HomeMy WebLinkAboutC-9737-1 - MOU for a Water Well FacilityMEMORANDUM OF UNDERSTANDING BY AND BETWEEN
I
THE CITY OF NEWPORT BEACH AND
U THE LAGUNA BEACH COUNTY WATER DISTRICT
FOR A WATER WELL FACILITY
This MEMORANDUM OF UNDERSTANDING ("MOU") is entered into as of this alday
of Q i, (; 2024 ("Effective Date") by and between the Laguna Beach County
Water bistrict ("Laguna Beach"), located at 306 Third Street, Laguna Beach, CA and the
City of Newport Beach, a California municipal corporation and charter city ("Newport
Beach"), located at 100 Civic Center Drive, Newport Beach, CA, with each individually
referred to as "Party" and collectively referred to as the "Parties."
PURPOSE
The purpose of this MOU is to establish a framework for collaboration between Laguna
Beach and Newport Beach for the acquisition, development, operation, and maintenance
of a new water well facility that would supply groundwater to the Parties' water customers.
RECITALS
A. Newport Beach is a municipal corporation duly organized and validly existing under
the laws of the State of California with the power to carry on its business as it is now
being conducted under the statutes of the State of California and the City Charter.
B. Newport Beach's Utilities Department oversees, manages, and maintains Newport
Beach's water system. Most of Newport Beach's water supply comes from the local
groundwater basin, which is sourced from four strategically located water wells in
Fountain Valley, CA. The remaining water supply is imported from Northern California
and/or the Colorado River through the Municipal Water District of Orange County
("MWDOC"), which is significantly more expensive than groundwater.
C. The City of Newport Beach Water Master Plan policies and goals include Future
Project F-13 which consists of developing a new water well to meet Newport Beach's
water supply needs.
D. Laguna Beach is a special district under California Water Code Section 30000 et seq.
that operates as a subsidiary district of the City of Laguna Beach while continuing to
exist as a special district.
E. In 2015, Newport Beach and Laguna Beach entered into an agreement allowing
Newport Beach to sell excess groundwater to Laguna Beach. In recent years, there
has been very little excess water due to limited water well capacities.
F. Laguna Beach's Fiscal Year 2023-24 Goals & Actions to implement its 2023-2028
Strategic Plan includes taking steps to develop groundwater as a reliable water source
by way of developing potential new well sites.
G. Laguna Beach purchased the property located at 17902 Bushard Street, Fountain
Valley, CA as legally described in Exhibit "A," and depicted in Exhibit "B," which
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are attached hereto and incorporated by reference ("Property"). Newport Beach and
Laguna Beach wish to enter in this MOU to work cooperatively to develop a new water
well at the Property to supply ground water to both Parties' water customers.
H. As provided in Section 5, this MOU memorializes the Parties' intentions for the Project,
as defined below, through the phases set forth in Section 4.A through 4.C. The Parties
anticipate that they will memorialize their respective obligations in connection with the
phases of Project implementation consisting of Design and Permitting, Construction,
Operations and Maintenance ("Project Implementation") by way of a subsequent
agreement between the Parties.
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises set forth herein, Newport Beach and Laguna Beach do hereby agree as follows:
PROJECT DESCRIPTION
The project consists of the development of two wells at the Property, which consist
of a deep and shallow well, approximately 50-feet apart, anticipated to produce 5,000-
6,000 acre feet ("AF") of groundwater to serve Newport Beach's and Laguna Beach's
water customers ("Project"). For the purposes of this MOU, "Well" refers to a dual -well
facility.
The term of this MOU shall commence on the Effective Date, and shall terminate
upon execution of a separate agreement between the Parties governing Project
Implementation, as defined in Recital H above, or 2026, whichever occurs first,
unless terminated earlier as set forth in Section 3.
3. TERMINATION
Either party may terminate this MOU by providing the other Party with not less than
sixty (60) calendar days' written notice to the other Party. Notwithstanding the foregoing,
the provisions of Section 9, Section 10, and Section 14.9 of this MOU shall survive the
expiration or early termination of this MOU.
4. PROJECT PHASING
The Project phases and Parties' obligations are set forth herein.
A. Land Acquisition — Costs, Proportionality and Timing
Laguna Beach purchased the Property for Two Million Seven
Hundred Fifty Thousand Dollars ($2,750,000.00).
Laguna Beach shall be solely responsible for maintaining the
Property prior to Newport Beach's Acquisition as set forth in Section
4.0 below and paying for all hard and soft costs of maintaining the
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Property subject to the maintenance cost sharing obligations set
forth in Section 4.C.ii.
B. Preliminary Design and Land Use Entitlements — Costs,
Proportionality, and Timing
i. The Project will be designed as a dual well facility (i.e. a deep and
shallow well similar to Newport Beach's other facilities) ("Preliminary
Design").
ii. The land use entitlements required for the Project include a general
plan amendment, zoning code amendment, and CEQA
determination through the City of Fountain Valley ("Land Use
Entitlements"), which will serve as the lead agency under CEQA.
iii. Newport Beach shall be solely responsible for processing the
Preliminary Design and applying for the Land Use Entitlements for
the Project, and for paying all hard and soft costs for these phases
as they become due subject to the cost sharing obligations set forth
in (iv) below.
iv. All costs related to developing the Preliminary Design and
processing, applying for, and obtaining all Land Use Entitlements
through final approval shall be shared equally between Newport
Beach and Laguna Beach except that Newport Beach is entitled to,
and shall add, an additional 15% charge to all hard costs' payable by
Laguna Beach to account for Newport Beach's staff time for the
Preliminary Design and Land Use Entitlement processing.
V. Laguna Beach and Newport Beach will reconcile and reimburse all
costs and amounts owed under this Section 4.B upon the successful
completion of the Newport Beach Acquisition of the Property as
provided in Section 4.0 below.
C. Newport Beach Acquisition of the Property — Costs, Proportionality
and Timing
Newport Beach intends to purchase a fifty-one percent (51 %)
interest in the Property from Laguna Beach for One Million Four
Hundred Two Thousand Five Hundred Dollars ($1,402,500.00)
("Newport Beach Acquisition") upon completion of the Conditions of
Purchase. "Conditions of Purchase" means final completion of the
Preliminary Design and approval of the Land Use Entitlements set
forth in Section 4.B above including expiration of any statute of
limitations challenging the approval of the Land Use Entitlements for
the Project, Newport Beach accepting conditions of title, execution
of a joint powers' agreement for the operation of the Project, and
recordation of a grant deed transferring fifty-one percent (51 %) of the
fee simple ownership interest in the Property to Newport Beach.
Laguna Beach shall pay all costs of maintaining the Property as they
become due except that Laguna Beach and Newport Beach will
share equally in all hard costs of maintaining the Property, including
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but not limited to, weed abatement, dust, fencing, security, dumping,
neighbor concerns etc.) except that Laguna Beach is entitled to, and
shall add, an additional 15% charge to all hard costs, incurred by
Laguna Beach as of the date title was transferred to Laguna Beach
through the Newport Beach Acquisition. The Parties shall reconcile
and reimburse all maintenance costs and amounts owed under
Sections 4.A through 4.0 upon the successful completion of the
Newport Beach Acquisition.
iii. All other hard or soft costs associated with acquiring the Property for
the Project shall be paid for by the Party incurring that cost. (For
example, escrow postponement initiated and paid for by Laguna
Beach; Phase 1 environmental assessment initiated and paid for by
Newport Beach.) "Hard cost" means costs and/or services which are
contracted for by the Party such as legal services or environmental
consultants. "Soft costs" shall mean the Party's staff time and/or
materials utilized towards the Project.
5. PROJECT IMPLEMENTATION
The Parties anticipate that they will memorialize their respective obligations in
connection with the Project Implementation in a subsequent agreement between the
Parties. A non -binding example of such obligations is attached hereto as Exhibit "C"
("Sample Implementation Terms") solely for reference, and the Parties do not intend to
execute, or agree to, the Sample Implementation Terms by attaching them to this MOU.
6. CAPACITY/OWNERSHIP
The Parties understand and agree that the Project should be designed so that
capacity/ownership of the Well shall be uninterruptible during well operations/flow.
Initially, the capacity/ownership shall be split 50-50 between Laguna Beach and Newport
Beach until Laguna Beach reaches its capacity cap of 2310 acre-feet per year ("AFY")
(2025 AFY plus one month of average demand of 285 AFM). Thereafter, all remaining
available production capacity/ownership shall belong to Newport Beach. The design
capacity of the Well will be the calculated design flow determined by the consulting
engineer, multiplied by a percentage reduction agreed upon by the Parties to account for
reductions in flow due to multiple wells flowing loss, resting and initial degradation. (For
example, assuming the design yields a flow of 5,000 gallons per minute ("gpm"), the well
could technically continuously produce 8,000 acre-feet. However, the design capacity
should be reduced by an agreed or industry standard percentage.) The official well
capacity shall be the post -Construction commissioning/testing capacity multiplied by a
percentage reduction to account for the reductions noted above. One year after
Construction is completed, the official Well production capacity shall be retested and
recertified as the 1-year post -Construction commissioning/testing capacity multiplied by
a percentage reduction to account for the reductions noted above. If and when the Well
production capacity is reduced by degradation, contamination, maintenance, or
construction activities, each Party will equally share the reduction on an annual basis.
Project costs, including property acquisition costs, will be recalculated based on the actual
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split of capacity between the Parties, and reimbursements will be made as necessary to
reconcile amounts owed.
7. REPORTING AND ACCOUNTING REQUIREMENTS
At all times during the term of this MOU, each Party shall maintain true, proper,
and complete books, records, and accounts (collectively, "Books and Records") in which
shall be entered fully and accurately all funds received and transactions completed for
the Project as well as the expenditure of any funds for the Project. Each Party shall
maintain the Books and Records in accordance with Generally Accepted Accounting
Principles ("GAAP"). Each Party shall make available to the other party copies of such
Books and Records upon five (5) working days of the other party's written request.
8. INDEPENDENT ENTITY
In the performance of this MOU, each Party, and the volunteers, agents and
employees of each Party, shall act in an independent capacity and are not officers,
employees or agents of the other Party. Nothing in this MOU shall be deemed to constitute
approval for either Party or any of either Party's directors, officers, volunteers, employees
or agents, to be the agents or employees of the other Party.
9. INDEMNIFICATION
To the fullest extent permitted by law, Laguna Beach shall indemnify, defend and
hold harmless Newport Beach, its Council, boards and commissions, officers, agents,
volunteers, and employees (collectively, the "Newport Beach Indemnified Parties") from
and against any and all claims (including, without limitation, claims for bodily injury, death
or damage to property), demands, obligations, damages, actions, causes of action, suits,
losses, judgments, fines, penalties, liabilities, costs and expenses (including, without
limitation, attorney's fees, disbursements and court costs) of every kind and nature
whatsoever (individually, a Claim; collectively, "Claims"), which may arise from or in any
manner relate (directly or indirectly) to the breach of this MOU by Laguna Beach,
maintenance of the Property prior to the Newport Beach Acquisition, or the negligent
and/or willful acts, errors and/or omissions of Laguna Beach, its principals, officers,
agents, employees vendors, suppliers, consultants, subcontractors, anyone employed
directly or indirectly by any of them or for whose acts they may be liable or any or all of
them in the performance of this MOU.
Likewise and to the fullest extent permitted by law, Newport Beach shall indemnify,
defend and hold harmless Laguna Beach, its boards and commissions, officers, agents,
volunteers, and employees (collectively, the "Laguna Beach Indemnified Parties") from
and against any and all Claims, which may arise from or in any manner relate (directly or
indirectly) to the performance or breach of this MOU by Newport Beach, or the negligent
and/or willful acts, errors and/or omissions of Newport Beach, its principals, officers,
agents, employees vendors, suppliers, consultants, subcontractors, anyone employed
directly or indirectly by any of them or for whose acts they may be liable or any or all of
them in the performance of this MOU.
6 l 824.00101 \42645299.5
10. INSURANCE
Without limiting Laguna Beach's indemnification of Newport Beach, Laguna Beach
shall obtain, provide and maintain at its own expense during the term of this MOU or for
other periods as specified in this MOU, policies of insurance of the type, amounts, terms
and conditions described in the Insurance Requirements attached hereto as Exhibit "D,"
and incorporated herein by reference.
11. PROHIBITION AGAINST TRANSFER
Neither Party shall assign, sublease, hypothecate, or transfer this MOU, or any of
their respective rights or obligations, or any portion thereof, hereunder, directly or
indirectly, by operation of law or otherwise without prior written consent the other Party.
Any attempt to do so without prior written consent of the other Party shall be null and void.
12. NOTICES
All notices, demands, requests or approvals to be given under this MOU shall be
given in writing and conclusively shall be deemed served when delivered personally or
on the third business day after the deposit thereof in the United States mail, postage
prepaid, first class mail, addressed as hereinafter provided.
All notices, demands, requests or approvals from Laguna Beach to Newport Beach
shall be addressed to the Newport Beach at:
Attn: City Manager
City of Newport Beach
100 Civic Center Drive
P.O. Box 1768
Newport Beach, CA 92658-8915
All notices, demands, requests or approvals from Newport Beach to Laguna Beach
shall be addressed to Laguna Beach at:
Attn: Executive Director
Laguna Beach County Water District
306 Third Street
Laguna Beach, CA 92651
13. DISPUTE RESOLUTION
The Parties shall seek, in good faith and within a reasonable time, to resolve any
disputes regarding this MOU first by meeting and conferring among two designated staff
representatives, one from each Party. Any disputes that cannot be resolved by the staff
representatives may be referred by either Party to the Laguna Beach General Manager
and to the Newport Beach Utilities Director for resolution. Neither Party will pursue other
methods of dispute resolution, including mediation or litigation, until there is an impasse
between the General Manager and Utilities Director.
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14. STANDARD PROVISIONS
14.1 Compliance With all Laws. Each Party shall at its own cost and expense
comply with all applicable statutes, ordinances, regulations and requirements of all
governmental entities related to its obligations under this MOU, including federal, state,
county or municipal, whether now in force or hereinafter enacted.
14.2 Cooperation. Newport Beach and Laguna Beach will work cooperatively to
complete the Project. Regular meetings shall be scheduled during the Project phases set
forth in Section 4 to discuss project status and obtain consensus on decision points. The
Parties shall meet on a monthly basis for such purposes during the Preliminary Design
and Entitlements Phase described in Section 4.0 herein. In the event Newport Beach
terminates this MOU and Newport Beach Acquisition set forth in Section 4.0 does not
occur, Newport Beach authorizes Laguna Beach to utilize the Preliminary Design plans,
drawings and/or specifications prepared for the Project subject to Laguna Beach
obtaining all required approvals from the architects, engineers, and consultants that
prepared the Preliminary Design plans, drawings, and/or specifications. Any use by
Laguna Beach will be at its sole risk and without liability to Newport Beach.
14.3 Waiver. A waiver by either Party of any breach, of any term, covenant or
condition contained herein shall not be deemed to be a waiver of any subsequent breach
of the same or any other term, covenant or condition contained herein, whether of the
same or a different character.
14.4 Integrated Contract. This MOU represents the full and complete
understanding of every kind or nature whatsoever between the Parties hereto with respect
to the subject matter of this MOU, and all preliminary negotiations and agreements of
whatsoever kind or nature are merged herein. No verbal agreement or implied covenant
shall be held to vary the provisions herein.
14.5 Interpretation. The terms of this MOU shall be construed in accordance with
the meaning of the language used and shall not be construed for or against either Party
by reason of the authorship of the MOU or any other rule of construction which might
otherwise apply.
14.6 Amendments. This MOU may be modified or amended only by a written
document executed by both Laguna Beach and Newport Beach and approved as to form
by the City Attorney of Newport Beach.
14.7 Severability. If any term or portion of this MOU is held to be invalid, illegal,
or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions
of this MOU shall continue in full force and effect.
14.8 Controllinq Law and Venue. The laws of the State of California shall govern
this MOU and all matters relating to it and any action brought relating to this MOU shall
be adjudicated in a court of competent jurisdiction in the County of Orange, State of
California.
61824.0010 1\42 645299.5
14.9 No Attorney's Fees. In the event of any dispute or legal action arising under
this MOU, the prevailing party shall not be entitled to attorney's fees.
14.10 Counterparts. This MOU may be executed in two (2) or more counterparts,
each of which shall be deemed an original and all of which together shall constitute the
same instrument.
[SIGNATURES ON NEXT PAGE]
61824.00101 \42645299.5
IN WITNESS WHEREOF, the parties have caused this MOU to be executed on
the dates written below.
CITY OF NEWPORT BEACH,
a California municipal corporation
Date: I /A I //Z-0 vy
By: —mill --
Will O'Neill
Mayor
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date: 10 2-
By: C
Aar n C. Harp 4(►c.l�l
City Attorney
ATTEST:
Date:
Leilani I. Brown
City Clerk
LAGUNA BEACH COUNTY WATER
DISTRICT, 1 California special district
Date: �l zoo
By:'`�
Sue Kempf
President
APPROVED AS TO FORM:
Date: tT1 "_�_o'
B y:J&U�VK 4 A
Legai_Co nsel
ATTEST:
Date:
By:
C\k�z��
Keith an Der aaten
Secretary
[END OF SIGNATURES]
Attachments: Exhibit A — Legal Description
Exhibit B — Property Depiction
Exhibit C — Sample Implementation Terms
Exhibit D — Insurance
61824.0010 1\42645299.5
Exhibit A
Legal Description
All that certain real property situated in the County of Orange, State of California,
described as follows:
THAT PORTION OF PARCEL 2, IN THE CITY OF FOUNTAIN VALLEY, COUNTY OF
ORANGE, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 95, PAGES 41 TO
42 INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER
OR SAID COUNTY, SHOWN AND DESCRIBED AS "NOT A PART' OF THE MAP OF
TRACT 16434, IN THE CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE
OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 851, PAGES 22 TO 23,
INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
61824.0010 1\42645299.5
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Exhibit C
Sample Implementation Terms
Design and Permitting Phase — Costs, Proportionality, and Timing
i. Upon approval of the Land Use Entitlements, Project Implementation
will begin with the final design phase and permitting which shall
consist of the Preliminary Design as modified by the Land Use
Entitlements ("Design") and permitting by other governing agencies
including, but not limited to, Santa Ana Regional Water Quality
Control Board ("SARWQC"), Orange County Water District
("OCWD") and City of Fountain Valley ("Permitting").
ii. Newport Beach is designated as the Party responsible for the Design
and Permitting for the Project Implementation.
iii. During the Design and Permitting, Newport Beach will study if any
transmission or distribution upgrades are necessary or
recommended.
iv. All costs related to the Design and Permitting will be apportioned to
each Party according to the relative capacity of water projected to be
used by that Party except that Newport Beach is entitled to, and shall
add, an additional 15% charge to all hard costs' payable by Laguna
Beach to account for Newport Beach's staff time for the Design and
Permitting.
V. Laguna Beach and Newport Beach will reconcile and reimburse
costs on a quarterly basis during the Design and Permitting phase
with all costs to be reconciled and reimbursed before either Party is
obligated to proceed with any further phases of the Project
Implementation.
Construction Phase — Costs, Proportionality, and Timing
iv.
VA
Upon completion of the Design and Permitting, the next phase of
Project Implementation will be construction of the Project.
Newport Beach is designated as the Party responsible for soliciting
formal bids for construction of the Project, awarding the construction
contract, and overseeing the construction of the Project.
All costs of construction, including, but not limited to, necessary
infrastructure upgrades as determined during Design and Permitting,
will be apportioned to each Party according to the relative capacity
of water projected to be used by that Party except that Newport
Beach is entitled to, and shall add, an additional 10% charge to all
hard costs to reimburse/account for the staff time efforts during the
phase.
Initially the capacity and cost allocations will be based on the design
capacity.
Laguna Beach and Newport Beach will reconcile and reimburse
costs on a quarterly basis during the construction phase.
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vi. All costs to be reconciled and reimbursed prior to operation of the
Well.
vii. The final capacity and cost allocations will be based on the
commissioning flow capacity of the Well.
C. Well Operations and Maintenance
i. Upon construction of the Project, Newport Beach will be responsible for
operation and maintenance of the Well.
ii. The operation and maintenance of the Well will be apportioned to each
Party according to the relative capacity of Well allocated to that Party
except that Newport Beach is entitled to, and shall add, an additional
15% charge to all hard costs' payable by Laguna Beach to account for
Newport Beach's staff time allocated to Operation and Maintenance.
iii. The Parties agree to review and update the current cost allocation
method as needed to reflect the new well and facilities.
iv. Any unused production capacity from the Well may be used by the other
Party as an interruptible supply, with costs reimbursed to make the other
Party whole.
V. Newport Beach shall provide Laguna Beach's uninterruptible supply
amount of 2310 AFY from the Well and/or any of Newport Beach's other
wells.
vi. Laguna Beach and Newport Beach will reconcile and reimburse costs
on a semi-annual basis during the Operations phase.
D. Annual Meetings and Capital Costs.
i. The Parties will meet annually before the end of each fiscal year to
determine necessary capital and operation and maintenance costs
("Capital Costs") for the well and associated appurtenances ("Well
Facilities") for the next fiscal year and to determine and agree upon the
official well capacity value for the year based on the flow reduction
percentage discussed above.
ii. The Parties shall adopt all necessary budgets and make all necessary
appropriations sufficient to cover all amounts payable under this MOU,
including each Party's proportionate share of all Capital Costs, subject
to the approval of each Party's governing body.
E. Reporting and Emergency Operations Plan.
The City of Newport Beach will submit all necessary production reporting
for both Parties as required by Orange County Water District. Within the
first year of operation, the Parties agree to develop an emergency
operations plan to optimize the availability of well water and other
emergency supplies regionally available to either Party in the event of
loss of imported water.
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Exhibit D
INSURANCE REQUIREMENTS
A. Provision of Insurance. Without limiting Laguna Beach's indemnification of
Newport Beach, and prior to commencement of Work, Laguna Beach shall obtain,
provide and maintain at its own expense during the term of this Memorandum of
Understanding ("MOU"), policies of insurance of the type and amounts described
below and in a form satisfactory to Newport Beach. Laguna Beach agrees to
provide insurance in accordance with requirements set forth here. If Laguna
Beach uses existing coverage to comply and that coverage does not meet these
requirements, Laguna Beach agrees to amend, supplement or endorse the
existing coverage.
B. Acceptable Insurers. All insurance policies shall be issued by an insurance
company currently authorized by the Insurance Commissioner to transact
business of insurance in the State of California, with an assigned policyholders'
Rating of A- (or higher) and Financial Size Category Class VII (or larger) in
accordance with the latest edition of Best's Key Rating Guide, unless otherwise
approved by Newport Beach's Risk Manager.
C. Laguna Beach's Coverage Requirements.
1. Workers' Compensation Insurance. Laguna Beach shall maintain Workers'
Compensation Insurance providing statutory benefits and Employer's Liability
Insurance with limits of at least two million dollars ($2,000,000) each employee
for bodily injury by accident and each employee for bodily injury by disease in
accordance with the laws of the State of California. In addition, Laguna Beach
shall require any and all subcontractors to similarly maintain Workers'
Compensation Insurance and Employer's Liability Insurance in accordance with
California law for all of the subcontractor's employees. The insurer issuing the
Workers' Compensation insurance shall amend its policy by endorsement to
waive all rights of subrogation against the City of Newport Beach, its City
Council, boards and commissions, officers, agents, volunteers, and employees.
Laguna Beach shall submit to Newport Beach, along with the certificate of
insurance, a Waiver of Subrogation endorsement in favor of City of Newport
Beach, its City Council, boards and commissions, officers, agents, volunteers,
and employees, and any person or entity owning or otherwise in legal control
of the property upon which Laguna Beach performs activities contemplated by
this MOU.
2. General Liability Insurance. Laguna Beach shall maintain commercial general
liability insurance, and if necessary excess/umbrella liability insurance, with
coverage at least as broad as provided by Insurance Services Office form CG
00 01, on an occurrence basis, in an amount not less than five million dollars
($5,000,000).
61824.00101 \42645299.5
The policy shall cover liability arising from premises, operations, products -
completed operations, personal and advertising injury, and liability assumed
under an insured contract (including the tort liability of another assumed in a
business contract) with no endorsement or modification limiting the scope of
coverage for liability assumed under a contract.
Laguna Beach shall submit to Newport Beach, along with a certificate of
insurance, additional coverage as stated in Section D. Laguna Beach's Other
Insurance Requirements.
3. Excess/Umbrella Liability Insurance. If any Excess or Umbrella Liability policies
are used to meet the limits of liability required by this contract, then said policies
shall be "following form" of the underlying policy coverage, terms, conditions,
and provisions and shall meet all of the insurance requirements stated in this
MOU, including, but not limited to, the additional insured and primary & non-
contributory insurance requirements stated herein. No insurance policies
maintained by the Newport Beach, whether primary or excess, and which also
apply to a loss covered hereunder, shall be called upon to contribute to a loss
until the Laguna Beach's primary and excess/umbrella liability policies are
exhausted.
Laguna Beach shall submit to Newport Beach, along with a certificate of
insurance, additional coverage as stated in Section D. Laguna Beach's Other
Insurance Requirements.
4. Property Insurance coverage shall be maintained on an "All Risk" basis equal
to the full replacement cost of Premises, including flood and earthquake, with
no coinsurance clause. Laguna Beach shall be solely responsible for the
payment of any deductible. Proceeds payable under the above insurance shall
be fully payable to the City as Loss Payee.
5. Crime insurance. Laguna Beach shall maintain crime coverage in an amount
not less than one -hundred thousand dollars ($100,000) covering public
employee theft, depositors forgery or alteration and computer and funds
transfer fraud.
6. Pollution Liability Insurance. Laguna Beach shall maintain a policy providing
Laguna Beach's pollution liability ("CPL") coverage with a total limit of liability
of no less than five -hundred thousand dollars ($500,000) per environmental
loss and in the aggregate per policy period. Claims -made policies require a 10-
year extended reporting period. The CPL policy shall include coverage for
cleanup costs, third -party bodily injury and property damage, including loss of
use of damaged property or of property that has not been physically injured or
destroyed, resulting from pollution conditions caused by contracting operations.
Coverage as required in this paragraph shall apply to sudden and non -sudden
pollution conditions resulting from the escape or release of smoke, vapors,
fumes, acids, alkalis, toxic chemicals, liquids, or gases, waste materials, or
other irritants, contaminants, or pollutants. The CPL shall also provide
61824.00 10 1\42645299.5
coverage for transportation and off -Site disposal of materials. The policy shall
not contain any provision or exclusion (including any so-called "insured versus
insured" exclusion or "cross -liability" exclusion) the effect of which would be to
prevent, bar, or otherwise preclude any insured or additional insured under the
policy from making a claim which would otherwise be covered by such policy
on the grounds that the claim is brought by an insured or additional insured
against an insured or additional insured under the policy.
Laguna Beach shall submit to Newport Beach, along with a certificate of
insurance, additional coverage as stated in Section D. Laguna Beach's Other
Insurance Requirements.
D. Laguna Beach's Other Insurance Requirements. The policies are to contain, or
be endorsed to contain, the following provisions:
1. Waiver of Subrogation. All insurance coverage maintained or procured
pursuant to this MOU shall be endorsed to waive subrogation against City of
Newport Beach, its City Council, boards and commissions, officers, agents,
volunteers, and employees, and any person or entity owning or otherwise in
legal control of the property upon which Laguna Beach performs activities
contemplated by this MOU or shall specifically allow Laguna Beach or others
providing insurance evidence in compliance with these requirements to waive
their right of recovery prior to a loss. Laguna Beach hereby waives its own right
of recovery against Newport Beach and shall require similar written express
waivers from each of its subcontractors.
2. Additional Insured Status. All liability policies including general liability,
products and completed operations, excess/umbrella liability, pollution liability,
and property insurance if required, shall provide or be endorsed to provide that
City of Newport Beach, its City Council, boards and commissions, officers,
agents, volunteers, and employees, and any person or entity owning or
otherwise in legal control of the property upon which Laguna Beach performs
the activities contemplated by this MOU shall be included as additional insureds
under such policies.
3. Primary and Non Contributory. Laguna Beach's insurance coverage shall be
primary insurance and/or the primary source of recovery with respect to City of
Newport Beach, its City Council, boards and commissions, officers, agents,
volunteers, and employees, and any person or entity owning or otherwise in
legal control of the property upon which Laguna Beach performs the activities
contemplated by this MOU. Any insurance or self-insurance maintained by
Newport Beach shall be excess of Laguna Beach's insurance and shall not
contribute with it.
4. Notice of Cancellation. All policies shall provide Newport Beach with thirty (30)
calendar days' notice of cancellation or nonrenewal of coverage (except for
nonpayment for which ten (10) calendar days' notice is required) for each
required coverage.
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5. Subcontractors. Laguna Beach shall require and verify that all subcontractors
maintain insurance meeting all the requirements stated herein, and Laguna
Beach shall ensure that Newport Beach is an additional insured on insurance
required from subcontractors. For CGL coverage subcontractors shall provide
coverage with a format at least as broad as CG 20 38 04 13.
E. Additional Agreements Between the Parties. The parties hereby agree to the
following:
Evidence of Insurance. Laguna Beach shall provide certificates of insurance to
Newport Beach as evidence of the insurance coverage required herein, along
with a waiver of subrogation endorsement for workers' compensation and other
endorsements as specified herein for each coverage. Insurance certificates
and endorsements must be approved by Newport Beach's Risk Manager prior
to commencement of performance. Current certification of insurance shall be
kept on file with Newport Beach at all times during the term of this MOU. The
certificates and endorsements for each insurance policy shall be signed by a
person authorized by that insurer to bind coverage on its behalf. At least fifteen
(15) days prior to the expiration of any such policy, evidence of insurance
showing that such insurance coverage has been renewed or extended shall be
filed with the Newport Beach. If such coverage is cancelled or reduced, Laguna
Beach shall, within ten (10) days after receipt of written notice of such
cancellation or reduction of coverage, file with the Newport Beach evidence of
insurance showing that the required insurance has been reinstated or has been
provided through another insurance company or companies. Newport Beach
reserves the right to require complete, certified copies of all required insurance
policies, at any time.
2. Newport Beach's Right to Revise Requirements. Newport Beach reserves the
right at any time during the term of the MOU to change the amounts and types
of insurance required by giving Laguna Beach sixty (60) calendar days' advance
written notice of such change.
3. Right to Review Subcontracts. Laguna Beach agrees that upon request, all
agreements with subcontractors or others with whom Laguna Beach enters into
contracts with on behalf of Newport Beach will be submitted to Newport Beach
for review. Failure of Newport Beach to request copies of such agreements will
not impose any liability on Newport Beach, or its employees. Laguna Beach
shall require and verify that all subcontractors maintain insurance meeting all
the requirements stated herein, and Laguna Beach shall ensure that Newport
Beach is an additional insured on insurance required from subcontractors. For
CGL coverage, subcontractors shall provide coverage with a format at least as
broad as CG 20 38 04 13.
4. Enforcement of Contract Provisions. Laguna Beach acknowledges and agrees
that any actual or alleged failure on the part of Newport Beach to inform Laguna
Beach of non-compliance with any requirement imposes no additional
61824.00 10 1\42645299.5
obligations on Newport Beach nor does it waive any rights hereunder.
5. Requirements not Limiting. Requirements of specific coverage features or
limits contained in this Exhibit D are not intended as a limitation on coverage,
limits or other requirements, or a waiver of any coverage normally provided by
any insurance. Specific reference to a given coverage feature is for purposes
of clarification only as it pertains to a given issue and is not intended by any
party or insured to be all inclusive, or to the exclusion of other coverage, or a
waiver of any type. If Laguna Beach maintains higher limits than the minimums
shown above, Newport Beach requires and shall be entitled to coverage for
higher limits maintained by Laguna Beach. Any available insurance proceeds
in excess of the specified minimum limits of insurance and coverage shall be
available to Newport Beach.
6. Self -Insured Retentions. Laguna Beach agrees not to self -insure or to use any
self -insured retentions on any portion of the insurance required herein and
further agrees that it will not allow any indemnifying party to self -insure its
obligations to Newport Beach. If Laguna Beach's existing coverage includes a
self -insured retention, the self -insured retention must be declared to Newport
Beach. Newport Beach may review options with Laguna Beach, which may
include reduction or elimination of the self -insured retention, substitution of
other coverage, or other solutions. Laguna Beach agrees to be responsible for
payment of any deductibles on their policies.
7. Newport Beach Remedies for Non Compliance. If Laguna Beach or any
subcontractor fails to provide and maintain insurance as required herein, then
Newport Beach shall have the right but not the obligation, to purchase such
insurance, to terminate this MOU, or to suspend Laguna Beach's right to
proceed until proper evidence of insurance is provided. Any amounts paid by
Newport Beach shall, at Newport Beach's sole option, be deducted from
amounts payable to Laguna Beach or reimbursed by Laguna Beach upon
demand.
8. Timely Notice of Claims. Laguna Beach shall give Newport Beach prompt and
timely notice of claims made or suits instituted that arise out of or result from
Laguna Beach's performance under this MOU, and that involve or may involve
coverage under any of the required liability policies. Newport Beach assumes
no obligation or liability by such notice but has the right (but not the duty) to
monitor the handling of any such claim or claims if they are likely to involve
Newport Beach.
9. Coverage not Limited. All insurance coverage and limits provided by Laguna
Beach and available or applicable to this Contract are intended to apply to the
full extent of the policies. Nothing contained in this MOU or any other
agreement relating to Newport Beach or its operations limits the application of
such insurance coverage.
10. Coverage Renewal. Laguna Beach will renew the coverage required here
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annually as long as Laguna Beach continues to provide any Work under this or
any other MOU or agreement with Newport Beach. Laguna Beach shall provide
proof that policies of insurance required herein expiring during the term of this
MOU have been renewed or replaced with other policies providing at least the
same coverage. Proof that such coverage has been ordered shall be submitted
prior to expiration. A coverage binder or letter from Laguna Beach's insurance
agent to this effect is acceptable. A certificate of insurance and/or additional
insured endorsement as required in these specifications applicable to the
renewing or new coverage must be provided to Newport Beach within five (5)
calendar days of the expiration of the coverages.
11. Maintenance of General Liability Coverage. Laguna Beach agrees to maintain
commercial general liability coverage for a period of ten (10) years after
completion of the Project/MOU or to obtain coverage for completed operations
liability for an equivalent period.
12. Laguna Beach's Insurance. Laguna Beach shall also procure and maintain, at
its own cost and expense, any additional kinds of insurance, which in its own
judgment may be necessary for its proper protection and prosecution of the
services provided under this MOU.
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