City and in identifying financial challenges early, if any, allowing for appropriate measures to be taken. The Financial Model shall be completed by July 31, 2024. The Loan funds are to be used by Borrower for the construction of the Project and shall be disbursed as described in Sections 3.2 through 3.3. Conditions 2.5 and 3.1.2 may, upon approval of the City Manager, may be continued to a date certain following a loan disbursement. 3.2 DISBURSEMENT OF LOAN. The Loan shall be disbursed by City to Borrower from time to time at such times and amounts as contained within the Construction Schedule in Exhibit “D” and shall not exceed the Maximum Amount or the amount required for the Project, if lower. Disbursements shall occur as follows: (i) Borrower may request a draw down on amounts necessary to pay City–approved costs, which draw, if requested, shall be funded, provided that Borrower has submitted all required documentation to the City in connection with such draw (as further described below) and (ii) after construction has commenced, construction disbursements shall be disbursed to contractors or the District following receipt of invoices and contracts relating to the work for which a disbursement is requested, also pursuant to 3.3. 3.2.1 ENGINEERING; CONSTRUCTION COSTS. City agrees to provide the Loan to Borrower, to provide financial assistance to Borrower for certain Project costs such that the Draw Downs on the Loan shall be in phases or from time to time. Soft costs (excluding the costs of the professional engineer, construction inspector, a project bookkeeper/accountant and Builder’s Risk Insurance premiums) may not be paid for from the Draw Downs of the Loan unless agreed to by the City Manager. 3.2.2 APPROVAL AND PAYMENT. Upon receipt of the Application for Disbursement the City Finance Director and City Engineer or Public Works Director shall review the same and shall approve the same subject to such exceptions as the City deems reasonably necessary and appropriate under the then current circumstances. Such approval may not unreasonably be withheld or delayed. The City shall pay, or cause to be paid, any approved disbursements within twenty (20) days following the City's receipt of the corresponding complete Application for Disbursement. In addition, on or about the ___of each month, a City representative , shall attend a monthly job site inspection, conducted by the Borrower, to verify that the portion of the application for disbursement is complete. 3.3 APPLICATIONS FOR DISBURSEMENT. From time to time after execution of this Loan Agreement and continuing until all of the Loan has been disbursed, subject to the limitations of Section 3.2, Borrower may submit to the City an "Application for Disbursement." Each Application for Disbursement shall include: 3.3.1 A written, itemized statement, signed by a representative of the Borrower which sets forth: (i) a description of the work performed, being performed, or to be performed, -6- material supplied, and/or costs incurred or due for which disbursement is requested; and (ii) the total amount incurred, expended and/or due for the requested disbursement. Back up documentation shall be presented to substantiate the disbursement request, including contracts, invoices, etc. All moneys applied for and disbursed pursuant to this Section shall be applied only for the corresponding improvements and the statement(s) by the representative of the Borrower shall so affirm, in a writing signed under penalty of perjury. 3.3.2 Certification that items in the Application for Disbursement have not been subject to a previous request and that there are no mechanics liens in connection with the work or that upon payment, a release of mechanics lien shall be made for such progress payment and that upon the final payment, an unconditional waiver and release shall be made. 3.3.3 Certification that in completing work pursuant to this Section, the Borrower has complied or will comply with all applicable laws or is complying with all applicable laws. Each Application for Disbursement by the Borrower shall constitute a representation and warranty by the Borrower that all work encompassed by the Application has been or will be accomplished in accordance with sound construction practices and laws, and that the Borrower is in compliance with all of the provisions of this Agreement. Review by the City of any Application For Disbursement, document invoice, engineer’s report, or other item required herein is for the purpose of administering the loan under this Agreement. The City is not responsible for any of the work and does not, by its review, intend to take responsibility for the appropriateness, quality or standards or anything else related to the work. 3.4. CITY CREATED ACCOUNT. The City shall create a separate account in which it shall record the loan/note proceeds described herein and from which it shall make disbursements to pay Borrower or Borrower’s contractors related to the Note upon approval of the Borrower’s Application for Disbursement. ARTICLE IV CONSTRUCTION OF THE PROJECT; RELATED COVENANTS 4.1 RECORDS. Borrower shall be accountable to City for all funds disbursed to Borrower pursuant to the Loan Documents and agrees to maintain records that accurately and fully show the date, amount, purpose, and payee of all expenditures drawn from Loan funds, and to keep all invoices, receipts, and other documents related to expenditures from said Loan funds for not less than the term of the Loan. Records must be kept accurate and current. Borrower shall provide such records to City upon request of City. City shall notify Borrower of any records it deems insufficient. Borrower shall have seven (7) calendar days from the date of said notice to correct any deficiency in the records specified by City in said notice, or, if more than seven (7) days shall be reasonably necessary to correct the deficiency, Borrower shall begin to correct the deficiency within seven (7) days and correct the deficiency as soon as reasonably possible. Borrower shall promptly comply with all requirements or conditions of the Loan Documents relating to notices, extensions and other events required to be reported or requested. Borrower shall promptly supply, upon the request of City, any and all information and -7- documentation which involves the development of the Project. Borrower shall provide City with all records and books requested by City within one day of such request. Borrower shall provide that City shall have access to quarterly financial reports, including Balance Sheets, Statement of Revenues and Expenditures, Detailed Accounting Reports of Expenditures and Revenues. Borrower shall provide such items to City quarterly on the 15 days of a subsequent quarter for the previous quarter, commencing December 15, 2024. Borrower shall provide to the City monthly updates of current expenditures, expected future expenditures and progress reports on the Project. 4.2 AUDITS. Borrower shall make available for examination to City at reasonable intervals throughout the term of this Loan and during normal business hours all books, accounts, reports, files, and other papers or property with respect to all matters covered by these Loan Documents, and shall permit City to audit, examine, and make excerpts or transcripts from such records. City may make audits of any conditions relating to this Loan. Borrower shall provide the City with its annual financial audit report by Dember 1 of each year, commencing on December 1, 2025 for its financial transactions for FY 2023-24. 4.3 BORROWER RESPONSIBILITIES DURING WORK. The Borrower shall be solely responsible for all actions necessary for the construction of work on the Project and cause all construction of the Project to be performed in accordance in accordance with all other applicable laws and regulations. The cost of constructing all of the improvements or work required to be done on the Project shall be borne by Borrower. Borrower acknowledges and agrees that the Project would be considered to be a "public work" "paid for in whole or in part out of public funds," as described in California Labor Code Section 1720 such that Borrower shall pay prevailing wages in connection with the construction of the Project. Accordingly, Borrower shall indemnify, defend and hold the City and the City Council and City employees and City consultants harmless from and against any all liability, loss, damage, costs, or expenses (including reasonable attorneys’ fees and court costs) arising from or as a result of any action or determination that Borrower’s construction of the Project failed to comply with any applicable prevailing wage laws 4.4 SCHEDULE OF PERFORMANCE; PROGRESS REPORTS. Borrower shall begin and complete all construction and/or work in accordance with the Project schedule to be provided by Borrower to the City by Board to Discuss. Once construction is commenced, it shall be diligently pursued to completion, and shall not be abandoned for more than thirty (30) consecutive days. Borrower shall keep the City informed of the progress of construction and shall submit monthly written reports of the progress of the construction to the City in the form required by the City. Borrower shall also provide monthly reports on all expenditures on the Project. ARTICLE V INDEMNITY AND INSURANCE 5.1 GENERAL INDEMNITY. To the full extent permitted by law, Borrower expressly agrees to and shall indemnify, defend, release, and hold City and City and their officers, -8- officials, agents, servants, employees, attorneys and contractors harmless from and against, any claim, liability, loss, damage, entry, cost, or expense (including, but not limited to, attorneys’ fees, expert fees, and court costs) which arises out of or is in any way connected with Borrower’s construction of and/or work on the Project and any act, omission or item related to or arising out of the Loan Documents. City shall not be responsible for any acts, errors or omissions of any person or entity and their respective officers, agents, servants, employees or contractors. The parties expressly agree that the obligations of Borrower under this Section shall survive the expiration or early termination of the Agreement. 5.2 INSURANCE. Prior to the commencement of any construction by Borrower on the Project, Borrower or its contractors shall procure and maintain, at its sole cost and expense, in a form, amount and content satisfactory to City and appropriate for the type of work, during the entire term of such entry or construction, insurance satisfactory to the work being performed on the Project, including but not limited to casualty insurance, workers compensation, and Builders Risk insurance. All the policies of insurance, [except the Builder’s Risk insurance], shall be primary insurance and shall name City, City, and their officers, employees, and agents as additional insureds. The insurer shall waive all rights of subrogation and contribution it may have against City, and their officers, employees and agents and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days prior written notice to City and City. In the event any of said policies of insurance are cancelled, Borrower shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section to the City. No work or services under this Agreement shall commence until the Borrower has provided City with Certificates of Insurance or appropriate insurance binders evidencing the above insurance coverages and said Certificates of Insurance or binders are approved by City. The Borrower agrees that the provisions of this Section shall not be construed as limiting in any way the extent to which the Borrower may be held responsible for the payment of damages to any persons or property resulting from the Borrower’s activities or the activities of any person or persons for which the Borrower is otherwise responsible. 5.3 NON-LIABILITY OF OFFICIALS, EMPLOYEES AND AGENTS. No officials, employees and agents of City shall be personally liable to Borrower for any obligation created under the terms of these Loan Documents. 5.4 RIGHTS OF ACCESS. Representatives of the City shall have the reasonable right to access the Project without charges or fees, at any time during normal construction hours during the period of construction and upon reasonable notice to Borrower, for the purpose of assuring compliance with this Agreement, including but not limited to the inspection of the construction work being performed by or on behalf of Borrower. Such representatives of City shall be those who are so identified in writing by the City Manager, City Engineer, or Public Works Director. ARTICLE VI DEFAULT AND REMEDIES -9- 6.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall constitute an “Event of Default” under this Loan Agreement: 6.1.1 Monetary. (A) Borrower's failure to pay when due any sums payable under the Note and Loan; and (B) Borrower's use of Loan funds for costs other than approved costs or for uses inconsistent with other terms and restrictions in the Loan Documents; 6.1.2 General Performance of Loan Obligations. Any substantial breach by Borrower beyond applicable notice and cure periods of any material obligations on Borrower imposed in the Loan Document. 6.1.3 Representations and Warranties. A determination by City that any of Borrower’s representations or warranties made in the Loan Documents, or any certificates, documents, or schedules supplied to City by Borrower were untrue in any material respect when made, or that Borrower concealed or failed to disclose a material fact from City. 6.1.4 Damage to Property. Material damage or destruction of the Project by fire or other casualty, if Borrower does not take steps to reconstruct the Project; or 6.1.5 Bankruptcy, Dissolution, and Insolvency. Borrower's: (A) filing for bankruptcy, dissolution, or reorganization, (B) making a general assignment for the benefit of creditors; (C) applying for the appointment of a receiver, trustee, custodian, or liquidator; (D) insolvency; or (E) failure, inability or admission in writing of its inability to pay its debts as they become due. 6.2 NOTICE OF DEFAULT AND OPPORTUNITY TO CURE. For all Events of Default, City shall give written notice to Borrower of any Event of Default by specifying: (a) the nature of the event or deficiency giving rise to the Default, (b) the action required to cure the deficiency, if an action to cure is possible, and (c) a date, which shall not be less than thirty (30) days from the date of receipt of the notice or the date the notice was refused, by which such action to cure must be taken or if a cure is not possible within thirty (30) days, to begin such cure and diligently prosecute such cure to completion which shall, in any event, not exceed ninety (90) days after the date of receipt of the notice to cure. The City has the sole discretion to determine whatever additional reasonable time is needed to cure. Following an Event of Default, interest shall accrue at five percent rate (5%). 6.3 CITY'S REMEDIES. Upon the happening of an Event of Default by Borrower and a failure to cure said Event of Default within the time specified in Section 6.2 above, City's obligation to disburse Loan proceeds shall terminate, and City may also, in addition to other rights and remedies permitted by the Loan Documents or applicable law, proceed with any or all of the following remedies in any order or combination City may choose in its sole discretion and/or any other remedy provided by Law or equity: 6.3.1 Terminate this Loan Agreement, in which event the entire principal amount outstanding and all accrued interest under the Note as well as any other monies advanced to Borrower by City under the Loan Documents including administrative costs, shall immediately become due and payable at the option of City; -10- 6.3.2 Bring an action in equitable relief (A) seeking the specific performance by Borrower of the terms and conditions of the Loan Documents, and/or (B) enjoining, abating, or preventing any violation of said terms and conditions, and/or (C) seeking declaratory relief; 6.3.3 Accelerate the Loan and demand immediate full payment of the principal amount outstanding and all accrued interest under the Note as well as any other monies advanced to Borrower by City under the Loan Documents; 6.3.4 Disburse from Loan proceeds any amount necessary to cure any monetary default; 6.3.5 Provide for an offset of any amounts due and amounts incurred in pursuing remedial action against the City’s annual assessment due to the District, as such assessment becomes due. City may treat such offset as a remedy or an advance. 6.3.6 Pursue any other remedy allowed at law or in equity. ARTICLE VII GENERAL PROVISIONS 7.1 BORROWER'S WARRANTIES. Borrower represents and warrants (A) that it has access to professional advice and support to the extent necessary to enable Borrower to fully comply with the terms of the Loan Agreement and to otherwise carry out the Project, (B) that it is duly organized, validly existing and in good standing under the laws of the State of California, (C) that it has the full power and authority to undertake the Project and to execute the Loan Agreement and related agreements, (D) that the persons executing and delivering the Loan Documents are authorized to execute and deliver such document on behalf of Borrower, (E) and (E) that all representations in the Borrower's submissions of materials related to the loan or the annual assessments are true, correct and complete in all material respects and are offered to induce City to make this loan. 7.2 PROPOSITION 218. Borrower shall comply with Proposition 218 as it applies to Borrower’s increase of assessments. 7.3 CONFLICTS OF INTEREST. Borrower covenants that no person who exercises or has exercised any functions or responsibilities with respect to the activities funded pursuant to this contract or who is in a position to participate in a decision -making process or gain inside information with regard to such activities, may obtain a personal or financial interest or benefit from the activity, or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties, during, or at any time after, such person's tenure. Borrower shall exercise due diligence to ensure that the prohibition in this Section is followed. 7.4 TERM OF THIS AGREEMENT. This Loan Agreement shall commence on the date set forth above and remain in full force and effect throughout the term of the loan. -11- 7.5 GOVERNING LAW. The Loan Documents shall be interpreted under and be governed by the laws of the State of California, except for those provisions relating to choice of law or those provisions preempted by federal law. 7.6 STATUTORY REFERENCES. All references in the Loan Documents to particular statutes, regulations, ordinances, or resolutions of the United States, the State of California, or the County of Los Angeles, or the City of Rancho Palos Verdes shall be deemed to include the same statute, regulation, ordinance, or resolution as hereafter amended or renumbered, or if repealed, to such other provisions as may thereafter govern the same subject as the provision to which specific reference was made. 7.7 TIME. Time is of the essence in these Loan Documents. 7.8 CONSENTS AND APPROVALS. Any consent or approval of City or Borrower required under the Loan Documents shall not be unreasonably withheld. Any approval required under the Loan Documents shall be in writing and executed by an authorized representative of the party granting the approval. 7.9 NOTICES, DEMANDS AND COMMUNICATIONS. Formal notices, demands and communications between Borrower and City shall be sufficiently given and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, to the principal offices of Borrower and City as follows: CITY: City of Rancho Palos Verdes 30940 Hawthorne Boulevard Rancho Palos Verdes, CA 90275 Attention: City Manager -12- BORROWER: Klondike Canyon Geologic Hazard Abatement District 30940 Hawthorne Boulevard Rancho Palos Verdes, CA 90275 Attention: KCLAD and P.O. Box 3675 Palos Verdes Peninsula 90274 Attn: KCLAD 7.10 RELATIONSHIP OF PARTIES. The relationship of Borrower and City for this Project under this Loan Agreement is and at all times shall remain solely that of a debtor and a creditor, and shall not be construed as a joint venture, equity venture, partnership, or any other relationship. City neither undertakes nor assumes any responsibility or duty to Borrower or any third party with respect to the Project, or the Loan. 7.11 ASSIGNMENT AND ASSUMPTION. Borrower shall not assign any of its interests under this Loan Agreement or the Loan Documents to any other party, except as specifically permitted under the terms of the Loan Documents, without the prior written consent of City. Any unauthorized assignment shall be void. 7.12 WAIVER. Any waiver by City of any obligation in these Loan Documents must be in writing. No waiver will be implied from any delay or failure by City to take action on any breach or default of Borrower or to pursue any remedy allowed under the Loan Documents or applicable law. Any extension of time granted to Borrower to perform any obligation under the Loan Documents shall not operate as a waiver or release from any of its obligations under the Loan Documents. Consent by City to any act or omission by Borrower shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for City's written consent to future waivers. 7.13 INTEGRATION. This Loan Agreement and the other Loan Documents, including exhibits, executed by Borrower for the Property, if any, contain the entire agreement of the parties relating to this Project and supersede any and all prior negotiations. 7.14 OTHER AGREEMENTS. Borrower represents that it has not entered into any agreements that are inconsistent with the terms of the Loan Documents. Borrower shall not enter into any agreements that are inconsistent with the terms of the Loan Documents without an express waiver by City in writing. 7.15 AMENDMENTS AND MODIFICATIONS. Any amendments or modifications to the Loan Documents must be in writing, and shall be made only if executed by both Borrower and City. 7.16 SEVERABILITY. Every provision of this Loan Agreement is intended to be severable. If any provision of this Loan Agreement shall be held invalid, illegal, or unenforceable -13- by a court of competent jurisdiction, then the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired. [Signatures on next page.] -14- In witness whereof, the parties have executed this Loan Agreement as of the date first written above. CITY: BORROWER: City of Rancho Palos Verdes KLONDIKE CANYON GEOLOGIC ABATEMENT DISTRICT By: ___________________________ Mayor By: _______________________________ ATTEST: Name: Steve Cummins Title: Chairman _______________________________ City Clerk APPROVED AS TO FORM: _______________________________ Elena Gerli, City Attorney A-1 EXHIBIT “A” The maximum loan amount of One Million Nine Hundred Seventeen Thousand and Five Hundred Dollars ($1,917,500.00) is to be utilized for Steps 1-3 of the Stabilization Project (Entire project is estimated at $5.4 million): o $153K Step 1 - install the temp 16" flex pipe first & hold off on the permanent HDPE V-Ditch. o $765K Step 2 - install 2 of the 3 deep water pumps and the 1 observation well. o $1M Step 3 - fissure filling and earth removal at the Portugues Bend/Klondike Canyon slide interface. B-1 EXHIBIT “B PROMISSORY NOTE $1,917,500 (“Loan Amount”) ______________, 20__ (“Note Date”) FOR VALUE RECEIVED, the undersigned (herein, “Maker” or “Borrower”) hereby promises to pay to the order of the City of Rancho Palos Verdes, a municipal corporation (“Holder” or “City”), at a place designated by Holder, the principal sum of (“Note Amount”), plus any accrued interest. The maximum Note Amount shall not exceed One Million Nine Hundred Seventeen Thousand and Five Hundred Dollars ($1,917,500.00). This “Loan” is the result of a loan from City to Maker to assist in the cost of certain projects of stabilizing the Abalone Cove Landslide a sub-slide of the greater Portuguese Bend Landslide Complex in the geographical area of Maker (“Project”) pursuant to a Loan Agreement executed immediately preceding this Promissory Note (“Note”) between City and Maker. The term “Loan” herein shall only refer to the amounts actually paid out by City and any interest thereon, if any, as provided herein. Except as otherwise provided herein, the defined terms used in this Note shall have the same meaning as set forth in the Agreement. 1. Purpose of Loan. Pursuant to the terms and conditions of the Loan Agreement, the Holder has contributed the Loan amount for the implementation and/or construction of the Project. The Holder accepts this Note as evidence of the Loan. 2. Loan Amount. The maximum principal amount of the Loan shall not exceed One Million Nine Hundred Seventeen Thousand and Five Hundred Dollars ($1,917,500.00). The amount of the Loan shall be a draw down loan starting from zero and will increase with each disbursement on the Loan, with each disbursement to be agreed upon by City and Maker as to amount and timing. Repayment of the Note shall include interest payments at the rate of two and a half percent (2.5%) per year on the Note. Payment of the Note shall be as described in Section 4. 3. Prepayment. Maker may prepay the outstanding balance of the Note, in whole or in part, at anytime without penalty. 4. Term of Fund Loan; Repayment. The Loan shall be amortized over a twelve (12) year period commencing with the initial disbursement under the Loan. Payments on the Loan shall be in the amounts and at such times as indicated on the amortization schedules prepared by City and amended as each additional B-2 disbursement under the Loan is made. Payments shall be due on December 1 of each year, commencing on December 1, 2025, and continuing on each subsequent December 1 thereafter. All accrued and unpaid interest and all unpaid principal shall be due and payable on December 1 of the twelfth (12th) year following the initial draw down under the Note. An amortization schedule for the Loan shall be prepared by the Finance Director of the City as if the total amount of One Million Nine Hundred Seventeen Thousand and Five Hundred Dollars ($1,917,500.00) had been disbursed at one time shall be attached to the Loan Agreement and this Note. The amortization schedule shall be updated by the Finance Director at the time of the initial disbursement and each subsequent disbursement thereafter reflecting all disbursements on the Loan and shall replace the prior amortization schedule. In all events the term shall remain twelve (12) years from the initial disbursement. The updated amortization schedules shall be acknowledged by the Chairman of the Board of the Maker. The initial and updated amortization schedules shall be attached hereto as Exhibit “C”. The City retains the right, in its sole discretion, to forgo the physical payment of that portion of its annual assessment payable to the Borrower in an amount equal to the next payment to be made by Borrower under the Loan per the then applicable amortization schedule 5. Default; Cross-Default; Acceleration. 5.1 In addition to Maker’s failure to perform the requirements of this Note, Maker shall also be in default of this Note if Maker violates or fails to perform any provision of the Loan Agreement. 5.2 Default by Maker of this Note or of the Loan Agreement, shall constitute a default of this Note and all of the Loan Agreement. 5.3 In the event Maker fails to perform hereunder or under the Loan Agreement, for a period of thirty (30) days after the date of written notice from Holder that such performance was due, Maker shall be in default of this Note. Prior to exercising any of its remedies hereunder, City shall give Maker written notice of such default, and Maker shall thereafter have thirty (30) days to cure such default; provided, however, that if the default hereunder is solely as a result of a default under the Loan Agreement, the default, notice, and cure provisions of the applicable document shall apply. If Maker cures a default within the cure period set forth in the applicable document, Maker shall be deemed to have also cured that default under this Note. If Maker does not cure a default within the cure period, Maker shall be deemed in default under this Note and the Loan Agreement. In the event Maker is deemed in default under this Note, and has not cured the default within the time set forth in the applicable notice of default, Holder may, at its option, declare this Note and the entire obligations hereby evidenced immediately due and payable and collectible then or thereafter as Holder may elect, regardless of the date of maturity. Upon such occurrence, the balance of the Note will be due and owing together with interest which shall accrue from the date of the default at five percent (5%) per year. In addition, City may advance and/or credit funds from City’s annual assessment due to KCLAD for the default and any interest costs. At the time of such advance, City may, in B-3 its discretion determine that such amount is an advance and the event of default continues to accrue or City may determine that the credit cures such default. 6. Collection Costs; Attorneys’ Fees. If, because of any event of default under this Note or the Loan Agreement, any attorney is engaged by Holder, including the City Attorney, to enforce or defend any provision of this instrument, whether or not suit is filed hereon, then Maker shall pay upon demand reasonable attorneys’ fees, expert witness fees and all costs so incurred by Holder together with interest thereon until paid at the applicable rate of interest payable hereunder, as if such fees and costs had been added to the principal owing hereunder. 7. Financial and Audit Reports. Borrower shall submit quarterly financial reports to the City due on the 15th day of the first month of the following reporting quarter and shall provide the City an annual financial audit report on December 1, commencing on December 1, 2025 for its financial transactions for FY 2023-24. Prior to issuance of the first draw down, the Borrower shall work with the Director of Finance to develop a 10-Year Financial Model outlining estimated Sources of Revenues and Expenditures. The Financial Model tool shall assist in upholding Borrower’s repayment obligations to the City and in identifying financial challenges early, if any, allowing for appropriate measures to be taken. The Financial Model shall be completed by July 31, 2024. 8. Waivers by Maker. Maker and all endorsers, guarantors and persons liable or to become liable on this Note waive presentment, protest and demand, notice of protest, demand and dishonor and nonpayment of this Note and any and all other notices or matters of a like nature, and consent to any and all renewals and extensions near the time of payment hereof and agree further that at any time and from time to time without notice, the terms of payment herein may be modified between Holder and Maker. 9. Severability. The unenforceability or invalidity of any provision or provisions of this Note as to any persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 10. Notices. All notices, demands, requests, elections, approvals, disapprovals, consents or other communications given under this Note shall be in writing and shall be given by personal delivery, certified mail, return receipt requested, or overnight guaranteed delivery service and addressed as follows: B-4 If to Holder: City of Rancho Palos Verdes 30940 Hawthorne Boulevard Rancho Palos Verdes, CA 90275 Attn: City Manager If to Maker: KCLAD 30940 Hawthorne Boulevard Rancho Palos Verde, CA 90274 Attention: KCLAD And P.O. Box 3675 Palos Verdes Peninsula 90274 Attention: KCLAD . Notices shall be effective upon the earlier of receipt or three days after the notice is placed in the mail. Each party shall promptly notify the other party of any change(s) of address to which notice shall be sent pursuant to this Note. 11. Attorneys' Fees. If this Note is not paid when due or if any Event of Default occurs, Maker promises to pay all costs of enforcement and collection, including but not limited to, reasonable attorneys' fees, whether or not any action or proceeding is brought to enforce the provisions hereof. 12. Modifications. Neither this Note nor any term hereof may be waived, amended, discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by Maker and Holder. No delay or omission on the part of Holder in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note. 13. No Waiver by Holder. No waiver of any breach, default or failure of condition under the terms of this Note shall be implied from any failure of the Holder to take action, or any delay be implied from any failure by the Holder in taking action, with respect to such breach, default or failure from any prior waiver of any similar or unrelated breach, default or failure. 14. Nonassignability. Maker may not transfer, assign, or encumber this Note in any manner without the prior, express, written authorization of Holder, which may be given or withheld by Holder in Holder’s sole and absolute discretion. It shall be deemed reasonable for Holder to refuse authorization for B-5 any reason or no stated reason. Holder may freely transfer, assign, or encumber Holder’s interest in this Note in any manner, at Holder’s sole discretion. 15. Governing Law. This Note has been executed and delivered by Maker in the State of California and is to be governed and construed in accordance with the laws thereof. Any litigation arising in connection with this Note shall be instituted in a court within the County of Los Angeles, California. 16. Time of Essence. Time is of the essence in the performance of the obligations and provisions set forth in this Note. B-6 IN WITNESS WHEREOF, the parties have executed this Note as of the date first above written. “MAKER” KLONDIKE CANYON GEOLOGIC HAZARD ABATEMENT DISTRICT By: Its: Chairman By: Its: Vice-Chairman C-1 EXHIBIT “C” Loan Amortization Schedule Loan Summary (KCLAD) Loan amount $1,917,500 Scheduled payment Annual interest rate 2.50%Scheduled number of payments Loan period in years 12 Actual number of payments Number of payments per year 1 Total early payments Start date of loan 12/1/2025 Total interest Payment Number Payment Date Beginning Balance Scheduled Payment Total Payment Principal Interest Ending balance Cumulative interest 1 12/1/2025 $1,917,500 $186,932 $186,932 $138,994 $47,938 $1,778,506 $47,938 2 12/1/2026 $1,778,506 $186,932 $186,932 $142,469 $44,463 $1,636,037 $92,400 3 12/1/2027 $1,636,037 $186,932 $186,932 $146,031 $40,901 $1,490,006 $133,301 4 12/1/2028 $1,490,006 $186,932 $186,932 $149,681 $37,250 $1,340,325 $170,551 5 12/1/2029 $1,340,325 $186,932 $186,932 $153,423 $33,508 $1,186,902 $204,059 6 12/1/2030 $1,186,902 $186,932 $186,932 $157,259 $29,673 $1,029,642 $233,732 7 12/1/2031 $1,029,642 $186,932 $186,932 $161,191 $25,741 $868,452 $259,473 8 12/1/2032 $868,452 $186,932 $186,932 $165,220 $21,711 $703,232 $281,184 9 12/1/2033 $703,232 $186,932 $186,932 $169,351 $17,581 $533,881 $298,765 10 12/1/2034 $533,881 $186,932 $186,932 $173,585 $13,347 $360,296 $312,112 11 12/1/2035 $360,296 $186,932 $186,932 $177,924 $9,007 $182,372 $321,119 12 12/1/2036 $182,372 $186,932 $182,372 $177,813 $4,559 $0 $325,679 $186,932 12 1 $325,679 D-1 EXHIBIT “D” Construction schedule is to be determined by the ACLAD Board and the City after receiving City Council’s approval of the financial assistance package. Additional requirements are included in Section 4.4 Schedule of Performance; Progress Reports.