97-040 lease of Water System PropertyAGREEMENT FOR LEASE OF REAL PROPERTY (WATER SYSTEM)
THIS AGREEMENT FOR LEASE OF REAL PROPERTY (WATER SYSTEM)
("Lease") is entered into as of , 19_ between the CITY OF
CUPERTINO, (hereinafter referred to as "City"), and a
California corporation ("Lessee").
WITNESSETH:
WHEREAS, City provides water service to approximately metered
customers in the service area described in Exhibit A attached hereto (as such service area
may change from time to time in accordance with this Lease, the "Service Area"); and
WHEREAS, City is the owner of certain real property, easements and rights of
way and those certain pipes, mains, pumps and appurtenant facilities (including without
limitation buildings, pump houses, sheds and other structures) constituting all of City's
water system (the "Water System") within the Service Area and more specifically
described in Exhibit B attached hereto; and
WHEREAS, City desires to lease the Water System to Lessee, and Lessee desires
to lease the Water System from City, for the period and upon the other terms and
conditions set forth herein;
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and for good and valuable consideration, the receipt and adequacy of
which the parties hereby acknowledge, City and Lessee hereby agree as follows:
Section 1. Lease of Water System.
City hereby leases to Lessee, and Lessee hereby leases from City, the Water
System as described on Exhibit B. The Water System is leased in an "as is" condition.
Neither City nor any of its agents has made any representation or warranties with respect
to the Water System except as specifically set forth in this Lease. City agrees, however,
to provide Lessee with copies of maps, drawings, plans and specifications of the present
system, along with customer service and account records in a form agreeable to both
parties, all at least thirty (30) days prior to the Closing Date defined below. Lessee agrees
to use its best efforts keep all customer information confidential, whether received from
City or developed during the Term of the Lease.
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Section 2. Term of Lease.
The term of the Lease of the Water System shall be twenty-five (25) years unless
terminated earlier as provided in this Lease (the "Term"). The Term of this Lease shall
commence on (the "Closing Date"). City and Lessee shall jointly read
the meters of all customers in the Service Area within 10 business days preceding (a)
the Closing Date and (b) the expiration or termination of this Lease. All monies for
services rendered and water sold prior to the Closing Date meter readings and after the
expiration or termination of the Lease meter readings shall be the property of the City.
All monies for services rendered and water sold after the Closing Date meter readings and
through the expiration or termination of the Lease meter reading shall be the property of
the Lessee. Accrued expenses will be allocated in a similar manner.
Section 3. Use of Water System.
Subject to the provisions of this Lease, Lessee agrees to use the Water System for
the purpose of furnishing potable domestic water service to City customers. Lessee
agrees to furnish water, including water service for fire protection to all customers in the
Service Area in accordance with the applicable rules relating to service at all times during
the term of the Lease.
Not withstanding the above, Lessee shall not serve customers outside the water
system without City's written permission.
Lessee has no authority to and shall not retire, sell, transfer, convey, or encumber
any real property of the Water System. Lessee has no authority to retire, sell or otherwise
dispose of any personal property of the Water System without prior permission of the
City.
City retains the right to utilize or continue to utilize any portion or portions of the
Water System, including easements, tanks, buildings, and appurtenances for any legal
purpose which does not interfere with Lessee's use of the Water System to furnish
potable domestic water service to City customers.
Section 4. Title
All Capital Improvements shall be deemed part of the Water System and title to
such Capital Improvements shall immediately vest in City. Any other property added to
or incorporated into the Water System by Lessee pursuant to its maintenance obligations
under this Lease or which are added by new developments shall be deemed part of the
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Water System and title to such property shall immediately vest in City. Lessee shall not
own the Water System or any part thereof or any interest therein.
Section 5. Concession Fee.
As partial consideration for this Lease, Lessee agrees to pay the City a one time
concession fee (the "Concession Fee") of within 30
days of the execution of this Lease. The Concession fee is not a security deposit and is
not refundable.
Section 6. Base Rent.
As additional consideration, Lessee agrees to pay to City as annual rental
(hereinafter called the "Base Rental") for the use of the Water System, the sum of
. The Base Rental shall be paid to City on the basis of City's fiscal year
which commences July 1st and ends on June 30th. The Base Rent for any partial fiscal
year shall be prorated on a daily basis. The first payment of Base Rent shall be paid
within thirty (30) days from the Closing Date and shall be in an amount computed to the
end of the then current fiscal year. Thereafter, said payments of Base Rent shall be due
and payable, for each fiscal year that this Lease is in effect, without demand, notice,
deduction or offset, in equal annual installments in advance on the first day of said fiscal
year. Beginning on July 1, 1997, the Base Rent shall be increased or decreased each year
on July 1 by the same percentage as the May Urban Consumer (U) Price index for the
San Francisco Bay area for the preceding 12 months; provided, however, that in no event
will the Base Rent be less than the amount set forth in the first sentence of this Section.
The obligation to pay Base Rent shall end upon expiration or termination of this Lease.
Section 7. Operation of Water System
A. Repair, Maintenance and Operation. Lessee shall at its own expense
throughout the Term of this Lease, undertake any utility plant addition, betterment,
replacement, improvement, repair and perform routine and emergency maintenance of the
Water System in accordance with customary utility practices and shall operate the Water
System and pay all costs and expenses of operating the same (including the costs of all
utilities, plant improvements, water and all public charges, taxes and assessments of any
nature whatsoever), it being understood and agreed that City shall be under no obligation
to pay any cost or expense of any kind or character in connection with or related to the
management, operation, improvement, repair or maintenance of the Water System during
the Term of this Lease.
B. Customer Services Obligations: rendering monthly or bi-monthly bills to all
customers receiving water service in the Service Area; payment processing; responding to
customer inquiries on water service, bills, leaks or other concerns; collecting bills;
processing applications for new or transfer of service; collection of customer deposits for
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new service; collection of construction meter deposits; and investigation of customer
complaints.
C. Emergency Service Obligations: maintaining twenty-four (24) hour on-call
response to emergency calls or customer inquiries; providing an emergency or natural
disaster operations plan; maintaining an emergency communications system; providing or
having access to equipment required to perform emergency repair work to vital system
equipment and water mains; including evaluating and if necessary providing emergency
diesel powered back up generator at critical pumping stations.
D. Water Quality Testing Obligations: performing, or causing to be performed,
by a State of California certified laboratory, any and all water sampling, analysis, testing
and reporting as required for water sources, distribution mains or customer premises,
testing and reporting as required for water sources, distribution mains or customer
premises, by the U.S. Environmental Protection Agency, State of California Department
of Health Services and Office of Drinking Water and the County Environmental Health
Department or acts of the U.S. Congress or California Legislature; scheduling and
collecting water samples to test for microbiological, inorganic and organic constituents;
transportation to certified lab; preparation of monitoring plans; sample collection
training; reporting to appropriate regulator(s); record keeping; analysis interpretation;
special or emergency sample collection and analysis emergency notification to affected
customers, if required; preparation and distribution of any and all published and
distributed customer reports on water quality; new well or water source sampling and
analysis; response to customer inquiries on water quality; coordination of cross -
connection control and potential contamination issues; conducting annual system survey
with California State Department of Health Services; obtaining permits and compliance
with appropriate air district; providing hazardous materials control program, and ensuring
all operator certification is in compliance with State and Federal requirements.
E. Other Service Obligations: implement a Water Conservation or Waste Water
program; maintain distribution system maps and plat maps; prepare any required urban
water management plans; and in general, to do all such acts and perform all such services
as required to operate the Water System in a manner similar to that in which it operates
its own district systems, subject; however, to the provisions of this Lease.
F. Reports: Lessee shall provide City written reports, in a form suitable to both
parties, related to Lessee's operation and maintenance of the Water System, as described
herein. The frequency and contents of the reports shall be as follows:
(1) Annually: summary of extraordinary maintenance, capital improvements,
developer installations with job description, percentage of completion and pertinent
comments relative to the project, service and complaint report with listing of customer
complaints and inquiries, reason for customer contact and resolution of the matter; water
quality analysis of microbiological testing.
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(2) Periodically: any other report or information that is reasonably requested by
City in connection with the operation and maintenance of the Water System.
G. General Operation: Unless inconsistent with the specific terms of this
agreement, Lessee shall operate the Water System according to the procedures and
administrative rules by which it operates its other water systems in the City of Cupertino.
Section 8. Rates and Charges.
Lessee shall propose to City reasonable rates and charges that Lessee will impose
for water service to be delivered to the customers served by the Water System. Such
rates shall require approval by City, which approval shall not be unreasonably withheld.
Any disapproval shall state the reasons therefor. In determining reasonable rates and
charges, City shall consider all relevant information, including the California Public
Utilities Commission approved rates in similar, nearby municipalities. Lessee may ask
City to approve increases in rates from time to time.
City shall act on all requests for rate increases within sixty (60) days of receipt of
the request. In cases of natural disaster, other emergencies or acts of God, City
recognizes that extraordinary rate relief on an expedited basis may be necessary and City
agrees to expeditiously approve any such reasonably requested rate relief. In the event
City does not act on any requested rate relief either within the 60 day period or on a
expedited basis, as the case may be, and such rate relief is subsequently approved or
ordered, the water rates and charges shall be adjusted to subsequently recover from
customers over a reasonable period of time such amounts as are necessary to place Lessee
in the same position it would have been had the rates been in effect from and after the end
of such 60 day period.
Not withstanding the foregoing, Lessee may upon written notice to the City, pass
through to customers in the Service Area in a manner substantially similar to that
permitted by the California Public Utilities Commission any increase or decrease in the
cost of water or power (to the extent not already reflected in rates), as well as any new
City imposed fees, charges, taxes, license or permit fees, so long as Lessee promptly
passes through in a manner substantially similar to that permitted by the California Public
Utilities Commission any decreases in water or power costs. Lessee shall, at City's
request, provide City with any information which may reasonably request documenting
any changes up or down in the cost of water or power. Lessee may also impose
conservation or rationing penalties on those customers exceeding their allocations, in the
event of mandatory water rationing involving penalties imposed by the Santa Clara
Valley Water District.
In the event, that rates or surcharges are reduced by order of the P.U.0 or
voluntarily by Lessee in areas of the City, other than in the Service Area of the Lease, the
Lessee shall forthwith reduce its rates or surcharges within the Service Area of the Lease
by the same percentage.
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A. Phase in Rate and Structure
Should Lessee's rates and charges be higher than that of City's at the time of
Closing Date, Lessee will perform a conversion of rate structure and phase in rates and
charges over a three period as follows.
(1) Rate Structure Conversion. Beginning in Lessee will
convert the City's inverted rate structure to Lessee's flat rate structure by taking the
revenue generated by the rates excluding charges and other revenue and computing an
equivalent flat rate that would generated the same amount.
(2) Phase-in Period. Beginning in 1997 Lessee will have new
rates and charges established by computing the differences between revenue generated
using current Lessee rate and that of the new rate structure computed above in Section 6
B(1), and dividing said difference by three years yielding a rate increase allowed annually
for the next three years starting on 1997 and concluding on
2000 thereby completing the transition period. The charges will be changed
in the same manner by taking the difference between the City's rates as established on
1997 and the Lessee's charges for the same period and dividing by 3 years
to yield the annual increase which will begin on 1997 and end on
2000, thereby completing the transition period.
B. No charge will be made for water delivered to Cupertino fire department
facilities. No charge will be made for fire fighting activities. All other municipal
properties using water service will be charged regular rates.
C. In the event of mandatory water rationing imposed by the Lessee, the Santa
Clara Valley Water District or any other authorized public utility and other authorized
public authority and to the extent allowed by law, Lessee may impose water conservation,
mandatory water rationing and rationing penalties on those City customers exceeding
rationing allocations.
Section. 9 Evaluation of System/Arbitration
Lessee, upon written request of City or City's agent, shall permit City or City's
agent to conduct a comprehensive inspection of the Water System, including, but not
limited to, field inspections, maintenance records and reports, customer complaints,
capital improvement installations, schedules, and plans, in order to assess the condition of
the Water System.
In the event that City determines that all or part of the Water System is not being
operated or maintained in accordance with customary utility standards, City shall provide
written notice to Lessee describing the deficiencies which City wishes to be corrected.
Lessee, shall within sixty (60) days thereafter, file with City its written response
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describing which deficiencies Lessee agrees are valid together with a plan to correct said
deficiencies. Failure of Lessee to provide said written response within said period shall
be deemed by City as an admission that said deficiencies exist and City may through an
action for specific performance or other legal action compel Lessee to perform the work
necessary to correct said deficiencies.
In the event that Lessee, in its written response to City disagrees with any or all of
the deficiencies described in City's notice or in the event that City does not agree to the
plan for deficiency corrections, then, in that event, the parties shall meet in good faith, in
an attempt to resolve all issues.
In the further event that agreement cannot be reached between the parties or any
or all issues, then the parties agree to submit the unsolved issues to arbitration under the
rules of the American Arbitration Association or such other association as selected by the
Presiding Judge of the Santa Clara County Superior Court, State of California.
Section 10 Water Supply.
Lessee will perform and honor all water supply contracts executed by City and
presented to Lessee prior to the Closing Date. Any bills or invoices received by the City
pursuant to such contracts for water delivered after the closing Date shall be promptly
forwarded to Lessee for payment. Lessee has no right to terminate any such contract or to
renew any such contract for more than 12 months without the express written permission
of the City. If assignment or transfer of any water right or contract is deemed necessary
by either Lessee or City, City will cooperate with Lessee in completing such assignment
or transfer for the duration of the Lease.
Lessee shall not modify or take water supply wells out of permanent service
without the express written permission of the City's Director of Public Works.
Section 11. Customer Billing and Collections.
A. Lessee shall bill and collect from customers receiving water through the
Water System on the basis of the rates approved by City pursuant to Section 8, as
adjusted for any pass-through adjustments permitted or required by the provisions of
Section 8, and shall own, keep and retain all proceeds from such collections as the sole
property of Lessee. Lessee shall propose payment and credit rules substantially similar to
those imposed by Lessee in similar adjacent localities, and more particularly to customers
served by Lessee in other parts of the City, with such modifications as City approves, and
City shall approve such rates if they are reasonable and comply with all provisions of law
applicable to municipality owned water systems. Any amendments thereto shall be
submitted to City for approval.
Lessee reserves the right to bill each customer on a monthly or bi-monthly basis,
in the discretion of Lessee.
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B. In addition, Lessee shall bill and collect on behalf of City from customers
receiving water through the Water System any additional amounts which City may assess
as a utility user's tax on such customers and shall promptly pay all such amounts to City.
C. City agrees to cooperate with Lessee in collection of unpaid/delinquent
accounts. In doing so, City shall not be obligated to pursue collection on behalf of the
Lessee of any such amounts unpaid by customers.
D. Transition Periods: the meters of all customers in the Service Area shall be
read (jointly unless City and Lessee agree otherwise) in accordance with the schedules set
forth in Exhibit G prior to the commencement and expiration of the Term or the
termination of this Lease. All monies received by either City or Lessee pertaining to
water service furnished prior to commencement of the Term shall be and remain the
property of City and, to the extent received by Lessee, shall be accounted for and paid
over to City with reasonable diligence. All monies received by either City or Lessee
pertaining to water service furnished during the Term shall be and remain the property of
Lessee and, to the extent received by City, shall be accounted for and paid over to Lessee
with reasonable diligence; provided, however, upon expiration of the Term or termination
of this Lease, the amounts then due and the amounts due through such date by all
customers shall be calculated and, in lieu of collection and retention by Lessee, Lessee
shall be promptly paid such amount by City minus a reasonable amount for bad debts
based on the collection history of the customers in the Service Area.
Section 12. Employees.
Lessee will make reasonable efforts to offer employment to City employees now
working directly with the Water System, but Lessee will not be required to offer full or
temporary employment to any such individuals.
Section 13. Insurance.
A. Obligations of Lessee. During the term of this Lease, Lessee at its own cost
and expense shall maintain insurance, issued by a carrier or carriers acceptable to City, as
follows:
(1) Commercial general liability insurance in the single limit amount of
not less than $5,000,000, written on an occurrence basis. Such insurance shall include
coverage for injury (including death) or damage to persons and/or property arising out of
the operations of Lessee pursuant to this Lease. The policy shall include coverage for
liability assumed under this Lease for personal injury, property damage and all other
insurable claims as an "insured contract" for the performance of Lessee's indemnity
obligations under this Lease.
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(2) Workers' compensation insurance, or a certificate of self-insurance,
insuring against liability under the Workers' Compensation Insurance and Safety Act
now in force in California, or any act hereafter enacted as an amendment or supplement
thereto or in lieu thereof. Such insurance shall fully cover all persons employed by
Lessee in connection with its operations under this Lease for claims of death or bodily
injury arising in connection with their employment by Lessee pursuant to its operations
under this Lease.
(3) Automobile (vehicle) liability insurance on an occurrence basis for
bodily injury and/or property damage in a single limit amount of not less than one million
dollars ($1,000,000).
B. All policies of insurance shall contain an endorsement in favor of City and its
officers, agents and employees listing them as additional insureds.
C. The parties shall periodically review the insurance required hereby for the
purpose of agreeing on increases in the minimum limits of such insurance, from time to
time, to amounts which may be reasonable and customary for similar facilities of like size
and operation.
D. All insurance shall be effected under policies issued by insurers of recognized
responsibility, licensed or permitted to do business in the State of California and
reasonably acceptable to City.
E. All policies of insurance issued by the respective insurers shall provide that
such policies shall not be canceled or materially changed without at least thirty (30) days'
prior written notice to Lessee and to City. Copies of such policies shall be deposited with
City, together with appropriate evidence of payment of the premiums therefor, prior to
the Closing Date. Copies of all renewed or new policies, together with evidence of
payment, shall likewise be deposited with City prior to expiration dates of expiring or
non -renewed policies.
F. The limits of insurance required by this Lease or as carried by Lessee shall not
limit the liability of Lessee nor relieve Lessee of any obligation hereunder.
G. Lessee shall cause each insurance policy obtained by it to provide that the
insurance company waives all rights of recovery by way of subrogation against City in
connection with any damage covered by any policy.
Section 14. Liens and encumbrances.
City agrees to keep the Water System and Groundwater free and clear of all liens,
security interests and encumbrances except for those consented to by Lessee. Lessee
agrees to keep the Water System and Groundwater free and clear of all liens, security
interests and encumbrances, except for those consented to by the City.
Section 15. Surrender Upon Expiration or Termination.
Upon expiration or termination of this Lease, Lessee agrees that it shall surrender
to City the Water System in good order and condition and in a state of repair that is
consistent with prudent use and maintenance in accordance with customary utility
standards.
Section 16. Default and Remedies.
A. The occurrence of any of the following shall constitute a default by Lessee:
-(1) If Lessee fails to make any payment to City or to any third party
required by this Lease as and when due, or to obtain and maintain any insurance required
by this Lease, where such failure continues for ten days following receipt of written
notice from City specifying the failure;
(2) If Lessee fails to perform any of its other covenants or agreements
herein contained, where such failure continues for thirty days following receipt of written
notice from City specifying the failure;
(3) Notwithstanding subsection (2) above, if a failure to perform cannot
feasibly be cured within thirty days, for example, a major repair, if then Lessee fails to
commence and diligently proceed toward full performance of the cure within thirty days
following receipt of written notice from City specifying the failure, or if Lessee fails to
complete such performance within a reasonable time; or
(4) (a) If Lessee is or becomes bankrupt or insolvent or makes any general
arrangement or assignment for the benefit of creditors; (b) if Lessee becomes a "debtor"
as defined in 11 U.S.C. Section 101 or any successor statute thereto (unless, in the case of
a petition filed against Lessee, the same is dismissed within 90 days); (c) if a trustee or
receiver is appointed to take possession of substantially all of Lessee's assets or of
Lessee's interest in this Lease and possession is not restored to Lessee within 60 days; or
(d) if a writ of attachment or execution is levied on, or there is a judicial seizure of,
substantially all of Lessee's assets or of Lessee's interest in this Lease and such seizure is
not discharged within 60 days.
B. If City shall default in the performance of any of its covenants or agreements
contained herein and such default shall continue for a period of thirty days after receipt by
City from Lessee of written notice specifying the nature of the default, then Lessee may
at its option, upon 30 days written notice, cancel and terminate this Lease. In the case of
a default which cannot feasibly be cured within 30 days, if City fails to commence
performance and diligently proceed toward full performance within 30 days after receipt
of notice by Lessee of City's failure to perform or fails to complete performance within a
reasonable time thereafter, Lessee may, upon 15 days notice, terminate this Lease.
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C. In any action brought by the City in a court of competent jurisdiction to
enforce the provisions of this Lease or for monetary damages for its breach, the City, if
successful, shall recover, in addition to any monetary damages, its litigation costs,
including reasonable attorney's fees.
D. City shall have the following remedies if Lessee commits a default. These
remedies are not exclusive; they are cumulative in addition to any remedies now or later
allowed by law or provided for elsewhere in this agreement.
(1) Lessee's Right to Possession Not Terminated. In the event of a
default by Lessee, during the continuance of the default and for so long thereafter as any
damages or other sums payable by Lessee in connection with such default remain unpaid,
City can continue this Lease in full force and effect, and the Lease will continue in effect
as long as City does not terminate Lessee's right to possession, and City shall have the
right to collect the rent when due. In the event that Lessee ceases to operate the Water
System, City can enter the Water System and relet the Water System and the
Groundwater, or any part of it, to third parties for Lessee's account. Lessee shall be liable
immediately to City for all costs City incurs in reletting the Water System and the
Groundwater. Reletting can be for a period shorter or longer than the remaining Term of
this Lease. Lessee shall pay to City the rent due under this Lease on the dates the rent is
due, less the rent City receives from any reletting. No act by City allowed by this section
shall terminate this Lease unless City notifies Lessee that City elects to terminate this
Lease.
(2) Termination of Lessee's Right to Possession. In the event of a default
by Lessee, during the continuance of the default and for so long thereafter as any
damages or other sums payable by Lessee in connection with such default remain unpaid,
City can terminate Lessee's right to possession of the Water System and the Groundwater
at any time. No act by City other than giving formal written notice to Lessee shall
terminate this Lease. Acts of maintenance, efforts to relet the Water System and the
Groundwater or the appointment of a receiver on City's initiative to protect City's interest
under this Lease (other than the appointment of a receiver to perform all of Lessee's
obligations hereunder) shall not constitute a termination of Lessee's right to possession.
On termination, City has the right to recover from Lessee:
(a) The worth, at the time of the award, of the unpaid rent that had
been earned at the time of termination of this Lease;
(b) The worth, at the time of the award, of the amount by which the
unpaid rent that would have been earned after the date of termination of this Lease until
the time of award exceeds the amount of the loss of rent that Lessee proves could have
been reasonably avoided;
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(c) The worth, at the time of the award, of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the amount of the
loss of rent that Lessee proves could have been reasonably avoided; and
(d) Any other amount necessary to compensate City for all detriment
proximately caused by Lessee's default.
"This worth, at the time of the award," as used in subsections (a) and (b) of this
section, is to be computed by allowing interest at the maximum legal allowed upon a
judgment. "This worth, at the time of the award," as referred to in subsection (c) of this
section, is to be computed by discounting the amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award, plus one percent (1%).
(3) City's Right to Cure Lessee's Default. City, at any time after Lessee
commits a default, can cure the default at Lessee's cost. If City, at any time, by reason of
Lessee's default, pays any sum or does any act that requires the payment of any sum, the
sum paid by City shall be due immediately from Lessee to City at the time the sum is
paid, and if paid at a later date shall bear interest at the maximum rate an individual is
permitted by law to charge from the date the sum is paid by City until City is reimbursed
by Lessee. The sum, together with interest on it, shall be additional rent.
E. Notwithstanding any provision of this Section 16 to the contrary, if a default
or failure to perform by Lessee poses a threat to public health or safety, City shall so
notify Lessee, and if Lessee fails to take corrective action within the time specified in
such notice, City may enter the Water System and take all necessary action at Lessee's
expense. Lessee shall promptly reimburse City for its costs.
Section 17. Assignment.
Lessee agrees not to assign this Lease or sublet the Water System or any portion
thereof without the consent of City, which consent shall not be unreasonably withheld.
Section 18. Discharge of Liens.
Lessee agrees to pay and discharge all claims for materials, parts, labor, water,
power and other consumables and supplies furnished at Lessee's instance or request upon
or to the Water System and to keep the Water System free and clear of all liens resulting
from such claims. City agrees to pay and discharge all claims and obligations for
materials, parts, labor, water, power and other consumables and supplies furnished at
City's instance or request upon or to the Water System prior to the commencement of the
Term of this Agreement.
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Section 19. Indemnity.
Lessee agrees to hold City, and its officers, agents and employees, free and
harmless of and from, and to defend, indemnity, and protect City, and its officers, agents
and employees, against all liability, loss, claims, demands, damage, expense, costs
(including, without limitation, reasonable attorneys' fees and all costs and fees of
litigation and its threat) of any kind or nature arising out of or in any way connected with
the Lease or Lessee's performance or obligations under this Lease to the maximum extent
permitted by Law. The expiration or termination of this Lease and/or the termination of
Lessee's right to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the Term hereof or by
reason of Lessee's occupancy of the Water System. Without in any way limiting the
foregoing, Lessee shall be solely responsible for, and agrees to defend and indemnify
City and hold City harmless for any third parry claim or action challenging the validity of
this Lease. In the event this Lease is declared invalid, Lessee waives any claim it may
have against City in connection therewith.
City agrees to hold Lessee, and its officers, agents and employees, free and
harmless of and from, and to defend and indemnify Lessee, and its officers, agents and
employees, against all liability, loss, claims, demands, damage, expense, costs (including,
without limitation, all costs and fees of litigation and its threat) of any kind or nature
arising from claims by third parties or governmental agencies and resulting from
negligence, gross negligence, recklessness or willful misconduct by City in connection
with City's ownership or operation of the Water System prior to the Closing Date.
Section 20. California Law.
This Lease shall be governed by the laws of the State of California.
Section 21. Notices.
All notices, statements, demands, requests, consents, approvals, authorizations,
offers, agreements, appointments or designations hereunder by either party to the other
shall be in writing and shall be sufficiently given and served upon the other parry; if sent
by United States registered mail, return receipt requested, postage prepaid and addressed
as follows:
City: City of Cupertino
City Clerk
10300 Torre Avenue
Cupertino, California 95014
Lessee:
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or at such other address as either party shall later designate for such purpose by written
notice to the other party. Mailed notice shall be deemed given on the date of delivery
shown on the receipt card.
Section 22. Waiver.
The waiver by City of any breach by Lessee of any term, covenant or condition
hereof shall not operate as a waiver of any subsequent breach of the same or any other
term, covenant or condition hereof. The waiver by Lessee of any breach by City of any
term, covenant or condition hereof shall not operate as a waiver of any subsequent breach
of the same or any other term, covenant or condition hereof.
Section 23. Representation.
City hereby represents and warrants to Lessee that the City owns the Water
System free and clear of any and all liens, security interests and encumbrances, other than
the claims of the , which City agrees
to satisfy out of the proceeds of the Concession Fee payment received by City pursuant
to Section 5 .
Section 24. Nondiscrimination.
Lessee covenants by and for itself, its officers and assigns, and all persons
claiming under or through it, and this Lease is made and accepted upon and subject to the
following conditions: that there shall be no discrimination against or segregation of any
person or group of persons, on account of sex, race, color, creed, national origin, or
ancestry, in the leasing, transferring, use, or enjoyment of the Water System nor shall
Lessee itself, or any person claiming under or through it, establish or permit any such
practice or practices of discrimination or segregation.
Section 25. Counterparts.
This Lease may be executed in any number of counterparts, each of which when
so executed shall be deemed to be an original, but all together shall constitute but one and
the same Lease.
Section 26. Merlaer and Modification
This Lease and bid documents related thereto setforth the entire agreement
between the parties with respect to the subject matter hereof, and supersedes all other oral
or written provisions. This Lease may be modified or terminated only in a writing signed
by all parties.
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Section 27. Taxes and Assessments; Possessory Interest.
Lessee shall pay all taxes, assessments, fees, levies, charges, license or permit fees
and other governmental charges of any kind or nature which are or may be at any time or
from time to time during the Term of this Lease levied, charged, assessed or imposed
upon or against the Water System or the Groundwater or the leasehold estate created
hereby or which may be imposed upon any taxable interest of Lessee acquired pursuant to
the Lease. Without limiting the generality of the foregoing, Lessee acknowledges that
this Lease may create a possessory interest which may be subject to property taxation and
that Lessee may be subject to the payment of property taxes levied on such interest. Any
such tax shall be the sole responsibility of Lessee.
Section 28. In -Lieu Franchise Fees
In addition to all other considerations described in this Lease, Lessee shall pay
City during the term of this Lease, an in -lieu franchise fee equal to the franchise fee
charged to Lessee by the City for its other water system existing within the City (and
which is not part of this Lease) as prescribed by Title 6 of the City's ordinance code.
Section 29. Supplies, Tools and Equipment.
Lessee agrees to buy from City the supplies, tools, and equipment listed in Exhibit
C for the lump sum of . (Subject to verification)
Section 30. Attorneys' Fees.
If any party to this Lease commences legal proceedings or arbitration to interpret
this Lease, to enforce any of its terms or for damages for its breach, the prevailing party
shall be entitled to recover reasonable attorneys' fees.
Section 31. Net Lease.
This Lease shall be deemed and construed to be a "net lease" and Lessee hereby
agrees that the rental provided for herein shall be an absolute net return to City free and
clear of any expenses, charges or setoffs.
Section 32. Compliance with Law.
Except as otherwise provided in this Lease, Lessee shall, at Lessee's sole cost and
expense, diligently and in a timely manner, comply in all material respects with all
"Applicable Law," which term is used in this Lease to include all laws, rules, regulations,
ordinance, directives, covenants, easements and restrictions of record, permits, and
requirements of any applicable fire insurance underwriter or rating bureau, relating in any
manner to the Water System or the Groundwater (including but not limited to matters
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pertaining to (i) industrial hygiene, (ii) environmental conditions on, in, under or about
the Water System or the Groundwater, including soil and groundwater conditions, and
(iii) the use, generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage tank, now
in effect or which may hereafter come into effect, and whether or not reflecting a change
in policy from any previously existing policy. Lessee shall notify City in writing (with
copies of any documents involved) of any threatened or actual claim, notice, inquiry,
citation, warning, complaint or report pertaining to or involving failure by Lessee, the
Water System or the Groundwater to comply with any Applicable Law.
Section 33. Hazardous Substances.
A. Lessee will not cause or permit to occur any release, generation, manufacture,
storage, treatment, transportation, or disposal of Hazardous Substance (define below) on,
in, under, or from the Water System or the Groundwater or any portion of it in violation
of Applicable Laws. If Lessee does cause or permit any release or disposal of any
Hazardous Substance on, in, or under the Water System or any portion of it, Lessee, at its
own cost and expense, will immediately take such action as is necessary to detain the
spread of and remove the Hazardous Substance to the complete satisfaction of City and
other appropriate governmental authorities. Lessee shall promptly notify City of any
release or disposal (of which Lessee has knowledge or becomes aware) of any Hazardous
Substance on, in, under or from the Water System or the Groundwater.
B. Lessee agrees to indemnify, defend (with counsel reasonably acceptable to
City) and hold City and City's officers, agents and employees free and harmless from and
against, all losses, liabilities, obligations, penalties, claims, litigation, demands, defenses,
costs, judgments, suits, proceedings, damages (including consequential damages),
disbursements or expenses of any kind (including attorneys' and experts' fees and
expenses and fees and expenses incurred in investigating, defending, or prosecuting any
litigation, claims, or proceeding) that may at any time be imposed upon, incurred by,
asserted, or awarded against City in connection with or arising from or out of:
(1) any Hazardous Substance, on, in, under, or affecting all or any portion
of the Water System or the Groundwater, excluding any Hazardous Substance released,
generated or disposed by City;
(2) any breach of any covenant or agreement of Lessee contained or
referred to in this section;
(3) any violation or claim of violation by Lessee of any Applicable Law;
or
(4) the imposition of any lien for the recovery of any costs for
environmental cleanup or other response costs relating to the release or threatened release
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of Hazardous Substance, excluding any Hazardous Substance released, generated or
disposed by City.
The expiration or termination of this Lease and/or the termination of Lessee's
right to possession shall not relieve Lessee from liability under any indemnity provisions
of this Lease as to matters occurring or accruing during the Term hereof or by reason of
Lessee's occupancy of the Water System and the Groundwater.
C. For purposes of this Lease, "Hazardous Substance" means any substance,
material or waste which is defined as "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste," "restricted hazardous waste" or
similar term under any provision of any federal, state or local law and includes, without
limitation, hydrocarbons, petroleum, gasoline, crude oil or any products, by-products or
fractions thereof.
Section 34. City's Access.
City and City's agents shall have the right to enter the Water System at any time
in the case of an emergency, and otherwise at reasonable times and on reasonable prior
notice for the following purposes (i) to determine whether the Water System is in good
condition as required by this Lease and whether Lessee is complying with its obligations
under this Lease, (ii) to serve, post or keep posted any notices required or allowed by law
or under this Lease, and (iii) as City may otherwise reasonably deem necessary.
Section 35. Execution
This Lease is effective upon full execution. It is the product of negotiation and
therefore shall not be construed against any party.
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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed and attested by their proper officers thereunto duly authorized, and their official
seals to be hereto affixed, as of the day and year first above written.
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
CITY OF CUPERTINO
LESSEE:
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Mayor
EXHIBIT A --Service Area
EXHIBIT B --Water System
EXHIBIT C --Supplies, Tools, and Equipment
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